As manufacturers charge ahead in 2017, there is a renewed sense of optimism and excitement as they gear up for growth, investing in equipment, new manufacturing technologies such as 3D printing, and software to support digital transformation and new collaborative, connected factory floor competencies.
But ushering in these innovations and rising to the task of meeting new customer demands and expectations places new demands and expectations on quality programs. Manufacturers must understand the impact of these sweeping changes from a quality perspective, so they can make the necessary changes now to ensure their quality programs keep pace with this evolution.
Managing Increased Complexity and Expanding Quality Reach
We continue to see increased complexity in manufacturing supply chains and in the growing sophistication of products, increasing the scope and reach needed for quality initiatives. Manufacturing supply chains have gotten more complex as more manufacturing is taking place outside the four walls of the enterprise. For example, at last count, Apple now has more than 500 suppliers in China, Japan, and Taiwan and 60 in the United States.
From a finished product perspective, we’re seeing the creation of products to embody intelligence and be more self-aware—i.e. smart refrigerators, smart washers and dryers, even smart sneakers! Many of these products are being produced via joint partnerships of older manufacturers and newer companies with a predominantly digital DNA.
As more intelligence is “baked” into products, manufacturers need to boost capabilities for traceability around products and components including sensors and embedded software. Objectives will encompass the elimination of blind spots in internal quality processes and the eradication of waste that can impede velocity of new product introduction.
To this end, we believe 2017 will be the year of supplier quality management as organizations look to put more rigor into managing the performance of suppliers to get products to market faster without sacrificing quality. The focus will be 360-degree visibility that goes far beyond compliance; compliance will be merely a baseline. Compliance mandates are also fueled by the enhanced scrutiny of supplier quality from OEMs, and agile solutions capable of adapting to customer mandates quickly will also be critical to success in 2017.
Harnessing Data to Aid Quality in the IoT Era
Innovation and digital disruption on the manufacturing floor is also adding pressure from a quality perspective. Smart manufacturing—the use of IoT devices to improve the efficiency and productivity of manufacturing operations—is producing more real-time data than ever that can be harnessed to optimize operations. However, according to the McKinsey Global Institute, despite the immense potential factories have for value creation in the IoT era, an estimated 70% of data captured in manufacturing goes unused.
IoT data can help manufacturers assure product quality and even predict and prevent failures at the component level, the assembly level, and with shipped product to understand risk for product warranties. But analyzing this data and converting it to meaningful, actionable, real time insight still remains a sticking point for most manufacturers.
Supporting New Product Introduction and Sustainable Success
Since its launch in August 2016, Samsung’s rollout of the Galaxy Note 7 smartphone has been plagued by quality and safety issues stemming from its lithium-ion batteries overheating, and in some cases even catching fire. Industry experts estimate that as a result of this debacle, Samsung has lost more than $20 billion in market value and the company has said the recall will cost $5 billion or more.
Considering the significant financial and reputational impact resulting from this catastrophic product failure, is it any wonder that quality has quickly catapulted to the top of the C-suite agenda?
In 2017, we believe we will see manufacturers break through to map quality to competitive advantage as quality leaders better their bottom lines in a number of ways: through improved supplier quality and reduced supplier related risk, through vastly improved customer complaints processes leading to root cause insight, and through the eradication of costly problems. These activities will also drive improved operational visibility to support informed tactical and strategic decision making. This supports sustained velocity of new product introduction (NPI), lowers costs, and establishes a culture for long-term sustainable success.
Quality as a Pillar of Operational Excellence
Today’s modern manufacturing enterprise requires a modern proactive quality approach. We can no longer afford to treat quality as a cost center. Quality is not an “add on” process; it is a pillar of operational excellence. It must be built in and intrinsic to shop floor operations. To this end, ERP and quality management system (QMS) integration is quintessential to establishing a single source of truth. The seamless and dynamic exchange of data allows free flow of information up and down the organization, eliminating silos and blind spots.
In 2017, leaders will put an integrated ERP and QMS foundation in place to support holistic best-practice quality initiatives spanning the value chain. These capabilities will include: supplier quality and performance and management, advanced quality planning, FMEA and control plans, inspections, equipment maintenance and then all the core components of a QMS such as document management, training and competence, complaint management, NC/CAPA, and audits.
This foundational approach will also support the convergence of structured and unstructured data—from humans, machines, systems, and even enterprise social networking—to support better and more informed decisions. This foundation will provide support for proactive decisions so organizations can course correct as needed, and also provide valuable insights on trending and predictive analysis—enabling manufacturers to mitigate potential issues before they disrupt or endanger operations.
As well, this will allow organizations to capture issues and corrective actions taken, to support compliance requirements and to add to the “corporate memory,” empowering the organization to work better and smarter over time.
The holy grail of quality is 360-degree visibility, measurable, real-time performance and the ability to go far beyond compliance into the realm of true, value adding and sustained improvement initiatives. A single source of truth for quality provides the best possible platform for improvement. Organizations with operational excellence in mind continue to strive towards reinforcing the quality management pillar with streamlined, harmonized processes where ERP and QMS are tightly integrated. With this approach, risk management can be embedded into operations to address new compliance demands and also to drive better leadership commitment and accountability.