| External failure<\/td> | Defects the customer finds<\/td> | Credits, penalties, complaints, re-sends, lost accounts<\/td> | Yes<\/td> | Yes<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\nWhy the distinction matters<\/h2>\n\n\n\nCOPQ is the number that gets a project funded. It’s money already being spent, every month, to produce things twice. Cost of quality is the number that tells you what to do about it. An operation that spends almost nothing on prevention and a fortune on appraisal and failure has its money in the wrong buckets, and more inspection won’t fix that.<\/p>\n\n\n\n The mix is the insight. When failure costs dwarf prevention, a modest investment in fixing the process upstream usually removes far more failure cost than it adds. When appraisal is huge, it’s often a symptom: people check everything twice because the process can’t be trusted.<\/p>\n\n\n\n How to calculate COPQ<\/h2>\n\n\n\nYou don’t need perfect data. Start here:<\/p>\n\n\n\n \n\n- Defective items per year<\/strong> = monthly volume \u00d7 12 \u00d7 defect rate<\/li>\n\n\n
- Internal failure cost<\/strong> = defective items \u00d7 rework hours per item \u00d7 fully loaded hourly cost<\/li>\n\n\n
- External failure cost<\/strong> = defective items \u00d7 share that reach the customer \u00d7 cost per escaped defect<\/li>\n\n<\/ul>\n\n\n\n
A worked example: a claims team handles 4,000 claims a month at a 6% defect rate. That’s 2,880 defective claims a year. At 45 minutes of rework each and $45 an hour loaded, internal failure costs $97,200. If 15% reach the customer at $250 each, external failure adds $108,000. Total: $205,200 a year, from a defect rate most managers would call fine.<\/p>\n\n\n\n The COPQ Calculator<\/a> runs that math for your own numbers. It’s free and gives you the annual figure without asking for an email.<\/p>\n\n\n\nWhere people go wrong<\/h2>\n\n\n\n\n\n- Counting only external failure.<\/strong> Credits and penalties are visible. Rework by salaried staff isn’t, and it’s usually the bigger number.<\/li>\n\n\n
- Calling all appraisal waste.<\/strong> Some checking is necessary. The question is whether you’re checking because the process is risky or because it’s broken.<\/li>\n\n\n
- Using COPQ to blame people.<\/strong> The number describes the process. If it turns into a stick, people stop reporting defects and your next measurement gets worse while the process stays the same.<\/li>\n\n<\/ul>\n\n\n\n
Frequently asked questions<\/h2>\n\n\n\nIs cost of poor quality the same as cost of quality?<\/h3>\n\n\n\nNo. Cost of quality includes prevention and appraisal, the money you spend to get quality right. Cost of poor quality covers only internal and external failure, the money you lose when it goes wrong.<\/p>\n\n\n\n Is inspection part of the cost of poor quality?<\/h3>\n\n\n\nNot by the standard definition. Inspection is appraisal, which belongs to cost of quality. Heavy inspection is often a sign of high COPQ, though, because people check more when they don’t trust the process.<\/p>\n\n\n\n How do I estimate COPQ without good data?<\/h3>\n\n\n\nUse monthly volume, an estimated defect rate and average rework time, then refine it. One quarter of real defect data beats a year of debating the estimate.<\/p>\n\n\n\n |