Hopefully you are not thinking about how to get ROI on the Quality Management System you have already decided to invest in. If you’ve made the decision to invest funds, you’ve probably already made the business case. However, you might want to look at some criteria for expediting that business case – for delivering earlier (which typically means a higher return on investment that projected). If you haven’t made the decision to invest in QMS, we offer here some areas that should be included in your presentation of the merits of the investment.
First, let’s look at what you have promised (or what your business case should contain). Generally, there are two areas that go into the calculation of the cost of quality. The cost of good quality (all the resources focused on prevention and improvement), and the cost of poor quality (all the resources used to handle defects or failures). Poor quality encompasses scrap and rework within the manufacturing process, and the costs associated with delivering a product that fails, such as complaints, returns, warranties, and recalls.
Understanding the history of these costs within your own operations is a start. Harder to determine is the potential for future product defects and failures, and the difference between what can be expected with the status quo, and what can be expected if a QMS is supporting your quality processes. If you make the assertion that a QMS can help you improve the current state, you should define what metrics you are using to baseline and improve. Don’t forget what can potentially replace the bandwidth that is currently used to deal with quality issues (e.g., more line capacity can generate additional revenue, improved quality can improve brand and increase orders).
Now, you’ve baselined and set improvement goals, quantified the dollar value business case on the return. What can you do to increase the likelihood of hitting your targets, and accelerating the return to the business (and looking like a hero)?
First, choose your QMS wisely. Get plenty of implementation references and case studies that give you confidence the implementation process is streamlined and proven. Understand how quickly most companies realize an ROI – is it within the first year of implementation?
Second, select a system that will allow you to quickly implement your productivity measures. The ROI period is dependent on the speed with which you can execute your initiatives and begin to measure the improvement against your established metrics. The faster you can get your measures implemented, the faster you can track to your ROI.
Third, make sure the system you choose is capable of meeting customer requirements, such as the need for traceability as a proof method. Also, make sure those requirements can be attained in a short period of time. This will also help secure follow-up orders, and contribute to the piece of your business case related to increasing the top line, vs. merely improving the bottom-line costs.
Finally, make sure your quality system meets your initiatives today, and can support your initiatives in the future. You will most certainly expand your concept of product quality over time. Make sure you choose a system that anticipates that expansion, going beyond the shop floor to span the product lifecycle – from ideation to realization to utilization.