Case Study- Objectives

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Assessment of Quality Objectives in a

Manufacturing Organization-A Case

Study at ABC IndustryProf.R.T.Salunkhe

*

Assistant Professor,

Mechanical Engineering Department,

T.K.I.E.T. Warananagar,

Dist.-Kolhapur, India 416113

[email protected]

Prof. J.S. BagiAssociate Professor,

Production Engineering Department,K.I.Ts College of Engineering Kolhapur,

Dist.- Kolhapur, India

[email protected]

Abstract:The design and implementation of an organization's quality management system is influenced by

varying needs, particular objectives, the products provided, the processes employed and the size and structure of

the organization. ISO 9001:2008 specifies requirements for a quality management system where an organizationneeds to demonstrate its ability to consistently provide product that meets customer requirements, and aims to

enhance customer satisfaction through the effective application of the system, including processes for continualimprovement of the system. This paper focused on the methods for assessment of quality objectives at ABC

industry. This is useful for them not just for improving their supply chain performance but for improving their

outsourcing strategies and approach. The quality level is also increased from 3.83 to 4.15. The organization

continually improves the effectiveness of the Quality Management System through the use of quality policy,

quality objectives, analysis of data, corrective and preventive action etc.

Keywords: QMS-Quality Management System, SCM-Supply Chain Management, Customer Satisfaction,

Rejection, Rework

Introduction:

The effective deployment of ISO 9000 quality management system (ISO 9000 QMS) has been widely

recognized in recent years as a means of building sustainable competitive advantage and thereby enhancing firm

performance. ISO 9000 standards are internationally recognized and designed to demonstrate that the supplying

organization has achieved a basic level of quality by the formalization and documentation of its quality

management system.[1] For this study a number of recent publications related to the effects of ISO 9000 quality

management system were reviewed. Australian manufacturing companies found that certification is likely to

lead to both actual and perceived quality improvements, as well as overall improvements in organizational

performance. [2] It is proposed that ISO 9000 certified companies in the US industry expect their quality

systems will lead to improving product design, process design, product quality, public image and supplier

relations. [3] Despite the clear definitions and objectives of ISO 9000 QMS and its widespread international

acceptance, there is considerable confusion and frustration surrounding the role and business value of ISO 9000certification. Although the number offirms that want to implement ISO 9000 QMS is increasing day by day,

many of them increasingly started questioning the link between ISO 9000 QMS and firm performance. [4]

Prof.R.T.Salunkhe et al. / International Journal of Engineering Science and Technology (IJEST)

ISSN : 0975-5462 Vol. 3 No. 10 October 2011 7377


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Nearly 900,000 organizations in 170 countries have adopted the ISO 9001 Quality Management System

standard, a remarkable figure given the lack of rigorous evidence regarding how the standard actually affects

organizational practices and performance. Implementing a quality management system that conforms to ISO

9001 requires companies to document operating procedures, training, internal auditing, and corrective action

procedures. It also requires companies to implement procedures to improve existing procedures. [5]

The literature has identified several controversies in defining the nature of relationship between ISO9000 QMS, manufacturing parameters, competitive priorities and firm performance. The first research question

deals with the performance improvement of firms as a result of ISO 9000 QMS certification. The second

research question deals with how the performance is improved. In order to examine the research questions a

research framework was developed. [4]

The Research framework (fig.1) shows that ISO 9000 is an initiatory Phase of affecting firm

performance. Model suggests that the relationship of ISO 9000 QMS, manufacturing parameters and

competitive priorities is linked to firm performance through customer satisfaction. The exploitation of ISO 9000

QMS standards is expected to generate new manufacturing capabilities that influence competitive priorities.

This situation increases customer satisfaction that leads to firm performance improvement.

Fig.1. Research Framework

Based on the research framework, the study firstly will focus on the first research question that deals with the

performance improvement offirms as a result of ISO 9000 certification.Therefore the study will examine if there

is a significant difference between the ISO 9000 certified and non-certified firms in relation to the firm

performance. Secondly, the benefits of ISO 9000 QMS on manufacturing parameters will be investigated [4].Case Study Implemented at ABC Industry

Brief Introduction of ABC Industry:

ABC has more than 35 years experience of producing web offset and sheet fed offset presses. Over the

years, ABC has emerged as a thriving, nimble, printing machinery enterprise, due to its ability to transform itself

rapidly to meet the challenges of a highly competitive global economy and its commitment to become a supplier

of choice by delighting customers with services and products. Constant modernization and introduction of state-

of-the-art technology at ABC has enabled it to stay ahead in the industry and successfully surpass all

expectations.

Ever motivating management practices, excellent leadership, highly skilled workforce and a well-

focused approach led it to achieving their goal of being a leader in the niche 4-page newspaper offset printingpress market. They owe their strong position as a supplier of printing presses not only to their technical

competence, but also to their clear orientation towards the wishes of their customers. At ABC, they recognize,




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meet and exceed their customers needs with precision quality, while their commitment to excellence in every

phase of their business reflects in the quality of their products.

In its relentless efforts to meet and exceed the needs and demands of its customers ABC has made rapid

progress in the international market. Leading publishers from South America, Europe, Middle East & Asia have

all invested in their presses. Their customers count on them to give them a product of superior quality at the

lowest cost. Their technical expertise and unrelenting thrust towards continuous quality improvement are theprincipal strengths of ABC. Product of the company is printing machineries, having huge structures. Follows job

order or build to order production, Less accessibility to metropolitan cities, location of vendors at various parts

of the state, Components required for assembly are very costly, manufactured through vendor, abide with

customer specifications, Follow to keep minimum inventory level at the industry level, Relies on the vendor

delivery for the particular item, Fail in commitment given to customer, moreover it sometimes also cause to

loose their order.

Quality Objectives of the ABC Industry:

1. Total Customer Satisfaction.

2. To Ensure Effective Supply Chain Management.3. To Establish Proper Value Stream Across the Organization.

4. To Enhance Human Resource Utilization by Implementing Result Oriented HR Practices.

5. To Evolve as Responsible Corporate Sector, Nurturing Human Values and Concern for Society and the

Environment.

At ABC industry monitoring, measurement, analysis and improvement in processes are carried out in

order to:

1. Demonstrate conformity of the product.

2. Ensure conformity of the quality management system.

3. Continually improve the effectiveness of the quality management system.

In this paper first two Quality Objectives of the Organization are studied, also the product rejections/reworks are

studied with reference to measurement, analysis and improvement.

Part A:

1. Monitoring and measurement of Customer Satisfaction Index:

As one of the measurements of the performance of the quality management system, the organization

monitors information relating to customer perception as to whether the organization has met customerrequirements. Table 01 shows method for obtaining Customer Satisfaction Index for the Period (01/12/08 to

31/12/08).




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Table 01 Method for obtaining Customer Satisfaction Index

The following fig. shows Graphical representation of Total Customer Satisfaction Index for the years 2004-05,

2005-06, 2006-07, and 2008-09.

Fig.2. Total Customer Satisfaction Index Trend Analysis

From this graph it is observed that Customer Satisfaction Index is less i.e. 81.71% for the year 2006-07.

The analysis of this Customer Satisfaction Index is discussed in depth in the Management Review

Committee Meeting and some corrective actions are taken. The decreasing trend of Customer Satisfaction wasdiscussed in depth.

1. CEO instructed to arrange quarterly visits of senior officers from CSD and ASSLY initially to the dissatisfied

customers and submit report to CEO, GM and M.R.

2. CEO instructed to take necessary actions against the free supply due to design defects

3. G. M. also instructed to review the procedure for analysis of customer satisfaction and change the format,

after discussion with counterpart.For the above actions the target dates are given to the responsible persons.

Customers Dainik

BhaskarSimpral Matrubhumi

Parameters

General

1.Pre-installation Service 5 3 4

2. Machine delivery as per commitment. 5 4 4

3. Status of product after receipt at the premises 4 4 3

4. Deputation of service Engineer as per commitment 5 5 4

Point related to service Engineer

1. Communication /Behavior of Service Engineer/s 5 5 4

2.Completion of work as per schedule 5 5 3

Point related to Machine

1. Quality of Machine Manuals /Documents 4 5 4

2. Supply of spares during installation & commissioning 4 3 4

Customer Satisfaction Index =( Sum of individual scores/ 8)*20 92.5 85 75

Total Customer Satisfaction Index =(Sum of individual CSI /No. of

Customers)( 92.5 +85+75)/3 = 84.16




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Due to these corrective actions of measurement, it is found that Customer Satisfaction Index is increased in the

subsequent years i.e. above 80%.

2. Ensure Effective Supply Chain Management.Supply Chain Management is a set of approaches utilized to efficiently integrate suppliers,

manufacturers and stores, so that product is produced and distributed at the right quantities, to the right locationsand at the right time in order to reduce cost and satisfying the requirements. SCM is the processes from initialraw materials to the ultimate consumption of the finished product, linking across supplier-user companies.

2.1Supplier evaluation and selection method:While selecting supplier various criteria have to be considered in the decision making process.

Preference for a given supplier is generally assumed to be depends on an assessment, case-by-case, of the

quality, price, delivery & service he can provide. The relative importance of these selection criteria has been

estimated in various procurement situations. The selection of right source of supply is an important aspect in

materials management. The vendor is to be examined with respect to his capability and competency to supplyright quality of material at right time and at a competitive price.

Suppliers Performance Assessment is done on the following basis:-

1. On the basis of delivery time.

2. On the basis of Quality

3. On the basis of cost/price.

2.2 Supplier Gradation on the basis of delivery time:

The performance on the above criteria is evaluated against the purchase order during the period from

01/04/2008 to 30/06/2008.After processing purchase order as per work instructions & duly approved is sent to

supplier for manufacturing as per quality norms agreed and mentioned in purchase order. The analysis on the

basis of actual delivery against scheduled delivery is made once in three month and feed back is given to

supplier to made once in three month and feed back in given to supplier to improve upon.

The following table shows the delivery status of goods. If the material received as per the chart given in

the table it is treated as material supplied in time.

Table 02 Delivery Status of Goods

Area Difference Between S.D. To Actual Delivery

Local (Kolhapur +Shiroli+Gokul Shirgaon

+Kodoli+Warananagar+Pargaon +Vadgaon)8 Days

Ichalkaranji+Miraj+Sangli +Belgaum15 Days

A) Mumbai+Pune+Bangalore +Mysore+Coimbatore

B) All other items including casting. 30 Days

Table 03 shows that for drawing no.22W30.11526-0001 the material is received before the scheduled

date hence it is in time supply. But the drawing no.22W30.1899 found that there was delay of 96 days.




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Table 03 Delivery Status of Goods

The following table shows the Supplier Gradation on delivery basisagainst purchase orders during the

period from 01/04/08 to 30/06/08.

Table04 Supplier Gradation on the basis of Delivery

For Example: Delivery status for thePeriod from 01/04/08 to 30/06/08.

No of lots received in time: - 157

No of lots delayed : - 6

Percentage of lots received in time: - 96.32%

Supplier classification as per records: - A

2.3 Supplier Gradation on the basis of Quality:

Supplier Quality assessment for the quarter April-2008 to June -2008

Procedure:-

Quality rating (Qr) for a lot is to calculate by following formula

Qr =Q1 +(X*Q2)/Q*100

Where,

Q =Total Qty.Supplied.

Q1=Qty.Accepted.

Q2=Qty. Accepted with deviation.

X =Demerit factor when material is accepted with deviation.

If Major deviation Demerit factor=0.5

Minor deviation Demerit factor=0.8Major means for critical components which requires due attention while production.

Minor means requires less or no attention during further processing.

Suppliers are categorized once in three months on their current performance basis.

A- Performance having acceptance above 90%

B- Performance having acceptance between 81 to 90%C- Performance having acceptance between 61 to 80%

D- Performance having acceptance below 60%

All suppliers will be informed about there present Performance also suppliers in categories C and D

will be informed, to improve there present Performance. The Performance of suppliers in C and D Class in next

months shall be assessed and informed.

Drawing. No.Purchase Order

No.Sch. Date

Sch

Qty.

G.R.

Qty.GR No. G.R. Date Delay

In

Time

22W30.11526-0001 KS-137793/0-1 02/04/08 138 138 396034 29/01/08 - YES

22W30.1899 KS-139884/0-1 01/04/08 5 1 417771 06/07/08 96 NO

Grade In Time Supply

Grade A On And Above 70%

Grade B 60% To 70%

Grade C 50% To 60%

Grade D Below 50%




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The following table shows the Gradation of Suppliers on the basis of Quality.

Table 05 Supplier Gradation on the basis of Quality

Supplier Code Name of Supplier Cum. Rating Cum. Class

PVXYZ Supplier-1 68.52 C

PVLMN Supplier-2 53.79 D

PVABC Supplier-3 71.13 C

PVPQR Supplier-4 77.22 C

Example of Supplier -4Total Inspected Quantity = 468

Total Accepted Quantity = 266

Total Re-work Quantity = 159

Total Rejected Quantity = 43Quality Rating = 266+ (0.6*159)/468=77.22%

Hence Gradation of Supplier -4 is in C Class.

2.4 Guide-Lines for Actions to Be Taken On D Class Suppliers:

If the suppliers rating observed in class D for quarterly analysis report, the reasons for poor quality are

to be studied by Materials Department along with Quality Assurance dept.The feed back regarding poor quality

supply, is to be discussed OR communicated to the supplier by Quality Assurance dept. Necessary technical

guidance to be provided to the supplier for improvement in the supply by Materials Department or Quality

Assurance dept.Suppliers performances for three-quarters are to be analyzed and if the suppliers rating observed

in D class then again, that supplier is to be treated as Temporary Supplier and it is deleted from the list of

Approved Suppliers. Such suppliers to follow the same route to qualify for the list of Approved Suppliers.

During the detailed study /enquiry /observations, if the supplier is found observing wrong business practices, as

detailed below, then the supplier is declared as a Black-listed Supplier.

1. Supply of Non-genuine brand/make materials.

2. Submission of false inspection reports.

3. Supply of our parts to others to others like competitors, customers.

4. Disobey of secrecy agreement.

5. Unethical practices in commercial dealings.

Such incidences are to be recorded by Quality Assurance dept.and brought to the notice of Materials

Department and the supplier. The list of Black-listed Suppliers is to be finalized jointly by HOD PUR, /HOD

VRD & HOD QA. Materials Dept. PUR/VRD will not procure any material from the Black-listed Suppliers.

2.5 Supplier gradation on the basis of cost /price:

The following table shows supplier gradations on the cost basis. The Supplier which gives products at

minimum cost will be considered as the best supplier, but at the same time it is also necessary to see that

whether the supplier is capable to deliver the same at the right time, at right quality and in right quantity or not.

Table 06 Supplier Gradation on the basis of cost

Drawing No Description Supplier-1 Supplier-2

Supplier Gradation on cost

basis

A Grade B grade

L361.10-4831.1/3 Helical gear 5088 5499 Supplier -1 Supplier -2

L361.10-4831.1/3 Spur gear 2458 2382 Supplier -2 Supplier -1




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Part B:

Monitoring and measurement of product:

The organization monitors and measures the characteristics of the product to verify that product

requirements have been met. This is carried out at appropriate stages of the product realization process in

accordance with the planned arrangements. Evidence of conformity with the acceptance criteria will bemaintained. Records will indicate the person authorizing release of product. Product release and service delivery

will not proceed until the planned arrangements have been satisfactorily completed, unless otherwise approvedby a relevant authority and, where applicable, by the customer.

1. The details of Rejection / Rework at final inspection in Machine Shop in July -2006:

The following table shows the details of Rejection / Rework at final inspection in Machine Shop for the month

of July -2006Table 07 Details of Rejection / Rework

From: Quality Assurance Dept. To: All Concern

Ref: MIL-2/QA/F/14-A Date 10 August 2006

Sub.: MONTHLY REJECTION / REWORK REPORT (FINAL INSPECTION

DETAILS

TOTAL QTY. INSPECTED QTY. REWORK QTY. REJECT

1971 16 09

Rejection & Rework

Target July 2006Cumulative Avg. From

April-06

REWORK 1.2% 0.81% 0.75%

REJECTION 0.4% 0.46% 0.3%

( Total =1.27% =12700PPM )- Sigma level=3.83

REWORK DETAILS

Code Description Qty. Percentage Contribution

R-01 Operator Mistake 08 50.00%

R-71 VRD Problem 05 31.25%

R-21 Process Problem 03 18.75%

Total 16

REJECTION DETAILS


E-4 Cutting Tool Fault 02 22.22

E-1 Process Problem 01 11.11

C-2 Operator Mistake 05 55.56

K-1 VRD Problem 01 11.11

Total = 09




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From Table 07 it is observed that,

Rework is 0.81% against target of 1.2%.

Rejection is 0.46% against target of 0.4%

Sigma level achieved =3.83

1.1 Rework Report for the month of July 2006 final Inspection at Machine Shop:

The following table shows Rework Report for the month of July 2006 at Machine Shop

Table 08 Rework Report

1.2 Rejection Report month of July 2006 final Inspection at Machine Shop:The following table shows Rejection Report for the month of July 2006 at Machine Shop

Table 09 Rejection Report

The reports of rework and rejection are observed and the corrective actions are taken as follows:

1. The Operator has noticed their mistake and instructions are given to prevent reoccurrence.

2. The Vendor has noticed their mistake.

3. To remove process problems in process inspection is carried out.4. To provide proper training to the operators.

Date Drawing. No. & DescriptionQty.

RemarkInspected Rework

Rework Code ;- R-1 ( Operator Mistake)

14/07/06L560.02-12503.1/1-Drive

Housing02 01

Bore 65H7 ablong and oversize

by 0.15, Step observed 1*M6

not done.04/07/06 W16.22776-0469- Spindle 09 05 20f7 oversize by 0.02 to 0.04

11/07/06 W30-21038-0166- Setting disc 01 01 M10*1 Tapping not done

11/07/06 W30-21038-0165- Setting disc 01 01C Dia .90 Control thickness

33+0.1 found 33.4

Rework Code :- R-71 VRD Problem

23/07/06 B546.22-52104.2/3 Shaft

Assembly (L=1744)

16 02Undercut A2*0.2 not done

09/07/06 546.02-1772 Cross Yoke 02 02 Groove 5*5 not done

09/07/06 546.02-51766 Cross Yoke 01 01 Groove 5*5 not done

Rework Code ;- R-21 Process Problem

02/07/06 W30.20457-0103 Strip 03 03 1130-1200

Total =16


RemarkInspected Rejected

Rejection Code ;- E-4 Cutting Tool Fault

18/07/06 L361.10-4224.1/4 Worm 48 02 M8*1 Damaged

Rejection Code ;- E-1 Process Problem

21/07/06 W16.22776-0469 02 01 Flat 20f7 -19.75-19.80

Rejection Code :- C-02 Operator Mistake

23/07/06 W30.19576-0104 Threaded Spindle 05 01 TR16*4 Threading Damaged

28/07/06 W30.20422-0138 04 04 //ty 0.01 found o.1to0.3

Rejection Code :-k1 VRD Problem

28/07/06 361.10-4224 61 01 Hex punching size O/s by 0.5

Total = 09




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2. The details of Rejection / Rework at final inspection in Machine Shop for the month of Feb.2009are as

follows:

The following table shows the details of Rejection / Rework at final inspection in Machine Shop for the month

Table 10 Details of Rejection / Rework

From Table 10, it is observed that,

Rework is 0.28% against target of 1.2%.

Rejection is 0.13% against target of 0.4%

Sigma level achieved =4.15

2.1 Rework Report for the month of February 2009 final inspection at Machine shop:

The following table shows Rework Report for the month of February 2009.

Table 11 Rework Report for the month of February 2009

From: Quality Assurance Dept. To : All ConcernRef.: MIL-2/QA/F/14-A Date 03 March 2009

Sub.: MONTHLY REJECTION / REWORK REPORT (FINAL INSPECTION)

DETAILS

TOTAL QTY. INSPECTED QTY. REWORK QTY. REJECT

721 02 01

Rejection & Rework

Target Feb. 2009 Cumulative Avg.

REWORK 1.2% 0.28% 0.24%

REJECTION 0.4% 0.13% 0.16%( Total = 4100PPM )- Sigma level= 4.15

REWORK DETAILS


R-1 Operator Mistake 02 100.00%

Total = 02

REJECTION DETAILS


C-2 Operator Mistake 01 100.00%

Total = 01


RemarkInspected Rework

Rework Code ;- R-1 ( Operator Mistake)

05/02/09 546.23-14860 Cutting Cylinder 02 01 Chamfer 3*15 degree found oversize

by 2mm.

06/02/09 875.35-1101-Cylinder body 01 01 Flat 46+0.1 oversize by 0.4mm.

Total = 02




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2.2 Rejection Report month of Feb.09Final Inspection at Machine Shop:The following table Rejection Report for the month of February 2009.

Table 12 Rejection Report month of Feb.09

2.3 Analysis of Rework and Rejection:

The following table shows the analysis of Rework and Rejection are carried out. Once the defect is observed the

root cause analysis is done and the corrective actions are suggested. To achieve this target date for the

responsible person is given.Table 13 Analysis of Rework and Rejection

Sr.

No.

DrawingNo./Description

Qty. Defect Observed Cause Analysis Corrective ActionSuggested

TargetDate

01578.22-12222

Friction Cylinder01

42e8 &36j5 step

OD U/S by

0.18mm

Recoating job

size not checked

while grinding by

operator

Confirm grinding

allowance before finishgrinding by operator.

Immediate

02546.02-25349

Eccentric bush01

Bore 47M6 o/s by

0.005 & taper by

0.02

Fouling of

location pin in

clamping fixture

to be avoided.

Clamping fixture of

locating pin

modification required. Immediate

03 546.23-14860 01

Balancing hole

done near slotobserved less wall

thick

Balancing weight

removed at wronglocation

Drawing modification

required to reduce theslot length as cast

condition. Immediate

Results and Discussions:

With the globalization of the world economy, the delivery and environmental factors that influence a

companys global strategies and approach. The case study implemented at ABC industry, is useful for them not

just for improving their outsourcing strategies and approach but also high customer satisfaction, very low

inventory level and increase in profit.

From the reports of rework and rejection it is observed that there is considerable reduction in the

rework and rejection. Major issues are discussed in the management review committee meeting and the

corrective and preventive actions are taken to eliminate the cause of non-conformities in order to prevent

recurrence. The quality level is also increased from 3.83 to 4.15. From this the effectiveness of quality

management system is observed.

Acknowledgement:

First of all, I would like to express utmost gratitude to my Co-author Prof.J.S.Bagi, for his continued

support, encouragement and guidance provided in articulating this paper.

Finally, I am very much thankful to all those who extended their help directly or indirectly in

preparation of this paper.

Date Drawing. No. & Description Qty. Remark

Inspected Rejected

Rejection Code ;- C2Operator Mistake

24/02/09 H546.02-25349 1/3Eccentric Bush 08 01 Bore 47M6 oversize by 0.005 & taper

by 0.02mm.

Total = 01




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References:

[1] K.R.Beattie, A.S.Sohal, Implementing ISO 9000: a study of its benefits among Australian organizations, Total Qual. Manage.10 (1)(1999) 95-106.

[2] H.Liao, D.enke, H.Wiebe, An expert advisory system for the ISO 9001 quality system, Expert syst.Appl.27 (2) (2004) 313-322.[3] M.Ebrahimpour, B.E.Withers, N. Hikmet, Experiences of US-and foreignowned firms: A new perspective on ISO 9000

implementation, Int.J.Prod. Res.35 (2) (1997) 569-576.

[4]

Tufan Koc, The impact of ISO 9000 quality management systems on manufacturing-- Journal of Materials Processing Technology 186(2007) 207213.

[5] David I. Levine Michael W. Toffel - Quality Management and Job Quality: How the ISO 9001Standard for Quality ManagementSystems Affects Employees and Employers-Hass School of Business, University of California, Berkeley, CA 94720,

Levine@hass,berkeley.edu & Harvard Business School ,Boston, A 02163, [email protected]

[6] An IS/ISO 9001:2000, Manual of Quality Management Systems general requirements.[7] ABC Industry : Documents for Assessment of Quality Objectives, monitoring and measurement of Product for rework and rejection.[8] Dale H. Besterfield, ISO 9001 Requirements, Total Quality Management, Third Edition, 258-270.

