Lost in Translation
Outsourced maintenance has airlines feeling some turbulence
The grumbles have grown, but for the most part, airline passengers have gone along with the recent cutbacks in services, from tighter seating quarters to luggage fees. That’s because, at the very least, they could count on the plane arriving at its destination in one piece. But a trend that began to take hold in the early 2000s may put that assurance in jeopardy.
Prior to 2002, airlines based in the United States handled most of their own maintenance. Around that time, bankruptcy became a distinct possibility for several airlines, and cost cutting ensued. So airlines began looking for alternatives to the approximately $100 per hour—including overhead and other expenses—they spent on union mechanics in their own shops. The airlines discovered they could save 50% by using independent, nonunion firms and as much as 66% by outsourcing to developing countries, such as Panama.1
In 2003, airlines outsourced maintenance 34% of the time. Four years later, that number surged to 71%. During the same period, outsourcing to foreign companies jumped from 7% to 19%.2 But, what airlines are realizing now is that the money saved by the practice is heading back out the door due to equipment failures and the heavy fines that follow.
On March 7, 2008, the Federal Aviation Administration (FAA) fined Southwest Airlines $10.2 million for myriad violations that included knowingly flying more than three dozen aircraft that didn’t receive mandatory inspections for structural damage. Less than a week later, the airline pulled four Boeing 737s from service after discovering possible fuselage cracks.3 And, four months after that, a Southwest 737 was forced to make an emergency landing in Charleston, WV, after a foot-long hole opened in the fuselage.4
The Dallas-based airline is not the only one in the friendly skies to deal with these not-so-friendly conditions. In January 2009, a US Airways plane that had been overhauled at Aeroman—an El Salvador-based repair company—cut its flight path short when the pressure seal around the main cabin door began to fail.5 Then, in October, the airline was fined $5.4 million by the FAA for operating potentially unsafe aircraft.
The FAA also dinged United Airlines $3.8 million for making more than 200 flights with a Boeing 737 that had two towels jammed into the oil sump area to cover openings instead of the protective coverings that should have been in place.6
The FAA claims the diminishing use of in-house maintenance shouldn’t matter because of its steadfast oversight of third-party providers. The Department of Transportation’s Office of Inspector General called these claims into question in a 2008 report, which, among other things, said:
- "Air carriers are only requested to report their top 10 substantial maintenance providers. As a result, the system provides only limited data for FAA to use in targeting inspections."
- "Over a three-year period … inspectors for an air carrier inspected only four of 15 substantial maintenance providers." And a "major foreign engine repair facility" went uninspected "until five years after FAA approved this facility for carrier use."
- At repair stations that did not receive timely inspections, "problems existed, such as untrained mechanics, lack of required tools and unsafe storage of aircraft parts."7
Even at FAA-approved facilities, such as Aeroman, mechanics relay stories of dangerous maintenance practices. Among the anecdotes are supervisors who order the use of improper parts to speed up turnaround time and mechanics who can’t read repair manuals printed in English. When FAA inspections do occur, they’re done with enough advance notice that the facility can cover up unsafe conditions or practices.8
Not every airline is on board with the outsourcing trend. American Airlines, for instance, relies on its 6,000 mechanics in Tulsa, OK, to keep its fleet up to snuff. And it does so despite its mechanics making four times as much as their counterparts south of the border. How? According to company representatives, American’s turnaround time is about half that of foreign competitors, parts can be repaired rather than replaced, and the mechanics and management meet every week to discuss performance and how both groups can improve.9
That doesn’t mean American hasn’t experienced its own problems, though. In March 2008, its MD-80 fleet joined Delta and United on the ground because the airlines failed to perform routine inspections of crucial wire bundles in certain aircraft.10 And, in September of this year, it was revealed American had been under FAA investigation for several months due to questions surrounding the fasteners the airline uses on the bulkheads of a few MD-80 planes. A month later, the FAA expanded its inquiry after preliminary findings revealed 16 MD-80s flew for months despite substandard repairs to their bulkheads.11
- Daniel Zwerdling, "To Cut Costs, Airlines Send Repairs Abroad," Oct. 19, 2009, www.npr.org/templates/story/story.php?storyid=113877784.
- Christopher Hinton, "Southwest finds fuselage cracks in four aircraft," MarketWatch, March 13, 2008, www.marketwatch.com/story/southwest-finds-fuselage-cracks-in-four-aircraft.
- Associated Press, "Southwest checks fleet after hole forces landing," July 14, 2009, www.msnbc.msn.com/id/31902513/ns/travel-news.
- Zwerdling, "To Cut Costs, Airlines Send Repairs Abroad," see reference 1.
- Michael Ahlers, "US Airways, United face FAA fines for safety violations," CNN, Oct. 14, 2009, www.cnn.com/2009/TRAVEL/10/14/us.arilines.fines.
- David A. Dobbs, "Air Carriers’ Outsourcing of Aircraft Maintenance," Department of Transportation, Sept. 30, 2008.
- Daniel Zwerdling, "Crossed Wires: Flaws in Airline Repairs Abroad," Oct. 20, 2009, www.npr.org/templates/story/story.php?storyid=113942431.
- Daniel Zwerdling, "Bucking Trend, Airline Keeps Repairs In-House," Oct. 20, 2009, www.npr.org/templates/story/story.php?storyid=113971588&ps=rs.
- MSNBC, "American Airlines grounds fleet of MD-80s," March 26, 2008, www.msnbc.msn.com/id/23808772.
- Associated Press, "FAA expands American Airlines repair probe," Oct. 19, 2009, www.msnbc.msn.com/id/33381755/ns/travel-news.
Brett Krzykowski, assistant editor
Up to $800 Billion Wasted Each Year in U.S. Healthcare
The U.S. healthcare system wastes between $505 billion and $800 billion each year, according to a recent report by Thomson Reuters.
The report highlights several key areas of inefficiency in the U.S. healthcare system, including:
- Unnecessary care, such as the overuse of antibiotics and lab tests, to protect against malpractice exposure makes up 37% of healthcare waste.
- Fraud makes up 22% of the wasted expenditures, or up to $200 billion a year in fraudulent Medicare claims, kickbacks for referrals for unnecessary services and other scams.
- Administrative inefficiency and redundant paperwork account for 18% of waste.
- Medical mistakes account for $50 billion to $100 billion in unnecessary spending each year, or 11% of the total.
- Preventable conditions such as uncontrolled diabetes cost $30 billion to $50 billion a year.
"America’s healthcare system is indeed hemorrhaging billions of dollars, and the opportunities to slow the fiscal bleeding are substantial," according to the report, completed by Thomson Reuters’ vice president for healthcare analytics.
- Fox, Maggie, "Healthcare system wastes up to $800 billion a year," Reuters, Oct. 26, 2009, www.reuters.com/article/newsOne/idUSTRE59P0L320091026?.
Study: Quality of Care in U.S. Ranks Behind Other Countries
Despite spending more on healthcare than other developed countries, the United States lags behind on important measures of access, quality and use of health IT, according to an international study released last month.
The study by the Commonwealth Fund, a private health policy group, surveyed more than 10,000 primary care physicians in 11 countries and found the United States is also behind in terms of access to care and the use of financial incentives to improve the quality of care. In other countries, national policies have sped the adoption of such innovations.
The majority of U.S. physicians (58%)—by far the most of any country surveyed—said their patients often have difficulty paying for medications and care. Half of U.S. doctors surveyed said they spend substantial time dealing with the restrictions insurance companies place on patients’ care.
Only 46% of U.S. doctors use electronic medical records, compared with more than 90% of doctors in Australia, Italy, the Netherlands, New Zealand, Norway, Sweden and the United Kingdom.
The Commonwealth Fund called on the United States to learn from other countries (Australia, the Netherlands and New Zealand in particular) with "national payment and information system policies focused on primary care."
"The findings underscore the extent to which national policies matter," said Cathy Schoen, senior vice president for research and evaluation of the Commonwealth Fund.
- Schoen, Cathy, Robin Osborn, Michelle M. Doty, David Squires, Jordon Peugh and Sandra Applebaum, "A Survey of Primary Care Physicians in 11 Countries, 2009: Perspectives on Care, Costs and Experiences," Health Affairs, Nov. 4, 2009, www.commonwealthfund.org/content/publications/in-the-literature/2009/nov/a-survey-of-primary-care-physicians.aspx.
- Steenhuysen, Julie, "U.S. spends most, but health quality lags," Reuters.com, Nov. 5, 2009, www.reuters.com/article/email/idUSTRE5A40L720091105?sp=true.
2010 ASQ QUALITY CONFERENCE
Ford CEO to Speak at World Conference
Alan Mulally, the president and CEO of Ford Motor Co., will keynote next year’s ASQ World Conference on Quality and Improvement, May 24-26 in St. Louis.
Mulally, formerly the executive vice president of Boeing Co., has been at the helm of Ford since 2006. The quality-minded leader has been credited with keeping the automaker competitive during the current recession and finding ways to control costs, gain market share and increase production.
Mulally is scheduled to lead off the conference Monday, May 24. The next day, Robert Stephens, founder and chief inspector of the Geek Squad, is scheduled to appear. The Geek Squad is North America’s largest technology support company.
Terry Jones, the founder and former CEO of Travelocity.com, one of the largest travel companies in the world, will speak Wednesday, May 26.
For conference updates, visit wcqi.asq.org.
Three Quality Jobs Make Top 50 List
Money magazine and PayScale.com, a company that tracks wages, have ranked three quality-related jobs in their top 50 list of careers with great pay and high growth prospects.
Quality control engineer came in at No. 37, manufacturing engineer at No. 38 and quality assurance manager at No. 48.
In addition, business process/management consultant ranked No. 4 in terms of future growth.
The top five jobs overall were systems engineer, physician assistant, college professor, nurse practitioner and IT project manager.
For more information on the survey, which appeared in the November issue of Money, visit http://money.cnn.com/magazines/moneymag/bestjobs/2009/index.html.
QP ONLINE ON PAPER
Quick Poll Results
Each month, visitors can take a short, informal survey, and we post the results.
Here are the numbers from a recent Quick Poll:
"To aid in your organization’s economic recovery, what area should quality professionals focus on?"
- The economics of quality. 50%
- Developing a strategy of hands-on management. 19%
- Supply and purchasing. 16.6%
- Product development. 7.1%
- Training and human resources development. 7.1%
Visit QP’s home page for the most recent poll question posted:
"What’s the most effective way to get a raise?"
- Pursue more certifications.
- Pursue education and training.
- Become more flexible at work.
- Take on more projects.
Lean Six Sigma Conference Set
ASQ’s 10th annual ASQ Lean and Six Sigma Conference is slated for March 8-9, 2010, at the Pointe Hilton Tapatio Cliffs in Phoenix.
The conference, titled "Delivering Global Value and Excellence through Lean and Six Sigma," features a lineup of keynote speakers who represent diverse backgrounds and bring a variety of messages that stem from approximately 40 years of combined lean and Six Sigma experience. Speakers include:
- Rob Bryant, vice president, global infrastructure services process improvement, lead Master Black Belt, lean and Six Sigma, Computer Sciences Corp.
- Forrest Breyfogle, founder and CEO, Smarter Solutions
- Roger W. Hoerl, manager, applied statistics lab, General Electric.
- Ronald Snee, founder and president, Snee Associates.
For more information, call ASQ at 800-248-1946, or visit www.asq.org/conferences/six-sigma/index.html.
DATE IN QUALITY HISTORY
QP looks back on an event or person that made a difference in the history of quality.
Dec. 8, 1765
Eli Whitney, an American inventor who became famous during the Industrial Revolution for developing the cotton gin, was born on this date in Westborough, MA.
Whitney is also credited with influencing modern manufacturing by introducing a uniformity system. When Whitney was awarded a government contract in 1798 to produce 10,000 muskets, he did it with interchangeable parts that were similar in fit and function. This allowed for random selection of parts in the assembly of the muskets.
Whitney’s approach influenced manufacturing processes throughout the next century. Quality partially meant defining ways to objectively verify that the new parts would match the original parts or design. Exact replication was not always necessary, practical, cost effective or measurable.
Whitney ran his firearms factory near New Haven, CT, until he retired in 1820. He died Jan. 8, 1825.
- Folaron, Jim, "The Evolution of Six Sigma," Six Sigma Forum Magazine, August 2003, p. 38.
Who’s Who in Q
Name: Denis Leonard.
Residence: Bozeman, MT.
Education: A doctorate in business and management from the University of Ulster at Jordanstown in Northern Ireland.
Introduction to Quality: While pursuing his engineering degree, Leonard was introduced to quality by Joe Gunning at the University of Ulster. Gunning became Leonard’s role model, and his view of quality and its potential impact inspired Leonard.
Current Job: President, Business Excellence Consulting.
Previous Experience: Quality manager, Veridian Homes in Madison, WI, where he helped lead the company to the National Housing Quality Gold Award in 2006.
ASQ Activities: Leonard is a senior member of ASQ and is involved in many activities, including chair of the Quality Management Division’s (QMD) quality management forum review board, member of QMD’s technical committee for the Baldrige criteria, member of the ASQ Quality Press standing review board, ASQ World Conference on Quality and Management technical reviewer and member of the Feigenbaum Medal Committee.
Other Activities/Achievements: Leonard is a fellow of the Chartered Institute of Quality in the United Kingdom. He is also an assessor for the Northern Ireland Quality Award, a judge for the Wisconsin Forward Award and the lead judge for the National Housing Quality Award.
Recent Honor: Leonard received first place in this year’s U.S. World Standards Day Paper Competition.
Published: Leonard is the co-author of The Executive Guide to Understanding and Implementing the Baldrige Criteria (ASQ Quality Press, 2007). He has also contributed to Quality Progress and Quality Management Forum.
Favorite Ways to Relax: Reading, hiking and spending time with family.
Family: Wife, Mary, an assistant professor at Montana State University.
Quality Quote: Learning from his father, who always took great pride in his workmanship, Leonard believes, "Your work is a reflection of you—whatever that work happens to be. Leave work you can be proud of and strive to make a difference."
WATSON RECEIVES DEMING PRIZE Gregory Watson, past ASQ president (2000-2001), has been awarded the Deming Distinguished Service Award for Dissemination and Promotion by the Union of Japanese Scientists and Engineers.
CENTURY CLUB RECIPIENT Hesam Aref Kashfi, the president of the Iranian Society of Quality Managers, recently received ASQ’s Century Club Award for sponsoring more than 100 new ASQ members. Watson presented the award to Kashfi recently. Kashfi also received the 2009 Harrington-Ishikawa Quality Professional Medal from the Walter L. Hurd Foundation recently. The award is presented by the Asia Pacific Quality Organization.
NEW PUBLICATION In January, ASQ’s Education Division will launch a peer-reviewed publication, Quality Approaches in Higher Education, an online-only supplement for the Journal for Quality and Participation. Its focus is to actively engage the higher education community in discussions related to continuous improvement and quality in higher education. For more information or to submit an article, visit www.asq.org/divisions-forums/edu/index.html.
Word To The Wise
To educate newcomers and refresh practitioners and professionals, QP features a quality term and definition each month.
Derived from the German word taktzeit, which translates to cycle time. The rate of customer demand, takt time is calculated by dividing production time by the quantity of product the customer requires in that time. Takt is the heartbeat of a lean manufacturing system.
Source: "Quality Glossary," Quality Progress, June 2007, www.asq.org/quality-progress/2007/06/quality-tools/quality-glossary.html.
ASQ representatives recently met with the Senate’s newly formed Government Performance Task Force, which wants to learn more about successful cost-cutting measures in public and private sectors … Following up on ASQ’s forum on healthcare IT prior to the House of Representatives’ 21st Century Healthcare Caucus, ASQ met with officials from the Office of the National Coordinator for Health IT last month to continue dialogue on healthcare reform and offer ASQ’s expertise.
Capitol Q is a regular Keeping Current feature that highlights ASQ’s advocacy efforts with government leaders. More information can be found at ASQ’s Advocacy Room at www.asq.org/advocacy/index.html.
Ackoff, Operations Research Pioneer, Dies at 90
Russell L. Ackoff, a man many knew as the dean of the systems- thinking community and a pioneer in the realm of operations research, died Oct. 29 at the age of 90 from complications following hip replacement surgery.
Unlike many in his field, Ackoff’s educational background was rooted in philosophy, a discipline for which he received a doctorate from the University of Pennsylvania in 1947. That foundation was shared by C. West Churchman, his colleague at Case Institute of Technology and a co-author of Introduction to Operations Research. That seminal work, published in 1957, is widely accepted as the most influential early textbook on operations research.
In the book, the pair, along with fellow author E.L. Arnoff, threw the spotlight on the increased segmentation of management responsibilities. Their way of correcting the problem was operations research, which identified "the best decisions relative to as large a portion of total organizations as possible"—a view consistent with systems thinking.1
That focus on systems thinking permeated his career, including the 1972 work with Frederick E. Emery, On Purposeful Systems, which related the discipline to human behavior. Later, Ackoff offered his views on the advent of systems thinking, which he attributed to the work done by philosophers, mathematicians and biologists in the 1940s.
In this new approach, Ackoff said, "a system is more than the sum of its parts; it is an indivisible whole. It loses its essential properties when it is taken apart. The elements of a system may themselves be systems, and every system may be part of a larger system."2
Eventually, Ackoff became disillusioned with operations research, which he claimed was "narrow and inward-looking," and was limited by an increased emphasis on mathematics.3 This led to his rejection of operations research in favor of identifying himself with systems thinking.
His work in the field was far-reaching and even infiltrated the White House under President Bill Clinton, who relied on Ackoff as a consultant at the White House Communications Agency as it implemented systems thinking during its redesign.4
Yet, despite his many contributions, Ackoff waved off the very notion of being tabbed a guru. As he said, "gurus encourage followers who do things their way. I am an educator … I encourage others to go out and adapt these ideas … to do whatever is going to be the most effective solution for them."5
- Maurice Kirby and Jonathon Rosenhead, "IFORS’ Operational Research Hall of Fame—Russell L. Ackoff," International Transactions in Operational Research, Vol. 12, No. 1, 2005, pp. 129-134.
- Russell L. Ackoff, "Science in the Systems Age: Beyond IE, OR and MS," Operations Research, Vol. 21, No. 3, 1973, pp. 661-671.
- Kirby and Rosenhead, "IFORS’ Operational Research Hall of Fame—Russell L. Ackoff," see reference 1.
- March Laree Jacques, "Transformation and Redesign at the White House Communications Agency," Quality Management Journal, Vol. 6, No. 3, 1999.
- Ackoff Center for Advancement of Systems Approaches, "Russell L. Ackoff, Management Consultant and Systems Thinker, 1919-2009," Oct. 30, 2009, http://ackoffcenter.blogs.com/ackoff_center_weblog/2009/10/index.html.
EACH YEAR, NEARLY 50% of potential medication errors are caught before making it to the patient. Of those potential errors, 87% are intercepted by nurses. A recent study—which focused on identifying the costs and implications of medication errors by examining work environments and nurse staffing situations—found that nurses take seven routine steps in the name of medication safety. To read more of the study, visit www.healthleadersmedia.com.