The Real Cost of Poor Quality (COPQ) — Training Unit Content

Introduction: How Much Is Poor Quality Really Costing Your Business?

What Is the Cost of Poor Quality?

• Internal Failure Costs

• External Failure Costs

• Appraisal Costs

• Prevention Costs
   

The $20,000 Order That Did Not Make $20,000

• The True Cost of a Rejected Batch

• Material and Labour Costs

• Machine Time and Lost Capacity

• Inspection and Measurement

• Tooling and Setup

• Production Rescheduling and Overtime

• Investigation and Corrective Action

• Delivery and Production Disruption
   

Scrap and Rework

• The Direct Cost of Scrap

• The Additional Cost of Rework

• Lost Productive Machine Capacity
   

Visible Costs and Hidden Costs

• Costs We Can Easily See

• Costs Below the Surface

• Lost Capacity and Production Disruption

• Customer Confidence and Future Business
   

A Manufacturing Example: Finding the Origin of the Problem

• Where Was the Defect Introduced?

• Where Could It Have Been Detected?

• Connecting the Symptom to the Root Cause

• Establishing Useful Quality Data and Metrics
   

Simple Processes Reduce the Opportunity for Failure

• Clear Process Steps

• Controlling Hand-offs and Responsibilities

• Reducing Workarounds, Rework and Delays

• Simplifying Processes to Reduce Poor Quality
   

Four Categories of Quality Cost

• Internal Failure

• External Failure

• Appraisal

• Prevention

• Practical Manufacturing Examples for Each Category
   

How Should We Reduce COPQ?

• Establish Useful COPQ Measures

• Collect Consistent Data

• Track Internal and External Failures

• Identify Trends, Variation and Major Contributors

• Select Improvements Based on Evidence

• Verify and Sustain the Results
   

Keep Improvement Practical

• Production and Quality Improvements

• Define the Problem

• Collect the Data

• Identify the Cause

• Implement the Change

• Verify the Result

A Practical Starting Point
 

• Select One Recurring Quality Problem

• Identify Three to Five Useful Measures

• Calculate the Real Cost

• Decide What Data You Need

• Focus Improvement Where It Matters Most