September 1, 2017 by Chuck Cimalore Omnify Software
Sep. 1, 2017 – As quality leaders, it is our role in the organization to provide differentiation from the competition. This starts with quality process engagement across functions and definitely must be made a high priority with top management. The key elements are strategy, data and analysis that we can use to help communicate this to top management in order to drive this culture and important differentiation for the organization.
ISO 9001, the international standard that specifies requirements for a quality management system (QMS), helps organizations to consistently provide products that meet regulatory requirements. This standard makes top management responsible and accountable for carrying out a certain number of activities themselves. It provides a list of activities top management need to be involved with — some of those tasks, top management can delegate, some they cannot. ISO 9001:2015 helps bring together people at the highest levels into the quality management system. No longer does it centre on the quality management department. Leadership not only needs to promote quality management as a process but actually understand how all processes fit together.
Quality starts from the top
Quality leaders need to wear a lot of hats, be business savvy and emphasize quality. A great supporting tag line is “quality starts with me.” A lot of organizations use similar tag lines within their organization to ensure everyone in the organization understands that they play an important role in adopting a culture of quality. It helps cross-functional leaders, teams and individual contributors in an organization to understand their role within the organization and how it impacts on the final product and perception by customers. This is a good place to cultivate where quality initiatives can form. It is important to embody that tag line and lead the journey to transform quality away from being seen as not just a conformance activity, and rather a performance activity.
The quality leaders within the organization need to make that shift first and then help lead that shift across the company so the right results are achieved — all comes back to quality. Over time, we have seen that the competitive landscape is continuing to become more challenging. Quality is becoming a more important element in differentiating a company in this increasingly difficult landscape. ISO 9001:2015 is going to make the competitive landscape even more competitive. It is important to make this shift before your competitors do. This article will dive into these issues and provide some actionable content.
According to KMPG, digital transformation is the application of digital technologies to fundamentally impact all aspects of business and society. This transformation is also bringing increased quality and innovation. In fact, LNS Research performed a study in which 1,200 executives from various industries were benchmarked. One key conclusion drawn from this study is that the digital transformation and the Internet of Things (IoT) is driving quality improvement today and will be in the future.
The digital transformation requires that same evolution in our approach to business processes. Less time has to be spent bickering about who will do what and whose turf it is, and spend more time on what the potential is by carrying out a digital transformation. There needs to be a culture adopted where everyone is committed to the vision of what digital transformation means to their business. It is the only way to truly follow through with operational excellence and define a framework to support the processes and build business cases for change. The final step is in selecting the technology to make the digital transformation real.
An approach to quality management
An effective quality management strategy is a multi-year plan that aligns quality with strategic objectives through improvements across operational excellence. There is an “operational architecture” that takes into account the IT infrastructure, with such systems as product lifecycle management (PLM) and enterprise resource planning (ERP), from an IT perspective as well as the “operational technology” on the shop floor and with in-service equipment. The strategic objective looks across operational excellence and operational architectures and delivers value to the business. This is the element to consider when building out your initiatives. Quality can clearly have an impact on how a company is able to innovate and achieve rapid market adoption. It can help an organization gain more market share because of its product differentiation.
Look to put together a transformation framework that helps define the strategies. This is where you can have several initiatives going on at the same time. There are process, culture, and technology initiatives that are occurring at different levels of maturity but still all fit into a framework.
Foundation of quality strategy
When developing a strategy framework, there needs to be a plan of action or policy designed to achieve a major aim. Initially, the strategic objectives are set by the C-level where the organization reimagines business process and service delivery. Next, there is operational excellence upheld by the business leaders within the organization that aim to realign people, process and technology.
In building the plan, functional managers must devise business case development to define immediate and long-term ROI. Once this is achieved, the solution can be selected by IT/OT practitioners based all on the criteria developed and hopefully eliminating bias while seeking long-term partners. It is important to also put in culture-building activities. It is a pressure-packed scenario. This is because the rules are defined around the drive to quality but that does not actually have anything to do with compliance.
Compliance and quality
While compliance is important, conformance isn’t necessarily the strategy to meet compliance. Meeting the minimum requirements to be a supplier doesn’t make a good supplier. Quite often there can occur a positive or negative event, driving a business influence or pressure that forces action and response with a defined date and business owner. For instance, a manufacturer of biosensors and blood glucose monitors sought to create a safe, quality medical device for use worldwide and that meant ensuring all country-specific and local standards would be met. The driving factor caused them to work with several external auditors and legal counsellors to ensure compliance was achieved in every jurisdiction. The use of PLM software helped them to ensure all regulations were met and tracked throughout the product lifecycle of their medical device. It properly tracked all electronic signatures, providing electronic audit trails/history tracking, security controls and reporting.
The PLM system supported ISO 9001 requirements and made the audit process streamlined. This is an event that drove a business response because it required someone in top management to own the follow-through of an action that directly influenced the business. For this manufacturer, ISO 9001 ties in well to this scenario. Any potential crisis in terms of achieving compliance and being fined was averted. Too often quality gets executive priority on the heels of some negative event or crisis that occurs to cause change. It is far better to get in front of that and to make changes to combat challenges prior to a crisis situation. Why not implement a quality initiative when everything is going well?
It is vital to get executive and management buy-in. Find out what the executive management team measures in terms of their key performance indicators (KPIs) and how effectively they are achieving key business objectives. Align your quality initiative to address the objectives of executive management, as that will help determine their buy-in to follow through on achieving the quality initiatives presented.
It can take a decade to build bridges between quality and other functions and create cross-functional processes if you are working on a bottom-up approach. Companies can have a much faster track record if you can get an executive sponsor to help you in delivering a top-down approach, which typically gets much faster results.
Companies can have all kinds of challenges when it comes to quality, such as cultural issues. In some companies, those in charge of quality can be seen as the police, preventers of defects and may not be seen in the best light. This would be a typical cultural issue that would need to be addressed. ISO 9001:2015 can help address such issues.
Value over cost
There is a direct correlation between what level at which an organization is operating and whether they have a top-down approach vs. a middle-up one. There are numerous benchmarks and research studies to support this. Top management sponsorship matters. Those companies that have top management sponsorship have 2.6 per cent more best practices adoption than those that don’t. It can drive all kinds of changes. As a company goes through the scope of what they need to achieve, it can be challenging to identify the right metrics to use.
There needs to be a shift from being a cost centre to a value centre. When an organization thinks about compliance, how they invest in quality comes into play. A major difference is that if the organization is a cost centre, they will only invest the minimum they have to in order to achieve compliance. If the organization is a value centre, then they will look to adopt quality into all areas. More investment comes to those who are directly aligned with business value.
Core management principles of ISO 9001: 2015 can help address key challenges for avoiding nonconformities during any certification audit and can help with a lot of the issues, the LNS benchmark study uncovered. For instance, the study revealed that 37 per cent of respondents found dealing with disparate quality systems and data sources, as well as having quality metrics not effectively measured, to be problematic. More than 35 per cent of respondents felt that quality was a department, not a responsibility. Almost 25 per cent reported that they had no formal process in place for managing risk. More than 20 per cent of all benchmark participants admitted that there was a lack of visibility into supplier quality and no defined process for continual improvement. There were 16 per cent who answered that they had no formal process for capturing non-conformances. Overall there was a lack of executive support and audit/compliance management was dealt with on an ad hoc basis. These were all challenges that prevent an organization from achieving their quality objectives.
The statistics show gaps in where the industry stands in the adoption of the core principles of ISO 9001: 2015, which encompass: customer focus, leadership, engagement of people, process approach, improvement, and evidence-based decision-making and relationship management. It was interesting to learn from the benchmark study that 89 per cent of SMEs do not have visibility into real-time quality metrics across functions and some 87 per cent do not have top management executive buy-in for quality. With regard to the engagement of people, it would appear that 77 per cent felt that they do not have a culture of quality adopted. There were 79 per cent that did not close the loop on quality processes across design, manufacturing and suppliers. Over 60 per cent do not have any visibility into customer complaints and 55 per cent haven’t established corrective and preventive action (CAPA) processes across the company.
There are systems that can be implemented to assist with quality, such as PLM software that encompasses quality management. For instance, EST Analytical found it is helpful to have a single engineering change and quality control system to help meet ISO compliance. In EST Analytical’s case, they lacked control over their information because it was not indexed or linked. Using a PLM-based quality system, they created a more efficient and connected environment that would easily manage and track information and simplify data sharing across the company. The Engineering/R&D, manufacturing, purchasing, quality, sales and service departments use PLM for change management, bill of material (BOM) management, quality management, training management and project management to integrate various manual processes into a single automated system with traceability on all changes.
Conformance vs. performance
It is important to understand the state of your business and then define the state you’d like to be in. It is a multi-step operation that takes time and effort and will require some process and technology changes. Increase your maturity in your quest for quality continually and gather metrics to work towards this goal. Try to capture metrics around the cost of poor quality. Figure out a way to capture and use the data to deliver a real metric.
In summary, the best practices areas to achieve ISO 9001:2015 conformance are as follows:
• Develop closed loop processes established to connect quality across design, manufacturers and suppliers
• Implement compliance processes that are easily understood and documented
• Build cross-functional teams to manage quality across design, manufacturers and suppliers.
• Ensure formal audit management processes are established to understand current compliance status and identify areas for improvement
• Establish the ability to share compliance processes across functional areas
• Make quality an executive top priority
If you are able to incorporate the actions outlined in the above bullet points, the impact is tremendous. Successful organizations are using ISO 9001: 2015 to help drive top management’s priority to quality. By doing so, it truly will help organizations achieve operational excellence. Companies that are able to shift from conformance to performance will, in the end, gain a critical competitive advantage.
Chuck Cimalore is president and CTO of Omnify Software. He is an expert in business-ready PLM solutions for small to mid-size businesses and has helped original equipment manufacturers streamline development cycles, accelerate product innovation and improve bottom-line profitability.