Cost of Poor Quality Calculator for Failure, Scrap, Rework

Non-quality cost (NQC) and cost of poor quality (COPQ) refer to the impact of defects, delays, deviations, disconnects, and customer dissatisfaction that reduce the bottom line. Rolled throughput yield (RTY) is the product of individual process yields, the share of units that are complete and accurate (C&A), passing the value stream right fist time (RFT) and first time through (FTT). Scrap refers to unusable parts and service failures, causing a financial loss. Improving quality creates bottom-line value by reducing rework, repairs, returns, claims, and scrap.

What You Need to Know When Calculating the Financial Impact of Quality and Defects

The financial benefit calculator helps managers, engineers, and controllers to quantify improvement potentials, determine the feasibility of a project, and estimate the return on investment (ROI). Please note that these ‘back-of-envelope calculations’ are based on a simplification of reality. The result is illustrative and depends on the completeness and accuracy of the data entered. This calculator is for general information purpose only and not intended to provide specific direction or advice. As each situation is unique, there may be conditions that are not factored into the model. Taking into account the limitations, the financial benefit calculations still provide a great starting point to make quality improvement potentials explicit.