Core Processes Create Value

Performance Improvement Solutions for Your Business Needs September 2010

In this issue

  • Core Processes Create Value
  • Employee Satisfaction Survey
  • AS9101D QMS Assessment
  • In The News
  • AS9115 For Deliverable Software
  • Training Courses
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    Core Processes Create Value

    The current economic downturn has created an enhanced awareness on how an organization creates the value needed by its products, markets and customers. Becoming more efficient and effective is much more than eliminating process waste. Internal waste reduction may not be the primary need for an organizations markets or customers, thus waste reduction may not ensure continued sustainability of the organization.

    A process management approach can help an organization prevent a narrow view of a business system. The process approach is a set of interrelated or interacting activities, that require specific input resources, monitoring and measurement opportunities (before, during, and after the process), in order to achieve consistent product and service. An organization wanting to improve its economic performance can use the process approach to link improvement to strategic goals.

    The following questions is a good place to start:

    • What business are we in?
    • Who are our customers?
    • What do they do, and what do they expect from us (the value)?
    • What do we need to do to meet their unique requirements (capabilities)?
    • What is customer critical and what is less significant?
    • What are the critical core processes that will allow us to meet our specific capabilities?
    • Which core processes do we have, which do we need to create, and which do we need to manage better (process management)?

    Let us not forget that the “economic value” or rationale is particularly important. Identifying the critical processes that need to be either created or improved to provide the needed strategic capabilities should drive the overall improvement effort and economic value. This is the essence of process management (effectiveness of process = ability to achieve desired results, and efficiency of process = results achieved versus resources used).

    Identifying the missing gaps and implementing the missing processes can be the quickest way to improve a system. The organization must ensure that process improvements are linked to strategy and core process execution. To be a success, an organization must continuously improve all its essential core processes to provide value and to always satisfy customer requirements.

    Employee Satisfaction Survey

    Cust Sat

    According to a survey conducted by Newsweek Magazine, companies continue to cut a higher-than-expected jobs, you can’t blame the American worker for seething. Wages remain stagnant and unemployment is at 9.5 percent, even as employee productivity is at levels not seen since 2002. Much of the workforce has endured pay cuts, furloughs, and a loss of benefits. During the same time frame, corporate profits have rebounded, according to the Standard & Poor’s 500 Index.

    “There’s more of a divide in terms of compensation between senior executives and the average worker now,” says Thomas Kochan, a professor of management at MIT. “This will have a lasting effect and lead to lower trust and lower confidence in management.” If this environment lingers, it could lead to a profound cultural change in the way Americans view work.

    As the recession drags on, academics and executive coaches say workers have become disconnected from companies. Eighteen percent of large companies recently surveyed by Towers Watson said they had cut or eliminated the matching money they contributed to employees’ retirement plans, starting in September 2008. Even when profits came back, those benefits often have not.

    Nearly 48 percent of Americans say they planned to look for a new job once the economy stabilizes. Roughly half of those surveyed say they no longer trust their companies or feel like they treat workers fairly, according to Deloitte’s 2010 Ethics & Workplace Survey. “When you consider this, it has huge implication for companies’ bottom lines,” says Sharon Allen, chairman of Deloitte. “It costs money to replace workers, and it’s very costly in terms of the loss of institutional knowledge.”

    But will asking for more actually get employees anywhere? The recession has irrevocably shifted the labor market. While top performers and those in hot industries such as tech or finance may still be able to negotiate generous compensation packages, ordinary workers may not see the cash. Employees may change jobs, only to find out that the same problems exist at new offices. Worse, workers will simply become accustomed to this new reality and feel a dampening of ambition: a sense of gratitude for any job. “It just becomes a way of life,” says Robert Sutton, a professor of organizational behavior at the Stanford Graduate School of Business. For employees to really gain the upper hand again, they may need to wait until unemployment drops back to the 5 to 7 percent range. Unfortunately for everyone, that isn’t expected any time soon.

    Click here to read the Newsweek Survey.

    AS9101D QMS Assessment

    The International Aerospace Quality Group (IAQG) has released the AS9101D standard. Its theme for this current release is “Conformity joins performance and effectiveness, resulting in a satisfied customer.”

    The intent is to give the current ISO-based auditing process a stronger emphasis on QMS and process effectiveness, in addition to conformity to the AS91XX requirements. This represents a transition from clause-based auditing to a process-based approach for QMS assessment.

    This is not just a new checklist, but rather an “enhanced audit approach for evaluating process-based management systems.” According to the IAQG, these principles provide the foundation of AS9101D:

    (1) AS9101D takes a process-based approach to auditing. Auditing and certification comprise a process. Also, the organization is to be audited in terms of processes, not discrete compartments. Auditing plans and audit trails are to be based on processes.

    (2) AS9101 focuses on organization performance. An audit should identify process, input, and performance, and should include process performance measurement and monitoring, performance targeting, improvement measurement, and fulfillment of customer expectations. This information is to be used in planning the audit, when analyzing effectiveness, and in reporting the audit results relative to the performance effectiveness of the QMS, its processes, and improvement actions.

    (3) AS9101D recommends audit methodology to include the following areas:

    • Customer focus
    • Organizational leadership
    • QMS performance and effectiveness
    • Process management
    • Process performance and effectiveness
    • Continual improvement

    (4) AS9101D is for evaluating QMS effectiveness in addition to conformity. As part of evaluating conformity to requirements, audits are to evaluate the effectiveness of the QMS and associated processes. How well is the organization fulfilling customer expectations? Is it delivering quality products, and delivering them on time? Is the organization continually improving? The auditors are to use the Process Effectiveness Assessment Report (PEAR).

    (5) AS9101D improves reporting of audit results. The methods and forms for reporting audit results are standardized. Variation has been reduced to enable more consistent interpretation of audit results. The forms are easier for all stakeholders to understand, including customers and assessors. Surveillance of suppliers is more effective and efficient. The forms should enable the audited organization to better focus its improvement efforts. There are several new forms; in addition to the PEAR, auditors will now be using a Nonconformity Report, an Objective Evidence Record (which replaces the old checklist), and a QMS Process Matrix Report. AS9101D eliminates scoring and the use of a questionnaire.

    In addition, with AS9101D there is now a single audit standard that replaces all existing versions of 9100, 9110, and 9120. According to an IAQG media release, “Both QMS Certification auditors and Certified organizations will notice a significant change in how future audits are conducted, including the reporting of process effectiveness and audit conclusions. These changes will lead to a determination of an organization’s ultimate measure of QMS effectiveness – customer satisfaction.”

    For more information on the full roster of our aerospace offerings, visit our website or contact us.

    In The News

    Sustaining Edge Solutions is a proud Sponsor and Exhibitor of the 2010 Southern California Quality Conference, October 23, 2010 at Cal Poly University, Pomona CA. The Keynote speaker is David Spong, President of the American Society of Quality and sits on the Board of the Baldrige Foundation. Early Bird Pricing is $65 only until Sep 24th, 2010. See the Conference Website for more detail and program plan. See you there!

    AMT Urges Congress to Strengthen, Rebuild U.S. Manufacturing. In an open letter, Douglas K. Woods, president of The Association For Manufacturing Technology (AMT) urges Congress and the administration to help rebuild the U.S. manufacturing sector.

    AMT is urging Congress and the administration to implement policies consistent with AMT’s “Manufacturing Mandate,” a national manufacturing strategy to help rebuild and strengthen this country’s manufacturing sector.

    A solid economic recovery has been slow to take hold, and that has been especially true in the manufacturing sector where credit remains tight and uncertainty concerning the future has prevented companies from retooling, diversifying, and investing in R&D. AMT believes its national manufacturing mandate is necessary to cement this recovery and create a strong foundation for sustained economic growth.

    AS9115 For Deliverable Software

    This document supplements the 9100 standard requirements for deliverable software and contains quality management system requirements for organizations that design, develop, and/or produce deliverable software for the aviation, space, and defense industry. This includes, as required, support software that is used in the development and maintenance of deliverable software. The deliverable software may be stand-alone, embedded, or loadable into a target computer.

    AS9115 can be purchased at SAE International.

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