how to measure the roi of quality management systems for manufacturers

How to Measure the

ROI of Quality Management Systems for Manufacturers.

Copyright 2016 TrackVia, Inc. All rights reserved.

800-673-3302 | trackvia.com

There are countless benefits to implementing a quality management system, and it’s not just

to help directors of quality across the land perform

their jobs more effectively.



Benefit of a modern Quality Management System:1.

Fewer human errors

Reduction in manual processes

Financial Impact: Greater employee productivity



Better decision making

Accessibility to real-time reporting


Financial Impact: Less downtime



Greater speed of

production

Improved production

process


Financial Impact: Higher production yield



Fewer defects

More reliable quality control


Financial Impact: Decreases in returns or reworks



Moresatisfied

customers

Increased compliance

with ISO 9001


Financial Impact: Increase in sales and new sales



These benefits can be quantified by a dollar figure and are integral to how you

gauge the success of a next generation quality management system like TrackVia.



So, how do you equate quality measures to the profitability of a manufacturer?



Quality must affect either

income or

expense.



Just like, “poor” quality can decrease income or increase expense.

“Good” quality can increase income or decrease expense.

–+ –

+



Income• More customers• Repeat business• Competitive advantages

Expense• Lower production cost• Lower inspection cost• Lower working capital through reduced inventory

Here are some examples of how quality impacts income and expense.

Good Quality



Here are some examples of how quality impacts income and expense.

Poor Quality



Income• Loss of business• Penalties for late delivery or service• Partial or late payments due to customer dissatisfaction

Expense• Scrap and rework cost• Warranty cost• Sorting cost• Express shipping cost

Income• Loss of business• Penalties for late delivery or service• Partial or late payments due to customer dissatisfaction

Expense• Scrap and rework cost• Warranty cost• Sorting cost• Express shipping cost

Calculate the income and expense generated from “good” quality and “poor” quality.

Then, apply to this equation.

Income – Expense = Profit



Once you’ve determined the profit, you can calculate ROI.

( Profit – QMS Investment )

QMS Investment



An organization’s quality performance

affects its bottom line.

A next-generation QMS will increase efficiency and improve processes,

which translates into more dollars and cents

(generating them and keeping them).



Think of the investment in a modern quality management system as an investment in preventing quality issues.

The alternative for manufacturers?

Higher expenditures caused by a lack of quality.





Investment vs.

Expense

Prevention vs.

Correction=We can all agree that preventive action

is more beneficial to an organization

than is corrective action, right?

Interested in what a modern QMS can do for your manufacturing organzation?

Request a free demo today.



how to measure the roi of quality management systems for manufacturers

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