Part 2 of 4 The opening segment of this blog series covered five questions to benchmark your QMS project's readiness for capital approval. The last of these five questions - and arguably, one of the most important - revolved around aligning your QMS project with the goals of your organization. To help get your project approved, here are 5 key steps to integrating your QMS project with corporate initiatives.
1. Reduce Total Cost of Goods Sold (COGS)
It should come as no surprise - especially given the state of today's highly competitive global manufacturing industry – that most companies have launched lean process improvement initiatives to mitigate production costs at every turn. As a Quality Management professional, one of your tasks is to identify quality improvement initiatives to contribute to your organization’s lean process success. You can directly impact your company (and its bottom-line) by pinpointing where a holistic, integrated quality management system (QMS) can help reduce your company’s total COGS. For example, what would be the effect to your company if it reduced Direct Material Costs by only 1%? What would be the effect if it reduced Direct Labor by only 1%? For many companies, these changes equate to significant savings (often more than the initial costs of implementing a comprehensive QMS system).
2. Reduce Scrap and Rework Costs
Reducing Scrap and Rework Costs directly impacts your company’s COGS. Utilizing a holistic (i.e. real time and accurate) quality management system (QMS) allows your organization to lower its internal failure costs across the board. An integrated QMS will provide the insight into reducing Scrap and Rework costs; such systems (also) invariably improve the success rate of Corrective and Preventative Actions (CAPA) and Failure Modes and Effects Analysis (FMEA). If you can escalate and resolve quality issues as soon as possible in a product's life cycle, you can continue to reduce your internal failure costs.
3. Reduce Customer Returns and Lower Warranty Costs
You should not neglect to include the other side of the Cost of Quality metric (may or may not be categorized as part of your company’s COGS). External failure costs such as Returns and Warranties can be a substantial burden to efficiency as well as a negative impact on your company’s bottom line. Quality issues surfacing after a product hits the open market are (obviously) more expensive to mitigate than quality issues identified during the production process. An integrated quality management system (QMS) allows your organization to link data on external failures at every step in the value chain and ties these metrics to internal failure costs such as Scrap and Rework, giving your organization a more accurate portrayal of the total Cost of Quality.
4. Reduce Direct Labor Costs
Reducing Direct Labor Costs (again, part of COGS) remains one of the most fundamental initiatives of any manufacturing enterprise. When aligning your QMS projects with corporate goals, you must be able to demonstrate a positive impact (i.e. reduction) to the Cost of Direct Labor. This metric closely relates to the Cost of Quality as less scrap, rework, and customer returns demand less resources (e.g. man hours) to be used toward mitigation. From a different perspective, moving away from manual quality processes (e.g. excel spreadsheets) to an automated system fosters increased accountability and promotes employee efficiency (e.g. less time spent on inspections and audits).
5. Improve Total Quality
Improving Total Quality goes beyond merely reducing the Cost of Quality overall. Best-in-Class manufacturers cultivate a Culture of Quality that extends well beyond the confines of your department, according to research by the Aberdeen Group. Surely, as a Quality Management professional, you understand the potential of integrated, holistic QMS, but are you successfully communicating these benefits to your colleagues? Integrated quality management systems can actually facilitate this communication in an automated system if properly aligned with corporate initiatives. Additionally, by incorporating an enterprise wide solution, you can eliminate many of your existing disparate systems (reducing cumbersome data retrieval systems as well as annual maintenance fees) and give your executive leadership the cherished "single version of the truth". At a fundamental level, your QMS project must align seamlessly with corporate initiatives to gain capital approval faster. In the next segment of this blog series, quality compliance issues and how integrated quality management software can solve these problems will add to the discussion. <<Read Part 1: 5 Questions to Prepare your QMS Project for Quick Capital Approval