What is cost of Poor Quality (COPQ)?
- The cost of finding and fixing defects.
- Failing to meet customer expecations the first time.
- A missed opportunity for increased efficiency.
- The potential for higher profits.
- Loss in market share.
- Increase in cycle time.
- Labor associated with ordering replacement material
- Costs associated with disposing of defects.
Traditional Metrics
Six Sigma Metrics
For an average company, the COPQ can be as high as 25% of total sales!
For an average company, the COPQ can be as high as 25% of total sales!
Traditional Cost of Poor Quality
When quality costs are initially determined, the categories included are the visible ones, as depicted in the iceberg below.
(4-5% of sales)
Cost of Poor Quality (COPQ)
As a company gains a broader definition of poor quality, the hidden portion of the iceberg becomes apparent.
COPQ ranges from 15-25% of total cost.
| Indicators of COPQ | |
|
- Low Yield Rate - High Customer Failure Rate (PPM) - Incoming Product Quality Problems - Unpredictable Quality - Poor Process Capability (Cp, Cpk) - Measured System Error - High Past Due to Customer - High Maintenance Costs - Low Machine Utilization |
- Process Downtime - High Operating Costs - High Scrap/Rework Cost - High Inventories (WIP) - Long Cycle Times - Unpredictable Product Performance - Capacity Constrained - High Product Volume - Internal Perceived Poor Quality - External Perceived Poor Quality |
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