How to optimize the relation between quality costs and profit margin

International researches indicate that production faults and quality costs may reach up to 30% of the total turnover, so any decrease of this amount represents direct higher profits. Thus, by increasing with around 10-15% the costs with preventing the faults one may save over 20% of the costs with identifying the faults and fixing these, so that globally the quality costs decrease consistently.

“One of the biggest issues companies have to cope with is the cost of maintaining the quality, respectively the costs of fixing the quality faults, and their cut means directly a higher profit”, Adrian Bodomoiu, General Manager of Wizrom Software, says.

Wizrom’s ERP solution allows a decrease of over 20% of the costs with fixing the production faults due to the capacity of offering managers an improved project management, as well as the tools to enforce and control the quality.

“Managers monitoring this cost indicator have in WizPro a tool of great use in planning production more efficiently so that they ensure a maximum of quality all along the production flow and in the post-production quality control. The growth potential of profits is substantial. We can imagine a company which traditionally has a 1-digit profit margin and then calculate the potential profit if 10-15% of the operational costs would be cut”, Adrian Bodomoiu says.

In achieving this goal, managers may use Wizrom’s ERP solution to shape and plan the resources and legs of the production process, to set targets, allocate and control deadlines, respectively ensure firm checking of the resources, products and services during acquisition, production and distribution steps.

In the current economic context, such a management tool may make the difference between reporting profit and filing for insolvency.