business efficiency methods

8/3/2019 Business Efficiency Methods

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ntributed 6/5/99 by Pat Cordon email: [email protected]

siness Efficiency Methods:

lanning:

eview Operating Statements

nd Identify Areas That Offer Best Cost Reduction Potential

low Chart All Major Areas

roup Related Functions Under The Same Supervision

horten The Chain Of Command

efine Responsibilities And Authority; Eliminate Overlaps

ecentralize And Or Centralize Operations As Appropriateevelop A Profit Planning Program For Employees

Measure Benefits Before Spending

Make Employees Plan Major Jobs In Advance Of Implementation

efer All New Actions Until The True Needs Are Determined

educe All Committees And The Length Of Each Meeting

ave An Annual Cost Reduction Suggestion Program

esults

nalyses Of Departments And Activities:

s All Departments Necessary? Should Any Be Added?

re All Officers And Jobs Necessary?

s The Company Magazine Necessary?

s Company Sponsored Organizations Necessary?

stablish A Word Processing Center

educe Central Filing

entralize Office Services

valuate All Major Cost Programs

eview The Need For Institutional Type Advertising

liminate Duplicate Records. Put A Price Tag On Each Report Issued. The Information Will Be Surprising

eview All Scrap; Determine If Any Scrap Value Can Be Realizedesults

ersonnel:

et A Good Example For Your Staff

romote From Within To Improve Morale

nstitute A Hiring Freeze For Short Periods

eview Manpower Requirements Periodically

eview All Education And Training Programs

ave Period Performance Reviews

equest Periodic Time Distribution Reports From Employees

esults

fficiency:

tart And Leave Work On Time

tilize People To Full Capacity And Qualifications

ermit Carryover Of Work Lad And Level Out Peaks

educe Overtime By Better Scheduling And Prioritizing Work

eview All Form Designs For Efficiencyeview Quality Of Office Equipment

tandardize Equipment

se More Estimates In Accounting

ave Cycle Billings

lose Manuals Quarterly; Use Estimated P&L Statements Monthly

educe Quantity Of Reports


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esults

utside Services:

ire Temporaries For Emergencies; No Overtime

tilize A Auditor's Free Technical Service

ut Out Professional Services Where Possible

o Your Own Building Maintenance

se Bank Facilities To Accumulate And Pay Freight Bills

se Bank Facilities To Mechanically Reconcile Bank Accounts

elf Produce Costly Supplies Or Materials Needed

esults

ommunications

eview All Communications And Facilities

tart A Telephone Expense Reduction Campaign

educe Switchboard Hours; Close Board Earlier

se One Central Mailroom Only

stall Inter-Office Mail And Messenger Service

echanize Mail Processing

se Lowest Class Mail Rate When Feasible

se Lighter Paper And Envelops

on't Use Separate Envelops On Inter Office Mail

ail Dividend Check With The Annual Report

liminate The Second Proxy Mailing

on't Mail Statements To All Customers

educe Size Of Mailing Lists

on't Use Express Mail Unless Necessary

esults

eetings And Travel:

trictly Regulate All Travel

ut Out Executive Cars

ut Out Company Planes

se Coach Instead Of First Class Air Travel

se The Airport Bus Instead Of Cabs

tagger Company Hours To Relieve Congestion Problems

ease Company Cars Instead Of Purchasing ; Use Compacts

et Up Your Own Transportation Fleet

educe Meeting And Travel Expense By A Set Percentage

liminate Or Reduce Convention Attendance

se Lower Priced Hotels

ake Contact Travel Arrangements With Hotels In Cities That Are Frequently Visited By Company Employee

ontrol Moving Expenses Of People Transferredliminate Expensive Stockholder Meetings

liminate Special Stockholder Meetings By Better Planning

ut Down On Lunch Time Meetings

ave Management Meetings At Corporate Offices

esults

ayroll And Fringe Benefits:

chedule Overtime By Priority

ock Employees For Being Late

ave Shorter Lunch Periods

liminate Oddball Deductions For Employeesliminate Paychecks; Have Pay Deposited Into The Employee's Bank Account

chedule Varying Pay Rates To Level Load In The Payroll Department And Reduce Staff

liminate Fringe Benefits; Picnics, Golf Outings, Etc.

eview Employee Stock Option Plans

liminate Christmas Gifts To Employees

liminate Or Reduce Coffee Breaks

ave Suggestion Awards Programs


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Reduce Number Of Magazine And Newspaper Subscriptions

Develop Bibliography Of Current Periodicals To Ensure Review Of Latest Ideas

Results

Miscellaneous:

Assemble All Reports Into A Single Manual

Establish Greater Security To Avoid Inventory Thefts

Obtain Competitive Bids For Purchases Of Materials And Supplies

Review Purchase Frequency R Supplies And Materials

Review Technical Magazines Systematically For Cost Savings Ideas

Develop Checklist Of Cost Saving - Profit Producing approaches With Key Staff Members

Results

Product Engineering:

Make Tolerances More Flexible

Reduce Surface Finish Requirements

Eliminate Need For A Specific Part

Substitute A Cheaper Material

Reducing The Number Of Parts NeededCombining Part Functions

Design For Low Cost Tooling

Design For High Speed Production

ncrease Feeds And Speeds

Reduce The Number Of Design Changes

Design In Quality

Design To Reduce Scrap

Design To Standardize Production ProcessesUse Standard Hardware In Place Of Custom Hardware

Design To Reduce Manual Production Operations

Design To Reduce Material Content

Design To Reduce The Number Of Fasteners Required

Specific Alloys To Enable Faster Machining

Specific Alloys To Cut Tool Wear

Design The Cheapest Finish Feasible

ResultsShipping, Receiving, And Warehousing:

Use Conveyors For Moving Operations

Use Reusable Pallets And Storage Boxes

Keep Warehouse Locked

Minimize Travel Distances

Group Like Parts Together In Warehouse

Use Hydraulic Lifts Instead Of Ladders

Ship And Receive In Unit LoadsProtect Product From Damage Or corrosion

Use Maximum Height For Warehouse Storage

Speed Handling Through Improved Scheduling

Use Proper Storage Containers

Pre Arrange Movement Of Materials


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ard Against Incorrect Engineering Drawings

ovide For Scrap / Rework When Planning

hedule To Minimize Waiting Time

negotiate Vendor Prices

ep Production Overruns To A Minimum

cognize Production Bottlenecks; Then Minimize Them

ep Accurate Records

ad Work Centers To Minimize Set Ups

nimize Sales Changes To The Master Schedule

sults

ant And Manufacturing Engineering:

rrect Wrong Bill Of Materials

duce Average Earnings

rtail Use Of Fuel And Electricity

rrect Loose Work Standards

ep 90% Of All Production Jobs On Standard

ep 80% Of All Indirect Labor Jobs On Standard

e Allowances In Standards Sparingly

sure The Proper Use Of Feeds And Speeds

ue Frequent Labor Performance Reports

mbine Production Operations

ange Standards To Reflect Improved Methods

mple Production Counts For Accuracy

alyze And Reduce Machine Downtime

andardize Equipment Parts

mbine Or Reduce Machine Setups

mplify Tooling, Jigs, And Fixtures

ep Accurate And Up To Date Equipment Recordsase Rather Than Buy Equipment

echanize Manual Operations

sults

ality Control:

duce Scrap Levels

duce Rework Levels

duce Warranty

prove Tool And Gauge Inspection

duce Vendor Quality Problems

librate Testing Equipment

ohibit Use Of Marked Up Engineering Prints

rap All Make Shift Tooling

gregate Defective Stockodernize Inspection Equipment

view Packaging Quality

vestigate Sales Of Plant Scrap

sults

fety:

tablish A Plant Safety Program

lf Insure Your Company

et Free Advice On Safety Issues

e A Nurse To Screen Employees

ve Workers Participate In The Safety Program

e Posters And Awards To Make Employees Safety Conscious

et The Union On Your Side

e Control Reports To Monitor Progress

e Accident Reports To Identify And Correct Safety Problemsblish Safety Rules And Discipline Offenders

ovide Safety Training For All New Employees

ake Safety The Responsibility Of The Line Managers

e Self Inspection Checklists

e An Internal Expert On Safety Regulations

vestigate Accident Prone Employees

ovide First Aid Training For Emergencies

nduct Housekeeping Tours To Prevent Accidents

ve The Plant Manager Chair The Safety Committee

ow How To Use Fire Extinguishers

e Lead Free Paint

e Safety Glasses On Every Job

sults

ctical advice on internal control

rnal control should assist and never impede management and staff from achieving their objectives. The old adage is that you can't manage what you can't

he importance of the objectives, and the degree of risk of not achieving them

he seriousness of the potential exposures, and the degree of risk of them occurring

e cost, if any, of additional control measures

control must be cost effective - tailored to a realistic assessment of need and should be appropriate for the purpose.

ere control depends upon a comparison or reconciliation of figures it is preferable to arrange things so that the generation of the figures which need to be c

ere control depends upon supervision it is important that this is taken seriously and that, the work of subordinates is not left to trust. Delegation is an import

trol must be taken seriously. A well designed system of internal control is worse than worthless unless it is complied with, since the assemblance of contro


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ovides a documentation structure and ensures that processes, procedures are documented, effective and under control.

umented procedures provide a uniform method to business operations.

mpliance with QS-9000 standards ensures responsibilities are defined.

istration ensures employees are trained and qualified to perform their job functions.

sists in substantially reducing and/or eliminating errors.

ovides a marketing advantage.

rmits you to advertise to your customers.

l be necessary to compete.

proves relationships and credibility with your Auditors and your automotive customers.

r having been in the auditing business for twenty years, We believe we have seen most of the management approaches to running a business and the fac

me executives see departments as individual functions and manage these departments accordingly; some see the departments as one system and managi

intent in the development of those systems was to create substantial customer satisfaction using defect detection and prevention methods; the very core

nition of Internal Control - SAS 78; Internal Controls

rnal control is a process-affected by an entity's board of directors, management, and other personnel-designed to meet the following objectives: reliability o

ontrol Environment

isk Assessment

ontrol Activities

formation and Communication

onitoring

/QS-9000 Process Audit

em Elements

9000 Business Planning and Customer Satisfaction

agement Reviews 4.3:

ncialsd Sorting

d Repairs

tomer Complaints-response

R's

M's

N's

very Performance

ness Planning 4.1

ning Requirements 4.18

rnal Audits 4.17

rective And Preventive Action Follow up; CAR/Preventive Action Effectiveness 4.14

tinuous Improvement 4.2

ration Costs/ Quality/Delivery measurements

lity Planningoing Cpk Results For Special Characteristics & KPC's

ake Proofing 4.2

9000 Management Representative & Review Of Elements

tor Performance

mium Freight

tomer Returns

rnal Scrap Percent

rantee Costs

work Percent

ysis & Use Of Company Level Data 4.5

chmarking

tomer Satisfaction 4.6

vicing reports 4.19

very response

tomer Request for Quote 4.3 Document Control 4.5

ain Customer Input

roval/Issue

ablish Internal Capability and feasibility 4.2.3

olve Price-Quantity-Delivery-Dimensions-Materials-Specification- Ongoing Changes

dback to Customer

tomer submits order for contract review 4.3.2

grate Customer Material-Engineering Specs/Packaging/Identification-Labeling Requirements

endment 4.3.3

ords 4.3.4

tion II - Customer Requirements

lity Procedures 4.2chasing 4.6.1 - 4.6.4

dor Audits/ Performance 4.6

/ Product Verification

olve Differences

sibility Review and Capability Analysis 4.2.3

ufacturing And support Functions-purchasing Tool Design-Shop Floor Personnel

cial Customer Quality Needs

cial Auditor Needs

lity Planning 4.2


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ning

hnical Interfaces

cial Characteristics

ablish Special Processes/Process Capability

ablish Verification Requirements

neering Changes

t Output Verification/Validation

ing Design

e Design - Gage R&R

s Functional Team Develops Production Part Approval Process (4.2)

ation Of B.O.M. & Routing Package & Work Instruction

anced Product Quality Planning (cross Functional Team Addressing Customer Requirements & Document/Process Change Control) 4.2.3:

tomer Or Internal Engineering Prints

lities Planning

MEAS/SFMEAS/PFMEAS-Mistake Proofing

lities Planning

otype, Pre-launch, Production Control Plans

y Production Containment Plan

s Functional Team Reviews PFMEAs & Control Plans & Develops Early Containment Plan 4.2.3

s Functional Team Develops Process Flow Charts, PFMEAs (Mistake Proofing & its Effectiveness) and Control Plans (Containment-Reaction Plans) 4.2.3

minary Process Capability

ection & Verification Of Incoming Material 4.10

tomer Requirements

ect Key Product Characteristics & KCC's (Appendix C) Tied To Design, Preliminary And Process Control Plans - Form - Fit -Function - Safety - Performan

wing Specification & Approval Review 4.4

e Design & Calibration Schedule

e Repeatability & Reproducibility (MSA)

fication Testingrnatives

trols And Processes

pment

ing Requirements

lity Procedures & Records 4.2.2 & 4.16

kmanship Criteria-Process Parameters -Work Orders 4.9

stics 4.20

ded Skills 4.18

trol & Inspection Equipment 4.11

duct Identification, Status, Traceability , Labeling & Packaging Requirements 4.8 & 4.12

ded Resources 4.2.2

ng Charts Section 3

cial Characteristics Matrix

ning Requirementstomer Handling, Storage, Packaging, Preservation & Delivery Requirements. 4.15

tinuous Improvement & its Effectiveness

AP Approval 4.2

s Functional Team Approves PPAP Submittal Package

s

ensional Layouts

erial Specifications

ing Considerations

ging & Fixtures

s Functional Team Submits PPAP 4.2;

ysler PSO and Ford PSW-ISIR

tomer Approves PPAP Submittal 4.2

s Warrant, Dimensional Checks And Control Plans

QP 4.2.3cess Control 4.9:

trol Plans 4.2.3

ting Package

M.

duct Identification And Traceability 4.8

ection And Test Status 4.12

ntory Control 4.15

dling, Packaging And Shipping Requirements 4.15

Up Instructions - Setup Verification 4.9

rator Instructions 4.2

kmanship Criteria - Process Parameters 4.9

rator Checksheets 4.2

oing Process Capability 4.9

m Root Cause Analysis (8d - 5 phase) 4.14 - Review With Managementm Audits Processes & Reduces Process Variation Through Process Improvement 4.9 & Corrective Preventive Action

work Instructions

trol Of Non-conforming Product 4.13

ing, Gage, Machine, Equipment Preventive Maintenance 4.9

brated Equipment 4.11

brated Inspection, Testing, And measuring Equipment 4.11

eiving, Work In Process And Final Inspection Methods And Inspection Points 4.10

ing System 4.2

c On KPC's And Unstable Processes 4.20


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omplishment of company goals and objectives based on customer requirements

tinuous improvement in cost- quality -throughput - delivery

ect detection and prevention

te / variation reduction

sed loop system with * effective follow through for each element within the standard

agement review / corrective action / internal correction for procedures / work instructions * continuous improvement in cost- quality -throughput - delivery

procedures being followed / deployed / complete throughout the company?

document logs current?

customer manuals updated as indicated in level I and level ii?

revision levels current?

there single lapses or major lapses following the documentation

Quality Operating System (Linkage Between documents)

el I (Why):

% General 10% Specific

lity approach And Philosophy; Goals, Scope, And Objectives

ects Actual Procedures In Use At The Facility

f & Concise (Keep It Simple - 25 To 35 Pages)

es Management Policy And Traceability To Authority

Commercially Sensitive Information

t Address All Elements And Sub-Elements Of The Standard

t Identify The Documentation Scheme For The Other Levels

el II (What, Where, When, Who, Why):

% Specific 10% General

ndard Operating Procedures

t Contain A Procedure To Write A Procedure

mpany Facility Function Or Department Procedures

Be Modified At Any Time Without Registrars Approval

d Copy Or Electronic

el III (How):hod And Practice

mpleted By Individual Or Department

% How To Complete The Task

ting Sheets, Inspection Sheets, Setup Sheets, Operations Measures, Process Standards

el IV (Records, History, Forms & Other Supporting Information):

ective Proof - Quality Operating System In Use And Is Effective

mplete Forms, Checklists

ention Times Specified And Retrievable

d Copy Or Electronic

orical Supporting Documents

ection Tally, Test Results, Process Data System, Approval Sheets, Calibration Log, Purchase Order

porting Evidence

ng Positive Customer Feedback on Cost, Quality, and Delivery , Over-shipment, Prototype builds, PPM, ASNs, Performance

ng ROS, ROE, ROAng Income Statement and Operational Performance Measurements

owing Business Plan in operational, marketing, environmental, customer satisfaction

G B3 or B4 (version 2.0) Individual Parts Label Application

ndard Bench testing vs portable testing; conversion of one hardness scale to another;

kwell-depth the indenter goes into the specimen-homogeneous metals with smooth surfaces (tungsten vs ball);

ell-diameter of indent (10mm ball)- tested material 10 times the depth of penetration A2LA or NVLAP, ANSI B-89, GP-10 Guidelines, Traceability to the N

G M-3 (version 2.0) or M-5 (version 0) Supply Chain Recommended Business practices for EDI AIAG M-3 (version 2.0) or M-5 (version 0) Supply Chain R

Qualifications, Training evaluation, Training courses, Tests, Training effectiveness, Strategic Planning

t Techniques

ting and Listening-Take the Time-

n Answer Their Concerns

ntain Eye Contact while Listening.

Open-Ended Questions.

d Rhetorical Questions Like " You Understand What I Mean, Don't You?"

Hypothetical Questions.

d the Wandering Eye.

fy Your Understanding before Jumping to Conclusions.

A Non-Verbal Question or Two.mize Disruption of Normal Auditing Activities.

d Trying To Understand the Process Yourself.

mize Note Taking when listening To Someone.

Lots of Direct Eye Contact.

Attention to the Speaker's Feelings As Well As To What Is Being Said.

't Lack Interest In The Speaker's Subject.

't Become Impatient With The Speaker.

't overreact To the Speaker's Language Such As

g Attacks or Profanity.


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en even when The Subject is complex or Difficult.

't Interrupt the Speaker with Your Point Of View.

pathize With the Speaker.

't Become Distracted By Noise from Office Equipment, Telephones, Or Other Conversations.

To relate to and Benefit from the Speaker's Ideas.

To Read The Speaker's No Verbal Cues.

't Just Listen For Details.

't Think Of Another Topic Because Of What The Speaker Has Said.

't Let Your Biases and Prejudices Hamper Your Thinking while Listening.

't Become Emotional Because Of What The Speaker Has Said.

t Planning

age Your Time; Stick To the Audit Plan.

uments-Does It Meet The Intent-Review/ Test Procedures Against What Is Being Done/Implemented- Look At Objective Evidence-Test It Independently T

Observant And Listen To What's Being Done In Their Areas, But Don't Let Your Mind Wander.

her Enough Information about what's being done in operational areas.

e Frequent Feedback to the Company.

uss And Share Information With Other Auditors In Private.

erence the Standard and Use It Effectively to Reference and Communicate with Throughout the Audit.

't Be Dependent On The Checklist - Add To The Checklist With Their L2 Information.

e Sample Sizes Of 5 To 15 (95% Confidence Levels) In Each Area - Pick The Samples Yourself.

Your Knowledge, Skills and Experience.

cess Audit approaches Include Vertical (Backward and Forward) And Horizontal; Grouping Elements Together That Form A Continuous Flow of Operation

g Audit Manual Up To Standard.

ect Evidence until the End of the Audit-Be Diligent.

Open-Ended Questions.

e Scientific Samples and Random Samples.

d Backtracking-Try to Audit Two or Three Elements all At the Same Time.

To Enough Operators to Verify That They Are Doing - What the Procedures Or Work Instructions Is Communicating.e Lead Auditor Close Out Corrective Actions.

en Writing a Non-conformance, A. Associate Like Corrective Actions, B. Breakout a Non-Conformance On Separate Corrective Action Forms, C. Write Cor

ew Procedures as Auditor Demonstrates - Ask them to show you where it is written In the Procedure.

The Audit; Put Travel Arrangements On The Audit Plan.

Good Time Management, And Good Company Communications.

t Implementation

The Company Procedures, Standard And Interpretations Effectively; Cover Customer Requirements- Drive Customers To Write Down Customer Require

the Checklist Effectively - Don't Backtrack.

t What the Company does well - Ask For Records to Verify the Positive Things in the System.

9000 Audit approach:

9000 Requirements Include ISO 9000 Standards, QS-9000 Requirements, APQP/SPC Manuals QS-9000 Interpretations, Customer Requirements, And P

ctive = Build Rapport And Trust; Ask Open Ended Questions; Take Good Notes; Listen Verify Everything; Thank The Auditee

rough = Appropriate Samples And Records Verificationiased = Identify Strong And Weak Areas

sistency And Integrity = Maintain Auditor Development Task Force Expectations

t Tools = Standard And Interpretations; Procedures; Checklist

s The QS-9000 Meet The Intent - Shalls And Shoulds Are Addressed; Clearly Say What You Do

S-9000 Implemented On All Shifts - Compliance To Procedures; Records; Observations; Interviews; Samples - Volumes Of The Most Frequent And Rece

he QS-9000 History Effective = Achieved The Desired Results Set Out By QS-9000 And Customers

agement Commitment

naround Of Corrective Actions

pose And Measureables In The System

tomer Satisfaction With Customer Requirements

d Trust and Rapport - Explain what you're doing.

Open-Ended Questions - Interview At The Lowest Level.

en For Intent And Try To Read Nonverbal Communication.

fy Records and Conversations from Independent Sources - Half the Information Obtained during an Audit Is Seeing.en Recording Observations, Name the Person and Title, Note Department and Location of the Interview, State the Non-Conformance; State Why It Is A No

fy System Effectiveness: Company Goals And Objectives; Management Review Results Based On QS-9000 And Business Planning; Procedures Meet Th

ems Audit - Adequacy or Desk Audit.

ew Of Quality Manual, And Standard Operating Procedures - Available (4.2); Authorized (4.2-4.5); Current (4.5-4.16); Unaltered (4.5); Understood (4.9);

uate Company for Registration Readiness to ISO 9001, ISO 9002, ISO 9003 Or QS-9000: 98.

pare Audit Checklist.

mpliance Audit - Opening Management Meeting.

ndance Sheet.

uld Be Attended By Executive Officers and Upper Management for the Facility under Review.

ew Audit Purpose.

Company Must Assure That A Mutually Agreed Upon Understanding Is Reached About The Purpose Or Reason For The Audit And The Quality Standard

Lead Auditor Must Ensure Consensus On The Acceptability Of Audit Team Members, The Method Of Conducting The Audit, Points Of Contact In Case O

Company (Auditee) Should Provide Evidence To Support The Competence, Independence, And Objectivity Of The Internal Auditors.

Lead Auditor Might Provide the Company with A Set of Working Papers Showing the Various Items To be reviewed and A Schedule for the Various To BeCompany Must Help Achieve Consensus On Who Will Represent The Auditee On All Matters During The Audit, Access To The Various Activities To Be

Auditee Should Bring A Controlled Copy Of The Level I And Level II Documents, Evidence Of Support And Commitment To The Quality Operating Syste

Company Should Brief Subordinates On The Audit, How It Effects The Different Work Areas, And Inputs Expected From Employees.

Lead Auditor Should Verify Resources And Facilities Such As Changes In The Availability Of People, Transportation, Workrooms, Clerical Support, Office

Lead Auditor Should Leave Time For Any Questions.

t Tour

alk Through Of The Organizations Flow Of Ideas, Documents, Goods, And Materials I.E. Design, Material Control, Production, Packing, Shipping

centrate On the Sequence and Location of Activities.

ability Audit Of The Quality Operating System


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rational Area

ree of Benefit for Customer Satisfaction

chasing

90%

ntory Control

60%

ngs and Collections

60%

tronic data processing

60%

ital expenditures

50%

ufacturing and Production

45%

pping and Receiving

30%

keting

30%

ncial and Debt Management

10%

ermining Sampling Methods:

mpling is used extensively by auditors in their work. Samples are portions of a whole (or population) which are used to represent the whole. The sample us

tor's sample and evaluation procedures. Nevertheless, auditors should know when and how to use it. Judgmental sampling may be used to select exampl

red Degree of Audit Assurance

mple Size of the Total Audit samples

fidence Level of Compliance to the Standard, Internal Controls and System Effectiveness

h

erate

5 (Broad Based Historical Samples)

(Broad Based Samples)

(Broad Based Samples)

99%

95%

% to 90%

gh desired degree of audit assurance generally indicates that little or no reliance is placed on internal controls or other related substantive procedures.

erate desired degrees of audit assurance generally indicate that some reliance is placed on internal controls or other related substantive procedures.

trong Customer Satisfaction-Quality, Price, Delivery, Service, Technology

Progress On Continuous Improvement Projects As Well As Mistake Proofing Implementation

Effectiveness Of The Preventive Actions Implemented

Strong Operating, Delivery, Quality, Cost Reduction, Inventory, And Customer Satisfaction Measurements

Management Review Results Based On QOS, QS-9000, And Business Planning

Evidence Of What Is Reasonable And Customary In The Industry

Point By Point Checking Of Various Activities Or Work Areas Against The Approved Procedures , Standard And Interpretations; General As Well As Detai

Each Activity is reviewed and A Decision Needs To Be Made As To Whether It Meets the Standards Requirements.

Preparation Of Conformity Of Audit Papers

A Determination Should Be Made About Detail Points To Be Verified Sample Confidence Levels, Or Conversely Risk Levels, Performance Level, And SaOperational Meeting Briefing Guides

Mutual Agreement Should Be Reached On The Sequence And Timing Of Visits Within Organization Areas, The Matching Of Auditors With Guides, Accord

nitial Visits To Plant Area

21

21

22

t Analysis By Element

ments/Department Audited

9000 Standard


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Address

Contact

Phone Number

Auditor Names

Required Number of Audit DaysCalendar Dates

Number of Auditors

Document Status

Audit ScheduleAudit Plan

Auditor Room & Telephone

Opening/Closing Meeting

Transparencies & Projector

GuidesAuditees to be interviewed per the Audit Plan

Organization Chart

Plant Flow Diagram

Administrative supportTravel

Map

Estimated Travel Time

Time Differential

Motel & Phone Number

Airline Tickets and Cost

Special Safety Requirements


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age of Material:

kaging Requirements:

ety Considerations:

r-head cranes:

motors:

cial Lift Vehicles:

ronmental Compliance/responsibilities:

ution Discharge Requirements

ardous Waste Hauling

Emissions:

DS:

m Water Discharges:

d Contamination:

ycling of Business Waste:

er:

:

Based Fuel:

ts or Solvents:

als:

tic or Rubber:

od:

ste Discharge:

ds:

ids:

micals:

tomer Owned/Supplied:

kaging

w Materialsmponents

ing

ng

t Treating

ting

pping (No. Of Shifts):

t Notes for clarification and impressions and Objective Evidence can be attained through observations, records checking and interviews:

fy everything

k to multiple sources to verify compliance

and system effectiveness

probing questions and actively listen

or information to draw upon

oduce The Auditor To The Manager Responsible For The Function, And The Manager Should Be Asked To Describe How Activities Are Initiated, Defined,

Examination And Evaluation Of The Work Area Must Cover People, Facilities, Product, And Records.tor Should Query Workers On Their Awareness Of The Quality Operating System, Their Perception Of How Management Is Committed To It, And Their U

fy Information Gathered In Interviews (Show Me A Situation....).

fy System Effectiveness by Checking Evidence of System Effectiveness from Independent Sources.

ew The Actual QS-9000 Documented Procedures (Assuming They Meet The Intent) Against Actual Company Practice To Determine Adequate Complian

ress All ISO And QS-9000 Elements To An Adequate Level.

Some Drawing Numbers And Revisions Should Be Noted For Checking Against The Work Order And Against The Configuration Control In The Drawing O

mmon Traps In Auditing:

ng To Plan the Audit.

ping Confidential Information Confidential

ng To Make Use Of A Checklist.

ng the Auditee Pick the Sample.

nding Too Much Time Learning What the supervisor Knows.

looking around and/or observing.

ping To Conclusions.membering What You Used To Do In Your Company or Department.

ng To Let the Unit supervisor Know of Your Audit Findings.

ng the Auditee Control the Audit Time.

ng To Follow-Up on the Corrective Actions That Were Based On Findings.

sequent Visits To Plant Area.

fy or Clarify Points Noted During the Initial Visit.

fy the supervisor that The Auditor Will Be Back To Visit the Area and The Purpose of the Visit.

t Strategies:

supervisor Should Not Be Requested To Be Present To Reduce Interference.

t Reviews-Daily Status-Final Status.

t Teams should meet At the End of the Day To Review Their Findings.

ew the Previous Day's Findings with the Quality Coordinator.

nge Audit Plans for Additional Verification or Clarification.

e The Audit Is Completed, The Team Should Develop A Quantitative Report Dealing With Specifics.al Debriefing With Original Attendees- Preparation And Implementation For The Management Review - Closing Meeting.

Preliminary Report Should Include An Appreciation For The Cooperation And Assistance Provided By The Company Staff-Highlight Some Points Where

sent A General Statement About The Acceptability Of The Quality Operating System-Stress That The Final Decision Will Be Made In Writing Once The De

mmarize the StrongPoints of the Quality Operating System Noted during the Audit.

mmarize The Major Areas Requiring Corrective Action-Make Sure All Major Noncompliance Are Mentioned

mmarize The Minor Areas Requiring Corrective Action.

mmarize the Quality operation auditing Activities Still To Be Carried Out I.E. The Final Written Report, The Methods To Be Used To Handle Corrective Acti

agement Report

e The Report In A Binder


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gn a management representative to ensure quality requirements are met. The management representative reports to the top executive of the organization

odically review the quality system to ensure its effectiveness.

a multidisciplinary approach to problem solving.

ure qualified people are in support positions.

elop business plan with QS-9000: 98 as a part of it.

chmark for quality, production and operations efficiency.

sure customer satisfaction.

multifunctional teams for advanced quality planning.

lity Policy:

w is the commitment to Quality Implemented and reviewed

of Financial, Operational and Quality Performance Plans, Activities, Measureables and compare with the on the floor activities and measureables

PC

roductivity

apability

roduction Performance/Cycle Time Performance

crap

elivery

ost Performance

orrective and Preventive Action

ustomer Satisfaction

at do the Customer satisfaction indicators look like (positive trends or a reaction to negative trends)

cess for determining customer satisfaction

tinuous improvement goals and progress

chmarking and Measureables

at condition are the financial ratios, operating ratios, cost of quality, income statement, cash flow, ROS, ROA, ROE

w do you handle the responsibility for quality,(organizational chart-job descriptions)

lth and Safety System

ronmental systemsning

lity Goals and Objectives

lity Operating System

ablish a quality system and document it in the quality manual, with reference to supporting quality system procedures.

lity planning process should parallel the level II and III procedures for :

duct program plan preparation

ource acquisition

gn feasibility reviews and process capability studies

ntenance of quality control/inspection records

trol plan development for all 3 phases of production

ew of standards and specifications

cial characteristics FMEAs

quality system procedures must be consistent with the quality policy.lity plans (control plans) must be documented to reflect the operations of the organization.

cally, the quality manual and the quality system are the quality plan.

ement the quality system and ensure its effectiveness.

advanced quality planning :

program

duct design / development

cess design / development

duct / process variation

dback assessment and corrective action

mplete and Functional Level 1,2,3 and 4 Quality Management Documentation System with effective Linkage between levels and sub systems

anced Product Quality Planning:

se 1

and define the program

e of the Customer

ness Plan Marketing strategy

duct Process benchmarking strategy

duct Process assumptions

duct reliability assumptions

duct reliability studies

tification and acquisition of resources

tomer inputs

gn Goalsability and quality goals

minary Bill of Materials

minary Process Flow Chart

minary special characteristics listing

duct Assurance plan

agement support

se 2

duct Design and development

gn failure mode and effects analysis


13/484

neering specifications

erial specifications

wing and specification changes

w tooling, equipment and facilities requirements

cial characteristics

es/testing equipment requirements

m Feasibility Commitment

agement support

se 3

cess design and development

ating techniques and instrumentation

kaging standards

duct Process Quality Operating System review

cess flow chart

tification of suitable verification at appropriate stages

ification of standards of acceptability

tification and preparation of quality records

r Plan layout

racteristics Matrix

cess failure and effects analysis

launch control plans

cess instructions

surements systems analysis plan

minary process capability plan

kaging specifications

agement support

se 4

duct and process validation

duct trail runsurement systems analysis evaluation

minary process capability studies

duction part approval

duction validation testing

kaging evaluation

duction control plan

lity planning sign-off

agement support

se 5

dback, assessment and corrective action

uced variation

tomer satisfaction

very and service

duction Part Approval Process:

Determine If All Customer Engineering Design Records And Specification Requirements Are Understood By The Auditor And That The Process HAS The

AP Applies To All Production And Service Commodities:

en A New Part Or Product Needs Manufactured

en Corrective Action Needs To Be Made On A Part

en Part Needs To Be Modified Because Of An Engineering Change

en A Different Material Is Substituted For A Previously Approved Part

en New Tools, Modified Tools, Or Dies/ Molds Are Used In Production

en The Auditor Makes A Change To The Manufacturing Process

en Tooling Or Equipment Is Transferred To Another Location

en A New Subcontractor Is Used For Parts, Materials, Or Services

en Volume Production Tooling HAS Been Inactive For 12 Months Or More

en The Customer HAS Requested That Shipping Be Suspended Due To A Quality Concern

umentation Required By:duction Part Submission Warrant

earance Approval report

Samples Per The Control Plan

tomer Auditor Design Records

er Authorized Engineering Change Documents

ensional Results Referenced To Engineering Part Drawing Requirements

cking Fixture Specific To A Specific Part

ormance Durability Tests Specified By The Design Record

cess Flow Diagrams

trol Plans That Include Significant Product And Process Related Characteristics

cess Capability Results

e R&R Studies

neering Approval as Needed

duct warranty:part fails one or more of its designed functions.

customer has the wrong expectations for the function of the part.

design is successful but processing or delivery is weakening its function and causing failures.

ematic causes beyond engineering and manufacturing

duction Part Approval Process:

w part or product

AP system must be in place


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AP is granted for subcontracted materials

AP is granted for production processes

mission Levels:

ermined By Auditor Quality Recognition Status

ermined By Significance Of Part

ermined By Significance Of Process

erience With Prior Part Submission Levels:

el 1 Warrant Only

el 2 Warrant With Product Samples And Some support Data

el 3 Warrant With Product Samples And Complete support Data

el 4 Complete support Data

el 5 Warrant, Complete support Data, Samples, Auditor's Location

tional PPAP Conditions:

Auxiliary Drawings And Sketches Must Show Part Number, Change Level, Drawing Date, And Auditor's Nameify Gages To Dimensions

rporate Critical Symbols Onto Production And Parts

erial Tests Must Be Performed as Specified

ormance Tests as Required

tinuous improvement

elop a comprehensive continuous improvement plan for satisfying the customer lead times, delivery, price and variation reduction throughout the company

ze spc data for variable data - not pre control

tify and track opportunities for productivity improvement in manufacturing

r suppliers are expected to understand the use of the listed measures

ness plan as reference.

S for FORD

trol charts

's

ability indices

e analysis

chmarking

tify quality and productivity improvements

n all employees impacting continuous improvement

ufacturing capabilities

n cross functional teams to improve facilities, processes, and equipment

trol strategies - FMEAs - problem solving -service reports.

vide capability studies

ow-up on subcontractors if they provide tooling

quate resources for tool design and fabrication as well as marking.

management and maintenance capability, storage, setup.

age receiving of tooling.

change program.

ups of tooling.

elop mistake proofing for process and design

tract Review

tracts with suppliers and interfacing organizations are needed.uire QS-9000:98 compliance from subcontractors

ablish a procedure for defining and reviewing contracts.

ure that any differences with contracts are resolved.

bal contracts are allowed.

cedures should describe how amendments to a contract are handled.

p records of reviewed contracts

ure that requirements in the contract can be met.

ablish and maintain records resulting from contract reviews.


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Systematic causes beyond engineering and manufacturing due to a lack of a holistic approach

gn Control

ablish And Maintain Procedures And Training Records To Control And Verify The Design Of The Product -- .Keep Records Of Application Regulation Stan

pare Plans That Define How The Design Process Will Be Carried Out.

ument Interfaces Between Departments

duct Engineering, Process Engineering, Design Engineering

gn Plan, Standards, Preliminary Design, Final Design, Configuration Control, Document Verification, Product Verification, Design Review, Metrology

duct And Document Project/Product Design Reviews- Can Outputs Be Verified Based On Customer Inputs (cross Reference as Appropriate)

gn Output: Geometric Dimensioning And Tolerancing, DFMEAs, Production/Field Testing, Customer Performance Risk Tradeoff Analysis

ne Acceptance Criteria To Verify That The Design Meets The Input Requirements.

date The Design To Ensure That The Product Meets The Customer's Requirements.

ument, Review And Authorize All Design Changes.

duct warranty:

part fails one or more of its designed functions.




ument And Data Control

trol Quality Operating System Documents And Data Through A Formal, Documented Process, Including Customer Initiated Changes And External Docum

ew And Approve All Quality Operating System Documents And Data.

elop A Control Mechanism For Customer Engineering Change Requests And Document S That Reside In Software

ntain A Master List Of Quality Operating System Documents That Reflect The Latest Revision Of Each Document.

lity Operating System Documents Must Be Available And Accessible To Individuals Who Are Required To Use Them.

tify Obsolete Documents That Were Archived For Later Use (E.G., Legal purposes).

y Changes To Documents Through A Formal, Documented Process.

neering Drawingsection Test Procedures

k Instructions

rations Procedures

Procedures

erial Specifications

ument Approval/ Issue

ument Changes

chasing

supplier is responsible for ensuring that the product conforms to the requirements.

vey subcontractors and provide records

ess and select subcontractors based on their past performance and their ability to meet requirements, including quality requirements.

ntain a list of approved subcontractors, unproved subcontractors, and how you monitor subcontractors for compliance

fy that the product ordered is accurately shown on the purchasing document.

ew and approve purchasing documents.chasing documents must specify if products are to be verified at the subcontractor's site.

r suppliers need to respond to your quality requirements using QS-9000:98 ; QSA to audit your suppliers

trol Of Customer Supplied Product

umented procedures must be established for maintaining customer-supplied products.

ect at receiving and periodically insure product condition

ord and report any loss, damage or deterioration of customer-supplied products to the customer.

fy, store, maintain customer supplied product

tag any non-conformance

duct Identification And Traceability

ablish and maintain procedures to identify:ducts throughout receiving production, delivery and installation.

duct or production batches with a unique identifier where traceability of the product is required.

coding ideal

cess Control

trolled conditions for production, installation and servicing processes.

orm processes in controlled conditions:

control plans

document production, installation and servicing procedures.

preliminary process control requirements Ppk 67

ime greater than 95%

preventive maintenance

on-going process improvement requirementscapability analysis

verified job set-ups

process change control

provide a suitable working environment.

comply with standards and procedures.

control process and product characteristics.

approve processes and equipment.

ection And Testing


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P. - defect detection.

l inspection - functional testing based on customer requirements.

ect and test in-process and final product to verify conformance to requirements before use.

ection and testing records must be kept, and should clearly state the:

party accredited labs.

s or fail status.

ection authority for releasing products.

est has failed, apply procedures for controlling non-conforming products.

plier certification.

duct warranty:

part fails one or more of its designed functions.




trol Of Inspection, Measuring And Test Equipment

trol of inspection, measuring and test equipment (4.11) ref. 4.11 MSA

tify measurements and accuracy required to:

select the proper equipment.

measurement certainty

note MSA on the control plan

select the proper software.

ensure equipment/software is compatible.

ensure a suitable environment.

equipment traceability

gauge conditions

ument procedures to control, calibrate and maintain inspection, measuring and test equipment including:

calibrate against standards.

control customer owned and employee acquired test and inspection equipmentestablish the frequency to calibrate.

determine acceptance criteria.

document the calibration status.

note the appropriate calibration standard on the proper outside service

record and maintain calibration results.

notification to customer.

measurement systems analysis by part family

ection And Test Status

tify the inspection and test status of products throughout production, installation and servicing.

k the inspection and test status on the part

k early launch controls as specified by the customercify the inspection and test status by indicating the product's conformance or nonconformance.

ntain the inspection and test status throughout production, installation and servicing.

ease products that pass final inspection, unless otherwise authorized.

trol Of Non Conforming Product

ablish and maintain procedures to:

ensure that non-conforming product is prevented from being used.

segregation of non-conforming product

ew and disposition non-conforming product ( material review boards and six months MRB history).

reinspect any product that was reworked or repaired.

engineering approved product authorization

ntain records of any non-conforming products that were accepted or repaired.

elop rework and repair instructions

ntain records of customer approved deviations

rective And Preventive Action

ablish and maintain procedures or records for:

problem solving methods

analysis of returned parts

upper management review

verification of corrective action

addressing customer complaints.

identifying and eliminating the cause to prevent recurrences.

determining and implementing corrective and preventive actions.

ensuring corrective and preventive actions are effective.cessary, apply and record changes to procedures.

ress corrective and preventive actions at management reviews.

iplined problem solving approach for internal and external problems

rective action for all products and processes.

ect - analyze - eliminate


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delivery, to protect product quality through delivery of the product.

target 100% on time delivery.

determine appropriate material handling methods

determine how you check or rotate stock

storage of an inventory management system

customer requirements

improved inventory turns

verify ASN's ( advanced shipping notifications).

trol Of Quality Records

ablish and maintain procedures for managing quality records.

vide contractor development strategies and records

e and maintain records in an environment that prevents deterioration or damage.

ure that records are legible and can be easily identified, and are retrievable.

ablish and record retention times for quality records.

production records one year

charts and other level iv documents one year

ords may be in hard copy or electronic form.

duction part approvals.

ing , quality, audits, retention periods, new part qualifications.

rnal Audits

ablish and maintain a process for conducting internal quality audits.

agement must review audit corrective actions and program effectiveness

ective evidence.

ts must be conducted by personnel who are organizationally independent of the area being audited.edule and prioritize auditing function

ords audit results and assign noncompliance to the manager responsible for the area that was audited.

ow up on corrective and preventive actions, until they are closed out.

fy the effectiveness of the corrective or preventive action(s).

able working environment.

ning

ument training procedures.

wer how supervisors became qualified to approve training

mpany strategic issue.

tify training needs and provide appropriate training.

ure employees are qualified to perform their assigned tasks, considering their education, training and experience. (i.e. how did you learn how to do this job

ntain training records for all employees.

ning evaluation.

vicing

ablish and maintain procedures for servicing the product and verifying the results.

vide feedback to all impacted functions

w services performed will meet the requirements.

ntain a record of services provided.

stical Techniques

tify the need for statistical techniques.

e sure the operator knows what happens when the control chart trend is up or down or above or below the control limits

vide APQP input in determining the appropriate statistical techniques

ument techniques in the control plan.

ablish and maintain procedures to control the use of statistical techniques.

tomer requirements

ysler - regional value added partnerships :

l : to eliminate waste through simplification, eliminating, and fool proofing transactions

ended enterprise is a driving corporate philosophy

ner - like supplier relationships

ropriate use of parts identified with symbols shield, diamond, pentagon, significant

ual layout

rnal audits - one per year

gn validation / production validation

d - global price-based sourcing to fewer suppliers:


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S 9000 : first tier suppliers by Jan. 1, 1996

egrate EDI with sub contractor requirements at least weekly by Jan. 1, 1997

er 2 -communicate EDI data requirements at least weekly

er 2 - integrate EDI with sub contractor requirements at least daily by Jan. 1, 1998

nual layouts

S 9000

ntrol item parts

tical characteristics

t up verification

steners

at treating

ocess and design changes

pplier modifications of control items

S testing performance

OS

aterial qualification

ualification sampling plans

n going product and process monitoring

proval for Control Plans

eneral Motors - two prong approach:

r commodity products - wants full range - low cost suppliers

aintains high degree of design and development for high technology and commodity like products

gh tech products - wants global suppliers with outstanding technology, quality and price performance

blications list requirements

stomer approval of control plans

S-9000: 98 QUALITY OPERATING AUDIT PLAN


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NTAINS IMPROVEMENT

OCESSES

OVISIONS

OCESS IS DEFINED ; APPROVED ; AND UNDER CHANGE CONTROL

CUMENT ALL ELEMENTS IN LEVEL 1 & LEVEL 2

NAGEMENT COMMITMENT

OVIDE TRACEABILITY THROUGH THE DOCUMENTATION

PLOYEE INVOLVEMENT

OVIDE 4-6 MONTHS DOCUMENTATION HISTORY

NITOR PROGRESS ENFORCE DEADLINES

e

t.

9000:98 Operational Audit

son(s) Interviewed

oductions, Opening Meeting

agement Team

ness Background-Plant Tour

agement Team

agement Responsibilities, Financial Statement Analysis, Customer Satisfaction, Business Plans, Management Review, Benchmarking, Company Level D

agement Team

lities Planning

rnal Audits (4.17) - Management Review (4.1)

rective and Preventive Action (4.14)

tinuous Improvement

ake Proofing

ning (4.18)

vicing (4.19)

lity Operating System (4.2), Customer Requirements (Section 2 and 4.1)

ument and Data Control (4.5)

trol of Quality Records (4.16)


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sign Control (4.4), Advanced Product Quality Planning (4.2.3), Production Part Approval Process

oling Management System and Design (Section 2-23)

rchasing - Subcontracted Manufacturing - Tooling and Dies - Raw Materials - Purchased Components (4.6)

ceiving Inspection (4.10)

ntrol of Customer Supplied Tooling, Raw Materials, Packaging (4.7)

cess Control, Capability, Preventive Maintenance, Safety and Environmental (4.9)

tistical Techniques (4.20)

rk in Process and Final Inspection (4.10)

ntrol of Inspection, Measuring and Test Equipment, GR&R, Calibration Criteria (4.11)

duct Identification and Traceability (4.8)

pection and Test Status (4.12)

ndling, Storage, Packaging, Preservation, and Delivery (4.15)

ntrol of Non Conforming Product, Rework and E. A.P.A.s (4.13)

te: All shifts will be covered during this audit -

ments 4.5, 4.14, and 4.16 will be reviewed by each auditor as appropriate


21/484

inspection and test status

control of quality records

cators of a successful ISO/QS-9000: 98 Operating System:

agement is involved and committed in the process

urn on Operating Assets remains high from quarter to quarter

h flow remains consistent

re management enforcement of declared aims

re is enforcement of a monitoring system

ts are carried out to get to the root cause of problems

ts are reviewed and acted upon appropriately

viding an audible system that can be verified by external auditors

ping to successfully implement the feedback loop

using on customer needs

ying a supplier / customer relationship with well-defined and mutually agreed upon requirements

eloping a prevention attitude throughout the company, accompanied by an early detection and correction system

ablishing clearly understood documented procedures for everyone involved

cedures are deployed

re is control of all appropriate documents and data

viding adequate quality training for everyone that includes general comprehension of what quality means and training in the use of specific financial, opera

ering a good working relationship with external auditors

sing out all corrective actions to prevent re-occurrence

ufacturing Effectiveness:

ecasting is centered around customer production demand

of Materials is accurate; material shortages are non existent

es and operations management planning is accurate and coordinated with inventory planning for every product

up times are reduced; inventory buffers are reduced

e and the amount of processes are synchronized

ducts are produced to what is needed at the time neededkflow is synchronized during work in process so that stocks don't accumulate during work in process

re is a balancing of uneven work-flows with flexible workers and equipment

nsport and material movement is removed as much as possible

up times are shortened and lead time is reduced

ste is reduced or eliminated

on and walking is minimized

manufacturing process is designed to prevent defects

ufacturing and vendor lead times are reduced

ormance measurements and reward systems are weighted toward quick response

9000:98 operational audit - operational audit review

as assessed

9000:98 operational audit standard

9001

9002

9003

9000:98 - ISO 9001

9000:98 - ISO 9002

conformance / discrepancy reference number

4.1

agement responsibility


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4.2

ality system ; Production part approval process; Continuous improvement; Manufacturing capabilities

4.3

ntract review

4.4

sign control

4.5

cument and data control


23/484

4.8

roduct identification and traceability

4.9

rocess control


24/484

4.13

Control of non conforming product

4.14

Corrective and preventive action


25/484

4.18

raining

4.19

ervicing

4.2

tatistical techniques


26/484

Customer satisfaction / complaints

Capacity utilization


27/484

Capacity variance and Cycle Time

nventory Turns


28/484

ROS

Continuous improvement projects


29/484

VACATION / ABSENT HOURS

C

TOTAL HOURS WORKED

DUNITS PROCESSED


30/484

K

% PART BACK TO STOCK

L

% SCRAP

MEARNED HOURS


31/484

M ( N

TILIZATION

N ( O

ECTION HOURS

ETY LOST TIME HOURS

HOURS

EIGHT COSTS PER SHIPMENT

WNTIME HOURS

CKLOG UNITS

N-TIME SHIPMENTS

Manufacturing QS-9000:98 Operational Auditcess Audit Matrix

of the most effective methods to verify that procedures are used, records are kept and that the Quality Operating System is effective is using audit trails.

pical "process" audit trail to assess the effectiveness of the ISO 9000/QS-9000 Process might look like this:

ermine Measurements:

Income As A % Of Sales

rage Time To Market For New Products

w Product Sales Dollars As A % Of Total Sales

rst Time Quality

al Vs Planned Production


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es Forecast Accuracy

es Dollars & % Growth

ket Share %

ployee. Satisfaction Index

tomer Satisfaction Index

h Flow From Operations

urn On Net Assets

itability ROI

ne Improvement Objectives:

ste Elimination

d Time Reduction

ductivity Gains

P. Reduction

very Improvement

Up Reduction

lity Improvement

hine Uptime

roved Cycle Time

duct Variance Analysis:

E

h Flow

A/ROS

acity Variance

acity Utilization

o Delay

ntory Turnover

e Studieservation

t Process For Continuous Improvement - Track Metrics - Determine Future Trends

Existing Business Processes:

ket

uest For Quote

tomer Sales

cept

sibility Review

elopment

ecasting

chasing

thly Production Plan

erial Requirement Plan

ection Planfing Plan

ban Plan

ufacturing Capacity Plan

erial Handling

kaging

very

allation/Servicing Plan

tomer Satisfaction

k For Gaps, Trends & Patterns As Well As Opportunities For Improvement; analyze Problem Solve Data:

ance Analysis Identify Value Added Time

uce Or Eliminate Non Value Added Time

ermine Internal & External Organization

yze Parallel vs Sequential Work

stigate The Application Of Information Technologytify Mistake Proofing Opportunities

9000 and QS-9000:

agement Responsibilities/Financial/Operating Measurements/Customer Satisfaction/Management Review / Continuous Improvement/Business Planning/

lity Policy Implementation ,Company Goals And Objectives Based On Customer Requirements

ng Performance Metrics

tinuous Improvement In Cost- Quality -Throughput - Delivery

ect Detection And Prevention

ste / Variation Reduction

sed Loop System With Effective Follow Through:

t Reduction Requirements

very Requirementstract Review Methods

sibility Capability Review

lity Planning/Special Characteristics

gn Methods, Control and Verification

anced Product Quality Planning Implementation

duction Part Approval

chasing Methods

ming Inspection Methods

duct Identification/Traceability/ Work in Process Inspection


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trol of Non-conforming Product

dling/Storage/Packaging/Preservation / Delivery Methods

pping Methods

very Requirements

e Case of a Tooling and Equipment Supplement Audit(QS-9000-TE):

tract Methods

lity Policies

sibility Reviews

gn Methods

Cycle Costing

n time Between Equipment Failures

n Time To Repair Equipment

ss Functional Teams

ure Mode and Effects Analysis

lity Planning/Reliability and Maintainability

ing Systems

trol Planning

cal Path Scheduling

ng Plan Management

ect Management

chasing Methods

bration and Gauge Repeatability & Reproducibility Systems

duct Identification

hine run-offs

cess Control and Capability

C approaches

ection Identificationdling and Packaging Methods

very Requirements

ning Records

vicing Requirements and Capability

0 Dry run

ability Methods

Hour Dry Run

t Strategies:

ts Should Review The Core Business Processes Of:

lity Goals And Objectives As They Relate To The Business Plan

es

gnchase

ufacture

ing

king

very

vice

ermine Market Conditions, Business Goals & Customer Requirements & Auditor Requirements

ts Should Review The Documents Of :

ults / Measurements

em Administration

sonnel

ning

rnal Audits

Closed Loop Systemem Effectiveness

ermine The Balance Between System Elements :

ning

ementing

trol

ow-Up

orting

uation

t Reduction?

duct Quality?

Time Delivery?

A's?

acity?

ability?anced Quality Planning?

tomer Requirements?

rent system:

pare a paper/work flow of the existing system in force; break the system down from input (planning) to execution (implementation of the plan) to the reporti

ain live copies of all documents used in the area and write the purpose of each on the reverse side of the documents and number each document to identif

duct flow:

cate the flow of finished products/materials through the area, starting with the first stage of activity moving through the area, routing movement through the

or operating problems:

at are the major operating problems existing in the department as described by the supervisor:


34/484

ct of change

at is the relationship of these plans/changes to the planned installation of the pending system?

sical layout:

ain copies of the physical layout (blue prints, flow diagrams, etc.) Or draw one; indicate area designations, major pieces of equipment, furniture, etc. Denot

sonnel Roster:

mplete personnel Roster, indicating employees names, hired dates, shifts, job classification, and positions as well as appropriate pay rates and vacations in

ibility chart:

employees names, functions, critical skill levels, and if they were transferred into another area or department

pment list and location within the department:

all the major machines and equipment located in the department; their limitations and normal operating output speeds in units per hour:

ntity

me of equipment or machine

tations maximum output per hour

mal operating speed output per hour

k Objective Evidence : For ISO 9000 QS-9000 Intent; System Implementation; Effectiveness In Practice Does The Quality Operating System and/or Produ

m

ction

ety

ness Compliance

ormance

ronment

mponent Performanceerial Specifications

rmation Technology

Management Defined And Authorized Strategic Business Objectives, And How Can They Be Sure That All Product Developments Comply With These Ta

e Management Established, Authorized and Implemented Documented Procedures for the Development and Evolution of All Product Ranges?

at Steps Are Taken To Ensure that Customer Requirements are identified and Effectively Addressed?

All Market Research Activities Accurately Costed, Justified as Being Worthwhile and Authorized?

w Does Management Identify Potential New Markets Or Opportunities To Differentiate Their Products?

k At Linkage Between Design Record, DFMEAs, PFMEAs, Control Plans And Operator Instructions; Paying Particular Attention To Special Characteristics

otype Control Plans Call Out Dimensional Analysis And Material Certification Or Material Requirements

ncial Audit Analysis:

eral planning

ective Evidence:

ew and assessment of internal control structure

eral

ted financial statements

edules supporting footnote disclosures and other report workpapers

solidation and combination workpapers

sted trial balanceof general ledger balances

sting journal entries and reclassification entries

ysis of unrecorded audit differences

ncial statement disclosure checklist

er of representations

sequent events review documentation

mmitments and contingencies, including lawyers' letters

rd of directors and related committee minutes

orts on internal control

es for management letter comments

ew and approval checklist

return information and worksheets

ning and Administrationmpany acceptance and retention evaluation form

t planning audit checklist

rnal control structure audit checklist

ytical review workpapers

t program

agement letter

t time budget and control

trol of schedules


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wance for doubtful accounts and notes receivable

ntory and production costs

paid expenses

er current assets

perty, plant, and equipment

ngible assets

er noncurrent assets

ilities

ounts payable

es payable and related interest expense

rued payroll and related liabilities

er accrued liabilities

me taxes

er current liabilities

g-term debt and related interest expense (including capitalized lease obligations)

er long-term liabilities

ty

ital stock

tional paid-in capital

ained earnings

rations

ems walkthrough

s of controls

enues

t of sales

ng, general, and administrative expenseser operating expenses

operating income and expense

erstanding Financial Ratios

o analysis is an excellent tool for determining the overall financial condition of your small business. Think of it as a way of "taking the temperature" of your

& Bradstreet publishes key business ratios in its monthly Dun's Review as well as in its annual "Cost of Doing Business." Contact Business Information S

ounting Corporation of America publishes Parameter of Small Businesses which classifies operating ratios for various industry groups on the basis of gros

rent Ratio

Test or "Quick" Ratio

ntory Turnover Ratio

eivables Turnover Ratio

ables Turnover Rationtory to Net Working Capital

t to Equity Ratio

urn on Assets (ROA) Ratio

ss Profit Margin Ratio

urn on Sales Ratio

rent Ratio

is the standard measure of any business's financial health. You derive this ratio from the figures on your balance sheet. It tells whether a company has en

formula: Current Assets divided by Current Liabilities.

Test or "Quick" Ratio

is a tougher measure of liquidity than the current ratio because it excludes inventories when counting assets. It calculates the company's liquid assets in r

desired quick ratio is 1:

formula: (Current Assets less Inventories) divided by Current Liabilities.

ntory Turnover Ratioratio tells how often your business' inventory turns over during the course of the year. Because inventories are the least liquid form of asset, a high invent

formula: Cost of Goods Sold divided by the Average Value of Inventory.

eivables Turnover Ratio

number indicates how quickly your customers are paying you. The greater the number of times your receivables turn over during the year, the shorter the

formula: Net Sales divided by Receivables

ables Turnover Ratio

number tells how quickly you are paying your bills. The payables turnover ratio reveals how often your payables turn over during the year. A high ratio me

formula: Cost of Sales divided by Trade Payables

ntory to Net Working Capital

ratio tells how much of the company's funds are tied up in inventory. If this number is high compared to the industry average, it could mean the business

formula: Inventory divided by Net Working Capital

k to List

t to Equity Ratio

ratio indicates how much the company is leveraged (in debt). A high debt to equity ratio could indicate that the company may be over-leveraged, and shoformula: Total Liabilities divided by Total Equity

urn on Assets (ROA) Ratio

number tells you how effective your business has been at putting its money to work. The ROA is a test of capital utilization -- how much profit (before inte

formula: Earnings Before Interest and Taxes divided by Net

rating Assets

ss Profit Margin Ratio

ratio shows how efficiently a business uses material and labor in the production process. It shows how the percent of net sales remaining after subtractin

formula: Gross Profit divided by Total Sales

k to List


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auditor can use this form to document the performance and evaluation of ratio analysis in connection with analytical procedures performed in an audit. Th

UIDITY RATIOS

_

_

_

_

Current ratio =

rent assets

rent liabilities

__

__

__

__

_

_

_

_

Quick or acid test ratio =

rent assets - inventory

rent liabilities

__

__

__

__

OFITABILITY RATIOS

_

_

_

_

Gross profit ratio =

Sales - cost of goods sold

Sales

__

__

__

__

_

_

_

_

Operating margin ratio =


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Net Sales

_____

_____

_____

_____

9__

9__9__

9__

. Net income ratio (or profit margin ratio) =

Net income

Net sales


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Total debt

Total assets

__________

_____

_____

19__19__

19__

19__2. Debt to equity ratio =


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9__

9__

2. Average age of inventory =

360 days

nventory turnover_____

_____

_____

_____


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pecial Features For Investigation And Evidence Of Management Review

bjective Evidence:

tatistical Trends

ustomer Satisfaction / Complaints

RR's

PM's

apacity Utilization

crap/Rework As A Percent Of Sales

roductivity Improvement

fficiency Improvement


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ual WIP Turns

Cost of Quality Appendix

Continuous Improvement Appendix

t Analysis for Controlling Costs:

mary Cost Drivers

ondary Cost Drivers

ctive Operating Activities

t Analysis for A Typical Manufacturing Business

ars Spent On Premium Freight

essive Fluctuation Of Schedules

duce Transaction Costs In Purchasing, Stacking And Accounts Payable

velop High MRO Item Fill Rate At 90% By The Subcontractor

vide Smallest Possible Investment In MRO Inventory

rove MRO Item Quality

ect Labor, Indirect Labor, Salaries, Overtime Premium, Shift Premium, Bonuses, Vacation Pay, Holiday Pay

Time Shipments

itor Schedules Are Changed From The Required Lead Times

ployer FICA, Business And State Unemployment, Worker's Compensation, Group Insurance, Retirement, Employee Assistance

entory Turn-Over Performance

d Up Of Excessive Inventories To Hedge Risk Caused By Inaccurate And Fluctuating Information

preciation, Rentals, Shop Supplies, Property Taxes, Insurance, Utilities, Office Supplies, Contract Services, Travel, Entertainment, Education

solete Material Inventory Dollars

ccurate And Poor Quality Of Information

ineering, Maintenance, Tool Room, Facilities, Data Processing, Material Handling

mber And Cost Of Unplanned Changeovers

r Information Entering Into Production Schedule

neral Factory Overhead, Material Burden, Materials Management, Quality Control

d Time For Information Flow From One Tier To Another

erial Information Moving Slowly Through The Supply Chain

neral/Administration, Accounting/ Information Systems, Sales

fective Procurement And Stocking Processes For Indirect Material And Factory Supplies

ntenance, Repair, And Other Items:

essive Number Of Auditors

h Number Of Blanket Purchase Orders/ Requisitions / Purchase Order Releases Issued

h Cost Per Purchase Order Release


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Raw Material Costs, Purchased Parts, Incoming Freight

Cost Of Service, Outbound Freight, Incoming Freight

Cost Of Goods Sold

Cost Reduction Opportunity Analysis:

Variable Costs Through Specific

ine Item Analysis

Departments

Assignment Costs

General/Administrative


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Demand Driven Costs

MaintenanceO

Engineering

P

Tool Room

Q

Total Demand Driven Costs

Total Of O Through Q

Total "Controllable" Costs


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ontrollable Costs

d Costs

f Total Costs

ributions

f Total Costs

Total Costs

f Total Costs

ts Related to Quality Procedure

RPOSE

establish the method for collecting? maintaining, and analyzing quality cost data to achieve continuous improvement through the Company.PLICATION

ains to all quality costs connected with preventing and correcting non-conforming materials. The data is to be gathered and analyzed by the Operations a

PLICABLE MATERIALS

y/Weekly Production Management Report

thly Production Management Summary

rterly Production Management Summary

wntime Report

wntime Summary

ect/Delay Frequency Report

y/Weekly Transportation Report

ekly/Monthly Transportation Summary

FINITIONS

al Hours Direct labor hours or time spent processing coils or sheets, including Normal Rework.

ned Hours Hours earned by producing an acceptable product as measured by operator inspection and multiplied by the standard labor hour (Hrs/Ton).Quantity accepted x standard hours (a pre-determined standard of performance for processing or material handling).

lable Hours Total direct labor hours available for coil or sheet processing; including downtime training, meetings and abnormal rework but not vacation,

ductivity Percentage indicator that measures the output (earned hours) vs input (available hours).

zation Percentage indicator measuring the amount of time an operations was used to produce a coil or sheet vs the total hours worked.

iency Percentage indicator measuring an operator's performance on work processed how well he has performed.

eduled Attainment Percentage indicator measuring the successful completion of planned volume at a controlled reasonable cost and on schedule.

OCEDUREOperations and Transportation Departments have the responsibility for collecting, organizing, maintaining and evaluating quality cost data and genera

quality cost data will assist the Operations and Traffic Departments improve quality in:

blem Prevention

uation

rective Action

tomer Quality Problems

quality costs relative to the prevention category are those employees with quality operations, quality planning, quality training and indoctrination, associat

quality costs relative to the evaluation category are those employees with inspection, testing, quality audits, calibration and repair of test equipment, an

quality costs relative to the corrective action category are those employees with rework, repair, scrap, reinspection, and retesting and material review.

quality costs relative to the customer quality problems category are those employees with processing complaints, repair of returned materials, replac

lity cost data are to be collected from the appropriate production reports, work orders and traffic reports.

lity cost data are to be prepared daily, weekly, monthly and quarterly as determined by the need for the quality data. Distribution of the reports is to be

ERT COQ. XLS

y / Weekly Cost of Quality Summary


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PROCESSING AREA:

60" SLITTER

24" SLITTER

CUT-TO-LENGTH LINE

SHIPPING

RECEIVING

PACKAGING


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F

HOURS PER TON

C D


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K

% COIL BACK TO STOCK

L

% SCRAP


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S

% PRODUCTIVITY

M O


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HOURS

X

FREIGHT COSTS PER SHIPMENT

Y

DOWNTIME HOURS


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WEEK 1

WEEK 2

WEEK 3

WEEK 4

TOTALS

ATOTAL WORK DAYS

B

VACATION / ABSENT HOURS


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BEST F X BEST D) C

% YIELD

J% COIL UTILIZED (THROUGH PUT)


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% PRODUCTIVITY

M O

T

% EFFICIENCY


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OWNTIME REPORT

MPLOYEE __________________________________________________

HIFT __________________________________________________

ATE _________________________________

ODE

OWNTIME REASON00 8:00

00 9:00

00 10:00

0:00 11:00

:00 12:00

00 2:00

00 3:00OTALS

ORK ORDERS


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E

BACK END

F

MAINTENANCE


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N

PACKING LINE BACKUP

O

COILS NOT PULLED


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U

MISCELLANEOUS


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TOTAL HOURS

CAPACITY UTILIZATION ANALYSIS


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D. Actual Hours Worked

3895.7

3855.5

4619.7

3310.24439.2

36523336.25

4202.2

3515


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44

58

5071

8263

G = D E


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0.957

0.839

0.789

0.882


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Month

JAN

FEBMAR

APR

MAY

JUNE

JULYAUG

SEP

OCT

NOV

DECTOT

A N mber of Work Da s


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E. Tons. Processed


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Worst Month Best Month

% Utilization


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FFICIENCY? UTILIZATION and PRODUCTIVITY REPORT

-1

-2

Quan-

ty

-3

-4


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Medical

Other

1


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2


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1


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PRODUCTION EVALUATION REPORT

ASSOCIATE

Atten-

dance


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SUB-TOTAL


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B-TOTAL

TAL

acity utilization calculation

ne-month summary shows a total of 21424.5 tons processed using? .69 hours or 44 hours per ton.

rate of .69 tons per hour? from the number of hours worked for that entire period? it can be determined that the department functioned at only 88% of its c

% Capacity = Hours Per Ton x Tons Processed x 100Actual Hours Worked

% Capacity = 44 x 21424.5 = 308528 = 88%

348275 348275

(The best hours per ton (44) become the standard for the calculation in the other months.)

The best performance was in the month of April when production reached 99% of its capacity.

% Capacity = 44 x 2297 = 99%

for April 3310.25

And the worst month was August at 78.9% of its capacity.

There is a variance of 25% of its capacity.

(.26 x Total Labor Costs = Savings)


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higher the variances the more indication of the lack of good operational tools to control costs and therefore greater potential for improvement.

rating performance ratios

roductivity is the percentage indicator that measures the output (earned hours) versus input (available hours).

% Productivity = Earned Hours* x 100

Available Hours

erformance is the output of measured work in relationship to total hours worked. It also measures how productive the area is

% Performance = Earned Hours X 100

Total Hours Worked*

fficiency represents how well an associate has performed on measured work.

% Efficiency = Earned Hours x 100

Hours on Measured Work*

(Actual Hours)

tilization represents the percentages of time employees are working against measured activities and are determined by:

% Utilization = Measured Hours Worked x 100

Total Hours Worked

nitions

ned hours are the output of measured hours of work produced (real work accomplished) in the department. Hours earned by producing acceptable produ

rs on measured work represent those hours actually spent by employees on measured or estimated work.

al hours worked is the total clock hours for which an employee works in the department.

cheduled attainment is the successful completion of planned volume at a controlled reaso