Iowa State Universityof Science and Technology

Chad Laux

Agriculture and Biosystems Engineering

Industrial and Agriculture Technology9/27/05

The Impact of Quality Management SystemsThe Impact of Quality Management Systems

OutlineOutline

BackgroundDescribe project (Charter)Review methodology selecting

measuresQ & A

BackgroundBackground

2nd Year PhD student in Industrial & Ag Technology – Dept. of ABE

Spent 10+ years in Industry – Six Sigma BB, Quality/Training Mgr, Project Mgr, etc.

This project is part of my PhD dissertation at ISU (AG 9000 Development, Tech Transfer)

Have spent past year learning about FC and QMS systems + internal auditing

What is being askedWhat is being asked

Of Regional Operations Managers – at minimum, provide data & information upon request about FC processes and/or measures

Locations – may want to compare a process to multiple locations

Are the measures valid? Asking the question at non-QMS locations about the measure – Is it valid to check?

Main Research QuestionMain Research Question

How has ISO/AIB impacted FC’s operations?– Implement a process of the fiscal impact of

QMS impact through the collection of total costs vs. total benefits.

– Calculate costs/benefits & report results– Create a set of application materials for

use by Industry as output from project.

Project Management (Charters)Project Management (Charters)

Outlines project in one document: answers:– Business case – Purpose of project– Opportunity statement – Business impact– Goal statement – Success criteria– Project scope – Project boundaries– Project plan – Timeline of activities– Team selection – who and what

Business Case Opportunity Statement

In 2004, Farmer's Coop became certified to the ISO 9000:2000 quality We have the opportunity to show the fiscal impact of implementingmanagement standard to improve operations in efficiencies, a QMS in agribusiness and the creation of a process for doing so.performance, and predictability. Through this process, the company In addition, there is the opportunity to influence the business decision of Through this process, the company wants to quantify the fiscal impact how much further the company will be implementing a QMS acrossof implementing the ISO standard. This would align with a FC business rest of its business locations.initiative of implementing a quality management system throughoutit's multiple locations.

Goal Statement Project Scope

Implement a process of the fiscal impact of QMS impact through the "In" Study of ISO impact at FC locations with QMS (ISO and AIB):collection of total costs vs. total benefits Odebolt, Bayard, Early, Greene, Rake

Create a set of application templates for grain and agribusiness Study of FC locations without a QMS:industries for technology transfer from university research to industry Bradford, Farnhamville? Rockwell City?application.

Creation of training materials/templates

Level 1 Savings=unknown "Out" Capital spending, unless approved by the Project Sponsor.

Hiring of associates without the Project Champion approval.

Project Plan Team Selection

Project Champion - Tom Miller

Project Sponsor- Tim Sullivan

Project Coordinator- Chad Laux

Resource Team- Butch HemphillShawn CogdillDr. Charles HurburghQuality Manager (1/06)IT, Accounting (9/05-11/05)Reg. Op. Managers (12/05-2/06)Elevator Operators (12/05-2/06)

In Scope of Project (Charter)In Scope of Project (Charter)

Study of ISO impact at FC locations with QMS (ISO and AIB):

Odebolt, Bayard?, Early?, Greene?, Rake?– Study same process across multiple locations –

look for weak spots

Study of FC locations without a QMS: (Control)– Bradford, Farnhamville? Rockwell City?– Validity check of measures: no change from

QMS/non-QMS location – not valid indicator

Out of Scope (Charter)Out of Scope (Charter)

Study of ‘Enabling’/supporting FC processes

Capital expenditures w/o prior approvalHiring w/o prior approval

Project Team (Charter)Project Team (Charter)

Project Champion – Tom Miller– Overall control of process at FC (in conjunction w/

Charlie) Sponsor – Tim Sullivan

– Liaison btwn. ISU & FC; remove roadblocks Coordinator – Chad Laux

– Primary work done by C.L. Primary resources

– Butch Hemphill, Shawn Cogdill, Dr. Charles Hurburgh

Other resources– Reg. Op. Managers, IT, Accounting, operators

Project Timeline (Charter)Project Timeline (Charter)

Duration: 12 monthsEst. Completion: 1/07Milestones:

– Create methodology, Map processes, ID measures: 12/05

– Start data collection on measures: 1/06– Finish data collection, finish improvements:

9/05– Data analysis finished, deploy templates:

12/06

MethodologyMethodology

Started w/ review of literature of ‘expert’ opinion of other studies:– There were no similar projects

• Focused on surveys, no case studies, no sufficient details

– Questions unanswered from lit. review for case study:

• Why where the particular measures chosen? What is the right number of measures? How comprehensive?

Utilize Business Process Management (BRM) in QMS study– Identify business’s high-level processes

• ID core vs. enablers of FC business

– Analyze process relationships• Ensure no gaps in the main processes• Look at the interfaces/links between processes

– Analyze process performance• ID Input, process, output measures (used

SIPOC)• Analyze cause-effect of measures w/ fiscal

performance

MethodologyMethodology

Why BRMWhy BRM

Needed to make scope manageable, practical, concentrated– Too many FC ISO/AIB procedures (approx.

60) upfront, BRM focuses on what is most important

– Gives insight by answering:• Is your org. measuring the right things?• Does your org. need to develop a more

comprehensive set of measures?

– BRM ‘process approach’ is scaleable: can be replicated easily elsewhere

All FC QMS DocumentsAll FC QMS Documents7.2.1 Order Processing for Gain Shipments7.4.3 Verification of Purchased Product7.5.1 Control of Operations-Loading Order7.5.1 Control of Operations-Release & Post Shipping7.5.3 Identification and Tracking- Grain Identification and Tracking7.5.3 Identification and Tracking-Inspection and Grading7.5.5 Preservation of Grain-Handling and Preservation7.5.5 Preservation of Grain-Storage Areas7.5.5 Preservation of Graing-Bulk Grain Shipping8.2.4 In-process Inspections8.2.5 Final Inspection8.3.1 Control of Nonconforming Grain8.3.1 Grain Nonconformity Report Form (FORM)Butch 3.01 Process Verification Sampling ProceduresChad 2.03 Grain Temperature Control Procedure

Shawn 3.03 Quality Control & Data Management, Outbound House Grading Comparison1.04 Procedure for Rejecting Contaminated Grain or Otherwise Unacceptable Deliveries1.09 Commodity Grain Receiving-Storage Assignment Policy1.12 Inbound Probing & Sampling Procedure1.15 Grading Procedure, Inbound Corn1.15 Grading Procedure, Inbound Soybeans2.01 Cracking Corn For Export2.02 Inspection Requirements for Tarped Grain Piles 2.03 Grain Temperature Monitoring & Recording Procedure2.06 Grain Inventory Physical Measurement, Large Diameter Bins2.06 Grain Inventory Physical Measurement, Standard Grain Facility2.06 Grain Inventory Physical Measurement, Flat Storage Structures2.08 Commodity Grain In-House Transfer3.01 Grading Cracked Yellow Corn3.03 Quality Control & Data Management, Truck Scale Grade Comparison4.03 Quality Control & Data Management, Grades for Corn Processed Through Rollermill4.05 Sampling Procedure, Outbound Corn & Soybeans, Rail 4.07 Procedure for Handling Out-of-Specification Product (Rail)4.07 Procedure for Handling Out-of-Specification Product (Truck)5.06 Web-Based Billing Procedure for CN Shuttle Trains (Odebolt)5.07 Weighing Procedure for Railcar Shipments (Bayard)5.07 Weighing Procedure for Railcar Shipments (Farnhamville)5.07 Weighing Procedure for Railcar Shipments (Yetter)1.01 Weighing Procedure - Truck Scale (Odebolt)1.01 Weighing Procedure - AS 400 Truck Scale Inteface1.01 Receiving Pit Inspection Procedure1.01 Receiving Pit Inspection Record (FORM)1.15 Grain Tracking Program1.15 Scale Ticket Record Approval & Editing Procedure1.15 TCS Personnel Inbound Grain Grading Policy2.01 Corn Screening Procedure (Odebolt)2.01 Corn Drying Procedure (Bayard)2.01 Corn Drying Procedure (Farnhamville)2.01 Corn Drying Procedure (Odebolt)2.01 Inbound Grain Truck/Trailer Unloading Procedure (Farnhamville)2.03 Infested Grain, Identification & Management3.02 Sampling & Grading Corn Going to Feedmill (POLICY)3.03 Quality Control & Data Management, Truck Scale Probe Water Test Comparison4.01 Finished Products Attributes, Information Policy5.07 Railcar Loading Procedure (Bayard)5.07 Railcar Loading Procedure (Farnhamville)5.07 Railcar Loading & Weighing Procedure (Odebolt)5.07 Commodity Grain Inventory Shipping Assignment Policy5.08 Customer Shipping Claim Log (FORM)

1.0 Scope2.0 Normative Reference3.0 Terms & Definitions4.1 General Requirements4.2 Documents5.1 Management Commitment5.2 Customer Focus5.3 9.03 Quality Policy (Replaced the ISO Quality Manual Sec. 5.3, Quality Policy)5.3 9.03 Quality Policy5.4 Quality Planning5.5 Administration5.6 Management Review6.1 Provision of Resources6.2 Human Resources and Training6.3 Facilities & Work Environment

8.5.2 Corrrective Action8.5.3 Preventive Action

Shawn 3.03 Control Charts, Evaluation and ReviewShawn 5.08 Procedure for Handling Customer Shipping ClaimsShawn 5.09 Rail Shipped Commodity Grain Rejection, Marketing Policy

0.01 Sample to explain formating1.01 Weighing Procedure - Truck Scale (Farnhamville) (Replaced with Weighing Procedure - AS 400 Truck Scale Interface)1.01 Weighing Procedure - Truck Scale (Yetter) (Replaced with Weighing Procedure - AS 400 Truck Scale Interface)1.01 Procedure for Receiving Bulk Mineral Oil1.01 Bulk Food Grade Mineral Oil Receiving Record (FORM)1.01 Procedure for Receiving and Storing Aluminum Phosphide1.05 Approved Supplier List (TABLE)1.10 Actellic Inventory Record (FORM)1.11 Aluminum Phosphide Inventory Record (FORM)1.16 Mineral Oil Storage Requirements Policy2.01 Weighing Procedure - Truck Scale (Early) (Obsolete: Replaced with Truck Scale Interface)2.01 Mineral Oil Application, Receiving Grain Through Gravity Pits2.01 Aluminum Phosphide Application Procedure (Recieving Pit)2.01 Aluminum Phosphide Treatment for Loads Placed Into Storage2.01 Dryer Master 500 Procedure2.01 Trackmobile Inspection Procedure2.01 Trackmobile Assignment & Accountability Policy2.01 Trackmobile Use & Maintenance Policy2.01 Cleaning Policy for Legs and Conveyors 2.01 Rail Yard Cleaning Policy (Odebolt) Discontinued (Incorporated into AIB 8.7, Elevator Cleaning Policy)2.01 Restarting Plugged Leg Equipped with A-B Softsart2.01 Trackmobile Daily Checklist (FORM)2.03 Mineral Oil Application Verification Procedure2.03 Mineral Oil Useage Log Sheet (FORM)2.04 Rail Scale Comodity Change Over Procedure (Bayard)2.04 Rail Scale Comodity Change Over Procedure (Farnhamville)2.04 Rail Scale Comodity Change Over Procedure (Odebolt)2.04 Rail Scale Comodity Change Over Procedure (Yetter)2.04 Truck Probe Comodity Change Over Procedure (DRAFT)2.04 Start-up and Change Over, Commodity Corn & Soybeans (Bayard)2.04 Start-up and Change Over, Commodity Corn & Soybeans (Farnhamville)2.04 Start-up and Change Over, Commodity Corn & Soybeans (Early)2.04 Start-up and Change Over Procedure, Commodity Corn & Soybeans (Odebolt)2.04 Start-up and Change Over Procedure, Commodity Corn & Soybeans (Yetter)2.04 Start-up and Change Over Procedure, Commodity Corn & Soybeans (Bradford)2.04 Aeration Authority Policy2.04 Corn Drying Authority Policy2.06 Grain Inventory/Train Blending Information Program2.10 Hazard Monitoring Equipment Verification, Alignment & Hot Bearing2.10 Hazard Monitoring Equipment Verification, Alignment & Hot Bearing (FORM)2.10 Hazard Monitoring Equipment Verification, Motion Monitoring2.10 Hazard Monitoring Equipment Verification, Motion Monitoring (FORM)2.10 Equipment Interlocking Policy (Early)2.10 Processes and Control Interlocking Table (Early)2.10 Equipment Interlocking Policy (Farnhamville)2.10 Equipment Interlocking Policy (Bayard)2.10 Equipment Interlocking Policy (Odebolt)2.10 Equipment Interlocking Policy (Yetter)2.10 Equipment Interlocking Table (Farnhamville)2.10 Equipment Interlocking Table (Bayard)2.10 Mineral Oil Useage Log Sheet (FORM)4.03 Quality Control Data Managment Grades for Corn Processed Through Roller Mills (Buckeye)4.11 Sample Retention Procedure5.04 Railcar Inspection & Preparation Procedure5.04 Unit Train, Notification, Car Inspection & Preparation Report (FORM)5.04 Railcar Cleaning Procedure5.06 Semi-truck Shipments - Inspection & Recording Procedure5.07 Radio Communication Procedure, Railcar Loading (Odebolt)5.07 Radio Communication Procedure, Railcar Loading (Yetter)5.07 Rail Yard Switch Policy6.01 Moisture Meter Constant Updating6.01 Verification of Exempt Measuring and Grading Equipment6.01 Table 2. Calibration and Quality Control Standards for Grain Analytical Equipment 6.02 Analytical Equipment Calibration Schedule (MATRIX)6.03 Verification Record, Exempt Measuring Equipment (FORM)7.01 Table of Training Procedures Applicable to Position (MATRIX)7.01 Table of Training Procedures Applicable to Position (MATRIX)7.01 Table of Training Procedures Applicable to Position (MATRIX)7.01 FC Employee Grain Grading Training Provided by TCS7.01 Grain Sampling and Grading Training Certificate (FORM)

Defining Core ProcessesDefining Core Processes

A series of activities which cross functional boundaries & create the end product or service that is delivered to external customers– Core processes common to most

businesses:Market and Sell

Take Orders

Manufacture Product

Delivery Product/Service

Maintain Customer

Core ParametersCore Parameters

Focused on ISO 2nd Tier Procedures:– All encompassing of the business (i.e. AIB)

Focused on External Customer oriented processes

Focused on processes that directly add value to the end product/service

Farmer’s Coop Core AreasFarmer’s Coop Core Areas

At minimum:

Receiving/grading

Storage

Shipping

Core FC ProcessesCore FC Processes

8.3.1 Control of Nonconforming Grain

8.2.5 Final Inspection

8.2.4 In-process Inspections

7.5.5 Preservation of Grain-Bulk Grain Shipping

7.5.5 Preservation of Grain-Storage Areas

7.5.5 Preservation of Grain-Handling and Preservation

7.5.3 Identification and Tracking-Inspection and Grading

7.5.3 Identification and Tracking- Grain Identification and Tracking

7.5.1 Control of Operations-Release & Post Shipping

7.5.1 Control of Operations-Loading Order

7.4.3 Verification of Purchased Product

7.2.1 Order Processing for Gain Shipments

Shipping

Storage

Storage

Storage

Storage

Storage

Storage

All 3

Shipping

Shipping

Receiving

Shipping

Enabling ProcessesEnabling Processes

A series of tasks & activities that are internal to business but contribute to the performance of core processes. The customers of enablers are the business processes.– Examples common to many businesses:

Human

Res

ource

s

Trainin

g/Dev

elopm

ent

Info

rmati

on T

echn

ology

Compe

nsati

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Leg

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Admini

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Process ApproachProcess Approach

Mapped Core FC Processes using a SIPOC diagram to learn about the system

Analyze Core level relationships – gaps?

Identify Measures from SIPOC’s

Define Business as a ProcessDefine Business as a Process

Process – a set of interrelated or interaction activities, which transforms inputs into outputs

PROCESS OUTPUTINPUT

SIPOCSIPOC

Supplier, Input, Process, Output, Customer Diagram

SIPOC is a process view of how a company goes about satisfying the customer. Because many organizations still operate as functional 'silos' and because no one person owns the entire process, just steps in the process, it's likely that few if any people will know the process from start to finish.

SIPOC DefinitionsSIPOC Definitions

Supplier - person/process/company that provides whatever is worked on in the process.

Input - The material or information provided. Process - The internal steps (both those that

add value and those that do not. Output - The product, service, or information

being sent to the customer. Customer - The customer of the outputs

SIPOC particularly useful when:SIPOC particularly useful when:

Who supplies Inputs to the process?What specifications are placed on the

Inputs?Who are the true Customers of the

process?What are the Requirements of the

customers?

SIPOC stepsSIPOC steps

1. Begin with the Process. Map it in four to five high level steps.

2. Identify the Outputs of this Process.3. Identify the Customers that will receive the Outputs

of this Process.4. Identify the Inputs required for the Process to

function properly.5. Identify the Suppliers of the Inputs that are required

by the Process.6. Identify input/process/output indicators of

effectiveness &/or efficiency7. Validate the SIPOC accuracy with Subject Matter

Experts.

DATE: PROCESS NAME: INSTRUCTIONS HERE

7/19/2005

S SUPPLIERS

I INPUTS

P PROCESS

O OUTPUTS

C CUSTOMERS

Location manager Final inspection Inspection documents Customer*

Scale operator Sales contract Train packet Grain marketing

Merchandising assistant Load order Invoice

Open rails contract (book) Journal entry

Unit train, cars, inspection, & prep. report

Grade certificates

Car numbers Manifest

Notification

VALIDATION METHOD:

INPUT MEASURES

PROCESS MEASURES

OUTPUT MEASURES VALIDATION TEAM:

*All these processes do poor job of noting who the customer is

HOW DO YOU MEASURE PROCESS EFFICIENCY AND/OR EFFECTIVENESS?

ISO 7.5.1 Control of Operation/Release & Post Shipping

START

END

Final inspection and grain released for shipping

At rail system, cars released & shipped

Compare final settlement to draft

Train packet prepared

Email inspection documents to Buyer

Complete settlement figures and enter

Check for errors & settle shipment

Analyze RelationshipsAnalyze Relationships The systematic identification & management

of various processes employed w/in an organization, especially, the interactions between processes.

PROCESSINPUT OUTPUT

PROCESSINPUT OUTPUT

PROCESSINPUT OUTPUT

CUSTOMER ORDER

CUSTOMERDELIVERY

ISO 9000:2000 based on this premise

PROCESSOWNER #1

PROCESSOWNER #2

PROCESSOWNER #3

Process Performance (Measures)Process Performance (Measures)

All processes can be measured by:– Efficiency: Productivity; resources per unit

in terms of time & money (cycle time, etc.)– Effectiveness: The degree that the

process output satisfies the customer’s requirements (% yield, Cp ratio, etc.)

Using SIPOCS, process experts, we’ll ID existing data that provides indicators of performance

Process Indicators (10/31/05)Process Indicators (10/31/05)

Lead time= actual work in processaverage completion rate

ProcessEfficiency = Processing time (value added)

Throughput time

Throughput time = Processing time + Inspection time + Movement time + Waiting/storage time

Cause and EffectsCause and Effects

Quantify relationships between financial and process indicators using statistical analysis

Y = f(X1…Xn)

Financial Process

Creation of materialsCreation of materials

– Process dashboards: Real-time information summary on process performance

– Often created manually w/ IT support using excellent process knowledge

– Sustain knowledge gained

As part of third objective to create materials to transfer research learning to industry use:

QuestionsQuestions