jump to navigation

Measuring Cost of Quality August 29, 2016

Posted by Tim Rodgers in Operations, Process engineering, Quality, Supply chain.
Tags: , , , , , , ,
add a comment

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.

(more…)

Advertisements

Measuring Service Quality August 1, 2016

Posted by Tim Rodgers in Operations, Quality.
Tags: , , , ,
add a comment

Product quality seems easy to measure. We just have to sit down with the people who will be using the product or the part or the subassembly and ask them what physical characteristics are important: dimensions and tolerances, chemical composition, electrical performance measurements, strength, weight, and the like. These are things we can then measure, either directly or through test results, on a representative sample from the production process. If we’ve defined the “fitness for use” characteristics correctly, based on what the customer tells us, then we can determine whether or not our processes can reliably produce products that meet those requirements.

Service quality is harder to measure. The trouble starts with defining the requirements. Who are the customers and what do they want? There may be a lot of them, possibly millions of them, with new ones every day. They each have their own set of unique expectations that might change from day to day. They may not be able to articulate their requirements, or at least not in a way that can be acted upon. Services are typically customized for individual customers, and there’s no standard level of performance. What’s acceptable to one customer may not be acceptable to another.

(more…)

Quality Decisions in Hindsight July 25, 2016

Posted by Tim Rodgers in Management & leadership, Operations, Organizational dynamics, Process engineering, Product design.
Tags: , , , , , ,
add a comment

For the last several years there’s been at least one high-profile case of quality failure that captures the attention of the business press for months at a time. Since late 2015 and early 2016 we’ve been watching to see if air-bag supplier Takata, iconic auto maker Volkswagen, and fast food chain Chipotle will survive their highly-publicized quality missteps. There’s always a lot of apologizing to the public, and a commitment to conduct internal investigations to identify and eliminate the causes of field failures. Senior management and boards of directors scramble to regain the trust of their customers.

I’m not at all surprised by the frequency of these events. What surprises me is that these events don’t happen more often. We should expect to continue to hear about similar catastrophic quality problems from otherwise reputable companies despite all the talk about six sigma and customer satisfaction, and despite all the investments in quality improvement programs. It’s the nature of business.

(more…)

How Much Quality Training Do You Need? July 18, 2016

Posted by Tim Rodgers in Management & leadership, Operations, Quality.
Tags: , , ,
add a comment

OK, not everyone needs to be a Six Sigma Black Belt, but what elements of quality training should be provided to everyone in the organization?

When I worked at Hewlett-Packard in the early 1990s, senior leadership in our business unit attended a week-long series of six sigma classes at Xerox. When these HP folks returned they were provided with training materials and required to teach their direct reports about six sigma, and those direct reports were required to teach their direct reports, and so on all the way down the organization to people like me.

At the time, quality was not really part of my official responsibilities. I worked at a desk, creating product marketing programs for an internal supplier. The six sigma training was interesting to me, but I didn’t see the relevance to my daily work. What I remember most about those classes was how we were supposed to organize routine meetings, including assigning roles during the meeting and being clear about the objectives for the meeting. I don’t remember anything that seemed directly applicable to the quality of our output as a business unit, or the quality of the work artifacts that we produced as part of our daily responsibilities. It just didn’t seem relevant.

(more…)

When You Neglect Operations February 1, 2016

Posted by Tim Rodgers in Management & leadership, Operations, Process engineering, Quality.
Tags: , , , ,
add a comment

A few months ago I heard that one of the companies I used to work for decided to shut down a business unit. I wasn’t surprised, but some people might have been. They had a diversified product line and a hard-working sales force that maintained a high level of demand. Large customers were excited about the new products under development. The supply chain was well-established. What went wrong?

(more…)

What’s the Value of ISO 9001? January 25, 2016

Posted by Tim Rodgers in Quality, strategy.
Tags: , , , ,
add a comment

Earlier tonight I called in to listen to a presentation given at my local American Society of Quality (ASQ) chapter meeting about some of the changes in the ISO 9001 specification in the new 2015 version. I thought the speaker did a great job. He’s a consultant who makes his living helping companies become ISO 9001 certified and preparing for audits. He highlighted the differences in the new version of ISO 9001, and provided some useful tips about how to prepare for the updated requirements.

I don’t think he intended to do this, but he also made me question the purpose of ISO 9001 certification, and specifically whether it’s worth the time and money and effort.

(more…)

What Is the Quality Team Responsible For? (Part 2) January 11, 2016

Posted by Tim Rodgers in Process engineering, Quality.
Tags: , , , , ,
add a comment

If “everyone is responsible for quality,” then what is the quality team responsible for? This isn’t a trick question. If a team or department (or person) doesn’t have a clear, distinct, and ideally-unique assigned responsibility, then should they continue to exist as a separate entity in the organization? Shouldn’t they be doing something else instead, as part of another team?

Of course many businesses don’t have a separate quality team or department at all, and others have chosen to eliminate the quality department as an independent function. That doesn’t necessarily mean that they don’t care about quality. Some of these businesses would probably argue that they have a greater commitment to quality because those principles and tools are fully integrated into all of their functions and processes. Why should all of the Six Sigma Green Belts and Black Belts be located in one central organization? Why not build local competencies within the functional groups, whether in new product development or marketing or finance?

(more…)

Can Business Process Variability Be a Good Thing? October 6, 2014

Posted by Tim Rodgers in Process engineering, Product design, Quality.
Tags: , , ,
add a comment

At least once a month I see an on-line discussion that starts with someone taking the position that companies who focus on operational excellence using six-sigma or lean techniques are doomed because they can’t possibly be innovative at the same time. There seem to be several assumptions in this argument: (1) all companies must innovate in order to compete, (2) innovation in operations management somehow doesn’t count, (3) application of six-sigma or lean in one area of the business means that you can’t innovate elsewhere, and (4) innovation is inherently incompatible with six-sigma or lean. As you can probably guess, I don’t agree with all of those assumptions, and I’ve written about this previously in the context of design and product development processes (see Innovative Design vs. Lean Product Development).

I’d like to explore this a little further. We can quibble about definitions, but let’s assume that six-sigma is about reducing variability and lean is about eliminating waste. In the world of business processes, strict application of these techniques would mean strict adherence to standard processes, measuring the performance of these processes, and continuously improving them by finding and eliminating sources of variability and non-value-added activities. Should lean and six-sigma be universally applied to all business processes? Can some variability and “waste” actually be good for the business?

I think it is. Look, if you care about the result, and you need the result to be predictable and consistent, then you need a process. Innovation, however, isn’t predictable, by definition, and I can’t imagine constraining creativity with a process. If you’re not open to consider different ways of doing things, then you’re not going to be very good at anticipating or responding to disruptive changes in the market or competitive environment. You’ll be constrained by the current process and business model. Continuous improvement is good and necessary, but sometimes you have to throw out the old to make room for something new and better. There are many, many examples of businesses that became irrelevant because they focused entirely on improving a process that proved to be outdated and inflexible. The businesses that thrive are the ones who balance process improvement with process innovation.

Where does process innovation come from? Often it comes from people who are modifying existing processes to meet their needs, perhaps without any authorization. Instead of stamping out variability and enforcing conformity, we should be trying to understand why these changes are being made and why the existing process isn’t working. I’m not saying that we should allow everyone to do whatever they please, but we should recognize that innovation requires experimentation, and that means allowing for differences and variability.

The Danger of Quick Fixes September 17, 2014

Posted by Tim Rodgers in Management & leadership, Process engineering, Quality.
Tags: , , , ,
add a comment

I think it’s fair to say that most people make better decisions when they have more time. With more time we can collect more data, consult with people who have more experience, and weigh the alternatives before choosing a course of action. In the specific case of problem solving, we can propose alternate root causes and perform experiments to verify the cause before implementing a solution. This kind of disciplined approach helps ensure that the problem doesn’t reoccur.

The thing is that in business we rarely have enough time, or all the time we wish we had. All of us make daily, small decisions about how to spend our time and resources based on external priorities and internal heuristics. Some of us have jobs in rapidly-changing or unstable environments, with periodic crises that need management attention. Unresolved situations create ambiguity in the organization, and ultimately these situations cost money, and this cost creates pressure to do something quickly. There’s an emotional and perception component as well: it “looks better” when we’re doing “something” instead of sitting and thinking about it. After all, “you can always fix it later.”

Of course “fixing it later” comes at its own cost, but that’s often underestimated and under appreciated. It’s tempting to implement a quick fix while continuing to investigate the problem. It takes the pressure off by addressing the organization’s need for action, which is both good and bad. The danger is that the quick fix becomes the de facto solution when the urgency is removed and we become distracted by another problem. The quick fix can also bias subsequent root cause analysis, especially if it appears to be effective in the short term.

Please note that I’m not suggesting that every decision or problem solving effort requires more time and more inputs. I’m not advocating “analysis paralysis.” We’re often faced with situations where we have to work with incomplete and sometimes even inaccurate data that may not even accurately represent the true problem. Sometimes a quick fix is exactly what’s needed: a tourniquet to stop the bleeding. However, corrective action is not the same as preventive action. If we want better decisions and better long-term outcomes, let’s not forget that a quick fix is a temporary measure.

How Do You Know It Needs Fixing? August 22, 2014

Posted by Tim Rodgers in Management & leadership, Process engineering, Quality.
Tags: , , , ,
add a comment

We’ve always been told that “if it isn’t broken, don’t fix it.” In the world of statistical process control, making changes to a production process that’s already stable and in-control is considered tampering. There’s a very real chance that you’re going to make it worse, and at the least it’s a bad use of resources that should be committed elsewhere to solve real problems. That’s great advice if you have the historical data and a control chart, but how do you know if a business process needs fixing if you don’t have the data to perform a statistical analysis? How can you tell the difference between a bad business process that can’t consistently deliver good results, and an outlier from a good business process? How do you know if it’s broken?

We often judge a process from its results, an “the ends justify the means” effectiveness standard. If we get what we want from the process, we’re happy. However, we’re also often concerned with how the ends were achieved, which means looking at the cost of the process. This can be literally in terms of the time required and the labor cost, and also in terms of the organizational overhead required and the non-value, or waste, that a process can generate. A process that isn’t giving the desired results is obviously a problem that needs fixing, but so is a process that’s inefficient. You have to spend time with the people who are routinely using the process to understand the costs.

Sometimes we’re not clear about what results we expect from a process. Simply getting outputs from inputs is not enough; we also usually care about how much time is required, or if rework is required (the “quality” of the outputs). We have to look at the process as part of a larger operational system, and how the process helps or hinders the business achieve greater objectives. This is often our starting point for identifying processes that need fixing because these processes create bigger problems that are highly-visible.

Sometimes we jump to the conclusion that a process is broken because we get one bad result. This is where a little root cause analysis is needed to determine if there are any differences or extenuating circumstances that may explain the undesirable outcome. In statistical process control we refer to these as special causes. Finding and eliminating special causes is the recommended approach here, not demolishing the process and starting all over again.

If the process does appear to be broken, it’s important to distinguish between a problem with the design of the process and a problem with how the process is executed. A process can look great on paper, but if the assigned people are poorly trained or lack motivation or don’t understand why the process is even necessary, then they’re unlikely to follow the process. People are usually the biggest source of variability in any process. They also tend to blame the process as the problem, even if they’ve never actually used it as intended. You might think this can be solved by simply applying positional power to compel people, but it’s often possible to make small changes to the process design to make compliance easier, essentially reducing the influence of “operator variation.” Once again, you have to experience the process through the eyes of the people who are using it, what we in quality call a Gemba Walk.

It’s easy to blame “the process” as some kind of inanimate enemy, and there are surely processes in every business that can be improved. However it’s worth spending a little time to determine exactly what the process is supposed to accomplish, how it fits into the larger business context, and whether there are special causes before launching a major overhaul. Sometimes it’s not really broken at all.

%d bloggers like this: