# FMEA Corrective Action ROI Calculator > Source: https://netray.co/tools/fmea-corrective-action-roi-calculator > Publisher: Netray (netray.co), AI and integration engineering for ERP and manufacturing systems. > Section: Free Tools ## Short answer Turn a recommended action into a business case: avoided failures, annual savings, net benefit, ROI and payback in months. ## Category quality ## Industry Discrete Manufacturing ## Audience - Quality manager - Process engineer - Plant manager ## Tool **Kind:** calculator **Currency:** $ **Inputs:** #### Annual volume **Key:** volume **Type:** number **Default:** 500000 **Min:** 0 **Step:** 10000 **Unit:** units **Help:** Units produced per year through the affected process. #### Failure rate before action **Key:** ppm_before **Type:** number **Default:** 3000 **Min:** 0 **Step:** 100 **Unit:** ppm **Help:** Failures per million units from history or the FMEA occurrence basis. #### Failure rate after action **Key:** ppm_after **Type:** number **Default:** 500 **Min:** 0 **Step:** 100 **Unit:** ppm **Help:** Expected rate once the action is proven. #### Cost per failure **Key:** cost_fail **Type:** number **Default:** 45 **Min:** 0 **Step:** 5 **Unit:** $ **Help:** Scrap, rework, sorting, returns and admin per failure. Use fully burdened cost. #### One-time action cost **Key:** one_time **Type:** number **Default:** 60000 **Min:** 0 **Step:** 1000 **Unit:** $ **Help:** Fixtures, sensors, validation, training. #### Running cost per year **Key:** running **Type:** number **Default:** 8000 **Min:** 0 **Step:** 500 **Unit:** $ **Help:** Maintenance, calibration, added labor. #### Evaluation period **Key:** years **Type:** slider **Default:** 3 **Min:** 1 **Max:** 10 **Step:** 1 **Unit:** years **Outputs:** #### Failures avoided per year **Key:** avoided **Expr:** volume * (ppm_before - ppm_after) / 1000000 **Format:** integer #### Gross annual saving **Key:** saving **Expr:** avoided * cost_fail **Format:** currency #### Net annual saving after running cost **Key:** net_annual **Expr:** saving - running **Format:** currency #### Net benefit over period **Key:** net_benefit **Expr:** net_annual * years - one_time **Format:** currency **Primary:** true #### ROI over period **Key:** roi **Expr:** if(gt(one_time + running * years, 0), net_benefit / (one_time + running * years) * 100, 0) **Format:** percent **Primary:** true #### Payback **Key:** payback **Expr:** if(gt(net_annual, 0), one_time / net_annual * 12, 0) **Format:** months **Description:** Shows 0 if the action never pays back. **Chart:** #### Net benefit vs failure rate after action **Type:** line **X:** ppm_after **From:** 0 **To:** 3000 **Steps:** 30 **Series:** - net_benefit **Disclaimer:** Results depend on your inputs. Include hidden costs such as customer escapes, line stoppages and expediting for a fair figure. ## Content **Intro:** Recommended actions compete for budget. This calculator converts an expected change in failure rate into money, so a PFMEA action can be compared with other capital and engineering requests. **Sections:** #### How to use the calculator **Body:** Enter annual volume, the failure rate in parts per million before and after the action, and the fully burdened cost of one failure. Add one-time and running costs of the action and choose an evaluation period. The calculator returns failures avoided, gross and net annual savings, total net benefit, ROI and payback. The chart shows how the net benefit changes if the action performs worse or better than planned. #### The formulas **Body:** Failures avoided equal volume times the ppm difference divided by one million. Gross saving equals avoided failures times cost per failure. Net annual saving subtracts running cost. Net benefit equals net annual saving times years minus the one-time cost. ROI divides net benefit by total spend over the period, and payback divides the one-time cost by net annual saving, expressed in months. The method is simple, undiscounted cash flow. **Bullets:** - For long periods, discount the cash flows in your finance model. - Do not count the same failure cost twice in scrap and rework. #### Reading the result **Body:** A negative net benefit or a payback longer than the product life suggests the action is not justified on cost alone, though safety or regulatory drivers may still require it. Use the chart to find the break-even failure rate, where the line crosses zero. If your expected performance sits close to that point, treat the action as risky. #### Common mistakes **Body:** Teams commonly assume a poka-yoke removes all failures. Real effectiveness is rarely 100 percent, so test a pessimistic ppm. Another mistake is using only scrap cost and ignoring downstream costs such as warranty, containment and customer charges, which often dominate. **Cta:** Netray can pull scrap, rework and return costs by part from your ERP so the cost per failure in this calculation is evidence-based. **Faq:** #### Where do I get the ppm before? **Answer:** Use nonconformance or scrap records divided by units produced over a stable period, ideally 6 to 12 months. Convert to failures per million units. #### What is cost per failure? **Answer:** The total cost of one failure event: material, labor, rework, sorting, freight, customer charges and any administrative time. Use a weighted average for mixed failure types. #### Is this discounted? **Answer:** No. It is simple cash flow. For projects longer than three years or with large capital, run the same inputs through a discounted model. #### What if payback shows zero? **Answer:** Zero means net annual saving is zero or negative, so the one-time cost is never recovered. Check running costs and the ppm assumptions. ## Search terms fmea action roi, corrective action cost benefit calculator, cost of poor quality calculator, quality improvement payback calculator, fmea business case, defect reduction savings calculator, poka yoke roi calculator, ppm reduction savings --- Talk to an engineer: https://netray.co/contact?intent=erp_ai | Machine catalog: https://netray.co/agent/catalog.json