Fastco Case Study: Cost of Poor Quality As a Percent of Sales

With multiple projects vying for your budgetary dollars, every purchase is scrutinized. With regards to statistical process control (SPC) software, companies view it primarily as a production efficiency tool, but they should expect more from their SPC software solution.

When evaluating SPC software, three critical areas must be considered:
1. Implementation time and return on investment (ROI)
2. Increase in production efficiency
3. Improvement in corporate profitability

Here are some questions you should consider when purchasing a SPC software solution.

Implementation time and ROI

SPC software has evolved into a highly sophisticated product that smoothly integrates into the production environment. Many SPC software companies will tell you that it takes “years” to implement an SPC software solution. How much revenue is lost each day if your implementation takes years? It shouldn’t have to.

When looking at SPC software solutions, consider the following implementation and ROI issues:
• Does the SPC solution provide a smooth implementation and offer a rapid ROI?
• Is the SPC software easy to install and can all levels of users, including engineers, managers, and operators, be quickly trained to use it?
• Does the SPC software design and setup lead to quicker employee adoption?
• Does the SPC software vendor provide personalized support throughout setup and implementation process?
• Once installed and working, does the SPC solution turn into a business investment that keeps paying for itself?

Increase production efficiency

According to Jack B. ReVelle, an ASQ Fellow and author of Quality Essentials: A Reference Guide from A to Z (ASQ, 2004), the cost of quality has numerous hidden costs to the company:
• Research shows that cost of poor quality (COPQ) can range from 15 percent to 40 percent of business costs, e.g., rework, returns and complaints, reduced service levels, and lost revenue.
• Most businesses don’t know what their quality costs are because they don’t keep reliable statistics.
• Finding and correcting mistakes consumes an inordinately large portion of resources.
• Typically, the cost to eliminate a failure in the customer phase is five times greater than it is at the development or manufacturing phase.
• Effective quality management decreases production costs because the sooner an error is found and corrected, the less costly it will be.

Case study: Fastco Industries

Incorporated in 1970, Fastco Industries manufactures special fasteners from its 150,000 sq ft facilities in Walker, Michigan. Serving a customer base in West Michigan, Fastco also supplies products to the Midwest, Canada, and Mexico. Although predominately a supplier of automotive fasteners, Fastco also has key customers in the office furniture, appliance, and recreational vehicle industries.

Dedicated to continual improvement, 100-percent on-time delivery, and zero defects, Fastco is committed to meeting and exceeding its customers’ expectations in quality and delivery.

“Fastco Industries has a brand promise of five weeks or less on new samples on standard designs,” says Brian Kropp, the company’s quality control manager. “Fastco is also known for making difficult products that others in our industry will not attempt, and are excelling at them.”

A Fastco operator using Synergy with a measurement device

For 10 years, Fastco met its COPQ metric of 0.4 percent of sales. Unfortunately, for a few years afterward, this quality metric was not met. This resulted in a management change and a concerted effort to change the company’s culture.

“Since implementing Synergy SPC software, we have met our COPQ metric as a percent of sales,” says Kropp. “During the last two consecutive years, we have lowered the COPQ each year. In 2013, the COPQ was reduced from the 0.4 percent to 0.37 percent and met for the rolling average of the year. In 2014, the COPQ goal was again lowered to 0.35 percent of sales, and we have met this goal for six out of eight months.

“Specialty parts require specialty tools and training,” Kropp continues. “Synergy has allowed us to maintain or identify areas that need improvement and plan for training or investing in improved or more accurate measurement tools. It has also helped bring Fastco from an outdated paper-based system to a live state-of-the-art manufacturing facility.”

Fastco has approximately 5,900 prints on file for separate parts. Active parts can range from 1,500 to 1,800 within a yearly time frame. These parts involve multiple production departments and steps, such as cold-forming forms for the part, pointing or drilling to make holes, creating threads on a cold-headed blank, and inspecting parts in from outside processes.

“Synergy has helped us to maintain a standardization of measurement, reduce variation in operator to gauge, and gauge to part variation,” says Kropp. “Synergy has helped to bring operator awareness of SPC, and how it can be used by seeing live charting results as they enter data instead of just numbers on a piece of paper that is filed to satisfy a customer. Synergy’s data entry also utilizes alert-detection to operators. If an operator enters an out-of-specification dimension or typo, the program will recognize this, and a pop-up will warn operators of the mistaken or out-of-spec entry. One of the improved training programs Fastco is implementing is a yearly Synergy training refresher course for all operators.”

Fastco also uses the Keyence Vision System with Synergy. “The Keyence Vision System is a measurement tool,” says Kropp. “It provides measurements in seconds that you would normally have to use two to three other measurement tools for. We can import these dimensions into Synergy. Most people are very impressed with it, as I was.”

Synergy and Keyence systems working together.

Due to Synergy SPC software, Fastco was able to identify large areas that needed improvement, such as operator measurement techniques and variation in product. “As an example, a part is running within control for two days on day shift, and a third shift is now running the part,” says Kropp. “For the third shift, every measurement was out of  control and quite different than the average entries of the day shift. When day shift came back in, measurements showed in control and met the previous average. This showed us that an operator on the third shift needed more training, standardization of the use of the gauge, or gauge technique.”

Kropp also likes Synergy’s flexible reporting system. “Synergy has the ability to create many types of charts, for tracking, monitoring and review,” adds Kropp. “These charts can be populated with raw production data in any number of ways to tailor a chart or report to the current or requested needs. This gives Fastco an advantage to be able to supply dimensional history (raw data or a report) of a part to a customer within minutes of the request.”

As the Fastco story illustrates, quality is more than the smooth execution of your production process. Each company should have an executive quality metric, but as ReVelle states, many companies are not tracking it because they don’t understand the amount of money they are losing daily.

When considering SPC software as it relates to production efficiencies, consider:
• Does the SPC software replace paper records and storage?
• Does it automate and streamline data collection, provide easy calculations as well as live charting and reporting to reduce user error?
• Can all users view live data instantly to see the status of production?
• Will the SPC software enable users at all levels to proactively prevent production errors before they occur, saving production time?
• If an out-of-control or out-of-specification condition does occur, will the SPC system automatically send emails to the appropriate personnel?
• Does the SPC solution maintain historical records for instant traceability, accountability, and easy access to information for regulatory and customer requirements?
• Is the SPC software able to improve audit and validation process by providing all data instantly available online?
• Does it improve customer confidence and satisfaction by instantly responding to customer requests?
• Does it increase percent of on-time delivery?

Improvement in corporate competitiveness

Many companies are under the assumption that SPC software is primarily for increased production efficiency. However, SPC software can be a valuable differentiator for your company as well.

When looking at SPC solutions, expect more than just increased productivity. See if it also can increase profitability. For example:
• Can the SPC solution enable you to expand into new markets?
• Does the SPC software increase customer satisfaction and optimize customer retention through instant response to customer requests?
• Are you able to leverage SPC software as a selling point to customers?
• Does the SPC solution enable you to test new products on existing equipment to see if it can build new products?
• With the SPC software, can you use historical data or demonstrate to customers how your equipment can meet their requirements to build new products and win new business?

Danei Edelen is the software marketing manager for Zontec, a Quality Digest content partner.

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