The Future of Manufacturing Quality

Here’s a quick test for those of you who work in manufacturing. What is your current target for customer PPM (# of defects sent to the customer, out of a million pieces)? If you work in the automotive industry then your target is probably in the double-digits, maybe the low double-digits. Other industries are approaching that target as well, some faster than others.

Now, what is your internal target? Maybe something around 1% defects? That means 99% or higher good parts internally. That sounds pretty good until you consider that 1% defective is 10,000 PPM. If your external customer PPM target is 100 then this is a gap between internal and external performance of two orders of magnitude.

Your numbers may vary but I’m sure that it is something along these lines. What accounts for the gap between internal and external expectations? Good old-fashioned INSPECTION. Testing, NDT, auditing, etc. Whatever you call it INSPECTION was something that was supposed to be rooted out years ago by the miracle tools—Lean® and Six Sigma®—as one of the most hated of wastes; literally, spending money on something that gives no value to the customer. In reality, however, INSPECTION continues to live on and is even more embedded in the mindsets of many companies. I’m sure that if you review your company’s PFMEA and Control Plans you will find that they are chock-full of inspection (a typical PFMEA Detection control and a product-focused method in the Control Plan [not process-focused]). I’m not only talking about the actual Inspectors here (or Technicians, or Auditors) but also the capital that is invested in test equipment. If you consider a typical production line in your company, how much of the total cost is captured in INSPECTION of some kind (Inspectors, test equipment, etc.). I wouldn’t hazard a guess but it’s probably 5%-20% of the total cost, depending on the product that you manufacture. “Of course,” you say, “the customer pays for this inspection so it’s really not a waste—we are getting paid to do it and it helps the customer get good parts.” Maybe that’s true, but what if that changes?

Imagine a customer who gives you an aggressive external quality target and tells you that they won’t pay for inspection and testing? That they’ve done studies and they know that more investment in the PROCESS can safely eliminate inspection and testing? It’s not a cost-free change but the investment in the process is less than the investment in testing so it is an immediate impact to total cost. And the best part is that through continuous improvement any remaining inspection can be eliminated and the total cost reduced even further. How would you deal with this?

I can tell you that it’s coming. We’re at the limit of material science in many industries. We’ve also wrung out much of the variation in many basic manufacturing processes over the past decades. We are now approaching the limit of what our material science and basic process improvements can achieve in cost savings. The next step is to strengthen our processes to point of measuring internal quality targets to double-digit PPM, not percentages.

I’d like to know what you think about this issue and any experience or ideas that you have in managing it.

BREAK YOUR THINKING

Greetings readers! After an eight month hiatus I'm back to write a new post about quality. Actually, I want to take this opportunity to explain the title of my LinkedIn profile, which is also the subject of this post: "BREAK YOUR THINKING".

Breaking your thinking has to do with changing how you approach your work. It is changing your mindset (defined as: "beliefs that affect somebody's attitude: a set of beliefs or a way of thinking that determine somebody's behavior and outlook"). It is about what you believe when you are doing your work. Breaking your thinking is profoundly changing your mindset, to a new paradigm through which you conduct your work. "Breaking" is much more profound than "changing" or "modifying" your thinking. It is similar to the thinking in Zen Buddhism of using Koans or nonsensical questions to help people attain enlightenment (a famous Koan is "what is the sound of one hand clapping?"). By considering such questions Zen students are forced to abandon their rational minds and therefore move closer to the nothingness of self that is enlightenment. Yes, this is pretty profound stuff, so let's move to some examples.

I'm sure that you've heard of "stretch targets". If you haven't, I'll explain briefly (if you have, skip to the next paragraph). Most companies set targets or objectives for people to attain, these are usually tied to people's compensation or annual bonus. "Stretch" targets are another set of targets that are even more aggressive than the original targets. They may be documented in the goals and bonus structure as "125%" or "150%" targets, meaning that there is even more money to be made by reaching those targets. They also may not be documented officially. The setting of stretch targets is one way that executives and managers try to motivate their teams to do more (frankly, they may be unattainable in reality but they give the executives/managers something to say "I'm really pushing my people").

From the quality field, an example metric is customer PPM (a defect rate measured in the number of defects per million parts). A company may set a goal of 4500 customer PPM per year with a stretch goal of 3500. Maybe their previous year's performance was around 5000 so the main goal is attainable with some effort; the stretch goal is attainable with even more effort and maybe a little investment. In the end, however, maybe the current year's performance is still around 5000 or maybe they can reach the 4500 target. Such gradual improvement is commendable to a point. Considering ever increasing customer quality expectations and ever decreasing customer cost expectations such gradual improvement is simply not competitive. Not in the global market of 2013. This level of improvement simply won't cut it anymore.

To make real, substantial improvement in today's global marketplace we need to break our thinking, not only push ourselves forward bit by bit. Using the above example if we set the PPM goal at 5 then there is no way for people to do a little bit (or even a lot) of effort to reach the target. It's simply not possible with the existing mindset, and that will be the reaction of the people who hear the target: "impossible!". It's not impossible. When faced with such a target people need to step back and really ponder how they do their work, they need to BREAK THEIR THINKING. This is the way to drive real improvement. In the end, let's be realistic, such huge improvement still takes time but setting this target and driving a new mindset in the company will lead to a relatively huge improvement (some people won't like to break their thinking and may leave the company, but so be it). In such a situation maybe the final result will be 1000 or 500 PPM. THAT'S GREAT! That is still a much better result than the 4000 or 3500 that would've been attained the other way. And next year, maybe the result will be 100 or even 5 (or even 0!). Once the new mindset takes hold and people, all people in the company (including the Board, CEO, and everyone else), really approach their work in a different way then the company can make dramatic improvements and suddenly produce higher quality parts at lower prices. Their customers will be amazed and they will start to eat away at their competitors, anywhere in the world.

It's easy to write this, right? It's easy to talk about this and imagine such results and such a mindset. The key is that the CEO and Board of Directors (or owners if a private company) must agree to this direction, lead this direction, and be the first people to break their thinking. This isn't something to dump on some hapless Quality Manager and say, "Here you go, change your mindset and reach this target!". This needs to start from and be led by the TOP of the company. Otherwise, it's not easy or hard, it's impossible.

Setting such "impossible" goals and asking people to break their thinking must start at the top but it must not cascade down to the bottom. What I mean is that this request must stop at the supervisor, engineer, and manager level. It MUST NOT be requested of the operators and other direct and indirect labor at the "lowest" levels of the company. Why? Because those people can only do the best that they can with the tools that they are given by the engineers and managers of the company. The company itself, based on its current culture and mindset, can only reach a certain level of variation in processes and products. This level is determined by the top management and implemented by the middle and lower managers through their staff. The operators have no way to change this. Breaking their thinking will not lead to any improvement, and attempting it may lead to more harm. Making posters on the production floor of "Zero defects" or "5 PPM" literally means nothing to them because such improvements can only come from improving the systems and processes, not through their actions. They need to be given the more advanced tools and methods that are developed after their engineers and managers break their own thinking and then simply asked to do the work in the new way. They will see the results also, they will see them before the customers or the managers do, and they will appreciate the opportunity to do their jobs in better ways.

In conclusion, I hope that this message is very clear to those of you in the top management of companies: you need to BREAK YOUR THINKING first and push your people to do the same. Set the "impossible" goals and push your people that they MUST be met. This is the only way for you and your people to break your thinking and be more successful.