Reducing COPQ can unlock huge values

I met with Mr Montek Singh Ahluwalia on 21 March, 2008 at the IMC Ramkrishna Bajaj National Quality Award and IMC Juran Quality Medal Award Ceremony, in Mumbai. A delightful person; very careful with his words, particularly to the media.

In a brief private meeting between him and IMC Presidents (current and past), I planted the concept of Cost Of Poor Quality (COPQ) in his thought process since discussions hovered around inflation, economic growth and the volatile share market. I explained that the COPQ in any organization is over 20 per cent of total costs. He was at first shocked, then briefly silent, and finally requested me to debrief him on the concept with a short note.

I present the summary of the four page note, below:

That quality is a prerequisite and is no longer a differentiator in today’s intensely competitive business climate, is well known. However, what is not as clearly known is the fact that the cost of poor quality (COPQ) is substantial. COPQ cannot be mapped by current accounting practices and hence remains hidden. Reducing the COPQ can potentially unlock huge value, but it must be driven by the leaders. By addressing COPQ, companies can look to adding 10 – 15% of the total costs to the bottom line without any capital investment.

For those persons interested in the full note, please write to us at info@qimpro.com

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Explore posts in the same categories: 05 Cost of Poor Quality, Benchmarking, Business, Management

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One Comment on “Reducing COPQ can unlock huge values”

  1. Yujung Says:

    Could you recommend any document that I can benchmark? I’d like to implement COPQ as quality improvement and cost reduction tool and I studied our company’s COPQ items and cost collecting methods but I think I need to study successful COPQ case.
    Any book or website that I can refer would be helpful.
    Thanks.


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