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By Nicolette Dalpino and Calleene Egan



Ten Steps to Address Risk Management

As the world seeks to extricate itself from the worst financial crisis for many decades, many senior risk professionals and independent experts are asking about the roles, responsibilities, and limitations of risk management in the world’s financial institutions. Are the tools available to risk managers fit for the purpose? Is there appropriate expertise and leadership at a senior level to guide risk management? Do risk managers lack authority to rein in the excesses of risk-takers? Is there sufficient understanding of potential risk concentrations across institutions’ full range of operations?

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By Dirk Dusharme @ Quality Digest

I always look forward to this time of year. Not in anticipation of prezzies under the tree, but for what changes 2009 will bring.

First, this issue brings you the last columns for two long-time columnists.

Davis Balestracci’s no-nonsense approach to statistics has been popular with our readers for four years. Irreverent, confrontational, and, hey, let’s say it, just a bit feisty, Davis has challenged our readers’ inbred assumptions about when and how to use statistics. Thanks, Davis, for four years of wit and wisdom and showing us how to “plot the dots.”

Stepping in to take Davis’ place is a man often quoted by Davis, Donald J. Wheeler. As the author of 24 books and hundreds of articles, he is one of the leading authorities on statistical process control and applied data analysis. He is a Fellow of both the American Statistical Association and the American Society for Quality. Don was also Quality Digest’s SPC columnist from January 1996 to December 1997. Welcome back, Don.

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By Nicolette Dalpino

IMTS Posts Biggest Attendance in Years

The International Manufacturing Technology Show 2008, held in Chicago, Illinois, September 8-13, posted its largest attendance since the year 2000. Total registration for the six-day event was 92,450, with 1,803 exhibiting companies.

“We are ecstatic that IMTS 2008 not only achieved but exceeded expectations and objectives,” states Peter Eelman, IMTS vice president of exhibitions. “The feedback from exhibitors and the purchasing activities of attendees prove that manufacturing is not only healthy, but thriving. Manufacturers coming to the show from around the world clearly understand that investing in the latest technology is key to being competitive.”

Purchasing activity was high, along with healthy traffic on the show floor. Some highlights for attendees and exhibitors included the introduction of software standard MTConnect, the Advanced Manufacturing Center, the new Innovation Center, and the National Institute of Metalworking Skills (NIMS) Student Summit, and a press conference from Hexagon Metrology.

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The hydraulic casting components made at Rexroth Guss, a subsidiary of Bosch Rexroth, are characterized by their complex, core-intensive construction and many free-form surfaces. These costly parts, made of cast iron or spheroidal graphite iron, are invariably designed in 3-D CAD software. The transition from 2-D to 3-D design prompted the quality department to look for an appropriate measuring solution to inspect their parts.

“ The requirements for quality assurance have increased with 3-D technologies,” says Frank Mill, quality manager at Rexroth Guss. “Earlier, all major dimensions could be taken from a 2-D drawing for tactile measurement, which is no longer the case. Modern 3-D drawings include little in the way of explicit dimensions. The curves of the free-form surfaces are almost impossible to verify using traditional tactile measurement techniques.”

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By Davis Balestracci

Take a look at the control chart in figure 1. There are no observations outside the common-cause limits, but there are five special-cause flags:

Observation 5: Two out of three consecutive points greater than two standard deviations away from the mean

Observations 21 and 30-32: Four out of five consecutive points greater than one standard deviation away from the mean


So, what do you do? Treat them as five individual special causes? Say, “Well, if you look at it realistically, there really seems to be three ‘clumps’ of special cause?” Because the last seven observations all fall below the mean, some readers might want to call them special causes as well. Maybe nothing should be done because no individual points are outside of the limits.

What have been your experiences?

As I’ve tried to emphasize time and again in this column, always do a run chart of your data first (as seen in figure 2).

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By Nicolette Dalpino and Carey Wilson

Short on News

The majority (52%) of 60 United States-based industrial manufacturing executives surveyed by PriceWaterhouseCoopers are now pessimistic about the U.S. economy, and 36 percent remain uncertain.



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By Quality Digest

Soft Air USA Inc. of Grapevine, Texas, is a subsidiary of Cybergun S.A., the world’s leading manufacturer of replica airsoft guns.

Airsoft guns fire 6 mm plastic balls using a low-power spring, CO 2, gas, or electric force designed to avoid the potential for injury. Many Soft Air USA products are used by the military and law enforcement agencies for training exercises. Soft Air USA has licenses from a wide variety of gun manufacturers, including industry leaders such as Smith & Wesson, Colt, Sig Sauer, IMI (Uzi), Mauser, Thompson, and Kalashnikov.

Because the real guns can’t be shipped to Asia, where the replicas are manufactured, in the past manufacturers would be forced to travel to the United States to make silicone molds of the guns, which they would then take back to their nations. However, Soft Air USA has recently devised a creative means for reducing the time required to get its licensed replica airsoft guns to market by as much as four to six weeks. The company is accomplishing this impressive feat by scanning the real guns using the laser-scanning service bureau of 3-D digitizer NVision Inc. of Southlake, Texas.

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By Hilton Hammond and Jeff Neuner

Gems Sensors & Controls, of Plainville, Connecticut, designs and manufactures a broad portfolio of liquid level, flow, and pressure sensors, miniature solenoid valves, and pre- assembled fluidic systems to exact customer requirements. The large number of configurable products, and the company’s high production volumes, create complex testing requirements. For example, many AC and DC voltages and resistance measurements need to be performed on the large number of different liquid level sensors that are built on a flexible production line.

Jeff Neuner, senior test engineer for Gems, overcame this challenge by developing an innovative testing application that scans a barcode to identify the part number and product configuration information. The test application software uses this product information to create a custom test profile. The application takes advantage of the versatility and speed of the 8845A precision multimeter from Fluke Corp., located in Everett, Washington, to handle many different part numbers and easily keep up with the production pace. The new multimeter has replaced three instruments that were required in the past, which saves floor space, simplifies test system architecture, and reduces maintenance expenses.

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By Quality Digest

Rooting for Analysis

Would somebody please ask Mike Micklewright to stop making sense (“Why Root Cause Analysis Sucks in the United States,”
)? He’s at risk of exposing a vast cottage industry of what Deming called “hacks,” and that could have incredible repercussions thereunto.

Just kidding about the hacks, of course. The real hacks, as Micklewright points out, are leaders who prefer tried-and-false methods of problem-solving. I liken it to how Congress blathers on about an issue and then passes legislation that has zero effect whatsoever, such as the “Airline Passenger Harassment Act of 2001.”

-- Jonathon Andell


I might not have chosen that title, but the article itself sums up the misconception or the inadequacy of how companies practice root cause analysis.

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By Nicolette Dalpino

A Different Side to Risk Management


s a result of the ongoing credit crisis, senior managers in financial services firms are reassessing their risk management processes. This is leading to a greater emphasis on enterprise risk management (ERM) or firmwide risk management, according to “The Bigger Picture: Enterprise Risk Management in Financial Services Organisations,” an Economist Intelligence Unit survey and report sponsored by SAS Institute Inc.

The report is based on an Economist Intelligence Unit survey in July 2008 of 316 senior executives from around the world. Among the respondents, 59 percent say that the credit crisis has forced them to scrutinize their risk-management practices. A key challenge for many financial services companies is that the move to an enterprisewide risk‑management approach is lengthy and often involves a shift in corporate culture.

Executives also indicated that a lack of relevant, timely, and consistent data is preventing a wider acceptance of ERM.

“This survey confirms that financial services organizations will increasingly be looking to adopt best practice in risk management, with firmwide risk and stress testing being placed center stage,” says Allan Russell, head of global risk practice at SAS.