The Global State of EQMS
- 1. Global State of EQMS Matthew Littlefield President and Principal Analyst #GlobalEQMS
- 2. EQMS Adoption Major adoptions of EQMS is coming. #GlobalEQMS
- 3. Agenda •About LNS Research •Why Quality Matters •Benchmark Data •Strategic Objectives •Our Biggest Challenges •Building a Model of Operational Excellence •EQMS Best Practices •Recommendations for Success #GlobalEQMS
- 4. Understanding LNS LNS is research and advisory firm that helps clients innovate and achieve operational excellence. We deliver the market intelligence and thought leadership needed to capture the value of technology through: Experienced analysts Primary research Deep industry contacts Interactive data visualizations #GlobalEQMS
- 5. Global Quality Advisory Council Starbucks - VP of Global Quality and Regulatory Affairs Onyx Pharmaceutical - VP of Global Quality Whirlpool - Director of Quality Lindt Chocolate – VP R&D and Quality Oriflame - Corporate Quality Lead Champion Technology - VP Quality and EH&S Gurwitch Products - VP Research and Quality Newell Rubbermaid - Director of Quality Hygia Health Service - VP of Operations Discount Tire - VP of Quality Daikin McQuay - Director, Corporate Quality Bio-Rad Laboratories – Director of Quality Assurance Owens-Illinios – VP of Global Quality Harley Davidson – Director Corporate Quality Alcoa – Director Corporate Quality #GlobalEQMS
- 7. Research Demographics •450+ Respondents to LNS Research Quality Survey from June 15, 2012 – March 31, 2013 #GlobalEQMS
- 9. The Changing Customer and Speed of News Changing preferences regarding where news is received, where research is conducted, and how opinions are formed LA Times, Boston Globe: For Sale Google Reader: Shuts Down Facebook and LinkedIn: News Feeds Transformed #GlobalEQMS
- 10. The Changing Customer Social Proof is the New Paradigm •People are starting the buying process online •Everything is ranked, rated, and reviewed •Buyers are interested in what others are interested in •They trust other people in their network •Good and poor quality are hard to hide Breaking News: Company X Recalls 1,000,000 Cars in U.S. 4/4/13 Boston, MA – After several incidents, Company X has decided to recall model 302z from its 2010 fleet. Owners are asked to return their automobiles to dealers for faulty #GlobalEQMS
- 11. Global Scale for Products and Operations 275 subsidiary companies, in 60 countries with 146 manufacturing sites 250+ brands, 26 Billion Dollar brands, 100+ manufacturing sites, consumers in 180 countries 50+ manufacturing sites in 25+ countries with almost 10,000,000 units sold across 70 models #GlobalEQMS
- 12. Top 5 Financial Objectives •Growing revenue is top for the majority of all companies #GlobalEQMS
- 13. Top 5 Operational Objectives •Improving manufacturing efficiency is top but not well aligned to financial goals #GlobalEQMS
- 14. Top 5 Quality Management Objectives •Quality goals are synched with operations but not necessarily financial goals #GlobalEQMS
- 15. Top 5 Quality Challenges •The top challenges are around Culture, metrics, and systems - all important elements of Operational Excellence #GlobalEQMS
- 17. Why Enterprise Quality Management Software •Disparate systems and business process •Lack of visibility into performance, compliance, and risk •Nearly impossible to collaborate across departments, trading partners, or the supply chain. •Quality and non-conformance data, as well as best practices, are not shared across the organization •Connecting Risk and Compliance as part of a quality platform #GlobalEQMS
- 18. Current System Landscape •ERP – Financial data, inventory data, production routings, recipe management •BI – Reporting, Analytics, Visibility •CRM – Customer complaints, trade promotions •PLM – Labeling management, packaging management, quality specifications, sampling plans •LIMS – Measurements and testing of Fats, solids, bacteria counts, etc. •MOM – In line and at line testing, statistical process control, manufacturing non-conformances •SCM – Supplier risk scorecards, delivery scheduling, inspection •EHS – Carbon management, energy management, reporting #GlobalEQMS
- 20. Adoption of ERP •ERP is well adopted across the industry #GlobalEQMS
- 21. Adoption of BI •BI is emerging, complements data and reporting in ERP #GlobalEQMS
- 22. Adoption of EQMS Major adoptions of EQMS is coming. #GlobalEQMS
- 23. Adoption of EQMS of Functionality •Because, Life Sciences companies view functionality as disparate systems: Doc Control, CAPA, Compliance, Risk and more #GlobalEQMS
- 24. Interconnecting Quality Processes Identification Investigation Escalation Correction Prevention Efficacy Assess Quantify Prioritize Mitigate Establish Criteria Assessment Reporting Communication Follow up Design Monitor Control CAPA Process Risk Management Audit Management Good Manufacturing Practices #GlobalEQMS
- 25. Proving the Value of EQMS – Metrics that Matter #GlobalEQMS
- 26. Understanding a Box Plot Box plots help to easily visualize the distribution of benchmark survey data #GlobalEQMS
- 27. PROCESS HEALTH Use of FMEA and ECO Supplier Audits Product Compliance CAPA Closure Customer Complaints Leading and Lagging KPIs PROCESS RESULTS Engineering Change Orders Supplier Defect Rate OEE On Time Shipments Successful NPI #GlobalEQMS
- 28. The Cost of Quality •CoQ = CoGQ + CoPQ •More than just failure costs •Measured as a share of revenue for benchmarking purposes •Can be thought of as an optimization problem – non linear •Is a major contributor to operating margin ©LNS Research 2013 #GlobalEQMS
- 29. The Cost of Poor Quality ©LNS Research 2013 •CoPQ = IFC + EXC, where: •IFC = Internal Failure Costs = Scrap Costs + Rework Costs •EFC = External Failure Costs = Returned Product Costs + Warranty Costs + Product Recall Costs #GlobalEQMS
- 30. The Cost of Good Quality ©LNS Research 2013 •CoGQ = AC + PC, where: •AC = Appraisal Costs = % of labor, software, and equipment costs focused on appraisal activities •PC = Prevention Costs = % of labor, software, and equipment costs focused on prevention activities #GlobalEQMS
- 31. The Cost of Poor Quality ©LNS Research 2013 •Measured as a % of revenue. #GlobalEQMS
- 32. The Cost of Good Quality ©LNS Research 2013 •Measured as a % of revenue. #GlobalEQMS
- 33. Overall Equipment Effectiveness (OEE) •Measures availability, efficiency, and quality (differs by company) •Must be put in context of supply chain #GlobalEQMS
- 34. Improving OEE •Establishing quality as a top executive priority improves median OEE by over 9% #GlobalEQMS
- 35. Improving OEE •Establishing real-time visibility of quality metrics in manufacturing improves median OEE by >7% #GlobalEQMS
- 36. Improving OEE •Establishing closed-loop processes to connect quality across the value chain improves median OEE by >9% #GlobalEQMS
- 37. Improving OEE •Implementing EQMS improves median OEE by >7% #GlobalEQMS
- 38. Complete and On-Time Deliveries •Percentage of products delivered on time with no errors or re-promise dates #GlobalEQMS
- 39. Improving On-Time Deliveries •Ability to identify risk factors across operations improves median OTD by >3% #GlobalEQMS
- 40. Improving On-Time Deliveries •Establishing closed-loop processes to connect quality across the value chain improves median OTD by >3% #GlobalEQMS
- 41. Improving On-Time Deliveries •Collecting quality data automatically through a web- based portal improves median OTD by >3% #GlobalEQMS
- 42. Successful New Product Introductions (NPI) •Measures the number of new products introduced hitting time, volume, and quality targets #GlobalEQMS
- 43. Improving New Product Introductions (NPI) •Establishing a formal risk management framework improves median successful NPIs by >32% #GlobalEQMS
- 44. Improving New Product Introductions (NPI) •The ability to identify risk factors across operations improves median successful NPIs by >24% #GlobalEQMS
- 45. Improving New Product Introductions (NPI) •Including suppliers in design for quality initiatives improves median successful NPIs by >9% #GlobalEQMS
- 46. Improving New Product Introductions (NPI) •Establishing real-time visibility of quality metrics in manufacturing improves median successful NPIs by >16% #GlobalEQMS
- 47. Percentage of Products in Compliance •Measures effectiveness of internal education programs/SOPs #GlobalEQMS
- 48. Improving Products in Compliance •Easily understood compliance processes improves median Products in Compliance by >5% #GlobalEQMS
- 49. Improving Products in Compliance •Establishing closed-loop processes to connect improves median Products in Compliance by >3% #GlobalEQMS
- 50. Improving Products in Compliance •Establishing a formal NC/CAPA process improves median Products in Compliance by >3% #GlobalEQMS
- 51. Improving Products in Compliance •Establishing a formal audit management process improves median Products in Compliance by >3% #GlobalEQMS
- 52. Recommendations for Success •Define the role of quality in your company’s strategic objectives. •Identify the relationships between leading and lagging KPIs across the value chain •Benchmark performance in KPIs and track progress •Create closed-loop quality management process with EQMS •Integrate quality business processes, like: CAPA, Audit Management, Risk Management, and more #GlobalEQMS
- 53. Thank You!! For More Information - Contact: Matthew Littlefield President and Principal Analyst matthew.littlefield@lnsresearch.com