When you decide to implement a quality management system in your company, you actually decide to implement three systems:
- Process Management System
- Management by objectives
- Quality Management System
Each of them provides your company with specific benefits that can be measured and expressed in Polish zlotys. These arguments should convince you to treat system implementation as an investment. If it isn’t, it doesn’t make sense for you to waste your money and valuable time.
First, by implementing a quality management system, you ensure that your employees correctly identify the real (physical: real quality) and hidden (subconsciously expected: perceived quality) customer needs, and thus:
- – the probability of a transaction will increase,
- – the probability of correct contract performance will increase to 100%.
In this case, the number of valid complaints will drop to 0%. This will reduce the costs of considering complaints by 40% to 80% (the costs of complaints in a statistical company range from 5 to 20% of the sales value). Considering that the margin in the construction industry in very good conditions amounts to 5% of the contract value, the replacement of one material composition or the working day of a working group may make you add to the business.
We will not delude you with increased sales, because in Poland we are only learning to pay attention to quality attributes, and in most cases the price decides. Regarding sales, we assume that there are no changes in the sales volume before and after the implementation of the system.
Thanks to the introduction of the process management system, i.e. the sequential analysis of the company’s activities, we are interested in the cycle of activities from the moment the customer’s need arises until it is satisfied and paid by the customer. This allows us to:
- – Shortening the company’s response time to the client’s needs (the time of acquiring the client and satisfying his needs), and thus increasing the efficiency of production (service) processes
- – Shortening the communication channel and making it immune to external and internal disturbances.
The effect is a reduction of operating costs from 1% to 10%. The largest labor productivity growth surveyed was around 30%.
Attention should also be paid to the optimization of material consumption, which saves 0.5% to 3% of material costs.
You may be surprised that in some enterprises we encounter a situation where an entrepreneur, or rather his employees, believe that suppliers dictate to them the conditions under which they can purchase goods or services from them. It is you who leave the money with them !!!
This can reduce your purchasing cost by 1% to 5%. This should be investigated!
Sometimes it happens that a company takes part in tenders that have the ISO 9001 requirement in their specification. In this case, there will be a sharp increase in sales on a new market!
To sum up: (minimal value)
- Sales increase: 0%
- Reduction of complaint costs: 40% (2.5%)
- Increase in labor productivity: 1%
- Optimization of material consumption: 1%
- New market: unlimited?
With the average annual turnover of the company at the level of PLN 2 million, with a dream of 10% net, this gives us:
- Sales increase: 0%
- Reduction of complaint costs: PLN 40,000
- Increase in labor productivity: PLN 20,000
- Optimization of material consumption: PLN 10,000
- Estimated savings in 1 year: PLN 70,000
The given values are average values, we have not included:
- material consumption optimization costs
- savings on suppliers
You must remember that the average cost of implementing a quality management system in a trade, service and production company employing about 50 people is only PLN 45,000 (PLN 30,000 implementation, PLN 15,000 certification of the system), while the cost of maintaining the certificate is within 3 years is PLN 10,000.
Counting in three years we will save an average of 210,000. PLN by spending 65 thousand. PLN, which gives us the difference in favor of the system in the form of 145 thousand. PLN.
Quality is free!
autor: Mariusz Mazur
