The Missing Link in Quality 4.0: Building the Business Case for Executive Buy-In and Company Engagement
Quality 4.0 is the latest initiative for companies looking to improve operational efficiency and product quality through digital technology. Transforming quality management is essential to address the major challenges posed by changing global markets and disruptive technologies, particularly in regulated industries. However, recent surveys suggest that most companies are not prepared to take on the issues that Quality 4.0 attempts to solve. For example, one survey on the status of Quality 4.0, conducted by the Boston Consulting Group and partners ASQ and DGQ, found that only 16% of respondents claim that their company has started to implement Quality 4.0, and only 20% report that their company has begun planning for implementation. Similarly, another survey of 700 senior executives by LNS Research, reported that the median adoption rate for automation of all processes is just 23%, and many respondents’ companies have yet to begin. Clearly quality management improvement efforts are in the early stages, and much work remains to gain the all-important executive buy-in and widespread acceptance within regulated sectors.
Building a business case for embracing Quality 4.0 within the C-suite starts by clearly defining it. The term refers to the seismic shifts created by digital connectivity among people, technology, and data that are shaping all aspects of product manufacturing and commercialization. It follows three prior megatrends in how people live and how business operates, beginning with the industrial revolution, followed by production lines and mass marketing, and the use of electronics and control systems in manufacturing.
Now, Quality 4.0 is in the spotlight as competition is heating up around the globe, particularly in heavily regulated industries, such as consumer products, chemicals, and cosmetics.
To make Quality 4.0 a reality, companies need a quality management system (QMS) that can measure effectiveness and provide a measurable return on investment (ROI). ASQ, an organization dedicated to making quality an organizational imperative, defines a QMS as “a formalized system that documents processes, procedures, and responsibilities for achieving quality policies and objectives.”
ASQ also explains that a QMS helps coordinate and direct an organization’s activities for meeting customer and regulatory requirements while improving effectiveness and efficiency on a continuous basis. Helping to meet these goals are today’s new systems, which are cloud-based and offer a common platform that unifies disparate quality applications and accelerates digital transformation initiatives. With this design, organizations no longer need to support massive software requirements and hardware configurations as all stakeholders are working on the same platform. As part of its functionality, the QMS also standardizes industry applications and best practices.
The LNS survey provides insight into why buy-in from the C-suite is so essential for transitioning quality management from its current disjointed status into a valued company-wide function with executive support. For starters, the survey names fragmented quality systems and data sources within company siloes as the top operational challenge (38%), and too often, negative events have pushed companies to react by making system changes that only serve to create more inconsistency in how quality is measured. The resulting patchwork of systems cannot support seamless, end-to-end processes, but instead may result in disconnected points and consequential efficiency problems, compliance risks, and even product recalls.
This article describes how to build a convincing case for the C-suite, with a focus on elevating the status of quality within the organization, creating a greater culture of quality and improving how data generated from a QMS can help produce better quality products in regulated industries.
Building the Case
Convincing the C-suite to invest in new cloud-based digital technology is often an intense challenge and requires a shift in mindset that fosters acceptance of a quality-centered culture. This is a major change from the status quo, whereby top executives do not see the value of quality management throughout the enterprise and consider it a standalone departmental task. To start building the case, leaders of the quality management function are crucial advocates, and based on findings from the BCG survey, the key skills those leaders need are in change management, communication, and strategic and long-term planning.1
"The most important use cases involving cross-functional collaboration...are centralization of quality data, and end-to-end quality management system, and quality cost transparency. A company must combine data sets from the quality systems of multiple functions to generate insights and address critical pain points across functions." Source: Boston Consulting Group 2019
Using those skills to collaborate with the C-suite will help drive the transformation. Leaders can start with a strategy of building use cases for manufacturing; R&D; service and post-sales; procurement; logistics and sales; and cross-functional collaboration, which entail using a single platform across the organization. Research suggests that in companies where quality has become a priority among executives, they adopt nearly three times as many best practices than other companies.2
Building the case involves many steps, including:
- Elevating the business of quality
- Talking the language of the C-Suite
- Developing metrics to show business value of a unified QMS solution
Elevating the Business of Quality
The promise of digital transformation is improvement to brand reputation, time to market, and ROI. Achieving these objectives means encouraging decision makers to embrace Quality 4.0 as an integral part of a long-term strategy for producing reliable products, rather than dismissing it as a generator of short-term costs. The enterprise-wide focus offered by a QMS will help elevate the quality function beyond siloes, a step needed to attract the attention of the C-suite. A modern QMS provides visibility across the business for improved collaboration, it and enables proactive risk management, data-driven decision-making, and greater efficiency from less manual effort. The intent is to position quality as a responsibility embraced across the company rather than relegating it to a departmental task.
Talking the Language of the C-Suite
Translating why the quality function should become essential to a company’s, manufacturing, R&D, service and after sales, and other departments means talking in a language that resonates with the C-suite team. The CEO, CFO, CTO, and the chief manufacturing officer (CMO), for example, will each interpret the quality discussion through a different lens, and tapping into those varied points of view is pivotal to gaining acceptance. For example, explaining the QMS from the standpoint of how it improves operational quality, cost controls, and time to market while reducing product shortages might be meaningful for the CMO. And persuading the CTO require more value statements focused on how the system automates manual tasks and streamlines cross-functional business processes with a single platform.
Developing Metrics to Show Business Value of a Unified QMS solution
Quality metrics support and justify the business case. Rather than relying on metrics from individual departments, such as the number of complaints or notifications of regulatory non-compliance, metrics can and should do more. To be effective, they should generate data that impact the entire organization including revenue, costs, inventory, regulatory risks, meeting of timelines, and more. LNS states that 37% of the market identifies poor metrics as a major roadblock to accomplishing quality objectives.
The report also describes four types of metrics that are intrinsic to a quality approach, namely:
- Descriptive – explains “what happened” (The most traditional, and monitors known or suspected correlations)
- Diagnostic – determines quality process cycle times to identify bottlenecks
- Predictive – used in trend analysis
Prescriptive – the most mature metrics, as they can predict failure and address what should be done to modify the outcome. (Prescriptive metrics are used exclusively in the machine learning and artificial intelligence domain.)
When integrated into a QMS, these metrics are generated from workflows that move across the organization and to outside suppliers, while providing audit trails, an essential requirement in regulated industries. With this capability, the QMS becomes the single source of truth for data that document adherence to timelines, testing results versus expectations, and audit readiness.
Building a case for the C-suite on QMS adoption means detailing the value of metrics that measure quality outcomes in real-time or near real-time. This critical information becomes actionable, providing competitive edge by allowing decision makers to change course as needed in the any of the steps, from R&D through to manufacturing, procurement, and sales. Highlighting these capabilities is the foundation for compelling use cases that can be developed by quality leaders and presented to the C-suite as part of a company-wide effort to elevate the value of quality, and justify why meeting quality outcomes is important to the organization.