Cost of Poor Quality (COPQ)

For MedTech organizations, quality is ultimately about whether patients and users can rely on a product to perform as intended. Yet the cost of failing to meet that expectation rarely appears as a single number.

Scrap is recorded in operations, rework in labor, nonconformance, and corrective and preventive actions (CAPAs) and complaint investigations in the quality budget. Because these costs sit in different places, much of the total goes uncounted.  

Together, they make up the cost of poor quality (COPQ), one of the largest controllable expenses a medical device manufacturer carries. Reducing COPQ protects margins and supports faster approvals, but its importance goes beyond financial performance: it helps manufacturers deliver the consistent quality patients and users depend on.

What Is Cost of Poor Quality (COPQ)?  

COPQ is the total cost incurred when a product or process does not meet requirements the first time. It includes scrap, rework, nonconformances, CAPAs, complaints, adverse events, field corrections, recalls, and warranty claims. In simple terms, COPQ is the cost of doing work incorrectly and addressing the resulting problems.  

What Is the Difference Between COPQ and Cost of Quality (COQ)?

COPQ is one part of the broader cost of quality (COQ). COQ also includes what an organization spends to prevent problems and assess quality. McKinsey found that prevention and appraisal account for only about one-third of direct quality costs in medical devices.  

The Four Categories of COPQ

Prevention Costs

Prevention costs: Activities intended to prevent defects, including design controls, risk management, supplier qualification, failure mode and effects analysis (FMEA), and training and communication.

Appraisal Costs

Appraisal costs: Inspection, verification and validation (V&V), audits, calibration, and other activities used to identify issues.

Internal Failure

Internal failure costs: Scrap, rework, retesting, nonconformances, CAPAs, and late design changes discovered before release.

External Failure

External failure costs: Complaints, adverse event reports, field corrections, recalls, warranty claims, supplier corrective actions, and regulatory actions after products reach the field.

For many MedTech organizations, the greatest opportunity is to reduce failure costs by identifying quality issues earlier in the product lifecycle, before they can affect the patients and users who depend on the product.

Why Measure the Cost of Poor Quality?

Quality costs are spread across engineering, procurement, manufacturing, quality, services, and finance. Organizations may understand individual problems without seeing their cumulative impact. In ASQ's 2025 benchmarking, only 31% of respondents said they fully understood how quality costs affect financial performance.  

Measuring COPQ also changes the conversation. A 2026 Medical Device Innovation Consortium (MDIC) study found that leading quality organizations translate quality performance into business measures such as scrap, warranty, and rework costs. Those measures make the operational impact of quality visible without losing sight of the reason quality matters: protecting the people who rely on the device. As one Chief Patient Safety & Quality Officer put it, 'If you start with compliance, you lose right away.'

The Impact of COPQ on Profit

COPQ comes directly out of margin. McKinsey estimated that recalls, warning letters, and consent decrees cost the medical device industry $2.5 billion to $5 billion annually, including $1 billion to $2 billion in lost sales. Costs also rise the later a design issue is found.  

The impact extends beyond direct financial loss. Quality failures can delay product introductions, trigger additional audits and investigations, reduce customer confidence, and undermine the trust patients and users place in a device. That makes COPQ an executive metric, not only a quality metric.  

How to Calculate COPQ  

The COPQ Formula

COPQ as a percentage of revenue = (COPQ ÷ Annual revenue) × 100

To establish a baseline, collect 12 months of failure-cost data, convert investigation and labor hours into financial values, and validate the calculation with finance. Then identify the largest cost drivers and trace them to their root causes. The purpose is not simply to produce a number, but to understand where poor quality begins and where improvement will deliver the greatest return.  

How to Identify Where COPQ Is

• Traceability gaps among requirements, risks, tests, and changes that surface late in audits.  
• CAPAs closed without addressing the root cause. MDIC found that closure-time targets can prioritize speed over effectiveness.  
• Duplicate complaints that are not linked to the same product configuration.  
• Audit preparation that requires teams to reconstruct records manually.  
• Post-market insights that never flow back into design.  

ERP, QMS, PLM, ALM, service, and finance systems each hold part of the COPQ picture. Connecting quality data to the product record helps teams trace costs to their source and identify recurring patterns.  

Example From a MedTech Company

At one global medical technology company, service operations had become a major compliance challenge. Every maintenance job and replacement part had to meet country-specific device regulations, and auditors could request supporting examples. Service data, however, was spread across multiple tools, formats, and manual processes, making installed-base traceability difficult to demonstrate.  

By moving global service onto ServiceMax, the company gave teams access to traceable service data that could be cross-referenced for audits. This improved installed-base traceability, harmonized data for compliance decisions, and saved time and cost. Connected service data can also help field issues inform future design decisions, strengthening the feedback loop between real-world product performance and the quality patients and users experience.

How CONMED reduces costs and improves patient safety

See how connected product and quality data supports safer products and lower costs.

Watch the Video

COPQ Benchmarks by Industry

In a 2017 analysis, McKinsey estimated that the direct cost of quality in medical devices was 6.8% to 9.4% of sales, or $26 billion to $36 billion annually, with roughly two-thirds tied to poor quality. MedTech also faces both financial and regulatory consequences when defects reach the field.  

The regulatory bar continues to rise. The FDA's Quality Management System Regulation (QMSR) aligned US requirements with ISO 13485 on February 2, 2026, while EU MDR and IVDR continue to push manufacturers toward continuously maintained product and quality records.  

How to Analyze COPQ Data  

Once COPQ is measured, focus on the largest sources of cost. Look for recurring nonconformances, ineffective CAPAs, supplier issues, complaint trends, audit findings, and product configurations associated with failures. Pareto analysis can help teams prioritize the few issues responsible for the greatest share of quality costs and compare where problems originate with where they are detected.  

Strategies to Reduce COPQ

Process Improvement Methodologies

Lean, Six Sigma, and FMEA are most effective when aimed at the failure modes that create the greatest cost and risk, including those with the greatest potential impact on patients and users, rather than isolated quality events.

Quality Management Systems

A QMS can standardize nonconformance, CAPA, complaint, and audit processes. Product-centric quality goes further by connecting each quality event to the product, configuration, supplier, and change it affects, giving teams the context to investigate and resolve issues faster.  

Automation and Digital Tools

As devices become more software-driven, teams need traceability that keeps pace with change. A digital thread connecting requirements, risk, design, quality, manufacturing, and service helps teams assess change impact earlier and keep compliance records current.  

Training and Culture

Sustained improvement requires visible leadership. As one MDIC participant put it, 'ten words from the CEO on quality are worth 1,000 words from the quality team.'  

How AI Helps Reduce Cost of Poor Quality

In regulated environments, AI creates value only when it operates within governed, explainable, and traceable processes. It can help teams assess requirements quality and test coverage, analyze change impact, identify duplicate or misclassified parts, and reduce manual effort in complaint investigations and audit preparation.  

Codebeamer AI is designed to deliver up to 53% time savings in requirements creation and up to 40% faster test-case creation. The technology still depends on sound processes and trustworthy product data. As one quality leader told MDIC, tools 'are byproducts of a good process.'  

Reduce the cost of poor quality with AI in MedTech

Discover how AI can help identify risks earlier, prevent failures, and strengthen quality.

Read the E-book

The Benefits of Reducing COPQ

Reducing COPQ can improve profitability, free engineering and manufacturing capacity, support faster product introductions, and strengthen audit readiness. Most importantly, it helps MedTech organizations deliver products patients and users can trust to perform as expected. McKinsey estimated that device makers adopting leading quality practices could recover $6 billion to $11 billion annually, or 1.5% to 3% of sales.  

Cost of Poor Quality Frequently Asked Questions  

Is Cost of Poor Quality the Same as Cost of Quality (COQ)?

No. COQ includes prevention, appraisal, and failure costs. COPQ represents only the failure-related portion.  

Who Owns COPQ Reduction Inside an Organization?

Quality typically leads measurement, while R&D, manufacturing, procurement, regulatory affairs, service, and finance share responsibility for improvement.  

How Often Should COPQ Be Measured and Reported?

A practical cadence is to track the main drivers monthly, report COPQ to leadership quarterly, and conduct a full cost-of-quality review annually.  

How PTC Helps Reduce COPQ

Much of COPQ is introduced early and discovered late. PTC helps close that gap by connecting quality information to the product record, giving teams the context to identify issues earlier, improve traceability, and reduce downstream costs.  

• Earlier issue detection: Codebeamer traces hardware and software requirements to risks and tests, while Windchill governs product structures and change.  
• Faster root cause analysis: Windchill links nonconformances, CAPAs, and complaints to affected parts, suppliers, and changes, helping corrective actions improve future designs rather than simply close findings.  
• Closed-loop post-market feedback: ServiceMax connects field service events with Windchill complaints, adverse event reporting, and CAPA processes, helping field insights inform the next design.  

CONMED replaced disconnected PLM and QMS tools with Windchill as a unified product and quality backbone. The approach improved audit readiness, root cause accuracy, adverse event reporting speed, and design robustness through closed-loop post-market feedback, while helping reduce COPQ.  

For MedTech organizations, reducing COPQ is not only a cost initiative. It is part of fulfilling the industry’s purpose: delivering reliable products that improve patients’ lives. Organizations that connect design, quality, and service data are better positioned to identify issues earlier, strengthen compliance, and bring safer, higher-quality products to market faster.