COPQ: How much does your inefficient process cost you?

COPQ: How much does your inefficient process cost you?

What is Cost of Poor Quality (COPQ), or Cost of Quality? The Cost of Quality, also abbreviated COQ, is another term for Cost of Poor Quality. Let’s briefly explain what COPQ is according to Six Sigma principles. It is another common metric that Six Sigma projects use, as we discussed in the Lean training course. These are the costs associated with poor quality products and services. In other words, COPQ refers to the costs that would disappear in the event of perfect systems, processes, or products.
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The cost of quality rises every time work is redone. The Six Sigma team should consult a financial expert to help them determine COPQ, which is the metric they use to benchmark the current state. Each company will calculate COPQ in a different way.
COPQ – Costs towards preventing poor Quality
Six Sigma Green Belt Certification training provides a brief explanation of COPQ (Cost of Poor Quality Six Sigma). This methodology allows an organization to assess the quality of its products and services and determine where resources are being used. This information can be used to help an organization determine the potential savings that can be made by improving processes.
COPQ: Types and Costs of Quality
In COPQ, there are four types of Quality Costs. These are:
Internal Failure Costs
External Failure Costs
Appraisal Costs
Prevention costs

Let’s take a look at each one individually.
Internal Failure Costs
Internal Failure Costs are the first type of COPQ. These costs are incurred in order to correct defects before the product or service can be delivered to the customer. These costs are incurred when the work results do not meet design quality standards. They are also detected before they are transferred.
Internal failure costs can include:
Waste: Unnecessary work or stock holdings due to errors, poor organization or communication
Scrap: These are products or materials that are not repairable, usable, or sold.
Rework or rectification is the correction of material or errors that are not correctable
Failure analysis: This is a process that identifies the causes of failure in a service or product.

External Failure Costs
The second category of COPQ are External Failure Costs. External Failure Costs are incurred by customers to correct defects. These costs are incurred when products or services fail to meet design quality standards and are not discovered until after they have been transferred to the customer.
External failure costs can include
Repairs and Servicing
Warranty Claims: These are products or services that have failed and are replaced or re-performed under a guarantee.
Complaints: This refers to all the work and costs associated in handling and servicing customers’ grievances
Returns: This refers to the handling and investigation of rejected products or recalls, as well as transport costs.

Appraisal Costs
Appraisal costs is the third category of COPQ. Appraisal costs can be associated with quality monitoring and measurement. These costs are related to the suppliers’ and customers’ evaluation of purchased materials and processes to ensure they meet specifications.
The following are examples of appraisal costs:
Verification: This refers to the checking of incoming materials, process setup, products, and compliance with agreed specifications
Quality audits: This activity ensures that the quality system works correctly
Supplier rating: This is an assessment and approval by vendors of products or services

Prevention costs
Prevention Co is the fourth category of COPQ.