Be Consistent with Corrective Action Terms

Let’s review, from an ISO 9001 perspective, how to handle resolving non-conformances and other problems, and discuss some common misconceptions.  First of all, we should make sure we clearly understand the definitions of the terms we use to discuss this facet of the improvement process.

Nonconformance: A requirement that is not fulfilled.

Correction: The action taken to eliminate or correct a detected nonconformance.

Corrective Action: The action taken to eliminate the cause of the nonconformance

Using these definitions, the first thing you might notice is that not all customer complaints should be considered nonconformances.  Not all customer complaints are due to nonconformity.

Not all Customer Complaints Call for Corrective Action

For example, you sell a computer application geared toward very experienced and knowledgeable users.  Someone who is not very knowledgeable buys the application, and then complains because they don’t understand how to use it.  Is that a nonconformance?  Probably not.  So perhaps no action is taken because there is no nonconformance.

But what if the same complaint occurs on a regular basis?  (Recall that we should be encouraging and analyzing feedback).  We may decide there is a nonconformance after all, but a sales or marketing nonconformance not a product nonconformance.  There should be a requirement that we clearly communicate what the product does and who the intended user is.  If we get regular complaints from people for whom the product was not intended, then that requirement is not being met.

The second thing that should be apparent from the definitions is the difference between correction and corrective action.  Correction is done to make an immediate fix of the nonconformance.  Corrective action is done to address the cause of the nonconformance so it does not reoccur.

Alternate Paths of Corrective Action

Once we decide that there is a nonconformance, there are actually two alternate paths an organization should follow when a nonconformance is found.  The first path is:

1. Correction
2. Analysis of cause
3. Corrective Action

The alternate path is

1. Analysis of cause
2. Correction
3. Corrective Action

Why the difference?  Because the situations surrounding a nonconformance are different.  Sometimes the correction or immediate fix is obvious and needs to be done right away.  For example, a customer was sent the wrong item.  We want to send the customer the right item immediately.  We don’t want the customer to wait while we investigate the reason that the wrong item was shipped.  Or, in another example, a jig was installed incorrectly on a metal stamp machine, and parts produced are defective.  Do we want to shut down production while we figure out why it was not properly installed?  No, we want to fix it and resume production first, then investigate the reason.

Sometimes the immediate correction that should take place is obvious, and there is no reason for delay.  Make the needed correction immediately.  That is when the first alternate path should be taken.

Other times, the immediate correction is not obvious.  If there is a problem in a complex computer program, for example, the immediate correction needed may not be apparent, and rushing to implement a fix before it is understood may cause more problems than it solves.  In such cases, correction should not take place until the problem is understood.  Here, the latter path should be followed.

Consider the Situational Factors for Corrective Action

The point is that there are situational decisions to make when employing the corrective action process.  While it is important to have a process to follow to deal with nonconformities, not all problems and nonconformities can be dealt with in the exact same way.  They need to be handled on a case by case basis.  If you routinely put every customer complaint or problem into the corrective action process, then you will likely overwhelm the corrective action process and it will not function properly when there are issues that need to be resolved through corrective action.

There are a few important points to reiterate.  First, correcting a problem is not taking corrective action.  Corrective action is when you analyze the problem to determine the cause, address the cause, and then, importantly, verify after an appropriate amount of time that the problem does not reoccur.

Second, correction and/or corrective action may not always be required.  This is especially true if the problem or nonconformance is identified as a special case that is rare and likely to never to reoccur.

Finally, either correction or corrective action may alone be sufficient.  Not every problem that needs correction requires corrective action.  For example, if the wrong item was shipped because both people who fulfill orders called in sick on the same day, then the cause is obvious.  And if it is determined that it was a rare occurrence not likely to happen again, then there is no need to address the cause.  On the other hand, sometimes a problem or nonconformance does not require a correction, but there is a need to investigate the cause and prevent reoccurrence.  Again, these decisions should be made on a case by case basis, depending on situational factors.

And remember, if a nonconformance occurred, then we are using the corrective action process.  Preventive action is taken to prevent a potential nonconformance that has not occurred.

In the next article, we will cover methods of analysis to determine the cause of nonconformance, commonly referred to as root cause analysis.

Finding Root Causes: Phase Four – Corrective Action Phase

The Corrective Action Phase is either about process re-design to address common cause variation, or it is about root-cause analysis to address special cause process variation.  Deming pointed out that about 85% of process defects are the result of common cause variation, so it is important to understand this concept.
All processes have variable output (not completely consistent).  The question to ask is, “Is the variation we experience common variation?”  In statistical terms we call this random variation.  (If it is not random then the variation has a special cause.)  This expected variation is really the capability envelope or capability range of the process.  If you are unsatisfied with the capability of a process, then the only solution is to make the process more capable through a process re-design.  The original design or documentation was done in Phase Two.  Phase Three, which we call Process Stability, is basically the check step for Phase Two, where you ensure the process’s capability and take action to improve it as necessary.

A Cycle of Continuous Improvement

In Phase Four of the process maturity scale we are tweaking the process design in a cycle of continuous improvements.  There are several methods you can use to accomplish this process improvement.  Quality Function Deployment (QFD) is a design tool that can be used to understand and rank the customer’s needs, wants, and desires, which make up the basis of your value proposition.
Six Sigma uses a host of quality tools to manage the whole corrective phase.  DMAIC (Define, Measure, Analyze, Improve, and Control) is the acronym for the Six Sigma process of corrective action.  But corrective action is internally focused on how we correct common or special causes of variation.  If we continue down this path we will eventually realize a diminishing return on our efforts, as we focus on smaller and smaller problems.
Once we start reaching diminishing returns (i.e. the investment of time and money needed to correct the problem outweighs the benefits gained) through correcting problems, the goal should be to move past the Corrective Action Phase.  We need to start thinking more externally and about what could go wrong, but hasn’t yet.  We are ready to employ tools used in the Preventive Action Phase:  Benchmarking, Failure Modes Effects Analysis (FMEA), Design For Six-Sigma (DFSS), or Poka-Yoke.

Phase Five – Preventive Action Phase

The Preventive Action Phase is all about preventing defects and errors before they occur.  We need a really good system for customer feedback, benchmarking, and external data collection.  In addition, our employees need to be flexible, be willing to try something new, and be unafraid of mistakes or critical comments.

The organization as a whole should be spending more time on preventing defects than correcting them.  Management, however, has to be careful not to harvest the profits from all of our good work using job cuts (known as the Iron Law of Layoffs).  “When product quality is bad use quality engineers, when product quality is good lay off the quality engineers.”  If we lay off the quality engineers, then who is going to focus on problems that have not occurred yet?  After all, isn’t that why there are fewer defects?  Once you lay off the quality engineers then the defects will start coming back, and you have started a vicious cycle.
We may start to use Hoshin Kanri for strategy implementation and we may start new market development.  As we venture into uncharted waters, we are actually reentering Phase One again with new processes and methods.  Now we are back to the Reaction Phase.  The cycle is complete.

Implementing Effective Management Systems

Now we have discussed all five phases of management system maturity.  It starts out as reactive, moves into documentation, and then stability before we can really have corrective and preventive actions.  Yet, many companies try to implement it all at once and get overwhelmed, or they get stuck somewhere in the first two phases.  Few organizations are able to implement a truly effective management system of well-defined policies, procedures and processes.
Have you figured out which phase your organization is in?  If you are like many, you might think your organization is a composite of all of the phases.  This could mean that you are trying to do a little bit of everything.  Or maybe some of your processes are farther along than others.  Either way, it is a good idea to align the organization to the same goals and try to get all of your processes to the same maturity level.
Remember, you are only as strong as your weakest link.  It will be more important to have all of your core processes complete Phase Two, where all processes are documented and you began to keep important process records, than to have a collection of processes at different phases.  Your weakest process could hold the others back.
But that shouldn’t stop you from implementing your strategy now that you know how it’s done.  Step through the phases one at a time.  Do your best to get out of the reactive phase as soon as possible. If you need help, give us at Bizmanualz a call.  We can start with a simple Gap Analysis that will identify what where you are in your process maturity and clarify what your next step should be.  With a little help from a company like Bizmanualz, you could achieve the effectiveness you are looking for in your management system.

This obviously includes the accounting department. We know from COSO and Sarbanes Oxley compliance that accounting procedures are an important element of internal control. Organizations spend a lot of effort to produce an accounting manual containing accounting policies and procedures. So, if you are going to produce an accounting manual with accounting policies and accounting procedures, how can you make the most of the effort you put into them?

There are two important questions you should ask about your accounting procedures:

1) How well do your accounting procedures accurately capture your accounting cycles or processes?

2) How can your use your accounting procedures to benefit your organization?

A Positive Contribution from Accounting Procedures

Your accounting procedure probably describes an accounting process as a collection of process steps and associated rules. For example; a collection process might send out collection notices, make phone calls, collect money, deposit money; and then repeat.

Where in this accounting process, however, do you collect data that measures how effective the accounting process is? When are you comparing results to objectives? In a more broad view, control is more that just a set of steps and/or a list of rules. Control is awareness of how well your accounting processes are carrying out important functions. On this path the accounting processes your accounting procedures describe can really provide an important contribution to your business.

The legal, regulatory and ethical concerns surrounding accounting processes only emphasize the importance of having good accounting procedure documentation. But the difference between a controlled accounting process with measurement and review and an uncontrolled accounting collection process can be described with one word: success.

A Different Version of an Accounting Control Procedure

Controlled processes collect data as in integral part of the business process steps. Now, at regular intervals, the data can be reviewed and accounting process effectiveness evaluated. Are objectives being reached? If not, why? Are the objectives meaningful and reflect importance and risk? Now, the necessary corrections can be identified and implemented as a result of the review.

For example; a controlled accounting collection process might send out two different collection notices to test the response rate of different notices, you may also make phone calls at defined intervals to determine the response rate. Collecting data means making reflective and meaningful adjustments to the business process.

Typically, auditors accept accounting procedures that list steps and rules, with lots of inspection and verification steps, as an adequate internal control system. What value, however, does that internal control system provide for your organization? As a business owner, CFO, Controller, or accounting department manager, is an internal control system that does the bare minimum good enough?

Using Process Analysis to Develop Standard Accounting Procedures

Understanding the accounting processes is the first step in being able to document them with well-written accounting procedures. Besides noting the steps of the accounting process, consider the following:

• Who is the accounting process owner?
• How do accounting processes interact? What are the inputs, outputs, customers, suppliers?
• What are the most important facets for process and organizational success?
• What are the risks associated with the accounting process (what could go wrong and how material would it be?

You might find process maps, flowcharts, or similar tools useful during this phase. Be sure to identify accounting process objectives, key metrics and how they are recorded, as well as how frequently they should be reviewed.

Once you start reflectively analyzing your process, you may notice better approaches or waste that can be eliminated. You might, however, want to avoid introducing too much change too quickly. One strategy is to introduce the most important changes first (according to risk, return, etc…,) then introduce more process improvements over time through other improvement activities. Once you understand your process and incorporate process improvements, data collection, and review, you are ready to start writing your accounting procedures.

After planning and analyzing an accounting process, writing an accounting procedure to document it should seem easy. One tip is to focus on describing the accounting process and avoid too much mundane detail (i.e. computer instructions). Too much detail makes the accounting procedure unfriendly to users, and those details are only needed by beginners anyway. Keep that information in training materials or work instructions.

Remember, simplicity and consistency (even with other organizational procedures) is a positive attribute of an accounting procedure. It is easier to add necessary information later as needed than it is to identify and strip out useless information and needless detail.

Accounting Procedures to Benefit Your Organization

This approach to writing an accounting procedure that describes a well-defined, controlled accounting process aligns with the concept of accounting policies we presented last week. The accounting policy clearly communicates goals, and the accounting procedure communicates the accounting process in order to execute it and reach the goals. The periodic review of accounting process objectives provides feedback for the accounting policy ensuring it is still current in reflecting what is important to your organization.

To learn more about Bizmanualz Accounting Procedures go to http://www.bizmanualz.com/accounting/ and check out the Accounting Policies and Procedures Manual or sign up for the Bizmanualz Newsletter and download a free sample accounting procedure right now.

The old adage frequently applied to ISO 9001 is “Say what you do and do what you say.”  Some organizations seem to take this to mean “Write down everything you do,” but that is really not required by the standard.  The actual requirement is that processes are well-defined and responsibilities clearly communicated.  This can be accomplished through a lot of methods that require little documentation, such as training. 

The key concept is that the goal is to use the ISO 9001 Standard to improve your business, and if it becomes a burdensome paper bureaucracy, then that is probably not happening.  Using a Lean (meaning not wasteful) approach to ISO 9001 is one way to ensure it becomes a boon, not a bust, to your organization.

Lean ISO 9001 QMS – The Quality Manual

The quality manual is an important facet of an ISO 9001 Quality Management System. The goal should be to have a lean and functional Quality Manual that is easy to maintain, distribute, and most importantly – use.  This not only eliminates waste, it sets the tone that the Quality Management System and its documentation isn’t a needless burden;but an important building block to improvement.

Read more about lean ISO 9001 quality manual;

Lean ISO 9001 QMS – Quality Systems Procedures

The goal of procedures in an organization is to document key processes.  The ISO 9001 Standard does not specify any format for writing procedures, nor does it specify a length.  Since no one wants to read long-winded, boring procedures – why write them?  Why not write one, two or three page procedures using formats like flow charts and lists that are brief and easy to understand?  Again, using a Lean approach makes procedures more useful so they can benefit an organization instead of being a paper burden.

Read more about lean quality system procedures;

Lean ISO 9001 QMS – Other QMS Documents

Very few documents are actually required by the ISO 9001 standard.  But at times developing simple, straightforward documents may be the easiest way to meet the standard, but even more importantly, provide a benefit to your organization.  Your organization must reflectively and actively decide when and where documentation is needed.

Read more about lean QMS documents;

On That Note

Answer to this month’s question:

Complying with ISO 9901 does not have to be a “document nightmare.”  Understanding the requirements of the standard and developing ways to meet them does not always require a lot of documentation.  In fact, the more Lean approach you take to creating documentation, the more likely the documentation you create will help your organization.

Please feel free to contact us with any questions or comments. Also, please let us know if you’d like any specific topic addressed in our future articles.

Regards,
Chris
Bizmanualz

I’m reminded of speaking to an adult evening management class at the local junior college in 1995. At the start I asked the class of about 20 students, “How many of you have heard of ISO 9001;please raise your hands?” Then I asked, “How many of those with your hands up have heard or believe that ISO 9001 is a documentation nightmare?” Not a single student lowered their hand. I went on to explain how ISO 9001 was only a documentation nightmare if a company chooses to make it so. The documentation myth of ISO 9001 persists to this day.

I recently had a telephone conversation with a manufacturing Quality Manager requesting some advice. His dilemma is that as his company nears the completion of their QMS conversion from ISO 9001 to TS 16949, he has a couple of key suppliers who refuse to pursue a formal registration to a Quality Standard. Their rationale is that they cannot justify spending a lot of money for a piece of paper or a plaque.

Simplify the QMS

My response to the Quality Manager was, “All they need is a simple Quality Manual and six procedures to document an ISO 9001 Quality System. To show they are at least moving toward a formal system, all they really need right now is a Quality Manual.” I further added, “It does not cost a lot of money, unless a company chooses to develop a complicated Quality System. In fact, a formal Quality Management System should help a company to become more efficient, and therefore;more profitable! But, whatever they do, they should keep it simple!”

After further discussion with the Quality Manager it was clear that his understanding of the requirements is that a lot of procedures and documents are needed. So the myth of ISO 9001 being a documentation nightmare is still a common misconception at many levels. This manager is definitely in the old school of Quality Systems as a documentation nightmare. He was amazed when I explained to him different methods of fulfilling the Quality Manual and procedure requirements, along with the concept of a Lean QMS.

Start with a Simple Quality Manual

So what is a Lean ISO 9001:2000 QMS? Well, a good place to start this discussion is with the required Quality Manual. Clause 4.2.2 of ISO 9001:2000 states the following:

The organization shall establish and maintain a quality manual that includes;

• the scope of the quality management system, including details of and justification for any exclusions (see1.2)
• the documented procedures established for the quality management system, or reference to them, and
• a description of the interaction between the processes of the quality management system.

There is nothing in this requirement that says a Quality Manual needs to be 50, or even 20 pages long. It does not state that each “shall” statement in the ISO 9001 standard needs to be addressed. It does not require pictures, the organization’s legal structure, or any additional details. However, most Quality Manuals seem to follow the pattern of addressing each and every ISO 9001 “shall” statement by essentially repeating the standard’s requirements. What an incredible waste!

The Registrar and the Registrar’s Auditor(s) know the content of ISO 9001:2000;there is no need to repeat it back to them. What about our customer’s you may ask? Usually a customer is not going to read a 30 page Quality Manual. If they do require a copy, they will merely file it and check off that you have one;so why not send them a simple Quality Manual?

Design a Manual to Meet the Standard

Let’s look at the specific requirements for the Quality Manual. Compliance to 4.2.2a can be accomplished in 2 or 3 paragraphs. A brief description of the scope of the organization’s Quality System, followed by a list or paragraph noting and explaining any exclusions to ISO 9001 clauses. So we are up to 1/2 to 2/3 of a page and we comply with 4.2.2a;agreed?

Section 4.2.2b calls for a list of documented procedures. It will help to simplify this requirement. Start with the six required procedures. If your company needs a few more;that is okay. Additional procedures are at the discretion and needs of the organization. One additional procedure that I always recommend to organizations is to address clause 6.2.2; Competence, Awareness, and Training. I found this to be a weak area in the average QMS, and addressing it in a procedure can help to strengthen this activity.

While it is still at the discretion of an organization to include additional procedures, the following example may help with this determination. Perhaps an organization has a small staff and sub-contracts much of their activity. Clause 4.1 requires an organization to ensure control over any outsourced processes and to identify any outsourced processes. This can lead to a short paragraph or a few additional sentences in the scope portion of the Quality Manual. However, I would recommend that this organization write a procedure identifying their activity related to clause 7.4, Purchasing. This is where the control and identification of the sub-contracted activity should be identified.

With this example, the organization would now have eight documented procedures; the six required procedures, a procedure for clause 6.2.2 and one for 7.4 (based upon their business needs). Most organizations should identify six to ten documented QMS procedures.

With the document list, our Quality Manual has increased by about a page. Now let’s consider ISO 9001 section 4.2.2c; the interaction of processes. This is often the most difficult task in developing the Quality Manual. Unfortunately, many organizations do not understand how their business works. My recommendation is to just do a simple overview of how the company functions and how processes interact. A good way to do this is in a flow chart or process flow diagram. A short 1 or 2 paragraph description can also be added, depending on the complexity of the organization.

Add the Finishing Touches

Now we have about a 2 to 2 ½ page Quality Manual. Stop! You are done! You have met the requirements of an ISO 9001:2000 Quality Manual. I know you want to do more. Most organizations will want an attractive cover page with the organization’s logo and/or a picture of the facility. Most organizations will typically want to have their approval signatures included in the manual and a revision history. This can be included in the manual or kept separate;it is the organization’s choice. So with a cover page, the approval signatures and brief revision history we have added two pages.

After adding these we now have a 4 to 4 ½ page Quality Manual. Are we finished? Yes! Stop! There is no need to add more. It is hard to break the paradigm of a lengthy Quality Manual, so there will be the pressure to add to it. A good Lean Quality Manual, however, should be two to five pages long. There is absolutely no reason to have an ISO 9001:2000 Quality Manual that is more than eight pages in length.

Now we have a lean and functional Quality Manual. It is easy to maintain and distribute, whether electronic copy or hardcopy, which eliminates waste. People are more inclined to actually review it due to the small size, so we have added value. It can be bound in a variety of formats for presentation to customers or sent to customers electronically. Why not go all the way and have an all electronic copy documentation system. We will discuss this further in a future article.

Now we have discussed having a Lean QMS Manual, and next week in Part II of this series we will discuss the concept of “Lean ISO System Procedures.”

Meetings are an Important Communication Tool

Many would say that meetings are a necessary evil in the business world. Meetings, however, are the most common and most critical way information is communicated in a department. It is the role of the department leader to ensure that meetings do not drag on forever and that they are conducted in a practical and productive way. Like many aspects of business, you can’t just hope good things happen by accident. You have to create a clear plan and find ways to measure how well you are executing the plan.

One of the most important jobs of a manager is to ensure lines of communication are open between you and your team. A good manager creates and then continually modifies and updates the plan for communicating through meetings. The meeting plan should be two-pronged: staff meetings and individual or project team meetings.

The Dreaded Staff Meeting

A pet peeve of mine is long, overly-drawn out staff meetings where everything everyone is working on is gone over in detail. People sit for a 1½ to 2 hours hearing about things they are not involved with just so they can contribute their 10-15 minutes worth. If you are wasting an hour of time for six people every week with this type of meeting; you are costing your department 39 man-days every year.

As the department manager it is your job to figure out how to productively execute meetings. Of course you need to have regular meetings with the whole staff, but is that the proper forum for extensive status reviews? Instead of wasting the group’s time, for staff meetings stick to the topics that affects everyone. If you want to keep everyone apprised of activity status, then keep it to a brief overview.

Meet Regularly with Individuals and Teams

Besides staff meetings, you should regularly meet with individuals and with project team members to discuss status, progress, and problems. Now is the time for detailed reports and discussions. Here is the opportunity to ensure priorities are established, decisions are made and clearly communicated, and schedules/milestones are set, reviewed, and changed. Your team members should leave these regular meetings with little doubt of how pleased or disappointed you are in their performance.

The role of these meetings is to provide the various levels of direction, mentoring, and coaching your team members may need. Let’s be honest; regular one-on-one reviews and status reports in comparison with established objectives and milestones are an important tool to keep performance and projects on-track and prevent them from ever going awry.

It’s Up to You

Allow me to reiterate that it is the manager’s job to keep the lines of communication open. The manager should schedule regular meetings as well as communicate agendas and expectations. It is also the manager’s job to ensure the meetings happen, and that they start and end on schedule. It can be very frustrating and a waste of time for a team member to prepare for a scheduled meeting that never happens. Plus, employee’s can feel uncomfortable if they are placed in the role of pestering the manager to conduct the scheduled meeting.

In so many ways, the department leader sets the tone with their behavior. This is certainly true with meetings. If the department manager is always late, is forgetful, or otherwise ignores the importance of meetings, then the staff will assume the same attitude.

It is also the department manager’s responsibility to keep meeting records, including dates, attendees, and minutes. The meeting minutes should be shared with all involved parties, especially important decisions and assigned action items. This is a positive aid in ensuring that what happened in the meeting is documented and communicated.

Meeting minutes can also serve as important records for compliance purposes. For example, they could serve as design review or vendor reviews that meet ISO 9001 record requirements. As part of the manager’s meeting plan, there should be a plan (and basic format) for how meeting minutes should appear, where and how they are stored, and what record requirement they meet.

And How Are YOU Doin’?

As with all plans and objectives, the only way to know how well you are doing is to regularly measure and compare them to the plan. For meetings, objectives could revolve around length, agendas, and carrying them out according to the schedule. If you are not doing well in keeping your meeting plan on track, then there could be a direct relationship between this and other issues with performance in the department.

Find a positive way to make meetings work for you and your department. Then your low performing team member will not be surprised by the poor review (and perhaps the poor review will even be prevented), and you won’t be surprised by a resignation letter of a top performer because they are frustrated and dissatisfied.

Another important advantage of implementing the ISO 9001 Standard is improved organizational culture. Faithfully employing the standard can actually change how people feel and behave in the organization, and how its members interact with peers, subordinates, and superiors.

Fact-Based Decision Making

Informed decision making is a key facet of the ISO 9001 Standard. Its emphasis on system and processes, objectives, record-keeping, and measurement means that information is clearly understood and shared throughout the organization; there is no perception that it is horded by a small group of decision makers. Since important information is part of regular process and management reviews, then everyone can see how it is used in decision making.

It is not uncommon for organizational members to feel that management does make the effort to collect all the key information prior to making a decision. Poor decisions lead to wasted efforts, reworking and backtracking, and worst of all, frustrated and demoralized employees. If important information is collected while executing processes, determining customer requirements, etc…, and team members are aware of the information and how it is used in the decision making process. Such an approach does wonders to gain buy-in and support of those who have to execute the decision.

Management that is long on blame and finger-pointing but short on objective facts is demoralizing to the staff. If implementing ISO 9001 can contribute to management by facts then improvement to the organizational culture is inevitable. The ISO Standard calls for clear record keeping based on stated objectives; it also calls for decisions to be made based on that information.

If an organization is properly implementing ISO 9001, then objectives are established that align with organizational priorities. Then as processes are executed data is collected (recall the emphasis on records) and shared (i.e. performance scoreboards) that clearly communicates performance relative to these objectives. Now there is no guessing about performance; it is established in black and white (or red and green) and accessible to everyone. Careful review of performance, including history, trends, connection between performance and events, can lead to improvement.

Establishing a Known Direction

As noted above, a facet of the ISO 9001 Standard is clearly stated objectives that should be based on established vision and mission. A recognized and acknowledged organizational direction with aligned, clearly defined, and communicated objectives lets organizational members know where the organization is headed and why. Looming doubts about organizational direction creates confusion and frustration; especially if the perception is that the direction is shifting or changing every other week.

A long term, stable strategy and direction is not only key for an organization to be successful – it is also key for the members to perceive that the organization has a consistent and committed course. Uncertainty creates fear. A better approach is for them to clearly understand their role and their place in the organization as it fulfills its mission and objectives.

Participative Management

Finally, most people agree that the biggest influence on organizational culture is management behavior. Not what management says, but what management does. Frequently members of an organization feel detached from management. Too often management is not very involved, or even aware of, the issues that the members of the organization face and overcome on a daily basis to make the organization function.

Management involvement is a fundamental tenet of the ISO 9001 Standard. Management has to be directly involved in creating the Quality Management System and in maintaining it. This includes regular management reviews that require management participation in organizational activities and resolving organizational issues. That kind of involvement by management produces positive results in several ways, including the perception that management cares about what members are doing at all levels of the organization.

All the records that collect data concerning performance will not be useful if management does not show they care about the data, and if they do not actively engage in using data for improvement. However, if management is actively perusing the Plan-Do-Check-Act philosophy then continual improvement will be the result.

These are just some examples of the positive effects that implementing ISO 9001 can have on organizational culture. There are other ways ISO positively influences organization culture, such as an emphasis on “fixing systems and processes,” not “fixing people.” Also, an emphasis on creating clearly defined processes with clearly defined responsibilities as discussed in the previous article.

Clearly, the ISO 9001 Standard is not just about creating meaningless compliance rules to which organizations must adhere. The bottom line is that ISO 9001 is a management tool used to continually and incrementally improve organizations in several ways;.streamlining processes and documentation, improving competitiveness, and improving how all members feel about their role in the organization. These are all important benefits that can be gained though sincere efforts to implement ISO 9001.

If you are interested in using ISO 9001 to improve you business Bizmanualz can help with off-the-shelf manuals, training, and consulting.

Aligning vision and mission statements that express the guiding principle and how to fulfill it are, of course, the ideal situation.  A frequent problem with this exercise is that an organization’s leaders do not truly understand the importance of a vision statement or recognize its value.  In these cases they come up with something that sounds good, or states what they want people to believe about their organization, or, even worse, simply spouts marketing drivel.  This approach to the vision statement can actually be a detriment, not a benefit, to the organization.

A Guiding Principle

The vision-mission statement is written for the members of an organization.  A clear vision statement should serve as a guiding light for members of the organization to understand what the organization is about, and to what ultimate principle all their efforts should be working toward, in both direct and in supporting roles.  Clear, accurate, reflective vision-mission statements are a crucial way of getting all members of an organization to pull in the same direction.  Those outside the organization should be a secondary audience.

A less than sincere vision statement can actually create problems in an organization instead helping it.  Members of an organization will know when vision statements do not really express the real core values (what is important) or principles of the organization.  They will see the statement as, at best, meaningless, and, at worst, a lie.  What effect do you think this has on the credibility of the organization’s top management?

Inconsistencies Cause Confusion and Waste

Let’s consider an example when is comes to sincerity and honesty in a vision statement.  Frequently, an organization might put something like “to provide the highest level of customer service” in a vision statement.  A problem might arise when an organization’s real ultimate goal is not the best customer service, but to maximize profit margins.  While many organizations have such a core purpose, they are not willing to be forthright in their vision statement.  Therefore, they come up with an artificial vision statement that confuses employees.

Providing top notch customer service, for example, is expensive.  It requires the customer service staff be well trained, well-compensated, have decision making authority, and feel like they are an appreciated and important part of the organization.  A commitment to high levels of customer service can certainly lead to increased sales and to growth.  Training, and compensation, however, are expensive propositions can also negatively impact short term profit margins.

Organizations stating a vision of excellent customer service while really seeking high profit margins have a serious compatibility and consistency problem.  For example, having underpaid, poorly trained, and stressed out customer service representatives with high turnover rates and no real authority is not the path to excellent customer service.

If the real vision is high profit margins, then that is what the vision statement should say.  Then at least the underpaid, under-trained customer service staff will understand their conditions, instead of looking with bewilderment at the vision statement promising excellent customer service.  Not only will they understand the vision and mission of the organization, they will be much more likely to behave in ways that fulfill the true goal of the organization

It is not that the leaders of the organization are typically tying to be deceptive, nor do they intend to confuse their staff.  As stated earlier, the problem typically stems from a lack of understanding of what the role of the vision statement is and its importance in communicating core values within the organization.  We hope examining an example of a misleading vision statement clarifies its significance and impact.

A New Vision with a New Year

Just as an insincere vision-mission can confuse members and cause inefficiencies and waste as they try to fulfill a vision that doesn’t really exist, a sincere statement of vision and mission puts employees on the same page as management.  If there is coherency and consistency between what management says and how management behaves, then members will more clearly understand what the organization is about, and they will be much more likely to behave in ways that fulfill the true goal of the organization. (Even if that is to deliver bad customer service in order to maximize profits, if that is what the organizational leaders really want.)

Creating a sincere, honest statement of vision of what the organization is and can be is an important step in getting your organization to pull together.  The first step in creating a sincere vision statement is for the leadership to spend some time reflecting on what their vision for the organization is.  Then, once crafted, it should be clearly communicated to all levels of the organization.   If you start now, you could be ready to roll out your new vision-mission statement with the New Year.  But it is important to create a vision-mission statement to last for the foreseeable future.  Constantly changing vision-mission statements can be as confusing as misleading ones.

Now we have defined terms and discussed the importance of vision-mission statements.  Next week we will tackle goals and objectives.

For a deeper understanding of process improvement programs for your organization, attend the next Implementing Lean Thinking or How to Align a System of People and Processes for Results class. If you are eager to learn more about creating more order out of the chaos you are feeling at work, then the How to Create Well-Defined Processes class is right for you.

To learn more about using effective auditing techniques to improve your organization, attend the next Internal Auditor or Lead Auditor Training Class.

At Bizmanualz, our mission is to help businesses and organizations improve through helping them implement innovative techniques and proven best practices. That philosophy carries through our manuals, our training classes, and our consulting efforts.

What kind of business improvement company would we be if we never applied this philosophy to our own organization?

In this series of articles we will discuss several things we have done as part of our “Improvement Journey.?? We feel that this phrase really describes our improvement philosophy: improvement is not a single event or action: improvement is a continual process that is part of everyone’s daily job and responsibility.

Envisioning a Lean Machine

Our manual series is a key product line at Bizmanualz. Our manuals provide policies, procedures, and forms addressing functions that exist in virtually any business – Accounting, Human Resources, Sales & Marketing, Computer and Networking, etc;. A CD containing procedures and forms in Microsoft Word format is included with each manual, so you can easily edit and modify our procedures to fit your needs. We produce these manuals and CDs in-house.

Sometime ago it was apparent that there was room for improvement in the production area, where the manuals and CD are produced, stored, and packaged. A period of growth had left the production area somewhat inefficient and unorganized. While we consistently met our goal of same day shipping; the time, effort, and inventory needed to achieve that goal did not truly align with the philosophy of a “lean production?? environment.

Involvement and Buy-In

Such a focused improvement project begins by involving those who work in the area every day. An ethnographic approach is useful – observe and interview. Take meticulous notes on what you find, and then organize and highlight the notes to look for recurrent themes and important issues. Talk to the department or section suppliers and customers, both internal and external. Then review what you have learned with the associates who work in the area.

Be particularly sensitive to the fact that you are tinkering with what they do on a daily basis. Don’t make them feel that what they have been doing was wrong or bad. Put the focus on improving in ways that will make their job easier and more enjoyable.

Remember that the people who work in the area will know the best ways to improve it, plus they will be the ones using (or not using) the new system daily. By spending time and talking with them you will learn their ideas to make their job easier and more productive, and those discussions will likely be the foundation for any positive contribution you may have. Directly involving the people who work in the area not only reveals the best approaches for reorganization, but it also improves buy-in to give the improvements a chance to stick over the long haul. (The odds are that after a fly-by re-engineering, once the turbulence and roar of the engines subside, the old way of doing things will return.)

In-Depth Evaluation and Clear Goals

After deciding the production area needed a focused improvement project, the improvement coordinator spent 3 days in the production area before suggesting or touching anything. First, a current state map was produced, which was used to identify clear goals that included eliminating excess work in process and inventory, reducing production errors, and improving machine effectiveness and reliability.

After information was collected and clear goals were set, a future map was drawn identifying the lean improvement principles that could be applied to achieve our goals. This included using leans tools such as;

• Five S & Visual Workplace
• Kanban
• Value Stream Mapping
• Poka Yoke
• TPM
• Facility Design
• Standard Work

The Benefits of Improvement

The positive effects of the focus on improving the production were noticeable and measurable. Benefits not only included a clean, inviting workplace and more satisfied employees, the lean improvement results included:

• A 75% reduction in finished product inventory (from 17 days to 4.5 days stock)
• A 50% reduction in production time
• Increased machine reliably from 83% to 95%
• Reduced transportation effort and time by 80%
• A virtual elimination of packaging errors and rework

While a focused project can bring noticeable improvements, the activity does not stop there. Continual improvement mechanisms like training, Kaizens, corrective action teams, and management review meetings will reinforce the improvements and keep the improvement efforts flowing.

Now the focus of improvement at Bizmanualz is on the Sales and Marketing pipeline, and that will be followed-up with a focus on Development functions. After all, improvement and quality should not be just about the production line. Lean tends to be focused on production because waste and inefficiency is so obvious in the form of inventory, scrap, rework, and work in process. Waste and inefficiency exist in the office area as well; it is just not as easy to see.

If you are interested in lean philosophies and tools, then attend our Lean Thinking class. In the meantime, Bizmanualz continues on its improvement journey. Next week we will talk about the Bizmanualz Kaizen process.

End-to-End Process Design

Your end-to-end process is comprised of four major areas: New Product Introduction, Inquiry to Order, Order to Remittance, and Customer Improvement. These four areas represent your company; how it satisfies your customers and makes money.

For each area we need begin to understand the flow:

• How many advertising impressions does it take to obtain an inquiry?
• How many inquiries need to be qualified to become leads?
• How many leads are needed before we can quote some business?
• How many quotes does it take to get an order?
• How many orders will reorder?

This is the basic description of your end-to-end process. In sales we call this the sales pipeline. However, this is more than a set of sales pipeline metrics; it is a description of your business model itself. Now, if we also track the defects that occur at each stage of the process, we can calculate the capability of our business model, or how good we are at getting and pleasing customers. Let’s examine each one to see how this information supports our strategy.

New Product Introduction

How do people become aware of your products? Typically this is done through marketing. But how good is your marketing? We only know how good it is if we examine the whole system. Does your marketing produce good leads for sales? Do your sales people provide feedback that allows you to improve your marketing?

Once you have begun to understand your marketing system, its effectiveness, and how it interacts with the other parts of the system, you are starting to understand how your strategy will work or not work. Areas of concern should be noted on an action items list, which we will discuss next week.

Inquiry to Order

How do you handle leads? Are leads qualified and developed into clear opportunities? Are you producing cash fast enough? What is your conversion rate from inquiry to lead to quote to order? Have you compared this to other companies, competitors or industries? If not, then how do you know if your strategy is any good?

Order to Remittance

What is your process for fulfillment? Have you measured your on-time delivery, % compete orders, quality and looked at your inventory? High inventory turns implies a good strategy to align all of the processes within your company. A good leadership strategy incorporates all of your critical processes.

Many companies focus 99% of their effort on the order to remittance process. You will probably find most of your lean and six sigma improvement efforts here too. Why? Because it is the most obvious place to find waste, see waste, and the easiest to remove waste.

The only problem is that this is not where you find 99% of the waste. For most companies there is more waste in the other three processes, but many managers do not know what to look for. As a result, it is not considered for improvement or incorporated into strategy efforts.

Customer Improvement

How do you keep your customers happy enough to re-order? This is about more than just a customer satisfaction survey; we are talking about working with your customer to improve their business. At General Electric they call this “At the Customer for the Customer.” GE provides training and assistance, often at no charge, in order to improve a customers business, save them money, and build a stronger relationship.

Current six sigma thinking introduces this external customer focus as a way to contract the entire supply chain from the supplier to the customer. If you want to really improve your organization then at some point you will have to move outside your own company and incorporate your suppliers and customers in a much closer (read trusting) supply chain relationship than you can imagine.

Once you have done this, then you are able to truly create a strategy with a competitive advantage. After all, isn’t this what strategy is all about ?

Next week we will look the action steps your organization needs to take to build your business model and achieve your vision.

To learn more about using process improvement programs for your organization, attend the next How to Align a System of People and Processes for Results class. If you are eager to learn more about creating order out of the chaos you feel at work, then the How to Create Well-Defined Processes class is right for you.

ISO 9000 Quality Auditor classes are forming now for Internal Auditor or Lead Auditor. Call for information on having private in-house training classes today.