2014

Purchaser and Supplier Quality

Going beyond ISO 9001, QS-9000 and TS 16949
by R. Dan Reid

Hitoshi Kume, who was tutored by Kaoru Ishikawa, contrasted quality control from the viewpoints of purchasers and suppliers, saying, "Quality control based on existing standards and purchasers' requirements is quality control from the purchaser's standpoint. On the supplier's side, quality control can be made into a management tool by building a system for performing quality improvement methodically, systematically and continuously."1

ISO 9001, QS-9000 and ISO TS 16949 are examples of requirements from the purchaser's perspective.

"As part of business management, quality control is a management tool with tremendous potential, and superb results can be obtained if suppliers take the lead and implement it on their own initiative. Its full potential cannot be realized if it is practiced simply in accordance with purchaser's requirements," Kume added.2

Time has proven Kume's comments true. Several industry sectors have mandated ISO 9000 based requirements to their suppliers. Yet purchasers, at least in the automotive industry, have been somewhat disappointed with the delivered quality.

In a 2001 Associated Press article, an independent supplier survey reported automotive suppliers were cutting corners on quality in response to automaker demands for price cuts.3 Only 20% of the 261 supplier respondents said they were improving quality.

Proven quality improvement methods have been known for more than 50 years but in most companies remain only partially deployed at best. Management often views quality as a somewhat discretionary expense--a candidate for the first thing to go when trouble comes, not something fundamental to business management.

One more key point from Kume is that living organisms do not evolve from the center of their class but from the periphery. "Quality control may appear to be positioned somewhat on the fringes of conventional business management, but it seems to be an effective way of causing business management to evolve."4

Companies interested in leading the business management evolution can use several strategies going forward. They will have to go beyond purchaser requirements and the generic fundamental ISO 9001 requirements.

What top management must do

ISO 9001:2000 places accountability for the management of quality with top management. In clause 5.2, it requires top management to ensure customer needs are determined and met. Clause 5.4.2 requires it to plan the quality management system to ensure requirements and quality objectives are met.

Management is responsible for the system employees' use, so it must understand the processes and what is necessary to improve them. Instead, as W. Edwards Deming said, management frequently does not know what must be done. In the meantime, quality practitioners need to implement strategies from the periphery.

Cost of quality in "management speak"

One proven strategy is to put quality into the language of money. Frank Gryna has said that money is the basic language of upper management.

In the 1950s, Joseph M. Juran defined a cost of quality approach that has been used by many organizations. Unfortunately many have focused only on the cost of poor quality because this is more easily identified.

QS-9000's third edition, clause 4.1.5, lists cost of poor quality as one of the required metrics for operational performance. ISO Technical Specification (TS) 16949:2002, clause 5.6.1.1, requires management to regularly review the cost of poor quality. Also, ISO 9004, clause 8.4, lists the economics of quality among data and information an organization should analyze. Ideally, cost of quality tracking and reporting should be integrated into an organization's accounting system.

Six Sigma has used this cost of poor quality concept to gain management support, showing why it is important to go beyond the cost of poor quality in tracking quality costs.

Mikel Harry and Richard Schroeder say some organizations are stuck at three or four sigma because they believe the costs of going beyond that through defect reduction will exceed the benefits of reducing poor quality. But, they say, five and six sigma performance levels enable companies to dramatically reduce the cost of appraisal and prevention.5 Companies that track only failure costs would not be aware of this.

Strategic auditing

The methodology used for internal auditing is also important. ISO 9001:2000, clause 8.2.2, requires an organization to conduct internal audits at planned intervals. In many companies, each element of the quality management system is audited only once a year.

This raises some questions: Who do you want to discover problems? When do you want them to be discovered in the process? Given that third-party audits are conducted at least annually, yearly internal audits do not provide an organization much of a chance to find problems and correct them before a customer or third-party auditor visits.

QS-9000 and ISO TS 16949 require internal audits be planned annually and conducted with varying frequency depending on whether nonconformances or customer complaints are identified.

Audits of customer oriented and critical product realization processes should be performed more frequently than those of support operations. When an internal audit identifies a nonconformity, subsequent audits of that area should be scheduled more often. Effectiveness and promptness of corrective action should be verified to ensure closure before a nonconformance becomes an external failure.

Process auditing--the next frontier

ISO TS 16949, clauses 8.2.2.2 and 8.2.3.1, require audits of manufacturing processes. ISO 9001:2000, clause 8.2.3, requires measurement and monitoring of processes to demonstrate the ability of the processes to meet planned results.

In the automotive industry, the control plan is a required document containing the plan for quality of the parts and processes. To develop an effective plan, an organization should review the design and process failure mode effects analysis (FMEA) documents.

A key input for the FMEA development is a review of the design record and any required specifications. As Juran pointed out years ago, quality starts with characteristics.

Customers will usually identify key or special characteristics, and suppliers will need to designate other characteristics as key or special, based upon their knowledge of their manufacturing processes.

For characteristics with a high risk or severity of potential failures or high risk priority numbers, efforts should be undertaken to error proof the part or process design. If the efforts are successful, the risk priority should be recalculated on the FMEA. If not, provisions on the control plan and work instructions at each applicable site should mitigate the effect of the potential failure. This will require implementation of verification activities at various stages of product realization.

Organizations should use design records, FMEAs, control plans and operator instructions as elements of the same process instead of treating them as separate unrelated exercises (see Figure 1, p. 86).

Corrective and preventive actions can be prioritized using the information generated in this process, along with records such as control charts, logs and cost of quality (such as rejects, warranty and returns). Error proofing should be revisited at every opportunity.

This approach should also be used in process auditing. Auditors should review process flowcharts, any RASIC (responsibility, approval, support, inform or consult) charts--good tools for defining responsibility, support, approval and information flow for steps in any process--and the documents in Figure 1, and previously mentioned operational records to plan the process audit.

Significant characteristics from the design record should be listed on the FMEAs so risks posed by potential failures can be assessed and prevented. Linkages between these documents should be checked at key or special characteristic interfaces. Characteristics with high severity or risk priority numbers on the FMEAs should be audited for special characteristic designation.

The frequency of verification activities required on the control plan should represent a significant sample of the total shift or day's production volume:

  • Gage repeatability and reproducibility for measuring devices called out on the control plan should be audited for acceptability.

  • Calibration records should be audited for compliance to any calibration requirements of the devices.

  • Key process equipment should be identified and included in the preventive maintenance plan.

  • Records of preventive maintenance and machine capability of equipment should be audited for compliance to the plan.

  • Spare parts availability for this equipment should be confirmed.

This information should be linked to the contingency plans, such as those required by QS-9000. Customer identified special characteristics should be suitably identified on the documentation. Documents or records specified by the control plan should be audited on the floor to verify they are being maintained as planned. Not completing these documents with a cross functional approach can lead to disconnects between the product realization plan and reality.

A competent auditor can effectively complete a process audit as described above in less than one shift. These auditors must be able to distinguish a good FMEA and control plan from a poor one. They must know both customer and supplier specified requirements.

Managing human resources

In the aftermath of Sept. 11, 2001, thousands lost their jobs in the United States as the economy slid into recession. Such rapid changes, whether growth or decline, stress existing management systems.

As employees are laid off, work has to be redistributed. For the redistribution to work properly, employees need training. Work instructions need to be updated when jobs are revised. ISO 9001:2000, clause 6.2.1, requires personnel whose work can affect quality be competent on the basis of education, training, skill and experience.

As organizations downsize, attention needs to be focused on competency. Requirements for education, training and experience should be documented. When, as often happens, a person without experience is named to a position affecting quality (quality director, for example) training requirements should be specified. Effectiveness of training should be periodically evaluated. Records of training completed should be maintained to document competency.

In addition, ISO TS 16949:2002, clause 6.2.2.3, requires on-the-job training for any personnel, including contract or temporary workers, in any new or modified job affecting product quality. This requirement has evolved from postmortem analysis of quality problems from suppliers when the root cause was lack of competence.

Quality practitioners need to understand fundamental quality management, including statistical methodology and variation management. Process capability and process control must be understood throughout the organization.

ASQ has resources that may be of help. Two basic courses, Quality 101 and Quality Basics, are available in several delivery methods. Quality Basics is actually targeted to personnel not assigned to product quality but who provide support for the product realization process.

The ASQ Statistics Division offers Improving Performance Through Statistical Thinking through Quality Press. These concepts are also fundamental for Six Sigma. Quality Press has also just published Fundamental Concepts of Quality Improvement, a collection of previously published ASQ papers that can provide a basic understanding to newcomers to quality.

Juran's Quality Handbook should be on every quality practitioners desk for easy reference, and Deming's Out of the Crisis should be required reading for mid-level to top managers. Both are good sources for ways to encourage continual learning within small groups or teams.

Regardless of the resources used, an organization needs to routinely offer fundamental quality curriculum for staff, especially those new to quality. People cannot achieve world-class quality without first understanding the fundamentals.

While most colleges and universities have generally not responded to this need, some vocational schools are now working cooperatively with local industry. ASQ sections should also view this as a local opportunity.

Managing continual change

Events of the past year have forced organizations to manage continual change. For quality to happen, quality control from the supplier's perspective is necessary. But evidence indicates suppliers do not always pursue the actions needed for quality improvement.

Perhaps quality practitioners who know what must be done can help the cause through the implementation of strategies that will improve quality. This will ultimately improve customer satisfaction, which in turn will provide "jobs and more jobs," as Deming said. Let me know if you have any ideas on this subject.

REFERENCES

1. Hitoshi Kume, Management by Quality (Tokyo: 3A Corp., 1995), p. 5.

2. Ibid, p. 4.

3. Associated Press, "Suppliers Say They Have Cut Corners," Oakland Press, July 25, 2001, pp. C1-C2.

4. Hitoshi Kume, Management by Quality, see reference 1, p. xii.

5. Mikel Harry and Richard Schroeder, Six Sigma (New York: Doubleday, 2000), p. 35.


R. DAN REID is manager, advanced activities, worldwide purchasing, at GM Powertrain. He is co-author of the three editions of QS-9000 and ISO Technical Specification 16949 and ISO International Workshop Agreement (IWA 1), an ISO 9004 based guidance document for healthcare. He was also delegation leader of the International Automotive Task Force and has served on numerous ISO committees, working groups and task groups, including the ISO 9001 revision group. An ASQ Fellow, Reid recently received an Outstanding Achievement Award from the Automotive Industry Action Group for his work in healthcare.


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