COPQ: Cost of Poor Quality



Cost of Poor Quality (COPQ) is a metric used to quantify the financial impact of defects, errors, and quality issues in a product or process. 

The formula for calculating COPQ is:

COPQ = Internal Failure Costs + External Failure Costs + Appraisal Costs + Prevention Costs

Here's a breakdown of each component


1. Internal Failure Costs: 

These are costs incurred when defects are identified before the product reaches the customer. Examples include rework, scrap, and downtime.


2. External Failure Costs: 

These are costs incurred when defects are discovered after the product has reached the customer. Examples include warranty claims, customer returns, and product recalls.


3. Appraisal Costs: 

These are costs associated with inspecting, testing, and auditing products to ensure quality. Examples include inspection labor, testing equipment, and quality control procedures.


4. Prevention Costs:

 These are costs incurred to prevent defects from occurring in the first place. Examples include training programs, process improvement initiatives, and quality management systems.

By calculating COPQ, organizations can identify areas where quality improvement efforts can lead to cost savings and better product quality. The goal is to minimize COPQ to improve overall profitability and customer satisfaction.

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