Quality Development Series

1. Quality Development Series Quality Management for the Business Professional Quality Expo Detroit June 12, 2008

2. Introduction Executive summary • Over 20 years of enterprise systems, change management, innovation management, and product development experience. Former IT executive at Volkswagen. • Sr. Associate with Booz Allen Hamilton helping clients plan and manage complex, global enterprise systems programs • Develop recommended approaches for benefits realization, change management, global program structures, innovation management and business transformation. • Certified Management Consultant (CMC) since 1995. Education • MBA, Conrad L. Hilton School of Management, Loyola Marymount University (Management with emphasis on International Business) • BS in Aerospace Engineering with minor emphasis in Economics, Henry Samueli School of Engineering and Applied Science, University of California at Los Angeles (UCLA) • Adjunct faculty member, University of Michigan – Dearborn, Graduate School of Management, Department of Management Studies (Marketing Policy and Product Development).

3. Agenda • Introductions / Administratia / Ice Breaker • Overview of Program and Expectations • Module 1: Introduction – A History of Quality • Module 2: Survey of Quality Management Systems • Break during exercise • Module 3: Quality Management Concepts for Business Professionals • Adjourn

4. Learning Objectives • Reduce anxiety around quality concepts. • Increase understanding of quality vocabulary and concepts. • Introduce the concept of a quality process. • Understand the kinds of quality standards that exist. • Understand key differences in quality readiness, compliance, and certification. • Introduce change management and validation concepts, including communication planning. • Review popular management concepts dealing with quality. • Provide resources you can use tomorrow.

5. Ice-breaker / Quiz • Where in the world: • Who you are • What you do • Where you are from • Why you are here

6. Agenda • Module 1: Introduction – A History of Quality • Module 2: Survey of Quality Management Systems • Module 3: Quality Management Concepts for Business Professionals

7. Quality Fundamentals • Definition • Quality refers to the distinctive characteristics or properties of a person, object, process or other thing. Such characteristics may enhance a subject's distinctiveness, or may denote some degree of achievement or excellence. • ISO 9000 defines quality as "degree to which a set of inherentcharacteristic fulfils requirements".

8. Modern History of Quality • After the United States entered World War II, quality became a critical component of the war effort. The armed forces initially inspected virtually every unit of product; then to simplify and speed up this process without compromising safety, the military began to use sampling techniques for inspection, aided by the military-specification standards and training courses. • The Japanese quality revolution after World War II welcomed the input of Americans Joseph M. Juran and W. Edwards Deming and rather than concentrating on inspection, focused on improving all organizational processes through the people who used them. • By the 1970s, U.S. industrial sectors such as automobiles and electronics had been broadsided by Japan’s high-quality competition. The U.S. response, emphasizing not only statistics but approaches that embraced the entire organization, became known as total quality management (TQM).

9. 21 CFR Part 11 AS 9000 QS 9000TS 16949 ISO 14000 IWA 1 Quality Vocabulary and Concepts Today, total quality has given way to many kinds of standards, guidelines and working documents all intended to support quality in the manufacture of products and delivery of services in different industries. ISO 9000 TL 9000 ISO 9001:2000 CAPA

10. Quality Vocabulary and Concepts • A quality management system, is composed of the following general components: • Processes • People • Management • Customers • Services and / or Products • and value. • How we define a “quality system” has undergone change over the years but it begins with the intent to offer a product or service to one or more customers.

11. How Product Development Happens Source: Hoffman, et. al.

12. Product Development – Risk and Reward Source: Griffin, Abbie, “PDMA Research on New Product Development Practices: Updating Trends and Benchmarking Best Practices, Journal of Product Innovation Management 14 (1997).

13. The Deming (PDCA) Cycle Plan. Recognize an opportunity and plan a change. Do. Test the change. Carry out a small-scale study. Check. Review the test, analyze the results and identify what you’ve learned. Act. Take action based on what you learned in the study step: If the change did not work, go through the cycle again with a different plan. If you were successful, incorporate what you learned from the test into wider changes. Use what you learned to plan new improvements, beginning the cycle again. Source: American Society of Quality.

14. The Quality Process – ISO9000:2000 Legend: Value generation Information flow ISO9000:2000 advocated for the first time a “closed-loop” process, where the beginning and the end are with the customer.

15. Module 1: Key Concepts • Quality refers to the distinctive characteristics or properties of a person, object, process or other thing. • ISO 9000 defines quality as "degree to which a set of inherentcharacteristic fulfils requirements". • There are many quality standards, guidelines, and working documents for different products and industries. • Modern quality founders such as Deming and Juran spear-headed the quality revolution in Japan and later in the US. • Conventional quality processes are “closed-loop” meaning each process starts and ends with the customer.

16. Agenda • Module 1: Introduction – A History of Quality • Module 2: Survey of Quality Management Systems • Module 3: Quality Management Concepts for Business Professionals

17. Development of Successful New Products • Products that don’t solve customer problems or don’t solve them at a competitive cost will fail. • Customer needs are the problems that a person or firm would like to have solved. • Products deliver solutions to customers’ problems.

18. Successful Product Development • Three issues must be thoroughly examined: • Defining the type of new product to launch • Establishing how its success will be measured • Anticipating potential reasons for possible failure

19. Managing the Product Lifecycle • The product life cycle- the cycle of stages that a product goes through from birth to death. • Product Lifecycle Management (PLM) is the active management of product information and position through the product life cycle. Introduction Growth Maturity Decline

20. Managing the Product Lifecycle During the maturity stage, sales initially increase but at a slower rate as the market becomes saturated and as competitive pressures reach their peak. Sales and profits typically decline in the latter half of the maturity stage. Even if new users are found and usage rates are increased, product sales may eventually start a long-term decline, as when a substitute product that offers a superior set of benefits displaces the “old” product. The growth stage of the product life cycle characterized by rapidly increasing product demand, new competitors entering the market in response, and rapidly increasing profits for the product varieties that customers decide best meet their needs. The introduction stage starts when a new product is presented to the market. Initial sales are slow, as potential customers must go through a learning process about the new product and its benefits before they purchase. Introduction Growth Maturity Decline

21. Encore of the Quality Process – ISO9000:2000 Legend: Value generation Information flow Most quality standards, regardless of industry orientation, abide by the “closed-loop” quality process of ISO9000:2000.

22. More Terminology… Quality “Core Tools” APQP – Advanced Product Quality Planning • The overall governing product readiness operating model for most repetitive manufacturing industries PPAP – Production Part Approval Process • A specific approval process in most manufacturing companies to certify a part is ready for assembly FMEA – Failure Mode Effects Analysis • Analysis performed generally at the design and manufacturing process levels to assess product risk 8D – “Eight-D” • A problem solving approach used to perform corrective action CAPA – Corrective Action, Preventative Action • A problem analysis approach similar to 8-D used in high tech

23. Other Quality Management Concepts • There have emerged post-”total quality” a variety of programs and techniques. These allow for a series of checks and balances in the organizations appropriate at different stages of the product lifecycle. • For Quality professionals: • Statistical Process Control (SPC) • Measurement Systems Analysis (MSA) • Production Part Approval Process (PPAP) • Six Sigma (6) • On the Shop Floor: • Kanban • JIT • Poke-a-yoke

24. Product Development vis-à-vis TS16949 (APQP) 2) Product Design Design FMEA PreliminaryBill of Materials Specification Design collaboration Control Plan(Prototype) 1) Concept Phase RFQ / Businesscase Development Plan Regulations (Laws, Standards, Objectives) Continuous Improvement 4) Validation Planning and production under real-life conditions Control plan for series production and inspection plan Process audit Production partapproval process(PPAP) 3) Process Design Process FMEA Routing creation Process flow diagram Statistical process Control (SPC) Control plan(Model) 5) Product Launch Quality Inspections during Production Requalification tests Process optimization Review SOP Release Review/ Approval Review Pre-ProductionRelease Review/ Approval Define type of APQP

25. PreventiveActions 8D Report Solution DB A Typical Quality Management System (QMS) APQP • Analysis • Know-How • Methods Quality Circle FMEA QM Plan Corrective measures (8D) Defects Planning Realization Production Product

26. Industries, and their standards, are blending • With a trend to enter new markets and industries with a company’s products, similarities and unique differences in quality adherence is encountered. Delphi’s move into consumer electronics(XM satellite radio) and medical productsmeans those products may need to satisfymore than one set of industry standards.

27. Readiness, Compliance, Certification • Readiness refers to the ability of an organization to begin to implement a QMS. • Compliance indicates that an organization is following one or more quality standards and guidelines with internal controls via an implemented QMS. This could involve internal audits. • Certification is awarded to a particular site or company division where one or more quality standards and guidelines have been implemented via a QMS and repeatedly audited and validated by a third-party registrar.

28. Example Internal Audit Program COMPLETEDCORRECTIVEACTIONS? YES VOLKSWAGEN DE MÉXICO NO INITIATE PROGRAM REVIEW AUDITFINDINGS Lead Responsibility: MAJORCORRECTIVEACTIONS? Management Third-party PROGRAM MANDATE AUDITFINDINGS NO QMO YES CONDUCT TRAINING PARTICIPATEAND AUDIT DEFINE PROJECT RECOVERY PLAN TOOLS & KNOWLEDGE

29. Case Study: Siemens VDO • Read the case study handout on Siemens VDO. • You are the management team for the Guadalajara plant operations and you are considering a quality initiative. • Break into teams and discuss the following: • What business drivers compelled Siemens to consider this program initiative? • How would this serve the customers of Siemens? • How did the business benefit from a quality managementprogram?

30. Ice-breaker • Three lies and a truth: • Tell the class three lies anda truth. • Class participants vote onwhich is the truth. • One point for each correct guess. • Participant with the most points (correct guesses) wins a prize!

31. Module 2: Key Concepts • Quality management systems (QMS) can occur and do occur during all stages of the product lifecycle. • Based on the standard or guideline that you are following there may be requirements in the conceptual design, production planning, validation, and through manufacturing and service. • Depending upon your product or service and the value chain your company operates, you may be subject to one or more quality requirements. • There is a huge investment / reward difference between readiness, compliance, and certification.

32. Agenda • Module 1: Introduction – A History of Quality • Module 2: Survey of Quality Management Systems • Module 3: Quality Management Concepts for Business Professionals

33. How Do you Implement Quality in an Organization? • Implementing Quality or any concept in an organization must address the fact that change will happen in the organization. • There are different levels of change in the organization based on quality concepts. • There are change management techniques and concepts you can learn and use to make your journey less painful than it could possibly be!

34. BUSINESS TRANSFORMATION BUSINESS PROCESS RE-ENGINEERING WORKFLOW RE-DESIGN Examples of Quality Initiatives in Business Benefit Potential

35. Managing the Transition A «New Beginning» The «Neutral Zone» «Letting Go » William Bridges, Managing Transitions

36. How Change Is Accepted 16% «resistors» 34% late majority 34% early majority 13.5% early adopters 2.5% innovators William Bridges, Managing Transitions

37. Why People Resist Change Certainty I know this change is bad for me! Uncertainty I think that this change will be bad for me! Skepticism I strongly doubt that any good at all will come of this Feelings I don’t feel good about this change . . . Understand that the organization is composed of groups with different needs and “agendas” . ..

38. Influence and Communication Think Awareness/ Need/ Need awareness Understanding/ Commitment/ Feel understanding Commitment Capability/ Action Do

39. Change Process • All change goes through a lifecycle, whether intended or unintended, which generally follows the diagram at right. • You can be pro-active about managing the change process or re-active. The choice is yours and that of your organization.

40. Some Principles for Initiative Planning The Uniqueness Principle Whatever the apparent similarities, each problem is unique and requires an approach that dwells on its own contextual needs. The Purposes Principle Focusing on purposes helps strip away nonessential aspects to avoid working on the wrong problem. The Solution-After-Next Principle Innovation can be stimulated and solutions made more effective by working backward from an ideal target solution. The Systems Principle Every problem is part of a larger system. Understanding the elements and dimensions of a system matrix lets you determine in advance the complexities you must incorporate in the implementation of the solution. The Collective PrincipleAn organization is made of a collective of individuals who hold the solutions to most organizational initiatives. Source: Variety of sources, including G. Nadler, S. Hibino, Breakthrough Thinking, 1990, Prima Publishing.

41. Business Processes in Quality • Management • Business • Support Source: American Society of Quality.

42. Communication Planning • Some typical sponsorship and communication techniques include: • Company newsletter / intranet news sites / email • Focus groups • Fireside chats • Management briefings • The old adage applies: “Tell ‘em what you are going to do, Tell ‘em what you are doing, Tell ‘em what you did.”

43. Module 3: Key Concepts • There are many quality concepts used across industries, appropriate for different activities across the business. • The best way to implement a quality management system (QMS) is to show the benefit to the people and to the organization through constant and open communication. • Pro-active change management techniques can help to successfully implement a QMS. • There are different levels of change with proportionate levels of resistance to change. Don’t bite off more than you can chew!

44. Learning Objectives – How did we do? • Reduce anxiety around quality concepts. • Increase understanding of quality vocabulary and concepts. • Introduce the concept of a quality process. • Understand the kinds of quality standards that exist. • Understand key differences in quality readiness, compliance, and certification. • Introduce change management and validation concepts, including communication planning. • Review popular management concepts dealing with quality. • Provide resources you can use tomorrow.

45. Summary and Discussion

46. Resources • The American Society of Quality • www.asq.org • Automotive Industry Action Group • www.aiag.org • UofM Medical Center Quality System Public Website • http://www.med.umich.edu/mqs/ • The Juran Institute • www.juran.org • Delphi Quality / Social Responsibility Web page • http://www.delphi.com/about/main/social/quality/

47. Thank you! Feel free to request a copy of this presentation. Contact Information: William Newman University of Michigan – Dearborn School of Management, Dept. of Mgmt. Studies wnewman@umd.umich.edu Office: (248) 922-5907