This is the third in a series of blog posts digging deeper into the seven keys to building a quality culture, which builds on Nicole Parker’s recent introduction blog. In this article, we will discuss the third of these seven keys; Awareness.
Raising children never ceases to teach me lessons. I observe how my children take actions or, in most cases don’t take actions, and I sit back and scratch my head. After studying this phenomenon, it reveals that they don’t have the experience to even be aware of the actions they have available to them. As a father it is imperative to help them understand how to efficiently navigate life. They need to learn how to apply prior knowledge to new situations where we will not be available. The same is true for our teams and our cultures.
In order for your teams to help reduce the cost of quality (COQ), they need to be aware of good practices and those behaviors that increase or decrease COQ and reflect and learn to apply those to future situations. All employees need to understand contributing factors to the COQ and the actions or inactions that lead to raising or lowering those costs. One powerful method to illustrate the impact COQ has on an organization is to determine how much product they need to sell to cover the costs of quality, which the American Society for Quality (ASQ) estimates to be as high as 20% of sales. This means nearly two and a half months of a year’s sales are required to fund COQ. Once this is accomplished all employees can be ambassadors for quality, challenge the status quo and identify waste and the culture can begin to shift.
Preventive Awareness
It should come as no surprise that it starts with prevention. This is where we can make the largest impact on reducing costs. Let’s look at some key factors that employees need to be aware of.
New Product Introduction (NPI)
Assessing Feasibility – When we are considering a new product, we should always consider the feasibility of meeting capacity, capability and quality requirements. If we fail to do this, we could quickly erode any possibility to attain our margins. If we lack the capacity to keep up with demand, we will either pay expedited shipping or worse, we could lose orders or our product quality will suffer, which will cause all kinds of chaos (cost) in our organization dealing with quality issues.
Planning – We need to be planning from our start of production (SOP) date. This will allow us to set the critical path for the project to meet the desired timing. Failure to meet timing in the early stages almost assures the overall project will be late leading to higher costs, quality issues and/or potentially penalties for some contracts.
Design – Don’t skimp on involving a cross-functional team of subject matter experts (SMEs) when designing product and manufacturing processes to prevent product design or process-related quality issues, which can lead to costs associated with scrap, rework, escapes, etc.
Pre-production Material Planning
Planning – Whether developing new products or changing existing products, planning the subcomponents/materials, especially those that will be purchased, should be identified early to allow time to properly select ideal suppliers for those commodities. If you don’t have the competency to make the subcomponents, you should outsource. This is not a time to experiment unless you have high confidence in your capabilities and have done something similar.
Sourcing Selection – Suppliers should not be selected on piece cost alone, but rather the overall cost including quality, delivery performance, capacity, capability, adaptability and financial health of a supplier. Deficiencies in any of these attributes contribute to higher overall cost of that subcomponent/material. Assessing these attributes can be done through audits, historical performance data or RFI/RFPs for prospective suppliers.
Potential Disruptions – In recent years, we have seen supply chain disruptions due to globalization where distance and natural disasters in any region can impact all regions. We should proactively develop risk profiling of critical subcomponents/materials and define mitigation strategies (e.g. secondary suppliers or carrying excess inventories). As recently as April 2021, it was revealed that Toyota (Thomas Industry – April 2), the leaders of lean, learned from the 2011 earthquake/tsunami that they needed to identify at-risk components including semiconductors. As a result they decided to carry excess inventory and were able to continue producing vehicles where others were struggling.
Geo-political Concerns – The geo-political climate is continuously changing. Trade agreements and duty/tariff rules are also changing, and having a global trade and transportation strategy is important to provide significant savings through strategic movement of product.
Supplier Management
Monitoring Performance – Measuring supplier performance can be very costly, so an automated and risk-based approach can reduce these costs. Consider those subcomponents/materials critical to the business, or suppliers that make up a significant portion of sourcing spend, and carefully monitor those suppliers to make sure those relationships are healthy. Most companies are measuring their suppliers’ quality and delivery performance, but having a finger on the pulse of their capacity, capability, adaptability, and financial health can mitigate impending disasters. Did their effective capacity just decrease because they now have a contract with a company with more purchasing power? Are there financial indicators showing significant issues? What actions are needed to mitigate that risk?
Collaboration Efficiency and Effectiveness – When there is change or variability, collaboration with your suppliers is no longer an option — it is a must — or sourcing issues are likely. Engineering changes, NPI, and Deviations are areas where suppliers need to be aware of the changes, but they must also collaborate on the changes they want to make. Without effective communication of change, quality or delivery issues will happen. Ongoing variability occurs in demand and delivery, so customers need to communicate demand and demand changes to suppliers, and suppliers need to provide delivery notifications and concerns about meeting demand changes. One method to better align inventory with customer demand is vendor managed inventory (VMI), where vendors maintain the inventory at the customer.
Audits
Focus – Historical audit results and past non-conformances determine high risk areas, processes or products to audit. Specifically, for process or product audits (including LPA), Failure Mode Effects Analysis (FMEA) should be used as a guide for areas of high risk. Audits cost money and should only be done if they are likely to uncover problems or opportunities, which are usually in the higher risk areas. Audits are an excellent way to confirm that corrective actions are effective.
Layered Process Audits (LPA) – LPAs are a means to get different perspectives in the company exposed to what is actually happening on the shop floor. Those perspectives bring a more rounded approach to yield quality, safety and efficiency improvements. They also educate those auditors as to what works and what does not, raising the level of knowledge in the organization. LPAs should take 10 minutes or less, should focus on risk or areas of high variability and questions should be as specific as possible.
Human Factors
Eliminate Variability – Use automation when it can significantly reduce variability or is on par with human variability but has higher throughput over a human.
Documentation and Training – When personnel are executing a process, make sure the elements of process variability are well-documented, but then make sure the personnel are adequately trained. Otherwise there are checklists to ensure variability is reduced.
Asset Management
Equipment – Make sure equipment has been designed to provide the accuracy and precision required. Then ensure that it is maintained properly to keep performance to the required standards. Recommended preventive maintenance generally reduces the variability and increases up-time. More recently, predictive maintenance (e.g. thermal, acoustic, oil analysis or vibration monitoring) and AI techniques around them can help predict when variability is starting to become an issue or when the equipment needs attention.
Gauging – Similarly, the gauges used to measure a process or product parameter need to reliably discern values to the level required and be capable of yielding repeatable and reproducible results regardless of the user. Once these gauges are in place, be it a thermal sensor and a hand gauge, routine calibration or confirmation, checks are imperative to ensure they are measuring accurately. If issues are found with a gauge, a non-conformance should be created to start the containment of potentially non-conforming product measured by that gauge.
Reactive Awareness
When we fail to prevent costs of quality, there are ways to reduce the cost of these situations. Here are some key reaction areas and methods for reducing those costs.
Non-conformances
Containment – Failure to get control of all parts potentially affected by a quality issue is important or additional product may be consumed in a customer’s product where value is added to a defective product, which will likely come back to the supplier. Conversely, over-containing can result in scrapping good products, unneeded sorting costs, etc. It is imperative to quickly determine when the last good part was produced or the first defective part was likely produced. Sampling plan frequency usually determines this.
Disposition – After a quality spill is contained, the next steps are to figure out what to do with the defective product (Sort, Scrap, Rework, Return to Supplier, etc.) resulting in the least cost. The people dispositioning the product should have knowledge to make the best decision to minimize the impact to the company. This may not be a pure cost-based decision because delivery timing may be very important to the customer.
Detecting – Ideally, there are process indicators that will help us determine that key characteristics are trending in a bad direction so that adjustments can be made before the non-conforming product is produced. In cases where there are no viable leading process measurements, detection of the non-conformance is the last line of defense. Product measurements and their frequency determine the likely size of a quality containment. It is critical to detect non-conforming product at the source to minimize additional value added to the defective product.
Corrective Actions
Choosing Wisely – Most companies do not have the resources to treat every non-conformance with a corrective action, so we need to use a risk-based approach to determine which non-conformances require corrective action. Those chosen for corrective action are those requiring elimination of a repeat.
Facilitation – Establishing the root cause of a problem is not trivial, and teams often end up identifying the cause of a symptom as a root cause and may never make a significant enough reduction in recurrence. It is imperative to have someone facilitate root cause analysis who is skilled at establishing a root cause. If the organization does not have this experience, it may be worth investing in training or professional help.
Root Cause and Corrective Action (RCCA) – Involve SMEs of all related areas to assist with first agreeing to the problem statement and then working on RCCA, but most importantly in corrective action to ensure the corrective actions are both effective and don’t cause other problems for the company. Expertise in RCCA along with SME knowledge should dramatically reduce repeats.
Closing
Remember, people can only act appropriately when they are aware of how their actions impact the costs to the company. Take the time to build the awareness, enforce it regularly, measure it, and the culture will shift. In the meantime, download and share our “7 Keys to Building a Quality Culture” infographic below.
