The Global State of EQMS
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Transcript of The Global State of EQMS
Global State of EQMSMatthew LittlefieldPresident and Principal Analyst
#GlobalEQMS
EQMS Adoption
Major adoptions of EQMS is coming.
#GlobalEQMS
Agenda
• About LNS Research
• Why Quality Matters
• Benchmark Data
• Strategic Objectives
• Our Biggest Challenges
• Building a Model of Operational Excellence
• EQMS Best Practices
• Recommendations for Success
#GlobalEQMS
Understanding LNS
LNS is research and advisory firm that helps clients innovate and achieve operational excellence.
We deliver the market intelligence and thought leadership needed to capture the value of technology through:
Experienced analysts
Primary research
Deep industry contacts
Interactive data visualizations
#GlobalEQMS
Global Quality Advisory Council
Starbucks - VP of Global Quality and Regulatory Affairs
Onyx Pharmaceutical - VP of Global Quality
Whirlpool - Director of Quality
Lindt Chocolate – VP R&D and Quality
Oriflame - Corporate Quality Lead
Champion Technology - VP Quality and EH&S
Gurwitch Products - VP Research and Quality
Newell Rubbermaid - Director of Quality
Hygia Health Service - VP of Operations
Discount Tire - VP of Quality
Daikin McQuay - Director, Corporate Quality
Bio-Rad Laboratories – Director of Quality Assurance
Owens-Illinios – VP of Global Quality
Harley Davidson – Director Corporate Quality
Alcoa – Director Corporate Quality
#GlobalEQMS
Research Model
#GlobalEQMS
Research Demographics
• 450+ Respondents to LNS Research Quality Survey from June 15, 2012 – March 31, 2013
#GlobalEQMS
Why Quality Matters
#GlobalEQMS
The Changing Customer and Speed of News
Changing preferences regarding where news is received, where research is conducted, and how opinions are formed
LA Times, Boston Globe:For Sale
Google Reader:Shuts Down
Facebook and LinkedIn:News Feeds Transformed
#GlobalEQMS
The Changing Customer
Social Proof is the New Paradigm
• People are starting the buying process online
• Everything is ranked, rated, and reviewed
• Buyers are interested in what others are interested in
• They trust other people in their network
• Good and poor quality are hard to hide
Breaking News: Company X Recalls 1,000,000 Cars in U.S.4/4/13Boston, MA – After several incidents, Company X has decided to recall model 302z from its 2010 fleet. Ownersare asked to return their automobiles to dealers for faulty
#GlobalEQMS
Global Scale for Products and Operations
275 subsidiary companies, in 60 countries with 146 manufacturing sites
250+ brands, 26 Billion Dollar brands, 100+ manufacturing sites, consumers in 180 countries
50+ manufacturing sites in 25+ countries with almost 10,000,000 units sold across 70 models
#GlobalEQMS
Top 5 Financial Objectives
• Growing revenue is top for the majority of all companies
#GlobalEQMS
Top 5 Operational Objectives
• Improving manufacturing efficiency is top but not well aligned to financial goals
#GlobalEQMS
Top 5 Quality Management Objectives
• Quality goals are synched with operations but not necessarily financial goals
#GlobalEQMS
Top 5 Quality Challenges
• The top challenges are around Culture, metrics, and systems - all important elements of Operational Excellence
#GlobalEQMS
EQMS Explained
#GlobalEQMS
Why Enterprise Quality Management Software
• Disparate systems and business process
• Lack of visibility into performance, compliance, and risk
• Nearly impossible to collaborate across departments, trading partners, or the supply chain.
• Quality and non-conformance data, as well as best practices, are not shared across the organization
• Connecting Risk and Compliance as part of a quality platform
#GlobalEQMS
Current System Landscape
• ERP – Financial data, inventory data, production routings, recipe management
• BI – Reporting, Analytics, Visibility
• CRM – Customer complaints, trade promotions
• PLM – Labeling management, packaging management, quality specifications, sampling plans
• LIMS – Measurements and testing of Fats, solids, bacteria counts, etc.
• MOM – In line and at line testing, statistical process control, manufacturing non-conformances
• SCM – Supplier risk scorecards, delivery scheduling, inspection
• EHS – Carbon management, energy management, reporting
#GlobalEQMS
EQMS Architecture
#GlobalEQMS
Adoption of ERP
• ERP is well adopted across the industry
#GlobalEQMS
Adoption of BI
• BI is emerging, complements data and reporting in ERP
#GlobalEQMS
Adoption of EQMS
Major adoptions of EQMS is coming.
#GlobalEQMS
Adoption of EQMS of Functionality
• Because, Life Sciences companies view functionality as disparate systems: Doc Control, CAPA, Compliance, Risk and more
#GlobalEQMS
Interconnecting Quality Processes
Identification Investigation Escalation Correction Prevention Efficacy
Assess Quantify Prioritize Mitigate
Establish Criteria Assessment Reporting Communication Follow up
Design Monitor Control
CAPAProcess
RiskManagement
AuditManagement
GoodManufacturingPractices
#GlobalEQMS
Proving the Value of EQMS – Metrics that Matter
#GlobalEQMS
Understanding a Box Plot
Box plots help to easily visualize the distribution of benchmark survey data
#GlobalEQMS
PROCESS HEALTH
Use of FMEA and ECO
Supplier Audits
Product Compliance
CAPA Closure
Customer Complaints
Leading and Lagging KPIs
PROCESS RESULTS
Engineering Change Orders
Supplier Defect Rate OEE On Time
ShipmentsSuccessful
NPI
#GlobalEQMS
The Cost of Quality
• CoQ = CoGQ + CoPQ
• More than just failure costs
• Measured as a share of revenue for benchmarking purposes
• Can be thought of as an optimization problem – non linear
• Is a major contributor to operating margin
©LNS Research 2013
#GlobalEQMS
The Cost of Poor Quality
©LNS Research 2013
• CoPQ = IFC + EXC, where:
• IFC = Internal Failure Costs = Scrap Costs + Rework Costs
• EFC = External Failure Costs = Returned Product Costs + Warranty Costs + Product Recall Costs
#GlobalEQMS
The Cost of Good Quality
©LNS Research 2013
• CoGQ = AC + PC, where:
• AC = Appraisal Costs = % of labor, software, and equipment costs focused on appraisal activities
• PC = Prevention Costs = % of labor, software, and equipment costs focused on prevention activities
#GlobalEQMS
The Cost of Poor Quality
©LNS Research 2013
• Measured as a % of revenue.
#GlobalEQMS
The Cost of Good Quality
©LNS Research 2013
• Measured as a % of revenue.
#GlobalEQMS
Overall Equipment Effectiveness (OEE)
• Measures availability, efficiency, and quality (differs by company)• Must be put in context of supply chain
#GlobalEQMS
Improving OEE
• Establishing quality as a top executive priority improves median OEE by over 9%
#GlobalEQMS
Improving OEE
• Establishing real-time visibility of quality metrics in manufacturing improves median OEE by >7%
#GlobalEQMS
Improving OEE
• Establishing closed-loop processes to connect quality across the value chain improves median OEE by >9%
#GlobalEQMS
Improving OEE
• Implementing EQMS improves median OEE by >7%
#GlobalEQMS
Complete and On-Time Deliveries
• Percentage of products delivered on time with no errors or re-promise dates
#GlobalEQMS
Improving On-Time Deliveries
• Ability to identify risk factors across operations improves median OTD by >3%
#GlobalEQMS
Improving On-Time Deliveries
• Establishing closed-loop processes to connect quality across the value chain improves median OTD by >3%
#GlobalEQMS
Improving On-Time Deliveries
• Collecting quality data automatically through a web-based portal improves median OTD by >3%
#GlobalEQMS
Successful New Product Introductions (NPI)
• Measures the number of new products introduced hitting time, volume, and quality targets
#GlobalEQMS
Improving New Product Introductions (NPI)
• Establishing a formal risk management framework improves median successful NPIs by >32%
#GlobalEQMS
Improving New Product Introductions (NPI)
• The ability to identify risk factors across operations improves median successful NPIs by >24%
#GlobalEQMS
Improving New Product Introductions (NPI)
• Including suppliers in design for quality initiatives improves median successful NPIs by >9%
#GlobalEQMS
Improving New Product Introductions (NPI)
• Establishing real-time visibility of quality metrics in manufacturing improves median successful NPIs by >16%
#GlobalEQMS
Percentage of Products in Compliance
• Measures effectiveness of internal education programs/SOPs
#GlobalEQMS
Improving Products in Compliance
• Easily understood compliance processes improves median Products in Compliance by >5%
#GlobalEQMS
Improving Products in Compliance
• Establishing closed-loop processes to connect improves median Products in Compliance by >3%
#GlobalEQMS
Improving Products in Compliance
• Establishing a formal NC/CAPA process improves median Products in Compliance by >3%
#GlobalEQMS
Improving Products in Compliance
• Establishing a formal audit management process improves median Products in Compliance by >3%
#GlobalEQMS
Recommendations for Success
• Define the role of quality in your company’s strategic objectives.
• Identify the relationships between leading and lagging KPIs across the value chain
• Benchmark performance in KPIs and track progress
• Create closed-loop quality management process with EQMS
• Integrate quality business processes, like: CAPA, Audit Management, Risk Management, and more
#GlobalEQMS
Thank You!!For More Information -
Contact:Matthew LittlefieldPresident and Principal [email protected]