Quality Management

Management requires everyone to work together for quality
Management requires everyone to work together for quality

A Fundamental Concept for Quality Management

Dr. Joseph M. Juran taught that quality management used the same three processes as financial management. They are:

  • Quality Planning
  • Quality Control
  • Quality Improvement

Quality Management – Quality Planning

Of the three elements, inadequate quality planning is a major source of quality deficiencies. Many of the remedies for quality improvement projects consist of re-planning quality. The best way to deal with poor quality is to prevent it in the first place. The earlier in the process a cause of poor quality can be removed the lower the cost to the company.

Quality Management – Quality Control

In creating quality control it is important to choose what to control, establish a unit of measurement, establish performance standards, measure performance, interpret the difference between actual versus the standard, take action on the difference. This is similar to Dr. Deming’s Plan-Do-check-Act cycle.http://technacon.com/category/dr-w-edward-deming

Quality Management – Quality Improvement

Improvement is created on a project by project basis. The first step is to identify specific projects, organize teams, discover causes, develop remedies, prove the effectiveness of the remedies, deal with cultural resistance, and establish controls to the hold the gains.

Quality Management – Return on Investment

As a rough rule of thumb, the average improvement project is worth $100,000 per year in decrease waste/cost while the average one-time cost is approximately $10,000-20,000.

Quality Management – Lessons learned

Some of the lessons learn through applying quality improvement projects are:

  • The return on investment in quality improvement is among the highest available to managers and quality improvement is not capital intensive.
  • The most decisive factor in the race for quality leadership is the rate of quality improvement

 

http://www.qualitycoach.net/products/jurans-quality-handbook-the-complete-guide-to-performance-excellence-9780071629737.asp

Quality Management follows the same basic principles as financial management, has a high return on investment and a low capital investment requirement.

Responsibilities

Quality is cyclical. Everyone contributes to the responsibilities

Quality is cyclical. Everyone contributes to the responsibilities

Who is Responsible for Quality?

Just who is responsible for quality; the customer or the processor or the supplier? Dr. Juran said they were all responsible for quality.

Customer Responsibilities

The customer must share in the responsibilities to produce a product that is fit for use. They must:

  • Transmit the needs to the supplier
  • Provide feedback to the supplier
  • Obtain feedback from the supplier

Transmitting the need is fairly clear. Provide accurate information as to specifications, delivery and expected costs. Providing feedback to the supplier is also easy to understand, if the product is unsatisfactory, tell them.

It is also necessary to provide positive feedback. At one company a customer service rep always did a little more for her clients. She would follow up on orders and check on their progress, not just in the MRP system but going out to the factory and making periodic physical checks. Thanks to her efforts more than a few errors were prevented. However, her supervisor had a performance measurement of time taking calls. When the rep was in the factory she wasn’t taking calls. There was no feedback system to her supervisor as to the effectiveness and importance of her actions so it did not appear on her performance reviews. Ultimately the rep was terminated.

The last bullet is one that is normally left out. Some of this comes from the concept “the customer is always right” or as one person put it “he who has the gold rules. The customer has the gold.” We supplied a product to an automotive manufacturer. The specification for the nut placement on the bolt was “8 mm max from the end”. Product shipped to specification. The first shift had been trained to slip on the product over both parts and tighten the nut. This was only possible if the nut had been backed off to the end of the bolt. The second shift slipped the product on one side and later inserted the other side. With the bolt backed off, the product would fall off before the assembly could be completed. Both shifts rejected the parts continually for the nut placement. The customer was furious over our “poor quality” back charging us and threatening to pull the business. They were not interested in hearing the cause of the problem. We were ordered to “fix it!” The fix – we sent our sales staff in once a month on both shifts to train the operators. The issue belonged to the customer they needed a mechanism to receive feedback.

Processor Responsibilities

The people and equipment producing the product are the most common owners of quality. They must:

  • Plan the process to meet the customer needs
  • Control the process to meet the customer needs
  • Improve the process based on customer feedback

This is the focus of most corrective actions and many people end up with the misconception that the processors own the quality responsibilities. This is not true. Quality is everyone’s job.

In my example of the customer service rep being fired for proactively checking in the factory, how many people caught the fact that she was addressing a symptom of poor quality and not the root cause? Since she was finding repeated mistakes in the process which would have produced poor quality parts, she should have gone to the person in charge and pointed out the situation. That should have resulted in root cause analysis and corrective action and she would not have needed to be in the factory.

Supplier Responsibilities

The supplier is the company as a whole that takes and order and provides a good or service. The supplier is also the previous step in the process. It is imperative that the supplier:

  • Knows who are the customers
  • Understands the needs of the customers
  • Avoid creating problems for the customers
  • Obtains feedback from the customers

As a company it is not enough to understand your own product and offer a “take it or leave it” attitude. The world is competitive and someone else is willing to step in and understand the customer’s needs and deliver exactly what they need, when they need it. A supplier must understand how the product is being used and proactively offer goods or services that best fit the customer needs. In the example of the nut position, we did offer to make two part numbers with the only difference being the nut location. The down side was maintaining inventories so the ultimate solution was for our staff to train the customer’s operators. Once we went in and talked to the people using the parts we were able to come up with a solution that avoided a problem for the customer. Did the customer fail to take on the responsibility to train their operators? Yes. Did we step up and solve the customer problem? Yes.

In the case of the internal customer, it is important to know how our product/subassembly/service is used. At one plant, a subassembly was a piece of cord cut to a set length and dropped into a gaylord then shipped across the ocean. At the next step the operator would attach the cord to a hook and wind the cord up, securing it with a rubber-band. As you can imagine the cords were twisted and tangled together and difficult to separate, wasting a great deal of time and frustrating the operator. The ultimate solution was to buy the cord in spools and set up a machine to attach the cord, measure and cut to length and automatically wind it. As an interim step the people cutting the cord would wind and rubber-band it with a tail sticking out to have the hook attached. The time to do the next operation was cut to a fraction of the original time. An interesting by-product was the wound cords took up less space and decreased the shipping cost as well.

Quality is everyone’s responsibility. It is the customer’s responsibility, the processor’s responsibility and the supplier’s responsibility. When each takes their responsibilities and acts on it the overall cost goes down and the quality improves.

Point 14 – Top Management Commitment to Action

Clearly define top management’s permanent commitment to ever improving quality and
productivity, and their obligation to implement all of these principles. Indeed, it is not enough that top management commit themselves for life to quality and productivity. They must know what it is that they are committed to—that is, what they must do. Create a structure in top management that will push every day on the preceding 13 Points, and take action in order to accomplish the transformation. Support is not enough: action is required!

Dr. W. Edwards Deming

What is Management’s Job – Commitment to Action

One of my father’s favorite sayings was, “lead, follow or get out of the way”. Management’s job is to lead. There must be a commitment to constant and on-going improvement. Each and every morning, management must look at their operation and decide what needs improvement and make a commitment to take action.

The Price of Failed Commitment to Action

If management does not make a commitment to constant and on-going improvement, it
will not happen. Management does not have to implement  the change but they must lead the change or their employees will end up building internal empires or chasing projects with
a lower value to the company.

Part of creating this commitment is developing a structure that guides the employees to
an on-going commitment of improvements in quality and productivity. Management must establish a system, indicate its’ importance to the company and demonstrate their own commitment to constantly and forever improving. It does not have to be fancy, but management must believe and support it.

The Call for Commitment to Action

There is a childhood chant, “Sticks and stones may break my bones but words will
never hurt me.” I wish it were true. How many suicides were prompted by cruel words? Words have power, the power to build up or the power to tear down.When management stands up and says “this is who we are and this is what we stand for” it can change the world.

My first job was with an ethical pharmaceutical company. We had a simple rule,
“Would you want your child to take this medicine?” If the answer was no, we threw it away. Every person on the line had the ability to call the supervisor and point out a problem. Each and every person on that line knew the importance of what they did and that attitude came from the top down. The VP of manufacturing walked through the plant several times a day and any operator
could stop him with a question or a concern. We had power and pride.

So what are you going to do, lead, follow or get out of the way?

Point 6 – Training Now? Are You Crazy?

Institute modern methods of training on the job for all, including management, to make better use of every employee. New skills are required to keep up with changes in materials, methods, product and service design, machinery, techniques, and service.

Dr. W. Edwards Deming

 

A business acquaintance of mine owned a small machine shop back in the ’70’s and 80’s. The last big recession, for those too young to remember.

He had eleven machinists working for him. Business slowed down and the employees knew there wasn’t enough work to keep everyone on board, someone would have to go. My friend called a company meeting. He walked in to some very tense men, each wondering if he was the one who was going to be leaving for good.

Instead of laying a man off, he instituted a program of extensive training and upgrading of skills. Everyday at least one employee was in training on new and better equipment. As his competitors went out of business he bought their newer equipment for a fraction of what it was worth. When the economy picked up my friend was ready, willing and able to produce good quality product at a fraction of the cost of his competition. When other companies tried to pirate his well trained workforce, his employees laughed in their faces. Their boss had stuck with them, they would stick with him.

How did he do it? For one thing he looked at a long term plan. He watched his money and kept a cushion so small hiccups didn’t have a disruptive effect. He had a good solid long term business plan with the track record to demonstrate its’ effectiveness so the banks would lend him money while other companies were being turned down.

Ultimately he fed back into point #1 he had a constancy of purpose to be competitive, stay in business and to provide jobs.

So what about you? Look at some of the grant programs available, you may be able to offer the training at no cost to your company. Even if you don’t have the cash reserves to buy new equipment, or pay roll is tight, ask the employees, would they take a temporary reduction in everyone’s salary to institute a training program that would make them more valuable in the long run? The answer might surprise you.

Point 5 – Improve Every Process

Improve every process

Improve constantly and forever every process for planning, production, and service. Search continually for problems in order to improve every activity in the company, to improve quality and productivity, and thus to constantly decrease costs. Institute innovation and constant improvement of product, service, and process. It is management’s job to work continually on the system (design, incoming materials, maintenance, improvement of machines, supervision, training, retraining).

Dr. W. Edward Deming

Improve constantly and forever, Wow, that is a tall order. Larger companies are able to staff for improvement, but what can the little guy do?

The first step is to prioritize, go for the biggest bang for the investment first. That does mean collecting data. Start with a Cost of Quality report. How much do you scrap? How much do you spend on rework?

When I go into plants to implement ISO9001 I expect to get them certified in system that is indicative of the company culture but I also look for where there is waste and I can reduce costs. I take a visit to the scrap bin and here is the trick, I look for similar parts with similar defects. This tells me there is a system failure. It can come from two places, the design of the part or the method of manufacture. I work backwards from the parts and look to save my client the annualized cost of my contract.

Service providers are a little different. There is no scrap box to look in. What I generally find with them is each employee has a different way of doing each job and there are no written directions or procedures. Each person is sure their way is best. Frequently they have found out about a customer problem and have incorporated a preventive measure in their own method. By listening and applying this information and then training the entire staff, making sure to acknowledge the source and reason for the preventive measure we create a streamline system that addresses all customer issues. We have searched out the problems and created improvement.

Both the manufacturer and the service provider do have customers. Both have complaints that can be used to create real and systematic improvement. Both have the opportunity to call their customers and really listen to what the customer wants and needs. A requirement of ISO 9000 is continuous improvement. The companies that deliver on that element grow.

My bank is ISO 9000 certified. I talked to one manager and he said the certification didn’t mean much to the average customer. What did make a difference was the consistency of accurate and reliable performance, from both new and long time employees. The customers found the bank listened to them and implementing safe new systems that made banking easier at no charge. ISO 9000 had created a system of continuous improvement that kept and drew in new customers. The bank has been able to stay in business, loan money and provide jobs. To quote the good Doctor, “So simple”.

Point 4 – End Lowest Tender Contracts

End the practice of awarding business solely on the basis of price tag. Instead require meaningful measures of quality along with price. Reduce the number of suppliers for the same item by eliminating those that do not qualify with statistical and other evidence of quality. The aim is to minimize total cost, not merely initial cost, by minimizing variation. This may be achieved by moving toward a single supplier for any one item, on a long term relationship of loyalty and trust. Purchasing managers have a new job, and must learn it.

Dr. W Edward Deming

We all do it. We go to a grocery store and will but the item that costs a few pennies less. Our perception is “they’re all the same”, but are they?

A very long time ago, before generics dominated the market, a major pharmaceutical manufacturer hired me as an engineer. Generics dominated conversations. Should they be allowed to replace brand name products? A well respected television news program did a segment on the subject. They stood in front of our plant, held up a generic pill and made the statement the pill was the same as anything made in our plant, the only difference was our pill cost a dollar and the generic cost a dime. What they didn’t know, or didn’t say, was our pills held the effective ingredient content to plus or minus 1% while the generic held the effective ingredient to plus or minus 25%. Generics took over the market and now if you want a name brand product, the doctor must write the prescription as “no substitutes” and some pharmacies will try very hard to get the patient to allow them to substitute. They insist, generics are exactly the same as name brands, they just cost less.

We look at suppliers the same way. They have to be the lowest price item coming through the door or we won’t buy. The companies that do research and could give us the next breakthrough product are competing with off-shore elements that copy the researching facilities products in violation of patent and copyright laws. And we support the theft by purchasing the cheapest initial product.

A bolt manufacturer can produce excellent product that never needs sorting or inspection. It goes direct to the lines and never causes a problem. A new supplier comes in a fraction of a cent cheaper in initial cost and we jump on the deal. Of course every tenth bolt has damaged threads and can’t be used but we buy from them and pat the purchasing agent on the back for our great savings.

How do we turn this around?

Look at your suppliers. When you go to evaluate the cost, look who helped you solve a problem with an innovative idea. Put a dollar figure to the increased sales or saved customer sales. Adjust the purchase price to reflect what the supplier did for you. Go talk to the line workers and look at the supplier costs on the cost of quality report. Adjust the supplier price accordingly. Point out to all the companies making an effort to quote how this information impacted your purchasing decision. Word will get around. Your suppliers will be watching what they do and looking to help you build your business and how can you beat that?

Point 3 – Cease Dependency on Mass Inspection

Eliminate the need for mass inspection as the way of life to achieve quality by building quality into the product in the first place. Require statistical evidence of built in quality in both manufacturing and purchasing functions.

Dr. W. Edward Deming

When ISO 9000 first came out, the auto manufacturers turned their noses up at it because it did not call for statistical process control. After significant discussion QS 9000 arrived to save the day. It should have been called ISO 9000 plus. The standard listed the ISO 9000 requirement and then added what the automotive companies had learned from Dr. Deming. Things stayed that way until 2000 when the ISO 9001 standard underwent major revisions to focus on continuous improvement and promote statistics.

Converting an inspection based workforce to statistical savvy operators isn’t as hard as it seems. It takes common sense. Process control limits are as simple as deciding when to mow the lawn and how much to adjust the blades or how high a temperature to set a stove when cooking up dinner. If you can compare them to everyday things that don’t use numbers, even the most math-a-phobic operator will lose the fear and begin to apply the technique, but that leads to point #8 and this is point #3.

Have you ever converted a process from inspection to statistical process control? How did it go? I did, it was a fun experience and I’d do it again.

Point 2 – The New Philosophy

The new philosophy

Adopt the new philosophy. We are in a new economic age, created in Japan. We can no longer live with commonly accepted levels of delays, mistakes, defective materials, and defective workmanship. Transformation of Western management style is necessary to halt the continued decline of business and industry.

Dr. W. Edward Deming

He spoke those words over 30 years ago but how much more true are they to today. Industry is going away from the USA in search of cheap labor, but has it been worth it?

What does management need to do differently to bring manufacturing back? What do we need do do differently with our children so they respect the person working in the factory? What do we need to do differently so people want to work for a company and have pride in what they do?

ISO started out as a European response to the superior quality of Japan and the USA. How do we bring business back on shore? What do we need to create an environment where manufacturing next door to your client is a wise business decision?

We start by looking at the real overall cost instead of chasing the short term profit. Moving off shore to reduce labor cost can be a false economy. Compare not just the labor and overhead savings but:

1. Increased shipping costs, especially expedited costs

2. Loss of control, does the new facility really understand your clients’ expectations? Assume makes an Ass out of U and Me, what is acceptable in one culture is anathema in another. Lead paint is unacceptable in the USA but used on childrens toys in third world countries.

3. Longer lead times. I dare you to get a rush shipment during Chinese New Year for the far east.

4. Putting a competitor in business. I worked with a fortune 100 company on a project. At the time they experienced extreme frustration. They had sent a product to a Chinese company for manufacturing quotation. The next thing they heard came not from the supplier but their customers. The quoting company had gone to their customers and under cut the fortune 100 company’s prices with an identical product, right down to the UL certification number. Everyone agreed it was a sad situation and the fortune 100 company had no recourse.

5. Addressing a dissatisfied customer. How much is in the pipeline when your customer notifies you of a problem? Add in the real cost of creating a gatekeeper while a solution is worked out and clearly communicated.

Point 1 – Constancy of Purpose

Constancy of purpose

Create constancy of purpose for continual improvement of products and service to society, allocating resources to provide for long range needs rather than only short term profitability, with a plan to become competitive, to stay in business, and to provide jobs.

Dr. W. Edward Deming

How do you create constancy of purpose in an economic time like this? Companies are struggling to stay in business and there are two places to put every dollar of resources so what do you do?

First you figure out how to keep the clients you have. That means understanding what makes you different from your competitors and building on that difference.

Second you understand what they like and dislike about your service and your product. You meet with your employees to discuss how to improve on the dislikes and support the likes. Making them part of the solution.

When your employees feel they are part of the solution morale improves and you drive out the fear of job loss and build loyalty.

You hold a steady course. If you started out with the right idea, don’t second guess yourself. There are ups and downs to everything, including the economy. Companies that chase fads are always one step behind the competition. Instead you get a long term picture, derive goals to meet that picture and work as a team with your employees to accomplish the end goal. Ultimately you will come through tough times stronger than the competition.

Think of it as you would your retirement investments. You buy in and hold through the lows in the market if you are in for the long term with a good investment strategy ultimately you will have a stronger financial position than selling at every market dip.

ISO 9000 is a Change to a Healthy Life Style, Not a Crash Diet

ISO 9000 is a change in the way everyone in the company thinks and behaves. It is not easy to implement correctly and it is very easy to back slide into the old way of doing things.

Think of ISO as a corporate change to healthy living from a junk-food junky. Ninety-nine percent of people don’t get up off the couch dust off the potato chip crumbs and start running five miles while munching on tofu.

Most people get on the scale and come to the realization they have to make a change. They may start out with a crash diet or they may add a walk to their daily routine, the diet may make a big impact in the short term with disastrous long term results while starting a reasonable exercise program will create gradual improvement your need for long term good health.

The corporate scale is the Cost of Quality report. It measures where there is waste and what it costs to keep control of problems. This is a report you should craft carefully because it is how management is going to measure your success or failure. Understand where the numbers come from, what it takes to collect them, and just how closely it relates to the P&L report. If you can’t find a close correspondence between the two reports, you need to revise the Cost of Quality report.

You need to break management into the idea that you are looking at a 5-10 year plan. Yes there will be measurable improvements in the short term but the real benefit comes from continuously monitoring and improving. You are about to implement Dr. Deming’s, Plan-Do-Check-Act and you better do it right or don’t bother doing anything at all.