COPQ Calculation with Excel Template

What is copq ?

Recently I have purchased one shirt from a reputed store.  One button was not there on the shirt. cost of shirt originally was Rs. 4800. As one button was missing.

I asked the storekeeper for discount and he reduced the price of by Rs. 300.

Cost of one minor defect is Rs. 300.  This cost is considered as the cost of poor quality or more popularly known as copq

We know Copq as cost of poor quality.

How is  COPQ (cost of poor quality) calculated?

  • Now we will take one illustration of the Cost Of Poor Quality computation in a  manufacturing company.
  • you can apply the same concept for any industries. For better understanding, relate the below picture in which the various costs mentioned related to calculation of  COPQ explanation.

How do you calculate the cost of poor quality COPQ in Excel?

  • For COPQ Computation in Excel, you can  download the template from below given . link and by putting various  costs related to poor quality into it you get the total value.
  • With the help of the Cost of poor quality analysis, we can prioritize the major cost spending area with the help of the Pareto Chart. Also we can find the root cause by cause and Effect Diagram behind the cost spending and we can make it better

How to Reduce COPQ? ( Cost of Poor Quality)

Crucial Points To Minimize COPQ

  1. Traceability
  2. NC – non conformance and Corrective Action
  3. Machine and Instrument Conservation
  4. Internal Inspection
  5. Change Management
  6. Client Complaints Management
  7. Supplier Enhancement Program
  8. Training & development of Workers

(1) Traceability

  • If we want to reduce the COPQ,  traceability is one of the most important parameters that we’ve to maintain for our product and process.  Without proper traceability, the company faces problems like rejection, rework,  or may be product recall and or batch withdrawal etc.
  • If possible also it’s better to apply the Poka-Yoke System within traceability from product to delivery. So we can constantly  view and access details on product position, time of product, storehouse, labeling and packaging, and delivery  &  other  affiliated information.

(2) Non conformance and Corrective Action

  • Apply strong correction action for every nonconformities without taking much time.
  • The nonconformities may be in any form, like product Defects, Errors in specification, or client complaints, etc.
  • Record and maintain all action, which was taken on nonconformities like corrective action taken, rework, warranty claims,  recall, etc.

We can use below standard methodologies for root cause and corrective action

  • 8D Problem Solving System
  • 5S Methodology
  • 5 Why
  • Cause and Effect Analysis
  • FMEA – Failure Mode Effect Analysis.

(3) Machine and Instrument Conservation

  • Well maintained and well dfunctioned machines produces less defective product
  • Maintenance processes of various instruments and machines will help us to give conformity of our products continuously.
  • Maintenance is also a part to keep product good product Quality. This will also reduce losses.

(4) Internal Inspection

  • Internal inspection is important for company to keep a record of non-conformities and corrective conduct.
  • This helps us to identify fault  in our system which can be reduced / deleted  from the system.
  • We can apply various checks plant check-ups, process check-ups, installation check-ups, QMS check-ups, and health & safety check-ups, which helps in boosting the performance of the company.

(5) Change Management

  • Change operation is also veritably important for the company it can be any change related to technology, culture, operation, system, process, etc.
  • Successful change operation depends on strong leadership and clear programs of the company.
  • Also, we’ve clear visibility into the whole process, including change history, data on the changes made, the status of change made, and departments or areas affected, etc.

(6) Client Complaints Operation

  • Effective client complaints handling without any wastge of time  help us to satisfy our client.
  • The happy client gives us repetition business and it’ll increase our top line.
  • Also, insure that the same won’t repeat again and again.

(7) Supplier Enhancement Program

  • The supplier’s enhancement program automatically improves our products.

It helps us reduce our COPQ by maintaining smooth process inflow and barring all Wastes of Manufacturing and Supply chain.

(8) Training and Commission of Workers

  • The learning and development with training of workers also reduce the Cost Of Poor Quality of company.
  • By conducting periodic training sessions, it not only boost performance of people but also reduce cost of poor quality.
  • We can estimate the effectiveness by test, questionnaires, and by giving the practical tasks.

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