Auditing the ProcessProactively Prevent Costly Process Failures

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The Problem

“GM agrees to pay $900M in ignition-switch scandal…”

“Takata air-bag recalls will cost the company $2.5B. ...”

“Boeing 787 battery fires cost company more than $600M…”

Manufacturers and service providers continue to suffer from customer complaints, warranty claims and product recalls

resulting in high financial costs and damaged brand value.

Defects and errors are more expensive and more likely than ever.

“The cost of poor quality in manufacturing companies ranges from 5 percent to 35 percent of sales. In service organizations, it ranges from 25 percent to 40 percent.” -

Institute of Industrial Engineers

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The Price of Failure

Process-related failures represent the largest component of the cost of quality.

These failures are seen in a number of areas, including costs associated with: • Scrap – from raw materials which have to be thrown away due to

process errors• Rework – when work is re-done because it was completed

improperly the first time• Warranty costs – the defects identified post-delivery, often by

end customers • Maintenance errors – due to acceleration of equipment failures

or calibration issues due to maintenance mistakes• Inspection costs – the cost of resources conducting and

managing inspection activities• Nonconformances – failures which can lead to regulatory

penalties, voluntary and involuntary recalls, losses due to de-certifications, etc.

• Loss of brand value– the damage failures can inflict on a brand, often reducing pricing power and customer loyalty

• Opportunity costs – representing growth missed due to capacity expended correcting errors

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The Cause: Process Failures

“GM’s CEO Mary Barra pledged to ‘hold ourselves accountable and improve our processes…’”

“Takata’s public report focused on the broken safety culture and identified multiple process weaknesses…”

“Boeing’s battery supplier needed to review its cell manufacturing process and ensure that employees were

properly trained…” Quality systems must focus on process to prevent failures

from happening in the first place.

Most quality systems are reactive and unable to locatebreakdowns in process until it’s too late.

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Reduce Unplanned Process Variations

Without the verifications from process auditing, even the best operators deviate from standards and work methods

fluctuate, leading to quality issues.

The surest way to reduce variation is to verify that approved processes are followed.

Process audits verify that employees are performing tasks consistently and according to defined work standards.

They can even be used to assess the adequacy of the standards themselves....

A robust verification examines all parts of a process, including the resources (equipment, materials, and people), the

environment, the methods followed, and the measurements collected to ensure process performance and compliance.

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Layered Process Audits Ensure Consistency

Layered Process Audits (LPA) are a key tool in addressing quality issues. Key members from all major process areas participate, and the audits have the following characteristics:

• Usually short checklists, 5-10 questions taking no more than 10-15 minutes to complete

• Written such that any layer of management can conduct them, without needing detailed subject matter expertise

• Involve multiple levels of management from the production floor to the executive suite

• Varying Frequency – First layer conducts daily audits, and others do weekly or monthly

• Management rotates review areas to maximize engagement and audit integrity

Effective quality management programs can reduce (cost of quality) substantially, thus making a direct contribution to profits. - Aberdeen Research

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LPA vs. Standard Audit Programs

LPA programs offer a number of advantages over traditional audit programs and techniques.

• More proactive than most traditional, sample-oriented approaches• Engage management at all levels - demonstrating commitment to

quality and compliance programs• Put more, varying eyes on processes, making it both less likely for

failures to go unnoticed, and harder to “self-pass” or “buddy pass” issues

• Foster a culture of quality and keep everyone more informed about how things are supposed to work – even in the face of constant change

As with standard audits, however, using paper and Excel or even traditional systems to support these activities can add overhead

without clear benefit.

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Paper and Excel Traditional “Quality” Software LPA Platform

Deploy Inexpensive, inefficient, Inconsistent adoption

Slow and expensive, managed by IT, decentralized

Cloud-based, rapid deployment throughout the

enterprise

CaptureManual, time-consuming

collection, inaccurate, unsearchable data

Requires extensive training, siloed data creates blind spots, limited data types

Easy to learn, uses existing mobile devices, complete

coverage including visual and location content

Report High effort, stale content, poor visibility

Typically static, reactive focus, new reports are

difficult to build

Real-time interactive dashboards drive immediate action; new reports are easy

to define and build

Solution: A LPA Platform

Successful LPA programs require an easy to learn, easy to implement and easy to use system that provides real-time visibility.

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Cloud-based platform means new customers launch within weeks and implementation risk is eliminated.

Modern, intuitive interface requires less training, allowing faster adoption.

Rapid Time-to-Value.

Real-time dashboards with drill-down reporting provide actionable insights into current results and corrective actions.

Real-Time Insights.

Easy-to-use mobile interface with sophisticated data integrity safeguards leads to the consistent collection of timely, accurate, and complete data from everyone in the organization.

Powerful scheduling capability ensures complete coverage for quality initiatives and reduces administrative time by up to 85%.

High-Quality Data.

Beacon is a world-class system that can handle virtually any assessment, from 5S to safety, from training to LPA, while virtually eliminating the overhead and significantly enhancing the benefits of these activities.

Introducing

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Summary - Key Takeaways

• Faster cycle times mean more defects are making it out the door, where the costs to correct are much higher.

• Traditional audits are reactive, focusing on specifications and sampling while largely blind to process failures.

• Layered process audits address these gaps, but they can create overhead or fail to address “check the box” behaviors.

• World-class LPA systems can virtually eliminate the overhead with LPA, and secure the best overall results.

• These LPA systems are extremely cost-effective, with payback periods in weeks or months.

• Using a successful LPA system can improve an organization’s culture of quality by focusing on verification and prevention.

“Companies with superior quality can outperform companies with poor quality by two to three times based on return on sales, and by up to five times based on sales growth.”

– Boston Consulting Group

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About Ease

Ease software has been successfully deployed across a wide range of enterprise environments worldwide – wherever customer satisfaction and high product quality are critical to brand strength.

2015 Gartner Cool Vendor for Manufacturing Operations

To download the full whitepaper or for more information about LPA programs or Beacon, visit us at www.easeinc.com or email sales@easeinc.com.