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Dec 19 2013

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Unlocking Best-in-class Quality Performance

I recently co-hosted a webinar with Kevin Prouty, Senior Vice President of Research at Aberdeen Group. Our presentation was on the topic of Quality, and what best-in-class manufacturers are now doing to better manage quality for a lower total cost. This post captures some of the findings we presented in that webcast, for a somewhat different perspective on what we learned.

To start, I should define what I mean by “Best-in-class.” These manufacturers are those performing at the top 20 percent of their peers, based on attributes that makes the most sense from a Quality perspective. In this case, the factors Aberdeen Group chose were the ability to successfully launch new products (i.e. getting it right the first time, to all markets), the profitability of the business, OEE and the percentage of shipments that were sent out on time, complete. Here is a summary that compares how the best-in-class performed against the “Laggards,” or those performing at the bottom 30 percent of their peers:

Best-in-Class Performance

The above metrics are significant. I would suspect that improving your OEE by 29% might just be enough to justify an entire Enterprise Quality Management Solution all on its own! So, now I have your attention … the next most important take-away is to understand where to focus your energies so as to work towards becoming a best-in-class manufacturer.

The Right Data, at the Right Time

The bottom line is that this is the most critical capability of improving your overall Quality performance across operations. We have all heard about Big Data – many are implementing expanded manufacturing intelligence programs to best capture a wide scope of operations intelligence, which can then be used for continuous improvement. They key, however, is not simply collecting data and storing it. It is all about collecting the right data, and making it available to the right folks, at the right time. This combination is very powerful. If done right, it can have a profound impact on how your operations perform, and can put you on a path to becoming best-in-class. See the below chart for a graphical depiction of how the leaders accomplish this task:

 Best-in-Class Quality performance

Source: Aberdeen Group research – The advantages of collecting the right data at the right time

 

Once you are committed to improving your ability to identify and make available the right data at the right time, it becomes clear what must be done next – remove disparate systems to eliminate data “silos” where data resides all by itself, on its own island, so to speak. Building this type of efficiency into your system will do amazing things to the performance on how quickly you can access data. And, with that improved performance will follow clarity and visibility into what processes might need to be updated to improve quality.

Information that can help you to improve your quality performance might be located within your warehouse management, production, maintenance, receiving or shipping systems. Collecting all of this information and overlaying the quality of your output can reveal some very interesting trends – creating intelligence for you to act upon and improve quality. And visualization of this data is key, since you have many various roles involved in the improvement process – Quality Engineers are passionate about Excel spreadsheet, while Quality Managers would focus on a one-page visually appealing chart.

If you are interested in learning more, you can watch a replay of the webinar here.

If you have any questions, I welcome your feedback as a comment below!

Permanent link to this article: http://www.apriso.com/blog/2013/12/unlocking-best-in-class-quality-performance/

2 comments

  1. Sal Orozco

    Greetings,

    This is Sal Orozco, working for a sourcing company who offers sourcing services to western clients. Our clients are typically focused in e-commerce so we usually source products that are in the hard lines category.

    We’ve been looking into implementing the idea of 100% QC checks on all of my suppliers, but not sure what unforeseeable and unintended consequences this may cause in the long run. Ideally, I would love to get suppliers to agree to 100% QC checks where we reject defective units and not pay for them. Do you think this is feasible when our MOQ is around 500 – 1500?

    To give you some background: Most of our clients are involved in e-commerce and their first orders are in the range of 500 – 1500; this is done to test their market.They gradually start to order more depending on their first order.

    We also understand that Amazon’s defect rate will slowly be moving from 6% acceptable defect rate -> downwards. We are trying to adjust to this new trend by offering 100% QC. Amazon customers are scared of bad reviews and they have a good reason to be scared. Amazon can kick an Amazon seller if they have to many complaints. I understand that 7% defect rate is within quality parameters but when one is involved in e-commerce this percentage is simply too high. People are more likely to go online and give a bad review when they’ve received a bad quality product. This can skew our client’s Amazon ratings, their reputation and give them kicked out of Amazon. Amazon’s requirements will be becoming more stringent and we simply want to adjust to this trend.

    The good thing about e-commerce clients is that they may make small orders, but they are consistent; making them more stable.

    We hope to work with you and see what services we can collaborate. What kind of cost structure would you be willing to work with if we had to work with 100% QC checks?

    Best Regards,

    Sal Orozco

    1. Miłosz Majta

      Well, the Supplier Quality Management is quite a broad domain, where many studies exist and resulting strategies may be taken into account. I would recommend reviewing some of these, publicly available, includig the the Six Sigma techniques. Long story short, there is no need for 100% QC if the right tools and techniques are put in place. Let me just name few of them like supplier scorecards, supplier performance monitoring with the quality metrics, dynamic sampling rules (based on supplier performance). In the same time, establishing the right communication and collaboration with the suppliers is key to make the mentioned techniques effective in improving the quality of supplied products.

      Thanks for your interest!
      Miłosz

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