Quality Digest’s picture

By: Quality Digest

"Es ris!" (“It’s snapped!”) This apocalyptic line from Richard Wagner’s Götterdämmerung (Twilight of the Gods) referred to the thread of fate or destiny that the three Norns, or Fates, had woven since the dawn of time. This ill omen portended the opera’s inevitable tragic conclusion. This year’s events paint an equally nonexistent future for General Motors Corp. If cutting worker benefits and closing plants are the best solutions the company can offer, I can’t see how it’s going to stay in business or continue to pay dividends. GM’s chief problems are the cost of company-paid health care and an antiquated product-distribution system that adds 20 percent or more to the price of every new car. Getting the United Auto Workers union to agree to shift some health care costs to workers and rewarding blue-collar workers for their cooperation by cutting 30,000 jobs addresses neither issue. Henry Ford would probably have considered these actions evidence that the company’s management team really doesn’t know what to do.

Thomas R. Cutler’s picture

By: Thomas R. Cutler

Many organizations are turning to outside operations-expense management companies due to the recognition of billing scrutiny as a key quality control and quality assurance issue. “When performing bill-auditing and rate-analysis services, many utilities in the United States have errors on at least one to three percent of the bills they send to their customers and have at least some of their customers on the wrong rate. Sometimes finding and fixing these quality mistakes translate into small incremental savings, but other times it’s a quality error that can add up to a major erroneous expense,” says Jeffrey Hart, CEO of Cadence Network, an operations-expense management firm.

When most customers receive their utility bill, they go through the following steps:

  • The bill comes in to a customer who looks at the bill and makes a mental comparison with the last bill.
  • This person then writes a check and pays the bill.
  • The bill is filed in a cabinet, most likely to be never seen again.

The quality process with outside operations-expense management firms is much different. Instead of three steps, there are more than ten documented quality steps depending on the type of solution being offered.

The quality steps for operations-expense management are:

Cheryl Ajluni’s default image

By: Cheryl Ajluni

In today’s fast-paced electronics industry, original equipment manufacturers (OEMs) design, manufacture and service a broad range of products that include fuel cells, pacemakers and wireless devices. In addition to the technical challenges associated with designing such diverse and complex electronic products, identifying quality issues throughout the supply chain remains a constant problem. Brand owners need to know if their product meets specification. If it doesn’t, they need to understand why as well as whether the problem was due to design, manufacturing or process issues. This product performance intelligence is paramount, as today’s OEMs must protect their brands and comply with stringent industry regulations while also meeting customer requirements.Effective product quality management is further complicated by the growing trend toward globalization. As a cost-saving measure, the design, manufacture and test of products are now all routinely done at multiple geographically dispersed sites. Manufacturing issues and product defects often aren’t identified until a product is manufactured or, worse yet, deployed in the field.

Thomas R. Cutler’s picture

By: Thomas R. Cutler

In repetitive manufacturing, it’s possible to apply statistical process control (SPC) techniques to purchased components and manufacturing quality as well as scrap and yield. Statistical analysis is acceptable if a company mass-purchases or mass-manufactures the same product to the same standards every time. The essence of engineer-to-order (ETO) is building a unique complex product every time. There may be components that are common from one machine to another, but not in the same quantity as a repetitive manufacturer.In the ETO world, the cost of poor quality can be very high. The cost of rework to replace an item in a complex assembly and the warranty costs resulting from equipment failure can have a serious negative effect on profit margins. In an ETO environment, quality must be part of the entire process, and not just part of purchasing and manufacturing—the typical focus of a repetitive manufacturer.

Paul McNamara’s default image

By: Paul McNamara

Brutally competitive markets are driving companies to design, build and improve their products faster and at lower costs. Faced with this economic climate, companies are understandably intent on freeing up resources—capital, engineering time and even plant space—that can be reallocated to high-growth, high-margin endeavors.For companies in high-tech electronics, testing is a mission-critical part of the new product development cycle. In these companies, test-related functions—and the engineers who perform them—consume enormous amounts of resources and company time.

The term “test environment” refers to the people, tools, practices and roles required to execute test-related functions. However, the test environment remains largely overlooked as a potential source of dramatic improvements in profitability, speed and engineering productivity.

In many companies, people either don’t see or don’t put the appropriate attention on this business within a business.” Like any business without strong metrics and rigorous financial statements, test-environment businesses tend to produce poor results at the bottom line. The symptoms of poor performance are easy to see if you know where to look.

Joseph A. DeFeo’s picture

By: Joseph A. DeFeo

Once the transformations described in the first of this two-part series have occurred, all organizations should follow a roadmap to achieve and sustain major, organizationwide and beneficial change. The result is a series of separate, different types of breakthroughs in various functions and levels. Sudden bursts of change in specific projects can occur, but it may take months or years before the cumulative effect of many coordinated and inter-related efforts provide maximum results. Although the effort usually begins as a response to a crisis, it should instead be a planned initiative.

The roadmap is a systematic—not prescriptive—way to achieve organizational change. It brings about a positive systemic change, not a technological change in the way business is done. One project won’t change a culture. Many projects that are managed effectively will be needed to meet long-term gains.

Joseph A. DeFeo’s picture

By: Joseph A. DeFeo

The challenges leaders face now are greater, increasingly complex and more difficult than ever before. Their response will decide the success or failure of their organizations in the future. The task is to achieve improved and sustainable results in the face of accelerating and unprecedented change. This is the first of a two-part series, which will examine breakthroughs that must occur before a process can be put in place to achieve major beneficial change organizationwide. The concluding part will include a systematic road map process to bring about and sustain positive change in the way business is done.

Some of the challenges we face have been caused by internal and external events that have changed environments where we live, work and compete. It could be many things: security concerns, fear of travel, technological developments, healthcare costs, defective products and services, or share owners who are unhappy with results or dishonest and unethical behavior. These challenges have many catalysts—technological, customers, societal and political. They can’t be put on the shelf for another day.

Robert F. Hart, Ph.D., and Marilyn K. Hart, Ph.D.’s default image

By: Robert F. Hart, Ph.D., and Marilyn K. Hart, Ph.D.

A steel mill had a quality problem in the manufacture of cold-rolled steel for use in applications such as automobile hoods. Several hot-rolled coils were welded end-to-end to form a long continuous band. The band included the welds that were made to join the original coils together. Unfortunately, many of these welds were failing under tension, causing damage and extreme danger as the coils flailed about.A functional test was performed at the weld station to discover why these coils were failing. After removing the long ridge of previously molten metal, the weld was removed in a 12 in. strip of steel from the full width of the coil. This was done four times every 8-hour shift. (In the steel mill an 8-hour shift is called a "turn".) A 1-in. diameter tool steel ball was pressed down into the test piece until a half-in. high bulge was raised on the opposite side. A failed weld bulge was one where a crack appeared, with some portion of that crack running parallel to the direction of the weld. The rationale for this definition was that such a crack implied that the weld had less ductility than the parent metal.

Barbara A. Cleary’s picture

By: Barbara A. Cleary

Donald Trump’s dramatic, “You’re fired!” on the reality show “The Apprentice” is just entertainment to most people. To teams of summer interns at PQ Systems Inc. in Dayton, Ohio, however, it meant a challenge for the ensuing work week.

The young interns, faced with the tedious task of contacting the company’s customers to verify contact information, saw a long summer ahead of them when they began in May. Cleaning up databases is a notoriously neglected job. And with the repetitive script, the mountain of names, and the difficulty of making a dent in the task, it’s neglected for good reasons.

That all changed when Larry Knight, a sales representative who had been a PQ Systems intern prior to his graduation from Wright State University a year ago, helped the six interns to develop a team approach to the task. Ultimately, they adopted the model of Trump’s popular television series.

Every two weeks, teams would gather in the company’s conference room and present the results of their activities with respect to numbers: contacts made, fax numbers gathered, e-mail addresses verified, database changes made, etc. An additional category—sales generated—was added after the interns discovered that some customers wanted to talk about the company’s products.

Shellye Archambeau’s picture

By: Shellye Archambeau

"Quality is never an accident, it is always the result of an intelligent effort"
—John Ruskin (1819-1900)

A manufacturing company had annual sales of $250 million. Its quality department calculated the total cost of repair, rework, scrap, service calls, warranty claims and write-offs from obsolete finished goods. This aggregated cost, called cost of poor quality (COPQ) amounted to 20 percent of the annual sales. A 20 percent COPQ implied that during one day of each five-day workweek, the entire company spent time and effort making scrap, which represented a loss of approximately $200,000 per day.

Experts have estimated that COPQ typically amounts to 5-30 percent of gross sales for manufacturing and service companies. Independent studies reveal that COPQ is costing companies millions of dollars each year, and its reduction can transform marginally successful companies into profitable ones. Yet most executives believe their company's COPQ is less than 5 percent, or just don't know what it is. All levels of executives recognize that quality is an absolute necessity to survive and succeed in today's business environment. The figure below provides a framework for calculating COPQ as a percentage of sales.

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