Capacity Planning For 1st-Responders

Early in my consulting career, working with Kei Abe, I was surprised to hear him make seemingly contradictory recommendations about the organization of maintenance in a small auto parts plant and in a large car assembly plant. In both, the managers were thinking of splitting the maintenance group into smaller teams, each dedicated to a production line.  In the parts plant, Kei Abe talked them out of it; in car assembly, he supported it. When I asked him why he just said: “the parts plant is too small.”

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Why we Need a Quality Department

Implementing Lean in a factory does not result in disbanding its Quality department. Even in organizations where all members are responsible for the quality of their output, you still need a quality department to (1) interact on quality matters with customers and suppliers, (2) organize and lead the organization’s response to quality emergencies, (3) monitor quality practices inside the organization and raise alarms when they slip, and (4) watch for new developments in technical tools and methods of quality management. Compared to the Quality Assurance(QA) department of a mass production organization, with its emphasis on inspections done by QA technicians, the Lean quality department has about half the size and twice the authority. The real question is not whether the Quality department should exist, but what its role should be, who should work in it, and how large it should be.

1. Participants

What follows is a summary of my posts in a thread from the TPS Principles and Practice discussion group on LinkedIn, started by , who asked whether we need to have a Quality department at all.. He thinks we don’t.

Other participants included Bill Austin,  Javier Gonzalez, Kris HallanFrederick Stimson HarrimanJeff Johnston, Ph.D., Daniel LangManikandan Manoharan,  Roy McFarlane CEng MIETMarc Rose, and Bill Shump.

2. The Duties of a Quality Department

Customers issue quality problem reports to the company, but not to the manager in charge of a shop floor operation. These reports land in the Quality department, which routes them where needed and reports back to the customer on countermeasures and permanent solutions in the format mandated by the customer. And the shoe is on the other foot with supplier quality problems.

In emergencies, the Quality manager has the authority to stop production, and organize recalls. When you respond to a quality emergency, external and internal quality have to be managed jointly, because you simultaneously have to interact with aggrieved customers, stop further shipments of defectives, and solve the problems that caused them.

During product launches, the Quality department sends technicians to dealership to observe customer returns, and customers’ reactions to the product’s features. Not all companies do this, but it is a sound practice, which results in detecting and solving problems early.

In response to customer mandates, the Quality department ensures that the company is properly certified. Some customers will mandate that your company be ISO certified. It does nothing to improve quality, but it is a cost of doing business. Someone has to be in charge of ensuring that you get and keep that certification, and that job usually falls to the Quality department, to minimize the impact on everybody else.

Management changes and employee turnover always put the company’s quality practices at risk of slipping, and it is part of the quality department’s job to keep this from happening, and make sure that up-to-date instructions are posted, that instruments and gauges are properly calibrated, and that mistake-proofing devices are not cast aside.

Finally, quality practices evolve. New technology appears, be in auto-ID or analytics; new management methods appear like Toyota’s JKK (jikotei kanketsu, 自工程完結,  or “autonomous process completion”) or Nissan’s QRQC (Quick-Response Quality Control). It’s the Quality department’s job to know what these are and recommend the implementation of relevant innovations in the company.

3. Who is Responsible for Quality?

The problem is not the existence of the quality department but the tasks it has been traditionally assigned, essentially relieving production of responsibility for quality. You could produce defectives and rely on inspectors from the quality department to filter them out. Then, when defectives escaped to customers, it was the inspectors’ responsibility. We now know that it is more effective to make everyone responsible for the quality of their own output. Even when you use a machine or assemble purchased components,you are supposed to take action as soon as you notice defects, for example by stopping the line.

In the 1960s, Volkswagen used to brag about inspections

In society at large, it is fair to say that fire prevention is everybody’s responsibility, but it doesn’t mean you do without professional firefighters. No matter how dedicated everyone in the company is to quality, you will still have instances like horse meat mixed with beef in processed foods, unintended acceleration in cars, or rockets that blow up. The question is: who is the first responder? A problem report arrives from the outside world. Who receives it? There has to be a department within the company to take these calls, take immediate countermeasures, organize the search for a permanent solution, and communicate back with customers.

There is plenty of other work to do to achieve and maintain quality. Does it ever stop? You start a new fabrication process with, say, 30% of defectives. You bring it down to 3%, then .3%, then 500 ppm, then 20 ppm, then 1 ppm… And whatever quality you achieve, you must maintain it, as new people join the production team while machines and tools age. Meanwhile, the external mandates don’t stop. And then you have to start over with the next generation.

We may not like having a Quality department, but we will have it as long as there is work to be done in that area that requires a special set of skills and is best done centrally as opposed to delegated to all other departments.

4. Quality and Public Relations

Another responsibility with respect to the outside is nurturing the company’s reputation for quality which, in many markets, is its crown jewels. Delivering high quality is not enough; excellent performance also has to be publicized, and reputation sometimes defended against attempts by competitors to besmirch it.

There have been cases of competitors making and selling defective copies of a company’s products in order to ruin its reputation. 100 years ago, NCR did it to corner the market for cash registers. 40 years ago, a supplier of taxi meters was driven out of the Egyptian market when taxi drivers started reporting malfunctions, which in fact were in counterfeit meters designed to fail.

Today, social media on the web are an arena where a company can receive not only genuine feedback on quality, but also be the target of malicious campaigns.

The ideal state is something you move towards in your internal operations, the part of the world that is under your control. The external environment is not under your control. You can wish for it to be different and better, but you have to deal with the way it is.

5. Internal versus External Responsibilities

The initiator of the discussion, , kept bringing it back to only actions that can be taken inside the organization — on production lines or in product design — to satisfy only one external constituency — customers.

In fact, managing quality requires you to take many actions that involve external interactions — like monitoring product launches or organizing recalls — and it involves multiple constituencies — including not only customers but also suppliers, complementers, competitors, and government.

That you need to worry about supplier quality is obvious. Following Abhijit’s reasoning with respect to production line managers, supplier quality should be left up to purchasing. But Purchasing is not properly equipped to vet potential suppliers for their quality or help existing suppliers improve theirs.

Complementers are companies that sell to your customers products that enhance the value of yours. If you sell computers, vendors of software that runs on your computers are complementers. These are companies you make alliances with. They have a stake in the quality of your output, as you do in theirs.

Competitors do not always have an interest in hurting your reputation for quality, for example when there is an overriding need for the public’s trust in the entire industry. Airlines do not try to raise doubts about the practices of other airlines, because they would suffer too if the public lost its trust in aviation. In this case, you need to organize some level of collaboration with your competitors, for example through industry groups or professional societies.

And government may step in with regulations if quality problems with your products put the public at risk.

For all these reasons, most organizations find it necessary to have a quality department.

6. The Quality Department at Toyota

As a few Google searches confirm, Toyota has a “Chief Quality Officer” for North America and a Quality division. The following is translated from a 2012 report on the Toyota website:

“COMMITMENT TO QUALITY

Basic Approach for Quality
Quality is achieved by cooperation among, design/development, procurement, production, sales, and customer service. If efforts are missing in any one of these areas, we cannot satisfy our customers, and it is not possible to deliver the quality.
And to practice “customer first” and “quality first” in order to go continue to meet the expectations of customers and society, each employee in each field has a very high awareness of the issues. We will strive to improve in each field and in cooperation with the other fields to improve customer satisfaction.

Customer First Promotion Headquarters (CF Headquarters) to strengthen and promote customer-first, and quality-first activity

[,,,]Customer service and Quality Assurance were integrated into the CF Headquarters in April 2012 […]”

Toyota had a quality emergency in 2010, and did not respond by disbanding its quality function.

7. Quality and Job Rotations in Support Groups

There is an assumption in many of the discussion’s posts that whoever works in quality is a specialist who doesn’t know production. It is in fact a common way to run organizations where people move from one support department in one company to the same department in another, allowing individuals to spend there entire careers in just quality, or just production control, or just IT.

While this is expected to result in a higher level of specialized expertise, it does not promote mutual understanding and cooperation across departments. Among the many possible countermeasures is the systematic rotation of some employees between departments every few years.

It is common in Japan. When doing business with Hitachi, I worked with a person in Production Control who had been a Design Engineer for 5 years and, as a result, had no problem understanding engineering issues. Working in the quality department does not have to be a lifetime commitment. You can come from Production, spend a few years in Quality, and go on to Maintenance.

People who rotate in this fashion may have a lesser depth of specialized technical knowledge but more perspective on how the organization works. Incidentally, this practice makes them both more valuable to their current employer and less to others.

Of course, nothing works perfectly and everywhere. Rotating high-potential individuals in this fashion is done with varying degrees of effectiveness worldwide. In a European multinational, I met a German engineer who was doing a great job as a production supervisor in Italy, and accumulating experience that was preparing him for bigger jobs.

But there are also companies where the tours of duty are too short for the individuals to be committed, and where they are rewarded for not making waves. In such cases, the rotation policy does not do much good.

8. Centralized versus Distributed Organization for Quality

In almost every support function, the same tension exists between forms of organization. Should this particular form of support be provided by a department of specialists for the whole organization, or should it be distributed and put under the responsibility of line managers? You have the same dilemma in quality, engineering, maintenance, production control, information technology, … and there is no single, universal answer.

The department of specialists is criticized as being bureaucratic, out of touch with the needs of the production floor, and managed in pursuit of goals that may not be in line with those of the business as a whole. But when you break it up and assign its members to production lines, you may make it impossible to assemble the critical mass of support needed to solve a particular problem, and you have these specialists report to bosses who do not understand their specialty, which causes retention problems.

As Kris pointed out, the size of the organization matters. The smaller it is, the more hats each member has to wear. As a rule of thumb, if the entire management team fits in a small conference room, you don’t have the problem of centralized versus distributed organization.

In larger organizations, the policy I described earlier of rotating some of the professionals between departments in one approach. A matrix structure is another. In it, you have each professional reporting “solid-line” to an operational manager and “dotted-line” to a functional manager of the same specialty, who can provide guidance in career development and skills maintenance.

As an engineer supporting a production line, you report to the line manager, but also stay connected with an engineering manager who can help you stay current with technology, attend appropriate conferences, receive continuing education, and figure out how to get where you can be 5 years from now.

On a case by case basis, you have to consider the nature of the support that is needed. How deep is the required specialized knowledge? You would not rotate people between open-heart surgery, rocket science, and baseball, but maybe you can between production control and quality assurance.

Other questions include:
o What is the work required?
o How much work is there?
o How variable is the work load?
o Is it all internal, or does it involve interacting with customers, suppliers, government agencies, etc. ?

You can’t have a one-size-fits-all approach, and cannot look to organization structure for perfect solutions. In the end, smart, motivated, ethical people will find a way to function in spite of the organization structure. As far as I can tell, if you just look at organization charts, the support structure at Toyota looks traditional.

Silos, “Value Streams,” and Lean Implementation

The on-line chatter about Lean is all about how you need to break down functional departments — or silos — and organize the company around “Value Streams” that encompass all the resources needed to fulfill orders for a product or product family, and are close cousins of BPR’s business processes and Wickham Skinner’s focused factories. When discussing implementation, however, the same value stream boosters/silo busters recommend that you start by setting up a “Kaizen Promotion Office” or “Lean Department.” This reminds me of the 1980s BBC series Yes Minister, in which an effort to streamline government starts with the creation of a new “Ministry of Administrative Affairs” and the hiring of 25,000 more civil servants to do the streamlining.

While it is ironic to create a new functional department while talking value streams, it reflects a reality: the notion of organizing everything by value stream is simplistic. As discussed in my comments on Deming’s exhortation to break down barriers between departments, there are many activities in a manufacturing organization that we cannot or should not distribute among value streams, including the following:

  1. Processes like heat treatment, painting or plating that we have to operate as common services performed on monuments for multiple value streams because we technically do not know how to execute them on smaller machines that can be dedicated by production lines.
  2. Support services like maintenance that require a minimum number of members of members for at least one to be available when called. If you have 20 technicians in a central maintenance department that are busy 80% of the time, then at least one will be available if a machine breaks 1-.8^{20}=99\% of the time. If you split this department into 4 groups of 5 technicians each assigned to a value stream, then, if a machine breaks down within any value stream technician availability will be reduced to an unacceptably low $latex 1-.8^{5}=67\%$ of the time.
  3. Support services that deal with external entities on behalf of the whole company or plant, like Quality or Safety for certification, or Shipping and Receiving with truckers.
  4. Support services whose job it is to maintain a common environment for operations, such as technical data management or IT.

As for the Kaizen Promotion Office or Lean Department, mission creep all too often takes it from a feasible facilitation and communication role to a direct implementation role, which is hopeless because:

  1. The operations groups have no ownership of the changes made by the Lean Department, do not understand them, and frequently reverse them as soon as they have a chance.
  2. The Lean Department cannot be large enough to have the capacity to do everything that is needed.

For the changes to happen and to stick, there is no alternative to leadership from within the organizations responsible for the target operations and participation by individuals who are directly affected.