Shannon McGarry
Explore how the Cost of Poor Quality (COPQ) affects manufacturing operations, how to calculate COPQ, and how tools like Autodesk Vault and Fusion Manage can help reduce it by integrating quality control into the entire product lifecycle.
In a highly competitive market, manufacturers feel the pressure to deliver reliable, defect-free products. However, despite technological advances and robust process controls, quality issues continue to erode margins and damage reputations. An important concept in quantifying these losses is the cost of poor quality (COPQ), a metric that has gained renewed attention in recent years. By identifying, calculating, and addressing COPQ, manufacturers can move from reactive to proactive quality management and drive long-term operational improvement.
Quantifying COPQ
COPQ refers to the aggregate financial losses caused by failures in product design, production, and delivery that fall short of meeting quality standards. COPQ is generally broken into four categories: internal failures, external failures, appraisal costs, and prevention costs. While the latter two categories are considered investments in maintaining quality, it’s the internal and external failure costs (i.e., scrap, rework, warranty claims, and returns) that comprise the most visible and damaging aspects of COPQ.
Internal failure costs emerge before a product reaches the customer, such as when defects are identified during in-house inspections. These costs often include labor, material, and machine time wasted on defective parts. External failure costs are more severe and reputationally damaging, occurring when flawed products reach the end user. These can include warranty repairs, product recalls, legal liability, and the erosion of brand trust.
Calculating COPQ requires rigorous data collection from multiple areas of production, quality control, and service. Manufacturers typically assess defect rates, yield losses, rework hours, and warranty claims, converting each into monetary terms. The cumulative value gives leadership a clearer understanding of how much revenue is being lost due to substandard quality. In mature operations, COPQ can account for as much as 15–20% of total sales.
Beyond financial losses, COPQ reduces operational efficiency and extends lead times. Engineering teams are often pulled away from new product development to investigate root causes and redesign flawed components. This creates a feedback loop where poor quality diminishes future competitiveness. Therefore, COPQ is considered to reflect the health of the entire production ecosystem.
Leveraging Autodesk Vault and Fusion Manage
To meaningfully reduce COPQ, manufacturers must integrate quality management with broader product lifecycle oversight. This is where PLM systems, such as Autodesk Vault Professional and Fusion Manage, deliver value.
Optimize Data Management with Autodesk Vault
Secure, organize, and manage your engineering data efficiently.
Autodesk Vault improves collaboration and standardization by managing CAD data with precision. When changes occur in a design file, Vault automatically tracks revisions. This maintains a single source of truth and prevent versioning conflicts. In this way, only verified and approved designs are released for manufacturing. As a result, internal failure costs associated with outdated or incorrect drawings are minimized. Vault also integrates change order processes directly into engineering workflows. Teams can capture the full history of modifications, including who made them, why, and when. This structured change management helps identify and mitigate the root causes of recurring quality issues.
Fusion Manage extends quality control beyond the design environment into broader PLM territory by offering robust workflows for quality events, including non-conformances, corrective and preventive actions (CAPAs), and audits. This cloud-based system allows organizations to respond quickly to quality events, assign ownership, track resolution progress, and document in real-time. Fusion Manage also connects quality data with bill of materials (BOM) information so that companies can trace defects back to specific components, suppliers, or manufacturing processes. Traceability to this extent helps identify systemic issues and prevent them from repeating across future product iterations.
Autodesk Fusion Manage: Connect People, Processes, and Data
Streamline workflows, enhance collaboration, and gain real-time visibility with PLM.
By using these tools together to capture and analyze quality data, manufacturers can reduce COPQ and build a foundation for sustained operational excellence.
Staying competitive with quality resilience
The cost of poor quality is a metric that extends far beyond simple production errors. Rather, it touches every aspect of manufacturing, from financial performance to customer loyalty and brand equity. By understanding its sources and implementing strategies to mitigate it, manufacturers can improve profitability and resilience. PLM systems like Vault and Fusion Manage offer powerful frameworks for integrating quality management across the product lifecycle.