While there are some Companies in Indian Manufacturing who have improved the Quality of their Processes to a very good level, still a big portion of the Indian Manufacturing is still in mediocre state. Quality of the Product is something that they have to work hard to attain. I notice following problems in these companies:
01. The Quality Plans are not defined well. Most of the Companies have just one Generic Quality Plan for all products together. This is simply not enough. One needs to go to a Micro level where they see the differences between Products and Processes for them. Broad brushing all the Products with one Plan is not enough.
02. Quality Plans are not implemented well. Quality Plan adherence in most of the Companies is about 30-40% only. Please check the actual situation on your Shop floor with a genuine audit. I am sorry to say ‘Genuine Audit’ as many companies have regular Audits that refuse to acknowledge the actual situation on the ground.
03. Quality Plans are impractical in many cases. The Quality Plans defined are impractical and the number of People checking Quality of Processes is just not enough to actually check the processes.
04. Quality is the job of Quality team only. While lot of word of mouth is happening about Quality being the responsibility of everyone, the actual work in monitoring and improving Quality is being done only by a handful of Junior most Quality Inspectors in most of the Companies.
05. Quantity still occupies most of the mind space. Getting the daily Production still occupies the mind space of most of the Engineers in Production function. The Management focuses on this and this alone in most of the Companies.
06. Quality of Problem Solving is not good. In most of the Companies, the Problem Solving is not recognized as a Skill that can be learnt. There is no training happening on the subject. There is general frustration around that same problems are repeating. But it is taken as a reality that cannot be avoided.
Generally, the medium-term approach is not given for the Quality. It is treated as an essential evil to please the Customers. There are no proactive improvements happening in this field. Only those forced by the Customers happen. This way there is more happening in Automotive Industry where the Customers are generally much more demanding than any other Industry.
In Non-Automotive industry, the status of the Quality is generally not good. There may be a few exceptions. But the Quality Systems in most of the Companies need a lot of improvement.
The Managements treat Quality as a subject that need to be managed somehow.
Set up a Vibrant Quality System
I would recommend two major steps in setting up a Vibrant Quality System in your Company. Maybe you can do lot more. But these two steps can become your Corner stones. You should Disrupt your Quality system with revsiting fundamentals and a good amount of Technology that is available today.
01. Make Quality as the responsibility of everyone
Quality should be the obsession of everyone in your Company. You cannot leave it to the few in the Quality function. Quality Team can co-ordinate the efforts on Quality. But they cannot be the only team who are worried about it.
Quality has to be everyone’s responsibility as everything right from Incoming Material to the Manufacturing Process, the Equipment, Final Inspection everything has to go right to get good Quality.
Rewrite your Quality Plans with the role for everyone in that. All the roles right from the Operator and right up to the Plant Manager should participate in the Quality Checks.
Manufacturing Supervisor’s role has to be rewritten. The Manufacturing Engineer’s role today is filled up with lot of Admin work. This happens as the Plants have not spent enough time in settling down the Manufacturing Lines. There are always problems in the lines on a daily basis. The Problems may be:
- Materials do not come in time. Supervisor chases for this.
- Process is unstable. Supervisor has to work with other functional teams to settle the process too frequently.
- Machines are breaking down frequently. Supervisor has to run around the Maintenance team.
So, you have an unstable Manufacturing and the Supervisor is doing everything other than taking care of the Quality. When Quantity becomes a problem in Manufacturing, everyone will run after only that. Quality takes a back seat. Stabilize the line and make the Quantity as a given. Then, the Supervisor will focus on Quality.
Involve the senior people in checking Quality: The entire Manufacturing team has to be very familiar with the nuances of the Manufacturing Process. When they do not know about the Process, the distance between them and the Operator team will increase.
Normally it is this team who take decisions about the improvements on the Shop floor. They take these decisions without deep knowledge of the Process!!
They will not be able to solve Process related problems; they cannot appreciate the issues on the shop-floor. Make it mandatory for the entire team to get involved in Quality checks, for this they have to study the process closely. When they continuously do this, they become more confident of themselves and they will be able to contribute positively to the Process Control.
Make Quality of Incoming Parts the responsibility of Materials team: Traditionally the Materials team gets the Parts / Raw Material and the Quality Team checks it. There is always a cat and mouse game between the two teams. You need to change this. Give the responsibility of Quality to the Materials Team. Make the Incoming Quality Manager and the team to report to the Materials Head. Let the Materials Head change the culture of his team. Invest into this. It will work.
Connect the dots between Quality and Equipment status: The Quality of the Product has lot to do with the Performance Equipment on which the Product is produced. Yet, the Maintenance team does not do much to control the Quality directly. Whenever the machine totally breaks down, they get involved. This has to change. Identify the Equipment parameters that have impact on the Quality of the Product and give the responsibility of ensuring these parameters to the Maintenance team.
Process Engineering Team has to keep revisiting the Process stability: The Process Engineering team sets the process initially and they prepare the Quality Plan. They will have to take responsibility to keep revisiting it with changes in the Process and maintain the Quality Plan updated. They have to play this role in an active manner.
Many of what I mentioned above are nothing new. But not followed in most of the Manufacturing Companies. Go back to fundamentals!
02. Let your Quality System go Digital and LIVE!!
Traditionally good part of the Quality checks in Companies are off-line. Some of the modern Manufacturing Lines may have controls not to let the bad quality go forward. But most of the Companies do not have an online Quality system.
The Quality Inspectors are checking the process and recording them. The action on the observations is scanty.
You can do the following:
- Go Digital with your Quality System. Develop an App that can capture all the Quality Plans of your Products. This App should be installed on Handhelds and all the Staff should carry the Handhelds that will alert them for all the Quality checks that they should do during the Day. Software are available with companies like Siemens that can cover all this
- Data input should be Digital to the extent feasible. The Input can be taken from the Machine / Gauge, Visual condition to be captured by a Camera and so on. This will ensure the correctness of the data.
- Analyze the Data. When you collect data online, you will collect a huge amount of data. The data will be:
o About the Process
o About the Equipment
o About the People who are collecting the data and so on.
You need to analyze the data and keep making the course corrections online.
- Develop a team of Data analysts: Your Quality team has to learn how to analyze the data and learn from the data. Analyzing the Micro data and making corrections is a skill that they have to learn.
o Example: If they capture the data about various Engineers capturing the Quality data and missing out a few data captures, they should be able to understand the problems in data capture and initiate corrective actions.
o Example: They should be able to look at data of Part dimensions in a machining process and decide when they should change the Cutter so that they can maintain the Process capability.
Just by doing these two Mega changes in your Company, you can build Vibrant Quality Systems in your Company.
Make a change. Do not continue with status quo.
Every Manufacturing Company always has Cost Reduction Agenda. While they try to improve their Product Design using Frugal Design principles, they always have Cost reduction agenda in the Product too.
The Business situation is becoming tougher and tougher for companies. The Topline and Bottom line Growth cannot be taken for granted! It has to be earned in the hard manner.
Automotive industry is going thru some tough phase. The Industry may get fragmented due to Electric Vehicles coming in. It is no longer left to a few Big companies. Few more Bigger companies like Apple, Google are entering this space. Some smaller / new Players are also entering the fray.
Manufacturing Companies across the world are trying to become more efficient using Industry 4.0 elements. The struggle to become more efficient is continuous for Manufacturing Companies.
Much like Individuals developing capabilities to do more things, Companies also need to develop Capabilities in their Companies. These Capabilities may be built around a few Practices in the Company.
Every Company needs to develop the Capability of ‘Continuous Cost Reduction’ on active basis.
I have seen many companies who get substantial Cost Reduction when they start it off for the first time. But after one /two years, the effort tapers off. They say it is no longer possible! I don’t think the Cost Reduction possibilities will dry up. The ideas to access new Possibilities may dry up.
I would like to highlight some Best Practices that can ensure Continuous Cost Reduction in a Company. Companies need to pick up a few or all of these elements and formulate their own Process. Following are some important elements in this process.
01. Cost Reduction Target: Every Company needs to have a Challenging Target for Cost reduction every Year. This Target may be there at the Company level in terms of Profitability improvement. This would be naturally broken down in to Targets for reduction of various expenses and will flow down to Various Functions in the Company. Some of the Cost Reduction Projects may be led by Cross Functional Teams. It is important to involve ALL functions in Cost Reduction effort. It should not be left to few Functions only.
02. Price Recovery: Companies need to have great focus on recovering the escalation of Expenses from Market. If there is a Raw Material price increase, if there is Power tariff increase, if you have given increments to your team, it is ideal if you can recover from the Market. The Market may comprise of individual Big Customers as well as After Market where you are addressing a bigger Market. Every Company would have its’ own constraints to recover full amount of Cost Escalation from the Market. The Competition and Customer Power will not simply allow this to happen. But still every Company needs to have a good mechanism to capture the Cost escalation and throw up information to Sales & Marketing to recover the higher Cost from the Market. Many a times a Good Software support is needed for highlighting the escalation of Costs and how much of it is being recovered from Market. This information has to be available. After this the Company will take a call as to how much it can recover from Customers and how much it cannot. I have seen many companies who simply do not know how much the Costs have gone up and how much is recovered. Resultantly they do not have control on their Profitability.
03. Cost Reduction as a KPI: Every Senior person in the Company needs to have Cost Reduction as a KPI and he has to deploy the Measures to achieve the Cost reduction to his teams. This KPI should have a reasonable weightage so that everyone takes it seriously.
04. Cost Reduction Projects: Every HOD should identify Projects to an extent of 150% of the Target that he is given. Companies may have a Guide line that at any point of time each HOD should have Projects for next 6-8 months. The Projects should have detailed Plans. This is essential to ensure the Projects are practical. Companies create some simple formats to have these details and have a sign off from all Stake holders that it is doable.
05. Brainstorming sessions: Every Company needs to have a structure for Brain Storming sessions to identify Cost Reduction Projects. Many of the Subjects may require a Cross Functional Participation. So, each HOD should work out a schedule for Brainstorming Sessions. Each Brain Storming session should have:
a. A Target for Value of Cost Reduction Projects that need to be identified in the session.
b. Advance information to Participants to come prepared.
c. Analysis of data to be sent to the Participants that will help them to understand the Cost Structure of the Product / Part.
d. Involve Supplier Partners as appropriate.
06. Involving SMEs: Every Company needs to have a hierarchy of Cost Reduction methods. While the Buyers would be pushing for Volume discounts, there should be some effort in challenging bigger things in the Company. May be Design of the Product may be redone to cut the costs by 1/3rdor the Dealer Model may be challenged in some areas to sell directly to the Customers. Every Company should have their own share of these Big Bang ideas and they may decide to involve some Subject Matter Experts (SMEs) from outside. These Brain storming sessions may be conducted with some notice and may carry on for a few sessions. Involving outside agencies like IITs / Technical Universities across the world in this effort is a good idea. These efforts will ensure that the Cost reduction effort will continuously happen in a company and it will not dry up after couple of years.
07. Involving Supplier Partners: The Cost Reduction has to be driven along with the Supplier Partners. Companies that want to take the ‘full benefit of a Supplier’s effort’ will not get much cooperation from the Suppliers. The Company needs to behave in a mature manner and look at the Medium-term benefit. Supplier Partners should be supported by the Company by training them, exposing them to new practices in technology and process. Companies who invest in to this will reap the Benefits from this type of philosophy.
08. Training of the Teams: If a company wants to do some serious Cost reduction, then it should identify the Competencies that its’ staff need to have and Train them to develop these competencies. Some examples of Competencies that are required are:
a. Ability to understand the Cost Sheets.
b. Product knowledge
c. Manufacturing Process Knowledge
d. Lean Principles
e. VA / VE
f. Frugal Engineering
It would be good to develop E-Learning material on these topics and keep training the Team members continuously. Training and Re-Training is needed in this area.
09. Involvement of All Employees: There should be processes in the Company to involve all employees in the effort of identifying ideas for Cost reduction. It would be good to develop a Mobil app for this and encourage all employees to keep contributing on a continuous basis. This type of Ideas Database can help a Company to maintain a Continuous flow of ideas and Cost Reduction.
10. Motivational means: Companies need to be liberal in rewarding the Employees for implementing great Projects. The practice that Facebook / WhatsApp etc. follow in this regard is a good example. Facebook rewards anyone who finds a bug in a handsome manner. Due to this incentive, there are always lots of committed hackers who are searching for a bug in Facebook. This is a win /win situation.
11. Spend time every day: All important Functions that are involved in Cost reduction should set up a War room for Cost reduction and ask the Teams to meet EVERY DAY for 45 minutes to push the Cost reduction Projects. Teams have to meet every day to ensure focus on the Cost reduction. This is a very important practice, if you want Cost Reduction to gain focus in your Company. The War room should have all the Parts, facilities to strip down the parts / products.
12. Bench marking: It would be good to encourage a practice of Bench marking the Products / Parts / Processes across the world. Every company can learn from others if the companies are open to let others in. It can’t happen with competitors. But, you can learn from Customers and Suppliers. Many companies get the Parts / Products and conduct a Strip Down Analysis to gain more insights.
13. Continuous activity: Cost reduction has to be looked at as a perennial activity in a Company. It has to go beyond the Annual Target. There should be Quarterly Target and the activity has to go beyond a Financial year as the Company may want to have Projects ready and identified for next 6 months.
14. Metrics: The Cost Reduction should have Lag and Lead indicators. While Department wise and Companywide target may be the Lag indicators, Practices like Brain Storming sessions, Daily War room meetings, Benchmarking, Strip down analysis etc. can be the Lead Indicators. It is very important to monitor the health of the Process of the Cost reduction.
15. Cost Council: It is good to formulate a Cost Council in the Company with senior people in it. This Council should set Bench marks with the Competition and Market for Price, Costs. This Council should formulate ideas for achieving Cost Competitiveness on a continuous basis. This Cost Council should be there at all levels in the Organization with its members conducting reviews at all levels. The CEO or Finance Head can become the leader for this Council.
There can be more ideas.
Individually the above ideas may be in practice in many companies. But what is needed is to put them together and formulate them in to a Competency for the Company. It will become a Competency for the Company if the individual elements are practiced regularly and a good result is coming regularly. Cost Competitiveness is very important for every Company. By putting together your own way of managing the Cost Reduction in your Company and practicing it continuously, you develop it in to a Competency for the Company.
Is Cost Reduction a strong Competency of your Organization?