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Everyone knows that becoming Lean is a gradual ongoing process. Some gains, particularly those involving value stream maps, may have a significant impact on reducing lead time and associated costs. However, other gains, such as applying the 5-S system, contribute to the overall success but in smaller increments.

Gradual ongoing gains may also be realized from applying Lean concepts in quality management systems (QMS). From experience, many organizations have implementation problems and are heavy on documentation for reasons such as:

• The belief that all tasks require work instructions or procedures
• One person owns the QMS. As a result he or she is free to introduce additional items (procedures, forms, frequency of events) without real evaluation of the impact on leanness
• The QMS has redundant and/or more-frequent-than-needed tasks. This includes the circulation for signature on an updated document or over-documenting a simple step
• Copies of documents where they are NOT needed
• Change of the QMS guard which  means adding more documents. Usually, it is easier to add than eliminate documents thinking that all existing documents are needed (or they would not be there in the first place!!)
• Just in case mentality: thinking that having more would likely impress the external auditor

How do these examples affect leanness?

 I am sure that there are many examples and questions about this issue.  A Lean QMS group on LinkedIn was started to share ideas and experiences. Please join as it is open for all!

In order to provide the best value to the customer, quality (of product and service) as experienced by the customer must be managed. By “managed”, I mean planned for, controlled, and improved. Many companies engaged in applying lean concepts focus on internal operations with little attention to quality. Or quality might be addressed one issue at a time, as needed. For example, if you’ve been applying lean concepts (e.g. value stream maps) but still get many customer complaints / high external failure costs, this might be an indication.

The fact of the matter is that applying lean concepts should not be in conflict with providing high quality that the customer wants. The objectives of a lean system are to improve quality, eliminate waste, reduce lead time, and reduce total costs. In his book “Lean Thinking”, leading expert Jim Womack outlines steps for applying lean starting with identifying value. Value is specified by the customer and created by you (the producer).

If the customer specifies value, why not study what they want? What types of complaints have we encountered in the past? Can we summarize such complaints on a Pareto chart? What complaints are repeated? Do we have survey results? Any informal data from sales or field service? Answering such questions upfront will help us determine value as perceived by the customer. Once that value is determined, it can then be identified and controlled on the value stream.

The Toyota case of sticking accelerator is a good example of how External Failure costs can add up very quickly. As mentioned in the previous post, external failure costs (the worst type of quality costs) are those related to a failure after the product has reached the customer. In addition to the impact on Toyota’s near-perfect reputation, and the loss customer confidence in the brand name, other immediate costs are incurred by the company and include, but not limited to, the following:

• Recall costs
• Warranty (of unaffected cars)
• Replacement / repair of sold and unsold cars
• Training service staff on special repair
• Liability / lawsuits
• Downtime at factories
• Wages during downtime
• Scrap and disposition of questionable parts
• Troubleshooting / Corrective actions
• Trips made by executives / engineers / designers
• Public relations
• Working with suppliers
• Dealership support
• Overtime for suppliers (for making good replacement parts)
• Additional freight and premium freight for replacement parts
• Additional legal council (in many countries)
• Discounts for future sales

It is estimated that, with the lawsuits associated with the recall, this will cost Toyota over $2 Billion. The question is could this have been prevented? or at least taken seriously after the very first few complaints? was failure mode and effects analysis (FMEA) or equivalent done for the break subsystem?

In many cases, we know exactly what we want to work on. We have a chronic problem that generates scrap, or we may have many customers complaints resulting in returns or recalls. In such cases, we get our team of Lean Six Sigma experts to start working…

But what if we don’t have one specific BIG problem? Should we relax and forget about it? Not really! A report on costs of quality (CoQ), especially those concerning non-conformance, will be worth our efforts.   

It is estimated that between 20% to 40%  of sales are quality-related costs. One third of CoQ is related to conformance (Prevention and Appraisal). The rest, or 67%, is related to non-conformance (failure). Failure costs are divided into two types: (1) Internal Failure: Failure cost incurred before release of the product to the customer or providing the service, and (2) External Failure: Any quality-related cost incurred after the product gets to the customer. Examples of internal failure include scrap, rework, re-testing, etc. As for external failure, warranty charges, returns, recalls, remedial upgrade of software are some of many examples.

There is a lot that can be done if we are able to separate our failure costs from the overall costs of goods sold, don’t you think?

I am always amazed with all the acronyms, abbreviations, and buzz words used in the world of quality. There are always new twists on how we should manage for quality. I just started reading an article in Quality Progress (June 2009) that mentions a new method for Six Sigma called 6TOC (pronounced “six tock”). This method combines Lean Six Sigma with theory of constraints. Who knows what’s next on the Quality menu.

Moreover, debates are going on over which method or system should be implemented; ISO 9001, Baldrige criteria, TQM concepts, Lean, Six Sigma, and now may be 6TOC. Another debate might be which comes first, Lean or Six Sigma, ISO 9001 or TQM, among others.

This blog is about simplifying the concepts of management for quality. I know that many quality professionals like the sounds of the quality lingo. I also know that packaging quality concepts differently, particularly when combined with software, is attractive and makes one wants to buy and quickly implement the contents, as seen in the demo.

My proposition for this blog is build a case for simplicity. In the process, I am hoping that we deal with questions like:

• Who cares about the acronyms?
• Do we have to implement a known method to feel good about ourselves?
• What are the first few things we should make sure we have?
• How do we measure performance for excellence?
• Who comes first, the employee or the customer?
• Do we need interim goals? If so, how are they set?
• Can we use PDCA instead of DMAIC and get the same results?

To start off, let’s say you were asked to help Company X achieve performance excellence, what would you do first?