Iowa State University

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The Impact of Quality Management Systems

• Iowa State University
• of Science and Technology
• Chad Laux
• Agriculture and Biosystems Engineering
• Industrial and Agriculture Technology
• 9/27/05

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Outline

• Background
• Describe project (Charter)
• Review methodology selecting measures
• Q A

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Background

• 2nd Year PhD student in Industrial Ag
  Technology Dept. of ABE
• Spent 10 years in Industry Six Sigma BB,
  Quality/Training Mgr, Project Mgr, etc.
• This project is part of my PhD dissertation at
  ISU (AG 9000 Development, Tech Transfer)
• Have spent past year learning about FC and QMS
  systems internal auditing

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What is being asked

• Of Regional Operations Managers at minimum,
  provide data information upon request about FC
  processes and/or measures
• Locations may want to compare a process to
  multiple locations
• Are the measures valid? Asking the question at
  non-QMS locations about the measure Is it valid
  to check?

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Main Research Question

• How has ISO/AIB impacted FCs operations?
• Implement a process of the fiscal impact of QMS
  impact through the collection of total costs vs.
  total benefits.
• Calculate costs/benefits report results
• Create a set of application materials for use by
  Industry as output from project.

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Project Management (Charters)

• Outlines project in one document answers
• Business case Purpose of project
• Opportunity statement Business impact
• Goal statement Success criteria
• Project scope Project boundaries
• Project plan Timeline of activities
• Team selection who and what

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In Scope of Project (Charter)

• Study of ISO impact at FC locations with QMS (ISO
  and AIB)
• Odebolt, Bayard?, Early?, Greene?, Rake?
• Study same process across multiple locations
  look for weak spots
• Study of FC locations without a QMS (Control)
• Bradford, Farnhamville? Rockwell City?
• Validity check of measures no change from
  QMS/non-QMS location not valid indicator

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Out of Scope (Charter)

• Study of Enabling/supporting FC processes
• Capital expenditures w/o prior approval
• Hiring w/o prior approval

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Project Team (Charter)

• Project Champion Tom Miller
• Overall control of process at FC (in conjunction
  w/ Charlie)
• Sponsor Tim Sullivan
• Liaison btwn. ISU FC remove roadblocks
• Coordinator Chad Laux
• Primary work done by C.L.
• Primary resources
• Butch Hemphill, Shawn Cogdill, Dr. Charles
  Hurburgh
• Other resources
• Reg. Op. Managers, IT, Accounting, operators

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Project Timeline (Charter)

• Duration 12 months
• Est. Completion 1/07
• Milestones
• Create methodology, Map processes, ID measures
  12/05
• Start data collection on measures 1/06
• Finish data collection, finish improvements 9/05
• Data analysis finished, deploy templates 12/06

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Methodology

• Started w/ review of literature of expert
  opinion of other studies
• There were no similar projects
• Focused on surveys, no case studies, no
  sufficient details
• Questions unanswered from lit. review for case
  study
• Why where the particular measures chosen? What is
  the right number of measures? How comprehensive?

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Methodology

• Utilize Business Process Management (BRM) in QMS
  study
• Identify businesss high-level processes
• ID core vs. enablers of FC business
• Analyze process relationships
• Ensure no gaps in the main processes
• Look at the interfaces/links between processes
• Analyze process performance
• ID Input, process, output measures (used SIPOC)
• Analyze cause-effect of measures w/ fiscal
  performance

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Why BRM

• Needed to make scope manageable, practical,
  concentrated
• Too many FC ISO/AIB procedures (approx. 60)
  upfront, BRM focuses on what is most important
• Gives insight by answering
• Is your org. measuring the right things?
• Does your org. need to develop a more
  comprehensive set of measures?
• BRM process approach is scaleable can be
  replicated easily elsewhere

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All FC QMS Documents
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Defining Core Processes

• A series of activities which cross functional
  boundaries create the end product or service
  that is delivered to external customers
• Core processes common to most businesses

Market and Sell
Take Orders
Manufacture Product
Delivery Product/Service
Maintain Customer
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Core Parameters

• Focused on ISO 2nd Tier Procedures
• All encompassing of the business (i.e. AIB)
• Focused on External Customer oriented processes
• Focused on processes that directly add value to
  the end product/service

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Farmers Coop Core Areas

• At minimum

Receiving/grading
Storage
Shipping
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Core FC Processes
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Enabling Processes

• A series of tasks activities that are internal
  to business but contribute to the performance of
  core processes. The customers of enablers are the
  business processes.
• Examples common to many businesses

Human Resources
Training/Development
Information Technology
Compensation Legal
Administration
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Process Approach

• Mapped Core FC Processes using a SIPOC diagram to
  learn about the system
• Analyze Core level relationships gaps?
• Identify Measures from SIPOCs

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Define Business as a Process

• Process a set of interrelated or interaction
  activities, which transforms inputs into outputs

OUTPUT
INPUT
PROCESS
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SIPOC

• Supplier, Input, Process, Output, Customer
  Diagram
• SIPOC is a process view of how a company goes
  about satisfying the customer. Because many
  organizations still operate as functional 'silos'
  and because no one person owns the entire
  process, just steps in the process, it's likely
  that few if any people will know the process from
  start to finish.

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SIPOC Definitions

• Supplier - person/process/company that provides
  whatever is worked on in the process.
• Input - The material or information provided.
• Process - The internal steps (both those that add
  value and those that do not.
• Output - The product, service, or information
  being sent to the customer.
• Customer - The customer of the outputs

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SIPOC particularly useful when

• Who supplies Inputs to the process?
• What specifications are placed on the Inputs?
• Who are the true Customers of the process?
• What are the Requirements of the customers?

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SIPOC steps

1. Begin with the Process. Map it in four to five
   high level steps.
2. Identify the Outputs of this Process.
3. Identify the Customers that will receive the
   Outputs of this Process.
4. Identify the Inputs required for the Process to
   function properly.
5. Identify the Suppliers of the Inputs that are
   required by the Process.
6. Identify input/process/output indicators of
   effectiveness /or efficiency
7. Validate the SIPOC accuracy with Subject Matter
   Experts.

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Analyze Relationships

• The systematic identification management of
  various processes employed w/in an organization,
  especially, the interactions between processes.

CUSTOMER ORDER
CUSTOMER DELIVERY
PROCESS OWNER 1
PROCESS OWNER 2
PROCESS OWNER 3
ISO 90002000 based on this premise
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Process Performance (Measures)

• All processes can be measured by
• Efficiency Productivity resources per unit in
  terms of time money (cycle time, etc.)
• Effectiveness The degree that the process
  output satisfies the customers requirements (
  yield, Cp ratio, etc.)
• Using SIPOCS, process experts, well ID existing
  data that provides indicators of performance

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Process Indicators (10/31/05)

• Lead time actual work in process
• average completion rate
• Process
• Efficiency Processing time (value added)
• Throughput time
• Throughput time Processing time Inspection
  time Movement time Waiting/storage time

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Cause and Effects

• Quantify relationships between financial and
  process indicators using statistical analysis
• Y f(X1Xn)

Financial
Process
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Creation of materials

• Process dashboards Real-time information summary
  on process performance
• Often created manually w/ IT support using
  excellent process knowledge
• Sustain knowledge gained

As part of third objective to create materials to
transfer research learning to industry use
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ISO Impacts Analysis
SV DF
QMS 1
ErrorQMS 12
Time 3
TimeQMS 3
ErrorTime 36
Total 58

• Repeated measures design
• Trts ISO, AIB
• 4 measured time periods
• 7 locations
• Compare measures among QMS/non-QMS locations

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Questions