ENHANCING AN IATF 16949 BASED QUALITY
MANAGEMENT SYSTEM TO PROMOTE
PERFORMANCE EXCELLENCE
______
A Thesis
Presented
to the Faculty of
California State University, Dominguez Hills
______
In Partial Fulfillment
of the Requirements for the Degree
Master of Science
in
Quality Assurance
______
by
Daniel Leon
Fall 2019
THESIS: ENHANCING AN IATF 16949 BASED QUALITY MANAGEMENT SYSTEM TO PROMOTE PERFORMANCE EXCELLENCE
AUTHOR: DANIEL LEON
APPROVED:
______Milton Krivokuca, DBA Thesis Committee Chair
______Catherine French, MSQA Committee Member
______Denis Bourcier, Ph.D. Committee Member
Copyright by
DANIEL LEON
2019
All Rights Reserved
Dedicated to all my family, especially to my wife Anne, and my children Daniel and Anna.
They bring joy to my life and sense to this work.
ACKNOWLEDGEMENTS
I would like to thank Robert Spencer and Tanya Spencer for their extraordinary guidance provided to finish this thesis. I would also like to thank my thesis committee members, Milton
Krivokuca, Catherine French, and Denis Bourcier for their guidance. Special thanks to Mike
Hudson for giving me the flexibility at work to make this happen.
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PREFACE
In this competitive world, a Quality Management System is not enough for an organization to be competitive. All its parts need to work in sync like a grand orchestra. In order to achieve a competitive market position, an Operational Excellence Management System is necessary to satisfy expectations of the entire organization, including shareholders, government entities, and customers. Within the Operational Excellence Management System, opportunities are available to establish balance, efficiency, and effectiveness as in a well-greased complex piece of machinery. This thesis proposes a framework for such a management system.
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TABLE OF CONTENTS
ACKNOWLEDGEMENTS……………………………………………………………………….v
PREFACE………………………………………………………………………………………...vi
TABLE OF CONTENTS………………………………………………………………………...vii
LIST OF TABLES…………...... ………………………………………………………………..viii
LIST OF FIGURES……………………………………………………………………………….ix
ABSTRACT…………………………………………………………………………………….....x
1. INTRODUCTION………………………………………………………………………………1
Background………………………………………………………………………………..1 Statement of the Problem………………………………………………………………….2 Purpose of Study…………………………………………………………………………4 Theoretical Basis and Organization………………………………………………………..6 Scope and Limitations……………………………………………………………………..9 Definition of Terms………………………………………………………………………..9
2. REVIEW OF LITERATURE………………………………………………………………….14
PDSA Cycle……………………………………………………………………………...14 High-Level Structure and Management System Standards………………………………16 Management Systems for Quality, Safety, and Environmental…………………….…….17 Quality Tools for Performance Excellence………………………………………………19 Pursuit of Organizational Maturity……………………………………………………….23 Performance Excellence Models: CMMI and MBQA……………………………………27 Operational Excellence Management System……………………………………………33
3. METHODOLOGY…………………………………………………………………………….34
4. RESULTS AND DISCUSSION……………………………………………………………….44
Plan: OEMS Requirements………………………………………………………………44 Company ABC: Manufacturer of Automotive Batteries…………………………………46 Do and Study: OEMS Process Requirements and Gap Analysis…………………………51 Act: Proposal Design for Change………………………………………………………...69
5. CONCLUSION………………………………………………………………………………..74
REFERENCES…………………………………………………………………………………..81
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LIST OF TABLES
1. Evolution of the Deming’s 14 Points of Management…………………………………………24
2. Components of the System of Profound Knowledge (SoPK)…………………………………26
3. A Better Practices and Best Practices under SoPK……………………………………………27
4. Relationships Among Categories, Capabilities, and Practice Areas.…………………………..30
5. OEMS High-Level Structure and Performance Objectives Summary…………………………36
6. OEMS Program Performance Scorecard………………………………………………………39
7. Comparison of Annex L with CMMI and Baldrige CPE Performance Excellence Models…………………………………………………………………………….40
8. OEMS Elements Relevant for Company ABC………………………………………………...45
9. Actual OEMS Scorecard for Company ABC………………………………………………….50
10. ISO and IATF Leadership Processes and Performance Excellence Models……..…………..52
11. ISO and IATF Planning Processes and Performance Excellence Models…..………………...54
12. ISO and IATF Resource Processes by Performance Excellence Models……………………56
13. ISO and IATF Operation Processes by Performance Excellence Models..…………………..58
14. ISO and IATF Performance Evaluation Processes……………………………………………61
15. ISO and IATF Continual Improvement Processes..…………………………………………..63
16. Common Clauses Among Quality and EHS Management Systems…………...……………..67
17. Recommended Actions to Improve the OEMS Maturity Level…………………….………...72
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LIST OF FIGURES
1. Deming’s PDSA Cycle for Continuous Improvement…………………………………………7
2. Six Levels of Organizational Maturity Established in the CMMI Model………………………..8
3. Evolution of the PDSA Cycle…..……………………………………………………………...14
4. Seven-Step PDSA Cycle………………………………………………………………………15
5. House of Quality………………………………………………………………………………20
6. The Objectives and Key Results Cycle………………………………………………………...22
7. The Stanford Design Thinking Process………………………………………………………...23
8. CMMI Initial Models…………………………………………………………………………..29
9. Evolutionary Levels for Maturity Assessment…………………………………………………31
10. 2019-2020 Baldrige Excellence Framework Criteria Overview……………………………...33
11. PDSA Sequence of Activities for Developing a New Integrated Management System………35
12. Quality Function Deployment Analysis for OEMS…………………………………………..38
13. OEMS Maturity Level Radar Chart…………………………………………………………..41
14. Pareto Chart of Categories in CMMI…………………………………………………………41
15. PDSA Framework for Enhancing an IATF 16949 Based Quality Management System……...42
16. Actual Quality Function Deployment for OEMS………………..……………………………49
17. OEMS Maturity Level by HLS Clause…………………………………….…..……………..65
18. Pareto Chart of Maturity Levels of the Current Management Systems………..……………...66
19. Common Tools Used in Quality and EHS Management Systems……………..……………..69
20. Integrated Mechanisms for OEMS Efficiency………………………………………………..69
ix
ABSTRACT
Automotive manufacturers establish their quality management system (QMS) based on
requirements from the International Automotive Task Force (IATF) 16949 and International
Organization for Standardization (ISO) 9001:2105. The automotive industry is highly
competitive and must apply systems thinking to establish an Operational Excellence
Management System (OEMS). Despite best efforts, Company ABC is struggling to keep its
systems up-to-date, be prepared for audits, and maintain excellent customer satisfaction in the
automotive supply chain. Company ABC practices the Plan-Do-Study-Act cycle to strategically align its QMS to drive competitiveness and improve customer perception while complying with
IATF 16949. Deming’s Theory of Profound Knowledge, including leading standards and principles, is used to propose a framework for an OEMS. A scorecard is developed to communicate effectiveness and efficiency metrics throughout the sequence of operational processes of OEMS. Baldrige Performance Excellence is incorporated in proposed continuous improvement practices to maintain competitiveness and promote excellence in customer satisfaction.
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CHAPTER 1
INTRODUCTION
Background
In the automotive industry there is one essential reference source that dictates the minimum requirements for a Quality Management System (QMS) in any organization participating in the automotive supply chain. This reference is the International Automotive Task
Force (IATF), which consists of automotive Original Equipment Manufacturers (OEM) and national automotive industry associations that represent industry suppliers. The IATF has set forth standards for use in conjunction with the international standards for a QMS based on
International Organization for Standardization (ISO) 9001:2015 standards. On top of IATF and
ISO 9001:2015 requirements, customers may choose to add their own specific requirements. The intention of this family of standards is to drive competitiveness through the supply chain to improve efficiency, effectiveness, and create value for consumers.
Essential requirements of IATF and ISO 9001:2015 standards are risk-based thinking and continuous improvement requiring an organization to assess their risks and opportunities in strategically supporting their supply chain and customer requirements. In order to stay ahead of the curve and remain competitive, it is necessary for organizations to develop their QMS within an Operational Excellence Management System (OEMS). Full maturity is accomplished through interdependent relationships with other elements of the organization such as safety, environmental responsibility, and good community relationships.
2
Annex L, formally known as Annex SL, provides the new high-level structure for ISO
management system standards. ISO technical committees must now use Annex L when revising
a standard or creating a new one. Additionally, Annex L replaces the historical ISO Guide 83,
expands on the base ISO structure already implemented (from eight clauses to ten clauses), and
introduces identical core text, common terms, and definitions as follows:
• streamline standards;
• encourage standardization; and
• ease the integration of management systems (NQA, 2019).
The adoption of the Annex L structure for coordinating ISO standards has made it easier
to combine multiple management systems into one integrated management system. By
implementing the Annex L structure, organizations avoid duplication in performing similar
activities, like management review, internal audits, and creating different platforms for identical
goals in separate Corrective Action Preventive Action (CAPA) systems.
Statement of the Problem
Company ABC is an automotive parts supplier that is ISO 9001:2015 and IATF 16949
certified, but year-after-year is struggling to keep its systems up-to-date and ready for audits,
while maintaining an excellent customer perception of their products and services. Company
ABC supports a significant portion of the global vehicle fleet by serving both OEM and aftermarket batteries. This automotive parts supplier is an established, worldwide organization.
Company ABC has several manufacturing plants in the United States (U.S.) serving automotive and aftermarket customers. It is important for the business to always deliver value to the customer in the form of the right product, at the right time, and at the right location. It is expected that the product will perform as rated for the life of its warranty.
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Company ABC is facing the following challenges in its manufacturing plants:
1. It is also ISO 14001:2015 and ISO 45001:2018 certified, but these two systems are not integrated with each other and with the third system ISO 9001:2015.
2. Quality leadership at the plant level reports to operations, creating conflicts of interests.
3. No centralized database for sharing knowledge.
4. Information systems rely heavily on paper-based forms that do not allow real-time inquiry or feedback.
5. Slow adoption of risk-based thinking (old practices versus new practices within ISO). The new revision of risk-based thinking is more explicit for managing risk and opportunities (new frameworks for risk of failure and risk of success).
6. Reduced effectiveness due to the amount of workload demands on individuals. Available human capital is insufficient to cover all processes required by IATF 16949 effectively (IATF has 90 more requirements than ISO).
7. Greater difficulty in obtaining process maturity.
Company ABC desires to resolve the issues outlined above while pursuing improvements in operational capability and maturity consistent with Capability Maturity Model Integration
(CMMI) guidance. CMMI is designed to help improve performance by providing businesses with everything needed to consistently develop better products and services (White, 2018).
CMMI allows Company ABC to establish alignment, integration, and management of internal processes within the single framework of Annex L to promote operational excellence. Integration of quality guidance from ISO 9001:2015, ISO 14001:2015, ISO 45001:2018, IATF 16949, and the Baldridge Excellence Framework criteria for Performance Excellence (PE) is planned for accomplishment over a several year period.
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Purpose of the Study
The IATF and ISO 9001:2105 are quality standards that automotive manufacturers are expected to adopt. In the highly competitive automotive industry, organizations must apply an
OEMS. The purpose of this study is to determine the requirements to design an OEMS that allows the integration of several management systems (e.g., safety, environmental, and quality) under a single umbrella using the principles of PE set forth in the Baldrige Excellence
Framework. The Baldrige Excellence Framework, which includes criteria for performance excellence, is an organizational assessment tool. It promotes leadership and management practices that nationally recognized role model organizations have validated through their high performance. Self-assessments are aimed at improving an organization’s performance by promoting innovation and supporting long-term success (Schaefer, 2018). For Company ABC, this method of operation will increase business competitiveness and value for all stakeholders
(any party that has an interaction with the organization system).
Despite best efforts, Company ABC is struggling to keep its systems up-to-date, be
prepared for audits, and maintain excellent customer satisfaction in the automotive supply chain.
The framework for the OEMS is ISO 9001:2015 and its Annex L structure which encourages the
organization to
• assess their operational environment;
• look at their processes and results; and
• assess effectiveness and efficiency of processes over time through learning and continuous improvement.
However, PE demands a further step to encourage innovation as part of the continuous
improvement culture—in a synergistic system. Deming’s System of Profound Knowledge
(SoPK) encourages leaders to thoroughly understand the system to be managed, how it is
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affected by variation, how its knowledge can be improved using the Plan-Do-Study-Act (PDSA) cycle, and how to nurture its people for the greater good of the system (Deming, 1994).
Furthermore, scorecards and dashboards will be used to present metrics for management review and performance assessment.
Deming’s PDSA theoretical framework serves as a basis to integrate Baldrige PE within
Company ABC management systems. The Baldrige Excellence Framework is a systems approach to performance excellence. The PDSA learning cycle can be used to strategically integrate ISO 9001:2015 and Annex L. Annex L provides the new high level methodology and structure for ISO management system standards. Annex L was created to introduce identical core text, common terms, and definitions to accomplish the following:
• streamline standards
• encourage standardization
• promote ease in integration of management systems (NQA, 2019)
Using this methodology and scorecard performance metrics for strategic objectives promotes an establishment of an integrated management review system. This structure provides a description of the organization with its mission, vision, and values statements. A Strengths,
Weaknesses, Opportunities, and Threats (SWOT) analysis will be conducted to provide input to the PDSA cycle to support adoption of the Annex L core management systems structure.
The goal of this study is to propose a performance scorecard within an integrated management systems structure that can be used to reinforce Company ABC’s QMS centered on the principles of performance excellence. A strategy is proposed to align short-term improvement tactics with long-term business operational excellence performance goals to
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• deliver increasing value to customers and stakeholders, contributing to organizational sustainability;
• improve overall organizational effectiveness and capabilities; and
• promote organizational and personal learning (Baldrige Performance Excellence Program, 2019a).
The Malcolm Baldrige Quality Award (MBQA) promotes a systems perspective by
managing all components of an organization as a unified whole to achieve ongoing success
(NIST, 2015). Baldrige PE, based on MBQA, elevates and integrates ISO 9001 and IATF 16949
to the other management systems (environmental, quality, and safety).
Theoretical Basis and Organization
In a PE model, organizations operate at some level of maturity which is sustained by
systematic continual improvement that creates value and builds knowledge. The framework for pursuing excellence is the PDSA learning cycle. The PDSA promotes continual improvement
(CI) throughout all areas of the organization and provides the foundation for Company ABC
QMS.
Figure 1 displays the PDSA learning cycle for continuous improvement (Deming, 1994).
This is Deming’s improvement on the PDCA cycle since it stresses the development and accumulation of new knowledge from learning (The W. Edwards Deming Insititute, 2019).
.
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Learn and create knowledge. Assess the current stage vs the Correct course as needed. ideal state and identify the gap Request corrective and that needs to be bridged. preventive actions Use risk thinking. Run through the cycle again.
Act Plan
Study Do
Study the actual results and Carry out the plan and collect compare against the expected data. results identified during the Plan stage.
Figure 1. Deming’s PDSA cycle for continuous improvement. Created by the author of this thesis.
ISO has created a high-level structure (HLS) called Annex L. Annex L can be overlaid on
the PDSA cycle for any of the newly revised ISO standards. PDSA serves as the theoretical framework for continuous learning and continuous improvement when pursuing excellence
(Adrian, 2009). Annex L overlays seamlessly on this framework to promote accomplishment of each maturity level in an organization so it can constantly improve.
Deming’s 14 points for the transformation of management are the foundation for performance excellence, a core concept of Total Quality Management, which help organizations improve quality and productivity (Deming, 1986). With the SoPK, Deming offered a management theory that leverages his 14 points of management to propel American organizations to a higher level of maturity and global competitiveness.
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CMMI is a compilation of best practices that enable an organization to operate at a maturity of performance excellence. Its model can be integrated with the PDSA learning cycle to classify organizational performance within various levels of capability and maturity (CMMI
Institute, 2018). Figure 2 explains the six levels of maturity established through empirical observation and calculation within the CMMI methodology. These maturity levels build on each other and must be progressed through level by level.
Figure 2. Six levels of organizational maturity established in the CMMI model. Adapted from “Definitions of Evolutionary Level Characteristics,” by CMMI Institute, 2018, CMMI model V2.0, p26. Copyright 2018 by CMMI Institute.
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The Baldrige criteria for PE provides a tool that helps quantify the maturity level of organizations so they can improve and become more competitive. There is no prescribed framework or methodology to implement the Criteria for Performance Excellence (CPE).
Organizations can benchmark their best practices to establish their strategy to promote their maturity to successively higher levels.
Scope and Limitations
The scope of the study is limited to providing a tool for improvement of the management systems for quality, environmental, and occupational health and safety in an organization operating within the automotive industry in the United States. The CPE of the MBQA and the capability and maturity levels of the CMMI will be used as a reference for determining organizational excellence for Company ABC. The full CMMI model will not be used so as not to infringe on intellectual property. Literature describing continuous improvement and performance excellence models will be reviewed with emphasis on Deming’s work, principally the PDSA theoretical framework. Based on this review, a proposal will recommend a course of action that can be taken for enabling the organization to develop and operate at a higher maturity level.
The only management systems standards to be considered are ISO 9001:2015, IATF
16949, ISO 14001:2015 and ISO 45001:2018. These management systems standards are organized to the ISO’s high-level Annex L structure. This study does not intend to replace the current management system model, but to offer recommendations and strategies to become more competitive in the aerospace and automotive industries.
Definition of Terms
Annex L: New HLS for ISO management systems standards, replacing the historical ISO Guide
83, and expands on the base structure already implemented (NQA, 2019).
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Capability Level: Apply to an organization’s performance and process improvement achievements in individual practice areas. Within practice areas, the practices are organized into practice groups labeled Level 0 to Level 5, which provide an evolutionary path to performance improvement. Each level builds on the previous levels by adding new functionality or rigor resulting in increased capability (CMMI Institute, 2018).
Capability Maturity Model Integration® (CMMI®): An integrated set of best practices that enable business to improve performance of their key businesses processes (CMMI Institute, 2018).
Corrective Action: Action to eliminate the cause of a detected nonconformity or other undesirable situation (Cianfrani, Tsiakals, & West, 2009). A change in a process or procedure to eliminate an issue once the root cause of an issue is identified to prevent the issue from reoccurring.
High-Level Structure (HLS): Developed by ISO to improve alignment among its international standards for management systems (ISO, 2015b, p. 9). The intent to create this HLS was to enhance compatibility of standards, allow easier implementation of new ISO standards, and increase the effectiveness in standard development for ISO technical committees.
International Automotive Task Force (IATF): An “ad hoc” group of automotive manufacturers and their respective trade associations, formed to provide improved quality products to automotive customers worldwide. IATF members include the following vehicle manufacturers:
BMW Group, FCA U.S. LLC, Daimler AG, FCA Italy Spa, Ford Motor Company, General
Motors Company, PSA Group, Renault, Volkswagen AG, and the vehicle manufacturers respective trade associations as follows: AIAG (United States), ANFIA (Italy), FIEV (France),
SMMT (United Kingdom) and VDA QMC (Germany) (International Automotive Task Force,
2019).
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House of Quality (HOQ): A product planning matrix that is built to show how customer
requirements relate directly to the ways and methods organizations can use to achieve those
requirements. HOQ diagrams use a design that resembles the outline of a house and can be created using technical and competitive benchmarking data. HOQ is considered the primary tool used during quality function deployment to help facilitate group decision making (ASQ, 2019a).
International Organization for Standardization (ISO): An independent, non-governmental
organization that brings experts together to share knowledge and develop voluntary, consensus-
based, market relevant international standards that support innovation and provide solutions to
global challenges (ISO, n.d.).
ISO 9001:2015: This standard sets out the requirements and the criteria for a QMS and is the
only standard in the family that can be certified. This standard is based on a number of quality
management principles, including a strong customer focus, the motivation and implication of top
management, and the process and continual improvement approach (ISO, 2019c).
ISO 14001:2015: The ISO 14001:2015 standard sets out the requirements and the criteria for an
environmental management system and is the only standard in the family that can be certified. Its
goal is to protect the environment and respond to changing environmental conditions in balance
with socio-economic needs (ISO, 2015a).
ISO 45001:2018: The ISO 45001:2018 standard sets out the requirements and the criteria for an
occupational health and safety management system and is the only standard in the family that
can be certified. Its goal is to prevent work related injury and ill health to workers, and to provide
safe and healthy workplaces (ISO, 2018).
Maturity Level: Represents a staged path for an organization’s performance and process
improvement efforts based on predefined set of practice areas (PA). Within each maturity level,
12 the predefined set of PA also provide a path to performance improvement. Each maturity level builds on the previous maturity levels by adding new functionality or rigor (CMMI Institute,
2018a).
Objective: A specific statement of a desired short-term condition or achievement; this includes measurable end results to be accomplished by specific teams or individuals within time limits
(ASQ, n.d.).
Original Equipment Manufacturers (OEM): Refers to the manufacturer of the original equipment, that is, the parts assembled and installed during the construction of a new motor vehicle (e.g., automobile, light truck, or truck) (International Trade Administration, 2011).
Operational Excellence Management System (OEMS): An integrated approach where several management systems are addressed concurrently to address several stakeholder requirements.
For example, stakeholders could include the customer, society, workforce, and regulatory entities.
Process: A set of activities that uses resources to transform inputs into outputs.
Process Approach: A management strategy whereby managers control the processes within an organization, the inputs and outputs of those processes, and the interactions between those processes.
Quality Function Deployment (QFD): A focused methodology for carefully listening to the voice of the customer and then effectively responding to those needs and expectations. Is an essential tool when an organization is working to determine what it needs to do to satisfy or even delight customers. With QFD, quality is a measure of customer satisfaction with a product or a service
(ASQ, 2019b).
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Risk-Based Thinking: Considering risk qualitatively when defining the rigor and degree of
formality needed to plan and control the QMS, as well as its component processes and activities
(ISO, 2015b).
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CHAPTER 2
REVIEW OF LITERATURE
PDSA Cycle
The PDSA is a continuous improvement cycle that originates from the Shewhart cycle
(Deming,1994). It provides the theoretical basis and framework for this study. (Moen & Norman,
2010). Figure 3 shows the evolution of the PDSA cycle from the scientific method, first transforming through the Deming wheel in the 1950s, the PDCA cycle to finally land on the clarification of the difference in the spirit between “Check” and “Study” in 1986.
Figure 3. Evolution of the PDSA cycle. Adapted from “Clearing up myths about the Deming cycle and seeing how it keeps evolving”, by R. Moen, and C.L Norman, 2010, Quality Progress, November, 23-28.
Leffakis (2016) recommends PDSA for continuous improvement initiatives like Kaizen
since it leverages on the application of knowledge and experience to build performance. Cleary
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(2015) sees this approach as a way to innovate and improve organizations, and explains the
seven-step approach to design thinking developed as part of Deming’s principle for transformation of American industry (concerning the removal of barriers that rob people of their pride of workmanship). Figure 4 represent Deming’s seven-step transformation of American industry PDSA cycle. The process is carried out by a team beginning with what is known as empathy with the customer so to identify customer needs. The first step of the process defines the system. This step aligns with Company ABC when referenced to the ISO HLS. The goal is to understand the system, its users, and customers, which corresponds with Deming’s SoPK.
Figure 4. Seven-step PDSA cycle. Adapted from “Design thinking and PDSA”, by B.A. Cleary, 2015, Quality Progress, July, 21-23.
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Knudsen, Ehlers, and Mainz (2017) advised on the importance of the correct application of the PDSA continuous improvement cycle. The author notes that not all recommended tasks are consistently followed by users of the PDSA cycle. The key characteristics to follow for a successful implementation are as follows:
1. use of iterative cycles
2. prediction-based test of change
3. testing from small to large scale
4. use of data over time
High-Level Structure and Management System Standards
Annex L belongs to the ISO and International Electrotechnical Commission Directives
Part 1 and Consolidated ISO supplement. Annex L lays out a HLS used to organize an ISO standard as follows:
1. scope
2. normative references
3. terms and definitions
4. context of the organization
5. leadership
6. planning
7. support
8. operation
9. performance evaluation
10. improvement (ISO, 2019b)
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The HLS provides identical core text, common terms, and definitions that facilitate the integration of several management systems such as quality, environment, occupational health and safety. The advantages of using a common structure like Annex L is it facilitates the standardization of mechanisms across processes allowing a significant increase in efficiency in the use of resources. At the same time, by managing several processes as a whole, the organization is taking a step closer towards PE with one single management system addressing the needs of all interested parties (ISO, 2019b).
ISO 9001:2015 Risk-Based Thinking
The new revision of ISO 9001 has brought the standard to a higher strategic level by emphasizing the need for an organization to understand the factors that interacts with it, thereby setting the stage be better prepared for effectively addressing customer expectations. This is the context of the organization (Clause 4 of ISO HLS), which along with risk-based thinking sets the framework of a QMS (ASQ, 2017). Risk-based thinking is a concept introduced in ISO
9001:2015 as a way to explicitly encourage risk management not only negative outcomes, but also exploding positive outcomes as opportunities (Robitaille, 2019). Risk-based thinking begins with top management and must be embedded in the processes (Devos, 2015).
Management Systems for Quality, Safety, and Environmental
ISO, through its different committees, has developed international standards that organizations can voluntary adopt to standardize their management systems by demonstrating consistency in their processes. A management system provides the tools to document the processes and mechanisms to continuously improve the organization by reducing variation and eliminating waste while satisfying stakeholder requirements. Relevant standards for the purposes of this study are as follows:
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1. ISO 9001:2015 QMS requirements
2. ISO 14001:2015 environmental management systems requirements
3. ISO 45001:2018 occupational health and safety management systems requirements
4. IATF 16949 automotive quality management system standard
The IATF 16949 was previously the technical specifications ISO/TS 16949:2009, which
was to be used in conjunction with ISO 9001:2008. In 2016, ISO withdrew ISO/TS 16949:2009,
and the IATF created IATF 16949 as a quality management standard. Its current revision is
meant to be used as a complement to ISO 9001:2015. It follows the ISO Annex L and adds
particular requirements pertinent to the automotive industry.
ISO 9001:2015
ISO 9001:2015 is the latest revision of the ISO 9001 international standard (ISO, 2015b).
This new revision brings several changes in structure with the purpose of promoting
interchangeable standards. This new structure is called Annex L and consist of 10 sections as
opposed to eight of the previous revision. Annex L points out seven quality management
principles, introduces the concept of risk-based thinking by eliminating preventive actions, and
requires top management to do a review of the context of the organization for strategic planning
purposes.
Paris (2015) ranked ISO to all of Deming’s 14 points of management and graded them on a scale from A to F, the very best to being far from compliant with Deming’s point. He noted that ISO only fully aligns with the points advocating for continuous improvement and on the job training (Paris, 2019a). An OEMS needs to complement ISO standards by fully applying and not contradicting the 14 points of management.
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IATF 16949
IATF 16949 contains all the requirements set forth in ISO 9001:2015. Within IATF
16949, the individual requirements of ISO 9001: 2015 are easily identified with what was originally ISO 9001 and what particular requirements pertain to the automotive industry. The
term automotive is to be understood as including cars, trucks (light, medium, and heavy), buses,
and motorcycles, and excludes industrial, agricultural, and off-highway vehicles used in mining,
forestry, and construction industries. Other specialty cars like race cars, semi-trailers,
ambulances, and recreational vehicles, are also excluded unless “up-fitted” by an IATF OEM
(IATF, 2016b). If a passenger car (e.g., police car), a light commercial vehicle (e.g., cash
carrying vans, ambulances, and recreational vehicles), or a heavy truck (e.g., dump truck and
semi-trailers) were “up-fitted” (or customized) by an IATF OEM, then the suppliers for the parts
become an integral part on these vehicles are eligible for IATF 16949 certification. If the parts
for the special cars are not directly specified by an IATF OEM (the relevant supply chain), the
“up-fitters” are not eligible for certification (Atkins, 2019).
IATF 16949, in conjunction with ISO 9001 and customer specific requirements, set the
tone for the automotive industry QMS (IATF, 2016b). IATF 16949 is also organized following
the Annex L structure. The remain competitive, Company ABC intends to integrate ISO and
IAFT certifications within the overall performance excellence umbrella.
Quality Tools for Performance Excellence
Quality Function Deployment and House of Quality
The quality function deployment (QFD) is a methodology that is used to identify and
prioritize customer expectations (ReVelle, 2004). QFD is typically communicated using the
House of Quality (HOQ) tool which is created using technical and competitive benchmarking
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data in a matrix. Figure 5 shows the correlation of customer requirements with product or
process technical features with technical and competitive benchmarking assessment.
Figure 5. House of quality. Adapted from “How to build a house of quality with technical and competitive benchmarking”, by ASQ, 2015 (https://asq.org/quality-resources/house-of-quality). In the public domain.
Scorecard Using Objectives and Key Results
Seneca the Younger, a roman philosopher said, “If a man knows not to which port he sails, no wind is favorable” (Goalcast, n.d.). In strategic management this means that leadership needs to know the answer to two basic questions:
1. Are we doing things right?
2. Are we doing the right things (Balanced Scorecard Institute, 2019)?
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Both questions should be answered in regard to the mission and vision of the organization
to understand how well plans are performing. In order to measure performance, the appropriate goals and objectives must be set to measure efficiency and effectiveness of the processes of the system in an organization. A scorecard, a common quality tool, can be constructed using the
Objectives and Key Results (OKR) goal framework.
The OKR model is widely accepted and used for its simplicity. Wilsey (n.d.) stated that
OKR “objectives,” qualitatively capture what you are trying to achieve, and “key results” measure progress towards the objective. Additionally, the OKR framework has objectives and key results which measure progress towards the objective and they are developed simultaneously at all levels, with bidirectional alignment over time (Wilsey, n.d.). For a successful implementation of goals, the organization must work methodically to achieve them. Goals are frequently set, tracked, and re-evaluated. They must describe the purpose and a way to assess achievement using the following OKR template: I will (Objective) as measured by (this set of
Key Results). For each objective it is recommended to have a set of two-to-five key results. The
OKR have initiatives associated to them that describe the mechanisms (e.g., projects, tasks, or activities) to be used to reach the goals successfully (Castro, n.d.a). Figure 6 illustrates the three steps of the OKR cycle.
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Figure 6. The objectives and key results (OKR) cycle. Adapted from “The OKR cycle: 3 steps for OKR success”, by F. Castro, n.d.b (https://felipecastro.com/en/okr-cycle/). In the public domain.
Innovation
A pivotal change in the ISO guidelines is the promotion of innovation. ISO (2019a) gives
a very good explanation in defining innovation as follows: “Innovation is an increasingly
important contributor to the success of an organization, enhancing its ability to adapt in a
changing world.” Creative and innovative ideas give rise to better ways of working, as well as
new solutions for generating revenue and improving sustainability. This is closely linked to an
organization’s resilience which helps stakeholders understand and respond to challenges and
seize the opportunities that might bring and leverage the creativity of both its own people
(workforce) and those it deals with (customers) (ISO, 2019a).
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Design Thinking
Design thinking is the ability to uncover a customer’s unspoken needs (Liedtka & King,
2014).
Figure 7 illustrates the Stanford design thinking process to empathize, define, ideate,
prototype, and test. For the purposes of this research, the first two steps of empathize and define
are the critical components for describing the organization and understanding the requirements of
the customer. The Stanford design thinking model has a direct relationship to the seven-step
PDSA model (Cleary, 2015).
Figure 7. The Stanford design thinking process. Adapted from “Can design thinking unleash organizational innovation?”, by B. Schmarzo, 2017, InFocus,(https://infocus.dellemc.com/william_schmarzo/design-thinking-innovation/). In the public domain.
Pursuit of Organizational Maturity
System of Profound Knowledge (SoPK)
In order to do a redesign of a QMS, it is necessary to make sure Deming’s founding management principles are understood. It is widely accepted that Deming’s 14 points of transformation management principles are key and must be embedded in the quality culture of
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any organization that wants to embrace the values of a world class quality organization (Deming,
1986). Table 1 shows Deming’s evolution of the 14 points of management and provides a
comparison as how Deming presented them originally (1982) prior to the publication of his book, Out of the Crisis (1986) (Moen & Norman, 2016).
Table 1
Evolution of the Deming’s 14 Points of Management
Note. Adapted from “Always applicable”, by R. Moen and C.L. Norman, 2016, Quality Progress, June, 46-53.
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Deming established the 14 points for the transformation of management in his SoPK, which was the pinnacle of his work (Deming, 1994). This SoPK is composed of four interrelated parts as follows:
1. Appreciation for a system. An organization is a network of interdependent processes that work together to try to accomplish the aim of the system. Therefore, management requires knowledge of the processes, people, and interrelationships among them.
2. Knowledge about variation. A stable system needs understanding of special and common causes of variation.
3. Theory of knowledge. It serves to predict outcomes; and it is built on theory. Information is used a tool and not knowledge by itself.
4. Psychology of individuals, groups, society, and change. Leaders must learn and understand the psychology of individuals and groups in the system and be aware how the change affects it. Deming teaches about developing human capital to the point where the work done stays in statistical control. This a key design input integral management system that aims to evolve to performance excellence (Moen & Norman, 2016).
Moen and Norman (2016) summarize all four parts of the SoPK from Deming’s book The
New Economics for Industry, Government and Education as shown in Table 2 (Deming, 1986).
The SoPK (all four parts) relate to one another and are meant to be applied together.
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Table 2
Components of the System of Profound Knowledge (SoPK)
Note. Adapted from “Always applicable”, by R. Moen and C.L. Norman, 2016, Quality Progress, June, 46-53.
Table 3 provides a comparative table of (1) faulty practices, (2) better practices, and (3) why the practice is better by using the SoPK (Moen & Norman, 2016). For example, take create constancy of purpose for continuous improvement versus short-term management. With the
SoPK, a practitioner can justify the benefits in terms of system, variation, psychology, and knowledge.
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Table 3
Comparison of Faulty Practices, Better Practices and Best Practices Under SoPK
Note. Adapted from “Always applicable”, by R. Moen and C.L. Norman, 2016, Quality Progress, June, 46-53.
Performance Excellence Models: CMMI and MBQA
Paris (2019b) expressed the ISO standards are still flawed and not up to par with maturity
models like CMMI or Malcolm Baldrige. Paris advocates for a more modular system with tiers
or maturity levels like the Strategic Management Maturity Model (Balanced Scorecard Institute,
2019). The article goes on to explain that the automotive industry is working on the development
of their own capability model (e.g., IATF, AIAG, and VDA). This is a natural evolution since
ISO withdrew from ISO/TS 16949 and IATF created IATF 16949.
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Capability Maturity Model Integration (CMMI)
The CMMI, as shown in Figure 8, helps organizations simplify development processes,
coded by category, to encourage a productive culture that decreases risks. The CMMI is currently administered and managed by the CMMI Institute (White, 2018). It is intended to help
an organization understand its current level of capability and performance (CMMI Institute,
2018). It was developed by the Software Engineering Institute at Carnegie Mellon University as a process improvement tool for projects, divisions, or organizations. The CMMI model was formed to accomplish the following:
1. Build an initial set of integrated models.
2. Improve best practices from source models based on lessons learned to ensure quality and timely solutions that delight customers and end users. The source models are as follows:
o CMMI Development (CMMI-DEV)
o CMMI Services (CMMI-SVC)
o CMMI Supplier Management (CMMI-SPM)
o CMMI People Management (CMMI-PPPL) 3. Establish a framework to enable integration of future models. The CMMI is designed to be flexible and agile with the capability to evolve as the business short-term and long-term needs and environments change. It provides a roadmap that guides improvement in terms of performance, quality, cost, schedule, and functionality (Carnegie Mellon Software Engineering Institute, 2005; CMMI Institute, 2018).
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Figure 8. CMMI initial models. Adapted from “Capability Maturity Model® Integration (CMMI®) Overview”[31], by Carnegie Mellon Software Engineering Institute, 2005, SlideShare, (https://www.uccs.edu/Documents/tboult/cmmi-overview05.pdf). In the public domain.
The CMMI model has 12 capability areas (CA) and practice areas (PA) (CMMI Institute,
2018). A CA is a group of related PA for improvement. The PA is a set of practices that describe
critical activities needed to achieve a defined intent and value. These categories are logical
groups that address common problems topics. Table 4 shows the relationship among CA and PA
categories as follows:
1. doing: 4-CA and 10-PA for producing and delivering quality solutions.
2. managing: 3-CA and 11-PA for planning and managing implementation of solutions.
3. enabling: 3-CA and 11-PA for supporting solution implementation delivery.
4. improving: 2-CA and 5-PA for sustaining and improving performance (CMMI Institute, 2018).
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Table 4
Relationships Among Categories, Capabilities, and Practice Areas
Category Capability Area Practice Area Requirements development and management Process quality assurance Ensuring Quality Verification and validation Peer reviews Technical solution Doing Engineering and developing products Product integration Service delivery management Delivering and managing services Strategic service management Supplier source selection Selecting and managing suppliers Supplier agreement management Estimating Planning and managing work Planning Monitor and Control Risk and opportunity management Managing business resilience Incident resolution and prevention Managing Continuity Compensation and rewards Staffing and workforce management Managing workforce Career and competency development Organizational training Empowered work groups Causal analysis and resolution Supporting implementation Decision analysis and resolution Configuration management Communication and coordination Managing safety Managing and planning safety Enabling Ensuring safety Managing and planning security Developing secure solutions Managing security Managing security threats and vulnerabilities Selecting and managing secure suppliers Planning and supporting security in work Process management Improving performance Process asset development Improving Managing performance and measurement Governance Sustaining habit and persistence Implementation infrastructure Note. Adapted from “Definitions of Evolutionary Level Characteristics,” by CMMI Institute, 2018, CMMI model V2.0, p32. Copyright 2018 by CMMI Institute.
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The PA also have six practice levels that build upon each other from Level 1 to Level 6 in
a similar way to maturity levels. Figure 9 shows how capability levels increase as organizations
implement statistical methods and creates knowledge to manage the systems. An organization
that is certified to a management standard would probably be at a Level 3, if all process had been
effectively implemented. The goal is to use quantitative methods to optimize processes and
objectives.
Figure 9. Evolutionary levels for maturity assessment. Adapted from “Definitions of Evolutionary Level Characteristics,” by CMMI Institute, 2018, CMMI model V2.0, p26. Copyright 2018 by CMMI Institute.
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Criteria for Performance Excellence (PE) of the Malcolm Baldrige Quality Award (MBQA)
PE is an integrated approach that increases value to customers and stakeholders by
improving overall organizational effectiveness and capabilities through organizational and
personal learning (Baldrige Performance Excellence Program, 2019a). The CPE from the MBQA
provides a framework to achieve PE.
The Baldrige PE Program was founded during the Reagan administration as a national
quality award in response to the need to improve quality and innovation in American
organizations within a competitive and globalized world. The U.S. government continues to
oversee the CPE for MBQA (Baldrige Performance Excellence Program, 2019a).
The MBQA model is a systematic approach that establishes a framework for PE through
continuous improvement by adding value to the customers and by increasing operational
performance. As shown in Figure 10, MBQA is based on seven dimensions that set the criteria to
assess organizational performance. The seven dimensions are as follows:
• strategy
• leadership
• customers
• integration
• workforce
• operation
• results
The MBQA model also prescribes the description of the organizational profile with
respect to understanding the functions of (1) organization, (2) core competencies, (3) regulatory environment, (4) governance roles and relationships, (5) customer requirements, (6) role of
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suppliers, (7) ecosystem, (8) competitors, (9) strategic challenges, and (10) strategic advantages
(Baldrige Performance Excellence Program, 2019b).
Figure 10. 2019-2020 Baldrige excellence framework criteria overview. Adapted from “Baldrige Excellence Framework”, by Baldrige Performance Excellence Program, 2019, How Baldrige works, (https://www.nist.gov/baldrige/how-baldrige-works). In the public domain.
Operational Excellence Management System (OEMS)
The OEMS is the proposed design model for this thesis. The intention is to optimize three management systems using the following PE, which include: (1) quality, (2) health and
occupational safety, and (3) environmental. The OEMS takes the natural progression of the
PDSA framework into the capability maturity models, CMMI and MBQA, using ISO HLS to
organize the processes for common areas of action. The CMMI maturity model measures the
degree of maturity adoption and the MBQA rates how well the OEMS model measures best
practices.
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CHAPTER 3
METHODOLOGY
The study proposes a step beyond the “what” to the “how” to comply and fulfill manufacturing standards. The methodology used for this research was the compilation, study, breakdown, and synthesis of systems requirements relevant to quality, occupational health and safety, and environment as prescribed by the following:
• ISO 9001:2015
• IATF 16949
• ISO 14001:2015
• ISO 45001:2018
These requirements were augmented with best practices proposed by the CMMI model and the CPE from the Baldrige PE Program in order to improve competitiveness and overall perception of excellence by the customer.
The PDSA framework was used as a project organization and planning tool for continuously improving an integrated system for efficiency and effectiveness in order to promote competitiveness and increase market share. Figure 11 depicts the PDSA continuous learning cycle for a new integrated management system.
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Implement scorecard Collect data about requirements of Select Initiatives to ISO / IATF management systems bridge the gap and performance excellence models
Repeat Plan DO Check Act cycle
Plan the design for the new integrated management system Determine initiatives based on ISO / IATF standards to close the gap and elements of performance excellence models
Figure 11. PDSA sequence of activities for developing a new integrated management system. Created by the author of this thesis.
In the Plan phase the characteristics of the new OEMS were defined. Annex L was chosen to integrate ISO 9001:2015, IATF 16949, ISO 14001:2015, and ISO 45001:2018. CMMI and CPE were used to augment the requirements in the standards in order to drive competitiveness across the organization.
The Do phase collected information about requirements from ISO and IATF standards, as well as those from the CMMI and the CPE models. Based on these requirements, objectives, and metrics were created within the context of the OKR framework. Additionally, the Do phase implemented a scorecard to quantify current state management systems in order to create a baseline for monitoring improvements.
In the Study phase an analysis was completed to identify elements missing in the standards model when assessed against CPE and CMMI. An average maturity level was assigned to each Clause of the HLS as this was already implemented in Company ABC. Lastly, in the Act phase initiatives were proposed to close the gaps, and a new baseline was estimated. At this point the first OEMS for Company ABC was created.
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Table 5 presents a summary of how the different elements of OEMS work together once the system is implemented. From left to right in Table 5, the OEMS and PDSA align to the HLS
Clauses as required by ISO. The performance objectives are identified for the HLS of each
Clause as intended for the OEMS. The ISO and IATF standards for the integrated management system sets forth the particular requirements for quality, occupational health and safety, and environment. Finally, the models for PE show CMMI and CPE from MBQA which provides associated rankings to performance objectives.
Table 5
OEMS High-Level Structure and Performance Objectives Summary
Baldrige OEMS CMMI Capability & CPE HLS Performance Objective Standards PDSA Maturity Level Maturity level Define mission, vision, values and believes Determine stakeholders and their needs, expectations and 4. Context of the Input requirements organization Define the scope, objectives and policies of the organization Define processes and interactions ISO 9001:2015 - of the system Quality Define process ownership, Management Core 5. Leadership accountability and Systems Input communications Determine and asses system risks IATF 16949 - Automotive Quality and opportunities Management 1. Reactive Establish objectives and processes 0. Incomplete Systems 2. Early Plan 6. Planning necessary for meeting the 1. Initial 3. Mature organization’s context and fulfill 2. Managed ISO 14001:2015 - 4. Role needs, expectations and 3. Defined Environmental Model requirements of stake holders 4. Quantitatively Managed Management Implement the processes and 5. Stable and Flexible Do 7. Support Systems mechanisms as planned
Implement the processes and Do 8. Operation ISO 45001:2018 - mechanisms as planned Occupational, Monitoring and measuring the Health and Safety activities and processes in relation Management to system objectives and reporting Systems 9. Performance the results Study Evaluation Note: Results are to be evaluated using the following factors: level, trends, comparisons and integration Take actions to continually Act 10. Improvement improve the OEMS performance Note. Created by the author of this thesis.
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Plan: What Needed To Be Done?
Company ABC needed to recognize the opportunity to become more competitive and have
an excellent perception by customers. The first step was to take advantage of the HLS Annex L
which allows administration of three different systems under an integrated management model.
The three management systems were quality, occupational health and safety, and environment.
The ideal state was defined with appreciation of the whole system (three systems integrated as one). However, it was important to identify where the ISO and IATF systems fell short in creating value from a stakeholder standpoint. The answer was to look for competitiveness.
In order to determine competitiveness, the criteria for PE of the Baldrige Excellence
Framework was used along with CMMI maturity levels. This was needed to understand the organizational profile for the organization and leadership triad as follows:
• leadership system
• strategy
• customer and stakeholder requirements
Under leadership system, objectives were defined based on customer requirements, needs, and expectations of relevant interested parties. Figure 11 displays the Quality Function
Deployment (QFD) summary table which cross-referenced what was important for the interested parties—weighted and scored against closest competitors to determine relative competitive value. The QFD analysis allowed Company ABC to establish what the most important objectives were that the OEMS needed to satisfy.
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Figure 12. Quality function deployment analysis for OEMS. Created by author of this thesis.
Table 7 illustrates a program performance scorecard that was created to establish relevant
OEMS objectives using the OKR framework. This scorecard incorporated measures of effectiveness and efficiency through key results. The QFD analysis and scorecard were created with the intention of being quality tools that will be improved with each iteration of the PDSA cycle.
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Table 6
OEMS Program Performance Scorecard
Stakeholder Objectives Effectiveness Key Results Type of key result Targets Share holder Financial Health Customer Service level Customer Certified systems Customer Electrical Compliance Employee Safe Workplace City Environmental Friendly Practices Government Product Safety, Regulatory and Statutory requirements Leadership Workforce Growth Note. Created by the author of this thesis.
A cross-reference of requirements of ISO compared to CMMI and Baldrige CPE is
illustrated in Table 7. This table follows the Annex L structure and cross-references the
corresponding CMMI and CPE criteria. When the cross-reference was not possible, a gap was identified in the ISO and IATF integrated model.
Do: When and How It Was Done?
A performance scorecard was designed to establish baseline metrics (see Table 6). The
requirements for an ISO and IATF integrated management systems and PE models from MBQA
and CMMI were compared to ISO and IATF-based management systems (shown in Table 7).
These quality tools and associated performance metrics were used to assess organizational
progress to reach a higher maturity level.
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Table 7
Comparison of Annex L with CMMI and Baldrige CPE Performance Excellence Models
Requirements Annex L for CMMI CPE Item Area Tool Requirement compliance as per CPE Leadership Leadership Senior Vision and Setting Management and Leadership Values Vision and Review Commitment Values (5.1) Promoting legal and ethical behavior Corporate Governance Legal and Legal and responsibility and Societal Ethical Regulatory
policies. Contributions behavior Compliance (5.1.1.1) Ethical Behavior
Societal Contributions Senior Communication Leadership Note. Created by author of this thesis.
Study: What Were The Results?
Based on the analysis of data summarized in the performance scorecard presentation, the
results along with the gap analysis were used in determining what initiatives needed to be
implemented to close discovered gaps. Missing elements were identified to support the
development of the integrated management system proposed program. The tentative OEMS
process was rated using the gap identified in the CMMI maturity level scores and presented in graphical format using a radar chart given as an example in Figure 13. This radar charts was used
to help track progression through the iterations of the PDSA cycle. Additionally, Figure 14
depicts a Pareto chart showing priorities of categories and PA of CMMI (listed in Table 4).
Lessons learned were documented to strengthen commitment to ISO and Baldrige criteria to
enhance performance as determined by the CMMI index.
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Figure 13. OEMS maturity level radar chart. Created by the author of this thesis.
Pareto Chart of Practice Area by Category
25 100
20 80
15 t t
60 n n e u c r o e C P 10 40
5 20
0 0 Category Doing Managing Improving Enabling Count 9 7 5 3 Percent 37.5 29.2 20.8 12.5 Cum % 37.5 66.7 87.5 100.0
Figure 14. Pareto chart of categories in CMMI. Created by the author of this thesis.
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Act: What Corrections Were Needed Based on Observed Results?
Initiatives were implemented to adjust course in the first iteration in developing the
maturity level for the proposed OEMS for Company ABC. This began a continual process to promote an improved culture at all levels across the systems in the organization. Figure 15 summarizes each phase of the PDSA cycle showing what was accomplished in enhancing an
IATF 16949-based QMS.
Close the gaps between ISO / Define the ISO / IATF IATF management systems and management systems and Performance Excellence models Identify Performance to create OEMS. Continue Excellence Models. cycle. Improve the capabilities and maturity of OEMS.
Act Plan
Study Do
Determine the gap between ISO Determine requirements of ISO / IATF management systems / IATF management systems and Performance Excellence and determine requirements for Models. Where does ISO / Performance Excellence IATF fall short? models.
Figure 15. PDSA framework for enhancing an IATF 16949 based quality management system. Created by the author of this thesis.
A plan was created using the Deming PDSA and SoPK frameworks. The plan addressed several issues that Company ABC was experiencing in duplication of activities by not having an integrated management system operating at a high management level. Objectives to promote
43
efficiency and effectiveness were added as key metrics to the strategic quality improvement
scorecard.
A high maturity management system was proposed to set the organization in a proactive
and prevention-focused state of operation. These changes were intended to promote a new culture that used quantitative tools to generate internal knowledge. An approach for efficiency was also suggested in order to improve the use of quality management tools.
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CHAPTER 4
RESULTS AND DISCUSSION
Plan: OEMS Requirements
Understanding the organization requires a statement of the mission, vision, values, and objectives of the system. This is a necessary part for any organization to state its intention and strategic direction for all stakeholders. It is also important that the mission be confirmed throughout the organization because it provides a tool to better engage (complete buy-in) with the system. This is part of the first step, the Plan phase, of the PDSA framework.
ISO and IATF do a good job setting the requirements (the necessary elements) that encompass that standards of the organization. They also specifically suggest a SWOT analysis which includes legal, cultural, market, and socioeconomic environments. CPE goes further and recommends additional elements to allow leadership to communicate a better picture of the system and its interactions. Such elements include the following: competitive position, competitive changes, comparative data, workforce profile, logistics, infrastructure, and relationships among stakeholders.
Table 8 proposes the elements (framework) that should be added to the OEMS for
Company ABC to improve a description of the organization for interested parties and their requirements. This is the only table that does not have a CMMI level since it provides a description of the organization and is not an actual process. However, it does suggest tools that will add varied degrees of completeness to the OEMS as information becomes available.
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Table 8
OEMS Elements Relevant for Company ABC
Requirements for Annex L Requirement CPE Process Item Area Suggested Tools compliance as per CPE
Context of the 4.1 Understanding Product Offerings -Catalog of products Organization the Organization Organizational Mission, Vision, Values, -Strategic Map and its Context Profile Organizational Organizational Culture -Balanced Scorecard Description Environment Workforce Profile -Logistics Assets -OEMS Manual Regulatory Environment -SWOT Analysis -OEMS Diagram -System Diagram 4.2 Understanding Organizational Structure -SIPOC the needs and Customers and -Process Descriptions Organizational expectations of Stakeholders & Interactions Relationships interested parties Suppliers, Partners, and -Process Collaborators Owners -Policies Objectives
4.3 Determining Competitive Position the Quality Organizational Competitive Competitiveness Changes Management Situation Environment Comparative Data System
4.4 Quality Strategic Context Key Strategic Challenges Management and Strategic Advantages Systems and its Key Performance processes Performance Improvement System Improvement System
Note. Created by author of this thesis.
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Company ABC: Manufacturer of Automotive Batteries
Company ABC designs and manufactures automotive batteries to supply OEM and
aftermarket demands. In partnership with distributors and lead suppliers (smelters), the
organization makes sure that a continuous flow of batteries serves different markets in the world.
Company ABC has a portfolio of products that are divided into four categories as follows:
1. absorbent glass mat batteries (AGM)
2. low voltage Lithium-ion batteries
3. enhanced flooded batteries
4. standard lead-acid batteries
From a strategic standpoint, it is important to understand Company ABC’s vision and
mission (what), and its customer base (who). The organizational description and interested
parties are key inputs to the Plan phase in the PDSA cycle as laid out in ISO HLS.
Organizational Description
The vision of Company ABC is to make a more comfortable, safe, and sustainable world
through battery collection and recycling programs. Its mission is to be the global leader for
vehicle battery storage solutions using the best cost model and at the same time delivering
superior value to the customer. The main system processes for achieving the mission and vision
are those certified with ISO 9001:2015, IATF 16949, ISO 14001:2015, and ISO 45001:2018.
Company ABC excels at designing batteries and processes that effectively support the
mission and vision of the company. Automation is at the core of manufacturing processes that
allow for a more efficient and cost effective manufacturing model while reducing variation of the quality and performance of the product.
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The workforce can be divided in two main groups: salaried and hourly employees. The predominant educational background of salaried employees is engineering and business management. The hourly workforce are unionized. Regardless of the role in the manufacturing plants, it is necessary for all employees to observe hygienic guidance to prevent lead poisoning.
Senior management are located in the corporate offices where they also host the product and process development teams, marketing, sales, and information technology (IT). The manufacturing plants are strategically located in regions to facilitate and lower transportation costs. Each plant location reports to the operations management structure from corporate. Human resources, finance, and safety report directly to their corresponding structures. Manufacturing, procurement, supply chain, engineering, continuous improvement, and quality report to the plant manager.
Interested Parties
In a PE model, all interested parties interacting with the integrated management system must be identified. There are more explicit requirements and interested parties identified for access in the matured integrated management system that must meet the minimum requirements set by ISO and IATF. As part of the Stanford design thinking model, it is important to understand the first step—the unspoken customer requirements by communicating and appreciating their needs (empathizing). The second step of the Stanford design thinking model is define and as the OEMS matures these customer requirements become better understood.
The main interested stakeholders on the customer side are the (1) distributors, (2) OEMs, and (3) end users. These parties are interested in having the right product in correct quantities delivered on time at the agreed location. OEMs are also interested in verifying that Company
ABC has its QMS and environmental management systems (EMS) certified, and a safe
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workplace for employees. In the local regional cities, the Environmental Protection Agency
(EPA), and the Occupational Safety and Health Administration (OSHA) are interested in
environmental friendly practices in plant operation. These communities and regulatory agencies also expect product safety, regulatory and statutory requirements to be effectively satisfied and certified by an independent third party. Lastly, Company ABC owner stakeholders expect to see increased market share, profitability, financial health, streamlined processes, cost reduction, excellence in customer service, and ethical practices to remain competitive in the global marketplace.
In order to determine the degree of fulfillment of the interested parties requirements, it is necessary to create OEMS objectives based on stakeholder needs and use the key results as the indicators. These indicators will be the input of a performance scorecard that will allow the assessment of the integrated management system at a glance. Figure 16 shows the QFD analysis with the correlation of OKR proposed for the OEMS for Company ABC.
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Figure 16. Actual quality function deployment for OEMS. Created by the author of this thesis.
ISO falls short in the topic of not only driving effectiveness and efficiency, but also in innovation to gain competitive advantage over competitors and to attract new customers. It is necessary to set goals to the key results. The type of key results will tell if effectiveness or efficiency is measured. Table 9 shows the actual performance scorecard for Company ABC’s
OEMS.
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Table 9
Actual OEMS Scorecard for Company ABC Interested Type of Key Target Objectives Key Results Party Result s Share Financial Health EBITDA Effectiveness >2B holder Customer Service level Order fill Efficiency 95% Order accuracy Customer Service level Effectiveness 98%
Customer Electrical Compliance Reserved Capacity Effectiveness 90%
Customer Electrical Compliance Cold Cranking Amps Effectiveness 90%
Customer Certified systems Status Effectiveness 100% <= Employee Safe Workplace Total recordable incident rate Effectiveness 0.75 <= 5 City Environmental Friendly Practices RCRA 8 Effectiveness ppm Governme Product Safety, Regulatory and Amount of people with blood Effectiveness 0 nt Statutory requirements lead > 0.20 g/dl Training Plan Fulfillment Leadership Workforce Growth Effectiveness 95%
Note. Created by the author of this thesis.
The OEMS scorecard gives an integrated view of the performance of the integrated management systems. It takes into consideration the higher categories of interested parties and lays out the most relevant requirements for a 30,000 foot level view in the dashboard. It followed the OKR method by adding key results to the objectives so in a quick glance one can also see the targets set forth for the performance cycle. The proposal for implementation is to use monthly, quarterly, and yearly reviews to track progress. The process must be monitored for effectiveness, efficiency, responsibilities, accountability, and management assignment as well as necessary resources allocated. Risk and opportunities need to be identified and considered for growth in all processes.
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Do and Study: OEMS Process Requirements and Gap Analysis
The requirements for the ISO and IATF standards were developed for Company ABC in six tables following the ISO HLS. Each table listed the requirement, CMMI level for gap
analysis purposes, and the CPE elements (by areas) to be used as reference to assess the
integrated management system level. The CPE are minimum elements expected in a mature
management system. Absence of the requirement was assigned a grade score of “1” and the
implementation degree was scored using values “2” through “5.”
The goal was to reach a score level of “5.” At best, ISO management systems would get a
score level “3” and IATF could get up to a score of “4” because IATF uses quantitative analysis
for risk management, measurement systems analysis, and statistical methods for process control
and improvement. All scores are based on the current state of Company ABC’s management
systems and the use of the criteria for maturity levels of CMMI. The CPE could be repeated in
different tables since there is no linear relationship between ISO and Malcolm Baldrige CPE.
Table 10 shows requirements and scoring for maturity of ISO and IATF leadership
processes as seen from the Malcolm Baldrige Excellence Framework. ISO HLS has three
leadership processes to be assessed within 10 areas. The focus for Clause 5 is culture, customer
relations, and leadership.
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Table 10
ISO and IATF Leadership Processes and Performance Excellence Models
Annex L CMMI Requirements for Compliance CPE Item Area Requirement Level as per CPE Senior Leadership Vision and Values Setting Vision and Values 2 Promoting legal and ethical behavior Legal and Regulatory Compliance 4 Governance and Societal Legal and Ethical behavior Ethical Behavior Leadership Contributions Societal Contributions Organizational Governance Governance System Performance Evaluation 2 Communicate key decisions and organizational Senior Leadership Communication 5.1 Leadership change Current Customers and Commitment Customer Listening Customer Expectations Potential Customers Customer Segmentation Customer Segmentation and Product Offerings Product Offerings Customers Customer relationships and Relationship management
2 support Customer access and support
Determination of customer
Customer Engagement satisfaction and Satisfaction, Dissatisfaction and Engagement engagement Use of the voice of the Satisfaction relative to other organizations customer and market data
5.2 Establishment Senior Leadership Vision and Values Setting Vision and Values of Policies and 3 Leadership Promoting legal and ethical behavior their communication 5.3 Mission and Creating an Environment for Success Organizational 4 Leadership Senior Leadership Organizational Creating a Focus on Action roles, Performance responsibilities Governance and Societal Organizational Governance Governance System 2 Leadership and authorities Contributions Performance Evaluation Note. Created by the author of this thesis.
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Company ABC is on average at score value of “3” in leadership. The vision, mission, and
values are set, but deployment to the highest operative levels is not yet effective. It can be argued
that middle management are aware of these deficiencies. On the other hand, the promotion of the legal and ethical behavior is well defined using mandatory online classes. Regulatory requirements are quantitatively managed. There are continuous improvement projects to help improve regulatory requirements. Communication with customers is defined by a dedicated department that manages customer complaints. Biannual surveys are sent to customers, but these surveys not been done in the past three years. There is a well define leadership structure, but quality and operations are merged in a single division creating a conflict of interest instead of a system of checks and balances. Because of new IATF and ISO risk-based thinking, there is use of risk management tools and the initial steps have been undertaking to establish intelligent risk taking.
The quality leadership at the plant level reports to the operations structure (corporate) which poses a problem (conflict of interest) when balancing the fulfillment of individual party requirements. In this case, management stakeholders could potentially have the upper hand over distributors, OEMs, and end users.
Table 11 summarizes requirements and scoring for maturity of the ISO and IATF planning processes. There are three planning process under Clause 6 of the HLS to be assessed in
relation to five areas. This Clause focuses on the development and deployment of strategy.
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Table 11
ISO and IATF Planning Processes and Performance Excellence Models
CMMI Annex L Requirement CPE Item Area CPE Key Terms Level 6.1 Actions to address Strategy Strategy Development Strategy Strategic Planning Process risk and opportunities Development 4 Process Innovation
Work Systems and Core Competencies 3 Measurement, Information and Organizational Organizational Learning Analysis, and knowledge Knowledge Knowledge Management Management 3 Strategy Strategy Development Strategy Strategy Considerations Development Process 3 Strategy Strategy Development Strategy Strategy Considerations Development Process 6.2 Objectives and 3 Strategy Strategy Development Strategic Objectives Key Strategic Objectives planning to achieve them Strategic Objective Considerations
2 Strategy Strategy Action Plan Action Plans Implementation Development and Action Plan Implementation Deployment Resource Allocation Workforce Plans Performance Measures Performance Projections 6.3 Planning of 3 Strategy Strategy Development Strategy Strategy Considerations changes Development Process 3 Strategy Strategy Action Plan Shift in Action Plan Implementation Modification Note. Created by the author of this thesis.
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Planning processes maturity level scores are an average of “3.” The strategic process is considered managed. The planning processes are set-up to enable transformation for short and long term planning horizons. The use of emergency and contingency plans is well defined throughout the different locations of the organization. The existence of Advanced Product
Quality Planning (APQP) for risk mitigation and the existence of a Continuous Improvement structure puts the system at a score level “4” despite Resource allocation being a score of only a
“2.” This is due to inconsistency in assigning resources to ensure effectiveness of the execution of processes.
The strategic plans are carried out with success but more tactical or operation plans might be delayed in favor of higher priorities. Company ABC is privately owned which means that it is not necessarily bound to the quarterly report goals allowing the company to set horizon plan to 5, 10, and 20-year planning cycles.
Table 12 illustrates requirements and scoring for maturity of ISO and IATF resource processes. There are five resources processes under Clause 7 of the HLS to be assessed in relation to eleven areas. The focus in this section is capability and capacity.
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Table 12
ISO and IATF Resource Processes by Performance Excellence Models Annex L CMMI CPE Item Area CPE Key Terms Requirement Level Organizational Organizational 3 Organizational profile Assets description environment Measurement, analysis, Measurement, analysis and improvement of Performance 3 and knowledge Performance measures organizational measurement management performance Action plan 7.1 Resources Resource allocation 2 Strategy Strategy implementation development and Workforce plans deployment Measurement, analysis Knowledge management Information and Organizational 3 and knowledge Best practices knowledge management knowledge management Organizational learning Workplace environment 3 Workforce Workforce environment Workforce climate
Workforce capability and Workforce capability 3 Workforce Workforce environment capability needs and capacity New workforce members 7.2 Competence Performance management Performance Performance development 2 Workforce Workforce engagement management and Learning and development development effectiveness Workforce capability 7.3 Awareness 2 Workforce Workforce environment Work accomplishment and capacity Measurement, analysis Information and 2 and knowledge Data and information Availability 7.4 knowledge management management Communication Communicate key decisions 3 Leadership Senior leadership Communication and organizational change Measurement, analysis 7.5 Documented Information and 3 and knowledge Data and information Quality Information knowledge management management Note. Created by the author of this thesis.
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The organizational practices for resource planning and allocation generally meet the
requirements set forth for certification purposes, but from an excellence model viewpoint it can
be scored as managed which is Level “2.” Because of the price competitive nature of the
automotive industry, companies often look to literally save pennies. This causes processes owned
by safety, quality, environmental, and production control to be often understaff at salary levels
creating an unbalanced workload on employees.
There are training programs in place managed by the plants and web-based training programs managed by corporate. Web-based training is meant mostly for salaried employees.
There are certified trainers for each process who are in charge of ensuring the proper training of hourly workers. There is no standardized program across plant locations, however, there is training in place. Awareness in terms of understanding why things are done is not systematically included in trainings, and therefore varies from training program to training program.
Accessing data, procedures, specs, and general organizational knowledge poses a challenge. There is no single repository of this knowledge. It is distributed in multiple platforms making it cumbersome for employees to find.
Table 13 illustrates requirements and scoring for maturity of ISO and IATF operation processes. There are seven operation processes under Clause 8 of the HLS to be assessed in relation to fourteen areas. This section focuses on the execution of the plan.
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Table 13
ISO and IATF Operation Processes by Performance Excellence Models Annex L CMMI CPE Item Area CPE Key Terms Requirement Level Determination of product and Product and process process requirements 4 Operations Work Processes design Key work processes 8.1 Operational Design concepts Planning and Process management and Control 3 Operations Work Processes Process Implementation improvement Supply-Network 3 Operations Work Processes Qualification management Current customers 3 Customers Customer expectations Customer listening Potential customers 8.2 Requirements Customer segmentation Customer segmentation 3 Customers Customer expectations for products and and product offerings Product offerings services / Relationship management Customer relationships Emergency 3 Customers Customer engagement Customer access and support and support preparedness and Complaint management response Governance and societal Legal and ethical Legal and regulatory compliance 3 Leadership contributions behavior Ethical behavior Safety and emergency Safety 3 Operations Operational effectiveness preparedness Business continuity 8.3 Design and Determination of product and development of Product and process process requirements 4 Operations Work Processes products and design Key work processes services Design concepts Supply-Network 3 Operations Work Processes Qualification management 8.4 Control of Measurement, externally provided analysis and processes, products knowledge Information and knowledge and services 2 Data and information Availability management management
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Annex L CMMI CPE Item Area CPE Key Terms Requirement Level Measurement, Measurement, analysis, and 8.5 Production and analysis and Performance 4 improvement of Performance measures service provision knowledge measurement organizational performance management Workforce capability and 8.5 Production and Workforce capability and 4 Workforce Workforce environment capability needs service provision capacity New workforce members
Productivity 8.6 Release of Process efficiency and 4 Operations Operational effectiveness Prevention products and effectiveness Cost management services Process management and 3 Operations Work processes Process implementation improvement 8.7 Control of Process management and Nonconforming 3 Operations Work processes Process implementation improvement outputs Note. Created by the author of this thesis.
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The average maturity level for the operations processes is a score of “3.” The operational planning is based on the APQP process. Customer requirements are translated into design inputs and outputs for the product which are verified against the design and validated by the customer.
The term customer requirements is understood to include end user, product safety, and regulatory
and statutory requirements.
Processes are also validated and managed for risk with tools like Failure Modes and
Effects Analysis, control plans and statistical process control. Emergency preparedness and
response plans are in place but not always fully validated. Communication with suppliers and
other plants is not an issue. The workforce is very competent due to their strong training
programs.
There are clear and well established processes for product release and for containment of
non-conforming product. Criteria for acceptance or rejection is well documented and available at
point of use. The path for an escalation process is standardized, but it is not repeatable.
Table 14 shows requirements and scoring for maturity of ISO and IATF performance
evaluation processes. There are three performance evaluation processes under Clause 9 of ISO,
and they are to be compared against 10 CPE areas. This section focuses on the study of results.
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Table 14
ISO and IATF Performance Evaluation Processes CMMI Annex L Requirement CPE Item Area CPE Key Terms Level 9.1 Monitoring, 4 Strategy Strategy implementation Action plan development Performance measures measurement, analysis and deployment and evaluation 9.2 Internal Audit 3 Measurement, analysis Measurement, analysis, and Performance measurement Comparative data and knowledge improvement of management organizational performance 9.3 Management Review 3 Results Product and process results Customer focus product Results and service results 4 Results Product and process results Work process effectiveness Process effectiveness and efficiency Safety and emergency preparedness 3 Results Product and process results Supply-Network Supply chain management results performance 3 Results Customer results Customer focused results Customer satisfaction Customer engagement 2 Results Workforce results Workforce focused results Workforce capability and capacity Workforce climate Workforce engagement Workforce development 2 Results Leadership and governance Leadership, governance, Leadership results and societal contribution Governance results Law and regulation Ethics Society 3 Results Financial, market, and Financial and market Financial performance strategy results results Marketplace performance 4 Results Financial, market, and Strategy implementation Intelligent risks strategy results results Note. Created by the author of this thesis.
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Performance evaluation is probably one of the most robust sub-processes in terms of data
analysis for financial health and the pulse of manufacturing processes. However, these processes
also score a level “3.” Company ABC thrives on producing continuous improvement initiatives based on data, perhaps because a large percentage of the management and salary positions are filled with professionals with business administration and engineering backgrounds.
Key performance indicators and critical to quality indicators are aligned with strategic
objectives. These are reviewed in monthly meetings and with semiannual management reviews.
In order to increase the maturity level it is necessary to add metrics that measure performance for
ethics, societal contributions, and evaluate results for taking intelligent risks.
Internal audits are done consistently on an annual basis on all processes. There is an opportunity for improvement in centralizing these management reviews for quality and
environmental health and safety (EHS), and their corresponding internal audits.
Table 15 shows requirements and scoring for maturity of ISO and IATF continual
improvement processes. There are three continual improvement processes under Clause 10 of
ISO and they are to be compared to nine CPE areas. This section focuses on the implementation
of initiatives to improve or to correct course.
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Table 15
ISO and IATF Continual Improvement Processes CMMI Criteria for Performance Annex L Requirement CPE Item Area Level Excellence (CPE) Key Terms 10.1 General 4 Measurement, analysis, Measurement, analysis, and Performance analysis Assessment for competitive and knowledge improvement of organizational and review performance and financial management performance health 4 Operations Operational effectiveness Process efficiency Productivity factors and effectiveness Warranty loss and customer productivity reduction
10.2 Nonconformity and 3 Strategy Strategy implementation Action plan Shift in action plan corrective action modification Rapid execution of new plan 2 Customers Customer engagement Complaint Resolve complaints promptly management and effectively 3 Measurement, analysis, Measurement, analysis, and Performance Comparative data and knowledge improvement of organizational measurement management performance 3 Strategy Strategy implementation Action plan Shift in action plan modification Rapid execution of new plan 10.3 Continual 4 Measurement, analysis, Measurement, analysis, and Performance Future performance improvement and knowledge improvement of organizational improvement Continuous improvement and management performance innovation 4 Operations Work processes Process management Product and process and improvement improvement 2 Strategy Strategy development Strategy Innovation development process 2 Measurement, analysis, Information and knowledge Organizational Knowledge management and knowledge management knowledge management 2 Operations Work processes Innovation Intelligent risks management Note. Created by the author of this thesis.
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Continual improvement was assigned an average maturity level score of “3.” There is a
well-defined continuous improvement structure which enables the business transformation
through the generation of knowledge. The Lean Six Sigma program is the main tool used by this team. They also take input from internal audits, critical to quality, and key process indicator
reports. The CAPA system is managed separately by an individual management system for
quality, safety, and environmental. Risk-based thinking and intelligent risk taking is fundamentally done by the engineering team and to some extent by process owners. Risk-based
thinking is still in the early stages of implementation. It will take several iterations to standardize
the skill and mindset. Innovation does not transcend through the organization, perhaps because it
is not an elaborated concept in any of the current management systems for quality and EHS.
Figure 17 is the radar diagram for the maturity level for Clause of the HLS of ISO and
IATF standards for quality and EHS. A perfectly standardized ISO management system would
give the organization a score level “3” for their processes. The APQP processes from IATF and
the strong continuous improvement program has set at score level “4” due to several processes
involved with continuous improvement and generation of knowledge.
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Figure 17. Radar diagram of OEMS maturity level by HLS clause. Created by the author of this thesis.
On average, the system is at a score level of “3” out of “5” in terms of maturity. Figure
18 shows that out of 24 subclasses, five were rated as score level “2,” thirteen were rated as score
level “3,” and six at score level “4.” Most of the low scores are in Support, and the highest
grades are not surprisingly in Operations, Performance Evaluation, and Improvement. For
processes at a score level “2” what was missing were the repeatability and standardization of the key elements across the organization. For a score level “3” the processes were standardized, but not consistently managed with data. Score level of “4” was assigned to processes that used data for fact-based decision making, but were still short on optimization. The lessons learned are to standardize the use of quantitative methods for decision making to ensure comparability and repeatability.
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Pareto chart of maturity level of of the current management systems
25 100
20 80
15 t t
60 n n e u c r o e C P 10 40
5 20
0 0 Maturity Level 3 4 2 Count 13 6 5 Percent 54.2 25.0 20.8 Cum % 54.2 79.2 100.0
Figure 18. Pareto chart of maturity levels of the current management systems. Created by the author of this thesis.
Common Clauses
ISO HLS Annex L allows integration all three of the management systems of Company
ABC. The implementation of the requirements for the standards are in Clauses 4 to 10. Across the standards, most of the requirements are the same, but in ISO 9001 refers to quality, ISO
14001 refers to environment, and in ISO 45001 reference is made to occupational health and safety. Table 16 shows differences in Clauses among the three systems. As for IATF 16949, it is based on ISO 9001 and would have the same characteristics. IATF 16949 only adds particular requirements applicable to the automotive industry like the core tools as follows:
• Advanced Product Quality Planning
• Failure Modes and Effects Analysis
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• Control Plans
• Statistical Process Control
• Measurement Systems Analysis
• Production Part Approval Process
Table 16
Common Clauses Among Quality and EHS Management Systems
Note. Adapted from “How to integrate ISO 9001, ISO 14001 and ISO 45001”, by M. Hammar 2019, 9001Academy, (https://info.advisera.com/hubfs/9001Academy/9001Academy_FreeDownloads/How_to_Integrat e_ISO_9001_ISO_14001_and_ISO_45001_EN.pdf). In the public domain.
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Common Mechanisms Among Management Systems
The integration of management systems in Company ABC poses the potential to standardize mechanisms to avoid duplication of resources. Integration can also prevent extra complexity in the management system by adopting different approaches to accomplish the same goal. Figure 19 depicts the tools that can be integrated in an OEMS to promote efficiency as follows:
• Scorecards can be integrated in an OEMS (shown in Table 6).
• Risk management tools can be standardized using one single approach.
• Documented information can be handled using a centralized document control system.
• Internal audits can be scheduled with a single source and the internal auditors can audit conformance to requirements on all three systems concurrently.
• CAPA system can be centralized and all corrective actions for all systems can be maintained in a single database.
• Management reviews can be done in a single session with a much broader scope.
• Emergency preparedness and response being unique to EHS can be integrated with the quality contingency plan.
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Figure 19. Common tools used in quality and EHS management systems. Created by the author of this thesis.
Act: Proposal Design for Change
Duplicated Functions
The first proposal for change will be to standardize and centralize the common
mechanism as shown in Figure 20. This will allow a more efficient use of resources to improve
the maturity level of the OEMS by having integrated, repeatable processes.
Figure 20. Integrated mechanisms for OEMS efficiency. Created by the author of this thesis.
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Conflict of Interests
Organizational governance requires accountability for senior leaders as well as ethical
behavior throughout the organization. By having the quality department reporting to operations
structure there is a possibility to not representing the best interests of end users. The proposal is to separate this function so quality at plant level has a direct responsibility to quality senior
leadership.
Information Systems and Knowledge
Centralize the information systems so it becomes easier to socialize the organizational
knowledge. This affects not only the efficiency in terms of speed for accessing relevant data but
also the effective execution of processes. The information needs to be accessible, available, and
reliable. Organizational learning is pivotal in a performance excellence system as described in
Deming’s SopK.
Risk-Based Thinking
In the Malcolm Baldrige Excellence framework, under leadership the CPE proposes the use of intelligent risk taking for seizing opportunities in order to create an environment for success. This aligns well with the spirit of ISO risk-based thinking. The proposal is to integrate risk-based thinking into the current risk management tools for assessing systems.
Resource Allocation
Resource allocation and workforce planning indicate that a mature organization mitigates risks, capacity, and capability needs in favor of effectively achieving strategic objectives. These resources need to be properly reflected in the financial plan. The proposal is to allocate proper
71 resources in order to increase the effectiveness of the administration of critical systems including internal audits, CAPA, and risk management.
Table 17 recommends actions to improve the OEMS maturity level through specific sub- clauses. Standardization, integration, and systematic use of quantitative methods for improvement and optimization are the key initiatives that are proposed for Company ABC to increase the maturity level of their management systems.
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Table 17
Recommended Actions to Improve the OEMS Maturity Level
Standard Maturity Level Recommended action 5.1 Leadership / 5.2 Policies and communication 3 Use quantitative indicators to measure effectiveness of the communication 5.3 Organizational roles, responsibilities and authorities 4 Use quantitative methods to optimize goal setting 6.1 Actions to address risk and opportunities 3 Use quantitative methods like simulations to improve risk assessment 6.2 Objectives and planning to achieve them 2 Use quantitative methods to improve workforce plan 6.3 Planning of changes 3 Use quantitative methods to improve contingency plans 7.1 Resources 3 Use quantitative methods to improve workforce plan and cultural climate 7.2 Competence 2 Standardize training programs 7.3 Awareness 2 Standardize training programs 7.4 Communication 2 Standardize data repository 7.5 Documented Information 3 Use quantitative methods to validate data accuracy 8.1 Operational Planning and Control 3 Use quantitative methods to improve process qualification 8.2 Requirements for products and services 3 Use quantitative data to improve customer experience 8.3 Design and development of products and services 4 Use quantitative data to optimize product and services 8.4 Control of externally provided products 2 Standardize qualification and evaluation of externally provided products 8.5 Production and service provision 4 Use quantitative data to optimize production and service provision 8.6 Release of products and services 4 Use quantitative data to optimize the release of production 8.7 Control of Nonconforming outputs 3 Use consistently quantitative data to improve the control of non-conformances 9.1 Monitoring, measurement, analysis and evaluation 4 Use quantitative methods to optimize customer satisfaction 9.2 Internal Audit 3 Use quantitative methods to improve the internal audit process 9.3 Management Review 3 Standardize metrics across the organization 10.1 General 4 Use quantitative methods to optimize the system 10.2 Nonconformity and corrective action 3 Use quantitative methods to improve complaint management 10.3 Continual improvement 3 Standardize the use of risk based thinking and innovation concepts Note. Created by the author of this thesis.
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By following Deming’s PDSA and SoPK frameworks any organization can reach a high
maturity level. It is a fundamental practice to define the system as recommended by the
Baldridge Excellence Framework in the description of the organizational profile.
It is important to empathize with the customer in order to be able to capture the unspoken
needs. This communication assures a strategy is implemented to drive competitiveness. The goal
is to use quantitative methods to optimize well standardized and repeatable process in order to
become more efficient, effective, and create more value for the customer.
The requirements for the ISO and IATF management systems can be complemented with
CPE. Managing quality and EHS under the same management system becomes a synergistic operation yielding more efficiency and better results. This can be achieved by integrating
common management mechanisms across quality, environment, and occupational health and
safety functions. With the integration all the processes and management mechanisms that are
standardized and repeatable allows creation of a foundation for the consistent use of quantitative
tools throughout the system.
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CHAPTER 5
CONCLUSION
In a globalized market automotive manufactures are constantly feeling the need for
change and advancement, the need for innovation to better serve their customers, and to become
more efficient and effective to improve their cost models. The ultimate goal for an automotive organization is to create value for all parties involved in the supply chain. This industry is highly
competitive and is regulated by the IATF. The IATF provides additional requirements to ISO
9001:2015 in setting standards for the automotive industry. Organizations compliant with IATF
are automatically compliant with ISO. IATF fosters risk and variation management along the
supply chain with the aim of improving efficiency and effectiveness in the supply chain to drive
competitiveness.
The leadership of an organization can use an integrated and mature QMS standardized
across the different processes of the organization to promote repeatability in operations to
generate knowledge based on factual data. This strategy supports continuous improvement
through optimization of processes using quantitative methods. The foundations of this integrated
management system are Deming’s PDSA and SoPK frameworks. The first component of
Deming’s management system embeds the scientific method in business management in order to
foster continuous improvement and optimization using benchmarks industry best practices. The
second component of Deming’s management system takes the system and divides it into four
macro elements to
• look at the whole system (appreciation of the system);
• use quantitative methods to understand variation (knowledge about variation);
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• create organizational knowledge (theory of knowledge); and
• understand the workforce profile, organizational climate, culture in order to exploit the strengths of each employee segment, and minimize weaknesses in favor of a synergistic approach to accomplish strategic goals.
When these two Deming frameworks are combined and applied to an organization consistently from the strategic plan to the operational levels, the performance excellence model is realized.
Two performance excellence models used in this study are CMMI and CPE of the
Malcolm Baldrige Excellence Framework. CMMI is an integrated set of best practices that allow businesses to compare and improve their processes against benchmarks. CPE is a list of criteria that allow an organization to determine if it is operating as required by asking questions that will allow the organization to improve from a systems perspective.
ISO has created management standards that are based on the PDSA framework and incorporated at a fundamental level in the spirit of the SoPK. These standards use the PDSA framework organized in a HLS called Annex L. ISO and IATF have published standards and guidance documents for a great variety of management systems. The standards applicable to this study are as follows:
• ISO 9001:2015, which is the standard for quality management systems
• ISO 14001:2015, which is the standard for environmental management systems
• ISO 45001:2018, which is the standard for occupational health and safety
• IATF 16949, which is the standard for automotive quality management systems
The goal of this study was to propose an OEMS that combined all these management system elements into one integrated quality, safety, and environmental management system.
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The organization under study is Company ABC, which is an automotive company that
designs and manufactures vehicle battery storage solutions for OEM and aftermarket customers
that are regulated by IATF rules. Company ABC is inconsistent in observing several of
Deming’s 14 points for management principles as follows:
• Principle 9: Break Down Barriers. Company ABC is currently certified with ISO 9001 and IATF 16949 along with ISO 14001 and ISO 45001. However, these management systems are not integrated which poses an opportunity for improvement.
• Principle 1: Create Constancy of Purpose Towards Improvement. The quality department at the plant level reports to operations, creating conflicts of interest between productivity of the process versus quality of the product (Principle 10 also applies).
• Principle 6: Institute Training on the Job. There is no centralized database for sharing knowledge. It is difficult for employees to find the right information when it is needed. Information should be readily available and accessible in a timely manner. In order to empower an employee, the organization needs to give the proper tools for decision making. Organizational knowledge is part of this tool set.
• Principle 5: Improve Constantly and Forever the System. In order to improve the system, it is necessary to get real-time data from a reliable source. Company ABC information systems rely heavily on paper-based forms that do not always provide the real-time feedback needed.
• Principle 3: Cease Dependence on Inspection to Achieve Quality. Quality is not inspected in, but is built into the product or process. Negative risk mitigation or intelligent risk taking is what ISO requires in the application of risk-based thinking. Negative outcomes are prevented from happening, good things are promoted to happen within the QMS, and in each iteration of review.
• Principle 10: Eliminate Slogans, Exhortations and Targets. Company ABC is losing effectiveness because of the amount of workload demands on individuals. Available human capital is insufficient to cover all processes effectively as required by IATF 16949 (IATF has 90 more requirements than ISO). There is greater difficulty in obtaining process maturity.
Deming’s 14 points of management were not meant to be used as a checklist, but rather as a list of the most common possible pitfalls. The 14 points of management are the preamble to the SoPK, which in turn, is the foundation of performance excellence.
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Plan Phase
The PDSA framework was applied to carry out the study in this thesis. During the Plan
phase, the study was defined to follow ISO HLS to do an assessment of a proposed integrated
management system. The systems to be integrated included ISO 9001, IATF 16949, ISO 14001,
and ISO 45001. The performance excellence models used to assess maturity levels were CMMI
and CPE. Both models followed the SoPK framework.
The statement of the problem at Company ABC required proposing an OEMS that would
allow the organization to become more competitive by improving efficiency of processes and effectiveness of meeting customer requirements. This would create greater value compared to competitors. Success in solving a problem was interpreted as obtaining an excellent description of the problem in the Plan phase.
Company ABC was described using elements of the organizational profile section of the
Baldrige Performance Excellence Framework as guidance. The question was how to become more competitive in fulfilling customer needs. The main interested parties were defined as follows:
• distributors, OEMs, and end users
• city, community, and federal government
• shareholders
Requirements were defined from a systems standpoint. Then objectives were created using the OKR method, which include the following:
• service level: measured with order fill and order accuracy.
• electrical compliance: measured with reserved capacity and cold cranking amps.
• save workplace: measured with amount of individuals with blood lead greater than 0.20 g/dL.
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• certified systems: measured in certification status.
• environmental safety practices: concentration of heavy metals of the Resource Recovery and Conservation Act.
• product safety, regulatory, and statutory requirements: measured as total recordable incident rate.
• financial health: measured in earnings before interest, taxes, depreciation, and amortization.
• workforce growth: measured as training plan fulfillment.
OKRs were cross-referenced in the QFD of the OEMS. Objectives were rated from one-
to-five from a competitive standpoint, and key results were rated from one-to-five in terms of
importance for the OEMS. Once OKRs were defined, a performance scorecard was designed along with a classification of key results by efficiency and effectiveness. An OEMS is most useful with a combination of efficiency and effectiveness indicators.
Do Phase
In the Do phase, the requirements from the ISO and IATF QMS were determined as well
as the requirements of the performance excellence models. CMMI was used to assess maturity
level and CPE provided the benchmark criteria. Collectively, these multiple management
systems and performance assessment measurements provided an integrated perspective of overall
quality performance.
Study Phase
In the Study phase, the gap between ISO and IATF management systems and CPE was
determined using CMMI levels. There were 24 sub-clauses taken into consideration and assessed against the CPE as applicable to the Clause. After the assessment, the following outcomes were determined:
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• 26% were at an average maturity score of Level 4.
• 54% of the sub-clauses are at average maturity score of Level 3.
• 21% were at a maturity score of Level 2.
Act Phase
At the end of first iteration of the PDSA cycle, Act phase recommendations for closing gaps were provided to address the problems identified at the beginning of this study.
Recommendations were as follows:
• Integrated mechanism to improve efficiency.
• Separation of plant quality leadership from the operations structure to avoid conflict of interests.
• Centralize the information systems so it becomes easier to access knowledge throughout the organization.
• Integrate risk-based thinking into management systems.
• Allocate resources to increase the effectiveness of critical systems administration (e.g., internal audits, CAPA, and risk management).
Key initiatives proposed to increase the maturity level of management systems in
Company ABC include standardization, integration, and systematic use of quantitative methods
for improvement and optimization. The PDSA framework will be used to continuously maintain systematic improvement in organizational performance excellence. The recommended sequential order of management system improvements are anticipated to be the following:
1. Integrate the quality, environment, and occupational health and safety management systems into the OEMS by standardizing the common management mechanisms among the systems.
2. Allocate resources to effectively manage and sustain the common mechanisms for updating and maintaining the various management systems.
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3. Improve the information systems to take advantage of data collected and discontinue collection of irrelevant data. Then create relevant and reliable information reporting using quantitative methods to support improvement and optimization of processes.
4. Use the newly created OEMS scorecard to assess performance of the OEMS with respect to efficiency and effectiveness of the integrated management systems.
5. Use the CPE to assess organizational performance excellence.
6. Use the CMMI model to assess and improve maturity levels of the processes.
7. Continuously repeat the cycle within the PDSA framework.
All of the changes required to accomplish these goals and objectives require extensive planning and testing in the process of arriving at final management systems design. The
execution of an implementation plan for these changes will require a multi-year sequential
planning schedule. Therefore, the integration of quality guidance from ISO 9001:2015, ISO
14001:2015, ISO 45001:2018, IATF 16949, and Baldridge criteria for performance excellence is
anticipated to be accomplished over a several year period.
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