Lean Culture Now!

Automotive Companies

In response to increased world competition in 2005 many large automotive companies mandated that their suppliers implement layered process audit (LPA) programs. They required suppliers to conduct layered process audits on all processes their parts went through and send monthly reports by platform to each assembly plant. Unfortunately, many costly mistakes were made by suppliers when developing their LPA programs. In addition, there was not a proven best practice for implementing an effective LPA program available. To find out the Top 5 Mistakes in Implementing Layered Process Audits and to see a Guide to Implement an Effective Layered Process Auditing System visit: http://www.layeredprocessaudits.com/FreeInfo_Signup.aspx

 

Big Corporations in Other Industries

A few years later a number of other industries learned about the improvements in quality and delivery the automotive companies had gained by having their suppliers implement LPA programs. Several decided to look into the advantages and hurdles of having their suppliers implement LPA programs. They came to the realization that this should improve the quality of the components they received from most of their suppliers. However, they also discovered that Auditing is NOT FREE.

 

Developing Supplier LPA Requirements

For most companies a one size fits all approach is not a best practice. LPA Requirements Criteria needs to be developed by the management team of the requiring company with the goal to gain the quality improvement in components without causing additional cost burden to their suppliers.

 

Recommendations:

Determine which suppliers to request or require that they implement LPA programs by selecting sorting criteria using key supplier metrics:

     Suppliers with ppm (parts per million) number

     Suppliers that have a poor on time delivery score

     Suppliers that have a high warranty claims rate or cost

     Your company is a large percentage of their business

Note: Due to the fact that every industry is uniquely different, the supplier criteria could be very different from industry to industry. (Example: Some industries want their suppliers to have 50 ppm or lower while for other industries 80% of their suppliers have more than 400 ppm).

 

Most companies have their purchasing group; with the help of the plant quality group, maintain this type of ongoing information for every supplier.

One does not have to implement it across the entire supply chain or to 80% of suppliers. You may discover that 30% of your suppliers make up 90% of your company’s cost of poor supplier quality.

 

Develop an LPA Implementation Plan

Determine your company’s realistic expectations (example 20% reduction in the supplier metrics the 1^st year and 10% following years).

 

Develop supplier training that includes the requirement for suppliers to submit monthly LPA reports to your company. You are giving a quality tool to your weaker suppliers to assist them improve quality and on time delivery. Your suppliers will foot the cost of auditing their high risk process, but will gain by lowering their cost for customer rejection, excess freight, scrap, warranty, and other costs due to poor quality.

 

To learn more about requiring supplier to implement a layered process audit program contact us at: http://www.leanculturenow.com/Contact_Us.aspx

Make a note in the message area that you would like to discuss in more detail Designing Supplier LPA requirements.

“Make Plans Now to Attend Classes”

Audit Training (1 day class)

Training Dates and Locations:

         April 25              Little Rock, AR

         May 16               Orlando, FL

         May 23               Detroit, MI

        June 6                 Amsterdam, NL

 ( Amsterdam class requires 6 participants to hold, seats are filling quickly, so contact us now if interested)

Learn the lean approach to several types of auditing (Layered Process Auditing, Mistake Proof, Safety, 5-S, ISO 14000, in addition to 3 types class members may name such as Sarbanes-Oxley) by attending our Auditing Systems Development training. Gain knowledge on how to implement or improve one of the most powerful shop floor tools that has been proven to increase customer satisfaction by improving product quality and reducing waste.  Layered Process Auditing is an effective way to drive process and facility culture changes that reduce scrap, warranty issues, and costs.

Our Quality expert will coach participants through the process of building a Layered Process Auditing or improving an existing LPA program to be more effective in addition to showing you how to use this methodology to manage other type audits.

Agenda:

      Review Layered Process Audit Overview and Other Audit Concepts

      Identify Benefits and Roadblocks

      Define What Supports an Effective Audit Program

      Examine Audit Implementation Process Map

      Discuss the Leadership’s Responsibilities

      Identify High Risk Areas

      Discuss the Difference between Process and Mistake Proof Questions and Audits

      Best Practice Audit Questions Examples

      Question Development - Breakout Session

      Identify Reporting Needs by Internal and External Customers

      Review How to Document an LPA Program

      Develop an LPA Audit Flow Diagram

      Determine Your Organizational Structure

      Identify Training Needs for Your Organization

      Learn Ways to Evaluate the Effectiveness of LPA and Other Auditing Programs

Enroll by Visiting: http://www.leanculturenow.com/Class_Registration.aspx

Class Name: Audit Implementation/ Improvement Training

Price: $495 per person at US sites includes training materials and lunch (room not included)

Price: $595 per person in Amsterdam includes training materials and lunch (room not included)

Registration confirmation, room reservation and logistic information will be sent to you upon receipt of class enrollment

Special room rates available for participants who register early for most locations.

Registrars, customers, and upper management are continuing to ask if their Layered Process Auditing System is effective.  Many companies are struggling to find meaningful ways to measure the success of their LPA program.

The following items tracked over time will demonstrate the results of your efforts:

• Number of customer rejections and complaints by month
• PPM
• Scrap cost
• Rework cost
• Warranty cost
• Total Cost of Quality
• Percentage of audits completed on time
• Number of non-recurring findings
• Response time for non-conformances
• Quality of containment activities (percentage not needing modified)
• Percentage of corrective actions approved by management
• Number of non-conformances escalated to your formal 8-D program and closed
• Operator’s opinion about the effectiveness of your LPA system

 

Many effective LPA programs will also deliver a culture shift in the areas of teamwork and quality throughout their facilities.

Management may notice: 

 

• A greater understanding of the processes by management
• Focus on the processes not the people
• Fewer blaming and judgmental statements made
• Decisions made based on analyzing data not on feelings
• Improved ability to contain problems
• Creative solutions to fix escape points
• Operators contributing solutions and improvement ideas

 

Using LPA Admin (the lean approach to layered process auditing) will:

• Greatly reduces the administrative time to manage the LPA system
• Allows auditors to receive automated audit notifications
• Stores and maintains audit checklist revision histories
• Allows auditors to record audit results
• Stores audit results including non-conformance, containment and corrective actions
• Maintains management approval of containment and corrective actions for each
• non-conformance, plus allows management to change these activities
• Allows management to be notified of non-conformances within minutes of the findings
• Ability to produces six preconfigured reports with time periods of a day to three years
• Allows management the ability to produce hundreds of custom audit reports
• Gives administrator the ability to add  3 custom type fields which may also be used to build unique reports (example: part number, machine number, spec level, etc.) 
• Manages up to 8 different audit systems (Process, Mistake Proofing, 5S, ISO 14001, and Safety in addition to 3 types you name such as Sarbanes-Oxley, security, maintenance, suppliers, etc.)
• This program is currently in four different languages: English/Spanish/German/French with the ability to add several other languages.
• All report headings are presented in the language the requesting computer is defaulted too
• All this is being done in Real Time

 

To gain additional information about LPA Admin please contact us at:

http://www.leanculturenow.com/Contact_Us.aspx

Jerry Yoder is an employee of Lean Enterprise Software Solutions

 

Companies of all sizes may choose to go high tech when doing layered process audits. Lean Enterprise Software Solutions announces that auditors using LPA-Admin can now complete audits in real time on the shop floor using tablets and touch screen phones. Save hundreds or thousands of dollars a year by reducing your paper and printing costs to complete layered process audits.

If your work environment is not safe or suitable to use this technology you may still greatly reduce paperwork by having your administrator date, sign and laminate your audit questions. Place these audits at a central location for your layer 1 auditors, such as supervisor offices. Auditors may easily pick up the audit and place them on a clipboard in order to complete the audit on the floor. The cost of replacing the laminated audit sheets is minimal and has proven to be the best practice low cost solution to eliminating paperwork.

Jerry Yoder is an employee of Lean Enterprise Software Solutions

Lean Enterprise Software Solutions announce a major expansion to the reporting capabilities of LPA Admin. These modifications are being delivered to our clients at no additional cost. These changes assist management in analyzing their LPA data at a much deeper level than before. The added features should increase the effectiveness of their LPA program and assist them in continually improving quality. The changes to LPA Admin include:

· Added four additional criteria to build Custom Reports

· Designed and built an additional reporting system called Dashboard that allows users to build and save custom dashboard(s) with only the data items that they are interested in reviewing

· Users control time period of Dashboard Reports

· Ability to convert Dashboard Reports to an Excel format to allow users to utilize the data for charting and graphing in their company’s custom format

Additional Custom Report Criteria

Auditors, Custom Field #1 (Machine #), Custom Field # 2 (Tooling #), and Custom Field #3 (Operator) have been added to the Custom Report Builder. Note: in this exhibit the Custom Fields have been chosen as Machine #, Tooling #, and Operator. The three Custom Fields may be uniquely named by each LPA Admin client. Possible Custom Fields may be Machine #, Tooling #, Part #, Jig #, Line, Cell, Operator #, Spec #, Router, Job Order … etc.

Custom Field Data

Management team must determine when they want the data entered into the Custom Fields before training their auditors. They have two different options and each will give them different reporting capabilities. Option 1: Only enter data in the custom fields when an auditor finds a non-conformance. This will allow management to create unique reports for the custom fields that have non-conformances. Option 2: Have the data entered in the custom fields for every audit by the auditor. This would allow one to create unique reports for the custom fields for audits with and without non-conformances. Example: Management wants the capability to know how many audits were done on machine # A-784 last month. This would require the data to be entered using Option 2.

Auditors simply need to enter the Custom Field data per management’s criteria when entering the other audit data before selecting Save Changes.

Additional Custom Report Capabilities

Management may now build the six different custom reports using the additional filter criteria: Auditors, Custom Field #1, Custom Field #2, and Custom Field #3. The report timeframe may range from a single day up to 3 years and is determined by selecting dates on the Begin and End calendars or by choosing a date range from the Date Range Quick List dropdown . Like all of our reports, the user has the option to export the report in a number of different formats, to retain the information in their computer files, or provide it to outside interested parties.

Added Dashboard Report

A new webpage called My Dashboard was added for each user of LPA Admin to allow them to see their data in a different format. A Dashboard sorts the data and lists it for only the Parameters one chooses. This webpage will welcome each person by name and the information they save under My Saved Dashboards are dashboards that only appear on their webpage. The report timeframe may range from a single day up to 3 years and is determined by selecting dates on the Begin and End calendars or by choosing a date range from the Date Range Quick List dropdown .

Building Custom Dashboard Reports

A Custom Dashboard Report may be easily built by choosing the criteria from the Parameters using the dropdown menu and then selecting the Show in Dashboard that they want listed on your Dashboard.

Then select the Dashboard Type either Audits Planned, Completed, Missed or Non-Conformance and Build Dashboard.

Dashboard Reports In Excel Format

Custom Dashboard may be converted to an Excel format that allows users to utilize the data for charting and graphing in their company’s custom format.

Saved Dashboard will look like this when saved in Excel

One can make changes in Excel such as highlighting areas of interest.

Example of making a chart from the data above.

For more information about LPA Admin and it’s capabilities contact us at http://www.leanculturenow.com/Contact_Us.aspx

Jerry Yoder is an employee of Lean Enterprise Software Solutions

I recently read an article by Malcolm Gladwell.  It’s the kind of experience that gives conflicting feelings, on one hand, I am humbled to realize how intelligent the man is, on the other hand, I am grateful that I at least have enough intelligence to appreciate his writing.   

The article I’m referring to was titled; Open Secrets; Enron, intelligence, and the perils of too much information.  In it, he discusses the differences between puzzles and mysteries.  To summarize, a puzzle can’t be solved unless there is enough information.  Gladwell states “Mysteries require judgment and the assessment of uncertainty, and the hard part is not that we have too little information, but that we have too much.”   So one needs further information, the other has too much information. 

Well this started me to thinking, in terms of Six Sigma, which is it, a puzzle or a mystery?  In reality, depending on at what point the process is currently at, it’s both.  The Six Sigma process should begin with the mystery.  There is an issue, a problem, a situation that needs to be improved.  The problem being, at the onset, we have no idea of how to accomplish this.  The define phase of the DMAIC roadmap then is to establish what the mystery is and what benefits can be obtained by solving it.  The question you must ask yourself is, do I have a mystery or do I have a puzzle.   

If a lack of certain information is all that is needed, then your problem is a puzzle, Six Sigma methodology may not be the best method to pursue solving the puzzle.  It may be more time consuming and expensive than is necessary and other, simpler problem solving tools might fit the situation better.  If, on the other hand, there is too much information; the possibilities regarding the solution are many and there is no clear idea on where the issue originates, then a mystery exists and Six Sigma methods may be the right tool.   

My experience with a number of different Six Sigma initiatives has found that one of the reasons for failing to achieve the benefits from the effort that was expected was a lack of selecting projects that fit the Six Sigma criteria.  Nothing kills the legitimacy and mars the perception of Six Sigma then investing heavily in money and resources to pursue something that could have been handled with less cost, time and people, especially if the effort is chasing items with little return on investment.   

While there were many reasons for this, one of these is that problems that were in reality puzzles were being approached as if they were mysteries.  When an organization invests in extensive training, time, and resources only to use the developed talent on simple, everyday issues, it’s no wonder some may feel cheated, the results nothing close to what was expected. The outcome then become less than satisfying, observed by others as an elaborate process to fix something that could have been accomplished simply by gathering available information and fitting the pieces together.  Six Sigma becomes perceived as much too complicated, costly and elaborate for the situation and altogether unnecessary. 

Let me make an analogy.  Think of the game of Clue, the object is to determine who committed the offense and with what weapon.  In the beginning, there are many suspects and many choices for what was used, it’s a mystery, there’s too much information.  During the course of the game, suspects and weapons are eliminated until someone wins by determining who did it and with what by eliminating unnecessary information and putting the pieces together .  Six Sigma is similar in its approach.  There are many possible reasons for the issue; man, material, methods, measurement and Mother Nature must be considered.  The DMAIC roadmap is designed to filter through these until a jigsaw puzzle is left and during the improve phase, these are simply fitted together.   

To put it another way, the foundational formula regarding Six Sigma, Y=f(x₁, x₂, x₃, x_i…), the outputs are a function of the inputs.  There are all these possibilities and the mystery is determining which ones.  The problem in applying Six Sigma to puzzles is we start with a formula that is closer to; Y=f(Xa, Xb and Xc), we have enough information, what’s left if to fit these together, and the puzzle is complete.  

A successful Six Sigma initiative requires a number of things be clearly established in order to achieve the benefits that are desired.  Each of these is important and without any one of them, the results will suffer.  I like to think of it as a wheel, supported by spokes.  Take away any of the spokes and the wheel will eventually fail.

 

Choosing the Right Projects is one of the spokes that supports the wheel, and every bit as important as the others.  While there are many failure modes that can occur in the project selection process, confusing a puzzle with a mystery is certainly one of them.

Whether your Six Sigma initiative is new, mature, or discarded at some point, ask yourself during the Define phase, do I have a mystery?  Is there too much information available and some method to sort and understand it is needed?  If not, then another approach might be in order.  If so, it satisfies one of the elements of project selection, remember that others must be considered as well, and if they too meet the criteria, go solve the mystery.

Lean Enterprise Software Solutions has a number of talented individuals who have the experience to assist companies solve difficult problems in many areas in order for you to compete in this world marketplace and contribute to your company’s profitability.   

Visit our website and discover the many services, training, facilitating, and coaching options that are available: www.leanculturenow.com

 

The United States has been in a recession that started in December 2007.  Nearly every business has been affected.  Most management has made extremely difficult decisions to attempt to survive.

During previous recessions management would cut support staff by 10 to 15 percent and reduce production workers to match customer product demand.  This was not all bad, because it forced companies to trim out the least value added management and support staff. Unemployment would go up to 8 to 10% and productivity would go down or improve slightly.  When business picked up companies would call back their production workers and over time add management as needed to support their business activities.

This recession has been very different.  Some companies have reduced their support management and staff by 40 to 80 percent in addition to their production workers.  U.S. unemployment is at 10.2% and climbing, but productivity has increased by 9%.  Increased productivity is great when competing in our world marketplace.  However, many believe that unemployment will remain high during this recovery, which will negatively affect the time it takes for the U.S. to come out of this recession.

 

Management must walk the fine line on how to staff their organizations to deliver high quality products on time at low costs.  They must also meet non product customer requirements, which require staff time.  One should analyze the long term cost and benefits before adding fulltime management staff.

 

Hiring options to meet increased demand on management’s time:

1.    Part time (does not require benefits)

2.    Temporary staff – (Some benefits are included in contract)

3.    Contact people who have experience and specialized knowledge for projects (short term, no benefits, quick start up, high productivity)

4.    Fulltime employee (training required, available for other assignments, benefits and legacy costs)

 

Lean Enterprise Software Solutions has a number of talented individuals that have the experience to assist companies improve in many areas to compete in this world marketplace and contribute to your company’s profitability.  Many of our associates will require no upfront money commitment, but are willing to work for a contracted percentage basis of the project cost savings.

Visit our website and discover what many other companies already know: www.leanculturenow.com

Many companies are finding an increased number of non-conformances as they continually modify their audit questions to focus on the high risk processes in their facilities. This increases the opportunity to improve quality, but does not guarantee you progress. To really drive your organization to achieve single digit PPM and eventually Zero Defects your management team must have good problem solving skills. Identifying non-conformances is a great first step to show you what, where, and when your problems are occurring. The next step is to determine immediate corrective action. This is like step 3 of a Global 8-D process: Develop an Interim Containment Action. This action should protect the customer (internal or external) 100% from the effect of the problem. It should be verified, easy to implement, and cost effective. The auditor or area management must also determine if containment actions are required for product made prior to the finding to protect the customer from a quality spill. Many companies do not realize that the containment action (example: reject prior 8 hour of production) needs to be part of the corrective action. Receiving rejections for products that were made a short time prior to when the non-conformance was found is a good sign that your containment activities were not effective. Implementing the immediate corrective action and containment action must be well documented within the requirements in your Quality Management System. This may require writing a deviation to change the process for a period of time in addition to documenting your actions in your LPA tracking system. If a management person is unable to identify a suitable immediate corrective action, the best action may be to shut down the process and contain the product produced prior to the finding. Effective LPA programs require an upper level management person who has profound knowledge in the non-conformance process area to review and approval the corrective action and containment activities within a short period of time. Management may modify the corrective action or containment activities to improve the protection to keep the customer from receiving poor quality products. Validation of the final immediate corrective action and containment activities will be done by your customers. They will notify you if they receive a quality spill.

The total cost of quality is the combined sum of the costs in these areas:

Scrap

Rework

Use of excess materials (i.e. Off-cuts)

Equipment breakdowns

Preventive maintenance

Yield below quote

Productivity below quote

Customer rejections

Returned goods and return freight

Warranty

Quality department (wages, equipment, & overheads)

Lab department (wages, equipment & overheads)

All mistake-proofing devices

All measurement devices and gages

Dock audits

Third party audits

Data collection systems

An effective layered process audit program will improve the overall quality of your organization, while reducing your company’s Total Cost of Quality.

• Reduces variation in production
• Improves & maintains discipline
• Reduces scrap and rework costs
• Improves communication
• Reduces internal and customer rejections
• Lowers PPM (part per million)
• Increase Employee participation
• Reduces warranty
• Stops production problems from becoming rejections
• Increases the number of improvement ideas

Improves the overall quality while reducing the cost of quality