Know Your QMS Return on Investment (ROI)

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Quality management can be difficult with so many moving parts and several stakeholders involved in the process. That’s why directors of quality are critical to the success of manufacturing organizations. A critical component of that success is quality management software, also called QMS. But, QMSs aren’t the same across the board. Their capabilities, features, and costs range dramatically, so it’s important to understand which QMS meets your needs and what return on investment (ROI) it delivers.

The importance of QMS in manufacturing

Let’s imagine life without a QMS. Data is manually recorded on a paper traveler and then manually entered into a spreadsheet. Then, someone in the back office assembles the data in a report. Two problems can occur: data is erroneously inputted and the report reflects old data points due to the lag time inherent in a manual quality management process. Sounds horrific.  

Now that we’ve described the internal headaches, let’s quickly review the ripple effect. Unreliable quality management reports result in poorly made products. Poorly made products result in unhappy customers. Unhappy customers result in lost revenue. Wait, there’s more.  Poorly made products result in additional scrap, recalls, and higher rework counts. So, not only are manufacturers without a QMS losing revenue from dissatisfied customers who choose to stop purchasing their product, manufacturers can also suffer from eroding margins due to the high cost of poor quality.  

The benefits of a QMS are actually fairly easy to explain. Quality management software takes what was once a long, tedious process of recording and capturing manufacturing data with pen, paper and spreadsheets, and simplifies it with a paperless system. Manufacturers enjoy increased productivity because of the reduction in man hours spent recording data. And, finally, directors of quality have reliable, real-time reporting at their fingertips.  

Modern quality management software, like TrackVia, leverage the latest advances in software and technology, such as cloud computing capabilities. Cloud computing means that stakeholders can upload and access quality management data and reports from anywhere, anytime. No one has to be tethered to their desk waiting for an email with the latest spreadsheet report. Directors of quality, for example, can access critical information from any device, desktop or mobile, while on the go. This real-time visibility empowers the management team to quickly respond to problems in the manufacturing process, which could prevent major and costly manufacturing defects. Let’s breathe a collective sigh of relief.

Measuring QMS ROI and why it’s important

At a high level, I think we can all agree that a QMS can provide tangible benefits to manufacturers. But, what does that mean in terms of dollars and cents? Quality affects both income and expense. Good quality, which is what we’re all striving for, increases income and decreases expense. On the other hand, poor quality decreases income and increases expense as you would expect. Quantify the impact of good quality and poor quality in terms of income and expense.  (Need some examples?  Scroll to slides 12 and 13 on this ROI Slideshare.)

Calculating the ROI of a QMS can be difficult, so we’ve developed an easy-to-use ROI calculator where you can customize the inputs based on your manufacturing business. You can even see the results in a graphical format and pass them around to colleagues in your organization.  

So, why bother measuring ROI? In most organizations, purchase decisions have to be justified and then justified again. And, when budgets are scrutinized, investments that don’t have clear ROI benchmarks and results are the first to be questioned by upper management. Being able to point to a clear ROI will safeguard your ability to leverage a QMS for Lean Process and continuous improvements.

What happens if the ROI doesn’t justify the cost of your QMS? Two things should be reviewed:  

  1. Have you outgrown your QMS? This may mean that your software no longer mirrors the complexity of your manufacturing process and therefore can’t lower the cost of quality and increase speed of production optimally.
  2. Is your QMS too expensive for what you need? This often occurs with rigid quality management systems that can’t adapt to the size and scale of different manufacturing organizations.

In either case, it’s time to look for a modern QMS that is right sized for your company. Today’s most effective QMS utilizes the latest features and innovations, like mobile technology, and can be tailored to meet your unique quality management needs.

Armed with a modern QMS, and its respective ROI, manufacturers are able to better compete. Customers are increasingly demanding and less forgiving, so a bad experience with your product could drive away a valued customer for life. A QMS can prevent that from happening by giving you better visibility into the process as well as potential problem areas before the product reaches its final destination, your customer.  

Think you’re ready for a next-gen QMS? Take a short quiz to find out!

 

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