Quality Case Study #1

by Chris Turley

Organisation profile

  • Automotive fuel systems supplier Toyota, Honda, Nissan, BMW, Jaguar, Land Rover, Lotus,
  • Ford, GM, Aston Martin, Daimler Chrysler
  • Turnover: Circa £25 million
  • Employees: 240+
  • Location: Leicestershire, UK
  • Customer quality performance: > 10,000ppm against the industry target of < 25ppm
  • Open complaints: > 120
  • Internal quality performance: Very poor but details unknown as not measured
  • Supplier quality performance: Very poor but details unknown as not measured

Business situation

– Significant risk of losing business as a direct result of customer dissatisfaction caused by poor quality performance (i.e. high number of problems, poor responses and service)
– Customers had no trust in the business or in the individuals
– Poor reputation with customer decision makers
– Customers applying pressure to accept external support (i.e. Toyota Supplier Development)
– Poor quality effecting delivery performance
– Incurring high costs due to penalties and cost recovery due to poor quality performance
Quality situation
– The existing Quality structure was not / could not provide the business with the required level of support
– Quality activities were not integral to the business
– The quality structure and roles were not clearly defined ̴ no goals, targets or objectives
– The Quality staff were not being led, managed or motivated and were almost at the point of surrender having been ‘beaten down’ by the situation.
– The importance of Quality within the business was stated but not emphasised, driven or owned.

Approach

The initial priorities were to get an understanding of the real situation (identify any critical issues), to get the quality staff working as a team and to ‘buy time’ from the customers to enable effective analysis and the identification of the business root causes of the poor performance. The defects alone were not responsible for the levels of customer dissatisfaction being experienced; the lack of ‘customer service’ was increasing the dissatisfaction and annoyance factor by ten fold.

Immediate Action 1: Gain control (quickly)

Quality team review undertaken to review and assess the current status.
Prioritised open concerns based on the real risk they posed.
Decided the ownership of the ‘high risk’ issues and agreed required actions and timing.
Created a core team to take control and deliver the required short term actions.
Communicate decisions and logic to key customer quality contacts.
This was quite a painful process initially, due to a combination of my direct approach, something the staff were not used to, and the staffs skills, experience and frame of mind. This was a very ‘hands on’ period in order to demonstrate that the team would not be asked to do anything I wouldn’t do myself.
In addition all customer ‘difficulties’ and meetings were led by me (i.e. the staff were protected from the dissatisfied customer) building a solid trust based relationship within the team over a short period.

Immediate Action 2: Remove the risk of poor quality to the customer

Containment activities (separate inspection activity Vs Agreed standard)
Inspect for known defects in process
Review and address key historical issues
It was vitally important to clearly demonstrate the effect of the change in approach and provide a tangible change point, primarily to the customer but also to the organisation itself. We initially used a combination of key personnel and managers to get this up and running quickly and it was not without problems but nothing works as well as a step change in performance.

Immediate Action 3: Communicate directly with the key customer quality contacts

Communicate the change in approach and the specific actions being taken
Create a personal relationship based on my ownership of the quality of product and service
Although time consuming and not without frustrations, this process was key to forming a ‘new’ face to face relationship with our dissatisfied customers. These people had been on the receiving end of our organizations poor performance and as a result were not wholly receptive. The more proactive openly offered support, while others waited for the results to convince them. The old adage about a good reputation being difficult to achieve was proven true in these circumstances.

Immediate Action 4: Visualise and manage status (Keep control)

‘Battle board’ or ‘Quality dashboard’
Daily Quality Team meetings
Weekly Concern Review
We implemented a ‘Battle board’ in the quality department to visualise the live issues, actions and ownership, replacing the concern files that existed previously. The board was for our internal department use, being updated in real time and reviewed each morning by the team. A positive side effect of this process was that it also served as a great passive communication tool both internally and when customers visited the office, any potential embarrassment caused by exposing our problems was outweighed by the effect of transparently demonstrating our control methods and management. This transparency also served as motivation to the team as any issues were openly challenged and discussed. All open concerns were reviewed, by the team, on a weekly basis, and this review was a powerful vehicle to get things done and also to remove any blocks or obstacles.
These immediate actions focused on managing the short term risks to the business and by their nature did nothing to integrate the Quality department within the organization. In fact they created a trench warfare mentality within the core quality team. The positives were clear to see in the ownership and proactive attitude of the team, but we also experienced a number of negatives, including a number of ‘teething’ problems between quality, manufacturing and projects staff

Next stage 1: Improvement Plan

Developed a programme of improvements focused on improving the quality of products produced (process based) and customer services provided (service based).
Communicate the programme across the whole organisation.
Communicate the programme to all key customer contacts.
Visualise the programme via Quality display board and staff briefings.

Once the improvement plan was underway it was vital to keep the customers fully updated with progress and ensure that the service they received was thorough and professional, whilst always fully representing the business interests. Having a poor reputation means that you are very often the first port of call when a problem occurs and conclusions are jumped to rather than investigated, with this in mind the level of support provided is critical, so we employed a very proactive approach in order to incur the minimum negative effect possible. We would offer on-site support at the customer allowing us to clarify issues and potential causes on or near the ‘coal face’ rather than just acting on the customer’s opinion. This approach is a delicate balancing act between being supportive and difficult but is a great way to build (repair) customer relationships without wasting time, money and manpower on issues not of your making.

Next Stage 2: In process quality

Poka Yoke – Fool proofing
Process improvement for zero defects
Reduce internal reject / scrap rates
Eliminate customer complaints / returns

The most efficient way to manage defects is not to make any in the first place so we focused our attention on developing our live production processes and our people to be capable of delivering zero defects.
The principles of Poka Yoke were driven into every facet of our processes (Equipment, tooling, cell layout and most importantly our staff). This phase of activity was based on a combination of simple basic engineering, making process as close to foolproof as feasible, and developing the awareness, knowledge and skills of our people.

Next stage 3: Processes & Systems Vs Actual

Complete review the organisations quality processes, systems and documentation.
What’s in the Quality Manual (Actual Vs Manual)
Understand what tools, techniques are actually in use
Understand how the organisation ‘does’ quality (What quality activities are undertaken)

It was clear from the outset that the Quality Manual bore no resemblance to reality and mainly focused on tasks relating to the administration and maintenance of QS9000 rather than tasks to enable an acceptable level of quality performance. Although QS was an important accreditation it was not supporting the daily activities and was of very little real value to the organisation.

Next Stage 4: Reactive to Proactive

Eliminate the root causes of quality problems before they occur
Products designed for manufacture and quality
Processes designed to deliver zero defects

We were dealing with the issues which already existed, but we now also focused on ensuring that we didn’t add to our workload by launching new products or processes which were not capable of zero defects. The key in achieving this was our New Product Introduction (NPI) or project management process. We implemented a number of quality specific activities into the NPI process, from design reviews focused on past problem history to quality tooling reviews and trials long before the start of production.

Solution

Delivering real quality improvement is about transparency and tenacity, bringing the problems to the surface, however painful, and dealing with them once and for all. Identifying, analysing and eliminating the root causes of the problems you experience, wherever they lie.
Our approach to dealing with our customers was based on one of ‘measured honesty’, clearly no business is totally transparent to their customers, however trust is a vital component in a successful customer supplier relationship and transparency, honesty and ownership are what trust is based on. We shared potentially professionally embarrassing issues with our customers and always proactively accepted ownership of issues, ensuring that they came to trust our input and opinion. We used logic as the arbitrator of our actions and established a strong position in all our customer relationships, leading us to become the preferred quality supplier of our chosen customers.

Benefits

The headline results achieved were as follows:
Customer PPM improved from >10,000ppm to <25ppm (99.75%) in 3 years
Recovered and then developed customer relationships based on integrity and trust
Delivered a business wide culture of quality
Became the quality supplier of choice for our chosen customers
Launched 50+ projects over 3 years with zero launch PPM

We later used the same approach at a sister plant in Yorkshire, UK, delivering an 83% improvement in customer quality performance and a 46% improvement in internal performance within 2 years.

The financial benefits are more difficult to establish, however as a guide we carried out a cost case study in an effort to understand the true cost of poor quality and determined that the average cost to the business of a single reject customer complaint was £1500 versus a component sale price of £3.50, so it’s not too difficult to visualise the ‘unseen’ cost of poor quality.

Of greater benefit was the effect on our people, environment and atmosphere, the improvements in quality performance changed the entire dynamic of the team, we went from being under constant pressure, constantly firefighting with our focus entirely on the reactive, to being able to be proactively plan and improve our business.
Our customer’s satisfaction levels improved dramatically, due in part to the obvious reduction in problems they were exposed to, but also as a result of the improved relationship.
It’s not easy to quantify the effects of a good customer supplier relationship however as a result of our quality performance we became the supplier of choice for our chosen customers, the ideal situation for any business.

Learning Points

  • Gain control quickly.
  • Data and evidence are king.
  • People are the key.
  • Prioritise tasks by effect.  The Pareto rule – 80% of the effects come from 20% of the causes.
  • Visualise status and keep it live.
  • Communicate clearly and regularly.
  • Develop and standardise an effective and robust problem solving process and structure.
  • In-process quality is the only efficient option.
  • Don’t ever give up….making improvements isn’t easy.

Process Key Stages

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