5 Ways the Quality Management System Reduces the Cost of Quality

By ETQ on March 1, 2016

According to the American Society for Quality (ASQ), the cost of poor quality totals up to 15% of an organization’s revenue. Scrapping defects, managing recalls, product redesign—all of these impact productivity and profits.

With the rise of quality certifications like ISO 9001, more companies are taking a systematic approach to reducing quality costs. The first step is implementing an automated Quality Management System (QMS), which drives cost savings across many areas. In this post, we’ll take a look at 5 of those areas.

1. Faster Event Resolution

Addressing adverse events before they become systemic issues is key to reducing costs. Looking at the biggest recall cases in recent years, it’s clear the costliest problems are those that weren’t effectively managed from the beginning.

How does the QMS solve problems faster?

  • It automates the Corrective and Preventive Action (CAPA) process. From review to root cause, action taken and follow-up, the QMS keeps Corrective Actions moving forward to ensure problems don’t fall through the cracks.
  • It shows you which issues need to be handled first. When you’re dealing with a laundry list of CAPAs, risk-based filtering lets you prioritize your work, preventing costly delays.
  • Total visibility lets you pinpoint the source of problems. The QMS can integrate multiple sources of data across your organization, from your Manufacturing Execution System to your Supplier Management data. This increased visibility makes it easier to quickly find the source of problems.

Instead of just putting out one fire after the next, the QMS gives you a systematic way to resolve problems, reducing quality costs by preventing recurrence.

2. Streamlined Change Management

In today’s economy, the ability to evolve is necessary to keep up with the competition. Unfortunately, the sheer cost of any proposed change can make it difficult for companies to stay agile.

How do you know you’re making the right choice? What will the various alternatives cost? How will the change affect other areas of the company?

The QMS reduces the uncertainty involved, with Change Management tools that track costs, analyze the risk associated with different options and help you plan for a smooth transition. An integrated QMS also simplifies things by linking related processes such as Employee Training and Document Control.

3. Fewer Operator Errors

You can’t underestimate the human element when addressing quality problems. After all, you could design the most sophisticated production system imaginable and still have quality problems if your people are dropping the ball.

An integrated QMS limits the probability and impact of human error in several ways:

  • Improving Employee Training programs. The QMS ensures your employees receive appropriate training customized to their location, department and role, also allowing you to track proficiency test results.
  • Raising visibility. An integrated QMS gives you real-time data and automated alerts, helping you prevent problems before they occur.
  • Automating workflows. With workflows that you can customize to your organization, the QMS helps standardize your process and make sure important requests and objectives keep moving.

4. Continuous Risk Reduction

Effective Risk Management is critical to reducing quality costs. The QMS lets you build risk tools into any process, including risk matrices, decision trees and even bowtie analysis.

A few examples:

  • Audit Management. Audits generate a ton of data, frequently leading to a long list of potential action items. The QMS clearly shows which items are high-risk items (and likely contributing the most to quality costs), helping you prioritize follow-up in a strategic way.
  • Legislative and Regulatory Requirements. When assessing regulatory compliance, your company may have multiple gaps that need to be addressed. The QMS lets you identify high-risk gaps so you can fix them first, ensuring you’re spending your time in the most effective way possible.
  • Reporting. Centralized Reporting capabilities that use risk as a common yardstick allow your team to make more informed, more strategic decisions that reduce quality costs.

Risk-based decision making is central to continuous improvement, providing an objective measure you can use to determine whether your work has reduced risk to acceptable levels.

5. Improving Supplier Quality

Poor supplier quality is a key driver of increased costs. An integrated QMS includes Supplier Management tools that let you benchmark performance, communicate with suppliers and help them understand your company’s needs.

How do Supplier Management tools reduce the cost of quality?

  • Detailed Supplier Ratings let you quickly identify your best performing suppliers, as well as those contributing the most to quality costs.
  • Secure cloud-based portals let suppliers view open Corrective Actions, helping resolve problems faster.
  • Reporting tools give you fast access to data you can use in supplier negotiations.

Reducing quality costs requires an ability to see inside your organization, helping you look beneath the surface to discover the underlying sources of problems. An integrated QMS gives you the tools to do it faster and with more precision.