Core Processes Create Value

The current economic downturn has created an enhanced awareness on how an organization creates the value needed by its products, markets and customers. Becoming more efficient and effective is much more than eliminating process waste. Internal waste reduction may not be the primary need for an organizations markets or customers, thus waste reduction may not ensure continued sustainability of the organization.

A process management approach can help an organization prevent a narrow view of a business system. The process approach is a set of interrelated or interacting activities, that require specific input resources, monitoring and measurement opportunities (before, during, and after the process), in order to achieve consistent product and service. An organization wanting to improve its economic performance can use the process approach to link improvement to strategic goals.

The following questions is a good place to start:

* What business are we in?
* Who are our customers?
* What do they do, and what do they expect from us (the value)?
* What do we need to do to meet their unique requirements (capabilities)?
* What is customer critical and what is less significant?
* What are the critical core processes that will allow us to meet our specific capabilities?
* Which core processes do we have, which do we need to create, and which do we need to manage better (process management)?

Let us not forget that the "economic value" or rationale is particularly important. Identifying the critical processes that need to be either created or improved to provide the needed strategic capabilities should drive the overall improvement effort and economic value. This is the essence of process management (effectiveness of process = ability to achieve desired results, and efficiency of process = results achieved versus resources used).

Identifying the missing gaps and implementing the missing processes can be the quickest way to improve a system. The organization must ensure that process improvements are linked to strategy and core process execution. To be a success, an organization must continuously improve all its essential core processes to provide value and to always satisfy customer requirements.

The Quality Guru asks: What are your company core processes, and how do you measure their effectiveness?

Sustain with Layered Process Audits

Layered Process Audits (LPAs) have become quite popular and in many cases mandatory for suppliers in the automotive industry. The effects of properly conducted layered process audits can be substantially positive. Because layered process auditing reduces the number of operator errors they have spread to industries outside of automotive.

So, what is a Layered Process Audit? They are a system of audits performed by multiple layers of supervision and management to monitor key process operations, characteristics and verify process conformance on an ongoing basis. LPAs are an excellent tool for minimizing variation in your processes and error-proofing systems.

A layered process audit is an ongoing chain of simple verification checks that ensure a defined process is followed correctly. It is a powerful management tool that can improve safety, quality and cost savings by amplifying problem solving systems and making continuous improvement almost routine. Through observation, evaluation and conversations on the manufacturing floor, these checks ensure key work steps are performed properly. LPA interactions are also an excellent way for managers to show respect for frontline workers.

Let's identify some essential components of a Layered Process Audit Program

* Management must take ownership of the LPA process
* Auditors Must identify and ask the right questions
* All management layers, top to bottom, must participate
* Immediate containment of nonconformances found
* Continual improvement must be included in the process
* Shift, daily, weekly scheduled and performed audits

Survey data shows excessive process input variation is the single largest cause manufacturing quality problem. This often results from a failure to reinforce process corrective actions. Or, can be attributed to a failure to follow the required steps and methods. Layered process audits reduce this variation along the manufacturing line up through the ranks of plant management. This helps ensure that operators are following the process steps.

Keep in mind that a layered process audit system must have a documented audit structure (just as quality system standards require) that schedules auditors at pre-determined levels and frequency of audits. These audits focus on process operations and error-proofing, not on finished product inspections.

One of the most common questions we hear with 5S (and Lean for that matter) is how do you sustain? Sustaining 5S can be very difficult without the use of a formal process. A layered audit program can be used successfully to ensure that your company's 5S efforts continue.

Layered Audits are tied directly into the fifth S - Sustain - and they are the means used in Lean Improvement Systems to avoid "backsliding" into old habits, creating sustainable culture change. Layered Process Audits require that multiple operational levels within an organization review the same key operational controls to ensure sustainability. Simply stated, they are an ongoing chain of simple verification checks, which through observation, evaluation and conversations on the line; assure that the process is being properly performed.

The key is everyone is an "auditor". This starts with the operator personally checking their process for compliance. Then the first line supervisor checks key processes, where feedback is immediate as are any agreed-upon corrective actions. The next level supervisor would then make the same checks, and so forth.

The essential part of the Layered Audit is the creation of a standard checklist You must identify and ask the right questions on the checklist. This is where Standard work at all levels of the organization is critical. Layered Audits is a formalization of "management by walking the Gemba".

Layered Process Audits can be compared to a pilot's preflight checklist. Is my operation ready for take-off? Am I confident that everything is in place to build and ship conforming product to my customer? When the day goes smoothly, management and operators can use the time saved to work on improvements. The beauty of LPAs is that managers often can learn much about the manufacturing processes from operators, and operators can learn much about what is important to customers from managers.

Let's review some of the proven benefits of LPAs.

* Reduces variation in processes
* Improves & maintains operational discipline
* Reduces scrap and eliminates waste
* Improves overall quality and reduces costs
* Stops problems from becoming nonconformances

Quality Guru Asks: What success have you had in performing layered audits? If you're not, and want to learn more, contact me for a Free Layered Audit Checklist.

AS9100 Transition Training and Changes

The International Aerospace Quality Group (IAQG) recently issued a letter on transition training for aerospace auditors. This training is a key element in the transition to the AS9100C, AS9110A, and AS9120A standards, as well as, use of the common AS9101D audit requirements standard.

All Aerospace Auditors (AA) and Aerospace Experienced Auditors (AEA) must complete Aerospace Auditor Transition Training (AATT) to be authenticated for auditing the new aerospace 2009 standards.

AS9100: This IAQG-Sanctioned AATT course has online and instructor-led components. The online component consists of an online initial examination and an online module titled, "Foundations: Understanding 9100". The instructor-led component is a 4-day course and includes an evaluation and examination.

Classroom: Instructor-led training is required for auditors seeking AS9100C and AS9110A authentication. AS9120A training does not include an instructor-led course. As previously stated, AS9100C instructor-led training is a pre-requisite for AS9110A and AS9120A training.

For more information on the IAQG-sanctioned Aerospace Auditor Transition Training, go to this Plexus web page.

AS9100C Changes. Let's look at a few of the key changes in the standard and identify important process points.

A. Expanded Scope from aerospace to aviation, space and defense organizations to better reflect the full range of users of AS9100.

B. Risk Management: This process defines the steps, sequences and interactions an organization must perform to ensure risks are properly handled. When risks are identified and communication is received, an assessment of these risks will be performed to determine potential impacts. Direct links to risk can be found in 3.1, 7.1.1, 7.2.2 7.4.1 & 8.5.3. Point: A formal, documented process must be established, implemented, and maintained covering responsibility, risk criteria, mitigation, acceptance and communication throughout product realization, including evidence of this system (this is much more than inserting the verbatim language/requirement on paper and stating our "sales personnel perform this").

C. Configuration Management: Moved from clause 4.3 to 7.1.4. The move and expanded scope provides focus of this requirement during product realization. Added ISO 10007 sections (a-e). Point: Have you defined what, who and how (a-e example: config ID & audit) are executed, controlled, and valid objective evidence)? Configuration management is aimed to know at any time the "as designed" and the "as built" configuration of products in order to ensure fit for use of these products.

D. Project Management: Project management has been added to the standard outlining requirements on planning and managing product realization risks, resources and schedule. Point: Most aviation, space and defense products are complex and involve multi-tier partners and suppliers and project management provides additional focus on upfront planning and the management of project plans throughout product realization.

E. Customer Satisfaction: This requirement defines mandatory measures (e.g. customer performance indicators) that all organizations of all sizes and complexity must monitor), analyze and review to assess if improvement is needed. If action is needed, improvements must be planned and implemented and the results of the action must be evaluated to check their effectiveness. Point: A formal improvement process (example- PDCA) can ensure method, evidence, and evaluation of effectiveness.

F. Monitoring and Measurement of Processes: The Achilles' heal - poorest evidence requirement we witness in documentation and measurable business performance improvement evidence. "Demonstrate the ability of processes to achieve planned results" (look beyond Management Review Inputs). Point: A note has been added to provide guidance on how an organization may go about determining appropriate process monitoring and measurement methods. It requires that the organization determine if the process nonconformity is limited or if it has affected other processes or products.

SES is currently working with a number of aerospace firms to achieve a successful and measurable transition. Contact Us for all your AS9100C training, documentation assistance, process improvement and internal auditing needs.

Daily Management & Problem Solving

Many of us are involved with corrective and preventive actions as required by ISO-9001. It is not unusual to see the following "story" in a corrective action:

* Problem - Customer received defective material.
* Root Cause - The test technician was new and was not adequately trained.
* Corrective action - Retrain the technician and evaluate the training effectiveness.

In world-class lean organizations, this is known as a level-1 corrective action where no in- depth root causes analysis was done on possible issues. In the example above it is quite possible that the entire training program and evaluation of effectiveness is problematic, not just the training received by the technician. A level-2 corrective action is where in-depth analysis is conducted but the solution did not include a poka-yoke or error proofing. Obviously a level-3 corrective action will include error proofing.

Individual incidents as indicated above are symptomatic of more widespread systemic issues. Understanding the root cause of systemic issue is a painstaking process and an investigator and the team will cross boundaries of many functions. It is very common that a systemic issue will have multiple root causes and each of them will require its own corrective actions. It is the responsibility of leaders of organizations to mentor the staff to ask more questions ("why did it happen?") and made decisions based on facts. Those of you use 5-Why techniques know that asking "why?" about 5 times will get you to the root cause.

Let us walk through a typical scenario of missed on-time delivery at JR manufacturing .The firm was struggling to get 95%+ on-time delivery (OTD). During Lean Daily Management, OTD performance of each department was discussed and each incident of delivery miss was discussed during the meeting. The discussion and investigation that followed one particular delivery miss is very revealing and shows the effectiveness of the system.

Adriana the planner, "We had scheduled this item for last week, but production and testing was not completed in time."
Daniel, the cell supervisor (who was listening, was prepared): "True. But we got P/N 342 just yesterday (Oct 17) and there was no way we will make and test that product in one day."
"Ok, Bob the department manager said, "This must be a supplier issue. But let us find it after the meeting."

After the daily meeting, Bob and the cell leaders visited the warehouse to check the data on material receipt. In fact, the material was received on the day it showed on the purchase order - the day before it was issued to the floor. So the supplier shipped it on time. Then, someone commented, "I bet we didn't order it in time."

"I don't know," Bob replied. They walked to the sales area and found that sales entered the order on Sept 18 and PO for P/N 342 was issued on Sept 21, very reasonable. The purchasing group is relieved that they didn't make a mistake. Bob was sure there was something out there that he is not seeing yet. He went back to the planner Adriana asked her how the lead time for the finished product was determined. By this time there were emotions and "not me" attitude. By second day, Bob found Adriana used 5-day lead time for this raw material P/N 342 but the purchase order indicated 11 days lead time.

Continued investigations revealed that the supplier changed the lead time, informed purchasing (who then changed the lead time for material receipt). But no one challenged the increase of lead time from 5 days to 11 days and no one thought this will affect lead time of existing orders.

On third day, Bob wrote down the root cause of this issue:"1) Suppliers are allowed to change lead time with only approval from purchasing, and 2) No system in place to incorporate changes in supplier lead times to existing orders and to communicate it within the organization."

That was for one item. But the fixes will make sure the same issue will not happen again.

Looks painful? Yes it is. Finding true, actionable root cause of problems takes patience, and continued asking of "why?" Once you find the issue, you address all possibilities of the same issue happening again.

John Shook, in his book, Managing to Learn, published by Lean Enterprise Institute, details why managers should not propose solutions to issues - they should teach their staff to ask the right questions, "peel the layers of the onion," and to make the root cause visible to all. Once there is an agreement and buy-off on the root cause, that associate now has the authority to propose solutions to specifically address those root causes. Thus the process of Daily Management and Problem Solving is all about empowering shop level associates to make decisions based on facts and to make continuous improvement as a way of life.

Good implementation of problem solving in any organization is a vital component of waste reduction and continual improvement.

Written by Mathew Nadakal, our Senior Consultant and Lean Six Sigma Blackbelt. Contact Mathew for more information on Lean Daily Management, and Problem Solving development.

Lean Daily Management

Jim is the GM at a $65 million / 225 employees, electronics manufacturing firm in the Southwest (let us call it JR manufacturing). In a recent meeting Jim described everyday life at work.

"At JR Manufacturing, time flies for everyone. The moment I walk in every morning, people come to me with different issues, ask my opinion on how to solve them and you have no idea what kind of issues are waiting for you daily. This is what makes it interesting and exciting. I am a hands-on kind of manager and I do get involved with everyday issues and my people appreciate that."

Sounds familiar?

In fact, this situation, where the senior and mid-level managers spend majority of their time to put out fires, prevails in more than 90% of the firms in the US. This is "normal" to many in those circumstances.

Let's take a look at the significant downsides to this style of management.

a) Jim's recommendations mostly came from prior experience with little in-depth analysis of the current issue or data to back up his decisions. As a result, the managers and shop floor associates don't bother to find a solution to the issue. They were used to seeing all the decisions coming from Jim. Jim needed to develop new customers and start a new product line. However, he was so busy with everyday issues; the growth of the business was suffering.

b) No one developed skills for root cause and problem solving; everything depends on Jim and two of his supervisors (the benefit of thorough root cause analysis, documentation and communication to standardize did not exist). How effective can a hands-on kind of manager be in this working environment?

c) All major key performance issues (such as customer quality issues and on-time delivery) are published at the end of the month and corrective actions are discussed at that time. Vital metrics are now lagging indicators, and could be changed to leading indicators if JR Manufacturing used Lean Daily Management and Problem Solving Techniques.

Lean Daily Management involves looking at issues on all key performance indicators from the day before, finding the root cause and putting in countermeasures. Issues from the day before are fresh in the minds of all involved and investigation of the problem will be much easier. Management of the issues and root cause analysis takes place where the issues occur.

Let's look at an example of a visual dash-board display of performance indicators that helps managers to understand the "state of the union," in a timely manner.

BDC Manufacturing (not a true company-Note: these methods can also be applied in a service environment) has implemented lean daily management to monitor safety, quality, delivery and cost (SQDC, as commonly called in a Lean organization). At every department (engineering, manufacturing, sales) you would find a 5 ft x 8 ft board that displays the results of 5 key performance indicators - the goals and month-to-date performance, results from the day before, pareto of issues, root causes and corrective actions to each issues, year-to- date performance. Each sheet is color coded. Green, means the goals are met and red means goals are not met.

Graphs on daily key performance indicators (KPI's) charts are prepared with green and red marker pens. As a manager looking at this dash-board, it is clear he/she should spend the time on the most critical issue and try to understand what the root causes are. The visual dash-boards give a prioritization of issues to the management in a 15-second glance.

When the expectations are established by management and employees are expecting questions such as "why did this happened and what are you doing about it," they will take ownership of the issues and find the solutions. The management is there only to counsel and make sure this process works. The senior management now can focus their attention to strategic issues such as business growth and customer relationship.

An important note, the biggest start-up mistakes to good lean daily management is, a) putting the blame on people, b) people talking about irrelevant issues and prolonging the meeting and c) the managers proposing solutions. It all takes training and discipline.

Next month, we will discuss some good examples of solving problems at the department level. Article written by Mathew Nadakal, a Lean Six Sigma Blackbelt and associate of the Quality Guru.

Quality Guru Asks: What success have you had in your company with Lean Daily Management and what methods do you find work the best?

Common Nonconformities

Have you ever wondered what are the most common nonconformities found by third party auditors?

A third party auditor's role is to examine your system and if necessary identify any nonconformances.

In ISO 17021, a nonconformity is defined as:

failure to fulfill one or more requirements of the management system standard, or a situation that raises significant doubt about the ability of the client's management system to achieve its intended outputs.

A nonconformity can be identified as a "minor" meaning failure to comply with a requirement which is not likely to result in management system failure, in many cases a single observed lapse or isolated incident. A nonconformity identified as a "major" meaning an absence or total breakdown of a system to meet a requirement, in some cases a number of minors related to the same clause or requirement.

A training session we recently attended by a major global registrar identified sample data from the year 2009 from over 18,000 minor nonconformities found.

The top 5 ISO 9001 minor nonconformities found were:

7.6 Control of Monitoring and Measurement Equipment- 32%
4.2.4 Control of Records - 20%
5.6 Management Review - 20%
4.2.3 Control of Documents - 16%
6.3 Infrastructure - 12%

The top 5 AS9100 Aerospace, 9110 Maintenance , and 9120 Distributors minor nonconformities found were:

7.5.1 Control of Production and Service Provision - 36%
4.2.3 Control of Documents - 26%
8.5.2 Corrective Action - 14%
8.2.2 Internal Audit - 13%
4.2.4 Control of Records - 11%

The top 5 27001 Information Security Management System (ISMS) minor nonconformities found were:

Clause 6 - ISMS Internal Audit - 32%
8.2 Corrective Action - 26%
4.2.1 Establish the ISMS - 22%
4.3.2 Control of Documents - 11%
4.3.3 Control of Records - 9%

The top 5 14001 Environmental Management System (EMS) minor nonconformities found were:

4.3.2 Legal and Other Requirements - 30%
4.4.6 Operational Control - 24%
4.5.2 Evaluation of Compliance - 23%
4.5.3 Corrective and Preventive Action -12%
4.5.5 Internal Audit - 10%

The results show that control of documents and control of records are, and have been for a long time an issue. Another common thread is corrective action and internal audit results.

The Quality Guru asks: What are your organizations most common audit nonconfromities, and what is working for you to eliminate them?

Looking to improve your audit results? Contact us - we deliver process based internal auditor training for all these management systems.

Auditing Customer Feedback Processes

Customer feedback is a process. It needs to be audited as a process, not as a "clause of the standard". An evaluation also needs to be performed on the way in which the process is managed (see ISO 9001:2008 clause 8.2.1), and its ability to provide meaningful information with which to judge the overall effectiveness of the QMS. The way in which the organization obtains this feedback ("the method") is up to the organization to define. The standard states "Monitor information relating to customer perception." Sources can include surveys, customer data, compliments...

The auditor needs to be aware of the specific characteristics of the organization's products that are likely to impact customer satisfaction. Throughout the audit the auditor should be alert for indications that may suggest customer satisfaction or dissatisfaction which could serve as input into the audit of the customer feedback process.

Sources of information can include:

* Goods returned by the customer;
* Warranty claims;
* Revised invoices;
* Direct observation of, or communication with the customer (for example in a service organization).

These are some of the issues an auditor should address during an audit of the customer feedback process:

a) What is the desired output of this process? What information is actually available on customer perceptions? How is this information used by management to drive improvements to the product, processes and the QMS?

b) How is the data collected to feed the process? There are many ways for an organization to monitor its customers' perceptions, and the auditor should avoid preconceived ideas about how this should be done. Some examples of techniques the organization can use include:

* face-to-face visits and evaluations;
* telephone calls or visits made periodically or after delivery of products and services;
* internal enquiries among the organization's personnel who are in contact with customers;
* other contacts with customers, for example by service or installation personnel.

c) How is the data analyzed? Simply collecting data on customer perceptions is not sufficient - the auditor must follow the process through, to check how the data is analyzed and what conclusions are made with respect to the effectiveness of the QMS.

1) Are there any trends? 2) Is the situation stable, improving, or deteriorating? 3) Are customer needs and expectations changing? Asking the organization about industry comparisons, or benchmarking activities, in order to put customer feedback into perspective can be extremely valuable.

d) How does the information generated by this process feedback into the QMS as a whole? Organizations should be using the results of the customer feedback process to trigger corrective and/or preventive actions and as one of the overall measures of the QMS performance. Auditors should review the way in which these processes interact and subject it to the audit process.

The auditor should be able to recognize that the output from the customer feedback process forms an important input into other QMS process, such as data analysis, management review and continual improvement processes. An auditor who strives to add value will try to ensure that the organization recognizes the benefits a sound customer feedback process.

Share your thoughts / methods on how your company monitors and audits customer feedback.