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ASQ 22nd Audit Division Conference • October 10-11, 2013 • Hilton el Conquistador Resort, Tucson, AZ
Quality Revolution … Evolution
How Delightful is your Audit Program? The next step in the evolution of your audit program…
Lance Coleman, Sr.
ASQ CQA, CBA, CSSGB
ASQ 22nd Audit Division Conference • October 10-11, 2013 • Hilton el Conquistador Resort, Tucson, AZ
Objectives • How do we objectively evaluate an internal audit
program?
• What are the steps needed to evolve an internal
audit program?
• Who is the auditor of the 21st century?
• What is the environment needed for this growth to
occur?
ASQ 22nd Audit Division Conference • October 10-11, 2013 • Hilton el Conquistador Resort, Tucson, AZ
Agenda
• Introduction - Viewing the audit program through the
eyes of Kano
• Audit Program Mechanics
• The auditor of the future
• Evolving from current to future state
• Q&A
ASQ 22nd Audit Division Conference • October 10-11, 2013 • Hilton el Conquistador Resort, Tucson, AZ
Introduction
ASQ 22nd Audit Division Conference • October 10-11, 2013 • Hilton el Conquistador Resort, Tucson, AZ
The Kano Model – An Introduction
• The Kano model is a theory of product
development and customer satisfaction developed
in the 1980s by Profession Noriaki Kano, a student of
Kaoru Ishikawa (of Ishikawa Diagram fame). This tool
is used as a means to
• Prioritize Critical to Quality characteristics of a
product or service as defined by the customer
• Identify implicit as well as explicit customer
needs.
ASQ 22nd Audit Division Conference • October 10-11, 2013 • Hilton el Conquistador Resort, Tucson, AZ
The Kano Model – An Introduction
The Kano diagram graphically depicts three states of
product or service delivery
• Basic Needs
• Achieving Performance
• Providing Delightful Service
Key Point:
Delivering better and better performance
“raises the bar” on expectation, yet does
not guarantee customer loyalty.
ASQ 22nd Audit Division Conference • October 10-11, 2013 • Hilton el Conquistador Resort, Tucson, AZ
Kano Model Plot
Basic “Must Haves”
ASQ 22nd Audit Division Conference • October 10-11, 2013 • Hilton el Conquistador Resort, Tucson, AZ
Implicit vs. Explicit Needs The way to move from performance to delight, from
the customer’s perspective is to take into account the
implicit as well as explicit needs of your customer.
• Explicit – clearly stated needs or requirements
• Implicit – implied needs or requirements
1) Sometimes implicit needs are more
important than explicit ones
2) Sometimes the customer might not
even realize what their implicit needs
are
Key Points:
ASQ 22nd Audit Division Conference • October 10-11, 2013 • Hilton el Conquistador Resort, Tucson, AZ
The Voice of the Customer (VOC)
Voice of the Customer - Collective insight in the wants,
needs, expectations and perceptions of the customer, derived
through direct and indirect questioning. This insight is used to
match as closely as possible product or service developed by an
organization to its customers needs, both explicit and implicit.
ASQ 22nd Audit Division Conference • October 10-11, 2013 • Hilton el Conquistador Resort, Tucson, AZ
The Audit Program Customer
Who is the audit program customer and what do they
want?
• Specific Site
• Entire Organization
• End User (Consumer)
ASQ 22nd Audit Division Conference • October 10-11, 2013 • Hilton el Conquistador Resort, Tucson, AZ
Audit Program Evolution
There are 4 phases through which an audit program
may evolve:
• Precertification
• Newly Certified
• Beyond Certification
• World Class
ASQ 22nd Audit Division Conference • October 10-11, 2013 • Hilton el Conquistador Resort, Tucson, AZ
Audit Program Evolution Phase 3 – Beyond Certification Phase 4 – World Class
Starting to talk to other systems
Beginning to shift focus from
compliance based to integrated
system
Action planning based on data
analysis
Higher visibility of audit results
Fully integrated with other systems
All three pillars of auditing clearly
evident
Clearly defined and appropriate
reporting strategy
Phase 1 – Precertification Phase 2 – Certified
Seeking structure and control
Backward facing
Reactive
Compliance and correction driven
“Fleshing out” the system
Data collection and reporting
ASQ 22nd Audit Division Conference • October 10-11, 2013 • Hilton el Conquistador Resort, Tucson, AZ
Charting the path forward…
ASQ 22nd Audit Division Conference • October 10-11, 2013 • Hilton el Conquistador Resort, Tucson, AZ
Audit Program Mechanics
ASQ 22nd Audit Division Conference • October 10-11, 2013 • Hilton el Conquistador Resort, Tucson, AZ
The Pillars of Auditing
An audit program can be thought of as a platform
that rests on the three pillars of:
• Compliance
• Improvement
• Risk Management
ASQ 22nd Audit Division Conference • October 10-11, 2013 • Hilton el Conquistador Resort, Tucson, AZ
Compliance
The key initial drivers of organizational improvement
are a robust internal audit and corrective action
program. One way for an auditor to verify compliance
to a QMS is to verify the 3D’s:
• Define your requirements
• Document how you will meet requirements
• Do what you document
ASQ 22nd Audit Division Conference • October 10-11, 2013 • Hilton el Conquistador Resort, Tucson, AZ
Compliance
D.O.oR.S. and L.O.C.kS.
One good way to remember the types of acceptable objective evidence is to remember the acronym D.O.R.S.
• Documents
• Observations
• Records
• Statements
ASQ 22nd Audit Division Conference • October 10-11, 2013 • Hilton el Conquistador Resort, Tucson, AZ
Compliance
D.O.oR.S. and L.O.C.kS.
There are four types of criteria against which to audit:
o Legal – federal, state or local laws
o Organizational – internal procedures, work instructions and specifications
o Contractual – those requirements imposed by the customer in their contract
o Standards – those requirements imposed by ISO standards on those organizations that are registered to or seeking to be compliant with them
ASQ 22nd Audit Division Conference • October 10-11, 2013 • Hilton el Conquistador Resort, Tucson, AZ
Risk Management – Defining Risk
• Risk – combination of the probability of occurrence
of harm and the severity of that harm.
ISO 14971:2007
• Risk – the effect of uncertainty on objectives
ISO 31000:2009
• Consumer Risk – the risk of accepting a bad part as
good
• Producer Risk – the risk of rejecting a good part as
bad
ASQ 22nd Audit Division Conference • October 10-11, 2013 • Hilton el Conquistador Resort, Tucson, AZ
Risk Management
Where does risk lie in our process?
1. Complexity of the process
2. Complexity of the product
3. Criticality of the product
4. Process location of the product
5. Newness of the product
6. Newness of employees
7. History of the process
ASQ 22nd Audit Division Conference • October 10-11, 2013 • Hilton el Conquistador Resort, Tucson, AZ
Risk Management
How do auditors help manage risk?
1. Audit frequency
2. Sample size
3. Complexity of audit plan
4. Containment
5. Corrective action plans
6. Effectiveness verification
7. Special training
ASQ 22nd Audit Division Conference • October 10-11, 2013 • Hilton el Conquistador Resort, Tucson, AZ
Risk Management
How do we formally integrate risk management into
the audit process?
• By tying finding classification to risk assessment
• Let finding risk dictate actions taken
• Let finding risk dictate report distribution
• Establish feedback loop to risk management
program
ASQ 22nd Audit Division Conference • October 10-11, 2013 • Hilton el Conquistador Resort, Tucson, AZ
Improvement
Lean and Six Sigma tools can be integrated into
current audit methodology in order to develop a
more robust, value added, and continuous
improvement driving internal audit program.
ASQ 22nd Audit Division Conference • October 10-11, 2013 • Hilton el Conquistador Resort, Tucson, AZ
Improvement
Let’s take three opportunities to incorporate Lean Six
Sigma tools into the audit program
• Value Stream Mapping
• SIPOC Diagrams
• Control Charting
ASQ 22nd Audit Division Conference • October 10-11, 2013 • Hilton el Conquistador Resort, Tucson, AZ
Improvement Value Stream Mapping
• Value add vs non-value add activities
• Potential process bottlenecks
• Opportunities to match cycle to takt time
Receive
Product
(1)
Review
Shipping
Docs
(1)
Review
Certs &
Inspect
(1)
Label
Product
(1)
Inventory
(1)
Material
Handler
(1)
Staging
(1)
FREIGHT
TRANSPORT
COMPANY
2
PRODUCTION
oods Inventory
/ Shipping
SUPPLIER
CUSTOMER
I
TT TT
TT
TT
TT
TT
I
% Defect
Total time
NVA time
Amount/Unitsrs. 1878
1878
Cap. 1710
TPP 0.96
Emp. 15
MnHrs. 2938
Cap. N/A
TPP N/A
Emp. N/A
MnHrs. N/A
Cap. N/A
TPP 0.34
Emp. 4
MnHrs. 740
Cap. 855
TPP 1.29
Emp. 8
MnHrs. 1888
Cap. 2765
TPP 0.18
Emp. 3
MnHrs. 676
CUSTOMER SERVICE/PURCHASING Orders Orders
SCHEDULING
Lead Time/Value Added Time
ASQ 22nd Audit Division Conference • October 10-11, 2013 • Hilton el Conquistador Resort, Tucson, AZ
Improvement
SIPOC Diagrams
• Identify implicit needs
• Identify input value streams
ASQ 22nd Audit Division Conference • October 10-11, 2013 • Hilton el Conquistador Resort, Tucson, AZ
Improvement
Control Charts
• Trending
• Training
• Equipment Discrimination
Key Thought: The three primary purposes for
use of control charts in production are to monitor
the process, identify special and common cause
variation, and show if the process is in control
ASQ 22nd Audit Division Conference • October 10-11, 2013 • Hilton el Conquistador Resort, Tucson, AZ
The Auditor of the Future
ASQ 22nd Audit Division Conference • October 10-11, 2013 • Hilton el Conquistador Resort, Tucson, AZ
The 21st Century Auditor
Bodies of Knowledge:
• Audit Methodology
• Quality Tools
• Standards/Regulations
• Technical Expertise
• Critical Thinking
ASQ 22nd Audit Division Conference • October 10-11, 2013 • Hilton el Conquistador Resort, Tucson, AZ
The 21st Century Auditor
Needed Skill Sets
• General Auditing Skills
• Metrology
• Lean Six Sigma
• Risk Management
• Root Cause Analysis
• Good Documentation Practices
ASQ 22nd Audit Division Conference • October 10-11, 2013 • Hilton el Conquistador Resort, Tucson, AZ
The 21st Century Auditor
Training and Educational Opportunities:
• College Degree
• External online and on site training
• Certifications
• Company Training
• Mentorship
• Conferences
• Self-study
ASQ 22nd Audit Division Conference • October 10-11, 2013 • Hilton el Conquistador Resort, Tucson, AZ
Evolving Program Evolution
ASQ 22nd Audit Division Conference • October 10-11, 2013 • Hilton el Conquistador Resort, Tucson, AZ
5 Steps to Evolving the Audit Program
• Assess the Audit Program
• Determine Desired Future State
• Perform Gap Analysis
• Develop Plan w/ feedback and C.I. loop
• Implement Plan
ASQ 22nd Audit Division Conference • October 10-11, 2013 • Hilton el Conquistador Resort, Tucson, AZ
Audit Program Assessment
• Planning - 40%
• Implementation & Results – 30%
• Reporting, Data Analysis and Records – 30%
Base score of up to 100%
ASQ 22nd Audit Division Conference • October 10-11, 2013 • Hilton el Conquistador Resort, Tucson, AZ
Audit Program Assessment – Value Add
Points/Description
+5 Observation that leads directly to $1000+
Lean savings
+2 Observation that leads directly to $1 - $1000
Lean savings
+0.5 OFI that is implemented by area
management
ASQ 22nd Audit Division Conference • October 10-11, 2013 • Hilton el Conquistador Resort, Tucson, AZ
Audit Program Assessment – Reality Check
Points/Description (Based on External Audit Results)
-5 Each major finding against audit program
-3 Each major finding from that was previously
identified internally
-2 Each major finding against QMS
-1 Each minor finding against audit program
ASQ 22nd Audit Division Conference • October 10-11, 2013 • Hilton el Conquistador Resort, Tucson, AZ
Summary • The three pillars of auditing – compliance, risk
management and improvement – must all be fully instated for an quality audit program to be considered truly robust.
• The auditor of the future will need to expand their skill set to include risk management, Lean and six sigma knowledge.
• The audit function is a service, and would benefit from clearly defined goals and objectives, stated from the perspective of the customer.
• Take a good look at your audit program when you return home and ask yourself, could we be doing more and if so, then why aren’t we?
ASQ 22nd Audit Division Conference • October 10-11, 2013 • Hilton el Conquistador Resort, Tucson, AZ
Resources
• Auditing Beyond Compliance
• Author: Janet Bautista Smith
• ISBN-13: 978-0-87389-840-9
• Gembawalks for Service Excellence
• Author: Bob Petruska
• ISBN: 978-1-4398-8674-8
• www.fullmoonconsulting.com
• www.asq.org/audit