Many small to medium sized organizations struggle with whether or not to implement a quality or process improvement program. In many cases, the company representatives state that it is too expensive to implement these enterprise programs such as “Six Sigma” or “Lean” in their organizations.

Regardless of the quality or process improvement program you decide to use in your organization, you must understand the cost of poor quality (COPQ) to your bottom line. Once you understand the COPQ for your organization, you can then better define and justify the best overall strategy to improve quality in your organization.

The cost of poor quality (COPQ) is the dollar value associated with the defects you find in the product or service you provide to your customers. This cost includes rework and labor.

Simplified steps to calculate the cost of poor quality (COPQ):

  1. Define what is a defect in your business
  2. Determine the number of defects you have encountered in a given timeframe
  3. Determine the labor cost to rework each defect
  4. Determine the material cost used to rework each defect
  5. Calculate COPQ by adding the labor cost + material cost

Branner Consulting, LLC can help you at any stage along your journey from process documentation to implementing process improvement projects. We also provide coaching and training in Six Sigma and Lean methodologies.