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© The Aerospace Corporation 2010 ASQ World Conference on Quality and Improvement file W05 – Richter.ppt
Session W05
Measuring Quality Audit
Effectiveness
Eric Richter, Ph.D. The Aerospace Corporation El Segundo, California
May 26, 2010
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The Aerospace Corporation
• Established in 1960
• Operates a Federally Funded Research and Development Center
• Emphasizes support of space programs
• Has 23 offices nationwide
• Employs 3800
El Segundo, CA
Colorado Springs, CO
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Learning Objectives
• Review the compelling need for
measuring audit effectiveness
• Understand the limitations of several
common audit effectiveness metrics
• Develop a process approach to
evaluating audit effectiveness
• Construct an audit effectiveness metric
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Contents
• The management dilemma
• Limitations of common metrics
• Modeling auditing as a process
• Six measures of a good audit
• Constructing an audit effectiveness
metric
• Summary and review
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© The Aerospace Corporation 2010 ASQ World Conference on Quality and Improvement file W05 – Richter.ppt
The management dilemma
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The management dilemma
NOTE: Examples in this presentation are used for instruction purposes and do not reflect the performance of any organization.
• Audits can surface problems in
advance of nonconformities
• Management may not know how to
apply the auditing tool
• Quality may not know what
management needs
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Management dilemma (cont.)
• Miscommunication between
Management and Quality may
weaken the audit program
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Management decisions
Establish a
required
audit
program
Containing
costs is a
constant
priority
Could audit
money be
more useful
elsewhere?
Auditing is
compared to
production
activity
“Compute”
the audit
return on
investment
Reduce the auditing activity to satisfy
only minimum contract requirements
Disengage by spinning off activities to a
corporate overhead function
Auditing is
judged to be
non-value
added
Minimize the
auditing
cost to the
program
Positive
results at
first, then
repetition of
same
problems
Contract and
AS9100
requirements
Key
n Support audits
n Question audits
n Reduce audits
n Decision inputs
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Signs of change
• Management shows little interest in
audit reports
• Audit status is put at the end of
management briefings
• Requests for targeted audits
disappear
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Concerns
• Quality just reports problems
Pareto analysis doesn’t address risk
Reports that do not translate findings
into a dollar cost
No predictive aspects to reports
Outside auditors find obvious issues
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The decision was made
• Size of audit teams are reduced
• Auditors are assigned non-auditing
tasks
• Production schedule trumps audits
Auditors must constantly innovate to keep management’s attention.
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© The Aerospace Corporation 2010 ASQ World Conference on Quality and Improvement file W05 – Richter.ppt
Limitations of common metrics
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Performance to plan
0
20
40
60
80
100
120
140
Nu
mb
er
of
Au
dit
s
Cum Plan
Cum Perf
NOTE: Chart is notional and does not reflect the performance of any particular company.
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Number of findings
0
5
10
15
20
25
30
35
40
45
Nu
mb
er
of
fin
din
gs
Number of findings
NOTE: Chart is notional and does not reflect the performance of any particular company.
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Audit the auditor
0
10
20
30
40
50
60
70
80
Nu
mb
er
of
fin
din
gs
Initial audit
Follow-up audit
NOTE: Chart is notional and does not reflect the performance of any particular company.
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© The Aerospace Corporation 2010 ASQ World Conference on Quality and Improvement file W05 – Richter.ppt
Modeling auditing as a process
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Process inputs and outputs
Inputs
•Staffing
•Regulation
•Resources
•Command Media
•Process Requirements
•Customer Requirements
Auditing Process
Outputs
•Capability
•Compliance
Feedback
•Management/Customer Issues
•Cost/schedule overruns
•Floor intelligence gathering
•Corrective Action Issues
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The auditing process
Modify
plan
Develop
Audit
Plan
Assess
Corrective
Action
Report
Results
Perform
Audits
Tabulate
Audit
Metrics
Inputs
Auditing Process
Outputs
Feedback
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Compliance vs. capability
Lower spec limit Upper spec limit
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© The Aerospace Corporation 2010 ASQ World Conference on Quality and Improvement file W05 – Richter.ppt
Six measures of a good audit
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Sponsor satisfaction
1. Meets customer and sponsor needs and requirements
Do executives, customers, managers derive value from the audits?
Do reports provide actionable direction?
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Risk
2. Measures organizational risk
Do reports discuss risk to the organization?
Do reports warn of future problems before product is affected?
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Organizational improvement
3. Fosters an environment of feedback and continuous improvement
Do audits contribute to the organi-zation’s improvement?
Do audits assist the organization in reaching its business goals?
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Auditor qualification
4. Auditors are qualified
Are requirements for auditors
established and adequate?
Are auditors skills continually
being updated?
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Updating auditor skills
Auditing techniques
Knowledge: quality systems and
technical processes audited
Basic statistics and use of quality tools
Presentation of material
Communication using management
language (cost, schedule)
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Documented process
5. Process is documented
Is there an audit plan which
describes the goals, approach and
schedule for the coming year?
Are relevant directive documents
up-to-date and aligned?
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Auditing improvement
6. Continual improvement of audit process
Do audits provide greater insight into the organization?
Is the auditing effort becoming more efficient?
Does the auditing effort stimulate preventive action?
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© The Aerospace Corporation 2010 ASQ World Conference on Quality and Improvement file W05 – Richter.ppt
Constructing an audit
effectiveness metric
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Weighting
• Six measures of audit effectiveness
(audit elements) are defined
• Each audit element is given a
weight
Weight may be tailored based on
organization’s needs
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Audit element scoring
• A three-tiered score is given to each
audit element
High score – improvement focus
Medium score – meets requirements
Low score –unpredictable or has
minimal control
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Calculating the metric
• Multiply the weight times the element
score
• Sum the products
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Audit element weights
Audit Element Weight
Meet customer and sponsor needs 25
Surface risk issues 20
Encourage feedback and continuous
improvement 15
Auditors are qualified 15
Audit process is documented 15
Continually improve audit process 10
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Tiered scoring examples
Audit
Element Points Rating
Meet
customer and
sponsor
needs
(9) presentations produce interest, requests and
dialog
(5) presentations made regularly
(1) little feedback from customer or sponsor
Surface risk
issues
(9) quantifiable discussion of risk in reports and
briefings
(5) vague or subjective discussion of risk in
reports and briefings
(1) little mention of risk in reports and briefings
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Calculation example
• Meet customer and sponsor needs (1 point)
• Surface risk issues (1 point)
• Encourage feedback and continuous
improvement (5 points)
• Auditors are qualified (5 points)
• Audit process is documented (9 points)
• Continually improve audit process (5 points)
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Calculation example (cont.)
• Multiply weight by the respective
rating and sum
25x1 + 20x1 +15x5 + 15x5 +
15x9 + 10x5 = 380
Maximum score is 900, minimum
score is 100
• Total score may be trended
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Overall stoplight rating
• Suggested ranges for an overall
scorecard rating
–680 to 900 Green
–320 to 679 Yellow
–100 to 319 Red
• Scorecard bands may be tailored
based on organization needs
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© The Aerospace Corporation 2010 ASQ World Conference on Quality and Improvement file W05 – Richter.ppt
Summary and review
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Compelling need
• Absence of a good audit effective-
ness metric has consequences
Management may not understand
the value and capabilities of a good
auditing program
Quality may not be able to
improve the program
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Limitations of common metrics
• Performance to plan
• Number of findings
• Audit the auditor
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Auditing process
• Auditing process has its inputs,
outputs and feedback
• Defining the process identifies more
clearly those items that need to be
measured
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Six audit measures
• Sponsor needs
• Risk
• Organization improvement
• Qualified auditors
• Document process
• Continually improve audit process
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Developing the metric
• Assign a weight to each audit measure
• Develop a 3 level measure on each
element
• Multiply the weight by the respective
audit measure
• Sum the products and trend
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Take away
Quality audit effectiveness is
measured by performing a process
audit of the audit process
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Questions?
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