Internal Auditing – Tips and Hints: Product Design & Development (Part 1)

The Product Design and Development requirements of ISO 9001:2015 are something which sets organizations, and their quality management systems, apart from (most) others.

There are relatively few organizations which create the often unique and innovative specifications for products (and services). As a result, many do not have a process for product design as part of their quality management system. The common justification for this “exclusion” from the quality system is that their customers provide the design specifications used in production. It should be noted that Design and Development in ISO 9001 applies to products (and/or services). At this point in time, process design is not considered, per se.

The requirements of Design & Development control (cl 8.3) in ISO 9001 run to nearly two pages. They are somewhat complex and, when auditing should not be viewed in isolation, so, let’s look at some other relevant parts of ISO 9001 which can apply to the 8.3 requirements.

Quality Objectives (6.2)

Of all the requirements outside of those contained in cl 8.3, it’s highly likely that Quality Objectives are going to be established for the product design and development process. Indeed, even if not specific to that process, objectives such as “right first time, on time and in specification apply to most products/processes. Indeed, these should flow from the quality policy. Typically, the organization uses project or programme management methodology, using three success criteria:

Measurement and monitoring (9.1.1)

These criteria are also applied to the measurement and monitoring of the process of product design and development. From a leadership point of view, it’s important that the new product development (NPD) process brings a product to market on time, on budget, and, at the same time, meets the specified requirements. Additionally, feedback from the customer, especially in the early days of product availability in the market, is critical.

We all know of examples where one or more of those criteria were missed[1].

Although not a “quality objective” per se, the budget allocated to new product development can be used as an indicator of problems encountered in the process. ?Verification and validation activities which, for example, fail the design may lead to redesign and retesting which causes delays and increased costs.

Audit Tip:

A simple and effective audit technique is to ask management how they judge the effectiveness of the NPD process. ?You can check on issues such as the product release being delayed. Was the budget over-run? What has been the initial feedback from the customer?

Resources (People, 7.1.2)

Another factor which comes into play is the less obvious “revolving door” of product development staff, mainly the new product designers. The speed of the revolving door – the turnover rate of design staff – is relatively slow. Research shows it can be about four to five years, depending on the typical product development lifecycle. Poor job retention in the design function is expensive for an organization: from the cost of recruiting someone, to have them then leave, taking their knowledge and experience with them, which is also very detrimental.

What’s the reason for the turnover? Consider the typical career of a product designer:

Their first assignment, once recruited from engineering university? Not a major product launch, but perhaps handling a few design changes, or even the “re-design” of an existing product, often needed to overcome performance problems being currently encountered.

While processing design change notices may be a reasonable way to learn the organization’s ropes, the product redesign can become a very tough assignment. Understanding, without prior experience, another person’s work (sometimes without documented notes) and then attempting to grapple the problems, all while under the pressure of getting the “fix” into the customers’ hands to bolster satisfaction or address competitive advantage, can be a daunting task. Engineering school didn’t prepare the designer for fixing someone else’s broken product. After all, design engineering, as taught at school, is about innovation, creativity and advancing technologies.

Maybe some successes are won on these initial endeavors and, the designer is subsequently rewarded by design management with a small-scale, “clean sheet” product development project.

Without a robust and well-managed NPD process, errors will, inevitably, impact the developed product, manifesting themselves in post-release problems which require additional design attention. This pressure to “fix” things runs counter to the career promise. Eventually, the designer seeks a position in another organization to fulfil that promise.

Audit Tip:

Does the organization, either through the engineering management or through the human resources function, identify and track the retention of engineering staff, specifically product designers, and understand the reasons for and costs associated with poor retention? Are they even aware (other than empirically – "it's a fact of life”) that it is an indicator of an under-performing or ineffective NPD process?

Corrective Action/Improvement (10.2/10.3)

Part of the design personnel retention issue described previously, and an additional indicator of the design process effectiveness, is the processing of design changes. Changes made to product designs once released for manufacturing and into the customers’ hands can have significant impacts on the overall performance of the organization. This isn’t limited to the cost expended by the design function in performing the change but the wider impact on manufacturing, inventory, field/service, and the supply chain. Research shows this cost can be excessive and borne across many elements of the supply chain often being missed when calculating the “cost of goods sold” – an important business metric.

Audit Tip:

When auditing new product development, a key performance indicator is the number of design changes which are processed, post-release into the marketplace, which are NOT directly the result of properly funded product upgrades approved, for release through the appropriate sales and marketing channels – that is to say, funded by sales revenue (even if only predictions). Does the organization have any information on a) the number of design changes, and b) the costs associated?

Next time, we’ll look at clause 8.3 in detail.

Stay tuned. In time, if you have a particular process we haven’t covered, and you would like to see it as part of the series, send a DM or email me [email protected] with a request.

[1] https://www.cbinsights.com/research/corporate-innovation-product-fails/