Manufacturing Rework Cost Calculator
Scrap, repair, re-inspection, and warranty claims. The Six Sigma COPQ framework shows manufacturing rework typically runs 5–20% of annual revenue.
Manufacturing COPQ Breakdown
Cost of Poor Quality components and their typical percentage of revenue for a mid-size manufacturer.
Internal Scrap
Parts scrapped during production before reaching the customer
Defective castings, machined parts out of tolerance
3–8%
of revenue
Rework & Repair
Labour to fix non-conforming parts before shipment
Re-welding, re-machining, re-assembly
2–6%
of revenue
Re-inspection
Quality inspection of reworked items
CMM re-inspection, functional re-testing
1–3%
of revenue
Warranty Claims
Cost of defects that escape to the field
Field service, returns, replacements, liability
1–5%
of revenue
5–20%
of revenue lost to COPQ
The American Society for Quality estimates that manufacturers lose 5–20% of annual revenue to poor quality costs. High-tech industries often see the upper end of this range.
3.4
defects per million (Six Sigma target)
Six Sigma quality means 99.99966% defect-free production. Companies achieving Six Sigma levels typically reduce COPQ from 20%+ to below 5% of revenue.
$1.2B
saved by GE via Six Sigma
General Electric reported saving over $1.2 billion through Six Sigma quality programmes in the first 3 years of implementation (1996–1998).
Sigma Level vs Defect Rate vs COPQ
As sigma level improves, defect rates and COPQ fall dramatically.
| Sigma Level | Defects per Million | Defect Rate | Typical COPQ |
|---|---|---|---|
| 2σ | 308,537 | 30.9% | >40% of revenue |
| 3σ | 66,807 | 6.7% | 25–40% of revenue |
| 4σ | 6,210 | 0.62% | 15–25% of revenue |
| 5σ | 233 | 0.023% | 5–15% of revenue |
| 6σ | 3.4 | 0.00034% | <1% of revenue |
Frequently Asked Questions
What is the average manufacturing rework cost as a percentage of revenue?
According to quality management research, manufacturing rework and scrap costs typically range from 5–20% of annual revenue, with low performers exceeding 25%. The American Society for Quality (ASQ) estimates that for most manufacturers, COPQ (Cost of Poor Quality) runs at 5–15% of sales. Six Sigma initiatives typically aim to reduce this below 1%.
What is included in manufacturing COPQ (Cost of Poor Quality)?
Manufacturing COPQ includes: internal failure costs (scrap, rework, re-inspection, downtime), external failure costs (warranty claims, returns, field service, customer complaints), appraisal costs (inspection, testing, quality audits), and prevention costs (training, process design, SPC). Internal and external failure costs are typically the largest and most addressable components.
How does Six Sigma reduce manufacturing rework cost?
Six Sigma uses the DMAIC methodology (Define, Measure, Analyze, Improve, Control) to systematically reduce defect rates. A Six Sigma process produces fewer than 3.4 defects per million opportunities. Companies that achieve Six Sigma levels typically report COPQ falling from 20–25% of revenue to below 5%. Each sigma improvement roughly halves defect rates.
What is the difference between scrap cost and rework cost in manufacturing?
Scrap cost is the value of materials and labor lost when a defective part cannot be salvaged — the part is discarded entirely. Rework cost is the additional labor and material required to bring a non-conforming part up to specification. Both are internal failure costs in the COPQ framework. Rework is generally cheaper than scrap but both represent waste that should be eliminated.