How do you measure the return on investment (ROI) of quality certification and accreditation?

2 Identify the relevant costs and benefits

To measure the ROI of quality, you need to identify and quantify the relevant costs and benefits of quality certification and accreditation. This may require research, data analysis, and estimation. Examples of costs include fees for certification and accreditation bodies, consultants, or external auditors; time and resources for preparing and implementing quality standards and procedures; investments in equipment, software, or personnel for quality control and improvement. Benefits may include increased sales or market share due to customer preference, trust, or compliance; reduced waste, rework, or warranty claims due to fewer defects or errors; improved productivity, efficiency, or innovation due to better processes, systems, or culture.

3 Calculate the ROI of quality

Once you have the costs and benefits of quality certification and accreditation, you can calculate the ROI of quality using a simple formula:

ROI of quality = (Net benefits / Total costs) x 100%

For example, if your net benefits are $100,000 and your total costs are $50,000, your ROI of quality is:

ROI of quality = ($100,000 / $50,000) x 100% = 200%

This means that for every dollar you spend on quality certification and accreditation, you earn two dollars in net benefits.

4 Compare the ROI of quality with alternatives

To evaluate the effectiveness of quality certification and accreditation, you may want to compare the ROI of quality with other alternatives. This could include not doing anything and maintaining the current level of quality, choosing a different quality standard or scheme, or investing in other areas such as marketing, R&D, or customer service. Comparing the ROI of quality with alternatives will help you make informed decisions about the best use of your resources and the optimal level of quality for your product.

5 Monitor and adjust the ROI of quality

The ROI of quality is not a static measure and may fluctuate due to changes in customer expectations, market conditions, quality performance, costs, and benefits of quality certification. To ensure that the ROI of quality remains positive and relevant, it’s important to monitor and adjust it periodically. This might involve collecting and analyzing new data, revising assumptions, or modifying actions to improve the ROI of quality.

6 Communicate and report the ROI of quality

Finally, you should communicate and report the ROI of quality to your stakeholders, such as customers, employees, management, partners, and regulators. This will demonstrate your commitment to quality and value, motivate and engage employees in quality improvement and culture, justify and support your quality strategy and budget, align and collaborate on quality goals and standards, and comply with regulations. Communicating and reporting the ROI of quality can also enhance credibility, transparency, and accountability. Furthermore, it can be used as a feedback tool to identify strengths, weaknesses, opportunities, and threats for product quality.