Tackling the cost of quality is not only about reducing the number of defects, but it also involves evaluating the entire quality management system. To calculate the cost of quality, there is one widely accepted method, the PAF model which stands for prevention, appraisal, and failure. It divides quality costs into good and poor. Good quality includes prevention cost and appraisal cost, and poor quality includes internal and external failure cost.
“The PAF model is a combination of ideas developed in the 1960s by multiple quality gurus including Crosby and Juran. Their concepts emphasized that it is better to have more upfront investment utilizing preventive activities to minimize the costs caused by quality failures later in the product lifecycle. Research shows that the cost of poor quality (including rework, returns, and reduced repeat sales) can range from 15%-35% of business costs.”
When improving the efficiency of your quality management processes and reducing the cost of failure, you can use your savings in investing in better prevention methods (better machines and tooling, more training…) which will improve quality even more.
Following are a few ways to reduce quality costs through QMS:
1- Solve Problems Faster
QMS helps solve problems faster by addressing adverse issues before systemic issues occur.
- CAPA Process automation: From the review to root cause and actions to follow-up, a QMS keeps Corrective Actions moving forward to ensure problems don’t go undetected.
- When dealing with a large list of CAPA’s risk-based filtering allows you to prioritize work, preventing costly delays.
- QMS allows you to find the source of a problem faster by integrating multiple data sources across your organization from your Manufacturing Execution System to your Supplier Management data.
Embracing the benefits of a quality management system provides a methodical approach to problem-solving. Doing so reduces quality costs by preventing recurrence.
2- Change Management Tools
Change is important today to keep up with the competition, however, it is challenging considering the sheer cost of any proposed change.
QMS helps you with making the right decision and reduces the uncertainty involved. With change management tools tracking costs, you can analyze the risks associated with various options and plan for a smooth transition.
3- Reducing Operational Errors
Always keep in mind the human element and never underestimate it. No matter how much you work on your production system, you might still face quality problems if your employees don’t have adequate training.
- It improves Employee Training programs: A QMS ensures your employees receive adequate and appropriate training taking into consideration their location, department, and role, and gives you the ability to track proficiency test results.
- It raises visibility: An integrated QMS gives you real-time data and automated alerts, which will help you prevent problems before occurring and intervene at the right time, which will also save you money.
- It automates workflows: Automated workflows mean you can customize procedures, and a QMS helps standardize your process while ensuring important requests and objectives keep moving.
4- Effective Risk Management
Quality cost reduction requires effective risk management. A quality management system allows you to build risk tools within any process, including bowtie analysis, decision trees, and risk matrices. Here are a few examples:
- Audit Management: Audits generate huge amounts of data, which often leads to an extensive list of potential action items.
Audit management capabilities help classify which items are high-risk (and likely contributing the most regarding quality costs), helping you prioritize follow-up strategically.
- Legislative and Regulatory Requirements: Assessing regulatory compliance might require your company to address multiple gaps. The benefit of a quality management system is that it allows you to identify high-risk gaps that need to be fixed first. Doing so ensures you’re spending time in the most effective way possible. That includes software validation regulations governing life and health science industries, where up-to-date software is an absolute requirement.
- Reporting: when you have centralized reporting capabilities using risk as a common yardstick, this allows your teams to make more informed and strategic decisions and will eventually reduce quality costs.
The central to continuous improvement is risk-based decision-making. It’s an objective tool that determines whether your work has reduced risk to acceptable levels or not.
5- Supplier Quality Improvements
A QMS includes supplier management tools that will allow you to effectively increase supplier communication and help them understand your company’s needs. Supplier ratings will help you identify your best-performing supplier and who’s contributing the most regarding quality costs. Faster problem resolving is guaranteed as well, through secure cloud-based portals that enable suppliers to view open corrective actions. Lastly, QMS provides reporting tools that give real time access to useful data in supplier negotiations.
If you want to know more about “Reducing Your Cost of Quality” watch our on-demand webinar.