Saturday, March 17, 2007

Cost of Poor Quality

COPQ - Cost of Poor Quality is the cost incurred for the repairing of the defective goods.

Cost towards any work that must be repeated is to be seen as COPQ.

For example : a company dispatches an incorrect shipment is to be called back and correct shipment should be sent to the customer. Similarly the returned shipment, is to be sent to the correct customer. These involve a lot of corrective actions, repetition of works already done, re-verification and confirmations.

Every activity involves costs and all are COPQ. Similarly certain costs routinely incurred in a company are accepted as inevitable. For example, cost of redesigning a product due to deficiencies in fitness for use, or cost of changing a manufacturing process because of the inability to meet product specifications. These are seen as normal activities of production, planning and control, but they are really part of COPQ.

To understand COPQ better, one should know about QUALITY COST. Quality cost comprises of
(i) Operating Quality Cost and
(ii) External Assurance Quality Cost.

OPERATING QUALITY COSTS are those costs incurred by a company in order to attain and ensure specified quality levels.

EXTERNAL ASSURANCE QUALITY COSTS are those costs relating to the demonstration and proof required by a customer w.r.t. quality provisions (e.g. cost of testing for a specific parameter at an external agency as demanded by the customer).

Related Links :

01. Do You Know About QCFI?
02. QCFI and its Contribution to Quality Circle Movement In INDIA
03. Dr. K. Ishikawa : Founder of Quality Circle
04. History of Early 1950's
05. Services Offered By QCFI
06. Tips to Deal With Interruptions
07. Tips to give Good Feedback
08. Benefits of ISO 9001 : 2000 Quality Management System
09. Debatable Points Related to ISO 9001 : 2000 Quality Management System
10. Re-Defined : Quality
11. Job Titles in Quality Field
12. Four Absolutes of Quality Management
13. Crosby's 14 steps to quality improvement
14. Tips to Create Your Own Luck

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