In my previous article, “Stop wasting your revenues: Why the cost of poor quality is your biggest competitiveness gap?”, we explored how the Cost of Poor Quality (COPQ) can quietly absorb up to 10% of revenue in industrial manufacturing. For many organizations, that realization was not entirely new. Most leaders already sense that quality-related inefficiencies exist somewhere in the system.
What is far less clear, however, is where these costs sit, how they accumulate, and why they remain so difficult to address. This is where many organizations get stuck: not in recognizing the problem, but in making it visible enough to act on.
COPQ in manufacturing: The problem is not what you see
In most industrial environments, quality is actively managed. Scrap is tracked, defects are reported, and warranty claims are monitored. On paper, it can look like the situation is under control. Yet margins remain under pressure, delivery performance fluctuates, and teams stay overloaded.
This happens because COPQ in manufacturing rarely exists as a single, visible metric. Instead, it spreads across everyday operations. It shows up in constant schedule changes, recurring rework, engineering time spent resolving issues, and inefficiencies that gradually become accepted as “normal”.
Over time, these small disruptions accumulate into a structural problem. One that impacts profitability far beyond what traditional quality metrics capture.
The COPQ iceberg: Understanding hidden costs of poor quality
The most visible costs of poor quality, such as scrap or rework, are only a small part of the picture. What truly drives performance sits below the surface.
Hidden costs of poor quality often include lost sales due to reliability issues, excess inventory built to compensate for uncertainty, expediting costs, and internal inefficiencies that rarely get linked back to quality.
Because these costs are distributed across functions, they are often not recognized as part of COPQ at all. They sit in different budgets, KPIs, and reporting structures. This fragmentation is exactly why many organizations underestimate the true financial impact of poor quality.
Why reducing COPQ is so difficult in practice
Reducing the COPQ is rarely about introducing another tool or methodology. In most cases, the challenge is more fundamental.
Organizations struggle with a lack of shared understanding of what COPQ actually includes. Data is inconsistent, scattered across systems, and often not comparable between sites or functions. Ownership is unclear, making coordinated action difficult.
At the same time, quality is still often treated as a technical or compliance topic, rather than a business driver. As a result, improvement efforts remain local and reactive, instead of strategic and cross-functional.
This explains why, despite significant effort, COPQ often remains unchanged, or even increases over time.
From quality issue to business problem
Organizations that successfully reduce COPQ approach it differently. They stop treating it as a quality-only topic and start managing it as a performance and profitability issue.
This shift changes the conversation. Instead of asking how to reduce defects, they focus on which quality-related issues have the biggest financial impact. Instead of solving isolated problems, they look at how inefficiencies spread across the organization.
Most importantly, they move from partial visibility to a more connected view of their operations. Because without that, even well-executed initiatives risk missing the real drivers of cost.
How strategic market intelligence helps make COPQ visible
In many of the projects I’ve been involved in, the turning point was not a new initiative, but a different way of looking at the problem.
What I often see is that companies rely heavily on internal data, which only shows part of the picture. It reflects what is tracked, not necessarily what drives the biggest losses.
Bringing in a broader perspective, combining internal data with external benchmarks, cross-industry practices, and insights from customers and suppliers, changes that. It helps connect scattered signals into a clearer view of where COPQ is actually created and which issues are worth prioritizing.
To help make this easier to navigate in practice, we prepared a short mini-report, “Quality without the blind spots” on COPQ in industrial manufacturing.
It focuses on practical aspects that are often difficult to structure internally:
- How to identify and prioritize the areas with the highest financial impact
- What actions can deliver quick wins vs. what requires longer-term change
- How to align teams and ownership across functions to drive real progress
- Where companies typically struggle when moving from analysis to execution
The goal is not to add another layer of theory, but to help make COPQ more tangible and easier to act on.
Wrapping up
From what I see, most organizations don’t struggle with effort when it comes to quality. They struggle with visibility. And until COPQ is clearly understood across the business, it will continue to quietly impact margins, operations, and customer outcomes.
If some of these patterns sound familiar, it’s usually a good moment to take a closer look.