We are, without doubt, in a period of severe austerity. Most organisations have a relentless focus on cost reduction and elimination that is likely to persist for many years. It is all the more remarkable then that something many Lean Six Sigma practitioners consider essential is absent. That is the “COST OF POOR QUALITY” (COPQ). Or, to put it another way, the total cost to your organisation of getting things wrong.
To illustrate what COPQ captures we will consider a product recall by Mattel a few years ago. Mattel identified that there was too much lead in the paint used on some toys produced in China so they instigated a product recall. The COPQ of giving lots of customers their money back and destroying the product are obvious. But what about the damage to Mattel’s reputation? How much more did Mattel spend on advertising to bolster their brand image; how many sales did they lose at Christmas. Harder to measure, but both are very real costs of poor quality.
In their book ‘Six Sigma’, Mikel Harry and Richard Schroeder provide an assessment of the likely levels of COPQ depending on your organisation’s performance based on their experiences with a wide number of organisations. Read the rest of "Cost of Poor Quality (COPQ) – The Missing Measure"