1. Quality Management An executive overview
This presentation covers at the executive and managerial level, the requirements defined in ISO 9001:2000.
The clauses of the standard are:
0. Introduction
1. Scope
2. Normative Reference
3. Terms and Definitions
4. Quality Management System
5. Management Responsibility
6. Resource Management
7. Product Realization
8. Measurement, Analysis, and Improvement
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2. Overview Agenda Quality Management Principles Business Plan
Performance Indicators
Question Period

3. Business rationalization
To achieve competitive advantage, East Penn must proactively implement business strategies to
meet customer requirements & enhance customer satisfaction
achieve, maintain and improve overall organizational performance & capabilities

4. Competitive Risks Markets customers, competitors, pricing, changes
Product
quality, performance, reliability, maintainability, innovation, demand, mix, seasonality
Processes
facility, capability, capacity, technology, quality
Suppliers
quality, delivery, price, consistency, flexibility
Other
workforce, capital, governmental policies, health, safety & environment

5. Quality Management
Implementing a quality management system must be a strategic decision
Must be consistent with other business strategies
Can be integrated with other management systems such as environmental, occupational health & safety, financial & risk management
QMS controls must focus on:
product conformity; consistency; continual improvement; enhancing customer satisfaction

6. Quality Management Principles
Eight quality management principles identified to implement a QMS
Must be used by top management to:
Lead & operate an organization successfully
Direct & control in a systematic & transparent manner
Address the needs of all interested parties
Maintain a management system & continually improve its performance
Maintain consistency with other management disciplines

7. Customer Focus Understand current & future needs of customers
Meet customer requirements
Strive to exceed customer expectations
Application
Understand product, delivery, price, support, etc
Communicate needs and expectations
Measure customer satisfaction
Manage customer relationships

8. Leadership Establish unity of purpose Provide direction
Create proper internal environment
Application
Have a clear vision of organization’s future
Demonstrate commitment to strategies & policies
Provide required resources and authority
Be proactive and lead by example
Understand and respond to external changes
Inspire, build trust and recognize
Have open & honest communication

9. Involvement of people Foster full involvement of people at all levels
Application
Encourage employees see themselves as stakeholders
Empower them to take ownership and responsibility
Motivate them to seek opportunities to make improvements & recognize achievements
Allow them to be innovative and creative
Assist them in enhancing their competencies
Encourage them to share knowledge
Help them derive satisfaction from their work
Emphasize focus on creating value for customers

10. Process Approach
Manage resources and activities as a process to achieve more efficient results
Application
Define processes & their sequence & interaction
Determine criteria, methods & responsibilities to operate & control processes
Monitor & measure inputs, outputs and conversion
Ensure adequate resources & information are available
Analyze & improve process performance

11. Resources Materials Facilities & equipment
Support services & utilities
Labor
Technology
Methods & measures
Management
Finance

12. Process Concepts
All work is a process – things go in (inputs), get worked on (conversion), come out differently (output)
Conversion activities transform inputs to outputs
Activities require resources
Outputs can be product or service
Inputs, outputs and activities are measurable
Each activity has a supplier and a customer
Each process must have a process owner

13. Process Model Organization ABC Company Inc East Penn Mfg value adding
activity
value
adding
activity
Input from supplier
Output to next process
Output to next process

14. Process Concepts All businesses are defined by processes
All processes are inter-dependent
All processes are defined by sub-processes
All processes cut across functional lines
All processes must satisfy customer requirements
All processes are capable of being improved

15. Process Management
ABC co
Supplier
Customer
Processes

16. Process Structure ABC Mfg Processes Activities Tasks Control Level
Work
Level
Tasks

17. Relationship between processes, functions and departments
Depts
Processes
Customer
Needs
Depts
Processes
Satisfied
Customers
$$$
Depts
Processes

18. Earmarks of process deficiencies
Functional separatism exists within the organization
Problem analysis focuses on the symptoms rather the root causes
Symptoms trigger the change rather than root cause analysis
Changes are implemented mostly by management and take long to implement
Inter-departmental politics and battles rage
Employees do not see themselves as stakeholders
Employees are unaware of how other processes & functions work
Measurements exist to prove functional interaction
Business objectives have a short term focus

19. Relationship of processes to quality management
Quality management is achieved by managing:
The structure and operation of processes
The quality of the resources and information flowing within the processes

20. Systems approach to management
Understand and manage the system of inter-related processes
Application
Structure process flow to efficiently achieve customer requirements and internal objectives
Understand the inter-dependencies
Establish effective communication
Measure and evaluate system effectiveness
Continually improve the system
Establish resource constraints prior to action

21. Continual Improvement
Establish continual improvement as a permanent objective
Application
Products, processes, system, customer satisfaction
Make it the responsibility of every person
Establish & achieve progressive objectives
Focus on effectiveness and efficiency
Use and provide training on tools and methods
Promote prevention based activities
Recognize improvements

22. Factual approach to decision making
Analyze and review operational results for effective management and decision-making
Application
Gather performance data relevant to business objectives
Products, processes, QMS, customer satisfaction, suppliers
Ensure data is accurate, reliable and accessible
Analyze data and information using valid methods
Use analysis to make decisions balanced with experience and intuition

23. Costs of poor quality Prevention costs Appraisal costs
Training, improved specifications, improved process, employee empowerment, improved technology & equipment
Appraisal costs
Costs of inspection, labor and equipment, moving & handling materials
Failure costs - Internal
Scrap & disposal, rework & re-inspection, opportunity costs of lost time, moving & storage of reworked units
Failure costs - External
Scrap & disposal, rework, opportunity cost of lost time & lost future sales, legal damages

24. Mutually beneficial supplier relationships
Create value by developing suppliers
Application
Identify and select key suppliers
Balance long-term and short-term goals
Create clear and open communications
Jointly establish a clear understanding of customer needs
Initiate joint development, but protect proprietary work & product
Share information and future plans
Recognize supplier achievements

25. Management Responsibility
Top management is responsible for the following:
Management Commitment
Customer Focus
Quality Policy
Planning
Responsibility, Authority, & Communication
Management Review

26. Management Commitment
Provide evidence of it’s commitment to develop, implement, and improve the quality management system:
Express importance of meeting requirements
(customer, as well as, statutory and regulatory)
Establish the quality policy
Ensure quality objectives are established
Conduct management reviews
Ensure the availability of resources

27. Quality Policy Top management must ensure quality policy:
is appropriate to purpose of organization
provides a framework for quality objectives
is communicated & understood within organization
is reviewed for continuing suitability
includes commitment to comply with requirements and continually improve effectiveness of system

28. Quality Planning Top management must:
ensure measurable quality objectives are established at relevant functions and levels
Establish objectives for products, processes, customer satisfaction, QMS, suppliers, dept’s
set objectives consistent with quality policy
ensure QMS planning is carried out to manage & improve processes as well as meet objectives
maintain integrity of system when changes to system are planned and implemented

29. Responsibility, Authority and Communication
Top management must ensure:
responsibilities and authorities are defined and communicated within the organization
a member of management is appointed as the Quality Management Representative
external & internal communications processes are established
communication takes place on the effectiveness of the QMS

30. Management Review Top management must perform reviews of QMS
Conduct these reviews at planned intervals
Ensure QMS is suitable, adequate, effective
Evaluate need for changes or improvement to QMS, processes, product, quality policy, objectives & resource needs
Maintain records of management reviews

31. Provision of Resources
Determine and provide needed resources to:
Implement and maintain the quality system
Continually improve its effectiveness
Enhance customer satisfaction (by meeting their requirements)

32. Personnel Determine competency needs for personnel
(education, training, skills, and experience)
Provide training to satisfy competency needs
Evaluate the effectiveness of training
Make employees aware of importance of activities & contribution to quality objectives
Maintain appropriate records (education, training, skills, and experience)

33. Infrastructure Buildings, workspace, and associated utilities
Determine, provide, and maintain the infrastructure needed to achieve conformity to product requirements.
Infrastructure includes, as applicable:
Buildings, workspace, and associated utilities
Process equipment (hardware and software)
Supporting services
(such as transport or communication)

34. Work Environment
Determine and manage the work environment needed to achieve conformity to product requirements.
Facility
Layout & condition of production, storage & office facilities
Safety of workforce
Temperature, dust, noise, ventilation, light, ergonomics, health & safety compliance
Safety of product
storage locations, containers, movement, mistake-proofing, preservation, packaging

35. Business Plan Have a formal Business Plan
Plan must be comprehensive and controlled
Use short-term as well as long-term goals
Have methods to determine customer’s current & future requirements & expectations
Have process to define scope & analysis of information, including frequency & methods of collection
Have methods to track, update, revise & review the plan
Ensure plan is followed and communicated as needed to the organization
Confidential & not subject to audit

36. Business Plan contents
Company history
General management
Marketing & sales
Products & pricing
Infrastructure
Operational performance
Personnel
Quality management system
Environmental management system
Financial management

37. General management
Plan & establish - goals, objectives, policies, processes
Define organizational structure
Provide resources
Demonstrate timely & effective decision-making
Establish effective communication processes

38. Marketing Gain knowledge of the market Gain knowledge of the customers
Gain industry & competitor information
Evaluate channels of distribution
Determine effective advertising & promotion
Determine marketing strategies & objectives
Establish branding & packaging strategies
Define plans & resources to deploy strategies
Track & measure marketing performance

39. Sales Management Develop sales forecasts Deploy sales management
Establish internal & external communication processes
Define and provide after sales service & customer customer
Provide sales & customer training
Determine sales strategies & objectives
Define plans & resources to deploy strategies
Track & measure sales performance

40. Product & pricing Evaluate existing product lines
Compare with competitor products
Research & evaluate new product technologies
Have strategies for new product introduction
Analyze product costs & profit contribution
Evaluate impact of volume & price changes
Study competitor costs
Determine product & pricing strategies & objectives
Define plans & resources to deploy strategies
Track & measure performance

41. Infrastructure Determine capacity & capability of existing facilities
Include – buildings, equipment, tooling, transportation, lab, information systems & support services
Relate to requirements for products, processes, access, workspace, environmental protection, health, safety, security, ergonomics, maintenance & support services
Determine strategies & objectives for infrastructure expansion
Define plans & resources to deploy strategies
Track & measure performance

42. Operational Performance
Research & apply suitable production, tooling & material handling technologies
Optimize facility layout and process flows
Use appropriate production planning and control techniques
Optimize inventory management – turns, rotation & levels
Determine strategies & objectives for operational performance
Define plans & resources to deploy strategies
Track & measure performance
Benchmark against industry & competitors

43. Personnel Determine personnel strategies & objectives
Establish recruitment strategies & policies
Develop compensation & benefits policies
Develop employee relations & services policies
Establish personnel development methods
Determine personnel strategies & objectives
Define plans & resources to deploy strategies
Track & measure performance

44. Quality & Environmental management
Plan QMS upgrade to ISO 9001:2000
Plan QMS certification to ISO/TS 16949
Plan EMS certification to ISO 14001
Plan laboratory certification to ISO 17025
Establish timeline, activities & resources
Develop & implement documentation & controls and provide necessary training
Achieve planned certification

45. Financial Management Establish financial capital planning
Implement reliable & timely financial accounting & reporting systems
Develop value-added cost accounting systems
Implement effective cash management
Establish budgets to track & control monthly and annual performance
Set appropriate credit management policies
Provide asset & risk management
Establish tax planning and management

46. Performance indicators

47. Performance indicators
Market and Customer
Share of market
New and lost customers
Customer satisfaction or dissatisfaction indices
Quality performance
Delivery performance
Response time
Market/channel/customer profitability
Warranties, claims, returns

48. Performance indicators
Competitor
Share of market(s)
Customer satisfaction or dissatisfaction indices
Quality performance
Delivery performance
Price performance
New-product development cycle time
Proportion of new products
Financial performance

49. Performance indicators
Business Processes
Product (PPM; defect; scrap; rework, waste, etc)
Order to delivery response times
Product-development cycle time
Number of new products
Manufacturing cycle time
Inventory turns
Sales (production) per employee
Reinvestment indicators
Health and safety performance

50. Performance indicators
Personnel
Employee morale
Applicants/acceptance ratio
Development hours per employee
Employee competence measures
Employee suggestions
Turnover ratios

51. Performance indicators
Environmental
Hours of community service
Hours of industry activities
Percentage use of recyclable materials
Amount of pollutant discharge
Accidents and injuries resulting from products or services
Fines/violations of government regulations

52. Performance indicators
Financial
Revenue growth
Markets/customer profitability
Product profitability
Return on sales
Working capital turnover
Economic value added
Return on capital
Return on equity
Cash flows

53. Performance indicators
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