Your Company Two Hour ISO/TS 16949:2002 Executive Overview Presents a: Presented by: Date:

TS 16949:2002 Executive Overview Outline TS 16949:2002 Executive Overview Quality Management Principles Process Approach New/Changed Requirements related to Management Responsibility

TS 16949 Is . . . A process approach for: Based on ISO 9001:2000 Implementing an effective quality management system, and Enhancing customer satisfaction through continual improvement Based on ISO 9001:2000

What does ISO 9000 accomplish? Gives the organization confidence that customer requirements are being met; Gives the customer confidence that products and services are consistent; Provides or sustains market entry; and Helps an organization achieve, sustain, and improve product/service quality by managing the processes that create them.

Goals for TS 16949 Provide a ‘model’ for continual improvement in the automotive supply chain, emphasizing defect prevention and reduction of variation; Define fundamental quality system requirements AND customer specific requirements (i.e. TS 16949 ‘plus’) uniquely applicable to the automotive industry; and Avoid the need for multiple certification audits.

Why Standardize Quality Management Systems? Provides a common basis for doing business and managing quality, globally; Allows diverse companies to exchange products and services with greater confidence; and Reduces the need to satisfy multiple (often contradictory) standards.

ISO 9000 is the Most Successful Standard in ISO History … Over 500,000 registrations world-wide in over 160 countries from all continents Over 40 “sectors” or industry classifications led by: electrical/optical equipment, metal products, construction, machinery, wholesale/retail trade but growing in acceptance by many others, including: engineering, information technology, health/social work, utilities, transportation, public administration, education, and other services.

Why did the ISO 9001/2:1994 Standards Need Revision? Bias Wording/terms biased towards manufacturing Problems with the 20 element model Difficult for small businesses to adapt “Flow” incompatible with how companies do business Incompatible with other models (ISO 14000 EMS e.g.) Not sufficiently “forward looking” Does not smoothly facilitate the move from “baseline” quality to performance excellence required by evolving user and customer needs (MBNQA, e.g.).

“One World … One Quality System” QS 9000 standards contain “loopholes” Too many companies have only sought to meet “minimum requirements” and then only by “twisting the intent” of the existing standards There is a growing demand for “performance” excellence QS 9000 is not sufficiently performance oriented ISO 9001:2000 is process/performance oriented, but by itself is not yet viewed as a “performance excellence” standard for automotive manufacturers

The Performance Pyramid # 1 Business Vision Performance Excellence Malcolm Baldrige Criteria Performance Improvement TS 16949 Baseline Performance: ISO 9001:2000 Competitive Advantage Efficient Quality Management System Effective

ISO 9001:2000 “Quality Management Principles” Customer Focus Leadership Involvement of People Process Approach System Approach Continual Improvement Factual Approach to Decision Making Mutually Beneficial Supplier Relationships

Customer Focus Organizations depend on their customers and therefore should: understand current and future customer needs; meet customer requirements; and strive to exceed customer expectations.

Leadership Leaders should: establish unity of purpose and direction of the organization, and create and maintain the internal environment in which people can become fully involved in achieving the organization’s objectives.

Process Approach Monitor more than process output: (typically through inspection activities) Monitor inputs and transformation activities as well: (i.e. define/control input, develop controls and mechanisms to manage the activity, and define/measure output in terms of desired results that are linked to established the organizations performance and improvement objectives)

Activity that transforms input into output What is a Process? Activity that transforms input into output Activity Input Output Resources: People Facilities/Equipment Material Methods Results: Products Services Performance

How is a Process Managed? Monitor & Measure the Process make sure the inputs are right, the transformation activities consistently work, and the desired results are achieved, then - improve the process as needed Activity Input Output Right Resources: Qualified People Right Facilities/Equipment Correct Materials Proven Methods Desired Results: Quality Products Quality Services Customer Satisfaction

How is a Process Measured? Efficient No Waste Effective Desired Results Achieved Activity Input Output Right Resources: Qualified People Right Facilities/Equipment Correct Materials Proven Methods Desired Results: Quality Products Quality Services Customer Satisfaction

System Approach Identify, understand, and manage interrelated processes (system) the output of one process is the input to one or more subsequent processes in the “system” these interfaces must be managed to ensure the outputs of a process meet the input requirements of related process(es) that follow

Benefits of the System Approach Clear understanding of processes and their interactions with other processes Better control of linkages between related processes and people who perform them Facilitates continual improvement

TS 16949 implements the PDCA improvement cycle Plan Clause 5. Management responsibility - everything flows from Management who define the requirements for the system Clause 6. Resource management - from these requirements the resources will be identified and management must ensure they are provided and applied within the system Do Clause 7. Product (and/or service) realization - the necessary process are established and carried out

TS 16949 implements the PDCA improvement cycle Check Clause 8. Measurement, analysis and improvement - processes and products will be monitored and measured against policies, objectives and requirements for the product and results/opportunity for improvement reported Act Clause 8. Measurement, analysis and improvement - acting upon data reported in the check cycle, improvement actions can be taken - directly, or as an output of the Management Review process (Clause 5.6)

Involvement of People People at all levels are the essence of an organization, and their full involvement enables . . . their abilities to be used . . . for the organization’s benefit

Continual Improvement Continuous Continual improvement of the organization’s overall performance should be a permanent objective: improvement activities must planned (take action to achieve a desired result) and monitored for effectiveness

The QMS Sustains the Gains of Continual Improvement Improve Process through PDCA Cycle Results Baseline Performance Plan Do Act Check Measure/Monitor Results Against Objectives - Improve Process and Change QMS as Needed to Achieve and Sustain Desired Results QMS Improvement Objective

Factual Approach to Decision Making Effective decisions are: based on the analysis of data and information.

Performance Against ‘Desired Results’ Actions are taken when targets/goals NOT achieved, especially as they may relate customer targets/goals for: ‘Zero Defects’ (PPM) Capability (Cpk, Ppk) Efficiency (thruput, scrap, waste) On-Time Delivery (schedule adherence) ‘Expediting’ Costs (premium freight)

Mutually Beneficial Supplier Relationships An organization and its suppliers are inter-dependent so: a mutually beneficial relationship enhances the ability of both to create value.

TS 16949:2002 Supplier Expectations ISO 9001:2000 Registration, and customer approved processes for: Advanced Product Quality Planning (APQP) Production Part Approval Process (PPAP) Process Control (Control Plan, Flow Diagrams, SPC) Containment Process Corrective/Preventive Action Process (utilizing ‘8D’ or other ‘disciplined’ problem solving process) Targeted Improvement; e.g. quality (PPM), capability (Cpk/Ppk), schedule (on-time delivery), cost of quality (scrap, rework, etc), efficiency (productivity/throughput)

The ISO 9000:2000 standards include 3 documents... Quality Management Systems - Fundamentals and Vocabulary ISO 9001:2000 Quality Management Systems - Requirements ISO 9004:2000 Quality Management Systems - Guidelines for Performance Improvements

Role of ISO 9000:2000 Defines quality management principles terms and definitions fundamentals: - systems approach - process approach - continual improvement ISO 9000:2000 is a “normative reference” (i.e. part of the requirements), replaces: ISO 8402:1994 and ISO 9000-1:1994

Role of ISO 9001:2000 Specifies quality system requirements: for achieving customer satisfaction applicable to entire enterprise Note: “permissible exclusions” (like design) must be justified, and are limited to requirements within Clause 7 - Product Realization ISO 9001:2000 replaces: ISO 9001/2/3:1994

Role of ISO 9004:2000 Provides guidelines for performance improvement, based on quality management principles and approaches defined in ISO 9000, and continual improvement of the quality management system itself note: however, ISO 9004 is NOT intended as a guideline for implementing or assessing implementation of ISO 9001 requirements ISO 9004:2000 replaces: ISO 9004-1, 9004-2, 9004-3 & 9004-4

ISO 9001 and ISO 9004 are the “Consistent Pair” Comprised of the following 8 clauses: 1. Scope 2. Normative references (part of the requirements) 3. Terms and definitions 4. Quality management system 5. Management responsibility 6. Resource management 7. Product (and/or service) realization 8. Measurement, analysis & improvement

TS 16949 incorporates all ISO 9000:2000 standards and ... ISO/TS 16949:2002 Quality Management Systems - particular requirements for the application of ISO 9001:2000 for automotive production and relevant service part organizations Customer Requirements / Guidance Advanced Product Quality Planning (APQP) & Control Plan Failure Mode Effects Analysis (FMEA) Production Part Approval Process (PPAP) Fundamental Statistical Process Control (SPC) Measurement Systems Analysis (MSA) Quality System Assessment (QSA) Checklist

Role of TS 16949 Developed as a stand-alone document Includes ISO 9001:2000 in its entirety Numerous additional automotive customer requirements

EXERCISE #1 Pick one of the eight quality management principles and list three of the most important actions you think your organization should take in applying this principle. 1. __________________________________________________________ 2. __________________________________________________________ 3. __________________________________________________________ How well does your organization do each of the actions identified above? How can top management become more involved in implementing the principles and requirements associated with TS 16949?

TS 16949 ‘in a nutshell’ Clause 4.1 “Establish a quality management system and continually improve its effectiveness” a) identify processes needed for the QMS b) determine the sequence and interaction of these processes c) determine criteria and methods needed to ensure these processes are effective d) ensure availability of resources and information need to support the operation and monitoring of these processes e) monitor, measure and analyze these processes, and f) implement actions need to achieved planned results and continual improvement of these processes

Clause 5 - Management responsibility 5.1 Management commitment - top management must demonstrate commitment to development and implementation of the quality system and continually improving its effectiveness through specific activities: communicate importance of meeting customer (and regulatory/legal) requirements establish quality policy and objectives conduct management reviews ensure availability of necessary resources QS-9000 1998 Cross Reference: 4.1.1 Note: Management must provide ‘evidence’ of their commitment to (i.e. involvement in) the QMS and its continual improvement

Clause 5 - Management responsibility 5.1.1 Process efficiency – top management shall review the product realization processes and the support processes to assure their effectiveness and efficiency. QS-9000 1998 Cross Reference: None Note: Management to review product realization processes for effectiveness and efficiency; organization may also identify key ‘manufacturing oriented processes’ and their associated support processes and describe how they are managed to achieve and improve effectiveness and efficiency. Review cost trends and benchmarking of key processes.

Clause 5 - Management responsibility 5.2 Customer focus - in addition to commitment to specific activities, top management must: ensure customer needs and expectations are determined, turned into requirements, and that those requirements are met customer requirements (identified per Clause 7.2.1) must be met with the aim of enhancing customer satisfaction (a “perception” that must be measured per Clause 8.2.1) QS-9000 1998 Cross Reference: 4.3.2 Note: Management must pursue the enhancement of customer satisfaction; typically this is through appropriate focus on customer oriented processes (see Section 7.2): i.e. those with significant input from customers, and describe how they are managed to enhance customer satisfaction.

Clause 5 - Management responsibility 5.3 Quality policy - this clause follows on from the general requirements for top management and requires them to establish quality policy that: is appropriate for the organization’s purpose, includes a commitment to meeting requirements and continually improving the QMS by: establishing and periodically reviewing the quality policy for continuing suitability, establishing and reviewing measurable quality objectives for achievement, and communicating policy and objectives at appropriate levels throughout the organization QS-9000 1998 Cross Reference: 4.1.1 Note: Policy must include statement on commitment to continually improve QMS.

Clause 5 - Management responsibility 5.4 Planning 5.4.1 Quality objectives. Must be measurable & consistent with quality policy Must be established at relevant functions and levels in the organization Must include those needed to meet product requirements (identified per Clause 7.1 a) QS-9000 1998 Cross Reference: None Note: Establish quality objectives for relevant functions and levels; objectives to be measurable. 5.4.1.1 Supplemental – top management shall define quality objectives and measurements that shall be included in the business plan and used to deploy the quality policy QS-9000 1998 Cross Reference: 4.1.4 & 4.1.5 Note: Business Plan requirements much less prescriptive; a process should be in place to create, disseminate and monitor quality objectives in Business Plan. The objectives should be customer focused, stipulated and deployed, measurable, measured, used to facilitate an effective and efficient review by management and utilized for corrective action and continual improvement. Quality objectives should address customer expectations and be achievable within a defined time period.

Clause 5 - Management responsibility 5.4 Planning (continued) 5.4.2 Quality management system planning. Top management must plan to ensure that the QMS meets the requirements of clause 4.1 The integrity of the QMS must be maintained when changes are planned and implemented QS-9000 1998 Cross Reference: 4.2.3.1 Note: Management to plan for changes when changes to the business occur; preparation of quality plans (see Section 7.1) not specified

Sample Policy and Objectives   Sample Policy and Objectives Quality Policy Statement Deliver High Quality Products On-Time at Competitive Prices through Process Management and Continual Improvement Measurable Objectives Improve Customer Satisfaction (satisfy new customers, achieve higher levels of satisfaction of loyal customers) Improve Supplier Performance (through timely supplier corrective action and supplier development activities) Improve Processes (through teamwork aimed at reducing scrap, rework, waste, cycle time variation, etc.) Improve Product Quality (through teamwork aimed at reducing defects, returns, ‘within spec’ variation, etc.) Improve On-Time Delivery Performance (through better planning and resource management)      

Clause 5 - Management responsibility 5.5 Responsibility, authority and communication 5.5.1 Responsibility and authority. Responsibilities and authorities must be defined and communicated with the organization QS-9000 1998 Cross Reference: 4.1.2 Note: Greater flexibility in how responsibility and authority is documented.

Clause 5 - Management responsibility 5.5 Responsibility, authority and communication 5.5.1.1 Responsibility for Quality Management with responsibility and authority for corrective action need to be promptly informed of products and process nonconformities People responsible for product quality must have the authority to stop production for quality problems All shifts must have people responsible for ensuring product quality QS-9000 1998 Cross Reference: 4.1.2.1.a, 4.1.2.2, 4.1.2.5 Note: : Documentation requirements for identifying and recording quality problems removed; added requirements to: identify responsibility for stoppage of production to correct quality problems, and to provide accountability across all shifts.

Clause 5 - Management responsibility 5.5 Responsibility, authority and communication (cont.) 5.5.2 Management representative. Top management shall appoint a member of management to Ensure QMS processes are established & maintained Report to top mgmt on QMS performance Ensure organizational awareness of customer requirements QS-9000 1998 Cross Reference: 4.1.2.3 Note: Representative to also ensure promotion of awareness of customer requirements. The management representative can also act as liaison with external parties on matters related to QMS. 5.5.2.1 Customer Representative. Top management must appoint someone to ensure that customer requirements are addressed. QS-9000 1998 Cross Reference: None Note: Management to designate personnel to ensure customer needs are met by QMS. The customer rep should participate in decision points related to product release, engineering release and activities related to customer requirements.

Clause 5 - Management responsibility 5.5.3 Internal communication. Top management must ensure processes are established to communicate effectiveness of the QMS. QS-9000 1998 Cross Reference: None Note: Management to ensure internal communication processes are created and used to address QMS effectiveness; also see clause 7.2.3 regarding customer communications

Clause 5 - Management responsibility 5.6 Management review 5.6.1 General. Top management must review the suitability, effectiveness, and adequacy of the QMS at planned intervals; and must evaluate the need for change, including changes to policy and objectives. QS-9000 1998 Cross Reference: 4.1.3, 4.1.3.1 Note: Review expanded to include QMS improvement opportunities and need for changes 5.6.1.1 QMS Performance. Reviews shall include all QMS requirements and performance trends; monitoring of quality objectives; reporting and evaluation of cost of quality; and evidence (records) of achievement of quality objectives and customer satisfaction. Evidence includes quality objectives specified in the business plan. QS-9000 1998 Cross Reference: 4.1. 3.1, 4.1.5 Note: Must go beyond ‘company level data’; i.e. review evidence of achievement of business plan quality objectives and customer satisfaction; benchmarking and competitive data comparisons not specified. Examples of measurement include gap analysis, timeliness, error rates and corrective action effectiveness. Cost of quality includes both internal and external costs.

Clause 5 - Management responsibility 5.6 Management review 5.6.2 Review input. Specific review inputs are required including performance trends related to audit results, customer feedback, product conformance, process performance, changes that could affect the QMS, and status of actions taken, as well as recommendations for improvement. QS-9000 1998 Cross Reference: None Note: Specifies information on sources to be included in review. See Clause 7.3.4.1 - Monitoring must be included in management review. 5.6.2.1 Supplemental. Review input shall include analysis of actual and potential field failures and their impact on quality, safety, and the environment QS-9000 1998 Cross Reference: 4.14.2.1, 4.14.3 Note: If the products is manufactured or distributed in a number of markets, the organization must ensure that there is a defined structure and decision process for info on field failures and/or product returns. Information should be collected in one central location and then disseminated and acted upon at all affected locations.

Clause 5 - Management responsibility 5.6 Management review 5.6.3 Review output. Decisions and actions as well as resource needs to carry them out must be documented. QS-9000 1998 Cross Reference: None Note: Specifies information on sources to be included as outputs.

EXERCISE #2 List your organization’s three most significant challenges or business needs over the next 2-3 years (consider any external changes that will affect your organization): 1. __________________________________________________________ 2. __________________________________________________________ 3. __________________________________________________________ What are your organization’s goals and objectives? How can you use TS 16949 to help deal with business needs and external challenges? ___________________________________________________________

Quality System Attributes Words of wisdom from Victor Schur (Sears): A Quality System must be S.E.D.A. -- - Suitable - Documented - Effective - Auditable Words of wisdom from Ian Durand (US Technical Advisory Group to ISO TC 176): “The basis of a quality system is to say what you do, do what you say, record what you did, check the results, and act on the difference.”

Use of Audits to Assess QMS Effectiveness has shifted 9001:1994 Effectiveness assessed in audit report Management review Internal audit 9001:2000/TS 16949 Internal audit Management determines effectiveness by analyzing all available data and information Customer satisfaction Management review Other data

Customer Oriented Processes

The Octopus Model

Examples of COPs

Exercise # 2 Map what you perceive to be the ‘customer oriented process” (COP) model for your organization. Identify ‘support oriented processes’ (SOPs) in place to aid in effective implementation of your organization’s COPs. Identify ‘management oriented processes’ (MOPs) in place to aid in achieving management objectives or requirements of ISO/TS 16949:2002 and related customer requirements documents. Present your COP/SOP/MOP model to the group and explain how this structure can aid in helping the organization establish/implement and effective continual improvement program.

Process Approach (Managers Define / Auditors Assess) 1. Process Scope and Boundaries 2. Process Flow, including: 2.1 Inputs used to effect process completion 2.2 Events that start process activity 2.3 Activities required to complete the process 2.4 Validation that process is effective 2.5 Events that signal process completion 2.6 Outputs resulting from process completion 3. Process metrics and statistics (to monitor/measure) 4. Process Change Management 5. Tools used to fulfill process requirements 6. Controlled Documents 7. Quality Records

Turtle Diagram

Turtle Diagram (Guide), WI 8.4-2 Rev 12-15-03

Exercise # 3 Map a ‘customer oriented process” (COP) using the deployment flowcharting technique from a pre-determined start and stop point. Complete a TURTLE DIAGRAM (or Process Assessment Worksheet) of this COP (use ‘tool of choice’ using the form and instructions included as course handouts). Identify key process performance measures that are (or could be) applicable to this COP. Document (or estimate) current COP performance. Determine if current performance is ‘acceptable’ or ‘in need of improvement’. If in need of improvement, establish a measurable improvement objective for this COP (i.e. can be tracked and achieved within a specified time frame), a list of ‘recommended’ actions to achieve the objectives, and required resources. Participate in a (mock) management review meeting presenting summary results of your COP ‘data analysis’, including ‘fact based’ justification for recommendations.

Where can I obtain more information? On the world-wide web: ISO web site www.iso.org TC 176 web site www.bsi.org.uk/iso-176-sc2 ASQ web site www.asq.org AIAG website www.aiag.org IsoQual, Inc.website www.qualitymap.com Other questions? IsoQual, Inc. Staff Email: isoqual@bellsouth.net or call (502) 299-6122