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Measuring Cost of Quality August 29, 2016

Posted by Tim Rodgers in Operations, Process engineering, Quality, Supply chain.
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I’ve always thought “cost of quality” was a great idea in principle. If you could take the costs associated with defects, field failures, returns, and warranty claims, and add the costs of inspection, testing, scrap, and rework, then you could get everyone’s attention.

Quality would no longer be some abstract “nice to have” thing, but a real expense category that could be monitored and managed. With an objective, quantitative model to view how much money is actually being spent because of poor quality and associated practices, you would be able to evaluate proposed improvement programs and measure their performance. You would have something concrete to discuss with design and production teams to compare with estimates of future sales and operating expenses, apples to apples. All of this would lead to informed, balanced, and better decisions.

It sounds great, but it’s a lot harder than it sounds. You may be measuring yields and defects and returns, but now you’ve got to measure costs.

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3D Printing and the Production Ramp August 8, 2016

Posted by Tim Rodgers in Process engineering, Product design, Quality, Supply chain.
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Yes, 3D printing is great. Incredibly intricate designs that have been virtually impossible to fabricate using traditional subtractive or injection molding technology can now be realized. The range of plastics and metallic materials that can be printed continues to grow. The falling prices for commercial printers makes them economically feasible for a variety of applications, including rapid prototyping and on-demand manufacturing of replacement parts for field repairs. The technology will continue to disrupt existing business models and help develop new ones, and I’m following all of this with great interest.

I’m especially interested to see how 3D printing will change traditional manufacturing, particularly for mass production. It’s one thing to build a single product that meets design and performance specifications, but it’s a different challenge to consistently make the quantities of products that are required to satisfy a larger market over an extended period of time at a cost that enables a profit. At some point I expect that established manufacturers will adopt 3D printing as a replacement for current fabrication technologies such as injection molding for some applications, however there are still significant cost and throughput advantages with the older processes.

Here are a couple of considerations:

  • Will the prototype design created using 3D printing still work with the volume production plan? Or, will it have to be re-designed to meet the manufacturer’s requirements and capabilities? A change in the fabrication method means re-visiting the discussion about design for manufacturability.
  • Are the materials used for the 3D printed prototype the same as those that will be used in the final product? What does that mean for functional and reliability testing of the prototype? Are those results still meaningful?

Again, it’s going to be interesting to see how this space develops.

The Battle Over Discrepant Material January 19, 2016

Posted by Tim Rodgers in Quality, Supply chain.
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Quality issues have been on my mind a lot lately, specifically some of the more frustrating things that I’ve had to deal with during my career as a quality manager. In my last job my team was responsible for managing the discrepant material review (DMR) process for our US-based factory.

For those who are unfamiliar, the DMR process is how most factories deal with raw materials or other inputs that have been identified as possibly defective and unsuitable for use. Incoming materials that don’t pass visual inspection or other testing are supposed to be sequestered so they can’t go into production. Later, the DMR process is used to determine what to do with that material. The choices are usually:

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“Speaking of Reliability” Podcasts January 2, 2016

Posted by Tim Rodgers in Quality, Supply chain.
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My friend and former colleague Fred Schenkelberg has started a regular podcast called Speaking of Reliability (SOR) featuring informal conversations on a variety of topics related to quality and reliability engineering. I’ve enjoyed being a part of this series.

I encourage you to check out the recordings at Fred’s Accendo Reliability web site:

http://accendoreliability.com/series/sor/

So far our conversations have been focused on supply chain issues, including how to get suppliers engaged in failure analysis and reliability improvements. You’ll find me on the following recordings:

  • SOR 013: The Design and the Supplier’s Capability
  • SOR 014: Importance of Clear Communication Across the Supply Chain
  • SOR 015: Dealing with the Drive to the Lowest Cost Supplier
  • SOR 016: Breaking the “Profit in Repair” Dilemma
  • SOR 017: Examples of Great Supplier Relationships
  • SOR 018: How to Build a Valuable Relationship with Your Supplier
  • SOR 027: The Need to Collaborate on System Failure Analysis
  • SOR 028: Failure Analysis Best Practices

You can also find the Speaking of Reliability podcasts on iTunes. Give a listen and let us know what you think.

Check Out “Document Center” December 11, 2014

Posted by Tim Rodgers in Quality, Supply chain.
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I don’t typically use this forum for recommendations, but here’s something I can support enthusiastically. My friends at Document Center manage and sell a comprehensive collection of industry and government standards from around the world. Customers who want to clearly express their requirements and quality expectations should be referencing standards in their communications with suppliers. Standards are developed through the cooperative efforts of experienced teams with deep understanding of their respective industries. While your specific product may have unique requirements, it’s important to use standards as a starting point rather than creating something from scratch. Your suppliers should already be familiar with them, and you should be as well.

If you’re looking for standards that are appropriate for your industry, or the most recent version of a standard that you’re currently using, go to Document Center. While you’re there, take a look at the guest blog that I contributed to the site last month at: Does Anyone In China Pay Attention to Standards?.

Why Should a Supplier Work Harder For You? September 22, 2014

Posted by Tim Rodgers in International management, Management & leadership, Quality, Supply chain.
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A recent LinkedIn discussion addressed the question of the best strategy for dealing with poor supplier performance. A lot of the respondents seemed to advocate a punitive approach, either threatening the loss of future business if performance doesn’t improve, or combing through the terms & conditions in the contract for enforcement language. I’ve always thought that there’s a lot of similarity between managing suppliers and managing subordinates, and I wonder if some of these same people threaten their teams with punitive actions when individual performance doesn’t meet expectations.

I’m not a psychologist, but I’ve always been suspicious about the long-term effectiveness of threats. A supplier who works to avoid negative consequences may achieve a minimum level of performance, but probably not much more than that. If you expect your supplier to represent your interests when you’re not actively observing their performance, you have to provide a reason for them to do so. What’s in it for them? An ongoing relationship with future business? That assumes that the supplier actually wants or values your business, which is not a given, and that you are sincerely prepared to switch suppliers if you don’t get the performance you expect.

Two important questions to consider before threatening to switch suppliers are: (1) What is the switching cost, including the risk to current production? and (2) Is switching suppliers really going to lead to higher performance? Regarding the latter question, there’s an assumption that the supplier is the cause of the poor performance. Before changing suppliers you need to be confident that the same performance problems won’t be repeated elsewhere.

A supplier is more likely to behave as a partner if they get something more out of the relationship than money for services rendered. So, what do suppliers want? Here are some examples:

  • Large, well-known customers that they can use in their advertising to attract new customers. This is especially valuable for smaller suppliers that are looking for revenue growth.
  • Technical capabilities that can be leveraged to other customers. If the customer’s requirements drive the supplier to develop new technology, or higher levels of quality or throughput, then the supplier will be able to attract other customers.
  • Entry into new markets. Suppliers that focus on specific markets (e.g., consumer electronics, semiconductors, automotive, aerospace) are at risk due to economic and demand cycles. A diversified portfolio of customers and markets provides more stability.
  • Predictable demand for better asset utilization. Suppliers are just like any other business: they like being able to confidently plan into the future. This is so important that some suppliers are willing to give a discount if the customer is willing to commit to use a fixed level of their capacity over a period of time.

Most suppliers operate with very small profit margins, and if they are in a position to choose their customers, they have to consider the cost to service each customer. If you can’t give them a reason to value your business, then you shouldn’t be surprised or disappointed if they don’t go the extra mile.

Seeing the Forest to Improve Quality May 14, 2014

Posted by Tim Rodgers in Process engineering, Product design, Quality, Supply chain.
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A few weeks ago I listened to a presentation by a quality engineer who gave an overview of his company’s processes for measuring and improving first-pass yield (FPY). He started with a fairly standard graph showing the trend in FPY over time, and later presented a detailed breakdown of the individual defects found at the end-of-line testing of the product. It was a typical Pareto analysis, with a problem solving focus on the defects that occurred most-frequently.

All very straightforward and by-the-book, but it seemed to me that there was something missing. Certainly part of our job in quality is to address the problems that occur most often, but it should also be about detecting trends and implementing preventive action, not just corrective action.

I asked the speaker if he had tried to classify the individual defects into categories of some kind (Answer: no). In this case, for a hardware product, one simple classification scheme would be to group the defects by root cause, such as design, workmanship, supplier, or test procedure. A large number of defects in one root cause category would indicate the need for a more generalized problem solving approach that prevents different, but similar, defects from occurring in the future.

You might get there eventually, if you ask enough “whys” during the corrective action root cause analysis, but too often this results instead in a localized fix to a specific defect. We don’t see the forest for the trees, and we end up chasing individual defects instead of addressing the real causes. It may look good to reduce or eliminate defects one-at-a-time, but in quality we should be working toward defect prevention, and that requires more detailed analysis.

Improving Quality in China March 27, 2014

Posted by Tim Rodgers in International management, Process engineering, Product design, Quality, Supply chain.
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Many years ago people would complain about “cheap Japanese” products, but today few people would associate Japanese brands with poor quality. The turn-around is widely-attributed to Deming, and Taguchi, and Juran, and other evangelists who taught not only the tools and processes, but also the long-term benefits that can be realized when a company adopts good practices and a culture of quality.

Today I hear people complaining about poor quality in Chinese-made parts and products, and there have been several widely-publicized incidents (see Aston-Martin and counterfeit parts). Many customers have decided to move their production and seek part suppliers in other locations, including “re-shoring” to North America, in-part because they’ve concluded that any cost savings due to cheaper labor is outweighed by the costs of poor quality. It’s hard to say whether this will have a negative impact on the worldwide consumer perception of Chinese brands such as Lenovo, Haier, and others.

Some people have tried to find cultural explanations, suggesting that individuals in the US, or Europe, or Japan are generally more likely to take pride in their workmanship than their Chinese counterparts, and therefore deliver better quality even if no one is watching. Others look for differences in education and training, and specifically point to the traditional Chinese emphasis on rote learning that discourages creativity and adaptation.

I worked in a factory in China for almost two years (see my other blog “Managing in China”), and I’ve used Chinese suppliers for over ten years. It’s dangerous and un-wise to generalize in a country of over a billion people, but I think the problem has less to do with individual skill and more to do with priorities and expectations. Margins are typically very small at suppliers and contract manufacturers, and unless there are clear incentives or penalties for quality performance these suppliers will cut corners, substitute materials, and, yes, occasionally ship defective parts because it costs money to scrap or repair. The performance of an individual machinist or assembler is determined by the priorities set by their line supervisor, and the highest priority is usually meeting the production quota, not high quality.

That being said, there is a growing movement in China to improve quality as more companies realize the internal and external benefits. Internal: lower cost production, specifically when scrap and rework can be prevented. External: a differentiator when competing for business. Customers can help move this along by making it clear that quality is a requirement for any future business awards. Competition will lead to improved quality if customers insist on it.

I don’t believe this is a uniquely-Chinese issue. Unless we start demanding better quality from our suppliers, we will surely be complaining about poor quality from Indonesia, or Vietnam, or any other alternative. Japanese brands improved their quality in the last century in-part to compete more effectively with US and European brands. If we insist on better quality, Chinese firms will surely do the same.

New Slide Deck: Subcontracting Quality March 20, 2014

Posted by Tim Rodgers in Quality, Supply chain.
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In March 2014 I presented a talk called “Subcontracting Quality” at my local chapter meeting of the American Society for Quality. Here’s a link to the file on SlideShare:

Subcontracting Quality: Extending Your Quality System to the Supply Chain from timwrodgers

Quality, Rework, and Throughput March 3, 2014

Posted by Tim Rodgers in Process engineering, Quality, Supply chain.
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Some years ago when I was managing a software quality department I got into a heated conversation with one of my colleagues about our testing. “If your team would just stop finding defects, we can wrap up this project.” I had to point out that it wasn’t my team that introduced the defects in the first place. Of course no one deliberately does that. Software engineers want to write new code, not fix their (or anyone else’s) mistakes.

Quality isn’t only important for external customers and end-users. Internal operations should also improve quality as a way of focusing limited resources on value-added activities. In manufacturing, repair and rework are part of the “hidden factory” that reduces throughput and can prevent the plant from running profitably.

This isn’t hypothetical. At the China factory where I worked my goal was to improve end-of-line yield to the point where we could eliminate a single rework station for each production line. With more than 30 lines and 2 shifts that added up to some significant savings as well as an increase in capacity.

We’re human, mistakes will be made, and the complexity of our designs virtually guarantees that there will be unexpected outputs and interactions when we put those designs to the test in a service environment. However, we shouldn’t accept the frictional cost of fixing defects as an inherent inefficiency in the value delivery system. A defect found today is worth more than a defect found tomorrow, but a defect prevented by better design of products and processes has a far greater impact.

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