Interested Parties

Management requires everyone to work together for quality

Management requires everyone to work together for quality

Context of the Organization – Interested Parties

This is one way of looking at Interested Parties. Other consultants look at it differently. You need to decide what works best in your company.

Scope, requirement hasn’t changed, Assume you reviewed it and it accurately represents your organization

Who are the interested parties?

This changes from company to company only you can determine who the interested parties are. In previous revisions of ISO we were mostly concerned with  the customer with some interest in our suppliers and our employees. But nothing was formalized and there wasn’t a direct consideration of risk/opportunity.

¡  People who have a stake in what and how your organization performs in producing products or services which meet the customers’ requirements

¡  Are relevant to the QMS

While section 4.2 of the ISO 9001:2015 standard does not require you to identify the risks and opportunities, they should be included in section 6.1. So we’ll go over that now and save repetition later.

Risk negative or positive, ISO 31000, 14001 opportunity, Interested Parties can be both

Here is a side point in ISO 9001 risk is considered to be either negative or positive. In ISO 31000 and ISO 14001 they consider risk as negative and opportunity as positive. Keep that point in the back of your mind in-case an auditor challenges the term “opportunity” and be prepared to say in your company opportunity means positive risk. You can use whatever name you want. I have a client who names quality objectives as “rocks”. It is a term everyone there knows and understands and it meets the standards requirements for quality objectives so the auditors don’t challenge the name.

Interested Parties effect the QMS

Interested parties effect the QMS. This is important because this may or may not include the customer, the end users and your competitors.

One way to look for Interested Parties is to consider the  following areas. Again you may not have all of these and you may think of some not included in this presentation. It is up to you to identify the interested parties for your company.

  • Suppliers – Providers of raw material, components, sub-assemblies, finished product and services
  • Internal groups – Employees, unions, stock holders, management
  • Intermediaries – The most common is a distributor but there are also aftermarket service groups
  • Alliances – A bank may recommend a consultant they think will increase the company’s profitability, while the consultant may recommend a bank to clients who are having banking issues
  • Influencers – Think of peer groups, councils, chambers of commerce

Organizing Interested Parties

There is more to be done than just list the interested parties. Some of the interested parties can provide both a risk and an opportunity. For example a supplier performance issue presents a risk to you meeting your customers’ requirements. However, if they are a leader in their industry they could provide you with a competitive advantage with a new product none of your competitors has access to use.

Slide 10 – Risks and opportunities

So let’s start the table.

Interested Party Concern Risk Opportunity
Suppliers Their reputation and quality/delivery/price influences yours Nonconformance Superior performance
Employees Is it stable? Do they have pride of workmanship? Controls product quality Source of innovation
Shareholders Source of investments, company direction Looking for short term ROI Supports re-investing
Community Impact on your reputation, and ability to produce Demands which reduce profits Promotes development
Intermediaries Increased sales, impacts your reputation Damage to product More contacts/sales
Alliances Increased opportunities, concerns for reputation Your reputation is tied to theirs Increased sales
Interested party Concern Risk Opportunity
Influencers Is their advice of value Different frame of reference Wide range of experience
Regulators Compliance Not managing changes Good rating
Certifying bodies  Do they understand the organization and the standard(s) Dependent on auditor training Global view of QMS

 

You get the idea.

Controlling Risk from Interested Parties

Now that you have a list of your interested parties and the concern or impact they have on your company with the inherent risks or opportunities, you need to monitor and control your risk and capitalize on your opportunities. So let’s add a column.

Interested Party Risk Opportunity Monitor
Suppliers Nonconformance Superior performance Annual performance review/ random inspection
Employees Controls product quality Source of innovation Annual performance review
Shareholders Looking for short term ROI Supports re-investing Review BOD reports
Community Demands which reduce profits Promotes development Community newsletters, membership in community organizations
Intermediaries Damage to product More contacts/sales Reports of NC and Sales
Alliances Your reputation is tied to theirs Increased sales Monitor press releases Qtrly Sales
Influencers Different frame of reference Wide range of experience Monthly meetings
Regulators Not managing changes Good rating Regulator updates/ ratings
Certifying bodies Dependent on auditor training Global view of QMS Annual surveillance audit

 

 

Of course these controls are typical examples and you should define what works for your company. The point is you should have a way to monitor and address risk and capitalize on opportunities.

Documenting Interested Parties

When the auditor arrives they are going to ask, “Who are your interested parties?” There is no requirement in the standard that you list interested parties.

You must communicate to your organization who are the interested parties and how they will be monitored.

So when identifying Interested Parties think about who affects or has the potential to affect your QMS

Let your common sense guide you on identifying the Interested Parties, Don’t worry, you can do this. If you need help, e-mail me at technacon1986@sbcglobal.net or call (708) 814-3685.

The next presentations will be on internal and external influences.

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 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 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.

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.

Don’t Skip the Good Stuff Part 6

Management Responsibility

            There is a saying, “What goes around, comes around” or you can look at this circle and considerate it the visual definition of “synergy”. There is a reason this is a circle. Management responsibility, resource management, product realization, measurement, analysis and improvement are interrelated. Take away any one of these and the ball, better known as your company profits, drops dead. It is another way of looking at Dr. Deming’s ‘Plan Do Check Act” model.

 

            Looking at section .2 the top box in the circle is management responsibility. I have seen many corporate executives abdicate this point to the quality manager. Usually they pass along the responsibility but not the authority. So what is management responsible for doing?

  1. Steer the bus

This means providing a long term plan, as in a 10 year objective and nothing as vague as “make money”.

  1. Provide the fuel

Management must find the people, funds, equipment and raw materials to make the process work.

            If a company is going to grow and remain in business there must be a written policy for doing business and goals to be achieved. Unless a company is a charity the basic is to make a profit. The question is how much profit? A company isn’t going to double in size without planning, or if it does, it won’t stay that way for long. Management must set out a clear and definitive game plan to get long term positive results.

            The fuel is something else management must provide. Imagine making medicine with untrained people. The result would be catastrophic. Management must find the right people and provide training. Good people are hard to find, they should not be treated as a commodity or the long term growth will suffer.

            Equipment is another resource management is responsible to provide. This does not mean going out and ordering a one of a kind machine to make your particular widget. It does mean making sure the machine consistently produces acceptable product. There is a tool called total productivity maintenance. I have seen examples where using team work and asking the operators for input has resulted in a machine which is 10 years old increasing in productivity by 30% and reducing variation by 50%. Normally productivity goes down and variation increases as a machine ages.

            Raw materials are another matter. There is an old saying, you can’t make a silk purse out of a sow’s ear. Raw materials must be capable of turning into good product. At one point I worked for a pharmaceutical company. We produced an injectable drug. The basic material was organic so there were variations. However on one particular lot an extraneous peak showed up in the gas chromatograph analysis. Checking backwards, that same peak had been in the raw material. Countless man hours were wasted because the raw material was not capable. Management had approve the purchase because they were desperate to fill a stock out situation and didn’t want to acknowledge the material was bad.

            Having provided everything necessary to make the product it is time to do just that – produce something to sell. There is an element of QS 9000 I like to implement in ISO 9000 applications. It is called the Pre-Production Approval Process (PPAP). It tests the ability to make a consistent product over a reasonable duration of time, usually half a shift.

            Once the product has been produced, it is time to measure and analyze for improvement and send it to the customer for feedback. One of my clients made toothpaste closures. They made millions of them and were very proud that they only had 12 open closures per 100,000 manufactured. The cost to the toothpaste company was huge down time. Every open closure shut the line down for cleaning for 10 minutes they were filling at the rate of 600 tubes per minute. Seven people stopped producing salable product and wielded scrub brushes for every open cap. With this feedback, my client designed a machine to make sure the closures snapped shut and removed those that did not. Cavity marking on the rejects gave the root cause of the problem and before too long they were whistling along at 3.4 parts per million open caps. Without the analysis and the customer feedback, my client would have lost a very important piece of business. Which would have impacted the long term plan.

So there you have it. The really good stuff for ISO 9000 is before you even get to the standard.

Don’t Skip the Good Stuff Part 5

            What is continual improvement of the quality management system? It is the big picture. It is looking at the performance of all the sub-processes that make the whole process, from getting the customer specifications and orders, to making sure the parts arrives on-time, at a reasonable cost and in a useable form.

            Here is where the quality manager has to avoid the biggest pitfall known to the engineering mind – trying to pick the fly poop out of the pepper. Engineers don’t know when to stop, and they are right, continuous improvement never stops but you have to know when to move on. I can say this as I am an engineer and there have been times when my engineering tendencies have driven my husband, a really knowledgeable construction consultant, to offer specific guidance (Honey, hand me the darned 2 x 4, it doesn’t matter that it’s off by a thirty-second).

            It is the Quality manager’s responsibility to evaluate the effectiveness of each step in the process and to determine where to improve the process. This means having a way to measure the performance of each step and a method to compare the various results. There are a number of tools to use.

            A good customer satisfaction survey is one. One of the most common things I see is a four or five generic question survey where any rating less than excellent draws attention like road kill draws flies. Sales staff and customers a like groan at the thought of filling the thing out and the input has no value. Do some research into your customer base. Talk to your sales staff, field engineers and repair people. They interacts with the customer in the field and you need their input on what is an effective line of questions to get real information from your customer.

            Complaints and returns are another resource when it comes to measuring customer dissatisfaction. There is a difference between measuring satisfaction and dissatisfaction. Depending on the price of a part, you may never know the customer has a problem. They may throw it away and go elsewhere without ever talking to you.

            Measuring internal costs to achieve customer satisfaction is a third. If you have to 100% sort parts before shipping them, this might be a process that needs to improve.

            Once you have all this data you must convert it into dollars of impact on the company. It is the only way to make a fair evaluation. How much is it taking away from profitability? How much sales have we lost? How much sales could we increase? Put a rough estimate together as to costs to evaluate a solution for each problem. Now you have a report that management can understand. Now you are ready to truly implement ISO 9000.

Don’t Skip the Good Stuff Part 4

            Let’s jump to the next page and Figure 1, don’t worry, we’re not skipping the good stuff, just getting a visual. We need to talk about how to obtain results of a process performance and effectiveness.

            We have to start with the customer requirements. Not just the in-house print but the specifications, prints and input of the customer. We need to know how they are using our product and what the method of installation is.

            The example of the reversed angle explains how the transfer of information from one document form to another can be a problem, but we also need to understand how the customer is installing the product.

            I remember being called to an automotive company to explain our excessive defect rate on a part. both shifts were reporting huge problems. The threats were long and loud. Until I pointed out that the two different shifts were installing the part in very different ways. In one case the nut had to be run almost completely down. In the other it needed to be so close to the tip of the bolt as to be in danger of falling off. Our specification from the customer was to have the nut run on “no less than 8 mm”. Of the 100 “defective” parts they had tossed on the table all 100 were at 8 mm. We than helped them do a study to find out which method of installation was most effective for their process. We left the retraining of the shifts to them.

            We could have left the customer embarrassed at their actions and gone away slapping ourselves on the back and talking about how smart we were. However, the problem was not solved and would have come back sooner or later. We would have ended up with a reputation as a poor quality supplier even though we were not at fault.

            Many times the customer’s requirements are not what they have written down. It is very possible the customer doesn’t even know what they require. When you are sure you are meeting the communicated customer requirements and they are having problems with your parts it is time to go find out how the parts are being used.

            This is the two bars in the figure labeled customers “requirements” and “satisfaction”. The circle directly relates to the standard. The continual improvement bar is for next time.

Don’t Skip the Good Stuff Part 2

            If you skip down a couple of paragraphs (actually it is good reading so don’t skip the good stuff) it talks about the advantage of the process approach providing control over the linkage between the individual processes. This one may need to be read a couple of times to make any sense.

            Here is another way of looking at it. An auditor once told me 90% of his findings came not from the processes but from the hand off between processes. In other words, mistakes came from poor communications and lack of ownership. This is the place the quality manager needs to be most vigilant. No one else is going to be looking at these because no one has clear ownership. If you’ve ever spent even a few minutes on material from Dr. Deming or Dr. Juran you’ll understand how this creates failure. 

             I was doing an initial audit on a new client and following an order that was in manufacturing and due to ship the next week. There was a discrepancy between the purchase order revision of the print and the manufacturing documentation. In engineering I found the order had been returned to sales because the revision required a significant tooling investment on a product that engineering understood was being phased out. As far as Engineering knew Sales was handling the situation. As far as Sales knew, the product was in production. The problem was no system for communicating print issues back to the customer. Engineering wasn’t responsible and Sales wasn’t responsible so no one addressed the issue.

            Want to find the points in the system most likely to fail? Sketch the process from customer through your company and back to the customer. Circle points of hand off between departments. Check how this flows if things are working and how the flow of communication works when something goes wrong. Pay particular attention to who is responsible for what actions. Now quiz people and see if they are aware of their responsibilities.