Pareto Analysis

June 6th, 2012

Our ISO9001, ISO14001 and OHSAS18001 management systems require us to maintain records of checks, audits and inspections. Analysing this data can help us set priorities for process and system improvement and to assist us in defining performance targets.

Pareto analysis can help us identify the most significant issues from the general morass of data and requires no real mathematical or statistical knowledge. It has also been called the 80/20 rule and underlines the premise that 80% of our problems tend to have 20% of the possible causes.

Vilfredo Pareto was an Italian economist and sociologist who identified that in his country approximately 80% of the wealth was owned by 20% of the population. The Pareto principle can be applied to all kinds of data for instance we might identify that:

  • Approximately 80% of or sales come from 20% of our customers
  • Approximately 80% of customer complaints come from 20% of our distributors.
  • Approximately 80% of audit findings are against 20% of our processes.

Of course the premise is a general approximation and not a rule that can be consistently proven mathematically.

To apply the Pareto analysis to set of data follow these simple stages:

  1. Review the data and decide how best to analyze it. Remember that we are looking at items that recur. We can analyse by recurring issues or recurring causes.
  2. Once decided list the issues or causes
  3. Use tally charts to identify the number of times each cause or issue occurs.
  4. Plot the frequency of occurrence against the issue starting with the highest frequency first and progressing to the lowest. See example below:

The above example shows types of employee injuries over 4 years for a scrap recycling plant. (The data is ficticous but does illustrate typical results for a Pareto analysis.) As a general rule with this type of data, we can see that by tackling the top 3 or 4 issues we can significantly reduce the number of overall accidents. (A client uses a similar analysis as part of an improvement programmed to support their OHSAS18001 integrated management system)

In this example we have analyzed the number of occurrences for each type of injury. Our next step should be to analyze why so many lacerations occur by identifying the root causes. We may need additional data to do this effectively for instance to know how many of the injured persons were wearing protective gloves at the time. This may necessitate introducing a process for collecting more detailed data; for example: amending our accident reporting form to collect data about the types and extent of PPE used.

Collecting additional data, if it is not readily available, will take time. However, in order to effect an immediate reduction in accidents we can use alternative techniques (like brainstorming) to identify potential root causes and use this data to improve our overall process.

If we have further analysed our data to identify the root causes of each issues (or potential root causes), we could carry out a Pareto analysis of causes as in the example below:

The three key system standards: ISO9001 (Quality), ISO14001 (Environmental), OHSAS18001 (Health and Safety) all contain specific requirements for analysing data.

In the example above, the results of such analysis give a clear indication of where we need to concentrate our process improvements in order to reduce our audit non-conformances.

The three key system standards: ISO9001 (Quality), ISO14001 (Environmental), OHSAS18001 (Health and Safety) all contain specific requirements for analysing data and for continuous improvement.

Pareto analysis is a simple and powerful tool for helping quality practioners to analyse data in order to identify the vital few issues and separate them from the trivial many. Used as input to management review and performance review activities it can be invaluable in focusing management’s attention on the key issues in the continuous drive for process and business results improvement.

MSA Studies on Fixed Size Gauges

April 28th, 2012

TS16949:2009 requires MSA (Measurement Systems Analysis) studies to be completed on measuring systems depicted on the manufacturing control plan. Variable measuring instruments which are used by different appraisers have both appraiser and repeatability variation which can be evaluated using one of the MSA manual methods for calculating Rand R.

But what of attribute studies for fixed size plug gauges? Have you attempted to carry out studies and did you obtain any meaningful results? My own experience of using the attribute study methods defined in the IATF MSA manual which is used to support TS16949 is that the studies rarely produce any meaningful results.

The problem is that in order to measure any variance you really need both good and bad product in the study sample. If samples are taken from normal production and the process is running in control, you are likely to find that all appraisers confirm that all samples are within tolerance. This doesn’t tell you anything relating to the suitability of the gauging system. The IATF manual suggests making special samples with small dimensional variation to the extremes of tolerance, but this assumes that you have the facilities to do so and maybe impractical?

A far simpler and revealing process for determining the risk associate with the use of fixed size plug gauges is as follows:

1) Tolerance study

Most plug gauges are manufactured to Master Gauge Maker’s tolerances which mean that the go plug has a positive tolerance and the not-go a negative tolerance. Confirm this from the gauge calibration record. This makes it impossible to use the gauge and accept a faulty product. The gauge is guard-banded to ensure only parts within tolerance are accepted. Therefore there is no risk to the customer.

2) Review the process yield (ppm defective)

The risk in using the plug gauge is a very small supplier’s risk, in that we could be rejecting good parts. To decide if this maybe a problem worthy of investigation we only need to look at the process rejects. If we are only rejecting set-up scrap or have no significant rejects then the risk is probably acceptable and a study would not be worthwhile.

3) Appraiser variation

If we do decide to carry out a study, since the gauge is a fixed size there is no equipment variation so we only need to consider appraiser variation. We can do this by using 3 different appraisers to re-appraise the rejects using the gauge. If we have any significant appraiser variation then we need to investigate why. Suggestion is that one or more of the appraisers are not using the gauge correctly.

4) Improve the process

If the process rejects are significant, then the first port of call should be a review of the process capability rather than a more in-depth appraisal of the measurement system. The recommendation here is that time and effort is used to improve the process rather than in quantifying the supplier’s risk of rejecting good parts.

5) Measuring the Supplier’s Risk By Calculation

With any gauge made to master gauge makers tolerances there will be a risk that some good parts are rejected which are near to the specification limits. This risk can be assessed by comparing the difference between the actual gauge size (measured at calibration) and the component drawing tolerance, with the process capability. That is using the normal distribution to calculate what percentage of parts will fall in the size range between the gauge size and the drawing tolerance. It can be quickly realised that for any process running in control at say 1.33 Cpk this risk is miniscule.

5) Measuring the Risk by Practical Means

Alternatively we can measure those parts that have been rejected using a more accurate direct measurement instrument and identify those that were rejected but are actually within tolerance and could have been accepted. The problem with this approach is that we are introducing another level of measurement system variation. To be sure of meaningful results we need an instrument with a resolution of one tenth of the range of measurements we are trying to take and a known R+R. If the difference between the gauge size and the drawing tolerance is .0005mm then a measuring instrument with a resolution of .00005mm and a gauge R+R of <10% would give reasonable results. In any case it’s a tall order.

6) In Conclusion:

MSA studies of fixed size gauges provide little value to the organisation.

Most gauges are guard-banded to prevent acceptance of non-conforming product and this can be confirmed by reference to calibration results.

Only appraiser variation is potentially present.

If the process is running in control at acceptable Cpk the supplier’s risk of rejecting good parts is insignificant. This risk of rejecting good parts can be determined but if there are significant numbers of parts reject by the gauging method, the process capability should be improved as this is the most likely cause.

Please note: TS16949 states that adopting other methods to those defined in customer reference manuals should be approved by the customer. (TS16949:2009 clause 7.6.1)

ISO14001 – Objectives for saving water resources

March 19th, 2012

Have you noticed how the ranking of environmental concerns change over time? It wasn’t so many years ago that we were concerned about the ozone layer and its effect on skin cancer. This led to the control and withdrawl of some refrigerants mainly CFCs and halogens. The focus then moved onto green house gases and the burning carbon based fuels and how they contribute to the greenhouse effect and rising earth temperatures. Whilst these issues are still with us, actions are being taken by many organisations to reduce their environmental impacts often as part of an improvement programme allied to ISO14001 certification.

Current concerns are now focusing on water – or lack of it. Particularly in the South East of England where rainfall over the past 2 years has been well below average and reservoirs have had to pump water from nearby rivers.

Perhaps it is time we re-looked at our ISO14001 targets and improvement actions to see the impact we have on the environment caused by water usage and effluent discharge.

WRAP (Waste & Resources Action Programme) believes that Businesses in the UK could on average cut their water usage by a third and there are some very cost effective an quick wins that can be achieved. Here are some of the savings that can be made.

If you have urinals that flush automatically then you will be wasting water flushing when the building is unoccupied. A number of systems are available to intelligently control when the flushing takes place. A hydraulic valve can be fitted to the inlet pipe which activates when water is being used elsewhere in the toilet (eg a wash hand basin), or you can use infra-red motion sensors to detect when someone is present in the room.

Wash hand basin taps which are the push type also offer water savings as do basins fitted with taps operated by infra-red sensors. You can also use an isolating ball valve or flow restrictors to reduce the flow rate. Fitting spray nozzles to existing taps can also reduce the amount of water used by up to 80% and are a cheap to retro fit as are aerator nozzles designed to add air to the exit flow from the tap which have a similar effect.

You can also reduce water usage from toilet cisterns by fitting mechanisms that control or reduce the flow. These include drop valve and siphon mechanisms that can be retro-fitted. Dual flush systems allow the user to select the flush needed. Simply adjusting a ball valve can make savings in water usage.

Although in small office based businesses, the toilet facilities are likely to offer the biggest potential savings, we should not forget the kitchen. Appropriate training can be given to ensure that water is used efficiently. Simple rules like not over-filling the kettle and not washing under running water come to mind.

If water is used in industrial processes for cleaning or cooling then re-circulating systems should be installed. Consideration can also be given to the possibility of re-using waste water from one activity as input to another. For example water from a cooling process maybe suitable as input to a washing process. Waste water from washing may be suitable for irrigation purposes.

Water resources are already critical in many parts of the UK following a reduction in rainfall over the past 2 years. Population growth and building programmes are increasing demand on already stretched resources. Concerted effort from landlords, businesses and domestic households can help reduce the pressure.

So here’s the challenge for us all: At our next Management Review meeting, let’s re-look at our environmental performance (and in line with our ISO14001 programme) set a new objective and strategy to reduce our water usage (ISO14001: clauses 4.6 Management Review and 4.3.3 Objectives, Targets and Programmes refer)

Marketing and processes and business behaviours should focus first on the customer experience

March 1st, 2012

What has happened to trust and respect in our society?

Do you find marketing and product and service promotional initiatives are becoming too intrusive?

Do you find your inbox cluttered up with scams offering fantastic benefits if you just send your bank account details? Are you plagued with pop-ups and unsolicited phonecalls offering you debt relief or products you are not the slightest bit interested in?

Would you like a marketing free day when you can just relax and make up your own mind about the worthwhile products and services you would like to buy? Yeah .. me too.

Too much, is counter productive. In fact I find over exuberant marketing extremely annoying and given choice will not buy from anybody who practices it. I do not trust them and I find their constant intrusions disrespectful.

As a quality consultant helping organisations to implement management standards ISO9001/ISO14001,  I spend my working life convincing management that putting customer’s needs and expectations first is essential for building customer loyalty, so it always amazes me that so many organisations still get this simple rule of business so horribly wrong. Who was the marketing genius that decide that every time I fill up the car at one of their chain of petrol stations, it is to my benefit to follow a ridiculous one-way system that directs me as far away as possible from the payment till?

On the television tonight is the result of an investigation that reveals that nursing homes are not always treating their residents with dignity and letting them make a contribution to how their homes are run. We hear tales of hospital patients being neglected on the ward.  The press is inundated with shocking sports reports or should I say bad sportsmanship reports. In the last few weeks we have had footballers suspended for abusing opponents and boxers banned for brawling outside of the ring.

These are obvious examples were a lack of professional conduct and total indifference to the feelings of residents, patients and sports spectators has resulted in “news”.

The really shocking thing for me is that these stories are so prolific, and not only are the press exposing them but in some cases prosecutions result.

It is time that we stopped all this nonsense and started to think first and foremost about our “customers”.  Spectators are the customers of sports events, patients the customers of hospitals and residents and those that pay for care are the customers of care homes.

Football clubs cannot survive without paying spectators. We expect the sport to be played in an atmosphere of good sportsmanship which means respect for the opponent and the rules of the game. We expect hospitals and care homes to treat those in their care with dignity and respect. But we shouldn’t have to expose misdeeds in the press or have issues discussed in parliament to get the trust and respect that we are looking for. It is a god-given right of the customer to expect it.

Ironically many of the organisations guilty of these “offences” have a mission statement that tells us the opposite of what we see in practice. I’m not naming names but you can check the mission statements of football clubs and hospitals and care homes on the internet yourself.

Its time to dust off our own mission statement and our quality policy. Get back to basics. Understand the true meaning of these statements and communicate and discuss them with our staff . Make sure everybody buys into our organisation’s ideals and adopts practices, systems and above all behaviours that really put customers and those we serve at the forefront of everything we do.  Quality system standard ISO9001 call this “customer focus” (ISO9001 clause 5.2) and also requires our quality policy to be “communicated and understood within the organisation” (ISO9001 clause 5.3d)

Finding new customers is harder in a recession but above all we all need to work a damn site smarter and be more focused to keep the ones we already (think) we have. Customers come back because they trust us and we treat them with respect. Betray that trust just once and you’re unlikely to keep them.

Is ISO9001:2008 relevant in a recession?

November 1st, 2010

The downturn in the economy in the UK has hit many small businesses hard. Not only do customers have less money to spend but they are becoming more choosy about where they spend it and are more demanding on the quality of goods and services they expect.

Being customer focussed and delivering valued products and services is achieved by being attentive to customer’s changing demands and planning products and services to deliver on expectations.

Previous research studies have shown that independently certified companies to the international quality standard ISO9001 are less likely to fail than non-certified companies. It is easy to be sceptical about these types of statistics as it could be argued that it is generally the better organised and customer focussed companies that choose to pursue the ISO9001 certification route in the first place.

However it is a fact that the ISO9001 management system standard provides a sound and proven framework for managing quality effectively in a business and that many major purchasers both in the UK and overseas see it as a practical way of pre-qualifying potential suppliers. In fact in some business to business trading sectors it is a pre-requisite to inclusion in the tender list.

My experience in helping companies to implement ISO9001 over a consultancy career spanning several decades is that any well-run business will already meet a tidy percentage of the requirements: mainly because a bulk of the standard is based on business common-sense. There may be a few activities which ought to be a bit more formal and almost certainly the organisation will require some additional processes which are designed to manage a quality system. However these are pretty straight forward once the requirements are understood.

The standard does require the management to adopt a particular style of management which we commonly call management by objectives and to manage the activities undertaken to fulfil customer orders as a set of inter-related processes. Setting objectives (or Key Performance Indicators, KPIs) for improving business performance and tracking our progress, making corrections when we falter and stretching further when we achieve is a sound strategy for business growth and prosperity.

Planning appropriate checks and balances into our processes will ensure that they are robust and that they are delivering the faultless products and services that our customers have come to expect. Customers are hard-won in a recession and we can’t afford to disappoint them.

AR Engineering Industries Ltd are a small engineering business based near Dartford in Kent. Introducing a Quality Management System and gaining ISO9001 certification was a key part of their survival strategy when faced with a fall in demand for their services at the start of the recession. Claire Cooper, their operations director focused on obtaining formal recognition of the company’s reputation for quality with ISO9001 certification and followed this up with a pro-active marketing strategy. Claire quotes ” Using processes and procedures mapped out within our quality manual helped us all work more efficiently and effectively. As a result of taking the time to implement a comprehensive system throughout all operations within the business, we can now deliver goods and services much more quickly and consistently”.

AR are under no illusion. ISO9001 certification has helped them secure new business and improve the future prospects for the company. However certification on its own is not enough. Potential customers need to know who you are and what you are capable of and for this you also need a pro-active marketing strategy.

AR Engineering Industries Ltd are a client of Business Partners Consultancy Ltd for implementation of ISO9001. Read their success story at: http://www.simplybusiness.co.uk/knowledge/articles.

Beating the Big Nationals on Customer Service

October 14th, 2010

I am making some improvements to a property I recently purchased. First on the agenda is to re-vamp the 1970’s style bathroom and bring it up to date. It’s a small room and the current arrangement has the wash basin partly overhanging the bath which prevents the use of a shower screen or shower curtain. The basic plan is to install a slightly smaller than standard wash hand basin, a short 1500 mill bath with shower mixer (installed the opposite way round) and a new close coupled toilet. The plan is to connect to the existing wastes to prevent changes to the outside of the building for which permission is required from the freeholder.

I prepared a room plan and identified the dimensional sizes of the items to be purchased. Then as I expect most people do, I trawled the internet to identify potential suppliers and the best prices. Personally, I find this somewhat frustrating as just about all the sites wanted to route me through a showroom type of approach where I could select a bathroom suite according to style. I could not find a full suite to the required sizes from one manufacturer but after a couple of hours was satisfied that I had identified a list of best prices for the various items, and from several suppliers.

The property we are renovating is currently unoccupied, so delivery was a fairly critical issue for us. We also wanted to purchase a new washing machine and hoped to get all the required items delivered pretty well at the same time. This proved to be a nightmare. Having identified the washing machine we wanted, we approached three local superstore type retailers. Two didn’t have the model in stock and could only tell us when they would have stock in vague terms “this week or next depending on supplier” the third was re-building the store and had the machines stranded on the top deck but no stairs.

We decided to order the bathroom stuff. I suggested to my wife that we pop in to the local plumbers merchant and see if they can help us especially as it was on the way home. I thought, they probably won’t be able to match the on-line prices but we should support our local businesses if we can. This proved to be a truly inspired decision. The showroom assistant was extremely helpful and took my list of requirements, identified all the items we needed and costed them within a few minutes. She showed me a complete breakdown of prices. The toilet was dearer but the hand basin cheaper. The bath was comparable but also included a bath panel. I was pleasantly surprised and so said, “OK we’ll go ahead” “I’ll order them now”, she said “and they will all be here on Monday, when do you want delivery?” “I don’t know” I stuttered embarrassingly, “you see it depends on when our washing machine supplier says they will deliver my order”. “No problem take my phone number and ring me when you know. I’ll hang on to the items until you want them. Just phone me in the evening before. I’ll get the boys to load up the van and we’ll bring them straight round.”

We went back to the internet, we found the washing machine on-line at competitive price but the retailer could only deliver Wednesdays sometime between 7.30am and 8.00pm. They could be more precise but not until the evening of the day before.

It was no problem to our local plumbers merchant. We called them up the evening before the washing machine was due and we had all the items required delivered on-time, up 3 flights of stairs and within 30 minutes of the washing machine.

I have to say the service and helpfulness was fantastic. A marked contrast to that offered by the large national superstores and on-line retailers who seem unable to tell you when they can have the items in stock and are inflexible when it comes to deliveries.

Only this morning on the BBC Breakfast was a feature about delivery services (or rather lack of services) from some retailers and how to get recompense for failed services. Fortunately I haven’t had this problem but I did learn a few lessons.

  • You are far more likely to get personal service and caring attitude from your local merchant that a national chain or the internet, because they want your business.
  • Your local merchant is often just as competitive.
  • You can discuss problems with your local merchant they will fit deliveries around your needs not theirs.

So if you’re running a small business and trying to compete with the big boys, listen to your customers and offer them what the big boys seem incapable of: personal attention, a helpful attitude and a service that meets the customer’s specific needs.

Integrated Management Systems – Are they worth the effort?

September 30th, 2010

It seems that every other month, someone comes out with the latest management theory on what we should all be doing to remain competitive in business. Most of us yawn and think: ‘Well, it seems like a good idea, but so was Betamax. Maybe I’ll just wait and see how popular this becomes’

So Integrated Management Systems – what the hell are they? And are they worth pursuing?

Business today need to meet the requirements of numerous stakeholders including: customers, employees, investors, regulators etc. Not only that, but the poor business managers need to meet all of their requirements at the same time and all the time.

I don’t know about you, but I often find it taxing just to meet the needs of my family at home. So just how well do smaller businesses manage to satisfy all these time-demanding stake-holders? My 17 years experience working as a business advisers to SMEs suggests not very well at all. Focusing on customers, these days is a pre-requisite to sales and keeping the cash straight is essential too, but the rest? Well, to be honest, there just isn’t enough time available, and every successive government has promised to cut regulation whilst the H&S pundits, the environmentalists and the EU are busy piling it on. (Or so it seems).

Trying to address all these issues separately, with different people and different processes is not only time-consuming but also results in significant duplication of effort. Now I know that we need to treat each of our stakeholders differently, and they all expect different outcomes: safe place of work, products that meet customer requirements, processes and products that cause no pollution risk etc. But many of the basic processes for planning and achieving these outcomes, for managing the work and making  improvements can be basically the same, and that’s ‘integration’.

Defining these processes, their inputs and outputs and how they can be measured is the ‘system’ part of the equation. Providing leadership, clear goals, tracking progress and making changes when necessary to achieve stakeholders’ expectations provides the ‘management’ part of the equation.

So that’s it. A single, one-size fits all, Integrated Management System and it sounds so simple everybody will be doing it. If only!!

The International Standards Organisation has taken the lead by making the standards which relate to management systems compatible. Processes which can take a common approach but which address different disciplines are written in the same terms within the standards. The most widely adopted of which are:

  • ISO9001:2008 Quality Management Systems Standard.
  • ISO14001:2005  Environmental Management Systems Standard.
  • OHSAS18001 :2007 Occupational Health & Safety Management.

Even with the standards reasonably lined up you still best to pour over the detail of each one of them. ISO14001 has requirements for assessing environmental aspects and impacts but in reality this is just a fancy name for an environmental risk assessment, and whilst the detail may be different, the basic process can be aligned with that used to evaluate health and safety risks.

Integration is now the way forward for companies wishing to meet one or more of the above standards, but sadly this approach is in its infancy. There are still many organisations introducing and managing parallel systems.

Integrated management systems, effectively implemented, have significant benefits. They are easier to manage and maintain, require less documentation and encourage employees to focus holistically on the needs of various business stakeholders when managing the business processes. This can ensure that meeting these varying needs becomes endemic in the day to day operations.

Organisations generally start by introducing a management system to meet one of the standards; an ISO9001 conformant Quality System being the usual starting point. But even when pursing this single objective, it is a good idea to think ‘integration’ and develop a system which can be easily upgraded to meet additional similar standards in the future.

Business Partners – New Web Site Launch

August 23rd, 2010

This is the re-launch of Business Partners Consultancy website. I will be regularly adding news and tips on quality, environmental management systems implementation and related topics, so please make our site a regular port of call.

Regular articles on ISO14001 ….. coming soon

Audits, pleasure or chore?

August 3rd, 2010

The client and supplier audits I do from time to time frequently find shortcomings in the internal audit process. Programmes are frequently behind schedule or the findings are trivial or nothing is ever found or reported. So why do them? Well apart from being a requirement of ISO9001 and all derivative standards, in the right hands and executed professionally, audits are a valuable management tool for identifying process and system weaknesses and driving continuous improvement.

Auditors should be selected by management and given appropriate training and support to do the function properly and in depth. An auditor who never bothers to investigate the process beyond the written instructions or process plans will not be effective. Audits should also focus on the effectiveness and efficiency of the processes and those operating them, and how those processes interface with other processes to generate wealth for the company.

For too many organisations auditing is seen as a chore to be fitted in if we get a spare moment. Well, I’ve got news for you; you will never have a spare moment so you will never find sufficient time to audit effectively. Audits need to be scheduled and planned. In particular auditors need to take themselves out of their daily routines and specifically schedule time to carry out and follow-up an audit.

If your management systems assessment body finds omissions and shortcomings that you didn’t then it’s probably a sure sign that your auditing process is not as searching or effective as it should be. Picking auditors with the right attitude, training them, supporting them and ensuring that you give them the time and resources to do the job effectively will pay dividends in improved processes, improved performance and should pave the way to business improvement.

BS25999 – Business Continuity Management

July 1st, 2010

Business Partners have been working with associates to develop a Business Continuity Management (BCM) Programme which will enable SMES (Small to Medium Sized Enterprises) to meet the requirements of BS25999 in a lean, practical and cost effective way.

Maintaining a credible Business Continuity Plan is becoming an important aspect of business management for all organisations and is particularly relevant for those working in environments where there are perceived risks associated with operations, business location, finance, or where customers seek additional assurances on continuity of supply (e.g. major events and public sector).

BS25999-2:2007 lays down the fundamental considerations for a BCM system to enable an organisation to continue operations in the event of a disruption, be it a major disaster or minor incident. The standard is suitable for all organisations regardless of size, location or market sector, and is available in two parts:

  • BS25999 part 1 – is a Code of Practice which provides recommendations of best practice and is a guidance document only
  • BS25999 part 2 – is a Specification against which organisations can develop a business continuity management (BCM) system which can be verified by internal audit and review and can also be externally assessed and certified by an independent assessment body.

Plaese contact us if you are planning to implement a Business Continuity Plan to BS25999 – we’d like to help you achieve it.