Measures the total cost incurred due to producing defective products, including rework, scrap, warranty claims, and lost revenue.

What it Measures ?

How much money is lost because of bad products.

Relevant StakeHolders 

Finance Team, Quality Control Team

Why it Matters ?

Reduces costs due to quality issues.

In-depth Use Case / Real-world Example

COPQ quantifies how much poor quality is costing the organization. It includes internal failure costs (like rework and scrap), external failure costs (warranty repairs, returns), and sometimes appraisal costs (inspections). For example, if a machine part manufacturer incurs ₹50,000 on scrap, ₹20,000 on rework, and ₹30,000 on customer returns in a month, the COPQ is ₹100,000. Keeping this number low is crucial for maintaining profitability. If a company identifies that most of the costs come from rework due to misaligned fixtures, it can focus on corrective action to reduce errors upfront. Monitoring COPQ helps manufacturers invest wisely in quality improvement and prevent problems before they escalate.