The cost of quality, or more accurately the cost of poor quality (COPQ), was described by Dr J.M. Juran as “the sum of all costs that would disappear if there were no quality problems”. This definition applies to all sectors; and to for-profit and not-for-profit organizations.

Cost of quality is the missing link between quality management and strategic results…… particularly, the financial goals and objectives of an organization.

A COPQ assessment is an important first-step for organizational transformation. It involves identifying the key value creation, and support processes of an organization; and therefore quantifying the chronic waste in these processes, in the language of management – MONEY!

Chronic waste is the gold in an organizational-mine. The quality improvement process aims to reduce chronic waste. Reduction in COPQ is the by-product of structured quality improvement projects.

When it comes to COPQ, most organizations have a tendency to focus on the initial or visible 5-10% of total cost (waste, rework, inspection costs, etc). What is not evident, but crucial is that the rest 15-25% of the hidden cost (excessive overtime, excess inventory, excessive employee turnover, etc) is not visible.

Some examples of COPQ are:

Based on our consulting assignments in India, Thailand, Indonesia, Singapore, Pakistan, Oman, Iran and Kenya, we at Qimpro estimate that the COPQ in an organization ranges between 15 and 40 per cent of total costs.

We are convinced that reducing COPQ is a smart approach to deal with uncontrollable business factors, such as, high inflation, high interest rates, spiralling oil costs, rising commodity costs, etc.

Qimpro has been facilitating structured quality improvement over the past 20 years and has saved each of its clients from Rs 5 crore to Rs 500 crore.

Note: Qimpro specializes in assessing the COPQ of organizations in the manufacturing, service, healthcare, and education sectors.