Definition
Failure to do all costs to products or services at once, including identification, internal failure, external failure and prevention.
In detail
Cost of Poor Quality (COPQ) is the total cost of not doing a product or service right the first time, including appraisal costs, internal failure costs, external failure costs, and prevention costs. It quantifies the financial impact of quality issues, helping management understand the return on investment of quality improvements. Closely related to the Six Sigma system, COPQ is a key metric for measuring improvement effectiveness. Typically, a COPQ analysis report is produced, breaking down costs by category and identifying improvement opportunities.
Example in practice
An electronics factory found high product rework rates. The team calculated COPQ, including rework labor, material waste, and customer complaint handling. Results showed external failure costs were the largest, so they increased prevention spending (such as design reviews and mistake-proofing). By comparing COPQ before and after improvement, they verified the effectiveness and continued monitoring.