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Quality and the Enterprise  

 

John B. deCastro, Business Essentials and Associates, LLC

Reprinted from Vintara Standard Wire #5, November 2002

 

As organizations are driven to become more competitive by lowering the cost of operations, Quality is coming back into fashion. Some organizations are latching their wagons to Six Sigma or Baldrige. Others are renewing their emphasis on the basics by bringing their systems into compliance with ISO 9001:2000. Ideally, the business process focus of ISO 9001:2000 provides companies the opportunity to align their quality systems with their operations. But to be successful, the quality system cannot simply be a "book on the shelf" to be studied just prior to the registrar's visit. The quality system must be the way things get done all the time.

While many companies have a consolidated view at the Environmental Health and Safety level, often the quality function is dysfunctional in that it is spread throughout various business units with no overall coordination.  Consequently, there is a missed opportunity for significant cost reductions and corporate knowledge transfer that could be gained by looking at and aligning these disparate unconnected quality systems.

I have consulted with a number of organizations facing this dilemma. One in particular had no easy way to send corrective action notices from field service personnel to the factory without involving very high levels of management. Further, delays caused by multiple chains of quality systems caused one frustrated customer to remark, "You're ISO registered?" This chain also contained huge gaps from a process perspective, so much so that steps in the process could be labeled, "then a miracle occurs!"

Knowledgeable senior staff members who engaged their associates in the next organization to fill these gaps often supplied the "miracle". It was not surprising that this entire system began to fail as these senior people retired or 'took the package'. Although all these issues directly impacted the efficiency and cost of operations, the heart of the problem was the very real and negative impact on customer satisfaction.

This problem was caused by an engineering design change at the factory that was not communicated to customer documentation, installation service, or systems engineering. Every one of these groups had their own ISO 9001 registrations and was fully compliant in their own little world. Nonetheless, the customer had spent over $600,000 for site preparation and electrical work for a system that no longer conformed to the original design. Luckily, the company credited him for his wasted money, but how many other dissatisfied customers were created by this one design change? When the incident was investigated, the group responsible for communicating this change had been laid off. There was never any process redesign after the lay off.

At another location there were over TEN different corrective action systems in the same facility due in part to multiple registrations. These ranged from paper based, to email, to locally written databases. My team first focused on getting the right group of subject matter experts to determine a streamlined process, design it, and test it. The final step was automating the entire procedure. As a result, field engineers could quickly escalate customer issues to the appropriate factory organization for immediate attention and resolution. The key lesson learned was to do the process re-design first and then automate. Don't expect an automated system to fix all your problems. As one of my wise mentors observed, "You can't change the culture with a system".

Another large organization conducting a review of quality registrations to the ISO 9001 standard found it had over 100 separate registrations. In some cases there were even multiple registrations at the same engineering or manufacturing location due to the different lines of business that were in residence. To further compound the problem, the company was doing business with many different registrars, which led to conflicts in the quality system between facilities. And finally, the company had no common way of dealing with the basics of document management, corrective action, or auditing systems that could lead to organizational efficiencies and substantial savings.

During "good times" a savings of one to three million dollars might seem like a pittance, but today organizations need to focus on saving every dollar. But high-level quality changes require high-level management support. When talking to management, it is essential to speak their language. Phrases like Return on Investment (ROI), Net Present Value, Business Continuity and Payback catches their attention. If a project can show a high ROI with a short payback, the quality manager has a much better chance of getting approval. Every organization has its unique way of presenting this data to management. Learn yours.

Substantiating the business case for quality reform may focus on cost savings as well as organizational efficiencies gained. For instance, standardizing on a single registrar can save 30-50% of direct costs paid to registrars. This is an easily identifiable hard dollar savings. However, it will also result in decreasing internal costs although these may be harder to quantify. Nevertheless, some of these reductions will certainly include the elimination of creative work-arounds, the decrease in the number of staff dealing with registrars, the streamlining of administration of registrar contracts, and the elimination of customer and employee confusion about which processes to follow.

There are a number of questions that help managers discover opportunities for improving the quality process as well as the bottom line such as: How many registered quality systems does the organization have? What is the difference between how similar facilities manage documents, corrective actions, and audits? Is the business really so different that the company can't use the same registrar even if the registered functions are different? Has the organization ever evaluated the number of registrars its uses for all the different registrations?

In a constrained economy and a competitive business climate, quality is not a luxury but an absolute necessity that can reap savings and efficiency while enhancing customer satisfaction. Making even small changes can yield big impacts. By answering these questions, using a single registrar, and integrating quality outputs in terms of the bottom line, the management of the quality process will become the golden thread for the business.

John B. deCastro is a Consultant with Business Essentials and Associates, LLC, a value based consulting firm assisting clients to reduce costs and create new revenue opportunities. John is a former Senior Manager for Knowledge Management at Lucent Technologies and Customer Satisfaction & Quality Director for AT&T Pacific West Business Unit. He holds an MBA from Golden Gate University and a BS from San Diego State University. Through Business Essentials, John enables organizations to create market opportunities and maximize the efficiency of scarce resources in the sales, marketing and operational areas.

Permission granted to reproduce article only with biographical and source information on copies  

© 2002  John B. deCastro, Business Essentials and Associates, LLC, & Vintara Corp.

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