Financial Benefits of Implementing ISO 9001
Are you having a hard time deciding if ISO 9001 will be beneficial for your company? Are you in a dilemma on investing a huge amount of money in getting an ISO 9001 certification and not sure if the certification will bring you any financial benefits in future? These are questions that will come to any leader’s mind when they start their certification journey. We will try to answer few of these questions through this article.
Financial benefits may not be evident immediately after certification but companies do benefit from ISO 9001 certification in the long run. These benefits are achieved through
- Improvement in internal processes which reduces operational cost
- Improved reputation in the market which increases sales
The combined effect of these 2 factors i.e. reduced cost and increased sales, impacts the company’s financial performance positively.
Let’s explore how ISO 9001 helps in:
- Reducing the Operational cost and
- Increase in Sales
Reduction in Cost
Operational Cost reduces because of improved processes that are put in place after ISO 9001 certification is done. Companies which actually see the reduction in cost are those which actually implements that processes and keep a track on it in not losing focus. The companies which lose focus on the processes after the certification is done, will not reap any of the benefits of this certification.
The basic premise on which ISO 9001 is built is bringing value to the customer and continual improvement. These 2 factors are very important differentiating factors in your business as these give you an edge over your competitors. Your competitors use similar processes to design products, they use similar material, even sell and distribute them like you do, how do you bring in the differentiating factor? What you need to do is build uniqueness in your products and create value for your customers. Continually improving the processes is how you create excellence and become globally competitive.
There is high competition today, to retain customers and improve market shares. Customers have high demands; they cannot be pleased with just their requirements being met; they want value for money. Industries today need to look beyond customer satisfaction, they need to strive for “customer delight” and this is at the core of ISO 9001.
Culture of continual improvement helps an organization in many ways. Below are some of the areas on how continual improvement create value for the customer and reduce operational cost for the organizations.
- When an organization develop a culture of continual improvement and promotes this culture in the organization, each person in the organization strives for it with improved processes and tools. ISO 9001 also focuses on this area and mandates organizations to have engaged and empowered people who are competent and at the same time highly motivated. This allows them to meet or exceed customer requirements with increased capability.
- ISO 9001 promotes identification of new services or opportunities which allows an organization to serve a larger number of customer and expand their customer base.
- Processes are streamlined when you create your Quality Management System as per the requirements of ISO 9001. This along with improvement in processes, bring in more efficiency in the processes as it takes out non-valued activities and decreases the time and effort needed to provide the service. High-quality outputs with fewer failures reduce time required to fix failures (rework). Less rework also means that customers will not need to have multiple contacts with the organization to get what they need, and their overall satisfaction with the service they receive will be higher.
- Each customer looks for improved quality, and when an organization processes are improved, or new services are created to provide the highest level of quality, this in-turn improves customer’s services and a customer experience on which they can rely.
- Having faster processes with reduced wastes helps an organization to serve more customers, and reduce the time they have to wait for services. Less waste and rework in the system reduces the cost to provide the service/product to the customer and these savings can be easily passed on to the customer and what customer gets is – The Value for Money.
- These process improvements not only benefit customers but also help reduce operational costs of an organization. Efficient processes can be accomplished in less time and effort. Companies can reduce resources because of this, which lowers operational costs. With the same number of resources and people, organizations can now deliver more. The systems become more efficient which gives people time to focus on business growth and to accomplish goals that they previously could not address due to lack of time.
- Ultimately, lower costs to the organization mean more profit or lower costs to customers. Offering superior services at a lower cost makes the organization more appealing to customers and provides an operational advantage over competitors.
Increase in Sales
This happens in 2 ways. The first one is the achievement of the ISO 9001 certification itself. Once you project yourself as an ISO 9001 certified company, it increases the trust of your potential customers in your company. They believe that you have streamlined processes and the quality of the products and services will be consistent. Your reputation increases many-fold which brings in more business for the company. Many companies require ISO 9001 certification when they start searching for contractors and the certification will help you in getting shortlisted at the proposal stage.
Secondly, when you have improved your operational processes and passed on the benefits to your customer, you get repeat orders. You retain your customer base and the same customer recommends your products and services to other potential buyers, which increases your sales further. They become your brand-ambassadors and with little efforts from your side, you add many new customers into your system.
The ISO 9001 certificate in itself, a culture of continual improvement and high focus on customer satisfaction which are at the core of ISO 9001 certification- All these factors contribute in improving your reputation and this brings in more business.
The combined effect of reduction in operational cost and increase in your sales prove to be highly beneficial to a company financially. The Return on Investment for ISO 9001 is high and can help you achieve the business goals that you have set for yourself and your organization.