How the roll-up gate works

How the Cost-of-Poor-Quality gate works

This tool grades each manufacturing cell's cost of poor quality against its own revenue. It sums five cost streams into one COPQ% per cell and bands it at 5% and 12%. A gate that can only make a cell's verdict worse then looks for one stream carrying the cell. The plant verdict is its worst cell, never the average.

The 6 cells

01Weld cell AgatedCOPQ 7.7% · Warranty/returns 75.4%, $52,000BLEEDING

02Weld cell A (warranty fixed)COPQ 2.9% · Warranty/returns 34.6%CONTROLLED

03Machining cell BCOPQ 6.8% · Scrap 46.3%COST DRAG

04Assembly cell CCOPQ 3.5% · Scrap 34.6%CONTROLLED

05Paint line DCOPQ 1.7% · Scrap 30.0%CONTROLLED

06Final QC gatefix firstCOPQ 14.7% · $880,000 a yearBLEEDING

QUALITY COST CONTROLLED

every cell reads CONTROLLED: COPQ at or under 5% of its own revenue, and the gate clear

MARGIN LEAKING

a cell reads COST DRAG (COPQ over 5% and under 12%) and none reads BLEEDING

MARGIN BLEEDING

any cell reads BLEEDING: COPQ at 12% or more, or the gate fired

Dominance gate · worsen-only

A cell where one cost stream is 60% or more of the cell's COPQ dollars, and that stream is $25,000 or more, reads BLEEDING whatever its COPQ%. A concentrated leak in one stream is a different problem than the same dollars spread thin, and a ratio alone would hide it. The cell releases to its ratio band when the stream falls under 60% of the total or under $25,000.

MARGIN BLEEDING

Why: Six cells, each graded against its own revenue. Three read CONTROLLED and Machining cell B reads COST DRAG at 6.8%. Two read BLEEDING: Final QC gate on its ratio, at 14.7%, and Weld cell A through the gate. Weld cell A is at 7.7%, inside the COST DRAG range, but Warranty/returns is $52,000, which is 75.4% of its $69,000 COPQ, so the dominance gate reads it BLEEDING. The plant takes its worst cell and reads MARGIN BLEEDING. 2 of 6 cells BLEEDING · plant COPQ $144,333 a month, $1,732,000 a year.

Fix firstFinal QC gate: of the two BLEEDING cells it carries the larger projected annual COPQ, $880,000, with Containment its largest stream

A 7.7% ratio didn’t clear Weld cell A: one stream carried three quarters of its cost, and the gate reads that as a leak a ratio would hide. The plant verdict is the worst cell, and where a cell is short, the fix first row names it. Your own cost inputs, computed offline. Not an audited financial figure or an industry benchmark.

RedHub AIthe AI that tells you when to doubt it redhub.ai/systems/cost-of-poor-quality-ledger