Cost of Poor Quality
Cost of Poor Quality (COPQ) is a term used in quality management to refer to the costs incurred resulting from producing products or providing services that do not meet the required quality standards. These costs can be both direct and indirect.
Direct COPQ are those that are directly related to the production of defective products or the provision of defective services. Examples of direct costs of poor quality include the cost of raw materials that are used to produce defective products, the cost of labor that goes into producing defective products, and the cost of repairing or replacing defective products.
Indirect COPQ are not directly related to the production of defective products or the provision of defective services but are still incurred as a result of poor quality. Examples of indirect COPQ include the cost of lost sales due to customers who are dissatisfied with the quality of the products or services they have received, the cost of dealing with customer complaints and returns, and the cost of retraining employees or implementing new quality control measures.
In general, quality management aims to minimize the COPQ by identifying and addressing the sources of poor quality in the production process and ensuring that products and services meet the required quality standards.