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ntributed 6/5/99 by Pat Cordon email: [email protected]
siness Efficiency Methods:
lanning:
eview Operating Statements
nd Identify Areas That Offer Best Cost Reduction Potential
low Chart All Major Areas
roup Related Functions Under The Same Supervision
horten The Chain Of Command
efine Responsibilities And Authority; Eliminate Overlaps
ecentralize And Or Centralize Operations As Appropriateevelop A Profit Planning Program For Employees
Measure Benefits Before Spending
Make Employees Plan Major Jobs In Advance Of Implementation
efer All New Actions Until The True Needs Are Determined
educe All Committees And The Length Of Each Meeting
ave An Annual Cost Reduction Suggestion Program
esults
nalyses Of Departments And Activities:
s All Departments Necessary? Should Any Be Added?
re All Officers And Jobs Necessary?
s The Company Magazine Necessary?
s Company Sponsored Organizations Necessary?
stablish A Word Processing Center
educe Central Filing
entralize Office Services
valuate All Major Cost Programs
eview The Need For Institutional Type Advertising
liminate Duplicate Records. Put A Price Tag On Each Report Issued. The Information Will Be Surprising
eview All Scrap; Determine If Any Scrap Value Can Be Realizedesults
ersonnel:
et A Good Example For Your Staff
romote From Within To Improve Morale
nstitute A Hiring Freeze For Short Periods
eview Manpower Requirements Periodically
eview All Education And Training Programs
ave Period Performance Reviews
equest Periodic Time Distribution Reports From Employees
esults
fficiency:
tart And Leave Work On Time
tilize People To Full Capacity And Qualifications
ermit Carryover Of Work Lad And Level Out Peaks
educe Overtime By Better Scheduling And Prioritizing Work
eview All Form Designs For Efficiencyeview Quality Of Office Equipment
tandardize Equipment
se More Estimates In Accounting
ave Cycle Billings
lose Manuals Quarterly; Use Estimated P&L Statements Monthly
educe Quantity Of Reports
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esults
utside Services:
ire Temporaries For Emergencies; No Overtime
tilize A Auditor's Free Technical Service
ut Out Professional Services Where Possible
o Your Own Building Maintenance
se Bank Facilities To Accumulate And Pay Freight Bills
se Bank Facilities To Mechanically Reconcile Bank Accounts
elf Produce Costly Supplies Or Materials Needed
esults
ommunications
eview All Communications And Facilities
tart A Telephone Expense Reduction Campaign
educe Switchboard Hours; Close Board Earlier
se One Central Mailroom Only
stall Inter-Office Mail And Messenger Service
echanize Mail Processing
se Lowest Class Mail Rate When Feasible
se Lighter Paper And Envelops
on't Use Separate Envelops On Inter Office Mail
ail Dividend Check With The Annual Report
liminate The Second Proxy Mailing
on't Mail Statements To All Customers
educe Size Of Mailing Lists
on't Use Express Mail Unless Necessary
esults
eetings And Travel:
trictly Regulate All Travel
ut Out Executive Cars
ut Out Company Planes
se Coach Instead Of First Class Air Travel
se The Airport Bus Instead Of Cabs
tagger Company Hours To Relieve Congestion Problems
ease Company Cars Instead Of Purchasing ; Use Compacts
et Up Your Own Transportation Fleet
educe Meeting And Travel Expense By A Set Percentage
liminate Or Reduce Convention Attendance
se Lower Priced Hotels
ake Contact Travel Arrangements With Hotels In Cities That Are Frequently Visited By Company Employee
ontrol Moving Expenses Of People Transferredliminate Expensive Stockholder Meetings
liminate Special Stockholder Meetings By Better Planning
ut Down On Lunch Time Meetings
ave Management Meetings At Corporate Offices
esults
ayroll And Fringe Benefits:
chedule Overtime By Priority
ock Employees For Being Late
ave Shorter Lunch Periods
liminate Oddball Deductions For Employeesliminate Paychecks; Have Pay Deposited Into The Employee's Bank Account
chedule Varying Pay Rates To Level Load In The Payroll Department And Reduce Staff
liminate Fringe Benefits; Picnics, Golf Outings, Etc.
eview Employee Stock Option Plans
liminate Christmas Gifts To Employees
liminate Or Reduce Coffee Breaks
ave Suggestion Awards Programs
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Reduce Number Of Magazine And Newspaper Subscriptions
Develop Bibliography Of Current Periodicals To Ensure Review Of Latest Ideas
Results
Miscellaneous:
Assemble All Reports Into A Single Manual
Establish Greater Security To Avoid Inventory Thefts
Obtain Competitive Bids For Purchases Of Materials And Supplies
Review Purchase Frequency R Supplies And Materials
Review Technical Magazines Systematically For Cost Savings Ideas
Develop Checklist Of Cost Saving - Profit Producing approaches With Key Staff Members
Results
Product Engineering:
Make Tolerances More Flexible
Reduce Surface Finish Requirements
Eliminate Need For A Specific Part
Substitute A Cheaper Material
Reducing The Number Of Parts NeededCombining Part Functions
Design For Low Cost Tooling
Design For High Speed Production
ncrease Feeds And Speeds
Reduce The Number Of Design Changes
Design In Quality
Design To Reduce Scrap
Design To Standardize Production ProcessesUse Standard Hardware In Place Of Custom Hardware
Design To Reduce Manual Production Operations
Design To Reduce Material Content
Design To Reduce The Number Of Fasteners Required
Specific Alloys To Enable Faster Machining
Specific Alloys To Cut Tool Wear
Design The Cheapest Finish Feasible
ResultsShipping, Receiving, And Warehousing:
Use Conveyors For Moving Operations
Use Reusable Pallets And Storage Boxes
Keep Warehouse Locked
Minimize Travel Distances
Group Like Parts Together In Warehouse
Use Hydraulic Lifts Instead Of Ladders
Ship And Receive In Unit LoadsProtect Product From Damage Or corrosion
Use Maximum Height For Warehouse Storage
Speed Handling Through Improved Scheduling
Use Proper Storage Containers
Pre Arrange Movement Of Materials
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ard Against Incorrect Engineering Drawings
ovide For Scrap / Rework When Planning
hedule To Minimize Waiting Time
negotiate Vendor Prices
ep Production Overruns To A Minimum
cognize Production Bottlenecks; Then Minimize Them
ep Accurate Records
ad Work Centers To Minimize Set Ups
nimize Sales Changes To The Master Schedule
sults
ant And Manufacturing Engineering:
rrect Wrong Bill Of Materials
duce Average Earnings
rtail Use Of Fuel And Electricity
rrect Loose Work Standards
ep 90% Of All Production Jobs On Standard
ep 80% Of All Indirect Labor Jobs On Standard
e Allowances In Standards Sparingly
sure The Proper Use Of Feeds And Speeds
ue Frequent Labor Performance Reports
mbine Production Operations
ange Standards To Reflect Improved Methods
mple Production Counts For Accuracy
alyze And Reduce Machine Downtime
andardize Equipment Parts
mbine Or Reduce Machine Setups
mplify Tooling, Jigs, And Fixtures
ep Accurate And Up To Date Equipment Recordsase Rather Than Buy Equipment
echanize Manual Operations
sults
ality Control:
duce Scrap Levels
duce Rework Levels
duce Warranty
prove Tool And Gauge Inspection
duce Vendor Quality Problems
librate Testing Equipment
ohibit Use Of Marked Up Engineering Prints
rap All Make Shift Tooling
gregate Defective Stockodernize Inspection Equipment
view Packaging Quality
vestigate Sales Of Plant Scrap
sults
fety:
tablish A Plant Safety Program
lf Insure Your Company
et Free Advice On Safety Issues
e A Nurse To Screen Employees
ve Workers Participate In The Safety Program
e Posters And Awards To Make Employees Safety Conscious
et The Union On Your Side
e Control Reports To Monitor Progress
e Accident Reports To Identify And Correct Safety Problemsblish Safety Rules And Discipline Offenders
ovide Safety Training For All New Employees
ake Safety The Responsibility Of The Line Managers
e Self Inspection Checklists
e An Internal Expert On Safety Regulations
vestigate Accident Prone Employees
ovide First Aid Training For Emergencies
nduct Housekeeping Tours To Prevent Accidents
ve The Plant Manager Chair The Safety Committee
ow How To Use Fire Extinguishers
e Lead Free Paint
e Safety Glasses On Every Job
sults
ctical advice on internal control
rnal control should assist and never impede management and staff from achieving their objectives. The old adage is that you can't manage what you can't
he importance of the objectives, and the degree of risk of not achieving them
he seriousness of the potential exposures, and the degree of risk of them occurring
e cost, if any, of additional control measures
control must be cost effective - tailored to a realistic assessment of need and should be appropriate for the purpose.
ere control depends upon a comparison or reconciliation of figures it is preferable to arrange things so that the generation of the figures which need to be c
ere control depends upon supervision it is important that this is taken seriously and that, the work of subordinates is not left to trust. Delegation is an import
trol must be taken seriously. A well designed system of internal control is worse than worthless unless it is complied with, since the assemblance of contro
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ovides a documentation structure and ensures that processes, procedures are documented, effective and under control.
umented procedures provide a uniform method to business operations.
mpliance with QS-9000 standards ensures responsibilities are defined.
istration ensures employees are trained and qualified to perform their job functions.
sists in substantially reducing and/or eliminating errors.
ovides a marketing advantage.
rmits you to advertise to your customers.
l be necessary to compete.
proves relationships and credibility with your Auditors and your automotive customers.
r having been in the auditing business for twenty years, We believe we have seen most of the management approaches to running a business and the fac
me executives see departments as individual functions and manage these departments accordingly; some see the departments as one system and managi
intent in the development of those systems was to create substantial customer satisfaction using defect detection and prevention methods; the very core
nition of Internal Control - SAS 78; Internal Controls
rnal control is a process-affected by an entity's board of directors, management, and other personnel-designed to meet the following objectives: reliability o
ontrol Environment
isk Assessment
ontrol Activities
formation and Communication
onitoring
/QS-9000 Process Audit
em Elements
9000 Business Planning and Customer Satisfaction
agement Reviews 4.3:
ncialsd Sorting
d Repairs
tomer Complaints-response
R's
M's
N's
very Performance
ness Planning 4.1
ning Requirements 4.18
rnal Audits 4.17
rective And Preventive Action Follow up; CAR/Preventive Action Effectiveness 4.14
tinuous Improvement 4.2
ration Costs/ Quality/Delivery measurements
lity Planningoing Cpk Results For Special Characteristics & KPC's
ake Proofing 4.2
9000 Management Representative & Review Of Elements
tor Performance
mium Freight
tomer Returns
rnal Scrap Percent
rantee Costs
work Percent
ysis & Use Of Company Level Data 4.5
chmarking
tomer Satisfaction 4.6
vicing reports 4.19
very response
tomer Request for Quote 4.3 Document Control 4.5
ain Customer Input
roval/Issue
ablish Internal Capability and feasibility 4.2.3
olve Price-Quantity-Delivery-Dimensions-Materials-Specification- Ongoing Changes
dback to Customer
tomer submits order for contract review 4.3.2
grate Customer Material-Engineering Specs/Packaging/Identification-Labeling Requirements
endment 4.3.3
ords 4.3.4
tion II - Customer Requirements
lity Procedures 4.2chasing 4.6.1 - 4.6.4
dor Audits/ Performance 4.6
/ Product Verification
olve Differences
sibility Review and Capability Analysis 4.2.3
ufacturing And support Functions-purchasing Tool Design-Shop Floor Personnel
cial Customer Quality Needs
cial Auditor Needs
lity Planning 4.2
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ning
hnical Interfaces
cial Characteristics
ablish Special Processes/Process Capability
ablish Verification Requirements
neering Changes
t Output Verification/Validation
ing Design
e Design - Gage R&R
s Functional Team Develops Production Part Approval Process (4.2)
ation Of B.O.M. & Routing Package & Work Instruction
anced Product Quality Planning (cross Functional Team Addressing Customer Requirements & Document/Process Change Control) 4.2.3:
tomer Or Internal Engineering Prints
lities Planning
MEAS/SFMEAS/PFMEAS-Mistake Proofing
lities Planning
otype, Pre-launch, Production Control Plans
y Production Containment Plan
s Functional Team Reviews PFMEAs & Control Plans & Develops Early Containment Plan 4.2.3
s Functional Team Develops Process Flow Charts, PFMEAs (Mistake Proofing & its Effectiveness) and Control Plans (Containment-Reaction Plans) 4.2.3
minary Process Capability
ection & Verification Of Incoming Material 4.10
tomer Requirements
ect Key Product Characteristics & KCC's (Appendix C) Tied To Design, Preliminary And Process Control Plans - Form - Fit -Function - Safety - Performan
wing Specification & Approval Review 4.4
e Design & Calibration Schedule
e Repeatability & Reproducibility (MSA)
fication Testingrnatives
trols And Processes
pment
ing Requirements
lity Procedures & Records 4.2.2 & 4.16
kmanship Criteria-Process Parameters -Work Orders 4.9
stics 4.20
ded Skills 4.18
trol & Inspection Equipment 4.11
duct Identification, Status, Traceability , Labeling & Packaging Requirements 4.8 & 4.12
ded Resources 4.2.2
ng Charts Section 3
cial Characteristics Matrix
ning Requirementstomer Handling, Storage, Packaging, Preservation & Delivery Requirements. 4.15
tinuous Improvement & its Effectiveness
AP Approval 4.2
s Functional Team Approves PPAP Submittal Package
s
ensional Layouts
erial Specifications
ing Considerations
ging & Fixtures
s Functional Team Submits PPAP 4.2;
ysler PSO and Ford PSW-ISIR
tomer Approves PPAP Submittal 4.2
s Warrant, Dimensional Checks And Control Plans
QP 4.2.3cess Control 4.9:
trol Plans 4.2.3
ting Package
M.
duct Identification And Traceability 4.8
ection And Test Status 4.12
ntory Control 4.15
dling, Packaging And Shipping Requirements 4.15
Up Instructions - Setup Verification 4.9
rator Instructions 4.2
kmanship Criteria - Process Parameters 4.9
rator Checksheets 4.2
oing Process Capability 4.9
m Root Cause Analysis (8d - 5 phase) 4.14 - Review With Managementm Audits Processes & Reduces Process Variation Through Process Improvement 4.9 & Corrective Preventive Action
work Instructions
trol Of Non-conforming Product 4.13
ing, Gage, Machine, Equipment Preventive Maintenance 4.9
brated Equipment 4.11
brated Inspection, Testing, And measuring Equipment 4.11
eiving, Work In Process And Final Inspection Methods And Inspection Points 4.10
ing System 4.2
c On KPC's And Unstable Processes 4.20
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omplishment of company goals and objectives based on customer requirements
tinuous improvement in cost- quality -throughput - delivery
ect detection and prevention
te / variation reduction
sed loop system with * effective follow through for each element within the standard
agement review / corrective action / internal correction for procedures / work instructions * continuous improvement in cost- quality -throughput - delivery
procedures being followed / deployed / complete throughout the company?
document logs current?
customer manuals updated as indicated in level I and level ii?
revision levels current?
there single lapses or major lapses following the documentation
Quality Operating System (Linkage Between documents)
el I (Why):
% General 10% Specific
lity approach And Philosophy; Goals, Scope, And Objectives
ects Actual Procedures In Use At The Facility
f & Concise (Keep It Simple - 25 To 35 Pages)
es Management Policy And Traceability To Authority
Commercially Sensitive Information
t Address All Elements And Sub-Elements Of The Standard
t Identify The Documentation Scheme For The Other Levels
el II (What, Where, When, Who, Why):
% Specific 10% General
ndard Operating Procedures
t Contain A Procedure To Write A Procedure
mpany Facility Function Or Department Procedures
Be Modified At Any Time Without Registrars Approval
d Copy Or Electronic
el III (How):hod And Practice
mpleted By Individual Or Department
% How To Complete The Task
ting Sheets, Inspection Sheets, Setup Sheets, Operations Measures, Process Standards
el IV (Records, History, Forms & Other Supporting Information):
ective Proof - Quality Operating System In Use And Is Effective
mplete Forms, Checklists
ention Times Specified And Retrievable
d Copy Or Electronic
orical Supporting Documents
ection Tally, Test Results, Process Data System, Approval Sheets, Calibration Log, Purchase Order
porting Evidence
ng Positive Customer Feedback on Cost, Quality, and Delivery , Over-shipment, Prototype builds, PPM, ASNs, Performance
ng ROS, ROE, ROAng Income Statement and Operational Performance Measurements
owing Business Plan in operational, marketing, environmental, customer satisfaction
G B3 or B4 (version 2.0) Individual Parts Label Application
ndard Bench testing vs portable testing; conversion of one hardness scale to another;
kwell-depth the indenter goes into the specimen-homogeneous metals with smooth surfaces (tungsten vs ball);
ell-diameter of indent (10mm ball)- tested material 10 times the depth of penetration A2LA or NVLAP, ANSI B-89, GP-10 Guidelines, Traceability to the N
G M-3 (version 2.0) or M-5 (version 0) Supply Chain Recommended Business practices for EDI AIAG M-3 (version 2.0) or M-5 (version 0) Supply Chain R
Qualifications, Training evaluation, Training courses, Tests, Training effectiveness, Strategic Planning
t Techniques
ting and Listening-Take the Time-
n Answer Their Concerns
ntain Eye Contact while Listening.
Open-Ended Questions.
d Rhetorical Questions Like " You Understand What I Mean, Don't You?"
Hypothetical Questions.
d the Wandering Eye.
fy Your Understanding before Jumping to Conclusions.
A Non-Verbal Question or Two.mize Disruption of Normal Auditing Activities.
d Trying To Understand the Process Yourself.
mize Note Taking when listening To Someone.
Lots of Direct Eye Contact.
Attention to the Speaker's Feelings As Well As To What Is Being Said.
't Lack Interest In The Speaker's Subject.
't Become Impatient With The Speaker.
't overreact To the Speaker's Language Such As
g Attacks or Profanity.
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en even when The Subject is complex or Difficult.
't Interrupt the Speaker with Your Point Of View.
pathize With the Speaker.
't Become Distracted By Noise from Office Equipment, Telephones, Or Other Conversations.
To relate to and Benefit from the Speaker's Ideas.
To Read The Speaker's No Verbal Cues.
't Just Listen For Details.
't Think Of Another Topic Because Of What The Speaker Has Said.
't Let Your Biases and Prejudices Hamper Your Thinking while Listening.
't Become Emotional Because Of What The Speaker Has Said.
t Planning
age Your Time; Stick To the Audit Plan.
uments-Does It Meet The Intent-Review/ Test Procedures Against What Is Being Done/Implemented- Look At Objective Evidence-Test It Independently T
Observant And Listen To What's Being Done In Their Areas, But Don't Let Your Mind Wander.
her Enough Information about what's being done in operational areas.
e Frequent Feedback to the Company.
uss And Share Information With Other Auditors In Private.
erence the Standard and Use It Effectively to Reference and Communicate with Throughout the Audit.
't Be Dependent On The Checklist - Add To The Checklist With Their L2 Information.
e Sample Sizes Of 5 To 15 (95% Confidence Levels) In Each Area - Pick The Samples Yourself.
Your Knowledge, Skills and Experience.
cess Audit approaches Include Vertical (Backward and Forward) And Horizontal; Grouping Elements Together That Form A Continuous Flow of Operation
g Audit Manual Up To Standard.
ect Evidence until the End of the Audit-Be Diligent.
Open-Ended Questions.
e Scientific Samples and Random Samples.
d Backtracking-Try to Audit Two or Three Elements all At the Same Time.
To Enough Operators to Verify That They Are Doing - What the Procedures Or Work Instructions Is Communicating.e Lead Auditor Close Out Corrective Actions.
en Writing a Non-conformance, A. Associate Like Corrective Actions, B. Breakout a Non-Conformance On Separate Corrective Action Forms, C. Write Cor
ew Procedures as Auditor Demonstrates - Ask them to show you where it is written In the Procedure.
The Audit; Put Travel Arrangements On The Audit Plan.
Good Time Management, And Good Company Communications.
t Implementation
The Company Procedures, Standard And Interpretations Effectively; Cover Customer Requirements- Drive Customers To Write Down Customer Require
the Checklist Effectively - Don't Backtrack.
t What the Company does well - Ask For Records to Verify the Positive Things in the System.
9000 Audit approach:
9000 Requirements Include ISO 9000 Standards, QS-9000 Requirements, APQP/SPC Manuals QS-9000 Interpretations, Customer Requirements, And P
ctive = Build Rapport And Trust; Ask Open Ended Questions; Take Good Notes; Listen Verify Everything; Thank The Auditee
rough = Appropriate Samples And Records Verificationiased = Identify Strong And Weak Areas
sistency And Integrity = Maintain Auditor Development Task Force Expectations
t Tools = Standard And Interpretations; Procedures; Checklist
s The QS-9000 Meet The Intent - Shalls And Shoulds Are Addressed; Clearly Say What You Do
S-9000 Implemented On All Shifts - Compliance To Procedures; Records; Observations; Interviews; Samples - Volumes Of The Most Frequent And Rece
he QS-9000 History Effective = Achieved The Desired Results Set Out By QS-9000 And Customers
agement Commitment
naround Of Corrective Actions
pose And Measureables In The System
tomer Satisfaction With Customer Requirements
d Trust and Rapport - Explain what you're doing.
Open-Ended Questions - Interview At The Lowest Level.
en For Intent And Try To Read Nonverbal Communication.
fy Records and Conversations from Independent Sources - Half the Information Obtained during an Audit Is Seeing.en Recording Observations, Name the Person and Title, Note Department and Location of the Interview, State the Non-Conformance; State Why It Is A No
fy System Effectiveness: Company Goals And Objectives; Management Review Results Based On QS-9000 And Business Planning; Procedures Meet Th
ems Audit - Adequacy or Desk Audit.
ew Of Quality Manual, And Standard Operating Procedures - Available (4.2); Authorized (4.2-4.5); Current (4.5-4.16); Unaltered (4.5); Understood (4.9);
uate Company for Registration Readiness to ISO 9001, ISO 9002, ISO 9003 Or QS-9000: 98.
pare Audit Checklist.
mpliance Audit - Opening Management Meeting.
ndance Sheet.
uld Be Attended By Executive Officers and Upper Management for the Facility under Review.
ew Audit Purpose.
Company Must Assure That A Mutually Agreed Upon Understanding Is Reached About The Purpose Or Reason For The Audit And The Quality Standard
Lead Auditor Must Ensure Consensus On The Acceptability Of Audit Team Members, The Method Of Conducting The Audit, Points Of Contact In Case O
Company (Auditee) Should Provide Evidence To Support The Competence, Independence, And Objectivity Of The Internal Auditors.
Lead Auditor Might Provide the Company with A Set of Working Papers Showing the Various Items To be reviewed and A Schedule for the Various To BeCompany Must Help Achieve Consensus On Who Will Represent The Auditee On All Matters During The Audit, Access To The Various Activities To Be
Auditee Should Bring A Controlled Copy Of The Level I And Level II Documents, Evidence Of Support And Commitment To The Quality Operating Syste
Company Should Brief Subordinates On The Audit, How It Effects The Different Work Areas, And Inputs Expected From Employees.
Lead Auditor Should Verify Resources And Facilities Such As Changes In The Availability Of People, Transportation, Workrooms, Clerical Support, Office
Lead Auditor Should Leave Time For Any Questions.
t Tour
alk Through Of The Organizations Flow Of Ideas, Documents, Goods, And Materials I.E. Design, Material Control, Production, Packing, Shipping
centrate On the Sequence and Location of Activities.
ability Audit Of The Quality Operating System
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rational Area
ree of Benefit for Customer Satisfaction
chasing
90%
ntory Control
60%
ngs and Collections
60%
tronic data processing
60%
ital expenditures
50%
ufacturing and Production
45%
pping and Receiving
30%
keting
30%
ncial and Debt Management
10%
ermining Sampling Methods:
mpling is used extensively by auditors in their work. Samples are portions of a whole (or population) which are used to represent the whole. The sample us
tor's sample and evaluation procedures. Nevertheless, auditors should know when and how to use it. Judgmental sampling may be used to select exampl
red Degree of Audit Assurance
mple Size of the Total Audit samples
fidence Level of Compliance to the Standard, Internal Controls and System Effectiveness
h
erate
5 (Broad Based Historical Samples)
(Broad Based Samples)
(Broad Based Samples)
99%
95%
% to 90%
gh desired degree of audit assurance generally indicates that little or no reliance is placed on internal controls or other related substantive procedures.
erate desired degrees of audit assurance generally indicate that some reliance is placed on internal controls or other related substantive procedures.
trong Customer Satisfaction-Quality, Price, Delivery, Service, Technology
Progress On Continuous Improvement Projects As Well As Mistake Proofing Implementation
Effectiveness Of The Preventive Actions Implemented
Strong Operating, Delivery, Quality, Cost Reduction, Inventory, And Customer Satisfaction Measurements
Management Review Results Based On QOS, QS-9000, And Business Planning
Evidence Of What Is Reasonable And Customary In The Industry
Point By Point Checking Of Various Activities Or Work Areas Against The Approved Procedures , Standard And Interpretations; General As Well As Detai
Each Activity is reviewed and A Decision Needs To Be Made As To Whether It Meets the Standards Requirements.
Preparation Of Conformity Of Audit Papers
A Determination Should Be Made About Detail Points To Be Verified Sample Confidence Levels, Or Conversely Risk Levels, Performance Level, And SaOperational Meeting Briefing Guides
Mutual Agreement Should Be Reached On The Sequence And Timing Of Visits Within Organization Areas, The Matching Of Auditors With Guides, Accord
nitial Visits To Plant Area
21
21
22
t Analysis By Element
ments/Department Audited
9000 Standard
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Address
Contact
Phone Number
Auditor Names
Required Number of Audit DaysCalendar Dates
Number of Auditors
Document Status
Audit ScheduleAudit Plan
Auditor Room & Telephone
Opening/Closing Meeting
Transparencies & Projector
GuidesAuditees to be interviewed per the Audit Plan
Organization Chart
Plant Flow Diagram
Administrative supportTravel
Map
Estimated Travel Time
Time Differential
Motel & Phone Number
Airline Tickets and Cost
Special Safety Requirements
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age of Material:
kaging Requirements:
ety Considerations:
r-head cranes:
motors:
cial Lift Vehicles:
ronmental Compliance/responsibilities:
ution Discharge Requirements
ardous Waste Hauling
Emissions:
DS:
m Water Discharges:
d Contamination:
ycling of Business Waste:
er:
:
Based Fuel:
ts or Solvents:
als:
tic or Rubber:
od:
ste Discharge:
ds:
ids:
micals:
tomer Owned/Supplied:
kaging
w Materialsmponents
ing
ng
t Treating
ting
pping (No. Of Shifts):
t Notes for clarification and impressions and Objective Evidence can be attained through observations, records checking and interviews:
fy everything
k to multiple sources to verify compliance
and system effectiveness
probing questions and actively listen
or information to draw upon
oduce The Auditor To The Manager Responsible For The Function, And The Manager Should Be Asked To Describe How Activities Are Initiated, Defined,
Examination And Evaluation Of The Work Area Must Cover People, Facilities, Product, And Records.tor Should Query Workers On Their Awareness Of The Quality Operating System, Their Perception Of How Management Is Committed To It, And Their U
fy Information Gathered In Interviews (Show Me A Situation....).
fy System Effectiveness by Checking Evidence of System Effectiveness from Independent Sources.
ew The Actual QS-9000 Documented Procedures (Assuming They Meet The Intent) Against Actual Company Practice To Determine Adequate Complian
ress All ISO And QS-9000 Elements To An Adequate Level.
Some Drawing Numbers And Revisions Should Be Noted For Checking Against The Work Order And Against The Configuration Control In The Drawing O
mmon Traps In Auditing:
ng To Plan the Audit.
ping Confidential Information Confidential
ng To Make Use Of A Checklist.
ng the Auditee Pick the Sample.
nding Too Much Time Learning What the supervisor Knows.
looking around and/or observing.
ping To Conclusions.membering What You Used To Do In Your Company or Department.
ng To Let the Unit supervisor Know of Your Audit Findings.
ng the Auditee Control the Audit Time.
ng To Follow-Up on the Corrective Actions That Were Based On Findings.
sequent Visits To Plant Area.
fy or Clarify Points Noted During the Initial Visit.
fy the supervisor that The Auditor Will Be Back To Visit the Area and The Purpose of the Visit.
t Strategies:
supervisor Should Not Be Requested To Be Present To Reduce Interference.
t Reviews-Daily Status-Final Status.
t Teams should meet At the End of the Day To Review Their Findings.
ew the Previous Day's Findings with the Quality Coordinator.
nge Audit Plans for Additional Verification or Clarification.
e The Audit Is Completed, The Team Should Develop A Quantitative Report Dealing With Specifics.al Debriefing With Original Attendees- Preparation And Implementation For The Management Review - Closing Meeting.
Preliminary Report Should Include An Appreciation For The Cooperation And Assistance Provided By The Company Staff-Highlight Some Points Where
sent A General Statement About The Acceptability Of The Quality Operating System-Stress That The Final Decision Will Be Made In Writing Once The De
mmarize the StrongPoints of the Quality Operating System Noted during the Audit.
mmarize The Major Areas Requiring Corrective Action-Make Sure All Major Noncompliance Are Mentioned
mmarize The Minor Areas Requiring Corrective Action.
mmarize the Quality operation auditing Activities Still To Be Carried Out I.E. The Final Written Report, The Methods To Be Used To Handle Corrective Acti
agement Report
e The Report In A Binder
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gn a management representative to ensure quality requirements are met. The management representative reports to the top executive of the organization
odically review the quality system to ensure its effectiveness.
a multidisciplinary approach to problem solving.
ure qualified people are in support positions.
elop business plan with QS-9000: 98 as a part of it.
chmark for quality, production and operations efficiency.
sure customer satisfaction.
multifunctional teams for advanced quality planning.
lity Policy:
w is the commitment to Quality Implemented and reviewed
of Financial, Operational and Quality Performance Plans, Activities, Measureables and compare with the on the floor activities and measureables
PC
roductivity
apability
roduction Performance/Cycle Time Performance
crap
elivery
ost Performance
orrective and Preventive Action
ustomer Satisfaction
at do the Customer satisfaction indicators look like (positive trends or a reaction to negative trends)
cess for determining customer satisfaction
tinuous improvement goals and progress
chmarking and Measureables
at condition are the financial ratios, operating ratios, cost of quality, income statement, cash flow, ROS, ROA, ROE
w do you handle the responsibility for quality,(organizational chart-job descriptions)
lth and Safety System
ronmental systemsning
lity Goals and Objectives
lity Operating System
ablish a quality system and document it in the quality manual, with reference to supporting quality system procedures.
lity planning process should parallel the level II and III procedures for :
duct program plan preparation
ource acquisition
gn feasibility reviews and process capability studies
ntenance of quality control/inspection records
trol plan development for all 3 phases of production
ew of standards and specifications
cial characteristics FMEAs
quality system procedures must be consistent with the quality policy.lity plans (control plans) must be documented to reflect the operations of the organization.
cally, the quality manual and the quality system are the quality plan.
ement the quality system and ensure its effectiveness.
advanced quality planning :
program
duct design / development
cess design / development
duct / process variation
dback assessment and corrective action
mplete and Functional Level 1,2,3 and 4 Quality Management Documentation System with effective Linkage between levels and sub systems
anced Product Quality Planning:
se 1
and define the program
e of the Customer
ness Plan Marketing strategy
duct Process benchmarking strategy
duct Process assumptions
duct reliability assumptions
duct reliability studies
tification and acquisition of resources
tomer inputs
gn Goalsability and quality goals
minary Bill of Materials
minary Process Flow Chart
minary special characteristics listing
duct Assurance plan
agement support
se 2
duct Design and development
gn failure mode and effects analysis
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neering specifications
erial specifications
wing and specification changes
w tooling, equipment and facilities requirements
cial characteristics
es/testing equipment requirements
m Feasibility Commitment
agement support
se 3
cess design and development
ating techniques and instrumentation
kaging standards
duct Process Quality Operating System review
cess flow chart
tification of suitable verification at appropriate stages
ification of standards of acceptability
tification and preparation of quality records
r Plan layout
racteristics Matrix
cess failure and effects analysis
launch control plans
cess instructions
surements systems analysis plan
minary process capability plan
kaging specifications
agement support
se 4
duct and process validation
duct trail runsurement systems analysis evaluation
minary process capability studies
duction part approval
duction validation testing
kaging evaluation
duction control plan
lity planning sign-off
agement support
se 5
dback, assessment and corrective action
uced variation
tomer satisfaction
very and service
duction Part Approval Process:
Determine If All Customer Engineering Design Records And Specification Requirements Are Understood By The Auditor And That The Process HAS The
AP Applies To All Production And Service Commodities:
en A New Part Or Product Needs Manufactured
en Corrective Action Needs To Be Made On A Part
en Part Needs To Be Modified Because Of An Engineering Change
en A Different Material Is Substituted For A Previously Approved Part
en New Tools, Modified Tools, Or Dies/ Molds Are Used In Production
en The Auditor Makes A Change To The Manufacturing Process
en Tooling Or Equipment Is Transferred To Another Location
en A New Subcontractor Is Used For Parts, Materials, Or Services
en Volume Production Tooling HAS Been Inactive For 12 Months Or More
en The Customer HAS Requested That Shipping Be Suspended Due To A Quality Concern
umentation Required By:duction Part Submission Warrant
earance Approval report
Samples Per The Control Plan
tomer Auditor Design Records
er Authorized Engineering Change Documents
ensional Results Referenced To Engineering Part Drawing Requirements
cking Fixture Specific To A Specific Part
ormance Durability Tests Specified By The Design Record
cess Flow Diagrams
trol Plans That Include Significant Product And Process Related Characteristics
cess Capability Results
e R&R Studies
neering Approval as Needed
duct warranty:part fails one or more of its designed functions.
customer has the wrong expectations for the function of the part.
design is successful but processing or delivery is weakening its function and causing failures.
ematic causes beyond engineering and manufacturing
duction Part Approval Process:
w part or product
AP system must be in place
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AP is granted for subcontracted materials
AP is granted for production processes
mission Levels:
ermined By Auditor Quality Recognition Status
ermined By Significance Of Part
ermined By Significance Of Process
erience With Prior Part Submission Levels:
el 1 Warrant Only
el 2 Warrant With Product Samples And Some support Data
el 3 Warrant With Product Samples And Complete support Data
el 4 Complete support Data
el 5 Warrant, Complete support Data, Samples, Auditor's Location
tional PPAP Conditions:
Auxiliary Drawings And Sketches Must Show Part Number, Change Level, Drawing Date, And Auditor's Nameify Gages To Dimensions
rporate Critical Symbols Onto Production And Parts
erial Tests Must Be Performed as Specified
ormance Tests as Required
tinuous improvement
elop a comprehensive continuous improvement plan for satisfying the customer lead times, delivery, price and variation reduction throughout the company
ze spc data for variable data - not pre control
tify and track opportunities for productivity improvement in manufacturing
r suppliers are expected to understand the use of the listed measures
ness plan as reference.
S for FORD
trol charts
's
ability indices
e analysis
chmarking
tify quality and productivity improvements
n all employees impacting continuous improvement
ufacturing capabilities
n cross functional teams to improve facilities, processes, and equipment
trol strategies - FMEAs - problem solving -service reports.
vide capability studies
ow-up on subcontractors if they provide tooling
quate resources for tool design and fabrication as well as marking.
management and maintenance capability, storage, setup.
age receiving of tooling.
change program.
ups of tooling.
elop mistake proofing for process and design
tract Review
tracts with suppliers and interfacing organizations are needed.uire QS-9000:98 compliance from subcontractors
ablish a procedure for defining and reviewing contracts.
ure that any differences with contracts are resolved.
bal contracts are allowed.
cedures should describe how amendments to a contract are handled.
p records of reviewed contracts
ure that requirements in the contract can be met.
ablish and maintain records resulting from contract reviews.
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Systematic causes beyond engineering and manufacturing due to a lack of a holistic approach
gn Control
ablish And Maintain Procedures And Training Records To Control And Verify The Design Of The Product -- .Keep Records Of Application Regulation Stan
pare Plans That Define How The Design Process Will Be Carried Out.
ument Interfaces Between Departments
duct Engineering, Process Engineering, Design Engineering
gn Plan, Standards, Preliminary Design, Final Design, Configuration Control, Document Verification, Product Verification, Design Review, Metrology
duct And Document Project/Product Design Reviews- Can Outputs Be Verified Based On Customer Inputs (cross Reference as Appropriate)
gn Output: Geometric Dimensioning And Tolerancing, DFMEAs, Production/Field Testing, Customer Performance Risk Tradeoff Analysis
ne Acceptance Criteria To Verify That The Design Meets The Input Requirements.
date The Design To Ensure That The Product Meets The Customer's Requirements.
ument, Review And Authorize All Design Changes.
duct warranty:
part fails one or more of its designed functions.
customer has the wrong expectations for the function of the part.
design is successful but processing or delivery is weakening its function and causing failures.
ematic causes beyond engineering and manufacturing
ument And Data Control
trol Quality Operating System Documents And Data Through A Formal, Documented Process, Including Customer Initiated Changes And External Docum
ew And Approve All Quality Operating System Documents And Data.
elop A Control Mechanism For Customer Engineering Change Requests And Document S That Reside In Software
ntain A Master List Of Quality Operating System Documents That Reflect The Latest Revision Of Each Document.
lity Operating System Documents Must Be Available And Accessible To Individuals Who Are Required To Use Them.
tify Obsolete Documents That Were Archived For Later Use (E.G., Legal purposes).
y Changes To Documents Through A Formal, Documented Process.
neering Drawingsection Test Procedures
k Instructions
rations Procedures
Procedures
erial Specifications
ument Approval/ Issue
ument Changes
chasing
supplier is responsible for ensuring that the product conforms to the requirements.
vey subcontractors and provide records
ess and select subcontractors based on their past performance and their ability to meet requirements, including quality requirements.
ntain a list of approved subcontractors, unproved subcontractors, and how you monitor subcontractors for compliance
fy that the product ordered is accurately shown on the purchasing document.
ew and approve purchasing documents.chasing documents must specify if products are to be verified at the subcontractor's site.
r suppliers need to respond to your quality requirements using QS-9000:98 ; QSA to audit your suppliers
trol Of Customer Supplied Product
umented procedures must be established for maintaining customer-supplied products.
ect at receiving and periodically insure product condition
ord and report any loss, damage or deterioration of customer-supplied products to the customer.
fy, store, maintain customer supplied product
tag any non-conformance
duct Identification And Traceability
ablish and maintain procedures to identify:ducts throughout receiving production, delivery and installation.
duct or production batches with a unique identifier where traceability of the product is required.
coding ideal
cess Control
trolled conditions for production, installation and servicing processes.
orm processes in controlled conditions:
control plans
document production, installation and servicing procedures.
preliminary process control requirements Ppk 67
ime greater than 95%
preventive maintenance
on-going process improvement requirementscapability analysis
verified job set-ups
process change control
provide a suitable working environment.
comply with standards and procedures.
control process and product characteristics.
approve processes and equipment.
ection And Testing
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P. - defect detection.
l inspection - functional testing based on customer requirements.
ect and test in-process and final product to verify conformance to requirements before use.
ection and testing records must be kept, and should clearly state the:
party accredited labs.
s or fail status.
ection authority for releasing products.
est has failed, apply procedures for controlling non-conforming products.
plier certification.
duct warranty:
part fails one or more of its designed functions.
customer has the wrong expectations for the function of the part.
design is successful but processing or delivery is weakening its function and causing failures.
ematic causes beyond engineering and manufacturing
trol Of Inspection, Measuring And Test Equipment
trol of inspection, measuring and test equipment (4.11) ref. 4.11 MSA
tify measurements and accuracy required to:
select the proper equipment.
measurement certainty
note MSA on the control plan
select the proper software.
ensure equipment/software is compatible.
ensure a suitable environment.
equipment traceability
gauge conditions
ument procedures to control, calibrate and maintain inspection, measuring and test equipment including:
calibrate against standards.
control customer owned and employee acquired test and inspection equipmentestablish the frequency to calibrate.
determine acceptance criteria.
document the calibration status.
note the appropriate calibration standard on the proper outside service
record and maintain calibration results.
notification to customer.
measurement systems analysis by part family
ection And Test Status
tify the inspection and test status of products throughout production, installation and servicing.
k the inspection and test status on the part
k early launch controls as specified by the customercify the inspection and test status by indicating the product's conformance or nonconformance.
ntain the inspection and test status throughout production, installation and servicing.
ease products that pass final inspection, unless otherwise authorized.
trol Of Non Conforming Product
ablish and maintain procedures to:
ensure that non-conforming product is prevented from being used.
segregation of non-conforming product
ew and disposition non-conforming product ( material review boards and six months MRB history).
reinspect any product that was reworked or repaired.
engineering approved product authorization
ntain records of any non-conforming products that were accepted or repaired.
elop rework and repair instructions
ntain records of customer approved deviations
rective And Preventive Action
ablish and maintain procedures or records for:
problem solving methods
analysis of returned parts
upper management review
verification of corrective action
addressing customer complaints.
identifying and eliminating the cause to prevent recurrences.
determining and implementing corrective and preventive actions.
ensuring corrective and preventive actions are effective.cessary, apply and record changes to procedures.
ress corrective and preventive actions at management reviews.
iplined problem solving approach for internal and external problems
rective action for all products and processes.
ect - analyze - eliminate
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delivery, to protect product quality through delivery of the product.
target 100% on time delivery.
determine appropriate material handling methods
determine how you check or rotate stock
storage of an inventory management system
customer requirements
improved inventory turns
verify ASN's ( advanced shipping notifications).
trol Of Quality Records
ablish and maintain procedures for managing quality records.
vide contractor development strategies and records
e and maintain records in an environment that prevents deterioration or damage.
ure that records are legible and can be easily identified, and are retrievable.
ablish and record retention times for quality records.
production records one year
charts and other level iv documents one year
ords may be in hard copy or electronic form.
duction part approvals.
ing , quality, audits, retention periods, new part qualifications.
rnal Audits
ablish and maintain a process for conducting internal quality audits.
agement must review audit corrective actions and program effectiveness
ective evidence.
ts must be conducted by personnel who are organizationally independent of the area being audited.edule and prioritize auditing function
ords audit results and assign noncompliance to the manager responsible for the area that was audited.
ow up on corrective and preventive actions, until they are closed out.
fy the effectiveness of the corrective or preventive action(s).
able working environment.
ning
ument training procedures.
wer how supervisors became qualified to approve training
mpany strategic issue.
tify training needs and provide appropriate training.
ure employees are qualified to perform their assigned tasks, considering their education, training and experience. (i.e. how did you learn how to do this job
ntain training records for all employees.
ning evaluation.
vicing
ablish and maintain procedures for servicing the product and verifying the results.
vide feedback to all impacted functions
w services performed will meet the requirements.
ntain a record of services provided.
stical Techniques
tify the need for statistical techniques.
e sure the operator knows what happens when the control chart trend is up or down or above or below the control limits
vide APQP input in determining the appropriate statistical techniques
ument techniques in the control plan.
ablish and maintain procedures to control the use of statistical techniques.
tomer requirements
ysler - regional value added partnerships :
l : to eliminate waste through simplification, eliminating, and fool proofing transactions
ended enterprise is a driving corporate philosophy
ner - like supplier relationships
ropriate use of parts identified with symbols shield, diamond, pentagon, significant
ual layout
rnal audits - one per year
gn validation / production validation
d - global price-based sourcing to fewer suppliers:
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S 9000 : first tier suppliers by Jan. 1, 1996
egrate EDI with sub contractor requirements at least weekly by Jan. 1, 1997
er 2 -communicate EDI data requirements at least weekly
er 2 - integrate EDI with sub contractor requirements at least daily by Jan. 1, 1998
nual layouts
S 9000
ntrol item parts
tical characteristics
t up verification
steners
at treating
ocess and design changes
pplier modifications of control items
S testing performance
OS
aterial qualification
ualification sampling plans
n going product and process monitoring
proval for Control Plans
eneral Motors - two prong approach:
r commodity products - wants full range - low cost suppliers
aintains high degree of design and development for high technology and commodity like products
gh tech products - wants global suppliers with outstanding technology, quality and price performance
blications list requirements
stomer approval of control plans
S-9000: 98 QUALITY OPERATING AUDIT PLAN
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NTAINS IMPROVEMENT
OCESSES
OVISIONS
OCESS IS DEFINED ; APPROVED ; AND UNDER CHANGE CONTROL
CUMENT ALL ELEMENTS IN LEVEL 1 & LEVEL 2
NAGEMENT COMMITMENT
OVIDE TRACEABILITY THROUGH THE DOCUMENTATION
PLOYEE INVOLVEMENT
OVIDE 4-6 MONTHS DOCUMENTATION HISTORY
NITOR PROGRESS ENFORCE DEADLINES
e
t.
9000:98 Operational Audit
son(s) Interviewed
oductions, Opening Meeting
agement Team
ness Background-Plant Tour
agement Team
agement Responsibilities, Financial Statement Analysis, Customer Satisfaction, Business Plans, Management Review, Benchmarking, Company Level D
agement Team
lities Planning
rnal Audits (4.17) - Management Review (4.1)
rective and Preventive Action (4.14)
tinuous Improvement
ake Proofing
ning (4.18)
vicing (4.19)
lity Operating System (4.2), Customer Requirements (Section 2 and 4.1)
ument and Data Control (4.5)
trol of Quality Records (4.16)
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sign Control (4.4), Advanced Product Quality Planning (4.2.3), Production Part Approval Process
oling Management System and Design (Section 2-23)
rchasing - Subcontracted Manufacturing - Tooling and Dies - Raw Materials - Purchased Components (4.6)
ceiving Inspection (4.10)
ntrol of Customer Supplied Tooling, Raw Materials, Packaging (4.7)
cess Control, Capability, Preventive Maintenance, Safety and Environmental (4.9)
tistical Techniques (4.20)
rk in Process and Final Inspection (4.10)
ntrol of Inspection, Measuring and Test Equipment, GR&R, Calibration Criteria (4.11)
duct Identification and Traceability (4.8)
pection and Test Status (4.12)
ndling, Storage, Packaging, Preservation, and Delivery (4.15)
ntrol of Non Conforming Product, Rework and E. A.P.A.s (4.13)
te: All shifts will be covered during this audit -
ments 4.5, 4.14, and 4.16 will be reviewed by each auditor as appropriate
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inspection and test status
control of quality records
cators of a successful ISO/QS-9000: 98 Operating System:
agement is involved and committed in the process
urn on Operating Assets remains high from quarter to quarter
h flow remains consistent
re management enforcement of declared aims
re is enforcement of a monitoring system
ts are carried out to get to the root cause of problems
ts are reviewed and acted upon appropriately
viding an audible system that can be verified by external auditors
ping to successfully implement the feedback loop
using on customer needs
ying a supplier / customer relationship with well-defined and mutually agreed upon requirements
eloping a prevention attitude throughout the company, accompanied by an early detection and correction system
ablishing clearly understood documented procedures for everyone involved
cedures are deployed
re is control of all appropriate documents and data
viding adequate quality training for everyone that includes general comprehension of what quality means and training in the use of specific financial, opera
ering a good working relationship with external auditors
sing out all corrective actions to prevent re-occurrence
ufacturing Effectiveness:
ecasting is centered around customer production demand
of Materials is accurate; material shortages are non existent
es and operations management planning is accurate and coordinated with inventory planning for every product
up times are reduced; inventory buffers are reduced
e and the amount of processes are synchronized
ducts are produced to what is needed at the time neededkflow is synchronized during work in process so that stocks don't accumulate during work in process
re is a balancing of uneven work-flows with flexible workers and equipment
nsport and material movement is removed as much as possible
up times are shortened and lead time is reduced
ste is reduced or eliminated
on and walking is minimized
manufacturing process is designed to prevent defects
ufacturing and vendor lead times are reduced
ormance measurements and reward systems are weighted toward quick response
9000:98 operational audit - operational audit review
as assessed
9000:98 operational audit standard
9001
9002
9003
9000:98 - ISO 9001
9000:98 - ISO 9002
conformance / discrepancy reference number
4.1
agement responsibility
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4.2
ality system ; Production part approval process; Continuous improvement; Manufacturing capabilities
4.3
ntract review
4.4
sign control
4.5
cument and data control
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4.8
roduct identification and traceability
4.9
rocess control
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4.13
Control of non conforming product
4.14
Corrective and preventive action
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4.18
raining
4.19
ervicing
4.2
tatistical techniques
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Customer satisfaction / complaints
Capacity utilization
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Capacity variance and Cycle Time
nventory Turns
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ROS
Continuous improvement projects
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VACATION / ABSENT HOURS
C
TOTAL HOURS WORKED
DUNITS PROCESSED
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K
% PART BACK TO STOCK
L
% SCRAP
MEARNED HOURS
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M ( N
TILIZATION
N ( O
ECTION HOURS
ETY LOST TIME HOURS
HOURS
EIGHT COSTS PER SHIPMENT
WNTIME HOURS
CKLOG UNITS
N-TIME SHIPMENTS
Manufacturing QS-9000:98 Operational Auditcess Audit Matrix
of the most effective methods to verify that procedures are used, records are kept and that the Quality Operating System is effective is using audit trails.
pical "process" audit trail to assess the effectiveness of the ISO 9000/QS-9000 Process might look like this:
ermine Measurements:
Income As A % Of Sales
rage Time To Market For New Products
w Product Sales Dollars As A % Of Total Sales
rst Time Quality
al Vs Planned Production
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es Forecast Accuracy
es Dollars & % Growth
ket Share %
ployee. Satisfaction Index
tomer Satisfaction Index
h Flow From Operations
urn On Net Assets
itability ROI
ne Improvement Objectives:
ste Elimination
d Time Reduction
ductivity Gains
P. Reduction
very Improvement
Up Reduction
lity Improvement
hine Uptime
roved Cycle Time
duct Variance Analysis:
E
h Flow
A/ROS
acity Variance
acity Utilization
o Delay
ntory Turnover
e Studieservation
t Process For Continuous Improvement - Track Metrics - Determine Future Trends
Existing Business Processes:
ket
uest For Quote
tomer Sales
cept
sibility Review
elopment
ecasting
chasing
thly Production Plan
erial Requirement Plan
ection Planfing Plan
ban Plan
ufacturing Capacity Plan
erial Handling
kaging
very
allation/Servicing Plan
tomer Satisfaction
k For Gaps, Trends & Patterns As Well As Opportunities For Improvement; analyze Problem Solve Data:
ance Analysis Identify Value Added Time
uce Or Eliminate Non Value Added Time
ermine Internal & External Organization
yze Parallel vs Sequential Work
stigate The Application Of Information Technologytify Mistake Proofing Opportunities
9000 and QS-9000:
agement Responsibilities/Financial/Operating Measurements/Customer Satisfaction/Management Review / Continuous Improvement/Business Planning/
lity Policy Implementation ,Company Goals And Objectives Based On Customer Requirements
ng Performance Metrics
tinuous Improvement In Cost- Quality -Throughput - Delivery
ect Detection And Prevention
ste / Variation Reduction
sed Loop System With Effective Follow Through:
t Reduction Requirements
very Requirementstract Review Methods
sibility Capability Review
lity Planning/Special Characteristics
gn Methods, Control and Verification
anced Product Quality Planning Implementation
duction Part Approval
chasing Methods
ming Inspection Methods
duct Identification/Traceability/ Work in Process Inspection
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trol of Non-conforming Product
dling/Storage/Packaging/Preservation / Delivery Methods
pping Methods
very Requirements
e Case of a Tooling and Equipment Supplement Audit(QS-9000-TE):
tract Methods
lity Policies
sibility Reviews
gn Methods
Cycle Costing
n time Between Equipment Failures
n Time To Repair Equipment
ss Functional Teams
ure Mode and Effects Analysis
lity Planning/Reliability and Maintainability
ing Systems
trol Planning
cal Path Scheduling
ng Plan Management
ect Management
chasing Methods
bration and Gauge Repeatability & Reproducibility Systems
duct Identification
hine run-offs
cess Control and Capability
C approaches
ection Identificationdling and Packaging Methods
very Requirements
ning Records
vicing Requirements and Capability
0 Dry run
ability Methods
Hour Dry Run
t Strategies:
ts Should Review The Core Business Processes Of:
lity Goals And Objectives As They Relate To The Business Plan
es
gnchase
ufacture
ing
king
very
vice
ermine Market Conditions, Business Goals & Customer Requirements & Auditor Requirements
ts Should Review The Documents Of :
ults / Measurements
em Administration
sonnel
ning
rnal Audits
Closed Loop Systemem Effectiveness
ermine The Balance Between System Elements :
ning
ementing
trol
ow-Up
orting
uation
t Reduction?
duct Quality?
Time Delivery?
A's?
acity?
ability?anced Quality Planning?
tomer Requirements?
rent system:
pare a paper/work flow of the existing system in force; break the system down from input (planning) to execution (implementation of the plan) to the reporti
ain live copies of all documents used in the area and write the purpose of each on the reverse side of the documents and number each document to identif
duct flow:
cate the flow of finished products/materials through the area, starting with the first stage of activity moving through the area, routing movement through the
or operating problems:
at are the major operating problems existing in the department as described by the supervisor:
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ct of change
at is the relationship of these plans/changes to the planned installation of the pending system?
sical layout:
ain copies of the physical layout (blue prints, flow diagrams, etc.) Or draw one; indicate area designations, major pieces of equipment, furniture, etc. Denot
sonnel Roster:
mplete personnel Roster, indicating employees names, hired dates, shifts, job classification, and positions as well as appropriate pay rates and vacations in
ibility chart:
employees names, functions, critical skill levels, and if they were transferred into another area or department
pment list and location within the department:
all the major machines and equipment located in the department; their limitations and normal operating output speeds in units per hour:
ntity
me of equipment or machine
tations maximum output per hour
mal operating speed output per hour
k Objective Evidence : For ISO 9000 QS-9000 Intent; System Implementation; Effectiveness In Practice Does The Quality Operating System and/or Produ
m
ction
ety
ness Compliance
ormance
ronment
mponent Performanceerial Specifications
rmation Technology
Management Defined And Authorized Strategic Business Objectives, And How Can They Be Sure That All Product Developments Comply With These Ta
e Management Established, Authorized and Implemented Documented Procedures for the Development and Evolution of All Product Ranges?
at Steps Are Taken To Ensure that Customer Requirements are identified and Effectively Addressed?
All Market Research Activities Accurately Costed, Justified as Being Worthwhile and Authorized?
w Does Management Identify Potential New Markets Or Opportunities To Differentiate Their Products?
k At Linkage Between Design Record, DFMEAs, PFMEAs, Control Plans And Operator Instructions; Paying Particular Attention To Special Characteristics
otype Control Plans Call Out Dimensional Analysis And Material Certification Or Material Requirements
ncial Audit Analysis:
eral planning
ective Evidence:
ew and assessment of internal control structure
eral
ted financial statements
edules supporting footnote disclosures and other report workpapers
solidation and combination workpapers
sted trial balanceof general ledger balances
sting journal entries and reclassification entries
ysis of unrecorded audit differences
ncial statement disclosure checklist
er of representations
sequent events review documentation
mmitments and contingencies, including lawyers' letters
rd of directors and related committee minutes
orts on internal control
es for management letter comments
ew and approval checklist
return information and worksheets
ning and Administrationmpany acceptance and retention evaluation form
t planning audit checklist
rnal control structure audit checklist
ytical review workpapers
t program
agement letter
t time budget and control
trol of schedules
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wance for doubtful accounts and notes receivable
ntory and production costs
paid expenses
er current assets
perty, plant, and equipment
ngible assets
er noncurrent assets
ilities
ounts payable
es payable and related interest expense
rued payroll and related liabilities
er accrued liabilities
me taxes
er current liabilities
g-term debt and related interest expense (including capitalized lease obligations)
er long-term liabilities
ty
ital stock
tional paid-in capital
ained earnings
rations
ems walkthrough
s of controls
enues
t of sales
ng, general, and administrative expenseser operating expenses
operating income and expense
erstanding Financial Ratios
o analysis is an excellent tool for determining the overall financial condition of your small business. Think of it as a way of "taking the temperature" of your
& Bradstreet publishes key business ratios in its monthly Dun's Review as well as in its annual "Cost of Doing Business." Contact Business Information S
ounting Corporation of America publishes Parameter of Small Businesses which classifies operating ratios for various industry groups on the basis of gros
rent Ratio
Test or "Quick" Ratio
ntory Turnover Ratio
eivables Turnover Ratio
ables Turnover Rationtory to Net Working Capital
t to Equity Ratio
urn on Assets (ROA) Ratio
ss Profit Margin Ratio
urn on Sales Ratio
rent Ratio
is the standard measure of any business's financial health. You derive this ratio from the figures on your balance sheet. It tells whether a company has en
formula: Current Assets divided by Current Liabilities.
Test or "Quick" Ratio
is a tougher measure of liquidity than the current ratio because it excludes inventories when counting assets. It calculates the company's liquid assets in r
desired quick ratio is 1:
formula: (Current Assets less Inventories) divided by Current Liabilities.
ntory Turnover Ratioratio tells how often your business' inventory turns over during the course of the year. Because inventories are the least liquid form of asset, a high invent
formula: Cost of Goods Sold divided by the Average Value of Inventory.
eivables Turnover Ratio
number indicates how quickly your customers are paying you. The greater the number of times your receivables turn over during the year, the shorter the
formula: Net Sales divided by Receivables
ables Turnover Ratio
number tells how quickly you are paying your bills. The payables turnover ratio reveals how often your payables turn over during the year. A high ratio me
formula: Cost of Sales divided by Trade Payables
ntory to Net Working Capital
ratio tells how much of the company's funds are tied up in inventory. If this number is high compared to the industry average, it could mean the business
formula: Inventory divided by Net Working Capital
k to List
t to Equity Ratio
ratio indicates how much the company is leveraged (in debt). A high debt to equity ratio could indicate that the company may be over-leveraged, and shoformula: Total Liabilities divided by Total Equity
urn on Assets (ROA) Ratio
number tells you how effective your business has been at putting its money to work. The ROA is a test of capital utilization -- how much profit (before inte
formula: Earnings Before Interest and Taxes divided by Net
rating Assets
ss Profit Margin Ratio
ratio shows how efficiently a business uses material and labor in the production process. It shows how the percent of net sales remaining after subtractin
formula: Gross Profit divided by Total Sales
k to List
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auditor can use this form to document the performance and evaluation of ratio analysis in connection with analytical procedures performed in an audit. Th
UIDITY RATIOS
_
_
_
_
Current ratio =
rent assets
rent liabilities
__
__
__
__
_
_
_
_
Quick or acid test ratio =
rent assets - inventory
rent liabilities
__
__
__
__
OFITABILITY RATIOS
_
_
_
_
Gross profit ratio =
Sales - cost of goods sold
Sales
__
__
__
__
_
_
_
_
Operating margin ratio =
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Net Sales
_____
_____
_____
_____
9__
9__9__
9__
. Net income ratio (or profit margin ratio) =
Net income
Net sales
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Total debt
Total assets
__________
_____
_____
19__19__
19__
19__2. Debt to equity ratio =
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9__
9__
2. Average age of inventory =
360 days
nventory turnover_____
_____
_____
_____
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pecial Features For Investigation And Evidence Of Management Review
bjective Evidence:
tatistical Trends
ustomer Satisfaction / Complaints
RR's
PM's
apacity Utilization
crap/Rework As A Percent Of Sales
roductivity Improvement
fficiency Improvement
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ual WIP Turns
Cost of Quality Appendix
Continuous Improvement Appendix
t Analysis for Controlling Costs:
mary Cost Drivers
ondary Cost Drivers
ctive Operating Activities
t Analysis for A Typical Manufacturing Business
ars Spent On Premium Freight
essive Fluctuation Of Schedules
duce Transaction Costs In Purchasing, Stacking And Accounts Payable
velop High MRO Item Fill Rate At 90% By The Subcontractor
vide Smallest Possible Investment In MRO Inventory
rove MRO Item Quality
ect Labor, Indirect Labor, Salaries, Overtime Premium, Shift Premium, Bonuses, Vacation Pay, Holiday Pay
Time Shipments
itor Schedules Are Changed From The Required Lead Times
ployer FICA, Business And State Unemployment, Worker's Compensation, Group Insurance, Retirement, Employee Assistance
entory Turn-Over Performance
d Up Of Excessive Inventories To Hedge Risk Caused By Inaccurate And Fluctuating Information
preciation, Rentals, Shop Supplies, Property Taxes, Insurance, Utilities, Office Supplies, Contract Services, Travel, Entertainment, Education
solete Material Inventory Dollars
ccurate And Poor Quality Of Information
ineering, Maintenance, Tool Room, Facilities, Data Processing, Material Handling
mber And Cost Of Unplanned Changeovers
r Information Entering Into Production Schedule
neral Factory Overhead, Material Burden, Materials Management, Quality Control
d Time For Information Flow From One Tier To Another
erial Information Moving Slowly Through The Supply Chain
neral/Administration, Accounting/ Information Systems, Sales
fective Procurement And Stocking Processes For Indirect Material And Factory Supplies
ntenance, Repair, And Other Items:
essive Number Of Auditors
h Number Of Blanket Purchase Orders/ Requisitions / Purchase Order Releases Issued
h Cost Per Purchase Order Release
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Raw Material Costs, Purchased Parts, Incoming Freight
Cost Of Service, Outbound Freight, Incoming Freight
Cost Of Goods Sold
Cost Reduction Opportunity Analysis:
Variable Costs Through Specific
ine Item Analysis
Departments
Assignment Costs
General/Administrative
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Demand Driven Costs
MaintenanceO
Engineering
P
Tool Room
Q
Total Demand Driven Costs
Total Of O Through Q
Total "Controllable" Costs
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ontrollable Costs
d Costs
f Total Costs
ributions
f Total Costs
Total Costs
f Total Costs
ts Related to Quality Procedure
RPOSE
establish the method for collecting? maintaining, and analyzing quality cost data to achieve continuous improvement through the Company.PLICATION
ains to all quality costs connected with preventing and correcting non-conforming materials. The data is to be gathered and analyzed by the Operations a
PLICABLE MATERIALS
y/Weekly Production Management Report
thly Production Management Summary
rterly Production Management Summary
wntime Report
wntime Summary
ect/Delay Frequency Report
y/Weekly Transportation Report
ekly/Monthly Transportation Summary
FINITIONS
al Hours Direct labor hours or time spent processing coils or sheets, including Normal Rework.
ned Hours Hours earned by producing an acceptable product as measured by operator inspection and multiplied by the standard labor hour (Hrs/Ton).Quantity accepted x standard hours (a pre-determined standard of performance for processing or material handling).
lable Hours Total direct labor hours available for coil or sheet processing; including downtime training, meetings and abnormal rework but not vacation,
ductivity Percentage indicator that measures the output (earned hours) vs input (available hours).
zation Percentage indicator measuring the amount of time an operations was used to produce a coil or sheet vs the total hours worked.
iency Percentage indicator measuring an operator's performance on work processed how well he has performed.
eduled Attainment Percentage indicator measuring the successful completion of planned volume at a controlled reasonable cost and on schedule.
OCEDUREOperations and Transportation Departments have the responsibility for collecting, organizing, maintaining and evaluating quality cost data and genera
quality cost data will assist the Operations and Traffic Departments improve quality in:
blem Prevention
uation
rective Action
tomer Quality Problems
quality costs relative to the prevention category are those employees with quality operations, quality planning, quality training and indoctrination, associat
quality costs relative to the evaluation category are those employees with inspection, testing, quality audits, calibration and repair of test equipment, an
quality costs relative to the corrective action category are those employees with rework, repair, scrap, reinspection, and retesting and material review.
quality costs relative to the customer quality problems category are those employees with processing complaints, repair of returned materials, replac
lity cost data are to be collected from the appropriate production reports, work orders and traffic reports.
lity cost data are to be prepared daily, weekly, monthly and quarterly as determined by the need for the quality data. Distribution of the reports is to be
ERT COQ. XLS
y / Weekly Cost of Quality Summary
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PROCESSING AREA:
60" SLITTER
24" SLITTER
CUT-TO-LENGTH LINE
SHIPPING
RECEIVING
PACKAGING
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F
HOURS PER TON
C D
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K
% COIL BACK TO STOCK
L
% SCRAP
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S
% PRODUCTIVITY
M O
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HOURS
X
FREIGHT COSTS PER SHIPMENT
Y
DOWNTIME HOURS
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WEEK 1
WEEK 2
WEEK 3
WEEK 4
TOTALS
ATOTAL WORK DAYS
B
VACATION / ABSENT HOURS
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BEST F X BEST D) C
% YIELD
J% COIL UTILIZED (THROUGH PUT)
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% PRODUCTIVITY
M O
T
% EFFICIENCY
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OWNTIME REPORT
MPLOYEE __________________________________________________
HIFT __________________________________________________
ATE _________________________________
ODE
OWNTIME REASON00 8:00
00 9:00
00 10:00
0:00 11:00
:00 12:00
00 2:00
00 3:00OTALS
ORK ORDERS
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E
BACK END
F
MAINTENANCE
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N
PACKING LINE BACKUP
O
COILS NOT PULLED
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U
MISCELLANEOUS
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TOTAL HOURS
CAPACITY UTILIZATION ANALYSIS
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D. Actual Hours Worked
3895.7
3855.5
4619.7
3310.24439.2
36523336.25
4202.2
3515
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44
58
5071
8263
G = D E
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0.957
0.839
0.789
0.882
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Month
JAN
FEBMAR
APR
MAY
JUNE
JULYAUG
SEP
OCT
NOV
DECTOT
A N mber of Work Da s
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E. Tons. Processed
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Worst Month Best Month
% Utilization
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FFICIENCY? UTILIZATION and PRODUCTIVITY REPORT
-1
-2
Quan-
ty
-3
-4
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Medical
Other
1
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2
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1
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PRODUCTION EVALUATION REPORT
ASSOCIATE
Atten-
dance
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SUB-TOTAL
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B-TOTAL
TAL
acity utilization calculation
ne-month summary shows a total of 21424.5 tons processed using? .69 hours or 44 hours per ton.
rate of .69 tons per hour? from the number of hours worked for that entire period? it can be determined that the department functioned at only 88% of its c
% Capacity = Hours Per Ton x Tons Processed x 100Actual Hours Worked
% Capacity = 44 x 21424.5 = 308528 = 88%
348275 348275
(The best hours per ton (44) become the standard for the calculation in the other months.)
The best performance was in the month of April when production reached 99% of its capacity.
% Capacity = 44 x 2297 = 99%
for April 3310.25
And the worst month was August at 78.9% of its capacity.
There is a variance of 25% of its capacity.
(.26 x Total Labor Costs = Savings)
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higher the variances the more indication of the lack of good operational tools to control costs and therefore greater potential for improvement.
rating performance ratios
roductivity is the percentage indicator that measures the output (earned hours) versus input (available hours).
% Productivity = Earned Hours* x 100
Available Hours
erformance is the output of measured work in relationship to total hours worked. It also measures how productive the area is
% Performance = Earned Hours X 100
Total Hours Worked*
fficiency represents how well an associate has performed on measured work.
% Efficiency = Earned Hours x 100
Hours on Measured Work*
(Actual Hours)
tilization represents the percentages of time employees are working against measured activities and are determined by:
% Utilization = Measured Hours Worked x 100
Total Hours Worked
nitions
ned hours are the output of measured hours of work produced (real work accomplished) in the department. Hours earned by producing acceptable produ
rs on measured work represent those hours actually spent by employees on measured or estimated work.
al hours worked is the total clock hours for which an employee works in the department.
cheduled attainment is the successful completion of planned volume at a controlled reaso
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