COPQ, CEPQ and CRPQ

measurements

Wk1413
 COPQ
=
COST OF POOR
QUALITY
Before Cost of Poor
Quality
 IF YOU WERE A
CUSTOMER AND NOT
SATISFIED WITH
PRODUCT
WHAT WILL YOU DO?
 CRS
=
CUSTOMER RETURN
 WHAT CAN BE YOUR
UNSATISFIED?

PRODUCT QUALITY

PACKAGING QUALITY
APART OF CUSTOMER,
WHICH PROCESS CAN
FIND OUT QUALITY
PROBLEM?
IN STORE
IN DISTRIBUTION
CENTER (DC)
 Direct to sale
area

OK
NOT OK (need
to fix
? Product/
somethings) packagin
Return g quality

Report in 2 category

1.Product quality: fixing cost

2.Packaging quality: fixing cost

 Direct to sale
area

NOT OK Product/
packagin
Return g quality

Report in 2 category

1.Product quality

2.Packaging quality
 1.Product quality 1.Product quality
2.Packaging quality 2.Packaging quality

1.Product quality
2.Packaging quality

Report in 1 category
“Internal Damage”
Pallet damage from Pallet damage from
delivery delivery

Pallet damage from

delivery

Report in 1 category
“Receiving Damage”
Summary
Summary
REPEATING
 Direct to sale
area

OK
NOT OK (need
to fix
? Product/
somethings) packagin
Return g quality

Report in 2 category

1.Product quality: fixing cost 20325

2.Packaging quality: fixing cost 10325

 Direct to sale
area

NOT OK Product/
packagin
Return g quality

Report in 2 category

1.Product quality 20325

2.Packaging quality 10325

 1.Product quality 1.Product quality
2.Packaging quality 2.Packaging quality

1.Product quality
2.Packaging quality

Report in 1 category
390
“Internal Damage”
Pallet damage from Pallet damage from
delivery delivery

Pallet damage from

delivery

Report in 1 category
391
“Receiving Damage”
 COST !
COPQ included:
• Cost of Customer return (CRS)
• Cost for damages found before reaching the
customer in the store (SDS)
• Cost per M³ (Storage cost)

COPQ is not included:

• Cost of poor Quality in Supplier production
• Hidden cost for handling poor Quality
• Cost for lost sales due to Quality blocks
• Bad will and lost sales opportunities
• Negative environmental impact (CO₂)
Sample of COPQ

IKEA use COPQ% as goal

 CEPQ
=
CUSTOMER
EXPEREINCE
PRODUCT
QUALITY
CEPQ
 Recruitment
Panel

Family no
IKEA
MDB receipt info

Questionnaire a
2 weeks (x2)
Panel
Questionnaire b
2 months (x2)

Ext. Partner

IDS-
Business
Object DB
Example of CEPQ

IKEA use CEPQ% as goal

 CRPQ
=
CUSTOMER RETURNED
PRODUCT QUALITY
 CRPQ
• Customer Returned Product Quality a
new way (from FY-14) to measure
our customer’s experience from our
quality offer.

• It is based on the information we

receive when our customer returns
the products either due to a handling
damage or a product error.
 CRPQ
• It can be seen as a complementary measure to
CEPQ and is a very good indicator of customer
experienced product quality especially for more
expensive goods as the customer than more
frequently bother to return if they aren’t
satisfied.

• For the cheaper articles, handled with the CEPQ

concentration strategy, the CEPQ statistics are
more relevant as far from all customers doesn’t
come back with the articles when they aren’t
satisfied. Please see further under CEPQ
concentration.
 CRPQ
• CRPQ is calculated as numbers of
articles returned by customers,(not
able to be sold again = TTYPE 325),
due to handling damage (reason code
10) or product error (reason code 20)
divided by the total number of sold
articles. Presented with YW4 frequency
as rpm (returns per million). The
improvement goals are to be
communicated as % improvement of
rpm.
 Calculation
• Use the Handling defects (10325) and
Product Defects (20325) from the
stores in quantity and we show this in
relation to the numbers of million
pieces sold.

• Formula for CRPQ:

(CRPQ Qty / Sales Qty) * 1,000,000

Example
 CEPQ
CONCENTRATION
 FOR
• Decoration, Cooking, Home org., Home
textiles, Lighting, Eating and
Bedtextiles (as off 2012-10-30)

• Plastic, Textile products, Luminaries,

Metals stainless steel, Paraffin/Stearin,
Glass tableware/decoration, Green
plants, Textile filled products, Frames,
Light sources and accessories. From
FY14 we add Paper and Textile
Construction
 Goal Setting

The goal setting for CEPQ shall only be made

for the Categories named above.

The goals shall be aligned with the goals of

the HFBs with big impact on the category.

The goals shall be expressed as improvement

from a full FYs result to the next FYs full
result. (This has been changed from earlier
comparing last tertials from FY to FY)
GOAL
• SC, COPQ       ≤ 7%
• SC, CRPQ        ≤ 10%
• SC, CEPQ        ≤ 7%
• AP, COPQ Pur = -10%
• CEPQ, CRPQ   = up to Cat.

***SC = Supply Chain (global)

AP = Asia Pacific (including TASEA)
COPQ Purchasing = 10 20 390 391
Q&A
THANK YOU