Cost of poor quality (COPQ) calculator

Add up internal failure costs (scrap, rework, re-inspection) and external failure costs (returns, warranty claims, complaints) for a period. Divide by revenue for the same period to express it as a percentage. Broader definitions also add appraisal costs such as inspection and testing.

Prevention costs are spent to stop defects happening, such as training, quality planning and error-proofing. Appraisal costs are spent to find defects, such as inspection, testing and audits. Internal failure costs come from defects found before the customer gets the product, such as scrap and rework. External failure costs come from defects the customer finds, such as returns, warranty work and complaints.

Definitions differ. The narrower one counts only failure costs, internal and external. The broader one also counts appraisal, because inspection and testing exist only because defects are possible. The calculator shows the narrower figure by default and has a switch for the broader one; say which you used when you report it.

The cost of quality is all four categories together: prevention, appraisal, internal failure and external failure. The cost of poor quality is the part caused by defects, the failure costs. Spending more on prevention usually aims to lower the failure costs.

Scrap and rework usually come from production and non-conformance records, returns and warranty costs from finance and customer service, and inspection and testing time from labor records. Count labor, material and overhead for each, and use the same period for every figure and for revenue.

A percentage lets you compare periods and sites of different sizes and see whether quality costs are falling as a share of the business. The money figure is still the one to use when ranking which defects to fix first.