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Why Quality really is Everybody’s Business

Professor John Oakland

11th November 2009

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The “Voice of Experience”

informs new research

The “Voice of Research” ensures we

employ cutting edge practices

How Oakland Consulting balance theory with practice

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Quality is high on the agenda everywhere ...

Financial Times17th October 2009

The Times15th October 2009

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... but what sort of challenges do we face?

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† FES = Front End Sales, External System Integrators etc

Quality in the 21st Century – who is ‘Everybody’?

Customers

FES

†

FES

†

BU1 BU2 BU3 BU4

YOUSub2

Sub1

Suppliers

Orders/ Revenues/ Cash

Goods/Solutions/Services

To achieve Quality across the entire business process chain we need to:Assess the customer needs & business value of meeting them

Find the right processes & partners and select the optimum solution

Prove and implement the right solutions

Make the proven solutions sustainable and continuously improve

Promote the spread of internal and external best practices

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7

Life is complex for Everybody

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Blame for Everybody

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Get a Grip – Sort it out!

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1. Clarity of direction

& objectives

2. Insight into current situation and priorities

3. Implementation to deliver real

business benefit

The three part ‘scaffold’ for Everybody

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Vision&

Mission

CSFs, KPIs & Targets

Process & organisational blueprint to deliver the

CSFs

Milestone plan, Activity & Resource plans

Results

• Project Metrics

• Process and People Performance

• Business outcomes

• Strategic objectives

Planning• WHY -

Purpose & Scope

• WHAT -Success factors & measures

• HOW - To deliver

• WHEN & WHO - will deliver

Understand Customer

Requirements

Understand Customer

Requirements

Develop the top level process framework

Develop the top level process framework

Strategic Alignment & Deployment

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Value-adding processes for Everybody

The leadership define the strategies and plans, and the value-adding processes form the links to the results

The value-adding process need to be:

– defined and documented

– managed from end-to-end

– measured and improved

Functions

Function A

Function B

Function C

Function F

Function E

Key process

Key process

Key process

Key process

Key process

Key process

Cust

omer

S

atisf

actio

n

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A top level process framework

Manage &develop

suppliers

Develop &manage

partnerships&

acquisitions

Develop &maintain

managementsystems

Managefinancial

resources &assets

ManageCommunication

Manage &developpeople

Develop &deploy

Policies,plans &

strategies

Developinnovativeservices

andproducts

Market &sell

servicesand

products

Plan &deliver

servicesand

products

ManageContinuous

Improvement

Manage Continuous Improvement

RESULTSRESULTS

CustomersCustomersPeoplePeople

ShareholdersShareholdersSocietySociety

Mission, Vision & Mission, Vision & CSFsCSFs

ValuesValues

PoliciesPolicies

Manage &develop

suppliers

Develop &manage

partnerships&

acquisitions

Develop &maintain

managementsystems

Managefinancial

resources &assets

ManageCommunication

Manage &developpeople

Develop &deploy

Policies,plans &

strategies

Developinnovativeservices

andproducts

Market &sell

servicesand

products

Plan &deliver

servicesand

products

ManageContinuous

Improvement

Manage Continuous Improvement

RESULTSRESULTS

CustomersCustomersPeoplePeople

ShareholdersShareholdersSocietySociety

Mission, Vision & Mission, Vision & CSFsCSFs

ValuesValues

PoliciesPolicies

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No wonder key processes involve Everybody

New products

on the market

Ideas for new

products

Example – A new product development process

Marketing R & D SalesManufacturing

Define market

opportunity

Create marketing materials

Launch Product

Launch Product

Launch Product

Launch Product

Develop prototype product

Test & validate product

Product production

Prepare sales force for launch

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Assessment and Review

Performance measurement through structured assessment and review is a critical component in effectively managing quality

It provides a roadmap for the improvement and helps to deliver superior business results in the new global market place

But failure to adopt this rigorous approach to quality management across complex supply chains can have disastrous consequences

And who is responsible ...?

Everybody

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Measuring your performance

39TOTAL (Max = 90) 

  3  Results18

   2 Quality improvement 17

   2 QC16

   2 Quality organisation, QA and QMS15

   2 Process control and work instructions14

    1Material inventories13

  3  Managing and maintaining production assets12

   2 Work environment11

   2 Conformity of supplied product10

    1Supplier selection, certification and management9

   2 Reward and recognition8

    1Managing people's performance7

  3  Skills and competencies6

   2 Work organisation 5

   2 Interface with HQ and global integration4

  3  Quality performance reporting 3

  3  Quality objectives and targets2

  3  Business commitment to quality1

Issue 54321LevelItem #

Summary of Self-Assessment Scores

39TOTAL (Max = 90) 

  3  Results18

   2 Quality improvement 17

   2 QC16

   2 Quality organisation, QA and QMS15

   2 Process control and work instructions14

    1Material inventories13

  3  Managing and maintaining production assets12

   2 Work environment11

   2 Conformity of supplied product10

    1Supplier selection, certification and management9

   2 Reward and recognition8

    1Managing people's performance7

  3  Skills and competencies6

   2 Work organisation 5

   2 Interface with HQ and global integration4

  3  Quality performance reporting 3

  3  Quality objectives and targets2

  3  Business commitment to quality1

Issue 54321LevelItem #

Summary of Self-Assessment Scores

39TOTAL (Max = 90) 

  3  Results18

   2 Quality improvement 17

   2 QC16

   2 Quality organisation, QA and QMS15

   2 Process control and work instructions14

    1Material inventories13

  3  Managing and maintaining production assets12

   2 Work environment11

   2 Conformity of supplied product10

    1Supplier selection, certification and management9

   2 Reward and recognition8

    1Managing people's performance7

  3  Skills and competencies6

   2 Work organisation 5

   2 Interface with HQ and global integration4

  3  Quality performance reporting 3

  3  Quality objectives and targets2

  3  Business commitment to quality1

Issue 54321LevelItem #

Summary of Self-Assessment Scores

Site A Site CSite C

Leadership

Policy

Organisation

Manufacturing

Supply

People management

Performance improvement

Site-specific reports showing areas of strength and risk across 18 dimension of quality management, including:

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Understanding your performance

Bringing together your performance measurement across the supply chain will highlight areas of priority

and specific improvement actions

21Overcoming the global sourcingchallenges of fast growth

... BUT a lack of focus on quality during the same period meant:o Warranty costs soared to >10% of sales revenueo Key customer relationships & companies reputation seriously damagedo Survival threatened

Client Growth (2003-2007)o Turnover increased by 150%o New factories were built in Europe, US and Asiao Average number of employees doubled

o A series of assessments of quality management practices were conducted in the manufacturing plants and key headquarter functionso Key problem areas were identifiedo Cross-business quality improvement teams put in place

$20M in reduced failure costs

Enabled global expansion

Improved On Time, On Quality delivery

Case Study -

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Transformation & Continuous Improvement

3. Pragmatic, Fact-based Methodology Yielding Rapid Results

Using proven methodologies, fact & data based, hands-on tools and techniques

1. Leadership & Top Down Cascade of Objectives

OTOQOC Delivery

performance

Customer Confidence

Efficiency Improvements

4. Skilled Improvers

People, trained, qualified and living in the organisation

5. Widely Shared Continual Improvement Culture

Shared commitment to constant improvements in performance

2. Supporting Infrastructure

Programme management

Effective communications and ‘Branding’

Supporting systems

8. Sustained Improvement

Continuation on a lifetime journey

7. Measurable Improvements in

the Service Delivery Areas

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Waste Removal

Variation Reduction

TIME

COST£££

Improving customer satisfaction andincreasing value for money

QUALITY

VALUEoutputs

Lean Six sigma

Delivering sustained quality improvement

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Improvement DRIVER for Everybody

A structured and proven approach to continuous improvement that:

Stops you jumping from the problem straight to the solution

Generates improvements in On-Time, On-Quality, On-Cost Delivery

Supports sustainable performance improvement

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Being Lean is Everybody’s Business!

Do not focus on the value adding activities!

Standardised Work

Waste Elimination

Parallel Processing

Layout

Batch Reduction

Quick Changeover

Line Balancing

Visual Management

Error Proofing

Remove the non-value adding activitiesWASTE

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Six Sigma is effectively a zero-error process so we strive for perfection

Reducing process variation (improving sigma) has direct effects on On-Time, On-Quality Delivery and Costs

Pilot 1 – 3 sigma landings Pilot 2 – 6 sigma landings

Which pilot would you rather fly with?

Reducing variation is Everybody’s business!

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Which pilot would you rather fly with?

Pilot 1 – 3 sigma landings Pilot 2 – 6 sigma landings

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Process variation affects Everybody

Inputs Process

Processes should deliver outputs on target, every time

Variation causes processes to miss targets

Inputs ProcessInputs

ProcessInputs Process

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DASHBOARD – Savings / Benefits (global)

EADS Black Belt Programme Cumulative Savings 2006-2009

0

20 000

40 000

60 000

80 000

100 000

120 000

140 000

160 000

180 000

200 000

Q1-06 Q2-06 Q3-06 Q4-06 Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09 Q3-09 Q4-09

K€

1st year savings of qualified EBB projects 2nd & 3rd year savings of qualified EBB projectsPotential savings of pipeline projects Total savings

Programme Investment

EADS Black Belt ProgrammeAverage saving/ benefit per project

100

120

140

160

180

200

220

240

260

280

300

320

Q1-06

Q2-06

Q3-06

Q4-06

Q1-07

Q2-07

Q3-07

Q4-07

Q1-08

Q2-08

Q3-08

Q4-08

Q1-09

Q2-09

Q3-09

Q4-09

K€

Total cumulative savings/ benefits:

ca120m k€

Average saving per project : 309k€

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Successful change requires Everybody

ImplementingChange

Readiness for

ChangePlanningPlanning

Leadership& DirectionLeadership& Direction

PROCESSESPROCESSES

Organisation& ResourcesOrganisation& Resources BehavioursBehaviours

Systems& Controls

Systems& Controls

Need forChange

Need forChange

ExternalEvents

It requires “Readiness” and “Implementation” to be in balance

Strategic

Operational

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... and as we deliver ‘carbon excellence’ ...

... We all have a big role to play

Getting

C a r b o n R e a d y

Leadership capability

Carbon trading and offsetting

Carbon footprint

assessment

Legislation watch

Low carbon technology

Carbon stream

mapping

Implementation plan

Performance management

Carbon briefings

3rd Party verification

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Yes it really is Everybody’s business!

The value-adding processes across all functions provide

the link between the strategic plans and the

results

A critical component in effectively managing quality in the 21st Century that

involves the complete supply chain

Developing a specific set of skills and knowledge across the organisation as we move towards a culture of continuous

improvement

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Yes it really does mean Everybody!

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CONSULTINGOAKLAND

CONSULTINGOAKLAND

www.oaklandconsulting.com

“No great improvements in the lot of mankind are possible, until a great change takes place in the fundamental constituting of their modes of thought” – John Stuart Mill

That means EVERYBODY ... including YOU!

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John Oakland is Executive Chairman of Oakland Consulting plc and Head of its Research and Education Division, the European Centre for Business Excellence. He is also Emeritus Professor of Business Excellence & Quality Management at Leeds University Business School.

Over more than twenty five years he has consulted in all aspects of business excellence and improvement to literally thousands of organisations. He has directed several large business research projects in Europe, which have brought him into contact with a diverse range of organisations. His work on the requirements of industry, commerce and the public sector has been widely acknowledged and published.

John has an international reputation for his work on performance improvement and he is author of several best selling books. He has written literally hundreds of papers, articles and reports on various topics in the field.

John is a Fellow of the Institute of Directors, Chartered Quality Institute, American Society for Quality and Royal Statistical Society.

Professor John Oakland