Sunday, February 27, 2011

The Impact of Quality on Social Responsibility

The guidance standard ISO-26000:2010 Social Responsibility was published in November 2010. In applying ISO 26000:2010, organizations are advised to take into consideration societal, environmental, legal, cultural, political and organizational diversity, as well as differences in economic conditions, while being consistent with international norms of behavior. As Social Responsibility becomes increasingly important in corporate boardrooms, many organizations will turn to the Quality professional for assistance linking sustainability efforts to the strategic quality planning process to deliver business results. It is said what gets measured gets improved. In his latest blog post, ASQ Executive Director Paul Borawski asks, "how do we measure return on investment in SR to assess business value?".

On a macro scale, rather than measure a country's economic output as Gross Domestic Product (GDP) or as GDP per capita, a SR look at the relative output might prorate GDP by each country's area (sq miles). Such a measurement recognizes a culture of sustainability where resources are used more efficiently. For example:

Country          GDP               Area         GDP/sq mile
USA        $14.6 Trillion    3,717,792      $ 3.9M/sq mile
Japan      $  4.3 Trillion       145,883     $29M/sq mile

On a micro-economic scale, a SR measure of Return on Investment for organizations might be a mathematical equation describing Loss to Society, incorporating terms for materials efficiency, energy use, greenhouse gas and VOC emissions, water conservation, biodiversity, etc.throughout a product's life cycle.

As one example, my employer, 3M, has had a "Pollution Prevention Pays" program since 1975. Engineering, manufacturing, laboratory, quality and EHS personnel have participated in over 8,100 PPP projects that have prevented over 2.96 Billion lbs of pollution in their first year, generating over $1.37 Billion in savings. Nearly every 3M manufacturing facility, globally, is ISO-14001 registered. 3M leadership constantly reinforces its values, principles, code of ethics and business conduct in all of our operations worldwide.

Implementation of SR is best managed using traditional quality improvement and project management tools and techniques. Development of new SR metrics for the balanced scorecard will help organizations focus on the long-term objectives.

Saturday, February 12, 2011

Flawless Execution - It's All About Leadership

In his latest "A View from the Q" blog, Paul Borawksi (ASQ Exec Dir) reflects on the goal-setting process and challenges leaders everywhere to not simply act, but to execute.

Why do so many well-formulated strategic plans fail to deliver on their promises? It's all about execution - or the lack thereof. Counter to a quote attributed to Edgar Whitney, "A good design poorly executed is much to be preferred over a poor design well executed", it is my experience that a great plan poorly executed is no better than no plan at all. Mark Fields (Ford) once said, "Culture eats strategy for breakfast." So true. Flawless execution requires diligence, accountability and a change acceptance strategy to assure organizational alignment. Human capital is our most important asset. Constant, consistent leadership communications, thorough policy deployment, an effective change agent, and a set of meaningful measures are required before any organizational change can be effectively implemented and internalized.

Having a clearly defined mission, compelling vision, shared purpose and an articulated code of conduct are a great start, but adopting an improvement framework such as the Baldrige Criteria brings a much-needed systems approach to achieve organizational performance excellence. Paul Grizzell (Core Values Partners, Inc.) - Baldrige consultant, Senior Alumni Baldrige Examiner, and previous Board member and judge with the MN Council for Quality - created this simple graphic demonstrating the improved organizational alignment achieved via the Baldrige model:

Finally, to drive effective execution we must stop the practice of 2-point comparisons and begin applying statistical thinking in the corner office and board rooms across America. Sustainable flawless execution requires real change with demonstrable new levels of performance with minimal variation. We must train ourselves to look for deeper root causes and not be satisfied with the quick fix, or be tempted to react to every undesirable data point as though it were due to a special cause. All processes have variation; effective leadership appreciates the differences between special cause, common cause; can distinguish trends and patterns; and, understands that management of variation requires systems thinking along with proper use of tools, methods and approaches. Flawless execution depends on it.

Tuesday, February 08, 2011

Business Conduct and Statistical Thinking in Commercialization

I had an interesting question posed to me the other day: Have I ever observed or perceived an instance of suspect integrity or questionable business conduct? And if so, what did I do about it? I thought this would make for an interesting discussion with respect to practicing more (better) statistical thinking and statistical engineering in one's new product introduction system and commercialization (NPI), and product management of change (MOC) processes . I offer two different hypothetical situations...

Scenario #1:
In an effort to be "first to market", a new-to-the-world product is fast-tracked through the organization's formal new product commercialization process. Early reviews from customers are favorable. Prototypes have been shown and customer orders taken early in the product development phase. Proper risk assessments have not been completed. Equipment, process and product validation studies have not been completed. Limited product has been made - maybe on the intended production line, but more than likely only on a pilot line. Just one "Qualification" run - a short-term "machine capability" study - has been evaluated... with acceptable results. The organization's operating plan has aggressive Top Line sales growth and Operating Income targets. The NPI Gatekeepers are deciding whether to go ahead with an accelerated "soft" launch in order to meet customer demand and generate revenue.

Sound familiar? What would you do?
Some questions for thought:

  • How might the industry you are in, or the markets you serve, play a role in your decision-making?
  • How much risk is the organization willing to accept? Have they even quantified the risk?
  • What do you know about the customer's needs? (Basic, Stated, Unarticulated)
  • How certain are you that tribal knowledge and presumed understanding of VOC have been adequately validated?
  • Are the test methods relevant to the customer... do they predict fitness for use?
  • Are the TMs adequate (Gage R&R, resolution, stability, etc.)?
  • Has acceptable process capability been demonstrated: Short-term? Long-term?
  • How were the product specifications established?
  • How / where will product be sampled for testing?
  • What do we know about the suppliers' process capabilities?
  • How rugged is the product design?
What other questions should be asked?

Scenario #2:
The manufacturing plant manager is facing factory cost challenges due to the triple threat of high waste, rising raw material prices, and lower than forecasted sales volume. A second source of supply for a key RM is being evaluated for reduced cost and improved availability. The customer contract (perhaps the blanket purchase order) has a boilerplate template stating that it must be notified by the vendor of any planned process or product changes. The producer's product maintenance engineer resolutely believes, based on analytical assessments and bench testing, that this RM substitution will be transparent to the customer. The business has a formalized product management of change process, but it is not consistently deployed nor executed.

Should the customer be notified?

What questions would you have of the RM substitution project?
Some thoughts:

  • Is this an approved supplier?
  • Is this supplier ISO registered?
  • Or, has a site evaluation been performed? Or, has a self-assessment been performed?
  • Have you assessed the supplier's process capability?
  • Have raw material - process interactions been modeled with this new supplier?
  • How many distinct lots of raw material / components have been evaluated?
  • What types of product testing have been completed:
  •       Standard battery of manufacturing tests only?
  •       Plus, product development tests (e.g. Consumer-use tests)?
  •       Plus, any stress testing or accelerated life testing?
  • When did we last we validate our customers' requirements?
Other thoughts?

What does it mean to apply statistical thinking and engineering? I don't think it has a lot to do with tools. We have the tools; and there are consultants who can teach us to use new tools. It comes down to leadership. Leadership and execution that integrates strategic quality plan deployment with effective and efficient systems and processes. So, how are you helping your organization to become more customer focused, apply statistical thinking for better decision making, and drive the right behaviors for sustainable operational excellence, growth, and customer satisfaction?