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COPQ - A Highly Misunderstood Term

Feb 26, 2008
This Six Sigma tool can certainly be used as an effective guide for making quality improvements, but that will become a possibility only when businesses understand the real meaning and purpose of COPQ.

Account books may register significant cost savings, but if a business organization wants to achieve real-time cost reductions, it would have to give due consideration to all the various aspects of COPQ.

General COPQ Misconceptions

As per the definition of COPQ, it may seem that only costs related to the defects are to be considered, but this would not be the right thing to do because other types of costs are also involved. For example, there are costs related to quality improvement initiatives that usually aim at reducing the number of defects.

Such costs can easily be classified as overhead, but if a business wants to assess the real impact of defects, it will have to include such costs while calculating COPQ.

In effect, it is only when costs related to manufacturing defects are clubbed with the costs incurred on quality improvements, does a business gets to know of the real COPQ.

Other Misconceptions

Another common mistake that businesses often commit is that they fail to include external failure costs while calculating COPQ. As the name suggests, external failure costs relate to expenses incurred by the organization on products or services that were rejected by end users on delivery. The rejections are usually due to defects in the final product. The defects may occur either due to a faulty quality control system or due to damage caused during handling and transportation.

Whatever be the reason, the point is that most businesses often overlook such incidental costs and consequently fail to calculate the real COPQ. In effect, they fail to make any real-time cost reductions. External failure costs may not make much of a difference to the COPQ if the rejection rate is low, but if the rejection rate is high enough, then the organization will definitely be required to include such costs while calculating COPQ.

COPQ is a highly misunderstood term, so much so that it is difficult to find two businesses sharing the same definitions on the subject. What more can be said, when variations exist even in the opinions of Six Sigma professionals such as Green Belts, Black Belts and Master Black Belts.

Experienced Six Sigma professionals vouch for the fact that COPQ has often been the main reason for conflicts between implementation team members.

However, in spite of all its negativities, COPQ is still preferred by businesses worldwide probably because its merits far outweigh its disadvantages. COPQ does not provide any guarantees, but if it is utilized in the prescribed manner, chances are high that the organization's quality improvement initiatives will prove to be a grand success.

This may be the reason why businesses and Six Sigma professionals worldwide still rely on COPQ.
About the Author
Tony Jacowski is a quality analyst for The MBA Journal. Aveta Solution's Six Sigma Online offers online six sigma training and certification classes for lean six sigma, black belts, green belts, and yellow belts.
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