Do you work in a buying office? Are you requested to keep costs as low as possible? Do you need to justify how every investment will contribute to cut costs?
If implementing quality inspection software to improve your inspections is a solution you're looking at, but you need to be able to show its ROI, then this article is for you.
In which ways have SynControl customers gained a positive ROI having used our software for a year or more?
We have spoken with several customers who have been using SynControl's software for more than a year, and they told us about the savings they have achieved. If you're considering software at the moment, these points help show the financial benefits to using such a solution.
Let's look at some of the issues that they faced with their quality inspections and eight key ways that they gained a return on their investment once they had adopted software:
1. Time saved for each report preparation
This is what inspectors and their managers realise right away: no more late nights preparing reports in Word/Excel!
Assuming you can have your inspectors spend one extra hour a day at work (for example, reviewing samples or following up on past issues), here are the calculations:
- Typical quality inspector salary in China today is about 10,000 RMB a month (when travel expenses and the New Year bonus are included). That’s about 1,500 USD a month.
- Their time in the factories – actually doing their job, not travelling or eating or reporting – is about 5 hours a day, for an average of 4 days a week (total 80 hours a month). One hour is worth about 19 USD (1,500 / 80).
- If they can spend one extra hour a day at work, the benefit for the company is (1-hour x 19 USD) x 4 days a week x 4.3 weeks a month = 326 USD per inspector, per month.
2. Lower staff turnover
It is a fair statement that inspectors enjoy a better family life simply by not having to prepare long reports at night. An obvious benefit is that they are more loyal to their company. Here is how it saves you money:
- An inspector that quits and is replaced costs about three months of his salary (in paperwork, time searching and interviewing the replacement, training, and lower productivity & quality of the replacement’s work).
- Let's assume the turnover gets down from 3 to 1 a year, in a team of 10 staff.
- 2 people x 3 months x 6,000 RMB a month = about 5,600 USD of annual savings.
3. Performing some jobs in 1 day rather than two days
Some clients have noticed that a QC job can be completed in few days. Here is an example:
- Five models of microwave ovens have to be checked. There are many checkpoints, many photos to capture, etc.
- Using Word/Excel, only 2 to 3 reports could be prepared at night. It has to be spread over two days.
- When using a quality inspection software, reporting is automated, which means all five models can be checked on the same day.
If this type of situation comes up in your company, you might be able to do the same amount of work with 1 or 2 fewer inspectors. As I wrote above, one may count the fully-loaded salary at 10,000 RMB a month.
4. Force inspectors to spend 5-6 hours working at the factory
Did you notice that some inspectors come in at 2 pm and are gone by 4 pm? The difficulty in monitoring them on a daily basis is quite frustrating.
In some cases, the amount of work truly is only 2 hours. If they use a mobile application, you should be able to have this information. Why not ask them to do more? Maybe they can review samples, check the quality of another order that is on the lines or do something else.
Again, there is often the possibility to do the same amount of work with fewer inspectors.
5. Cheaper hardware
Do you need to buy new laptops and new digital cameras every three years to a team of 25 inspectors? It is not a negligible line in your budget.
If they can use tablets, you can probably cut that budget by 40-70%. And, if they use their own smartphones, you save even more! So an app-based quality inspection software that runs on mobile devices mitigates new hardware costs.
6. All the information is in one database
How much time is wasted in your office looking for the right files, double-checking if a file is the latest version, and emailing the correct information to the right people? Probably hours every week in your quality department alone!
In some companies, one employee is assigned to dispatch all the correct information (an office employee like this who can read English in Hong Kong or Shanghai costs 1,000 to 2,000 USD a month, and sometimes even more).
However, with a correctly configured software, each user is shown the right information without human intervention, and this office employee can be re-assigned to more productive tasks instead, gaining your company a far better ROI on their relatively high salary.
7. Speed of decision making
If reports can be reviewed at 5 pm in the office, and decision makers have the information very quickly, does this save money?
In some cases, it does. Analyzing some problems one day later might result in the inability to make the necessary corrections before the closing date. Missing a shipping window sometimes costs tens of thousands of dollars (if a portion of the goods is to be sent by air to make up for the delay).
Putting a dollar figure on this benefit is difficult. If you had costly delays in the past, you can project what you would have saved this way.
8. Fewer quality issues hit your customers
This is, by far, the most significant source of saving for a company in the long run. Let’s say you were generating 100,000 USD a year in profit from a customer. Let’s say they are disappointed by quality issues you failed to detect, and they give half their orders to your competitor.
The cost? 500,000 USD in lost profit over the next ten years!
How to avoid this situation? A well-implemented quality inspection software package certainly helps make inspectors more likely to find issues. For more details, you may refer to our free e-book about the best practices for managing QC inspectors.
Have you seen an ROI from using inspection software?
In which ways have received a return on investment by switching your inspectors onto software instead of using old methods like spreadsheets and paper?
Are you suffering from any of the issues mentioned in this post? If so, it might be time to consider software solutions for your inspectors. Feel free to speak to us about SynControl, and how it may benefit your business.