Tuesday, July 28, 2015

Quality = Branding

Quality should never be seen as an accident.  It should be envisioned as an intelligent and proactive effort.  Poor quality, unsafe working conditions and or ignoring or non-compliance with regulations will lead to business disruption, financial loss, lawsuits and damage to the brand image of an organization. 

The vehicle for this crisis can originate with any step in the supply chain process, from design to raw materials to production or transportation.   Most of the time the major cause of poor quality can be traced to either inferior raw materials or the lack of design standards.   In some cases in recent times reputations have been ruined not by the former but by lack of social responsibility. 

Policies and procedures of quality management of suppliers must be aligned to the company standards who are selling the product.  Failures in the supply chain are passed down the line to other firms whose business is to markets these products.  These breakdowns can result in consumer dissatisfaction, regulatory issues and public criticism.  Let us remind ourselves of the tainted toothpaste or the lead paint in toys situations that damaged a company’s image. 

There are some vendors who are meeting this opportunity with stricter client quality standards set forth by the International Organization for Standardization (ISO), the American National Standards Institute (ANSI and the American Society for Quality (ASQ).   In addition, new security standards will have to be adhered to by transportation, shipping and logistics firms.  

To ensure vendor observance to the required quality management standards must conduct supply chain audits.  This validation process involves on-site vendor and or supplier audits which will compare actual to required policy standards.  These audits will identify areas of performance disparity and opportunities for improvement.  A constant vigil for quality improvement will reduce the risk of short and long term costly and embarrassing failures.

Internal auditors are not the proper route to take under these circumstances.  Independent management system auditors have the skills, geographic exposure and audit experience to effectively state audit protocols, aid in the planning and scheduling process and to guarantee audit goals of company are met.  Independent auditors bring an unbiased viewpoint and are usually up to date with changes in the international standards that need to be considered. 

In order for these audits to prove successful several criteria must be met.  They are the following:

1.       Set forth in detail all necessary activities
2.       Outline objectives of the audit
3.       All required personnel are available at the time of and the span of the audit.
4.       The audit processes and information necessities are understood and agreed upon

Fundamental to any audit criteria and deciding if there is a need for such improvement or to add controls are the gravity of a given quality management failure and the part of management to decide the potential consequences with regard to consumers, shareholders and or regulators.  

Many of these independent auditors will also encourage companies to broaden the scope of the audits to include environmental and health and safety management systems (ISO 14001) and (OHSA 18001). These establish explicit requirements in the environment and safety guidelines leading to identification of legal issues that a firm may be faced with.  Likewise, organizations today are faced with and need to consider the social accountability international standards (SA8000), faced with the responsibility of improving working conditions around the world. 

The closing stage of an audit requires close attention.   This is where the findings are converted into corrective action.  The resulting audit report considers the degree of conformity with the audit objectives and the performance gap and recommends improvements, business relationship changes, “root cause” investigation.  All of these will lead to corrective action to resolve digression from the proper course. 

As globalization will only continue companies must protect their supply chains by screening the quality management programs of their vendors.  It matters little if companies are dealing with a few or hundreds of vendors, management audits require clear-cut planning with experienced personnel to be effective.   More than ever before, firms need to grasp the quality management systems of their suppliers, the scope of the involved risks and the controls to be put in place to protect against quality failure and brand damage.

Thursday, July 9, 2015

Hiding the Evidence

No, this is not a reference to a James Patterson novel. 

Rather a reminder that a tidy office or facility will not solve problems and might hide evidence needed to show a necessity for a root cause analysis and counteractive behavior.

Is it alright to discard an item if it is identified as a non-production part? Is the discarding onto the scrap heap of a non-production item harmless to a company?  If it was a missing link in an item production it would lead to a work stoppage until the piece that was missing the part was found. 

This is ideally when and where an organization should implement a 5S program.  Just as refresher 5S is a system of: Sort, Set, Shine, Standardize and Sustain.  For some 5S is merely a housekeeping method rather than a problem identification system.  Housekeepers merely find any place to store the item as opposed to an orderly method.  The process should be to ask “why” until we find the basic cause and take action. The premise of 5Y is to ask “why” at least five times to unearth the root issue. 

The connection between 5S and 5Y should be robust.  The outcome of 5S program is a tidy office or facility.  However, the outcome should not be the goal.  Five S should be a troubleshooting program and a way to uncover and fix small problems before they become big ones.  

Five Y is the investigative part of Five S.  When running the 5Y part of 5S must ask the essentials: where, when, why and how.  Until those questions are completely answered followed by corrective action 5S merely becomes a useless “toy”. 

Perhaps, an example might be enlightening.  This is an example from a manufacturing facility which not only shows poor 5S program but lack of proper communications (this could just as easily occur in an office situation).

An electrical closet was closed but not secured.  Clearly a safety hazard and an OSHA violation.  Machinery was running and the operator was unaware of the closet was unsecured.  Asking the first “why” showed that maintenance crew had been working with the closet at night.  Furthermore, all must be well as the machinery was making parts.  The next “why” question revealed a quality issue.  The machinery was producing nonconforming parts and many parts were scrapped and the work was eventually stopped. 

The night shift maintenance crew had gone off their shift. The day maintenance group thought the work was completed and began operating the machinery unaware that the safety and error proofing devices had been disabled.   Uniformed that parts were merely ran as tests, the day shift proceeded to pack parts for shipping.  The day operators were running the machinery oblivious to the danger of serious injury.  Apparently, nonconforming items could be made at any time and not be caught due to the lack of automatic checks and proper communications.  This lack of safety procedure and communication will lead to poor customer service.  In this case bad parts had already been shipped to customers.  A robust and intertwined 5S and 5Y program would have identified the problem prior to a machine operator restarting any machinery. 

Lean systems or programs often begin with self-discipline – 5S and 5Y demonstrates and builds the need to follow these standards.  This is usually followed by further continuous improvements such as standard work, kanban, plant layout, point of use storage and cellular manufacturing. 

A superior 5S and 5Y program exhibits a facility’s culture and allows problem identification and preventive action. The premise of 5S is everything has a place, everything in its place and ready for use.  If not the 5Y portion of 5S must be engaged.   Without this engagement little problems will become larger or even momentous problems for an organization.