What is the Return On Investment of a Quality Management System?

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Your company could have many motivations behind implementing a quality management system (QMS) such as ISO 9001. But in the end, making the decision to invest in a QMS always comes down to potential for profit, and an organization’s quality performance absolutely affects the bottom line. That’s why it’s essential to understand the return on investment for a quality management system.

First, the term “quality” extends far beyond an organization’s products or services. Every process and system in an organization, whether a manufacturing, distribution or service industry, can meet quality objectives and expectations. And once an organization applies the quality concept to its entire management system and all of its processes, then the effect on bottom line will really be noticeable.

Here are a few benefits of a certified quality management system that make a financial impact.

  1. Quality management systems can help reduce manual processes, which means there’s less of an opportunity for human error. In the end, this translates to greater employee productivity.
  2. Your leadership team will have access to real-time reporting, which means they can make better, more informed decisions. Getting that real-time data means less downtime overall.
  3. Improving the processes and increasing efficiency means production can go more effectively. The end result is higher production yield.
  4. A QMS provides consistent quality control, leading to fewer product defects and/or service complaints. And ultimately, this means you’ll see fewer complaints, returns, reworks and escapes.
  5. Being more compliant with ISO 9001 (or any of the other QMS standards) means more satisfied customers, and you’ll see more sales, new sales and referral sales.

Quality does have a cause-and-effect relationship with finance – consider the simple economic equation of income minus expense equals profit. Therefore, either increasing income and/or decreasing expense increases your profit.

Investing in “good” quality systems can increase income in many different ways, including attracting more customers, encouraging repeat business and giving your organization a competitive advantage. Meanwhile, it can also lower your expenses by lowering production costs by streamlining processes, lowering inspection cost, and lowering working capital through reduced inventory. So even when factoring in the cost of implementing and maintaining a QMS, the numbers show that you’ll come out ahead by investing in quality.

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