4 Tips to Save Money with Internal QC Audits
Last year, US companies set aside $24.7 billion for warranty claims. Sounds like a pretty big number, right? Well, it might surprise you to find out it’s actually 17% lower than it was ten years ago!
The warranty expense rate— that is, the amount of product revenue lost to warranty payouts— has averaged 1% over the last fifteen years. That means if your annual revenue is $100 million, and you’re paying the average on warranty provisioning, you’re shelling out $1 million every year on warranties.
That’s a lot of cash just to settle up for faulty products. Even acknowledging the long-term progress above, it’s far too much to pay when you’re a part of a large or growing organization trying to optimize spending.
Aren’t internal audits are supposed to prevent costs like that?
If you’re not putting your data to work, what’s the point of collecting it? Chances are you’re like most user-facing operations, and significant fragments of your audit data live in an asset management or legacy system where they rarely serve to drive meaningful decisions.
Meanwhile, other bits and pieces battle for space in a filing cabinet or lie buried on the last page of a constantly expanding spreadsheet. All these antiquated systems doom the data they house to be filed and forgotten within the fiscal year.
That data could drastically reduce the cost of replacing or repairing faulty, defective, and below-spec products. But you need the right tools to take that burgeoning pile of files and turn it into fuel for better quality control. Internal audit software is the key to putting that data into action.
Poised on the right platform, you can act on audits and quality analytics, and you can ultimately reduce the amount earmarked for warranty claims. Here are four quick tips for leveraging your data with internal audit software that will save your organization time, money, and a whole lot of headaches.
1. Communicate QC holds on the spot
When audits discover a serious defect on the line, halt operations immediately. Don’t try to “walk it off” on the production floor with your fingers crossed in the hope it was an isolated fluke. Take the time to ensure the problem is resolved before resuming operations.
Check and double check every machine, employee, and product. Don’t be afraid to gather random samples after resuming operations. You’ll want to know if it comes up again. If you’re using mobile audit software, data-driven decisions about halts can occur faster and more efficiently by organizing corrective actions automatically.
Instead of handing off data manually via emails and phone calls, your team can settle issues based on action plans that initialize based on red-flag triggers. Real-time communication means that production holds are understood more quickly, fewer faulty products enter circulation, and the issue can be remediated much sooner.
2. Optimize your audit workflow
If you’ve ever performed an internal or QC audit yourself, you know that it takes a lot of time just to fill in basic information: location, employee name, type of audit, and so much more preliminary data. The average inspector has to scrawl this info in over and over again. Bog-standard forms crippled by boilerplate templates and coated with irrelevant fields only weigh down the auditing process.
These are the form-filling equivalent of a speed bump, and they generate discernible “lag” from execution to analysis. On the other hand, mobile internal audit software is able to autofill product information using existing data models. With the optimized workflow you get from mobile forms, irrelevant fields are wiped away and only the fields that fit the context are shown.
A good mobile app will not only keep delays at bay, it will also prompt the inspector with relevant reference data: what specific features should they check? What does a failing product look like? Auditors won’t waste time repeatedly entering information, and they won’t make mistakes matching quality standards with their observations.
3. Put your data to work right away
Legacy software, paper forms, and spreadsheets all have one thing in common: a total lack of integration. If you’re desperately trying to reconcile and collate data gathered by auditors on a dozen different systems, stop. The only way to put your data in the driver’s seat is to integrate your disparate systems for “one version of the truth.”
Internal audit software will take the manual work of combining all your data and automate it. With robust API integration, you could bring all your far-flung systems together the moment you collect it in the field. Not only would you save yourself a major headache, you’d also reduce the time it takes to find, fix, and prevent issues. Integration with powerful business intelligence tools grants a bird’s-eye view of product quality, and it keeps harmful or faulty products out of circulation.
4. Analyze, adapt, and improve
For most people, visualizing longitudinal data about where things are getting better or worse means hiring a third party to design graphs or spending a lot of extra hours on a single presentation. That’s why integrating your data with a system that provides up-to-the-minute measurables can make a huge difference in how you understand your data.
Internal audit software can sync field data with business intelligence dashboards, making it easy to explore configurable models of all that information. Mapping your QC data is about more than just impressing the bigwigs at a presentation, though. When you chart trends over time, you can draw meaningful conclusions.
If you’re stuck in a QC “holding pattern,” treading water quarter after quarter while warranty claims chip away at your bottom line, this kind of visualization could make the difference. You can trace the root cause of where defects occur: is it just one factory or one supplier shipping all these subpar goods?
Follow these tips and you’re sure to see an improvement in your QC expenses. Keep this in mind: it’s a process— not a quick fix.
We hope you enjoyed this promoted piece as much as we did!