Global Fastener News

1994 FIN – Why 99.9% Accuracy Fails In Quality Measurement

January 27
00:00 2012

 

May 1, 1994 FIN – What does customer satisfaction 99.9% if the time mean? In the U.S. it would mean 500 incorrect surgical procedures each week, 50 newborn babies every day would be dropped by doctors, two unsafe landings at O’Hare Airport each day, 22,000 checks deducted from the wrong account each hour, one hour of unsafe drinking water per month, and your heart would fail to beat 32,000 times each year.
“For some customers, 99.9% isn’t good enough,” Dr. Bob Hawthorne of Ellicott City, Maryland-based Hawthorne Consulting Group, says in his pitch for fastener industry firms adopting Total Quality Management (TQM).

Hawthorne, who spoke at the Western Association of Fastener Distributors spring conference, cited the example of a package prepared for C.O.D. shipment to a customer with a poor credit history which a clerk erroneously listed the customer as the “shipper.” It was picked up by the shipper and delivered back two days later. The seller paid $80 for its own parts and the money was sent to the customer with the poor credit rating.

Hawthorne’s quality program includes: concentration on the customer, unrelenting quest for quality, recognition of the structure in work, empowered and informed employees, a shared mission, systems are at fault, not people (the question, “who did it?” puts people on the defensive), a team approach and continued training.

The first management step in adopting a quality program is awareness, followed by assessment and renewal, according to Hawthorne.

The first step in solving problems is identifying them. Managers must then narrow problems to significant ones; analyze them; create a number of solutions; select the best solution; plan and implement the solution and then measure the success.

One method of determining problems is to consult customers and then employees. Ask employees about their level of awareness of quality, how open their supervisors are to suggestion and what obstacles they have in their jobs, Hawthorne recommended.

“Quality is like an iceberg, because 80% of the ice is hidden under the water,” Hawthorne pointed out. Mistakes, defects, scrap, inspection and overtime may be obvious, but unnecessary field service, customer dissatisfaction, confusion, low morale and turf battles are less obvious.

Hawthorne pegged distributors’ waste at 25 to 40%of operating expenses. His list of seven deadly wastes are: Inventory, waiting, over production, process, motion, transportation, scrap & rework.

Each firm must consider its competitive advantages. If your company has a technological edge, you must be aware that might not be sustainable. Hawthorne warned that a lowest price advantage is “risky”. But he rated a customer focus by the entire firm as “guaranteed to be a winner.”

Noting “the desert would reclaim” the grounds of the Rancho Mirage (California) Westin Resort where he was speaking to the Western Association, if the hotel left the land unattended, Hawthorne warned managers that “chaos happens.”

“A quality program means meeting or beating the requirements of customers consistently. Total Quality beats requirements without exception,” Hawthorne emphasized. “It is 100% satisfaction 100% of the time.”

TQM is a “major cultural change. It is horizontal environment. It is customer and job satisfaction. It is continual. It is constant improvement. It applies to all employees. It is not a motivation program or cost cutting (‘though cost cutting may be a byproducts of TQM’), abrupt and volatile or “this year’s program.”

Total quality management costs money, but the cost of not meeting the customer’s requirements the first time is higher, Hawthorne said. Returned goods mean credit memos, restocking, updating inventory records, returns to factory, lost sales times, expediting another shipment, lost customers, lost market share, extra documentation, high days receivables, high inventory, high service costs, warranty costs, credit/collection problems, wasted management time, legal costs.

Hawthorne cited the example of a $7.5 million revenue company with 15 employees. Before starting its TQM program, the firm had 22 employees. A steering committee developed a 40-hour course for all employees. Changes allowed servicing emergency orders in 20 minutes instead of the previous 24 hours. Measuring of errors and sources and partnering with manufacturers…. In the end, the company was able to achieve the same sales with 30% fewer people.

Hawthorne’s list of pitfalls in TQM programs: Lack of a formal process, lack of clear expression of goals and strategy, lack of management support (including funding), losing focus on the customer, lack of training or bad timing for training, poor communications, incentives, impatience and delegation to the quality department. “There must be continuous improvement,” Hawthorne emphasized.

Success factors: Integrating TQM into the strategic plan, making it right for you, linkage to performance management plans, involvement of senior executives, TQM strategy, improving customer-important processes, quantifying results and celebrating successes.

And quality must be recognized. “People respond to recognition. When was the last time you told your employees something good?” Hawthorne asked.  ©1994/2011 Fastener Industry News  For information on permission to reuse or reprint this article please e-mail: FIN@GlobalFastenerNews.com

 

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