Recently a supplier quality manager asked me about a dilemma he was having with the way his manufacturing facility was measuring in-process supplier quality. If they found defects in supplier parts during the manufacturing process, each defective item was tallied as part of the total. That is, each defective part counted against the total quality performance rather than each shipment counting as a whole against the total.  If one shipment was bad and had 25 of the same defects in it, all 25 defects counted against the supplier’s quality performance rather than just counting it as one defective shipment and essentially just one defect. The problem is that his staff is evaluated, in part, on the basis of supplier performance. One supplier quality incident can appear much more serious than it actually is, and it negatively impacts both the supplier’s scores and the performance reviews of the supply management staff that is responsible for managing that supplier.

The supplier quality manager felt that each quality defect should be counted in the overall quality performance score, as each defect is a problem, even if a number of parts have the same defect (and in many cases, a minor defect, which is a whole other issue). His staff feels that this approach is unfair, as one defect is typically addressed as one problem, even if it has occurred multiple times within a shipment. Mostly, however, they seem to be unhappy about the larger impact on their own performance reviews.

What should this company do? One approach is to calculate quality performance as they do now, but take the frequency and severity of quality incidents into account in the performance review. If there is one incident with 25 parts, the staff reasons, it’s much better than 25 incidents involving one part. And the one larger-size incident should have less impact on the performance review compared to multiple incidents with fewer parts. This approach is more subjective at review time and depends on the discretion of the manager. Is this subjectivity unfair? What do you think of each approach?

I would love to hear your views on how this company should handle this measurement challenge.

-Sherry R. Gordon

Supply chain failures seem inevitable these days, but are especially disconcerting when they indicate a larger systemic problem in critical equipment that is supposed to save lives. The U.S. Army just announced a recall of 44,000 Advanced Combat Helmets (ACH) manufactured by ArmourSource LLC (formerly Rabintex) due to concerns that they provide substandard ballistic protection. Another similar recall of 34,218 ACHs manufactured by Gentex Corp. occurred in May 2009. The Army did not reveal exactly how they discovered these defective helmets and what led them to quarantine some of the inventory. This recall affects about 4 percent of the one million ACHs in inventory. The helmets do not meet Army specifications. According to an announcement by the Army, “There is evidence that ArmorSource and Rabintex ACHs were produced using unauthorized manufacturing practices, defective materials and improper quality procedures which could potentially reduce ballistic and fragmentation protection.” The Army is not sure about either the exact risk to soldiers wearing the recalled helmets or whether any are being worn in a war zone. In the Gentex recall, the company alleged that a subcontractor had falsified certificates of compliance for the steel screws that it supplied. The exact nature of the ArmourSource recall has not been reported yet.

This situation highlights supplier management and supplier performance issues that the Army needs to address and raises more questions than answers. Some of these questions are:

• How does the U.S. Army in particular and the U.S. military in general determine whether suppliers are meeting its specifications and meeting its quality standards on an ongoing basis?
• How will the Army determine that the defective helmet problem is not more widespread than reported, particularly if so many aspects of ArmourSource’s manufacturing practices and process seem to be out of control?
• What is the Army doing about sub-tier supplier risk? What processes and practices are companies such as Gentex using to manage their suppliers and ensure that these suppliers are complying with their standards and government standards? How are these standards communicated to suppliers?
• How does defective sub-tier supplier material get into the product in the first place? And how do these quality escapes to the end customer, our troops, occur?
• How does the military track and trace products in the field? In the case of products critical to the lives and safety of U.S. troops, why is there no traceability? Soldiers have been give instructions about how to determine whether they are using a defective helmet so that they can exchange their helmets, but there seems to be no tracking system in place to know immediately where defective product has been deployed.

While the suppliers in question are saying that the defects affect a very small percentage of the helmets, why did it take the customer, the Army, not these prime contractors, to discover the defects and in this case, long after the fact? And how did these suppliers allow the defective product to escape to the customer? The supplier management and supplier quality systems do not appear to be in control, and the chances of more widespread problems are very high. The Army needs to do a thorough investigation of its procurement, supply management, and quality processes and practices and uncover how such situations can occur and potentially overhaul its approach to supply management and quality management. Then, it needs to take the necessary preventive measures to avoid these risks in the first place. Quality should not be left to the end user, our troops, to uncover defects in the equipment that their lives depend on. The recalls and finding solutions to these problems are costly to all. But no one should have to pay with their lives.

For more information on sub-tier management, here are a few of my previous posts:

Supply risk: the sub-tier or multitier challenge

Sub-tier supplier challenges loom even for the savvy

Sub-tier risk factors: trying to control the uncontrollable 

-Sherry R. Gordon

As part of the public flogging of Toyota for its massive quality problems and recalls, some are calling lean and the Toyota Production System into question. A recent WSJ article, How Lean Manufacturing Can Backfire, describes how Toyota’s use of common parts wreaks havoc during a recall. Part simplification is considered a lean practice. Many companies, especially GM, did not strive for part commonality and ended up with part proliferation, which is a costly and inefficient. GM didn’t have an integrated product team to design a vehicle, but a different design group for each system in the vehicle.  GM has paid for this inefficiency or rather the U.S. taxpayers are paying for it.  Why design a different braking system for every model? A common platform makes more sense.  However, when it comes to an auto recall, part proliferation means that fewer vehicles will contain the exact same part. That doesn’t mean that part proliferation is safer for the consumer, even if it is far more costly and inefficient. To say that lean has backfired because of this one practice is to throw out the lean baby with the media bathwater.  Ford, by the way, has adopted a common platform and common parts strategy for the Focus. Should Ford go back to the old platform proliferation approach? Probably not.

Toyota’s reputation for quality is now badly tarnished. And how they will get out of this mess is still not clear. But is this an indictment of lean? One of Toyota’s problems may be cultural. They kept known issues secret for far too long, possibly to save face, but in the long run making the situation more devastating. In lean, people are supposed to be rewarded, not punished, for uncovering problems as part of continuous improvement.  I think that lean at Toyota has in fact been lean manufacturing, confined to the manufacturing floor, and not lean enterprise, which encompasses all employees, including senior management and indirect employees.  Many companies think lean is just for the blue collar folks, not for management. It seems to have been counter-culture for Toyota to expose problems outside the factory walls.

I also wonder whether Toyota rested on its lean laurels and did not continue to evolve and improve its own system. In an AME discussion group, it was noted (and I have observed this myself) that Toyota employees are rarely seen at the many lean workshops and conferences that AME runs. If they do show up, it is only to present and then leave.

What I find typical in this situation is the lean bashing that ensues. Remember when this happened to the MBNQA (Malcolm Baldrige National Quality Award)? As soon as an award winner runs into trouble, as happened to the Wallace Company, critics pile it on and pronounce the whole system a failure. Wallace Company was a family-owned pipe and valve distributor received the Baldrige Award in 1990 and then filed for Chapter 11 bankruptcy protection in January of 1992. According to one observer, a consultant brought in to turn the company around said, “Instead of shoring up, officials spent time leading tours through the firm and on the lecture circuit.”  

It seems that Toyota was better at listening to its internal customers than its external customers.  It is better at fixing problems that associates find on the factory floor than the ones brought to its attention by its customers who drive the vehicles. The Toyota quality disaster will continue to be examined and written about for some time to come. And perhaps the causes of the problems will become clearer. But I believe that it wasn’t a failure of lean, but a failure of Toyota to follow the very system that made it successful in the first place. Toyota has the tools and the know-how to improve its quality and avoid quality and supplier glitches and potentially dangerous product failures. As I said when I wrote about its Tundra recall in November, Toyota had better reaffirm its commitment to quality and strengthen its resolve to fix underlying problems or suffer a decline like a couple of its American automaker brethren.

-Sherry R. Gordon

In a recent article in the New Yorker, author John Colapinto describes his adventures with a stealth Michelin Guide restaurant inspector in New York City as she visited some restaurants to see if they met the stringent guidelines to merit the coveted Michelin stars. The Michelin hotel and restaurant guide has enjoyed enormous success in France and many other countries worldwide — except in the U.S.  Back to that point a bit later. Michelin inspectors are careful to guard their identities from the hotels and restaurants they visit in order to ensure objectivity and no special treatment by the restaurant. Many restaurant critics have tried many ways, including  elaborate disguises, to keep their identities a secret, but mostly to no avail. At Michelin, even the company executives have never met the inspectors. 

Michelin inspectors are trained to rate the various aspects of the food and dining experience against a set of explicit standards. They perform a very detailed analysis of the food that compares it to these standards. They look for “quality of the products, mastery in the cooking, technical accuracy, balance of flavors, and creativity of the chef”.  They figure out the precise ingredients contained in sauces. They look for consistency and accuracy. Why, it reminds me of a supplier quality audit, except for the stealth aspect of the quality auditors. There are specific, documented standards, approved by the quality function. A supplier is rated in relation to how well it meets those standards. And in some industries, particularly biotech and pharma, suppliers are monitored to ensure the ongoing reliability of the identity, quality and purity of the materials — only in the case of a restaurant, those materials are food ingredients. The Michelin auditor questions the waitstaff about dishes on the menu to ensure that they are knowledgeable and not bluffing when describing the dishes. Likewise, in a supplier audit, employees are quizzed about their knowledge of the process and expected outputs. Receiving the coveted Michelin stars, like achieving certification from a customer, increases business.

Sounds like a perfect system for determining who gets the Michelin stars. It works well for the French. But so far it hasn’t caught on all that well in the United States. It may just be that when it comes to dining, technical accuracy is less important to Americans. Americans, according to the article, have emotional reactions to a dining experience that may not be measurable according to Michelin standards. In fact, I would venture to say that Americans love restaurants based on the emotional experience and even the entertainment element above the actual objective quality of the restaurant.

To carry the supplier audit analogy further, evaluating suppliers on much more than the cut-and-dried aspects of a quality audit may yield richer results.  This isn’t to say that a quality audit is not important. It is.  However, the qualitative aspects of supplier performance, such as responsiveness to customers, collaboration in new product development, the quality of the relationship, also matter. When supplier metrics are boiled down to the basic quantitative metrics, they can fail to capture some of the value-adding aspects of the customer-supplier relationship and supplier performance.   When a chef creates a special version of a dish for a lactose-intolerant customer, the chef may deviate from the standard. But the value to the customer may bring them back to the restaurant, whether or not the restaurant would be considered a great one by more objective standards.

As they say, it’s food for thought.

-Sherry R. Gordon

Yesterday Toyota announced that it is recalling 110,000 Tundra trucks built in 2000-2003 due to rust on the frames that is causing the spare tire to break off. Toyota is blaming a supplier, Dana Corporation, manufacturer of the cross member that holds the tire to the bottom of the truck, for the problem, and Dana is cooperating in the investigation.  This comes on the heels of a 3.8 million-car recall of Toyota and Lexus cars due to an alleged floor mat problem that is supposed to be causing unexplained acceleration. Of course, Toyota immediately suspected the floor mat supplier.  The actual cause of unexplained acceleration is still not definitively attributable to the floor mats. By the way, as an owner of one of the cars in question, a Toyota Prius, I find it hard to believe that the floor mats are causing any problems. On my car, there is a huge clearance between the floor mat and the gas pedal. No way could the floor mat be causing a problem on my car. I personally believe that there is some other root cause and hope that Toyota can get to the bottom of this one.  

These are dark days for the exemplar of quality and the acclaimed Toyota Production System. Its image is beginning to rust a bit, just like those cross members. In each case, the company suspected a supplier problem. The supplier is typically the whipping boy in automotive recalls, as big automakers do not actually make most of the parts that go into a car. But suppliers build to customer specification. It is the customer’s responsibility to ensure the accuracy and robustness of its specs and the supplier’s responsibility to build to these specs. If the specs are a problem, a good supplier should alert the customer and the customer should be open to listening to the supplier’s concerns.  All the more reason to revisit and tune up the practices of supplier relationship management, supplier qualification and supplier evaluation, collaborative product design, and quality control processes. In theory, Toyota practically invented the concept of lean suppliers, the lean supply chain and supplier development. In practice, something has been going awry.

To paraphrase the Bible, “Toyota, heal thyself.”  Toyota has the tools and the know-how to improve its quality and avoid such quality and supplier glitches and potentially dangerous product failures. They had better reaffirm their commitment to quality and strengthen their resolve to fix underlying problems or suffer a decline like some of their American automaker brethren.

-Sherry R. Gordon

It was only a matter of time before the ever-popular Six Sigma would reach the college classroom. I was reading an article about how York College in Southeastern Pennsylvania has begun to offer a course in Six Sigma in its MBA program. This is one of many MBA programs now offering Six Sigma courses. The York College program is designed to give students an understanding of Six Sigma, but not get them certified. The college plans to add several more classes to create a Six Sigma concentration so that students will be able to sit for the certification exam. Whether or not the students do become certified, I do think it’s a good idea to teach the Six Sigma tools. However, I sure hope that the MBA program will place sufficient emphasis on the strategic end of Six Sigma, not just the tools. As business schools hopefully teach about business strategy and policy, Six Sigma will be taught as a methodology linked to strategy and not just as another haven for tool heads, a subject about which I ranted on Spend Matters last August. Hopefully the head of the business school, who referred to Six Sigma as “lean operations practices” sits in on a few of the classes himself to gain a better understanding of what Six Sigma actually is.

While York College and others may thinks they are in the forefront of teaching continuous improvement practices and tools to students, there’s a high school in Massachusetts that in the 1990’s adopted TQM both as an internal process and as part of the high school curriculum – Minuteman Tech in Lexington, MA. The superintendent was ahead of his time with this approach. I have two sons who graduated from this school. What was good about teaching TQM and its problem solving techniques was that the students not only learned about the principles and practices in the classroom, but they saw the school implementing what it was teaching them. Minuteman was ahead of its time. And sadly, with the retirement of that superintendent, the school no longer espouses continuous improvement as part of its curriculum or operations.

In the case of York College, it appears that Six Sigma will simply be part of the curriculum, but not be adopted outside of the classroom to improve the performance of the whole college. While the students will have the knowledge gained in the classroom, they will not get the opportunity to experience Six Sigma in action in the college, which would give them far more understanding than just pursuing it as a course of study.

-Sherry Gordon

I don’t know about you, but I’m getting tired of being asked to fill out customer satisfaction surveys. It’s not that I don’t understand the need for customer feedback. Understanding the customer experience is important part of a good continuous improvement process. But often I’m not sure whether a company is going through the motions as a PR move  or really is going to do something about the feedback they get. If you think about it, you can be asked to fill out these feedback forms multiple times per day. In one day, I was asked for feedback by: my web hosting company after contacting tech support; my insurance company, after just calling to ask a question; the car dealer’s service department with an email before I even drove out of their parking lot; the hotel where I recently stayed, whose survey I abandoned after the second page of what was proving to be insufferably long and detailed. I’m getting survey fatigue.

One of the most challenging parts of surveys for the firms who use them is taking action, whether it be a customer survey or an employee suggestion box. It’s great to ask for feedback, but much harder to determine what feedback to implement and how to do so. Feedback can require root cause analysis to determine the source of the problem and the cooperation of multiple functions in an organization to solve it. Adopting the change that soliciting feedback requires is very hard work.

If I rate a service experience, is it the personality of the customer service rep that’s the issue? Is it their capabilities? Is it lack of training? Is it lack of resources in the customer service department?  And, in many instances, do I really care? A customer’s time for responding to surveys is limited. It’s usually hard to see the WIIFM (What’s In It For Me) side of these surveys.

Perhaps, as Bill Kalmar said in his column in Quality Digest, companies asking customers to take surveys should show that they value their customers’  time by offering small rewards or some compensation. Many find that more motivating than filling out a multi-page survey out of the goodness of my heart for a hotel whose front desk employee was surly and unhelpful to me and where I am unlikely to stay in again.

-Sherry Gordon

Davis Ballistracchi recently penned an insightful piece for Quality Digest, Why Did Total Quality Management Fail? One of the key reasons is management. They talk the talk, but don’t walk the walk. They sit on the sidelines, cheering employees on, but nothing changes because management doesn’t change. Management blocks the change rather than enabling it.

This piece took me back to my days as the Director of TQM for an office products distributor that was acquired by Staples. The president and owner of the company had read a lot about TQM and decided that TQM was going to be the path to delighting customers and making more money. I was hired to make the transformation. My first challenge was that very few of the employees had ever worked on a team before and had no team skills or meeting skills. So we had to start at square one in teaching basic skills before we could ever get to problem solving and continuous improvement. Employees became energized and the company was buzzing with excitement as employee-initiated change began to occur. We accomplished many good, even innovative things.

However, we hit the wall. Why? Because the president would not change his behavior. He would put on his green cardigan sweater (always a sign of trouble) and head out to the warehouse with a clipboard. There he would find problems, take notes, and order the associates around like small children. He would undo the accomplishments of the associates and “critique” them in a belittling way. He called it giving them feedback.

There was an “emperor’s new clothes” mentality at the company in relation to the president. No one dared to be honest with him, as the consequences would be ugly.  The Deming principle, “Drive out fear” was definitely absent, as the atmosphere of fear around the president was palpable.  To the horror of my fellow management team members, I would tell the emperor about the lack of clothing and the about the need for management to model and lead the change.

In all of his readings about TQM success stories, the president never noticed that change meant everyone, including him. And this man did not wish to change.

The end of my tenure at the company came in an interesting, but predictable way. The exasperated president told me that he was upset because I was not doing my job. The problem? I was foisting the responsibility for quality onto all the employees instead of implementing it myself. While he thought he was informing about my dereliction of duty, in fact, he was paying me the highest possible compliment. I had managed to make quality everyone’s, not the quality function’s job. Sadly, everyone’s job but his.

I left the company shortly after that conversation, to, believe it or not, tearful goodbyes from employees. Employees knew that it was the end of empowerment and change. Back to familiar same old, same old command and control management.

I learned several things: the importance of change starting at the top and also the difficulty of bringing about change from within. A leader who gives lip service to change but doesn’t truly embrace change ensures that change does not occur. An internal change agent rapidly loses his or her outsider status. I became an insider and was less able to bring about the change. I had been shoveling sand against the tide and experienced my own “lessons learned”.

-Sherry R. Gordon

It looks like Major League Baseball is paying attention to supply management and supplier quality. Did you ever notice how frequently major league baseball players break their bats? And have you noticed how some bats shatter violently, with pieces flying dangerously all over the place? MLB has been trying to do something about this, especially since there have been serious injuries of fans and umpires. In 2008 MLB asked wood-science experts to study the design and construction of baseball bats to see what causes some bats to shatter more explosively than others. One interesting finding was that maple bats shatter more violently than ash bats. MLB hired a bat inspection company to start inspecting the wood supplies of the various bat companies to make sure that the wood was acceptable. In the 2008 season, multi-piece failures were supposed to have been reduced by 30%.  The bat design and wood experts are trying to reduce the failures even further. Bat manufacturers have been cooperating with the inspections, agreeing that reducing the chances of dangerous shattering is a good thing. Also, the manufacturers are now required to carry more liability insurance. All of this has increased the price of MLB bats.

Even Major League Baseball needs to manage its critical suppliers, improve quality and work with suppliers to make improvements that will ensure the safety of its customers and stakeholders while still maintaining the important key characteristics of the product.

-Sherry Gordon

In an unprecedented move, the European Aviation Safety Agency (EASA) ordered Airbus to remove all of its old Thales speed sensors and replace them with sensors from BF Goodrich. Apparently, singling out specific suppliers for both a defective part and for replacement parts in an air crash situation has never occurred before. Thales was upgrading all of its sensors in Airbus aircraft to the latest version, but this move apparently was not considered sufficient. Now all Airbus A330 and A340 planes (about 200 planes) must contain at least two BF Goodrich speed sensors out of three total speed sensors. All sensors would have been reportedly replaced by BF Goodrich sensors if the company were not currently experiencing production and supply problems, according to an August 1^st article in the Wall Street Journal.

Several things are interesting about this decision. First, the cause of the crash of Air France flight 447 has not been definitively determined or attributed to the Thales speed sensors. Second, while there have been statements from EASA that the BF Goodrich sensors are more reliable based on “information they have received”. Some of that information may have been from Air France pilots, who reportedly have experienced issues with even the new supposedly foolproof Thales sensors and demanding that all Thales speed probes be replaced by the BF Goodrich sensors. U.S. investigators have not received complaints about the new upgraded Thales sensors. It will be interesting to find out what the actual data show about the better reliability of the BF Goodrich sensors as compared with the upgraded Thales sensor and whether the Air France crash was due to the Thales speed sensors’ malfunction.

Meanwhile, talk about switching costs of changing suppliers. The change to the BF Goodrich sensors is going to be far more costly than just the price of the sensors (which is being absorbed by Airbus). Just as airlines were scrambling to replace the old Thales sensors with the new ones, they will now have to replace at least two out of three sensors with BF Goodrich sensors. Sensor replacement requires a brief test flight to ensure proper speed sensor function. These tests will cause a costly operational nightmare for the airlines, as about two hundred test flights will be needed, requiring both pilots and the time for the flights and potentially causing flight delays and rescheduling.  And, one would hope that the increased pressure on BF Goodrich to produce these sensors and on the airlines to get them installed quickly will not lead to any more glitches, especially quality ones.