A Belt has determined that the insurance claim form needn't be reviewed by accounting thereby improving the number of claims a processer can handle. According to Cost of Poor Quality (COPQ)…

Question

Options

• ADownsizing savings
• BMedian savings
• CSoft savings
• DHard savings

• A
  14% (5)
• B
  8% (3)
• C
  5% (2)
• D
  73% (27)

Explanation

Eliminating an unnecessary accounting review step directly removes a quantifiable appraisal cost - a real COPQ expense (accounting labor hours) that was being incurred and is now gone - making it a hard saving because it produces a measurable, verifiable reduction that can be confirmed on financial statements.

Why the distractors are wrong:

• A (Downsizing savings) - Not a COPQ category; downsizing refers specifically to headcount-reduction programs, not process improvements.
• B (Median savings) - A statistical term with no meaning in COPQ financial classifications; it doesn't exist as a savings type.
• C (Soft savings) - Soft savings capture productivity or capacity gains that can't be directly verified on a P&L (e.g., "we could handle more volume someday"). Here, an actual appraisal cost is eliminated, crossing the line from soft to hard.

Memory tip: Use the acronym "Hard = Hit the Books" - hard savings literally hit the financial books as a confirmed cost reduction. If you can point to a removed expense (like eliminated accounting review hours), it's hard. If you can only say "we freed up capacity," it's soft.

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