#6 - A Focus on Quality Performance

Effectiveness measures provide oversight of how well our process is delivering our customer’s demands. They monitor our ability to deliver products or services that satisfy their Quality and Delivery requirements.

In today’s newsletter we will start to investigate these local, transactional performance measures in a little more practical detail, starting with the measurement of Quality Performance. We will explore the considerations you should make when deciding on the specific measurements you should use, appropriate to your situation.

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Quality Performance

Quality, and what is meant by the term, is a topic for conceptual debate of itself. When we are thinking about local, transactional performance we are specifically interested in the quality of the outputs delivered from our process. Whether these outputs are products or services, we are concerned with if they satisfy any agreed specifications or acceptance standards and are agreed to be fit for purpose.?

In many situations, such as when manufacturing engineering components, these output requirements will be clearly defined within a procurement contract, maybe referencing technical drawings, standards, specifications or legislature. At the other extreme, there may be no formal contract or product specification in place at all. For example, when ordering a meal at a restaurant, where acceptable quality and customer satisfaction are more dependent on subjective expectations and opinion.

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Quality Measures

In order to measure our Quality performance, whatever the contract in place, we must establish a standard against which we will then consistently measure our outputs. Where possible we should include our customers in validating that this standard aligns to their expectations. The standard we will measure against could well include a number of different characteristics relating to the product or service. These characteristics might be evaluated in either variable or attribute data terms. For example, a component might have a specific target? weight that must be achieved to within a certain tolerance. Other characteristics might rely on a more subjective standard relating to taste, smell or the aesthetic appearance of the output.

We would typically monitor our quality performance in terms of Non Right First Time (NRFT). This is measured at the individual unit of output level, judging each item as meeting the quality requirement, or not. We would simply count the number of products produced, or service interactions completed, and determine the number of these that failed to meet the quality requirements. The formula used for the calculation might look like this…..

The NRFT quality performance is generally recorded as a percentage.

One further option, when measuring our quality, would be to increase the level of detail within our data collection by introducing a count of individual errors or defects. We might measure this as well as whether the output is acceptable or not. This means that a product or service that is not right first time, might actually have a number of individual faults contained within it. This approach is appropriate if the product or service is of a high level of complexity, such as an automobile, a report, or a new build apartment, where we might measure the number of snags observed in pre delivery checks. This allows us to maintain a further performance measure of ‘average number of defects per product’.

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Where to Measure

Once we have defined our acceptance standards and the way in which we will measure and calculate our quality performance, we still have a few decisions to make relating to where and how to collect the data that we will need.

The first option, and one often used in industry, is to use data sourced from our customers. This is sometimes in the form of product returns or rejection notes.? These might detail the number of parts or components within a delivery that are being rejecting due to unacceptable quality, or maybe retained and repaired by our customer, probably at our cost. The obvious problem with this source of data is that by the time the customer is rejecting product, the damage, commercially and to our reputation, has already been done.

To resolve this problem, we can complete the checks of our output quality ourselves. Some companies will use a quality department to check their products prior to delivery, but still the product has already left the production department by this point, and inefficiencies introduced. In modern quality management, the preference would be that quality is measured at source, so that any issues identified can be addressed before the product has been released. This concept is often taken still further, and quality evaluated through the various process steps, giving feedback to each individual activity and responsible staff member.

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What is it all for?

One serious consideration when adopting performance measures such as Quality Performance is that of what we will do with the data generated. There is little or no point in investing time and effort defining performance measures and then collecting and storing data if it is not going to create genuine value. In fact, the efforts taken and demands on our staff should be considered as counterproductive. We should be anxious that this does not turn out to be the reality.

The delivered value could be in the form of demonstrating performance capabilities to prospective clients, or in proving the achievement of minimum performance standards. Some customers, for example those in the automotive sector, will have explicit supplier performance standards that need to be demonstrated to become an accredited supplier. Other achievement targets might relate to industry awards, again marketable and able to delivery measurable value.

The second area of significant value in adopting quality performance measurement is in the potential commercial savings achievable through performance improvements. One of the main reasons for the collection of performance data is its value in quantifying and understanding the reasons for poor performance, the use of detailed data to identify the root causes, and then management of continuous improvement of performance in a scientific and objective manner. We will deal with this in more detail within later newsletters.

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Summary

Quality Performance represents one of the most critical areas of performance measurement. Quality is one of the key Effectiveness measures essential to performance oversight, being a criteria impacting directly on the customer and their opinion of us.

To consistently evaluate our quality performance, we will need to define clear acceptance standards for every product or service we provide to our customers. This provides the benchmark against which each deliverable will be judged as acceptable or unacceptable. We will typically measure our overall performance in percentile terms, reflecting the proportion of our deliverables that fail to meet the acceptance standard. We should give consideration to where, when and how we will collect the data that will form our quality performance measures, ensuring that we minimise the burden of data collection and maximise the value we exploit from the time and effort invested.

The Greybeard Academy is made up of highly experienced, hands-on experts in business performance improvement who have ‘seen it, done it and achieved it’ many times in the past. This means that our advice and support is effective and efficient, saving time and costly mistakes.

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Karl Smith (M.D.)

The Greybeard Academy