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Jun 26 2012

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Do Quality Inspections Add Value?

If you work in a Lean manufacturing environment then I am sure you strive to remove waste. I recently read a conversation thread on LinkedIn on the topic of Quality. A question was asked if quality inspections added any value. You can see the post here.

I thought the original question is a great example of how the concept of a Lean manufacturing solution must be examined within the greater scope of how a business operates in order to really identify if an activity is wasteful. Let me explain.

First, to clarify, I fully agree with the statement that quality inspection is part of Quality Control (not Quality Assurance), where the objective is to separate defective product from defective-free product. I see Quality Assurance as the practice of preventing defects by establishing the proper designs, processes and trainings before a product is built. In other words, if you can design and build a product that is defect-free, then you have eliminated the need for quality inspections, thereby removing waste from your process. This is what I call “nirvana” for a Lean guru. I see this as a direction to work towards, but one that will never be actually achieved. This is a critical assumption. My rationale is that there are too many variables that are part of the production process. It is unreasonable to believe that at any one time a random event will NEVER occur. Rather, by its very nature, random act occur unpredictably, which means they can’t be “planned” away.

Given this assumption, if you choose to not perform a quality inspection during your production process, then some products will be shipped with defects. If this is acceptable, then don’t perform a quality inspection. Perhaps you are the low cost producer for your market. In that case, your customers might be forgiving and simply throw away an occasional product as long as most were acceptable. I would propose, however, that if this scenario describes how you operate, then you are exposed. A competitor could potentially steal your market share and customers, which leads me to the first way that Quality Inspections add value.

 

  • Final quality inspections are the last activity you perform before product is shipped, so represent the only true perspective of your customer’s buying “experience.” If you lose perspective of what this experience is like, then over time you will lose perspective of how your product is perceived in the market place – leaving a wide open hole for your competitors to offer new value to your existing customers.

 

Another benefit of implementing both a Quality Assurance and a Quality Control program is that the inspection process can provide valuable manufacturing intelligence that can then be used to design better quality products and processes. Every continuous improvement program is reliant upon gathering data to improve efficiency. Where will this data come from? This brings me to point #2:

 

  • Quality Inspections are a source of data and manufacturing intelligence on how your production processes are performing; they provide insights into how a better design might lead to higher quality and less waste. Statistical Process Control (SPC) analyses can be performed on your Quality Control data (i.e. inspection results) to gain insights for process improvement along your entire production process.

 

At the start of this post I suggested that those who don’t understand the value of quality inspections were not looking at the “big picture.” The cost to deliver a product extends beyond the build cost – it continues to occur across the entire lifecycle of a product, from delivery, support and warranty claims, all the way through disposal (for some products), which brings me to point #3:

 

  • Quality Inspections can help to reduce future costs, including rejected or returned items (perhaps damaged during shipment based on a packaging defect), higher warranty returns or more calls into your customer support center to answer questions such as “What happened to all the bolts I need to build my outdoor table set?”

 

All in all, quality inspections can be a source of considerable value-added activity, but perhaps more as a cost reduction and competitive defense tool, rather than as a justification to raise prices. But, in the end, if more money is flowing to your bottom line, isn’t that a value-added activity?

Permanent link to this article: http://www.apriso.com/blog/2012/06/do-quality-inspections-add-value/

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  1. Larry D.

    I would suggest some clarification for those industries that are not similar to the high-volume, high-unit cost industries like automotive, aircraft, etc. where the suppliers are essential “captive suppliers” where all of their Tier 1 production goes to their customer. Contract agreements with suppliers are typical. Proprietary parts and components designed are all subject to CI and CI Teams are formed by the customer to address any design & quality issues. That is the case with the TPS and other high-volume, high-unit cost industries. The margins are high enough to support CI Teams. That situation is almost a special case. Most industries and firms within them do not have the high volume, the high unit cost and therefore the high margins to support complete CI Teams coverage. In addition their suppliers are not “captive” but serve a large number of firms with a more standard design. Call these off-the-shelf components. Those non-captive suppliers are less interested in changing their standard design components in this situation. In fact if the purchased volumes are not high enough they may refuse to co-operate in a professional way. I would suggest this is the more typical situation for many firms. Changing suppliers away from this situation may be possible but the lower unit volume is still an obstacle. Of course, with off-the-shelf standard hardware parts the leverage to change the production process is almost nil. Also, in many industries there is pressure on product cost to match competitors and that pressure works against forming CI Teams – funded from margins – to work with suppliers on quality issues. The tactic to attempt to push inspections out of the plant to these suppliers is often met with less than head- nodding enthusiasm.

  2. Larry D.

    I would ask how those inspections indicated above can be planned. It seems that, in the past, the inspection plan was to do sample inspections. This was done at receiving inspection (piece parts) and on the assembly line and even whole unit inspections pre-shipment. In recent years the inspections were pushed back to the supplier in an effort to control the piece part quality process. As a general rule of thumb such inspections were based on the idea of “1% defective product” sold to customers. That is 10,000 defects per million.

    The number of defects is now expected to be much fewer than 3 Sigma quality (defects 66,807 PPM) just to stay in business against competition. it would seem that sampling inspections are now obsolete. Manufacturers are now moving through – going past the idea of 1% defective – to 4 Sigma quality (defects 6,610 PPM) quality and then toward 5 Sigma quality (defects 233 PPM) achieving that by other means as suggested above.

    It would seem that sampling to uncover defects loses its theoretical basis as the defective proportion gets smaller and smaller in PPM.

    The option left is 100% inspection most likely by automated means. How is this to be is carried out is the question. At the piece-part level? At the sub-assembly level? At the whole unit level? At a combination of all three? What would be the whole product quality plan?

    1. Milosz Majta

      I think this is a good question, but there is no general answer to it. It depends very much on the production type. For complex discrete manufacturing 100% inspection is a must, and this is not the final inspection but inspections at every critical stage of production (e.g. critical sub-assembly introduction phase) – typically these stages are called “quality gates”.

      On the other hand, during batch production (fast-paced), there is no way to conduct 100% inspections. To me, there is no “whole product quality plan”. Modern manufacturing organizations are built in a way that allows for continuous change, adoption and improvement. And that’s why I have mentioned analysis and intelligence tools that support those processes – to be able to adapt the quality plan/process based on changing trends, discovered correlations, root causes etc.

  3. Robert Napier

    I believe that the argument against inspection in a TPS Lean environment is that inspection relies on human judgement, which when coupled with a tedious routine like a typical inspection process tends to be very unreliable. Product STILL gets to the customer defective, whereas if you design and develop poke yoke (error proofing) methods into your process, you can reduce or eliminate some of these failures. I understand that there are some things that are non-value add that we live with to ensure that as much product as possible gets to the customer defect free, inspection being the major item. The goal in a Lean factory should be to reduce or eliminate inspection as much as possible as poke yokes are integrated. Toyota does things under certain circumstances like increase inventory in some processes to stimulate flow in others under certain conditions. All situations are different, but the end goal should be the same. Value add vs non value add is simply a way to separate things that COULD be removed during future continuous improvement activities vs what CANNOT. In an automatic transmission, i will ALWAYS have to install a clutch pack (value add), if I improve my process with poke yoke, I may not always have to have an inspector…

  4. Alfonso Cardenas

    Congratuations for this explanation, it results very helpful in order to share how exactly the ispection can improve a process no matter what they manufacture.

    I would like to make a citation of this blog on my thesis.

    How can I refer to this blog?

    Regards.

  5. Lee Scanlon

    Those are some great points, thank you for the perspective. I work in an organization that is constantly beating on me to show the value of the Quality Departments contribution in financial terms, and this article frames up the inspection piece nicely. Thanks!

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