2017

BACK TO BASICS

Improving a System

Add value by evaluating rework time and internal, external causes

by Robert Pintavalle

This article was featured in January 2016’s Best Of Back to Basics edition.

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When we think of nonconforming material, we think about scrapped and reworked material or products that directly cut into a company’s bottom line. But a closer look shows that a nonconforming material system can provide a wealth of information.

Most of this information is already recorded for companies that use the ISO 9001:2000 standard or have a similar quality management system (QMS). The standard requires that nonconforming products be "identified, controlled, (preventing) unintended use and (recording) the nature of the nonconformity and any actions taken."1

Two pieces of information transform a system that meets or contains the elements of an international standard for a QMS into a dynamic system with additional benefits that readily support the QMS.

The first bit of information answers the question, "Was the nonconformity created in house or by component parts supplied from outside the organization?" This can be recorded in a check box on the nonconforming material form (see Online Figure 1), which separates products into internal and external causes. Internally caused nonconformances become input for continuous improvement projects. Those caused externally can be analyzed to ensure adequate information is provided to the supplier or to determine whether corrective action by the supplier is necessary.

While more difficult to obtain, the second piece of information is equally valuable: rework time caused by the nonconformance, which includes the time required by all departments involved in reworking or dispositioning the nonconformance. Rework can be analyzed in two ways: by time or money. To analyze by time, total the amount of rework time for the month and divide it by the total units produced to determine the amount per unit. To analyze by dollars, multiply the rework time per unit by the labor cost.

Illustrate the findings

A 12-month line chart showing these rework costs can be presented to management. Add a line to the chart that represents a three or four-month moving average to smooth out monthly variation and see the general trend in rework costs (see Online Figure 2). These measures support Section 8 of the standard: "measurement, analysis and improvement or similar elements for measurements in a QMS."

To prioritize improvement efforts, create a Pareto chart using rework time or rework cost analysis for internally caused nonconformances. A Pareto chart of nonconformances from suppliers (external cause) can focus supplier communication where it is required.

A company that implemented this method saw a 55% reduction in rework cost per unit over a 12-month period. The results demonstrated the cost savings of improvement efforts and assisted in the prioritization of future continuous improvement projects.

Benefits of this additional information include reduced costs, focused problem solving, and increased management visibility, worker involvement, supplier communication and worker morale.

The softer benefits of increased worker involvement and morale are difficult to put a price tag on, but they can be the largest benefits. Workers usually stop ignoring issues that have been causing problems and frustration in normal tasks. When the nonconformances that have affected the workers are addressed, the employees become a valuable part of the system. Soon after including this additional information and taking action on it, an increase in reported nonconformances may be observed.

Measures from the nonconforming system are also valuable inputs into the management review system. Review of rework costs and sources of nonconformance by senior management creates buy-in and focus in these areas. The management review meeting also provides an opportunity for senior leaders to review not only specific action plans for reducing nonconformances and rework, but also their progress toward established goals.

Capturing a little more information about nonconformances and process rework can add a lot of value to an organization that focuses on doing it right the first time.

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Online Figure 1

Online Figure 2


References

  1. ANSI/ISO/ASQ Q9001-2000: Quality Management Systems Requirements, International Organization for Standardization, 2000.
  2. Ibid.

Robert Pintavalle is a senior process engineer with Watson Pharmaceuticals in Fort Lauderdale, FL. He earned his master’s degree in mechanical engineering from Union College in Schenectady, NY. Pintavalle is an ASQ-certified Six Sigma Black Belt, quality engineer, manager of quality/organizational excellence and quality auditor. He is a senior member of ASQ.


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