Achieving quality global manufacturing networks

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Achieving quality global manufacturing networks How best-in-class manufacturers overcome business challenges The
FABRICATOR May 2006 May 9, 2006 By Jane Biddle , Jim Brown Pressure from customers, regulatory agencies, and
shareholders is driving manufacturers to produce higher-quality products as they continue to strive for additional cost
reductions. Although high quality is a key determinant of customer satisfaction and long-term corporate viability, many
companies continue to struggle with basics such as collecting data, maintaining disparate systems, and enforcing
standard operating procedures (SOPs). Designing and manufacturing globally poses additional challenges, such as the
need to standardize quality goals and govern processes across partners and remote locations. Quality Requirements
Today In regulated industries, the Food and Drug Administration, Department of Defense, and other agencies are
mandating particularly comprehensive quality requirements. Standards today often include full genealogy reporting,
including processes performed by outsourced manufacturers, the inspection of incoming goods, iterative processing in
some manufacturing environments, and a feedback loop to engineering when product or process design-related
problems are detected in manufacturing and beyond. Delivering highly reliable products requires conformance to
procedures, rigorous testing, and continual monitoring of quality from the time raw material and parts are ordered from
suppliers until the product is used or consumed by the customer. Figure 1 Common Challenges Lack of Measurement.
More than half of survey respondents reported that they are most challenged by the lack of established quality metrics
for departments and for employee performance reviews (see Figure 1 ). This is a managerial problem as well as an
information problem. Leading companies are setting strategic goals at a corporate level and then cascading these down
to departmental scorecards and into employee performance sheets. However, many other manufacturers struggle to
establish and communicate quantitative goals because it can be difficult to collect data along key measurements,
rationalize results across functions and employees, and understand quality as an end-to-end process. Better-performing
companies tend to be proficient at communicating operating instructions and performance criteria to employees, helping
to ensure that quality expectations are met. SOPs provide employees with access to the latest process instructions,
associated documentation, and operational expectations. Additionally, training and certification requirements for all
critical processes are specified and enforced according to global and local policies and procedures. Limited Visibility.
More than half of survey participants identified the lack of visibility into quality processes across the product life cycle
among their top three challenges. Most manufacturers have fully or partially automated quality systems in various
departments. In many instances, semiautomated or manual processes still are used to collect quality data throughout
various inspection, production, engineering, compliant management, and service processes. From a financial
perspective, relevant quality data (for example, scrap and yield) is collected via enterprise resource planning (ERP) and
aggregated for financial reporting purposes. Customer relationship management systems also play a vital role by
enabling two-way customer communications relative to complaints and product upgrades or other notifications. Most
manufacturers have incrementally improved their quality systems (primarily data collection and reporting) to keep pace
with mandatory requirements, but have not yet taken a strategic view of quality. However, achieving global visibility
requires the automation of all processes, the integration of systems, the aggregation of data, and the ability to present
that data electronically, along with decision support tools to target operators, managers, and executives. Lack of Real-
time Response. The lack of integration and lack of real-time response also were cited as important challenges. At the
station or task level, operators often have the technologies and decision support tools to manage and control their
individual processes. However, providing management insight into these individual systems remains a challenge. As 49
percent of participants reported, it is difficult to access information captured in individual systems. Figure 2 Identifying a
problem close to the source gives maintenance and engineering the opportunity to correct the situation before additional
quality problems occur. Corporate Initiatives. Although only 22 percent of participants identified the lack of an
overarching corporate quality initiative as a challenge, it is worth noting that establishing such a unified corporate
program is critical to achieving both customer service and profitability goals. An enterprise cannot consistently improve
quality (and reduce cost) over time unless there is a centralized program with a governing body that establishes
overarching metrics and governs multiple continuous improvement programs. Key Business Value Findings This study
showed that the best-in-class companies—those that remain strongly competitive and successful—are substantially
more disciplined in the management of their engineering, manufacturing, purchasing, and human resource operations
than their poorer-performing counterparts (see Figure 2 ). Enforcing Quality Procedures. More than half of best-in-class
companies cited the enforcement of quality procedures across their enterprises as the top strategic action. (Quality
procedures define critical tasks, identify measurements, specify outcomes, facilitate data collection, and prespecify
corrective actions.) Closing the Loop on Quality. The second most important strategic action (38 percent) identified in
this survey was the implementation of closed-loop corrective action programs. Closing the loop includes: Quality
planning —Quality-related measures, processes, and supporting information technology (IT) solutions must be
established to ensure the correct procedures, tests, and corrective actions are taken to meet product quality goals and
customer requirements. Activity monitoring —This involves tracking and reporting on the employees, equipment, and
individual steps involved in production; identifying exceptions to specifications during processing in real time; triggering
an alarm when tracked factors trend out of specification; and ensuring each employee is properly trained on his or her
specific tasks. Process control —Decision-makers must be informed of actual or anticipated deviations and proactively
correct the deviations with predefined corrective actions before quality is compromised. Exception-based notification,
notification history, and data captured from devices provide context around exceptions. Analysis and action —Analysts
should bring their computers to operations meetings so everyone can collaboratively troubleshoot specific quality
problems as the meeting progresses. Gone are the days of prepared reports and leaving a meeting to get needed
information. Measurement —Annual, periodic, or frequent audits should be performed to measure the current state of
compliance and effectiveness, and sufficient reviews should be made to identify existing or potential nonconforming
products and issues. These observations should be recorded and reviewed with management and preventive measures
implemented through action plans. Design for Quality. Designing for quality includes developing products that can be
easily manufactured. Engineers can generate failure mode and effects analysis (FMEA) documents that encourage
engineers to predict performance problems during product design. By identifying potential flaws in design or production,
they can develop controls to prevent the occurrence of defects. In a fully closed-loop model, past failures are used to
feed the FMEA process to prevent engineers from repeating the same mistakes on new products. Manufacture for
Quality. Interactively managing quality on the shop floor was ranked fourth as a strategic initiative. Better-performing
companies ensure that shop floor operators are provided with adequate tools and training to identify quality problems
quickly, investigate the root cause, and solve or rework the problem on the shop floor. Aspects of product quality include:
Form —A manufactured product's dimensions, appearance, and configuration meet prescribed requirements. Fit —The
features of the product are applicable to its use, including proper function, interchangeability, and consistent geometry.
Function —The product performs as it is designed and meets customer expectations. Reliability —The product functions
according to expectations over a reasonable lifetime. Consistency —Every product has the same properties, functions,
and performance. Companies that consistently produce high-quality products typically have comprehensive maintenance
programs to ensure that machines and equipment always are operating in peak condition. Ensuring that incoming parts
and goods always meet specifications requires establishing supplier standards to ensure that their materials, production,
and testing methods meet enterprise requirements. Nonconforming goods should trigger a corrective action plan from
the supplier with assurances that the problem will not be repeated; following up at a later date on the plan's effectiveness
is critical. Figure 3 The objective of quality assurance is not just to reject defective products, but to investigate the
causes of defects so that they can be eliminated. Responding To Challenges As shown in Figure 3 , 50 percent of
respondents have incorporated quality metrics into their departmental scorecards and employee performance goals. The
second-most important strategy for overcoming challenges is embedding corrective action planning and processes into
engineering, manufacturing, customer service, and maintenance. Well-documented SOPs include not only traditional
operating procedures, but also "what if" scenarios, including potential rework sequences and the ability to notify
supervisors and managers if predetermined time thresholds or conditions exceed the scope of the operation. Attributes
and Actions of Best-in-class Companies Better-performing companies have mastered the basics of managing quality in
production and are leveraging those techniques in other areas of the business and supply chain. Three major attributes
set best-in-class companies apart from the rest: Global quality programs —Incorporating quality information into a single,
centralized system for a corporatewide initiative Real-time, Web-based access —Empowering decision-makers with
Web-based integrated technologies Integrated quality system —Tracking and managing compliance data, providing
visibility, and managing corrective action Organize to Drive Quality. An important common denominator for best-in-class
manufacturers is the presence of a high-ranking quality executive to create a culture of accountability and collaboration
throughout their company. Additionally, wise technology investments are enabling them to proactively deliver automated
task lists, procedures, and instructive documentation directly to the operators' workstations. Embed Corrective Action
Planning. The second-most important way that companies overcame quality issues was to embed corrective action
planning and processes into daily tasks and activities. SOPs should specifically describe the activity: input, output,
operator instructions, test parameters, limits, corrective action processes. Rules must be closely defined so that people
understand what needs to be done, can measure the activity, and can stop problems before the next processing step. A
company has to define processes before a technology can help manage them. Determine the Cost of Poor Quality. The
cost of poor quality can include anything from rework of incoming materials to aftermarket service costs. To measure this
cost, best-in-class companies capture, normalize, and aggregate individual elements (direct, indirect, and external costs)
from product design to retirement. Improve the Ability to Respond. As shown in Figure 1 , more than half of respondents
representing best-in-class enterprises are capturing best practices and standardizing production processes. These
actions presume the use of technology systems to help enforce standard work processes, as well as the ability to
analyze and compare performance results across product lines, facilities, and customers. Figure 4 Prudent investments
in manufacturing technology have helped best-in-class companies achieve this status. At one time investments in
automation, integration, and manufacturing execution systems (MES) seemed prohibitively expensive. Today, however,
lack of these technologies puts companies at a high risk for being unable to "sense and respond" to customers,
regulatory agencies, and unforeseen events. Determine High-impact Quality Strategies. Best-in-class companies
manage and maintain quality systems in at least seven disciplines, from ERP through engineering and manufacturing. In
most cases, these systems either will remain or be replaced with newer versions over time. Therefore, the challenge
becomes determining the strategy for integrating quality data and processes across the enterprise Fifty-eight percent of
companies already have a quality or compliance system, with another 23 percent adding one within the next year or two
(see Figure 4 ). A second strategy (reported by 36 percent) is to invest in business intelligence systems to integrate both
work processes and documentation. A third strategy (planned by 33 percent) is to add quality data warehouses to
provide a common platform that spans disparate systems, enabling the consistent and real-time reporting of data.
However, regardless of the technology strategy, manufacturers must take the time to create a comprehensive quality
management system that spans purchasing, product life cycle management, ERP, MES, customer service, and
document management. This blueprint for quality should guide the implementation and usage of systems relative to
quality-related activities across the enterprise and supply chain. Key quality metrics, functions, and data elements should
be incorporated into specific tasks and approval processes that often transcend individual systems. Benefits of Quality
Figure 5 Quality efforts are delivering good bottom-line results in many ways. As shown in Figure 5 , improved quality
efforts are enabling 65 percent of respondents to uncover problems at the source, permitting them to eliminate problems
and use resources more effectively. The sooner a quality problem is uncovered, the easier it is to limit its impact on
customer satisfaction and cost. About half of the respondents reported greater efficiency and productivity, which are
quantifiable numbers that drop directly to bottom-line results. Other benefits cited are the promotion of continuous
improvement programs and the ability to identify potential risks early. Recommendations for Action Even companies that
have been able to differentiate themselves relative to quality can continuously improve and extend their lead even
further. With the following actions, they can drive quality further into their businesses and extend the value into the full
product life cycle and across the supply chain. Consolidate improvement programs —Appoint an executive to drive a
corporatewide quality program. Articulate a formal program, including quality metrics for various functional areas, and
appoint a cross-functional governing body to ensure that quality processes are enforced throughout the company.
Enable life cycle view —Define quality processes from end to end, from product design through production, and
ultimately field service. Adopt corrective action planning techniques that identify root causes of problems discovered in
the field or in manufacturing. Design quality into process —Adopt quality planning techniques that identify potential
defects in advance. Use the information on potential defects to design around them and to develop control plans that
ensure the defects are not occurring in production. Develop a library of potential failure modes and access them when
defining products and manufacturing processes to avoid designing flaws into products. Jane Biddle is vice president,
global manufacturing research, and Jim Brown is vice president, global product innovation and engineering research,
Aberdeen Group Inc., 260 Franklin St., Suite 1700, Boston, MA 02110-3112, 617-723-7890, fax 617-723-7897,
www.aberdeen.com . This article is adapted from The Product Quality Benchmark Report, published in December 2005
by the Aberdeen Group and sponsored by Configure One, Infor, IQS, and MasterControl. The full report, available from
the Aberdeen Group, is based on a survey of 176 manufacturing enterprises in the discrete, process, and consumer
products sectors. You May Also Like Global energy management practices, standards increase plant profitability Where
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control Jane Biddle More Content by Jane Biddle Jim Brown More Content by Jim Brown Published In... The
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Pressure from customers, regulatory agencies, and

shareholders is driving manufacturers to produce
higher-quality products as they continue to strive for
additional cost reductions. Although high quality is a
key determinant of customer satisfaction and long-
term corporate viability, many companies continue
to struggle with basics such as collecting data,
maintaining disparate systems, and enforcing
standard operating procedures (SOPs).
Designing and manufacturing globally poses
additional challenges, such as the need to
standardize quality goals and govern processes
across partners and remote locations.

Quality Requirements Today

In regulated industries, the Food and Drug Administration, Department of Defense, and other
agencies are mandating particularly comprehensive quality requirements. Standards today often
include full genealogy reporting, including processes performed by outsourced manufacturers, the
inspection of incoming goods, iterative processing in some manufacturing environments, and a
feedback loop to engineering when product or process design-related problems are detected in
manufacturing and beyond.

Delivering highly reliable products requires conformance to procedures, rigorous testing, and
continual monitoring of quality from the time raw material and parts are ordered from suppliers until
the product is used or consumed by the customer.

Figure 1
Common Challenges
Lack of Measurement. More than half of survey respondents reported that they are most
challenged by the lack of established quality metrics for departments and for employee
performance reviews (see Figure 1). This is a managerial problem as well as an information
problem.

Leading companies are setting strategic goals at a corporate level and then cascading these down
to departmental scorecards and into employee performance sheets. However, many other
manufacturers struggle to establish and communicate quantitative goals because it can be difficult
to collect data along key measurements, rationalize results across functions and employees, and
understand quality as an end-to-end process.

Better-performing companies tend to be proficient at communicating operating instructions and

performance criteria to employees, helping to ensure that quality expectations are met. SOPs
provide employees with access to the latest process instructions, associated documentation, and
operational expectations. Additionally, training and certification requirements for all critical
processes are specified and enforced according to global and local policies and procedures.

Limited Visibility. More than half of survey participants identified the lack of visibility into quality
processes across the product life cycle among their top three challenges.

Most manufacturers have fully or partially automated quality systems in various departments. In
many instances, semiautomated or manual processes still are used to collect quality data
throughout various inspection, production, engineering, compliant management, and service
processes.

From a financial perspective, relevant quality data (for example, scrap and yield) is collected via
enterprise resource planning (ERP) and aggregated for financial reporting purposes. Customer
relationship management systems also play a vital role by enabling two-way customer
communications relative to complaints and product upgrades or other notifications.

Most manufacturers have incrementally improved their quality systems (primarily data collection
and reporting) to keep pace with mandatory requirements, but have not yet taken a strategic view
of quality. However, achieving global visibility requires the automation of all processes, the
integration of systems, the aggregation of data, and the ability to present that data electronically,
along with decision support tools to target operators, managers, and executives.

Lack of Real-time Response. The lack of integration and lack of real-time response also were
cited as important challenges.

At the station or task level, operators often have the technologies and decision support tools to
manage and control their individual processes. However, providing management insight into these
individual systems remains a challenge. As 49 percent of participants reported, it is difficult to
access information captured in individual systems.

Identifying a problem close to the

source gives maintenance and
engineering the opportunity to correct
the situation before additional quality
problems occur.
Corporate Initiatives. Although only
22 percent of participants identified the
lack of an overarching corporate quality
initiative as a challenge, it is worth
noting that establishing such a unified
corporate program is critical to
achieving both customer service and
profitability goals. An enterprise cannot
consistently improve quality (and
reduce cost) over time unless there is a
centralized program with a governing
body that establishes overarching
metrics and governs multiple
continuous improvement programs.

Figure 2

Key Business Value Findings

This study showed that the best-in-class companies—those that remain strongly competitive and
successful—are substantially more disciplined in the management of their engineering,
manufacturing, purchasing, and human resource operations than their poorer-performing
counterparts (see Figure 2).

Enforcing Quality Procedures. More than half of best-in-class companies cited the enforcement of
quality procedures across their enterprises as the top strategic action. (Quality procedures define
critical tasks, identify measurements, specify outcomes, facilitate data collection, and prespecify
corrective actions.)

Closing the Loop on Quality. The second most important strategic action (38 percent) identified in
this survey was the implementation of closed-loop corrective action programs. Closing the loop
includes:

• Quality planning—Quality-related measures, processes, and supporting information

technology (IT) solutions must be established to ensure the correct procedures, tests, and
corrective actions are taken to meet product quality goals and customer requirements.
• Activity monitoring—This involves tracking and reporting on the employees, equipment,
and individual steps involved in production; identifying exceptions to specifications during
processing in real time; triggering an alarm when tracked factors trend out of specification;
and ensuring each employee is properly trained on his or her specific tasks.
• Process control—Decision-makers must be informed of actual or anticipated deviations and
proactively correct the deviations with predefined corrective actions before quality is
compromised. Exception-based notification, notification history, and data captured from
devices provide context around exceptions.
• Analysis and action—Analysts should bring their computers to operations meetings so
everyone can collaboratively troubleshoot specific quality problems as the meeting
progresses. Gone are the days of prepared reports and leaving a meeting to get needed
information.
 • Measurement—Annual, periodic, or frequent audits should be performed to measure the
current state of compliance and effectiveness, and sufficient reviews should be made to
identify existing or potential nonconforming products and issues. These observations should
be recorded and reviewed with management and preventive measures implemented through
action plans.

Design for Quality. Designing for quality includes developing products that can be easily
manufactured. Engineers can generate failure mode and effects analysis (FMEA) documents that
encourage engineers to predict performance problems during product design. By identifying
potential flaws in design or production, they can develop controls to prevent the occurrence of
defects.

In a fully closed-loop model, past failures are used to feed the FMEA process to prevent engineers
from repeating the same mistakes on new products.

Manufacture for Quality. Interactively managing quality on the shop floor was ranked fourth as a
strategic initiative. Better-performing companies ensure that shop floor operators are provided with
adequate tools and training to identify quality problems quickly, investigate the root cause, and
solve or rework the problem on the shop floor.

Aspects of product quality include:

• Form—A manufactured product's dimensions, appearance, and configuration meet

prescribed requirements.
• Fit—The features of the product are applicable to its use, including proper function,
interchangeability, and consistent geometry.
• Function—The product performs as it is designed and meets customer expectations.
• Reliability—The product functions according to expectations over a reasonable lifetime.
• Consistency—Every product has the same properties, functions, and performance.

Companies that consistently produce high-quality products typically have comprehensive

maintenance programs to ensure that machines and equipment always are operating in peak
condition.

Ensuring that incoming parts and goods always meet specifications requires establishing supplier
standards to ensure that their materials, production, and testing methods meet enterprise
requirements. Nonconforming goods should trigger a corrective action plan from the supplier with
assurances that the problem will not be repeated; following up at a later date on the plan's
effectiveness is critical.

The objective of quality assurance is

not just to reject defective products, but
to investigate the causes of defects so
that they can be eliminated.
 Figure 3

Responding To Challenges
As shown in Figure 3, 50 percent of respondents have incorporated quality metrics into their
departmental scorecards and employee performance goals.

The second-most important strategy for overcoming challenges is embedding corrective action
planning and processes into engineering, manufacturing, customer service, and maintenance.
Well-documented SOPs include not only traditional operating procedures, but also "what if"
scenarios, including potential rework sequences and the ability to notify supervisors and managers
if predetermined time thresholds or conditions exceed the scope of the operation.

Attributes and Actions of Best-in-class Companies

Better-performing companies have mastered the basics of managing quality in production and are
leveraging those techniques in other areas of the business and supply chain. Three major
attributes set best-in-class companies apart from the rest:

1. Global quality programs—Incorporating quality information into a single, centralized

system for a corporatewide initiative
2. Real-time, Web-based access—Empowering decision-makers with Web-based integrated
technologies
3. Integrated quality system—Tracking and managing compliance data, providing visibility,
and managing corrective action

Organize to Drive Quality. An important common denominator for best-in-class manufacturers is

the presence of a high-ranking quality executive to create a culture of accountability and
collaboration throughout their company.

Additionally, wise technology investments are enabling them to proactively deliver automated task
lists, procedures, and instructive documentation directly to the operators' workstations.

Embed Corrective Action Planning. The second-most important way that companies overcame
quality issues was to embed corrective action planning and processes into daily tasks and
activities.
SOPs should specifically describe the activity: input, output, operator instructions, test parameters,
limits, corrective action processes. Rules must be closely defined so that people understand what
needs to be done, can measure the activity, and can stop problems before the next processing
step. A company has to define processes before a technology can help manage them.

Determine the Cost of Poor Quality. The cost of poor quality can include anything from rework of
incoming materials to aftermarket service costs. To measure this cost, best-in-class companies
capture, normalize, and aggregate individual elements (direct, indirect, and external costs) from
product design to retirement.

Improve the Ability to Respond. As shown in Figure 1, more than half of respondents
representing best-in-class enterprises are capturing best practices and standardizing production
processes. These actions presume the use of technology systems to help enforce standard work
processes, as well as the ability to analyze and compare performance results across product lines,
facilities, and customers.

Prudent investments in manufacturing

technology have helped best-in-class
companies achieve this status. At one
time investments in automation,
integration, and manufacturing
execution systems (MES) seemed
prohibitively expensive. Today,
however, lack of these technologies
puts companies at a high risk for being
unable to "sense and respond" to
customers, regulatory agencies, and
unforeseen events.

Determine High-impact Quality

Strategies. Best-in-class companies
manage and maintain quality systems
in at least seven disciplines, from ERP
through engineering and
manufacturing. In most cases, these
Figure 4
systems either will remain or be
replaced with newer versions over
time. Therefore, the challenge becomes determining the strategy for integrating quality data and
processes across the enterprise

Fifty-eight percent of companies already have a quality or compliance system, with another 23
percent adding one within the next year or two (see Figure 4). A second strategy (reported by 36
percent) is to invest in business intelligence systems to integrate both work processes and
documentation. A third strategy (planned by 33 percent) is to add quality data warehouses to
provide a common platform that spans disparate systems, enabling the consistent and real-time
reporting of data.

However, regardless of the technology strategy, manufacturers must take the time to create a
comprehensive quality management system that spans purchasing, product life cycle
management, ERP, MES, customer service, and document management. This blueprint for quality
should guide the implementation and usage of systems relative to quality-related activities across
the enterprise and supply chain. Key quality metrics, functions, and data elements should be
incorporated into specific tasks and approval processes that often transcend individual systems.

Benefits of Quality
Quality efforts are delivering good
bottom-line results in many ways. As
shown in Figure 5, improved quality
efforts are enabling 65 percent of
respondents to uncover problems at
the source, permitting them to eliminate
problems and use resources more
effectively. The sooner a quality
problem is uncovered, the easier it is to
limit its impact on customer satisfaction
and cost.

About half of the respondents reported

greater efficiency and productivity,
which are quantifiable numbers that
drop directly to bottom-line results.
Other benefits cited are the promotion
of continuous improvement programs
and the ability to identify potential risks
Figure 5
early.

Recommendations for Action

Even companies that have been able to differentiate themselves relative to quality can
continuously improve and extend their lead even further. With the following actions, they can drive
quality further into their businesses and extend the value into the full product life cycle and across
the supply chain.

1. Consolidate improvement programs—Appoint an executive to drive a corporatewide

quality program. Articulate a formal program, including quality metrics for various functional
areas, and appoint a cross-functional governing body to ensure that quality processes are
enforced throughout the company.
2. Enable life cycle view—Define quality processes from end to end, from product design
through production, and ultimately field service. Adopt corrective action planning techniques
that identify root causes of problems discovered in the field or in manufacturing.
3. Design quality into process—Adopt quality planning techniques that identify potential
defects in advance. Use the information on potential defects to design around them and to
develop control plans that ensure the defects are not occurring in production. Develop a
library of potential failure modes and access them when defining products and
manufacturing processes to avoid designing flaws into products.

Jane Biddle is vice president, global manufacturing research, and Jim Brown is vice president,
global product innovation and engineering research, Aberdeen Group Inc., 260 Franklin St., Suite
1700, Boston, MA 02110-3112, 617-723-7890, fax 617-723-7897, www.aberdeen.com.
This article is adapted from The Product Quality Benchmark Report, published in December 2005
by the Aberdeen Group and sponsored by Configure One, Infor, IQS, and MasterControl. The full
report, available from the Aberdeen Group, is based on a survey of 176 manufacturing enterprises
in the discrete, process, and consumer products sectors.