Manufacturers who grow faster than competitors and gain market share while thwarting price wars share a common trait. They have an intensity about product quality that reverberates throughout each work center and plant and extends across their production network.
A commitment to quality and exceeding customers’ expectations dominates these manufacturers’ cultures and focus. The latest quality metrics and statistical process control (SPC) charts aren’t relegated to computers in the back office. They’re front and center, displayed on flat screens and message boards on the shop floor where everyone can track progress against quality goals.
Quality-Driven Manufacturers
Manufacturers with a strong commitment to quality also understand that:
- Managing to quality metrics provides a goal-driven roadmap for surpassing compliance standards to achieve a strong competitive advantage.
- Quality metrics are interdependent on and reflect the relative levels of performance of a plant’s other functional areas, and they’re leading indicators of production performance.
- Attaining compliance with critical industry standards while reducing the cost of quality is achievable when quality and compliance goals are customized to each plant.
Teams Excelling at Quality Earn Customers for Life
Successful manufacturers understand that excelling at quality earns customers for life. They are committed to creating and sustaining a passion for quality across their teams that brings greater responsiveness and flexibility into manufacturing operations company-wide.
Across the spectrum of manufacturing strategies—from highly customized engineer-to-order (ETO) to make-to-order (MTO) and make-to-stock (MTS)—quality improves when every member of a team sees how their efforts make a difference. By concentrating on a core set of quality metrics, manufacturing teams have clear guidance on where to focus in meeting both their personal targets and the company’s goals.
Quality is a Force Multiplier for Growth
Attaining higher quality levels has a multiplicative effect throughout the entire company. For example, finding new ways to improve perfect order performance continually reduces return material authorization (RMA) rates doesn’t just reduce costs and inefficiencies; it also increases customer satisfaction, leading to more sales.
Similarly, improving overall equipment effectiveness (OEE) reduces manufacturing cycle times and helps to improve perfect order performance, so the company can meet customer commitments on time. Managing OEE to the highest levels possible has a direct impact on production yields while also reducing the cost of quality to further drive down costs per unit of production, excluding materials.
These factors taken together improve gross contribution margins while meeting or exceeding customer expectations as defined by committed to delivery dates. Their impact is amplified even further when applied to achieving compliance with industry quality standards.
The International Organization for Standardization (ISO) 9001 quality management system standard is one of the most widely adopted industry standards in the world. Other examples include the International Automotive Task Force (IATF) 16949:2016, International Aerospace Quality Group (IAQG) AS9100 for the aerospace industry, and United States Food and Drug Administration (FDA) CFR Part 11 for pharmaceuticals and medical devices.
Successful manufacturers who grow regardless of industry conditions have found a way to turn compliance into a competitive advantage. Unlike their competitors, they see compliance as more than a cost. They perceive compliance as a way to add value for customers—and compliance standards as liberating goals to be met and exceeded.
Propel Higher Manufacturing Quality with These 5 Metrics
Executing on a commitment to quality requires a way to measure progress toward that objective. Following are five key metrics that reflect how interdependent quality is across manufacturing operations. When they are combined with additional financial and operations data, each provides added insight into how quality can improve.
1. Corrective action/preventative action (CAPA) events are also known as corrective action requests (CARs). Addressing this metric and the events they define are required to stay in compliance with rigorous quality standards that vary by industry. An example is FDA 21 CFR 820.100 for medical device manufacturers. It requires their quality management systems to have CAPA tracking, reporting and auditing accessible to FDA auditors on a 24/7 basis.
2. Engineering change order (ECO) tracking is also known of as engineering change notice (ECN). This metric tracks changes to routing, bills of materials (BOMs), production workflows, and change requests from customers for customized products. Monitoring ECO provides insights into how well products are being managed and coordinated within an individual plant. It is also a leading indicator of potential systemic quality problems in a product design or the need for greater coordination with channel partners and customers.
3. Overall equipment effectiveness (OEE) defines how effective manufacturing workflows are to the machine and production line level, OEE is invaluable in benchmarking how specific manufacturing processes are performing. To calculate OEE for a specific machine or production line, multiply Availability x Performance x Quality.
4. Perfect Order Performance provides an immediate measure of how well synchronized each step of order capture, order management, production and fulfillment are, perfect order performance is measured as an index value. To calculate the Perfect Order Index (POI), multiply Percent of Orders Delivered on Time x Percent of Orders Complete x Percent of Orders Damage Free x Percent of Orders with Accurate Documentation x 100.
5. Return material authorizations (RMAs) and returns are a direct measure of product quality and a products’ nonconformance to customers’ specifications and requirements. They are issued for a wide variety of reasons, and it’s important to have a monthly Pareto Analysis done of the top 20% of factors that drive 80% of the returns. This will make cause troubleshooting more efficient, leading to permanent solutions to problems that may be causing RMAs to begin with.
A key takeaway of these five metrics taken in total is that quality must be a unifying thread across all manufacturing operations to succeed.
Conclusion
Successful manufacturers have a commitment to quality and exceeding customers’ expectations that dominates their cultures and focus. By adopting the five quality metrics discussed here, manufacturers have a powerful set of tools for focusing priorities across their teams, measuring progress against quality goals, and fostering a culture of continuous quality improvement.
Contact the DELMIAWorks team to get started.