Cost of Poor Quality

What are your business costs due to poor quality (CoPQ) and their effect on your bottom line? For this discussion, CoPQ is any costs (dollar amount) you can associate with the inability to correctly perform a task the first time. Common contributors to CoPQ are; rework, scrap, customer returns, waste, meetings, shipping, travel. The list is lengthy and can cover a wide range expenses a business incurs.

Every business probably has "CoPQ" expense accounts set-up in their accounting structure but, categorizes them as standard or expected expenses. In other words, "Just part of doing business, plan for it". You or your company's management may or may not be conscious of the potential savings available. The potential savings can be assessed by simply initiating performance measures on a few of these key expenses. Look at the obvious ones, scrap, rework and customer returns for the last 6 months to a year. You may have to work through the financial group to get reports applicable to your situation.

Take action if there is an expense that looks out of the ordinary, assign someone to track down the root cause. Traditional organizations have the quality professionals perform this task. One cause could be there is a single expense account or general fund for all scrap, which should be broken down into detailed accounts that allow specific tracking of expenses. If you are not comfortable undertaking this investigation, inquire who may be the correct person by contacting your manager or quality professional.

The basic framework to track CoPQ expenses should be in place, take a look at your situation and see. There could be an opportunity for you to contribute to the continued financial success of your business.