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How to survive and profit from a quality audit.

A customer audit of Motor Castings Co. led to a foundrywide philosophy of continuous improvement for 2000 and beyond.

In the pursuit for competitive positioning, foundries around the world are striving to achieve manufacturing excellence. In this stride, foundries are becoming aware they are not only being judged on quality and price, but now more than ever before, on their ability to become a certified supplier.

Achieving excellence requires a total commitment to improve all aspects of the business process--from suppliers, through the internal process and on to customers. It requires a corporatewide mindset that aims for excellence in every activity, with the common goal of high quality and efficiency.

Implementing more responsive, flexible systems is only a part of the overall strategy required. Improvement in all functions and activities within the organization should be the primary mission for any foundry that intends to remain viable as the year 2000 approaches.

Motor Castings Co., Milwaukee, Wisconsin, recently completed a full business supplier audit by one of its major customers. Now, it uses the audit criteria to maintain a companywide philosophy of continuous improvement.

Self-Assessment

Our preparation began by doing an internal self-assessment. We formed a team comprised of middle and top management personnel to evaluate our company in leadership, quality, delivery, cost and technology. The self-assessment included reviewing our current practices, competitive strategies, policies, procedures, management, human resources, communication systems, quality, productivity and overall customer satisfaction.

The intent of the self-assessment was to diagnose our foundry's overall position by analyzing our current strengths and areas for improvement, and then comparing them to the audit criteria.

Leadership/Management

Audits usually start by identifying the importance that effective management systems have on the entire organization. Most audit criteria requires evidence of strategic commitments by top management to revolve around four specific efforts. These strategies include:

Total Quality--a cultural transformation of human resources through education to move toward a strategically planned goal of zero defects and enhanced customer satisfaction.

Waste Elimination--identifying and eliminating activities that don't add value to the overall business objectives of the company.

Focused Technology--directing organization, activities, products and services in the areas the company does best.

Continuous Improvement--seeking out activities that will have a direct impact on quality, price and customer service.

Today, a company can't survive without top management's direct involvement in quality. Furthermore, management must demonstrate its leadership is consistent with the company's overall direction.

Mission Statement

Providing a clear vision for the company's future begins with a mission statement. Your company's mission statement should be clearly defined, consistently communicated and completely adopted by the entire organization. Once the values are established, the company should verify its adoption and continually reinforce ownership of these values throughout the firm.

All decisions made by the company must be consistent with its mission and guiding values. These objectives should focus not only on the long-term vision, but reinforce the adoption of continuous improvement throughout the organization. These mission statement values should never be compromised.

Organizational Structure

A key component of any leadership system is the organizational structure. Most auditors require evidence that your company's organizational structure is documented, showing all key functions within the organization are staffed to support normal business activities.

It is recommended that quality department officials bypass operations and report directly to a top-level executive, preferably the president. This approach eliminates any compromises related to quantity vs. quality. Generally, the fewer levels of management prove most effective.

Your company must have effective organizational communication systems that promote two-way communication. Keeping individuals informed and soliciting their ideas and opinions are the key. Communication systems may include daily production/operating meetings, project planning, continuous improvement, quality teams and "state-of-the-business" meetings.

Training and Education

Companywide training and education are an important part of the continuous improvement plan. Training programs should be developed with the overall business quality strategy in mind. After employees improve their skills, they should be given the opportunity to apply what they've learned.

The administration of your company's educational programs should include the individual's records and education. All training programs should be continually reviewed and modified to ensure the curriculum is constantly meeting the needs of the employees and company.

Business Plan

Some audits require a comprehensive business plan. This may seem fundamental, but many companies don't have a formal, documented plan.

Companies have traditionally developed business plans with a financial orientation. Most business plans, however, overlook the importance of operational objectives. In many cases, achieving the operational objectives makes the financial goals possible.

A three- to five-year business plan is adequate. Your company should review its business plan annually and incorporate modifications as changes occur. Foundry business plans should include:

* market analysis;

* financial planning;

* cost objectives;

* human resource development;

* growth projections;

* plant, facilities and expansion issues;

* R&D projections;

* competitive analysis;

* projected sales figures;

* quality objectives;

* customer satisfaction;

* continuous improvement.

Customer Satisfaction

The relationship your company has with its customers should be effectively managed. Your company should be easily accessible so a customer may register a comment, complaint or seek assistance at any time. The supplier-customer communication system must be continually evaluated so service can be improved. The following guidelines can be helpful in determining if your company is managing customer service effectively.

Requirements & Expectations--How does your company determine its customers' current and future requirements?

Customer Relationship Management--Does your company provide effective management of its relationship with customers and use information gained from customers to improve products and services?

Commitment--Does your company have a commitment relative to quality, delivery and/or pricing? If so, is your company keeping its commitment?

Determining Customer Satisfaction--Does your company have established methods for determining customer satisfaction, such as quality measurements, delivery performance, technical support and competitive analyses? Are complaints effectively handled and used for continuous improvement, while emphasizing prevention?

Quality Systems

A documented quality manual and continuous improvement plan are required to define your company's goals, objectives and activities for continuously improving customer satisfaction, quality, reliability and productivity to reduce variation and waste.

The manual should include details on implementing new technology, streamlining systems and developing a quality philosophy and procedures. In addition, it should detail the training and skills required for using statistical tools, problem-solving techniques and future implementation of new technologies.

A line item contained in the quality plan should list responsibilities for implementing each goal and objective. Objectives included in the quality plan must be assigned to specific individuals and target dates for achievement should be established. The plan should be approved, signed and dated by the appropriate management team (including senior management) and retained for review by your customers.

A system for measuring and documenting progress in achieving the objectives of the quality plan is required. It should also include methods for revising the plan to include additional needs and ensure continuous improvement.

Written process procedures covering all phases of each operation are necessary to ensure that correct methods and materials are used in conformance to the specification. These procedures must be based on acceptance criteria of zero discrepancies from your customers' specifications for all inspection activity.

The procedures should describe the conduct of activities and documentation requirements for each area of the quality function. A multidisciplined approach should be used for approval of quality procedures. A method of revising quality procedures must also be established.

Process Control

All quality audits require evidence that statistical process control (SPC) is used to control variation in designated key areas. Patterns of variation due to special causes must be identified. It is essential to be able to statistically quantify the capability of a process and control it to accurately produce results within a specified range. Capability studies are also useful in establishing a quality baseline and in monitoring the effects of improvement efforts on a process.

A procedure for determining and communicating key product and control characteristics is required. Key product control characteristics are anticipated variations that could significantly affect a product's safety, compliance to regulations, fit and function or overall customer satisfaction.

Key product characteristics can be identified by you or your customer. If your customer doesn't identify the key control characteristics, it is your responsibility to identify them. It is necessary to implement SPC to ensure that each key product characteristic variable is identified and controlled. Attribute key product characteristics should also be effectively controlled, along with documented evidence of their effectiveness.

SPC techniques should include x-bar r-charts, histograms, pareto analysis, R&R studies and design experiments.

Some quality audits require that defects be measured in parts per million. Regardless of the requirements, every foundry needs to start thinking about defect rates in parts per million (PPM). Today, world-class companies are achieving 100, 60 and even 20 PPM customer reject rates. At the beginning, it can be discouraging. For example, a 1% defect rate translates into 10,000 PPM. Measuring quality in this way is guaranteed to get everyone's attention.

In-Process & Final Inspection

Audits require a system to ensure that all product characteristics consistently meet specifications. In-process and final inspection operations require written process instructions that should be available at the point of use and contain the following information:

* engineering change level;

* operation;

* characteristics being evaluated;

* sample size and frequency of inspection and/or test;

* standards and acceptance criteria for approval or rejection (Note: acceptance criteria standards must be clearly defined);

* type of corrective action to be taken, if necessary.

The written process instructions should be signed and dated by appropriate management personnel, such as the supervisor, plant manager, quality assurance manager, industrial engineer or process control manager. Again, multidiscipline involvement is stressed.

In addition, documentation must prove that any reworked material must be reinspected according to normal inspection or processes to ensure it meets specifications.

A system should identify and control all nonconforming materials (purchased and manufactured) to include procedures and methods for identifying, segregating and disposing. These procedures should clearly state how the nonconforming material is prevented from being used, shipped or mixed with other material so it won't incorrectly enter the process flow.

Calibration/Specification

All measurement devices (variable, attribute and computer-aided testing, gauging, etc.) must be included in a calibration/verification process. The process should briefly include the traceability, device identification, control of device accuracy, recalibration control and all recordkeeping aspects of the process.

Detailed calibration instructions for each device type are needed to ensure the completeness and consistency of the activity. Accuracy of all gauges must be verified at established frequencies against international standards or masters.

You will also be expected to establish and maintain a documented system that ensures the latest applicable drawings and specifications are in effect. You must:

* have a written procedure that describes the method of handling obsolete drawings and specifications and the receipt, review, distribution and implementation of all changes to drawings and specifications;

* make all current drawings and specifications available for inspection;

* ensure that all obsolete drawings and specifications are removed from active files.

Control of Purchased Material

Your company should have a system ensuring that all purchased material conforms to incoming inspection criteria.

This control system should be based on one of the following methods:

* Verify specifications by statistical techniques. The supplier should provide documented statistical assurance that the purchased material meets specifications.

* Receive inspections and tests of material to evaluate the process performance.

* Evaluate material from outside sources, such as accredited laboratories, to verify process performance.

Cost Systems

The third step toward certification is the development of accurate cost systems. Most audits require the evidence of a cost system to track labor, material and overhead. Specifically, the system must have the capability to compare and track actual vs. standard costs at all levels of the casting process. Usually, a standard cost system, either manually or computer-generated, is used to accumulate all costs incurred during the casting process and to report on the performance of the production order.

A labor routing file must be maintained for each operation for all casting part numbers. The labor routing should identify the part, core, tool, machine, operation description and sequence, quantity and standard hours per piece.

The labor routing also supports the production scheduling function and supplies information on plant capacity utilization. The production scheduling system should be order-driven with the ability to view and adjust work center capacities based on current and future customer orders.

Material files are required for every part number manufactured. The bills of material should include standard quantities/weights of all materials used from the coremaking process through pouring. Records must support that the bills of material are periodically reviewed and updated as needed. Each material item contained in the product's bill of material should also be listed in a separate material file.

These files should contain material number, description, vendor name, unit of measure, unit price and lead time.

To ensure that up-to-date costs are used, a documented review (at least annually) is required of actual overhead costs and/or whenever there is a change to the manufacturing process. Overheads can be applied as a function of the labor (variable) and/or fixed to allocate the appropriate cost to the operation. It is important to note that the consumption of overhead can change dramatically as the volume of business increases or decreases. Computer-generated spreadsheets can be used as a tool to adjust overheads as volumes of business activity change.

A Vehicle of Improvement

The pressures of competing on a global basis will remain an ever-increasing dilemma as the 21st century approaches. The best insurance a foundry can have to remain competitive is a valid and reliable strategic manufacturing plan that directly supports its business plan.

Is Motor Castings a better organization since achieving the General Motors Co. "Mark of Excellence?" Yes. The audit helped us refine our existing systems and made us aware of areas for improvement. It has created a vehicle of continuous improvement within our company and has helped us develop the necessary commitment to make continuous improvement a part of our everyday culture.
COPYRIGHT 1993 American Foundry Society, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
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Author:Kennedy, Glenn R.
Publication:Modern Casting
Date:May 1, 1993
Words:2314
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