Applying Quality

August 27, 2021

K. Sullivan

Property & copyright of K. Sullivan

Professional Influences

• William Edwards Deming

• Dr. Robert Monczka

• Dave Nelson

• Gene Richter

• Jack Welch

• Tim Cook
Let’s Begin…
Ground Rules

Recording (Audio, Video) or

Screenshots Not Allowed
Topics
• Pure & Applied
• Reliability

• What is Quality?
• Failure Rates

• Quality Programs
• Reliability Curve

• Why Quality Programs Fail

• Real Life Examples

• Cost of Quality
• TCO - Total Cost of Ownership

• Quality Techniques • Finance Role In Quality Management

Pure & Applied
What is Quality?

• Degree of Excellence

• Free of De ciencies

• How e cient the Management

circle is in planning,
implementing and making
improvements

• Satisfaction of Customers
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Major Quality Improvement Initiatives

• Six Sigma

• TQM - Total Quality Management

• Kaizen

• Taguchi Methods

• Zero Defect Programs

3.4 dppm
But Unfortunately Many Quality
Prgrams Fail….
Why Quality Programs Often Fail (Typical)

• Lack of Proper Training

• Lack of Good Communication

• Inability to Integrate Cross-Functionally

• No Focus on Metrics

• No Teamwork

• No Standards

• No Incentives for Improvement

The Real Reasons Why Quality Programs Fail

• Inexperienced/Incapable Person Selected to Implement the Program

• Program Implementation is too Expensive

….to understand why these happen requires an understanding of COPQ/

COQ
 Cost of Quality

An unquali ed person or a

person lacking the right

experiences with implementing

a major professional Quality

Program will add excessive

costs long before any

substantive progress is achieved

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Quality Techniques

• Supplier Capability Review

• Incoming Inspection
• Total Quality
• Cause & E ect Diagrams
• Quality Control
Management

• Statistical Sampling
• Six Sigma
• Cost of Quality

• Statistical Process Control

• Taguchi Loss Function

• Acceptance Sampling
• Gage R&R Studies

• Process Mapping
• Cp/Cpk

• Scatter Diagrams
• AQP

…and many more

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What is Reliability?

Reliability is the probability that a product will perform a

required function under a stated condition for a de ned
period of time.

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 What is a Failure?
A good de nition of a failure is “the inability of a component, machine, or process
to function properly.” Failures come in all shapes and sizes. They can be individual
parts, entire machines, or a process. Broken down further, failures can be physical,
paper, process or thinking/cultural.

- A broken component is an obvious failure

- A speci cation that has poorly written requirements that fail to discern intended
criteria may go unnoticed for years.
- In some cases, it’s the culture of a company.

The failure rate is the inverse of MTBF (average time between failures)
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 Reliability Curve

Manufacturing/Install Failures

Designed-In Failures

# of
Failures

Infant Mortality Steady State Performance Wear-Out

Time

But assets rarely operate alone…

Let’s Look at 3 Systems:
Overall
Document
Success Success De ned As:
FTY (%)
Rate (%)

• Purchase Order/Contract SCM/

Purchase
-
-
No delivery issues

No price issues

Creation
Order/ - No quality issues

Contract - No technical issues

- No rejects

• Receiving/Material Receipt/ Receiving/

Material
- No functional issues

Incoming Material Inspection

Receipt
- No quantity discrepancies

- No partials

Supplier
- No invoice reissues

• Supplier Invoicing Invoicing

- No invoice discrepancies

- No matching issues
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 System Reliability
Component Integrated
Item Yield Def.

Component A .99 .01 Success: First time installation yields

a system that meets all performance criteria
Component B .92 .08
Component C .99 .01
Component D .95 .05
Component E .98 .02 Success = .806
Component F .96 .04

Initial reaction is to repair or replace System performance is unacceptable. Costs

defective components or increase service are seen as staggering to the operation.
levels. Costs appear to be minimal. Preventive & Corrective action required to improve the
Performance is viewed as tolerable and system level performance.
few actions are taken.

This is also the premise of achieving Six Sigma (3.4 dpm)

Real Examples of Quality Issues

Stainless Steel Example

Major Steel Producer

• No receiving inspection program

• No calibration process

• No quality control plan

• Major variation in application

 Multiple defects discovered after a shipment of material had been received at the
final destination after utilizing a commonly accepted process that includes QCP
plan submission, TPI, and the issuance of a COC. Why did the defects occur?
1. Quality measurement system not verifie
2. Quality procedure was violated by QC (intentional w/o knowing the consequences
3. TPI failed to properly review and re-create the data submitted by the suppliers QC
syste
4. Drawing/specification reviews were not conducted (no understanding of critical
characteristics
5. Only documents received by the TPI and the company were the COC, a tally sheet,
and the original QCP submitted with the tende
6. Quality Control methodology was not reviewed and formally accepted by the TPI
and the Compan
7. TPI was not properly qualified
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So what does all of this mean to

Finance Professionals?
 TCO - Total Cost
Of Ownership
• What lies below the surface?
 PRICE

COST
But which costs?
ESP TCO

• In Oil/Gas, Electric Submersible

Pumps are a good candidate for
TCO

• The Price to TCO ratio is

approximately 1:4

• So for every $1 of price there is a

$4 dollar or more impact

• Tendering on price can have

devastating consequences
Finance Role

• Finance is a key CFCT/Quality team participant (especially during

implementation)

• Finance is the “Score-Keeper”

• Finance realizes and recognizes the impact on the bottom line

• Finance provides a major contribution through its “Cost Analysis” capability

• Key role as the “business analyst” both professionally and as a team behavior

• Success is generally de ned by the degree of cost savings achieved

(standard of improvement)
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 One Last Point:
Digital Data in a Digital Future

Digital Transformation
Digital Transformation broken into 3
Groups:

Group 1 - Digital Assets (Use of digital

technology)

Group 2 - Digital Usage (Interaction

between customers and suppliers)

Group 3 - Digital Tools (for use by

employees)

 Winners are not afraid of losing

But losers are

Failure is part of the process of success

People who avoid failure also avoid success
-Robert T. Kiyosaki

 Contact:
sullitara@hotmail.com

All Of The Best!