Cost Decrease?  Our QMS Costs Us!

These are the typical words heard when the subject is broached about the improvements the quality management system (QMS) makes in decreasing the cost of production of products and services.

Why would this be true? What costs are there in having a quality management system? What are we doing extra that we would not be doing if we didn’t have a QMS?

Cost of Having a Quality Management System

The primary cost of having a quality management system is “time”. Time to manage the documentation. Time to respond to and address nonconforming material and respond to customers. Time to review orders, choose suppliers, and audit your processes to make sure people are doing what is expected. Time to perform a management review. Time to analyze data.
Without a doubt, all of this is still going to be occurring with or without a formal management system except for the managing of the documents. Even some of this would still be necessary even if there were no formal management system.

What about the management review? If a company who doesn’t have staff meetings (management reviews); where the company’s progress to its goals and its problems are reviewed, where plans are made for the future; then how would the managers of the company communicate and know the expectations for the future? So even without a management system, some sort of management review is necessary.

If a company does not address its nonconforming material including analyzing and try to prevent it, they waste money. If customers ask for responses and get none, customers are upset. This costs money.

So really what extra is done? Managing of documentation.

Why Does Managing of Documentation Cost So Much?

Usually, because there is too much documentation. Many companies who have been certified to ISO 9001 for many years and many revisions to the standard still have a system that met the requirements of the 1994 standard!

With the 2000 version and now the 2015 version, documentation should be only what is necessary to control processes and to mitigate risk. This should be less than 50 pages in a large corporation.

Note pages, not documents! Fifty pages of documentation. If your management system seems to be costing you, look at the number of documents that add no value and lean the documents. This is a way to decrease the cost of the management system.

How Does Having a Quality Management Save Costs?

The purpose of the ISO 9001 standard and the other quality management standards such as AS 9100, AS 9120, AS 9110, and TS 16949 are to ensure the production of consistent products and services and to ensure the system is continually improving.

Consistent products and services that meet customer requirements save you and your customers’ costs. Customers get what they expect. Your processes produce products and services that meet requirements; nonconforming products and services do not subtract from profit. Every manufacturing process can experience some loss and still be healthy. Each manufacturing facility must understand the reasons for the loss. The loss not understood is wasted knowledge. If products and services are not consistent, if rework is occurring, if the product is being returned, then the management system is not meeting the requirements of the standard to produce consistent products and services. Thus, Corrective Action should be pursued to determine the root cause of not having consistent products and services. The root cause must be addressed with actions to ensure the products and services become consistent.

Consistency applies to the office as well as in the plant. What causes inconsistencies in the office? What causes extra work? These inconsistencies cost! Launching pursuit of understanding the sequence and interaction of the office processes (support processes) is essential when looking for those inconsistencies and improving the processes. Having a consistent products and services come from the office is an essential part of saving costs of manufacturing the products and services.

Consistent products and services save money.

Sustaining Improvements Decrease Costs

When companies implement Lean/Six Sigma, Layered Process Auditing, and other programs that give improvement, the change is often short lived.  The improvement does not last.  It does not become part of the culture.  Why?  Often the improvements from programs do not get written into the quality management system as improvements.  Hence, the quality management system does not assist in keeping the improvements.  Writing the improvements into the processes, result in good investments.  Changes become part of the fabric of the way things are done and internal audits ensure the changes are in place per the plan while sustained improvements decrease costs.

Risk Assessments Decrease Costs

When a risk assessment discovers a potential weakness, controls are planned to address the risk, to mitigate the risk.  These controls tell us what are the important actions that must be performed to prevent the risk from becoming reality.  If a document is not helping mitigate a risk, why does it exist?  Risk Assessments can be used to decrease the costs of documentation.  Elimination of documents that do not help make more consistent products and services and improve the management system is necessary.

Summary of How a QMS Decreases Costs

Decreased costs come from more consistent products and services and by a constant pursuit of improvement.  This primarily occurs from two sources:  1.  By determining the necessary documentation and eliminating unnecessary documentation.   2.  The pursuit of consistent products and services.  Both yield improvements in the way products and services are produced and the improvements in the management system.

PECB 

Certifying against ISO 9001 as the main principle of assuring towards quality management systems is shown to decrease costs, substantially. Further, ISO 9001 implementation did show the success of business processes and performance improvements. Suitable for all kinds of organizations, PECB has demonstrated to provide efficient management processes to a large number of organizations through effective training methods of ISO 9001.