Measuring benefit of QS9000

[Steven Sulkin]

I am trying to put together a format to communicate the QS9000 project to the company. My objective is to communicate how QS relates to ISO, progress towards completing QS, and the benefits of QS to the bottom line.

The first two are complete, but I need something to measure the benefits. I am leaning two directions and would like some opinions.

First, use the balanced scorecard to show improvement in key indicators and just forget the overall dollar benefit.

Second, try to guess the benefits using quality costs.

I am concerned about attempting the second, but want to show benefit in terms everyone can understand. Opinions??? Experiences???
Just plain sympathy???

 

[Scott Knutson]

Steve -
My sympathies, my sympathies, my sympathies! I know how it feels. As a matter of fact, I am making a presentation this morning as part of our institutionalization effort that speaks directly to bottom line results. I am using data from the recent AIAG/ASQ survey. I can't remember where I found the data (it wasn't at the ASQ or AIAG website - at least I couldn't find it again), but I'd be happy to email it to you if you think it would help. Some pretty impressive numbers, really.

 

[Steven Sulkin]

For clarification, I am not talking about generic benefits. I have seen consultants put numbers to it, (cost of consultants, average benefit, etc.). I am talking about an ongoing number, benefits that are hitting our bottom line from our activities. For example, a team recently corrected a process problem that resulted in a sustained improvement in returns. This is an easy number to get at, but many are not. Cycle times, improved Cpk, improved %T are difficult to quantify in dollars.

 

[Marc]

Check out:

<a href="http://Elsmar.com/cgi-bin/archiveboard.cgi?read=2559">String from old forum archive.</a>

 

[Scott Knutson]

Steve -
I guess I'm not sure how specific you want to be, but I've got numbers like - 2:1 R.O.I after certficiation; cycle time improvements from 15 day to 1/2 day - those types of numbers, plus a whole lot of generalized data - 74% of 613 companies surveyed experienced improved productivity after certification - if this sounds like what you want, let me know.

 

[Steven Sulkin]

I guess I am asking a new question here. I am trying to measure the benefits within MY OWN company. How do I tell my management how their system is performing?

I am promising them that QS9000 will benefit their bottom line. I believe this to be true, but I have to find a way to measure it without hiring a whole staff to do it. As I said in my original post, I also run into vague areas where quantitative numbers are difficult or impossible to get.

What I envision is a number that I can tell my management and company monthly that says, hey guys, quality has saved us $XXXX this month. Its all because you guys found problems and fixed them. Congrats.

This is a critical issue for all quality professionals. How do we quantify the benefit of our quality system to the bottom line? Business are getting leaner and wont tolerate holding on to staffs that dont hit the bottom line. We have to share more than vague statements about how consistent our product is. I mean who really cares how high our Cpk is? If it doesnt get us new business (satisfy customer), and reduce costs (scrap) I wouldnt spend a penny on it. I have demonstrated in a limited number of cases how improving Cpk reduced scrap and lowered our cost significantly enough that it shifted our monthly profit statement for a product. I am just wanting to do it more consistenly.

Whew! Sorry about the tangent, but I believe this is critical to the future success of our field.

Thanks for your input on this topic. Its appreciated.

 

[Steven Sulkin]

Clap, clap, clap.

Thank you Marc. That is exactly what I will do.

 

[Marc]

The problem is you're asking a question everyone asks. Want to know how? You use measurables. What are you currently tracking? What should you be tracking?

You can take a snapshot of where you are now with respect to your current measurables. What are your current measurables? I don't know - maybe tell us here and we can comment.

But - bottom line is you have to take a snap-shot of 'NOW' and make your hypothesis (prediction) to management as to what or which will improve. Your proof will be in comparing the 'BEFORE' to the 'AFTER'. Be careful to choose what you believe to be appropriate measureables.

Some things are harder to measure than others. For example - new business. How do you really know what new business is due to the ISO or QS?

Other things are real easy - How much has the scrap gone down? How are customer complaint numbers trending?

Some things are not always so obvious. How is your Up-Time looking (and WHY - there can be many factors - one of which might be a concurent TPM implementation while 'new' training systems may be a large factor as well...)? How about operator errors? Up or down? These not so obvious things can also be hard to tack a $ figure on.

The bottom line is - what are you tracking regularly and what *should* you be tracking regularly? Make your list. Think about what should happen *within your company*. Pick your representative measureables. Make hypothesis for measurables. Implement. Monitor specified measureables.

Does this help?? Or have I just confused things for you?

[Note: This message was edited by Marc Smith]

 

[Scott Knutson]

I would also look at very specific cycle times for your products. Very often we really don't know what we do, if we duplicate efforts, if we have lots of non-value added stuff until we begin to document it. Once documented, we see the errors of our ways and try to remove unwanted stuff, thus improving cycle time. Increases in Corrective/Preventive actions should also occur due to more reviews (usually) and accompaning actions.

Hope this helps,
Scott

 

[Marc]

Well, Steve, now that some time has passed.... What say you?

What did you end up doing and how has it worked out?