Work out cost of poor quality instantly with clear inputs, formula shown and shareable results.
Cost of poor quality is the sum of internal failure costs — scrap and rework — and external failure costs from warranty, recalls and complaints. Expressed as a percentage of revenue it typically runs 5-15% in unimproved operations and under 2% in excellent ones. A high external share signals that detection is failing, not just prevention.
Cost of poor quality
COPQ = scrap + rework + external failure cost; COPQ % = COPQ x 100 / revenue
Capacity lost to producing scrap, expediting and overtime to recover schedule, extra inventory held to cover yield uncertainty, and engineering time spent firefighting. These hidden costs often exceed the visible ones.
Defects reaching customers cost 10-100 times more than the same defect caught internally, and they damage revenue as well as cost. Shifting spend to prevention and detection almost always pays.