How to Implement an IG Manufacturing Quality Procedure System
Cost-Benefit Analysis
And
Planning the Process
Learning Objectives
• Making the case: the importance of a formalized
quality assurance program;
• Making the case: quality is everyone’s responsibility;
• How to prepare the cost-benefit analysis for your
quality assurance program.
• How to plan the implementation of you quality system
• NOTE: We will need to develop a cost-benefit
spreadsheet template with set categories.
Making the Case
It Pays For Itself!
….but how can that be?
Making the Case
• Catch errors before they leave the plant
• On-site replacement of failed units can cost
many more times than the original installation
• Reduces warranty claims
• Enhanced customer satisfaction leads to more
orders
• Increases your productivity
• Increases profitability – less wastage, less call
backs
Making the Case
But don’t take our word for it, let’s
prove it….
Making the Case
• Costs to implement
– Outside consultants
– Compensation for Quality Control Manager
– Training Costs
• Management
• Departmental
• Employee
– Additional resources
Making the Case
There is a cost to your company if operations,
processes and products are not monitored?
– Do you know your failure rate?
– Do you know the customers that have gone to a
competitor?
– Do you know the reasons why
– What are your warranty claims?
– What is your future warranty liability reserves?
– Are you prepared for legal liability?
– Can you afford to not control your processes?
– What happens in a tough economy?
Hidden and Unrealized Costs
“We have no Failures!”
• Are you sure?




You may not know because…
Customer doesn't report as failures are relatively few;
Customer doesn’t know who supplied the units;
Failures are not reported to the company;
Failures are not reported to the management.
Be pro-active in learning about your failures!
In a tough, competitive economy your future may
depend on your knowledge of your product and what
you do about product failures
The Cost of Failure
• IF: 50 units of each year’s production fail (out of
an annual production of 100,000);
• THEN: 0.5% units will fail over a 10 year warranty
period;
• IF the cost to replace is 10 X original unit’s cost
(including manufacturing, lost time, on site
replacement including staging, on-site personnel,
transportation, insurance);
• THEN: Replacement = 5% of costs;
• High % of profits (2.5% to 3%)!
• Any greater than 50 failures and you could have a
serious problem!
The Cost of Failure
• Let’s get specific…..
Project Planning
• Pre-assess your current system
– Identify what you have and what you want to have
• Be realistic about the effectiveness of your current QA
processes. Do they work? Are employees following
procedures? Do you have unused manuals sitting on a
bookshelf?
– GAP analysis
• A formal tool (questionnaire) to investigate your own system
and identify what’s missing.
• Make decisions about what needs to be done.
• Define actions and identify exclusions.
• “Score the results”.
IDENTIFY GAPS
Answer each GAP Analysis Question
"YES"
"NO"
"N/A"
Then the requirement
has been met and
no action
required
Then a gap has been
identified and remedial action
should be taken.
Then the requirements is
not applicable to your
quality system and no
action
required
“We do not evaluate our suppliers.”
“We have calibration
procedures for each
piece of equipment.”
Need to determine actions and assign
tasks to the team members to remedy
the gap. Use plans!
“We don’t do any product
design. We get our
designs from our
customers.”
“Get material data sheets from
suppliers.”
FOR EACH "NO" ANSWER SELECT THE QUALITY
PROCESSES THAT NEED FURTHER DEVELOPMENT
GAP Analysis
• Each “no” answer…
– indicates a shortfall in your current system.
– indicates that this process of your quality system
does not meet the requirements of the standard.
– indicates that this process further development.
It needs to be created, modified or improved.
– requires an action to be included in your
implementation plan.
Project Planning
• Set a time to implement
• Identify the main implementation steps in the
project plan (actions identified from the GAP
analysis)
• Divide the main steps into individual actions and
add other items that will compliment the
implementation
• Define who is going to be responsible for each
action and don’t forget to set a deadline for
completion.
The Project Team
• Once the gaps have been identified, assemble
representatives from each area.
• Decide on who will be the team members.
• All successful teams have a champion who
supports the efforts. Usually someone from
senior management.
• Select an individual to act as the “hub”. All
communication and work plans are under the
supervision of this individual.
The Team
• Quality is everyone’s responsibility!
• Quality is an organization-wide project.
• Involve many in the activities; spread the
workload.
• Assign duties where the personality and
position fits. Everyone is an “expert” in their
subject areas.
• It takes everyone to build a quality product,
not just the plant personnel.
What’s Next?
•
•
•
•
•
•
The GAP analysis is complete.
The Plan has been set.
The time period has been established.
The project team has been formed.
The “champion” has been identified.
The “hub” has been identified.
…..Now the work begins, you are ready to
implement your plan!