© tel/fax 905-593-8867 email: [email protected] 1 quality management an executive overview

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Quality ManagementAn executive overviewQuality ManagementAn executive overview


Overview AgendaOverview Agenda

Quality Management PrinciplesQuality Management Principles Business PlanBusiness Plan Performance IndicatorsPerformance Indicators Question PeriodQuestion Period


Business rationalizationBusiness rationalization

To achieve competitive advantage, East To achieve competitive advantage, East Penn must proactively implement business Penn must proactively implement business strategies to strategies to meet customer requirements & enhance meet customer requirements & enhance

customer satisfactioncustomer satisfaction achieve, maintain and improve overall achieve, maintain and improve overall

organizational performance & organizational performance & capabilitiescapabilities


Competitive RisksCompetitive Risks MarketsMarkets

customers, competitors, pricing, changescustomers, competitors, pricing, changes ProductProduct

quality, performance, reliability, maintainability, quality, performance, reliability, maintainability, innovation, demand, mix, seasonalityinnovation, demand, mix, seasonality

ProcessesProcesses facility, capability, capacity, technology, quality facility, capability, capacity, technology, quality

SuppliersSuppliers quality, delivery, price, consistency, flexibilityquality, delivery, price, consistency, flexibility

OtherOther workforce, capital, governmental policies, health, workforce, capital, governmental policies, health,

safety & environmentsafety & environment


Quality ManagementQuality Management Implementing a quality management system Implementing a quality management system

must be a strategic decisionmust be a strategic decision Must be consistent with other business Must be consistent with other business

strategiesstrategies Can be integrated with other management Can be integrated with other management

systems such as environmental, occupational systems such as environmental, occupational health & safety, financial & risk managementhealth & safety, financial & risk management

QMS controls must focus on:QMS controls must focus on: product conformity; consistency; continual product conformity; consistency; continual

improvement; enhancing customer satisfactionimprovement; enhancing customer satisfaction


Quality Management PrinciplesQuality Management Principles

Eight quality management principles identified to Eight quality management principles identified to implement a QMSimplement a QMS

Must be used by top management to:Must be used by top management to: Lead & operate an organization successfullyLead & operate an organization successfully Direct & control in a systematic & transparent mannerDirect & control in a systematic & transparent manner Address the needs of all interested partiesAddress the needs of all interested parties Maintain a management system & continually improve Maintain a management system & continually improve

its performanceits performance Maintain consistency with other management Maintain consistency with other management

disciplinesdisciplines


Customer FocusCustomer Focus Understand current & future needs of customersUnderstand current & future needs of customers Meet customer requirementsMeet customer requirements Strive to exceed customer expectationsStrive to exceed customer expectations

ApplicationApplication Understand product, delivery, price, support, Understand product, delivery, price, support,

etcetc Communicate needs and expectationsCommunicate needs and expectations Measure customer satisfactionMeasure customer satisfaction Manage customer relationshipsManage customer relationships


LeadershipLeadership Establish unity of purposeEstablish unity of purpose Provide directionProvide direction Create proper internal environmentCreate proper internal environment

ApplicationApplication Have a clear vision of organization’s futureHave a clear vision of organization’s future Demonstrate commitment to strategies & policiesDemonstrate commitment to strategies & policies Provide required resources and authorityProvide required resources and authority Be proactive and lead by exampleBe proactive and lead by example Understand and respond to external changesUnderstand and respond to external changes Inspire, build trust and recognizeInspire, build trust and recognize Have open & honest communicationHave open & honest communication


Involvement of peopleInvolvement of people Foster full involvement of people at all levelsFoster full involvement of people at all levels

ApplicationApplication Encourage employees see themselves as stakeholdersEncourage employees see themselves as stakeholders Empower them to take ownership and responsibilityEmpower them to take ownership and responsibility Motivate them to seek opportunities to make Motivate them to seek opportunities to make

improvements & recognize achievementsimprovements & recognize achievements Allow them to be innovative and creativeAllow them to be innovative and creative Assist them in enhancing their competenciesAssist them in enhancing their competencies Encourage them to share knowledgeEncourage them to share knowledge Help them derive satisfaction from their workHelp them derive satisfaction from their work Emphasize focus on creating value for customersEmphasize focus on creating value for customers


Process ApproachProcess Approach Manage resources and activities as a process to Manage resources and activities as a process to

achieve more efficient resultsachieve more efficient results

ApplicationApplication Define processes & their sequence & interactionDefine processes & their sequence & interaction Determine criteria, methods & responsibilities to Determine criteria, methods & responsibilities to

operate & control processesoperate & control processes Monitor & measure inputs, outputs and conversionMonitor & measure inputs, outputs and conversion Ensure adequate resources & information are Ensure adequate resources & information are

availableavailable Analyze & improve process performanceAnalyze & improve process performance


ResourcesResources MaterialsMaterials Facilities & equipmentFacilities & equipment Support services & utilitiesSupport services & utilities LaborLabor TechnologyTechnology Methods & measuresMethods & measures ManagementManagement FinanceFinance


Process ConceptsProcess Concepts All work is a process – things go in (inputs), get All work is a process – things go in (inputs), get

worked on (conversion), come out differently worked on (conversion), come out differently (output) (output)

Conversion activities transform inputs to outputsConversion activities transform inputs to outputs Activities require resourcesActivities require resources Outputs can be product or serviceOutputs can be product or service Inputs, outputs and activities are measurableInputs, outputs and activities are measurable Each activity has a supplier and a customerEach activity has a supplier and a customer Each process must have a process ownerEach process must have a process owner


Process ModelProcess Model

Input from supplier

valueaddingactivity

valueaddingactivity

Output to next process

Output to next process

East Penn Mfg

Organization

ABC Company Inc


Process ConceptsProcess Concepts

All businesses are defined by processesAll businesses are defined by processes All processes are inter-dependentAll processes are inter-dependent All processes are defined by sub-processesAll processes are defined by sub-processes All processes cut across functional linesAll processes cut across functional lines All processes must satisfy customer All processes must satisfy customer

requirementsrequirements All processes are capable of being improvedAll processes are capable of being improved


Process ManagementProcess Management

Supplier ABC co Customer

Processes


Process StructureProcess Structure

ABC Mfg

Processes

Activities

Tasks

Control Level

Work Level


Relationship between processes, functions and departments

Relationship between processes, functions and departments

Functions

Processes

Processes

Processes

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Depts

Depts

Depts


Earmarks of process deficienciesEarmarks of process deficiencies Functional separatism exists within the organizationFunctional separatism exists within the organization Problem analysis focuses on the symptoms rather the Problem analysis focuses on the symptoms rather the

root causesroot causes Symptoms trigger the change rather than root cause Symptoms trigger the change rather than root cause

analysisanalysis Changes are implemented mostly by management and Changes are implemented mostly by management and

take long to implementtake long to implement Inter-departmental politics and battles rageInter-departmental politics and battles rage Employees do not see themselves as stakeholdersEmployees do not see themselves as stakeholders Employees are unaware of how other processes & Employees are unaware of how other processes &

functions workfunctions work Measurements exist to prove functional interactionMeasurements exist to prove functional interaction Business objectives have a short term focusBusiness objectives have a short term focus


Relationship of processes to quality management

Relationship of processes to quality management

Quality management is achieved by Quality management is achieved by managing:managing:

The structure and operation of processesThe structure and operation of processes The quality of the resources and The quality of the resources and

information flowing within the processesinformation flowing within the processes


Systems approach to managementSystems approach to management Understand and manage the system of inter-Understand and manage the system of inter-

related processesrelated processes

ApplicationApplication Structure process flow to efficiently achieve Structure process flow to efficiently achieve

customer requirements and internal objectivescustomer requirements and internal objectives Understand the inter-dependenciesUnderstand the inter-dependencies Establish effective communicationEstablish effective communication Measure and evaluate system effectivenessMeasure and evaluate system effectiveness Continually improve the systemContinually improve the system Establish resource constraints prior to actionEstablish resource constraints prior to action


Continual ImprovementContinual Improvement Establish continual improvement as a permanent Establish continual improvement as a permanent

objectiveobjective

ApplicationApplication Products, processes, system, customer satisfactionProducts, processes, system, customer satisfaction Make it the responsibility of every personMake it the responsibility of every person Establish & achieve progressive objectivesEstablish & achieve progressive objectives Focus on effectiveness and efficiencyFocus on effectiveness and efficiency Use and provide training on tools and methodsUse and provide training on tools and methods Promote prevention based activitiesPromote prevention based activities Recognize improvementsRecognize improvements


Factual approach to decision makingFactual approach to decision making

Analyze and review operational results for Analyze and review operational results for effective management and decision-makingeffective management and decision-making

ApplicationApplication Gather performance data relevant to business Gather performance data relevant to business

objectivesobjectives Products, processes, QMS, customer satisfaction, Products, processes, QMS, customer satisfaction,

supplierssuppliers Ensure data is accurate, reliable and accessibleEnsure data is accurate, reliable and accessible Analyze data and information using valid methodsAnalyze data and information using valid methods Use analysis to make decisions balanced with Use analysis to make decisions balanced with

experience and intuitionexperience and intuition


Costs of poor qualityCosts of poor quality Prevention costsPrevention costs

Training, improved specifications, improved process, Training, improved specifications, improved process, employee empowerment, improved technology & employee empowerment, improved technology & equipmentequipment

Appraisal costsAppraisal costs Costs of inspection, labor and equipment, moving & Costs of inspection, labor and equipment, moving &

handling materialshandling materials Failure costs - InternalFailure costs - Internal

Scrap & disposal, rework & re-inspection, opportunity Scrap & disposal, rework & re-inspection, opportunity costs of lost time, moving & storage of reworked unitscosts of lost time, moving & storage of reworked units

Failure costs - ExternalFailure costs - External Scrap & disposal, rework, opportunity cost of lost time Scrap & disposal, rework, opportunity cost of lost time

& lost future sales, legal damages& lost future sales, legal damages


Mutually beneficial supplier relationshipsMutually beneficial supplier relationships Create value by developing suppliersCreate value by developing suppliers

ApplicationApplication Identify and select key suppliersIdentify and select key suppliers Balance long-term and short-term goalsBalance long-term and short-term goals Create clear and open communicationsCreate clear and open communications Jointly establish a clear understanding of customer Jointly establish a clear understanding of customer

needsneeds Initiate joint development, but protect proprietary Initiate joint development, but protect proprietary

work & productwork & product Share information and future plansShare information and future plans Recognize supplier achievementsRecognize supplier achievements


Management ResponsibilityManagement Responsibility

Top management is responsible for the following:Top management is responsible for the following: Management CommitmentManagement Commitment Customer FocusCustomer Focus Quality PolicyQuality Policy PlanningPlanning Responsibility, Authority, & CommunicationResponsibility, Authority, & Communication Management ReviewManagement Review


Management CommitmentManagement Commitment

PProvide evidence of it’s commitment to rovide evidence of it’s commitment to develop, implement, and improve the develop, implement, and improve the quality management system:quality management system: Express importance of meeting requirementsExpress importance of meeting requirements

(customer, as well as, statutory and regulatory)(customer, as well as, statutory and regulatory) Establish the quality policy Establish the quality policy Ensure quality objectives are establishedEnsure quality objectives are established Conduct management reviewsConduct management reviews Ensure the availability of resourcesEnsure the availability of resources


Quality PolicyQuality Policy

Top management must ensure quality policy: Top management must ensure quality policy: is appropriate to purpose of organizationis appropriate to purpose of organization provides a framework for quality objectivesprovides a framework for quality objectives is communicated & understood within organization is communicated & understood within organization is reviewed for continuing suitabilityis reviewed for continuing suitability includes commitment to comply with requirements includes commitment to comply with requirements

and continually improve effectiveness of systemand continually improve effectiveness of system


Quality PlanningQuality PlanningTop management must:Top management must: ensure measurable quality objectives are established ensure measurable quality objectives are established

at relevant functions and levelsat relevant functions and levels Establish objectives for products, processes, Establish objectives for products, processes,

customer satisfaction, QMS, suppliers, dept’scustomer satisfaction, QMS, suppliers, dept’s set objectives consistent with quality policyset objectives consistent with quality policy ensure QMS planning is carried out to manage & ensure QMS planning is carried out to manage &

improve processes as well as meet objectivesimprove processes as well as meet objectives maintain integrity of system when changes to maintain integrity of system when changes to

system are planned and implementedsystem are planned and implemented


Responsibility, Authority and Communication

Responsibility, Authority and Communication

Top management must ensure:Top management must ensure: responsibilities and authorities are defined responsibilities and authorities are defined

and communicated within the organizationand communicated within the organization a member of management is appointed as a member of management is appointed as

the Quality Management Representativethe Quality Management Representative external & internal communications external & internal communications

processes are establishedprocesses are established communication takes place on the communication takes place on the

effectiveness of the QMSeffectiveness of the QMS


Management ReviewManagement Review Top management must perform reviews of QMS Top management must perform reviews of QMS Conduct these reviews at planned intervalsConduct these reviews at planned intervals Ensure QMS is suitable, adequate, effectiveEnsure QMS is suitable, adequate, effective Evaluate need for changes or improvement to Evaluate need for changes or improvement to

QMS, processes, product, quality policy, QMS, processes, product, quality policy, objectives & resource needsobjectives & resource needs

Maintain records of management reviewsMaintain records of management reviews


Provision of ResourcesProvision of Resources

Determine and provide needed resources to:Determine and provide needed resources to: Implement and maintain the quality systemImplement and maintain the quality system Continually improve its effectivenessContinually improve its effectiveness Enhance customer satisfaction Enhance customer satisfaction (by (by

meeting their requirements)meeting their requirements)


PersonnelPersonnel Determine competency needs for personnelDetermine competency needs for personnel (education, training, skills, and experience)(education, training, skills, and experience) Provide training to satisfy competency needsProvide training to satisfy competency needs Evaluate the effectiveness of trainingEvaluate the effectiveness of training Make employees aware of importance of Make employees aware of importance of

activities & contribution to quality objectivesactivities & contribution to quality objectives Maintain appropriate records Maintain appropriate records

(education, training, skills, and experience)(education, training, skills, and experience)


InfrastructureInfrastructure

Determine, provide, and maintain the infrastructure Determine, provide, and maintain the infrastructure needed to achieve conformity to product needed to achieve conformity to product requirements. requirements.

Infrastructure includes, as applicable:Infrastructure includes, as applicable:

Buildings, workspace, and associated utilitiesBuildings, workspace, and associated utilities Process equipment (hardware and software)Process equipment (hardware and software) Supporting services Supporting services

(such as transport or communication) (such as transport or communication)


Work EnvironmentWork EnvironmentDetermine and manage the work environment Determine and manage the work environment needed to achieve conformity to product needed to achieve conformity to product requirements.requirements.

FacilityFacility Layout & condition of production, storage & office Layout & condition of production, storage & office

facilitiesfacilities

Safety of workforceSafety of workforce Temperature, dust, noise, ventilation, light, ergonomics, Temperature, dust, noise, ventilation, light, ergonomics,

health & safety compliancehealth & safety compliance

Safety of productSafety of product storage locations, containers, movement, mistake-storage locations, containers, movement, mistake-

proofing, preservation, packagingproofing, preservation, packaging


Business PlanBusiness Plan Have a formal Business PlanHave a formal Business Plan Plan must be comprehensive and controlledPlan must be comprehensive and controlled Use short-term as well as long-term goalsUse short-term as well as long-term goals Have methods to determine customer’s current & Have methods to determine customer’s current &

future requirements & expectationsfuture requirements & expectations Have process to define scope & analysis of Have process to define scope & analysis of

information, including frequency & methods of information, including frequency & methods of collectioncollection

Have methods to track, update, revise & review the Have methods to track, update, revise & review the planplan

Ensure plan is followed and communicated as needed Ensure plan is followed and communicated as needed to the organizationto the organization

Confidential & not subject to auditConfidential & not subject to audit


Business Plan contentsBusiness Plan contents Company historyCompany history General managementGeneral management Marketing & salesMarketing & sales Products & pricingProducts & pricing InfrastructureInfrastructure Operational performanceOperational performance PersonnelPersonnel Quality management systemQuality management system Environmental management systemEnvironmental management system Financial managementFinancial management


General managementGeneral management

Plan & establish - goals, objectives, policies, Plan & establish - goals, objectives, policies, processesprocesses

Define organizational structureDefine organizational structure Provide resourcesProvide resources Demonstrate timely & effective decision-Demonstrate timely & effective decision-

makingmaking Establish effective communication processesEstablish effective communication processes


MarketingMarketing

Gain knowledge of the marketGain knowledge of the market Gain knowledge of the customersGain knowledge of the customers Gain industry & competitor informationGain industry & competitor information Evaluate channels of distributionEvaluate channels of distribution Determine effective advertising & promotionDetermine effective advertising & promotion Determine marketing strategies & objectivesDetermine marketing strategies & objectives Establish branding & packaging strategiesEstablish branding & packaging strategies Define plans & resources to deploy strategiesDefine plans & resources to deploy strategies Track & measure marketing performanceTrack & measure marketing performance


Sales ManagementSales Management Develop sales forecastsDevelop sales forecasts Deploy sales managementDeploy sales management Establish internal & external communication Establish internal & external communication

processesprocesses Define and provide after sales service & Define and provide after sales service &

customer customercustomer customer Provide sales & customer trainingProvide sales & customer training Determine sales strategies & objectivesDetermine sales strategies & objectives Define plans & resources to deploy strategiesDefine plans & resources to deploy strategies Track & measure sales performanceTrack & measure sales performance


Product & pricingProduct & pricing Evaluate existing product lines Evaluate existing product lines Compare with competitor productsCompare with competitor products Research & evaluate new product technologiesResearch & evaluate new product technologies Have strategies for new product introductionHave strategies for new product introduction Analyze product costs & profit contributionAnalyze product costs & profit contribution Evaluate impact of volume & price changesEvaluate impact of volume & price changes Study competitor costsStudy competitor costs Determine product & pricing strategies & objectivesDetermine product & pricing strategies & objectives Define plans & resources to deploy strategiesDefine plans & resources to deploy strategies Track & measure performanceTrack & measure performance


InfrastructureInfrastructure Determine capacity & capability of existing facilitiesDetermine capacity & capability of existing facilities Include – buildings, equipment, tooling, Include – buildings, equipment, tooling,

transportation, lab, information systems & support transportation, lab, information systems & support servicesservices

Relate to requirements for products, processes, Relate to requirements for products, processes, access, workspace, environmental protection, health, access, workspace, environmental protection, health, safety, security, ergonomics, maintenance & support safety, security, ergonomics, maintenance & support servicesservices

Determine strategies & objectives for infrastructure Determine strategies & objectives for infrastructure expansionexpansion

Define plans & resources to deploy strategiesDefine plans & resources to deploy strategies Track & measure performanceTrack & measure performance


Operational PerformanceOperational Performance Research & apply suitable production, tooling & Research & apply suitable production, tooling &

material handling technologiesmaterial handling technologies Optimize facility layout and process flowsOptimize facility layout and process flows Use appropriate production planning and control Use appropriate production planning and control

techniquestechniques Optimize inventory management – turns, rotation & Optimize inventory management – turns, rotation &

levelslevels Determine strategies & objectives for operational Determine strategies & objectives for operational

performanceperformance Define plans & resources to deploy strategiesDefine plans & resources to deploy strategies Track & measure performanceTrack & measure performance Benchmark against industry & competitorsBenchmark against industry & competitors


PersonnelPersonnel

Establish recruitment strategies & policiesEstablish recruitment strategies & policies Develop compensation & benefits policiesDevelop compensation & benefits policies Develop employee relations & services policiesDevelop employee relations & services policies Establish personnel development methodsEstablish personnel development methods Determine personnel strategies & objectivesDetermine personnel strategies & objectives Define plans & resources to deploy strategiesDefine plans & resources to deploy strategies Track & measure performanceTrack & measure performance


Quality & Environmental managementQuality & Environmental management

Plan QMS upgrade to ISO 9001:2000Plan QMS upgrade to ISO 9001:2000 Plan QMS certification to ISO/TS 16949Plan QMS certification to ISO/TS 16949 Plan EMS certification to ISO 14001Plan EMS certification to ISO 14001 Plan laboratory certification to ISO 17025Plan laboratory certification to ISO 17025 Establish timeline, activities & resourcesEstablish timeline, activities & resources Develop & implement documentation & Develop & implement documentation &

controls and provide necessary trainingcontrols and provide necessary training Achieve planned certificationAchieve planned certification


Financial ManagementFinancial Management

Establish financial capital planningEstablish financial capital planning Implement reliable & timely financial accounting Implement reliable & timely financial accounting

& reporting systems& reporting systems Develop value-added cost accounting systemsDevelop value-added cost accounting systems Implement effective cash managementImplement effective cash management Establish budgets to track & control monthly and Establish budgets to track & control monthly and

annual performanceannual performance Set appropriate credit management policiesSet appropriate credit management policies Provide asset & risk managementProvide asset & risk management Establish tax planning and managementEstablish tax planning and management


Performance indicatorsPerformance indicators



Market and Customer Share of market New and lost customers Customer satisfaction or dissatisfaction indices Quality performance Delivery performance Response time Market/channel/customer profitability Warranties, claims, returns



CompetitorCompetitor Share of market(s)Share of market(s) Customer satisfaction or dissatisfaction indicesCustomer satisfaction or dissatisfaction indices Quality performanceQuality performance Delivery performanceDelivery performance Price performancePrice performance New-product development cycle timeNew-product development cycle time Proportion of new productsProportion of new products Financial performanceFinancial performance


Performance indicatorsPerformance indicatorsBusiness Processes Product (PPM; defect; scrap; rework, waste, etc) Order to delivery response times Product-development cycle time Number of new products Manufacturing cycle time Inventory turns Sales (production) per employee Reinvestment indicators Health and safety performance



PersonnelPersonnel Employee moraleEmployee morale Applicants/acceptance ratioApplicants/acceptance ratio Development hours per employeeDevelopment hours per employee Employee competence measuresEmployee competence measures Employee suggestionsEmployee suggestions Turnover ratiosTurnover ratios


Performance indicatorsPerformance indicatorsEnvironmentalEnvironmental Hours of community serviceHours of community service Hours of industry activitiesHours of industry activities Percentage use of recyclable materialsPercentage use of recyclable materials Amount of pollutant dischargeAmount of pollutant discharge Accidents and injuries resulting from Accidents and injuries resulting from

products or servicesproducts or services Fines/violations of government Fines/violations of government

regulationsregulations



FinancialFinancial Revenue growthRevenue growth Markets/customer profitabilityMarkets/customer profitability Product profitabilityProduct profitability Return on salesReturn on sales Working capital turnoverWorking capital turnover Economic value addedEconomic value added Return on capitalReturn on capital Return on equityReturn on equity Cash flowsCash flows



Need Training or Consultancy help?Need Training or Consultancy help? http://www.askartsolutions.comhttp://www.askartsolutions.com has significant has significant

expertise in all of the implementation steps and expertise in all of the implementation steps and can help you fast track your way to an effective can help you fast track your way to an effective and profitable QMS. and profitable QMS.

If you need help in developing or implementing If you need help in developing or implementing your ISO 9001:2000 QMS, please call us at your ISO 9001:2000 QMS, please call us at 905-593-8867 for a no obligation review of 905-593-8867 for a no obligation review of your needs.your needs.

© tel/fax 905-593-8867 email: [email protected] 1 quality management an executive overview

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