Do you want ROI or risk a few billion?

There is a course I am involved with that has become a tradition; training outside vendors policy and procedures. For this article I will call it “Vendor Course ABC” or “VC ABC”. This training was established during a crisis as part of a strategic objective at that time. Although we collect level 1 and 2 evaluations and adjust the course each time we conduct it, we have yet to calculate the ROI. Why is this?

ROI can be considered the “magic number” as to whether a training has benefited the business. In some companies it is expected in the training report. However, there are some situations where the ROI is either too difficult to calculate or the cost of the course is balanced against other potential costs or risks. VC ABC falls into both of these categories.

First of all, the cost is difficult to calculate. There are significant costs involved in VC ABC- 3 trainers spend 2 days conducting the training. Meanwhile, the supplier representatives have to travel, train and spend 2 full days in training. This is all calculable, but what about the benefits? To gather the data from hundreds of suppliers over tens of thousands of parts in millions of units over time is next to impossible.

Next, the potential costs or risks of not having this training are very high. The suppliers make critical parts and if one of them fails the entire safety reputation of the company might be on the front page of the newspaper. This could cost billions of dollars. In addition, we rely on the suppliers to follow the policy and procedure to make quality parts. Again, the quality reputation of the company is at risk if these parts don’t meet our customers’ expectations, still risking billions of dollars.

So sometimes we have to build and deliver the training the best we can, not to reach a magic ROI number, rather to mitigate billions of dollars of risk.

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