Iowa State University of Science and Technology Chad Laux Agriculture and Biosystems Engineering Industrial and Agriculture Technology 9/27/05 The Impact of Quality Management Systems

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

Background 2 nd 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

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?

Main Research Question How has ISO/AIB impacted FC’s 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.

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

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

Out of Scope (Charter) Study of ‘Enabling’/supporting FC processes Capital expenditures w/o prior approval Hiring w/o prior approval

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

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

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?

Utilize Business Process Management (BRM) in QMS study –Identify business’s 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 Methodology

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

All FC QMS Documents

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

Core Parameters Focused on ISO 2 nd 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

Farmer’s Coop Core Areas At minimum: Receiving/grading Storage Shipping

Core FC Processes Control of Nonconforming Grain Final Inspection In-process Inspections Preservation of Grain-Bulk Grain Shipping Preservation of Grain-Storage Areas Preservation of Grain-Handling and Preservation Identification and Tracking-Inspection and Grading Identification and Tracking- Grain Identification and Tracking Control of Operations-Release & Post Shipping Control of Operations-Loading Order Verification of Purchased Product Order Processing for Gain Shipments Shipping Storage All 3 Shipping Receiving Shipping

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 ResourcesTraining/DevelopmentInformation TechnologyCompensation & LegalAdministration

Process Approach Mapped Core FC Processes using a SIPOC diagram to learn about the system Analyze Core level relationships – gaps? Identify Measures from SIPOC’s

Define Business as a Process Process – a set of interrelated or interaction activities, which transforms inputs into outputs PROCESS OUTPUTINPUT

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.

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

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?

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.

Analyze Relationships The systematic identification & management of various processes employed w/in an organization, especially, the interactions between processes. PROCESS INPUTOUTPUT PROCESS INPUTOUTPUT PROCESS INPUTOUTPUT CUSTOMER ORDER CUSTOMER DELIVERY ISO 9000:2000 based on this premise PROCESS OWNER #1 PROCESS OWNER #2 PROCESS OWNER #3

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 customer’s requirements (% yield, Cp ratio, etc.) Using SIPOCS, process experts, we’ll ID existing data that provides indicators of performance

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

Cause and Effects Quantify relationships between financial and process indicators using statistical analysis Y = f(X 1 …X n ) FinancialProcess

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:

ISO Impacts Analysis SVDF QMS1 Error QMS 12 Time3 Time*QMS3 Error Time 36 Total58 Repeated measures design: –Trts: ISO, AIB –4 measured time periods –7 locations Compare measures among QMS/non- QMS locations

Questions