Module II

THE QUALITY SYSTEM

Module II: The Quality System

Elements of The Quality System

Quality System Defined

As per ANSI/ISO/ASQ Q9000-2000 : The quality management system is that part of the organizations management system that focuses on the achievement of results, in relation to the quality objectives, to satisfy the needs, expectations, and requirements of interested parties, as appropriate.

Elements of a Quality System

! ! ! ! ! Quality policy Quality management Quality system Quality assurance Quality control

Functional Elements of a Quality System

1.! Quality in marketing 2.! Quality in specification and design 3.! Quality in purchasing 4.! Quality of processes 5.! Control of processes 6.! Product verification 7.! Control of inspection, measuring, and test equipment

Functional Elements of a Quality System

8.! Control of nonconforming product 9.! Corrective action 10.!Post-production activities 11.! Quality records 12.!Personnel 13.!Product safety 14.!Use of statistical methods

Module II: Quality Systems

Documentation of the Quality System

Quality System Documentation

1. Quality policy 2. Quality objectives 3. Quality manual 4. Procedures 5. Documents required to ensure the effective planning, operation, and control of its processes 6. Records

Mandatory Documented Procedures

! Control of documents ! Control of records ! Internal audit ! Control of nonconforming product ! Corrective action ! Preventive action

Hierarchical Documentation

Executive Management Quality Management Supervisors and Managers

I II III FORMS

Quality Manual General Procedures Specific Procedures

Document Control
! Documented procedures ! Reviewed and approved ! Master list (readily available) ! Ensure that: ! Documents are available ! Obsolete documents are removed or suitably identified

Document Control Changes

! Reviewed and approved by the same authority/function unless specifically designated otherwise.

! Authority has access to pertinent background information.

! Identify the nature of the change where practicable.

Specifications
! Specifications are documents stating requirements and can relate to either the product or the process by which the product is made. ! The Supplier Management Handbook defines a specification as a grouping of specific parameters that are required to ensure the success of a product to perform as designed.

Quality Information Is Used for Action

! To improve: ! The manufacturing process ! The design process ! The distribution process ! To demonstrate progress ! To document action on nonconformities ! Identification, correction, and prevention ! To demonstrate operation of the system

Module II: The Quality System

Quality Standards and Guidelines

Quality Management Principles of ISO 9000

1.! Customer focus 2.! Leadership 3.! People involvement 4.! Process approach 5.! Systems approach to management 6.! Continual improvement 7.! Factual approach to decision-making 8.! Mutually beneficial supplier relationships

Major Changes in ISO 9000 Over Time

1.! Greater focus on customer and customer satisfaction 2.! Focus on process approach 3.! Clarification of requirements for continual improvement 4.! Greater emphasis on the role of top management 5.! Measurable quality objectives 6.! New requirements for data collection and analysis 7.! Reduced emphasis on documented procedures 8.! Shift in emphasis from training to competent people

Malcolm Baldrige Award Criteria

1.! Leadership 2.! Strategic planning 3.! Customer and market focus 4.! Information and analysis 5.! Human resource focus 6.! Process management 7.! Business results

MBNQA Criteria Objectives

1.! Basis for organizational self-assessments 2.! Actually achieve the Baldrige award 3.! Provide feedback to applicants 4.! Help improve organizational practices and capabilities 5.! Facilitate information sharing of best practices 6.! Serve as a working tool for understanding and managing performance 7.! Serve as a guide for planning and training

Module II: The Quality System

Quality Audits

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Quality Audits

According to Juran, a quality audit is an independent review conducted to compare some aspect of quality performance with a standard for that performance.

Audit vs. Inspection

! An audit is external to the process, whereas an inspection is built into the process as a mandatory step. ! This implies that the process can continue with or without the audit process (unless the audit process justifies stopping the process), but a process cannot proceed past an inspection point without satisfactory results.

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Audits
Purpose 1.! Identify possible sources of systemic problems 2.! Plan preventive action to forestall problems 3.! Solve any problems that may arise Objective 1.! Meet requirements for certification to a standard 2.! Verify conformance with contractual requirements 3.! Obtain and maintain confidence in suppliers capability 4.! Contribute

Product Audits
A product audit is the examination of the form, fit, and function of a completed item after final inspection; characteristics are compared to a set of specifications, standards, or requirements. The boundaries for a product quality audit are narrow in scope.

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Product Audit vs. Inspection

Product Audit Purpose When Conducted Outcome Evaluates the entire product Randomly Broad scope report on issues such as packaging, shipment preparation, user documentation, how the product performs, etc. Inspection Process

Is part of the approval process On a regular and ongoing basis Accept or reject based on a decision rule such as ship/dont ship, or go/no go.

Process Audits
! Process audits investigate a complete process to verify that processes are working within established limits and audited against defined requirements. ! In addition to this check of conformance, process audits also examine the adequacy and effectiveness of the process. ! The boundaries for a process audit are very focused and cover only a portion of a total program.

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System Audits
! A quality system audit answers the question: Is the organizations quality system working, or is it broken? ! A quality system audit :
! determines whether or not an organizations quality system is in place. ! assesses if the system is adequate to meet quality goals and objectives. ! assesses if the system is being followed.

! ISO 9001 and TS16949 (specific to the automotive industry) are examples of quality system audits.

Audits: On Whom by Whom?

! First-party audits Internal audits

! Second-party audits Suppliers

! Third-party audits Independent

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Benefits of an Audit
! Increase awareness of quality among personnel ! Fosters quality system development ! Aids independence
!! Trains internal auditors !! Provides audit methodology

! Identifies improvement opportunities

!! Quality !! Productivity !! Reduces costs

! Aids in allocation of resources

Audit Process Steps

1.! Audit initiation 2.! Audit planning 3.! Audit implementation 4.! Audit reporting 5.! Audit completion

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Audit Preparation
! Define the purpose of the audit. ! Define the scope of the audit. ! Determine the audit resources to be used. ! Identify the authority for the audit. ! Identify the performance standards to be used. ! Develop a technical understanding of the processes to be audited. ! Contact those to be audited. ! Perform an initial evaluation of lower-tier documents to higher-level requirements. ! Develop written checklists of the data needs.

Audit Tools
! Checklists ! Audit sampling plans ! Procedures and flowcharts ! Forms for recording information (e.g., supporting evidence, audit findings, records of meeting)

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Audit Planning
1.! Define scope. 2.! Prepare schedule. 3.! Notify auditee of time and scope. 4.! Read documentation. 5.! Prepare checklist.

Audit Planning Key Principles

! Managers are responsible for: ! Quality ! Conformance to:
! Systems ! Specifications ! Procedures

! Audit is independent

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Audit Planning More Key Principles

! Helps to identify areas for improvement.

! Includes key interfaces.

! Discuss findings with unit manager at the time found.

Documents vs. Records

! Documents are written procedures, policies, etc. that establish a practice or direct a person how to do a jobor what should be done. ! Records are the result of a particular process being performed as specified in a document. Records are what has been done; they provide evidence that the practice outlined in a document has been completed as required.

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Why Audit Documents and Records?

! To ensure documents adequately meet higher-tier requirements, such as policies, codes, and standards. ! To ensure that records provide the objective evidence to demonstrate product acceptability and appropriate implementation of system/process controls. ! To provide the auditor with an understanding of the system/process/product under investigation.

What to Observe?
! Product ! Equipment ! Individuals ! Documents ! Assessing what they have seen after observing

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Audit Report Contents

! Audit findings, nonconformities, and number ! Specific requirements ! Audit evidence of the nonconformity or finding ! Provisions for the auditees response ! Provisions for recording corrective action and follow-up activities ! Opportunities for improving the quality, environment, and/or safety program.

Corrective Action Report Contents

! The finding ! Short-term (remedial or containment) actions, if applicable ! Root cause of the problem ! Long-term corrective action designed to eliminate the root cause ! Timeframe and responsibilities ! Metrics used to determine the effectiveness of corrective action

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Post-Audit Actions by Auditee

! Remedial

! Corrective

! Preventive

Preventive Action Input Sources

! Failure mode and effects analysis (FMEA) ! Fault tree analysis (FTA) ! Statistical process control (SPC) ! Internal auditing ! Product design

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Audit Responsibilities: Client/Sponsor

! Determines need for audit. ! Defines audit scope. ! Identifies concerns. ! Supports/staffs audit. ! Assures independence.

Audit Responsibilities: Auditor

! Complies to audit requirements. ! Plans and conducts audit. ! Documents observations. ! Verifies effectiveness of corrective action. ! Safeguards audit documents.

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Audit Responsibilities: Auditee

! Informs people of audit.

! Provides access to auditors.

! Cooperates with auditors.

! Performs corrective action.

Summary of Audit Conduct

! NO SURPRISES no unexpected visits. ! Objectivity facts and opinions clearly labeled. ! Minimize disruptions. ! Attack problemsnot people. ! Dont tell how to do things. ! Never use for punitive action. ! Issue balanced report. ! Schedule early.

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Auditor Traits
! Be a good listener. ! Avoid put-downs. ! Be inquisitive. ! Be positive. ! Be non-threatening. ! Avoid opinions. ! Maintain empathy not sympathy.

Module II: The Quality System

Cost of Quality (COQ)

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Quality Costs
Quality costs are the sum of all costs that would go away if there were absolutely no quality problems whatsoever throughout the value chain and life of the product.

Quality Costs as a Percent of Sales

Other 70% Quality 25%

Profit 5%

Other 70% Profit 25%

USA

Quality 5%

Japan

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Quality Cost Categories

1.! Prevention Costs Investments in the prevention of defectives (nonconformances) to requirements 2.! Appraisal Costs Appraisal of a product or service for conformance to requirements 3.! Failure Costs Failure to meet requirements can be internal or external

Three Levels of Quality Costs

PREVENTION APPRAISAL FAILURE

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Prevention Cost
Prevention costs are all the costs expended to reduce or prevent errors from being made. Investments in this type of cost usually give the best return and include the costs involved in helping the employee do the job right every time. This type of cost can be viewed as an investment in the future; therefore, it is also considered a cost-avoidance investment.

Examples of Prevention Costs

! ! ! ! ! ! ! ! ! ! ! ! ! Market research Field trials Customer surveys Development and implementation of a quality datacollecting and data-reporting system Development of the process control plan Job-related training Quality-related education and training Procedure writing Supplier surveys Design specification reviews Environmental impact planning Quality improvement programs FMEA

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Examples of Prevention Costs

! Quality and process control planning
!! !! !! !! !! Developing the quality system Defining requirements Procedure writing QA program audits System implementation

! ! ! ! ! !

Design reviews Trainings Process capability studies Process improvement projects Quality reports Data acquisition for analysis

Appraisal Cost
! Appraisal can be defined as testing, inspection, and examination to assess whether requirements for quality are being fulfilled. ! Appraisal costs monitor ongoing quality. These costs are the result of evaluating already-completed output and then auditing the process to measure conformance to established criteria and procedures. Appraisal costs include all the costs expended to determine whether an activity was done right every time. ! Appraisal costs answer the question: did you do it right?

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Examples of Appraisal Costs

! Inspection/verification and testing of incoming materials and products to assure conformance to requirements ! In-process inspection ! Final inspection of product before dispatch ! Product audits ! Dock audits ! Set-up, maintenance, and calibration of test equipment ! Field testing ! Internal functional testing ! Evaluation of field stock and spares

Internal Failure Cost

! Internal failure costs can be defined as those resulting from a product failing to meet the quality requirements prior to delivery (e.g., reprocessing, rework, retest, scrap). ! Internal failure costs are the costs incurred by the organization as a result of noncompliance detected before a product or service is provided. It is the cost the company incurs because not everyone did the job right every timethe cost to redo a defective product or correct an unsatisfactory service.

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Examples of Internal Failure Costs

! ! ! ! ! ! ! ! ! ! ! Scrap Sort, rework, or repair Troubleshooting Re-inspection and retest Material review boards Downgrading Downtime Yield loss Excessive lead time and inventory costs Over production Increased nonvalue-added cycle time

External Failure Costs

! External failure costs are associated with a product or service failing to meet quality requirements after shipment or delivery to the external customer. ! These costs are incurred by the organization producing the product or the service because the appraisal process did not detect all the errors before the product or service was delivered to the customer.

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Examples of External Failure Costs

! Costs of customer-rejected services or products ! Complaint handling ! Warranty costs ! Training of repair and customer service personnel ! Customer charge-back ! Product upgrades or updates in the field ! Overhead costs required to maintain field service centers ! Replacement costs ! Customer goodwill and missed sales

Quality Cost Curve

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Strategy for Using Quality Costs

1.! Take direct attack on failure costs and try to drive them to zero. 2.! Invest in the right prevention activities to bring about improvement. 3.! Reduce appraisal costs according to results achieved. 4.! Continuously evaluate and redirect prevention efforts to gain further improvement.

Quality Costs of a Typical Company

! Prevention 5%

! Appraisal

47%

! Internal Failure

46%

! External Failure

2%

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Use of Quality Costs

! Measure effectiveness of the quality system

! Pinpoint high loss areas

! Identify activities for quality unit(s)

! Budget prevention programs

How to Communicate Quality Costs

! By type of quality cost ! Prevention ! Appraisal ! Failure ! Internal ! External ! Pareto diagram ! Pie chart

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Keys to a Quality Cost Program

! Keep it simple. ! Use current records. ! Involve accounting management. ! Do not rewrite computer programs. ! Be consistent. ! Resist pressure for immediate results.

Cost of Poor Quality

! Cost of poor quality (COPQ) is the costs associated with providing poor quality products or services. ! COPQ includes: - Labor cost - Rework cost - Disposition costs - Warranty cost - Material costs - Others invested in the unit up to the point of detecting the nonconformance - Lost opportunity cost due to the loss of resources used in rework

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Limitations of Quality Cost Program

! Customer failure costs (time, potential lost business, embarrassment) and potential litigation expenses. ! Intangible costs, such as lost revenue due to lost customers, are difficult to capture. ! Cost of quality programs that tend to be vulnerable to short-term management practices. ! Hidden costs are difficult if not impossible to assess, thus costs are usually underestimated. ! The optimum balance between cost and quality level may be impossible to determine.

Quality Training
! Training is the primary method used by management to develop increased capability in job performance. ! Training is a continuing process that includes effort by both the trainer and the trainee towards the goal of acquiring new information, attitudes, and skills on the part of the trainee.

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Quality Training
! ISO 9001:2000 requires that personnel performing work affecting product quality shall be competent on the basis of appropriate education, skills, and experience. ! It also requires that organizations must:
! identify competency needs ! provide training for personnel affecting quality ! evaluate training effectiveness

Principles of Adult Learning

Expectations Adults need to understand what is expected of them and have their own expectations acknowledged. Experience Relevance Adults learn most efficiently if they can relate new information to their own past experience. Adults need to see a use for what they learn. It must fit into current needs and serve a useful purpose. Adults learn more effectively if they are able to proceed at their own pace. Adults take errors personally and are protective of their self-esteem. They learn better in a relaxed, anxiety-free atmosphere. Adults need to consolidate what they have learned through actively applying it. Adults need frequent opportunities to assess their progress. If adults are unable to apply what they have learned immediately after training, much of the learning will be lost.

Self-directed Adults need to feel in control of their own learning. Self-paced Self-esteem

Practice Feedback Immediate Application

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