What Does a QMS Cost for a Mid-Sized Manufacturing Plant?

Quality issues are costly, but quality prevention systems can be costly too. Many plant managers and owners wonder how much they should invest into their quality program in advance, and the truth is, it depends on a few variables. Knowing these variables in advance can help you plan and budget without any nasty surprises in invoices. Quality Management System is an organized approach to processes, procedures, and documentation that allows for a manufacturing company to produce consistent products meeting all customer and governmental standards. In a medium-size plant, which is basically a manufacturing facility that employs between 100 and 500 people, the Quality Management System affects production, procurement, maintenance, and engineering functions of the plant; therefore, it costs more than just software purchase and a piece of paper.

The total cost of a Quality Management System is divided into several groups: software costs, consulting, certification, training, labor, and maintenance. This guide will explain what each of these expenses is, give realistic price estimates for each group of costs in US dollars, and show how to budget for a QMS cost without any nasty surprises. All prices are industry-wide averages and not quotes, thus, your expenses may vary.

What Is a QMS and Why Do Cost Differ So Much?

A quality management system includes all processes, documents, and records that ensure a company provides reliable products and meets customers’ demands. QMS can be quite a simple document control process and a corrective actions record system or complex software solution integrated with your ERP and shop-floor systems. Plants usually develop their QMS based on an existing standard such as ISO 9001, IATF 16949 (auto industry), AS9100 (aerospace), ISO 13485 (medical devices).

It mostly depends on your initial situation whether your plant already has documented processes and trained personnel or not. The plant which has a developed infrastructure spends much less money than a plant which starts development from zero. In this case, you need to fill in just some gaps, while another plant needs to develop its QMS completely.  

The industry you belong to is another important issue. Some industries, including automotive, aerospace, and medical devices, involve more complex documentation, validation, and traceability and thus incur more costs and fees associated with those aspects. This is the reason why two plants that have the same size may have significantly different QMS budgets.

How Expensive Is It to Purchase QMS Software?

The first question to ask is what kind of platform you are going to use paper or software. The former type will cost less than $5,000 to set up but won’t be scalable enough. Lost documents, problems with version control, and ineffective corrective actions will eventually cost even more than a software license. Cloud-based QMS platforms are the most common option for mid-sized plants. Pricing will range from $30 to $150 per user per month or one-time annual fee for a platform license. For a facility that has 25-75 users, that will translate into $10,000-$50,000 annually. The core modules will include document control, non-conformances and CAPAs, audit management, supplier quality, and training records.

On-site and custom systems will require license fees ranging from $50,000 to $200,000+ plus costs of maintaining IT infrastructure and upgrading the system periodically. These types of systems will be useful for those plants that have unique security or integration requirements but are hardly the cheapest option out there. The connection to ERP/MES systems will cost an additional $5,000-$30,000 but it eliminates duplication and increases traceability.

What Is the Cost of ISO 9001 Certification?

If your clients ask for certification, you would have to pay the accredited body of certification for audits. The first time around, the initial certification audit costs somewhere between $5,000 and $20,000, depending on how many employees you have and how many sites there are. The annual surveillance audits would cost you $3,000 to $10,000 per year, while recertification audits cost about the same or less as the initial one every three years. Application and administrative charges would be a few hundred dollars up to a couple of thousands. It costs more when it comes to industry-specific standards, as it takes longer to do the audit and requires a specific qualification of the auditor. It is best to get quotes from at least three certified organizations.

What Factors Affect QMS Cost?

Various factors can increase or decrease the budget for QMS implementation. Larger plant size and larger workforce increase the cost due to higher requirements for training, documentation and audits. Similarly, more sites will raise the cost due to the higher cost of implementation and audit. The industry and the selected standard also make an impact on cost. In regulated industries, higher control requirements are expected which will also raise the budget. Another factor that makes an impact is quality maturity, the higher is the difference between the required and existing quality maturity, the higher will be the cost. Finally, software selection, ratio of internal and external resources, as well as geography, will affect the total cost.

What are the Costs that are Overlooked by Many QMS Budgets?

Process disruptions are the most common type of cost to overlook. The implementation of controls and recording can temporarily reduce productivity since it takes time for the team to get used to them. Another cost is audits that may find a lack of instrumentation or calibration. Improved quality means supplier audits.

Audits that have been failed can lead to more follow-up audits which delay certification. In addition, there is an indirect cost which is bad change management. Poor change management occurs when operators do not find the system helpful but just a burden. The implementation of a mature QMS often results in less scrap and rework, fewer customer complaints, quicker onboarding, and a customer base with needs for certification. One bad order or product recall may cost you more than the whole program. To determine ROI, consider the cost of poor quality at your facility. This includes all scrap, rework, warranty issues, downtime, and shipping costs. At facilities lacking good systems, this number may range from 5% to 15% of sales, meaning that any improvement will provide return on investment within one or two years.

What Are Some Ways to Minimize the Cost of Implementation of a QMS?

First, conducting an initial gap analysis would be wise as a way to save money by only buying what is needed. Right sizing also works, as documenting the processes used by the facility, rather than the processes suggested by the template, is always a good idea. Software should be scalable, but one shouldn’t buy modules that won’t be used. Training internal auditors means not having to rely on consultants forever, while phased implementation, starting with document control and corrective actions, will stretch out costs and effort. Comparing at least three certification bodies for the same scope can also result in savings.

Conclusion

A typical cost of implementation of a QMS within a mid-sized manufacturing facility is somewhere between $30,000 and $150,000 in the first year and then about $15,000 to $60,000 per year. These include expenses for software, consulting, certifications, training, and internal personnel, but you may face additional hidden costs if you do not account for them. The most appropriate way to proceed would be conducting a gap analysis and then budgeting in all categories in order to create a viable quality management system that will be feasible for the operation of your team. As an operating asset rather than a compliance expense, a QMS pays for itself by producing less defective products, building better client relations, and ensuring easy compliance with inspections.