Cost of Poor Quality (COPQ) is the expense incurred due to waste, inefficiencies, and defects. It's like an iceberg, because it's usually extremely more costly than most understand.
We calculate the Cost of Poor Quality (Which includes the 8 wastes of Lean) and advise on these costs when considering the cost of solutions to remedy the situation. This factors in when we determine how big of a problem you have in the first place. We want to remedy those problems that are costing you greatly.
The COPQ has been proven to range from 5% to 30% of gross sales for most companies.
The COPQ can be staggering when considering process inefficiencies, hidden factories, defective products, rework, scrap, etc.
Understanding COPQ and where to look for it will help uncover process inefficiencies, defects, and hidden factories within your business.
When we evaluate the Cost of Poor Quality we typically advise on a least costly solution, a mid-range solution, and an over-engineered solution. We try to advise toward a five to 10 year goal of reducing COPQ.
In 2017 (our First full year) our advised reduction in COPQ across the board was over $1.2M. We look forward in reducing $5M for our clients in 2018.