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The Audit ReportThe Newsletter of the ASQ Audit Division
May 2016, Issue 21
Newsletter EditorLance B. Coleman [email protected]
Division AdministratorShirl Furger 800-248-1946 x2147 [email protected]
In This Issue:Chair’s Message
Letter From the Editor
Why Executives Should Audit, by Paul Harding
Division News Bytes
Tips From the Trenches: Data Analysis, by Lance B. Coleman
Auditing Using Lean and Six Sigma Tools, by Scott Smith
Setting the Foundation for E-Auditing, by Shauna Wilson
Chair’s MessageWelcome everyone! This is my first “Message From the Chair” as the 2016–2017 Audit Division chair.
I want to sincerely and publicly thank Nancy Boudreau, the previous chair of the Audit Division, for all the help, support, and mentoring she has given me these past two years, and congratulate her on two outstanding and successful terms as Audit Division chair. Nancy will not be leaving us but will remain a part of the leadership team as the immedi-ate past chair so we can continue to benefit from her knowledge and experiences. I also want to thank our membership once again for making the 2015 Annual Audit Conference in Reno, NV, a huge success. Based on feedback, attendees learned a lot of new information and tools that they were able to take back to their own organizations and implement.
We have started the year off on a busy note. The Audit Division was excited to be a sponsor for BOSCON—a three-day event of learning, discovery, and networking opportunities! The Audit Division had five sessions during the conference. This year BOSCON focused on the opportunities that inno-vation presents to quality professionals in the 21st century. Expand the growth of quality globally by collaborating, innovating, and networking locally in a community forum dedicated to providing the most up-to-date information on changing standards (e.g., ISO 9001:2015), risk-based thinking, and the latest quality tools and techniques. The division has held two exceptional webinars so far this year that were free to our membership, and we will once again have our booth at WCQI. We will also be holding our Certified Quality Auditor (CQA) Refresher Course before WCQI, as well as before our own 25th Annual ASQ Audit Conference in October.
2016 is a year of leadership change for the Audit Division. Glenda West has been elected to the posi-tion of chair-elect and Billi Jo Johnson is our new secretary. Kevin Posey, whom many of you may know as our CQA Refresher Training instructor at our Audit Division conferences, is now also the new Audit Division treasurer, David Wu is our new mem-bership chair, Susanne Burke is our new financial audit chair and Vicky Geltinger is our new voice of the customer chair. Lance Coleman continues to be
our vice chair of communications, and John Mascaro, a longtime member leader and past chair of the Audit Division, will continue in his role as our marketing chair, as well as take on the new role of vice chair technical. The three new positions we created last year was something our leadership team felt was con-sidered a gap in our communications channel. I think we can all agree it is very important to communicate to members and potential members using the com-munication channels they use. To that end, our social media chair, Erin Lawrence, continues to keep us cur-rent on Facebook, Twitter, and LinkedIn. Be sure to follow us! Our digital media chair, Bryon Mattingly, continues to keep our website current with new mate-rial. Additionally, our webinar chair, Angelo Scangas, will continue to seek presenters for our quarterly webinar series that will be free for division members. If you would like to publish an article or participate in a webinar, please contact Lance. His contact informa-tion, as well as all of the member leaders’ information, can be found on the Audit Division website.
Other members of the 2016–2017 leadership team include Dennis Welch, logistics support, Cristina Welch, logistics support/photographer, Ted Williams, IT, and Quitman White, vice chair of arrangements.
We also have a group of regional counselors that acts as our “boots on the ground” when it comes to liaising with local sections. You can find the entire team on the organization chart published in this newsletter or by going to the Audit Division website. Many people have already asked when and where we are having our Annual Audit Conference for 2016. No need to wonder any longer. Our Annual ASQ Audit Conference will be held in Memphis, TN, home of legendary Elvis Presley, on Thursday, October 20, and Friday, October 21, with preconference tutorials October 17 – 19.
The entire Audit Division team looks forward to see-ing everyone at WCQI this year in Milwaukee, WI. Please be sure to stop by our booth for the latest and greatest information about what’s happening in the world of auditing. We will also have information about our conference in Memphis, TN, and will be giving away a free registration. Just stop by our booth and drop your business card in the fish bowl.
Looking forward to a great year ahead!
Cindy Bonafede 2016–2017 Audit Division Chair
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Audit Division VisionTo be the pre-eminent body for providing expertise on auditing and defining expectations for the audit profession.
Audit Division MissionTo develop the expecta-tions of the audit profession and auditors. To promote to stakeholders auditing as a management tool to achieve continuous improvement and to increase customer satisfaction.
The Audit Report is published four times a year as a chief information resource for members and friends of ASQ’s Audit Division.Information about the ASQ Audit Division may also be found at asq.org/audit.Reminder: All ASQ Audit Division endorsed communication and/or use of the Audit Division’s logo must be approved by the Audit Division chair.
Newsletter Publishing Guidelines
Authors Wanted!The Audit Report staff is looking for authors. Share your expertise with other audit profes-sionals while adding to your own credentials. Writing for the newsletter also earns CEUs to submit with your certification journal. If interested, please email submittals to [email protected]. Guidelines are below.
Main Factors1. Technical Merit
Includes correct factsRelevant to our mission
2. No selling of services3. Nothing offensive4. Original content only. Nothing previously
published or presented, without prior approv-al by review committee.
Additional Factors1. Not too similar to something recently done2. Desired subject matter – how timely is material?3. Well written (not requiring extensive editing)4. Needed length
CategoriesNewsletter submittals should fit into one of the following categories:• Tips From the Trenches – tools, tips, and
techniques for auditors• Faces in Auditing – new, up-and-coming
professionals of note in the field of auditing• Articles, case studies, or book reviews• News Bytes – event coverage, announcements,
and other audit profession-related news
LengthDesired length for tips, book reviews, articles, and case studies is 400 to 800 words. Tips and book reviews would be in the 400- to 600-word range, articles anywhere from 400 to 800 words and case studies, 500-plus words. If a submittal goes beyond 800 words, then we may look at breaking it into more than one part.
Review and Selection ProcessAll submitted works will be reviewed by at least two members of the review committee, which consists of the newsletter editor and four other members. The subject for a book review should be approved in advance by either two members of the review committee or by the newsletter edi-tor. The newsletter editor will determine when accepted articles will be published. Submittal of an article does not guarantee publication.
OtherAll articles containing photos should be submitted with the photo(s) as a separate jpeg attachment.
Calendar/Main Theme(s)Submittals relating to the main theme and from division members receive priority.March 1 Issue: Submit content by January 15 –
Preview of ASQ WCQI and open topicsJune 1 Issue: Submit content by April 15 –
Recap of ASQ’s World Conference and open topics
September 1 Issue: Submit content by July 15 – training, certification, back-to-school, and Audit Conference
December 15 Issue: Submit content by October 31 – Conference recap, year-end reflection, and looking ahead to next year
Volunteers Wanted!Help shape The Audit Report by joining our Newsletter Committee. We are looking for two more volunteers to participate in our Newsletter Committee. Please email your résumé to [email protected] if you are interested and want more information. For other volunteer opportunities within the Audit Division, contact Lawrence Mossman at [email protected].
Letter From the EditorHello Everyone,As we move further into 2016, I am excited as your leadership team con-tinues planning for our 25th Annual ASQ Audit Conference taking place in Memphis, TN, at the historic Peabody Hotel, October 20 – 21. We will soon be sharing some new and exciting aspects to our conference program this year, which will include increased participation from other divisions.
The featured article in this issue is “Why Executives Should Audit” by Paul Harding, the managing director of the South African Quality Institute. Tips From the Trenches, written by myself, will explain “Data Analysis” from an auditor’s perspective. Also, be sure to read “Auditing Using Lean and Six Sigma Tools” by Scott Smith and “Setting the Foundation for E-Auditing” by Shauna Wilson. The call-for-papers deadline for this year’s 2016 conference has been extended until May 31; visit http://asqauditconference.org/2016_ASQAuditConference-CallForPapers.pdf. For those of you who have already submitted proposals, they are being reviewed and you should hear back by May 1.Thanks as always for your support in reading our newsletter. I hope you continue to benefit from it and appreciate any feedback you care to give. Please stop by our booth at the World Conference on Quality and Improvement to meet the Audit Division leadership team; let us know how we are doing or if there are any topics you would like us to cover in the newsletter. Hope to see you at WCQI and our 25th Annual Audit Conference!
Warm regards and safe travels,Lance B. Coleman ASQ Audit Division Newsletter Editor [email protected]
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There is a tradi-tional school of thought, particularly in academia, that
says strategy and operations should be kept apart. My own work experience, particularly working with Japanese orga-nizations, shows this not to be the case.In order to explain this further, we need to refer to Figure 1. This model was cre-ated by Dr. Barry Witcher of the business school of the University of East Anglia. Dr. Witcher specializes in the philoso-phy of Japanese strategic management deployment, referred to as hoshin kanri or policy deployment. The model in Figure 1 shows that the important elements to look at with cas-cading objectives are: • Focus• Alignment • Integration• Review
This is referred to as the FAIR model that is part of the Japanese hoshin kanri approach. The FAIR model provides a system intrinsic to hoshin kanri for cascading strategic objectives across organizational structures. Once the four elements are established, strategic objec-tives need to be aligned across various functions so there are no winners and losers, just winners. Then they need to be integrated into the daily management operations of the organization.
Using the ISO 9001 StandardThe ISO 9001:2008 standard promoted a set of requirements that managed the organization’s activities relative to quality based on the plan-do-check-act (PDCA) cycle. In the model in Figure 1, this is referred to as daily management. Many executives saw this as a quality assurance activity and that it was nothing to do with strategy or meeting corporate objectives. However, on examination of the model found in Figure 1, we can see that formalized daily management
activities in terms of processes either pro-duce outcomes that are acceptable or not acceptable to the support of the strategic plan. Small things that go wrong manifest into big things going wrong that could eventually contribute to the failure to meet corporate objectives. The recently released ISO 9001:2015 requirements standard now puts a different complexion on the responsibilities of top manage-ment. ISO 9001:2015 now requires that leaders link the business processes to the context of the organization and its strate-gic direction. It also now holds leadership accountable for the success of the quality management system in terms of activi-ties prioritization and resource allocation leading to the organization achieving its quality objectives.
Internal AuditThe activity of auditing is generally accepted as either a financial audit, vali-dating the accounts; or a management system audit, validating the quality, environmental, or health and safety management system. This task is usually delegated to a full-time internal auditor conducting a first-party audit or a certi-fication body conducting a third-party audit. The challenge for auditors now will be in the interpretation of the 2015 standard covering the organization’s top management and their leadership role now specified in the new standard.
Top Executive Diagnosis (TED) or Top ShindanThe Japanese have developed another lesser known activity referred to as top shindan, roughly translated as top executive diagnosis. This activity is con-ducted by senior executives of Japanese organizations who go into all areas of the organization to review and diag-nose performance against set standards. Now this may take place at divisional top management level, shop floor, or office level. The purpose is not to fill in a check list as is customary with an
Why Executives Should Auditby Paul Harding, Managing Director, South African Quality Institute (SAQI) [email protected]
Continued on page 4
DailyWeekly
Monthly
Quarterly
Longer-termbusinessunit strategy
Annual hoshins,other objectives
Developmentand deploymentof objectives
Dailymanagement
Annualbusiness audit
Act Plan
DoCheck
Corporate purpose,business model, goals
Longer-term corporateobjectives, strategy
Annual
Focus
Alignment
Integration
Review
Catchball
PDCA
Business excellence
Multi-levelchecks andreview
Figure 1 A System for Cascading Strategic Objectives and Executive Review Taken From the University of East Anglia
Courtesy Dr. Barry Witcher.
The Audit Report ■ May 2016
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ISO 9001 audit but rather come to a judgment on whether an activity is con-tributing to the organization’s strategic objectives or not. So you will often find executives attending daily or weekly quality or production feedback meetings to get a feel for what is happening in the lower echelons of the organization.This is not a once or twice a year activity as indicated in a need for management review. Neither is it just a show of “presence” previously described as “management by walking around.” Some executives I have worked with will par-ticipate in as many as 50 top shindan audits a year in establishing the true performance of their organizations. Once a quarter they can then bring all the divi-sions together and discuss trends needing interventions to get the organization back on track if necessary. No surprises then jump out of the woodwork at the end of the annual improvement cycle.
Business Excellence ModelsYou can see at the bottom of the model in Figure 1 a representation of a business excellence model. This will interest most executives, but the information collected to make a judgment is also often gathered by an internal specialist or a third-party
independent assessor. Again, some peo-ple do not associate business excellence models with ISO 9001 requirements. They see them as two totally sepa-rate activities, although this should change with the introduction of the new requirements of the ISO 9001:2015 requirements standard.
A Unique ExampleSome years ago I went on a three-week training program to a top international automotive assembly organization in the United Kingdom. I asked my hosts if I could attend one of their internal audit programs. The internal audit I attended was led by the group’s financial director. I expected to see an audit of the finance department. I was totally wrong. The audit actually took place in the body shop assembly area with welding machines shooting sparks and other assembly activ-ities taking place. The financial director understood the engineering drawing pre-sented to him and also the process sheet associated with the engineering drawing. During the audit, he was able to pick up on a nonconformance relating to the work being carried out by the operator. When I subsequently asked the CEO why he had taken this approach to appoint
such a unique auditor, he replied, “If the financial director doesn’t understand how we assemble vehicles, how can he make sound strategic financial decisions relat-ing to our core business?”
ConclusionExecutives should show leadership traits and become more involved with daily management activities in support of their strategies. In fact, if we carefully read the new requirements for leadership that we find in the ISO 9001:2015 require-ments standard and also the definitions of leadership found in ISO 9000:2015, this is now a mandatory requirement. The real challenge is whether the third-party auditors will have the courage to mean-ingfully assess this new requirement.
About the author: Paul Harding holds a mas-ter’s degree in industrial administration from the University of Cape Town in South Africa. He retired as head of corporate quality from Nissan, one of South Africa’s leading automotive assem-bly organizations, before being appointed as the managing director of the South African Quality Institute. He is the African representative on ASQ’s Quality Management Division Technical Committee for Organizational Excellence and a member of numerous other technical committees with the South African Bureau of Standards.
DIVISION NEWS BYTESU.S. TAGThe United States/ASQ has been named the secretariat for the international Project Committee (PC) 302 Guidelines for Auditing Management Standards. This is a newly formed committee that will revise ISO 19011:2011 Guidelines for Auditing Management Systems. This international standard provides guidance on auditing management systems, includ-ing the principles of auditing, managing an audit program, and conducting management system audits, as well as guid-ance on the evaluation of competence of individuals involved in the audit process, including the person managing the audit program, auditors, and audit teams. ASQ also applied to be administrator for the U.S. Technical Advisory Group to ISO/PC 302 and is reaching out again to Audit Division members in the hope that you will consider becoming involved in this committee. Knowledge of the development of standards is not required, rather your techni-cal knowledge of auditing management system standards is. The ASQ Standards Team—Jennifer Admussen and Julie Sharp—will administer the committee and guide you through the standards development process. The time commitment is
two years—the agreed-upon timeline with ISO. Your respon-sibilities would include voting on drafts of the standards, commenting of drafts of the standards, and attending meet-ings. ASQ administers four other TAGs and they meet in person (with a WebEx option) every six months. As a mem-ber you will have access to a site for voting, which will also include drafts of the standards and ISO documents.If you are a resident of the United States, you can apply to be a member of TAG 302. Please contact Julie and Jennifer at [email protected] for an application to TAG 302. If you live outside the United States and would like to be involved, please contact us and we will give you the contact information for the ISO member body in your country.The website for our 25th Annual ASQ Audit Conference is now up—www.asqauditconference.com. Visit the site for the latest conference updates, as we will be updating the site regularly now through the end of the conference. The submittal deadline for concurrent session proposals is May 31. Share your exper-tise with your peers while gaining presentation experience and earning valuable RUs. Visit http://asqauditconference.org/2016_ASQAuditConference-CallForPapers.pdf for the call for papers.
The Audit Report ■ May 2016
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TIPS FROM THE TRENCHES: Data Analysisby Lance B. Coleman
Excerpted from Advanced Quality Auditing: An Auditor’s Review of Risk Management, Lean Improvement, and Data Analysis
At the start of my career one of my men-tors shared this bit of wisdom: Once is an incident, twice may be coincidence, but three times starts to look like a trend. This advice still rings true whether you are talking about audit evidence that has been collected or data plotted on a control chart. Three data points—or even three out of four—in one direction over time is something that may bear watching or reporting to the process owner. There are many other variables to consider, but as a rule of thumb this scenario at the very least should precipitate a “second look”
or review of subsequent data points. One of the early pioneers in statistical pro-cess control (SPC) using control charts, Westinghouse identified certain data patterns that were indicative of negative trends requiring investigation and these later became known as the Westinghouse Rules. A partial listing is below.
• Any single data point that falls outside three standard deviations from the process centerline
• Two out of three consecutive points fall between two and three standard deviations from the process centerline
• Four out of five consecutive points fall between one and three standard deviations from the process centerline
• Eight consecutive points fall on the same side of the centerline
Auditors seeing trends in data similar to that seen in Figures 2 and 3 should inquire as to whether the trend was inves-tigated. Also, they should consider under which circumstances would process data cause an investigation to be launched. Below are sample control charts showing different scenarios.To conclude, auditors do not need to be “statistical gurus” in order to audit and analyze process data. Auditors simply must be able to: • Read and understand various types of
charts and graphs• Recognize trends that should be
investigatedThey must also be able to question process owners about controls and response plans in place when a process goes either out of specification or out of control, with the understanding that lack of such controls or response plans is a significant weakness in the quality management system.
About the Author: Lance B. Coleman is the quality audit program manager for Ultradent Products Inc. in Salt Lake City, UT, and has more than 20 years of leadership experi-ence in the areas of quality engineering, lean implementation, quality, and risk manage-ment in the medical device, aerospace, and other regulated industries. He has a degree in electrical engineering technology from the Southern Polytechnical University in Marietta, GA, and is an ASQ Senior member. Coleman is an ASQ Certified Quality Engineer (CQE), Six Sigma Green Belt (CSSGB), Quality Auditor (CQA), and Biomedical Auditor (CBA). He is an Exemplar Global Principle QMS Auditor. Coleman is the author of Advanced Quality Auditing: An Auditor’s Review of Risk Management, Lean Improvement, and Data Analysis (Quality Press 2015) and The Customer-Driven Organization: Employing the Kano Model (Productivity Press 2014), as well as many articles on risk management, lean, and quality. Coleman is also an instructor for the ASQ Certified Quality Auditor Preparatory Course. He has presented, trained, and consult-ed throughout the United States and abroad.
Figure 1 Ideal Centered Graph
Figure 2 Downward Trend
Figure 3 Shift + Increased Variation
02468
10121416
A B C D E F G H I J K L
Data valuesUpper spec limitLower spec limitNominal value
Data valuesUpper spec limitLower spec limitNominal value
Series 1
02468
10121416
2.9470
2.9490
2.9500
2.9500
2.9510
2.9520
2.9530
A B C D E F G H I J K L
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
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Auditing Using Lean and Six Sigma Toolsby Scott Smith
At the 24th ASQ Audit Conference held in Reno, NV, in late October 2015, I presented on the topic of utilizing Lean Six Sigma tools to improve audit planning, implementation, cor-rective and preventive action, and follow-up activities. Both auditing and process improvement are important to me because they led my way into the quality profession I love. The rest of this article will delve into the details of this presentation by explaining the tools that can be used in each phase of the audit by the auditor, quality, and management. But first, here is a little bit of history about Lean Six Sigma for those of you who are not familiar with this discipline. Lean is based on the Toyota Production System (TPS). But the foundation was laid by Henry Ford and Frederick Taylor. Taylor looked at how the indi-vidual worker functioned through his time studies and was a proponent of standardized work, which is a staple of lean production.1 Henry Ford took Taylor’s standardized work and Eli Whitney’s use of interchangeable parts to build a comprehensive production system. He lined up processing machines wherever possible and delivered parts as needed to the next successive processing step.2 Post WWII, Japan embraced the previous work of Taylor and Ford as well as W. Edwards Deming and Joseph Juran as part of the rebuilding effort and looked to overcome some of the shortcomings of the previous industrial production systems. For instance, Ford’s system was good at producing a single product efficiently, but changeovers were difficult. Toyota began working on quick changeovers in the 1960s and refined the just-in-time concept of delivering parts to successive opera-tions as needed, thus decreasing the amount of inventory that needed to be held. Under the TPS, inventory is viewed as one of the seven forms of muda (waste). This is because inventory can become obsolete, ties up resources that could be deployed else-where, and takes time to move and can become damaged during transportation. Some of the tenants of lean include continuous improvement (striving to deliver perfection to the customer) and respect for people (all stakeholders including employees, the environment, and society as a whole).In the late 1980s and early 1990s, companies such as Motorola and Allied Signal began working on reducing variation in their production processes. This concept was fully popularized by Jack Welch at GE in the late 1990s. Whereas lean is focused on eliminating waste, Six Sigma is focused on reducing variation. These two disciplines are very powerful when combined, and they can be incorporated into making your quality auditing more effective. The following paragraphs will describe how you can incorporate some of the tools and concepts into your organiza-tion’s quality auditing system.
1 http://www.strategosinc.com/just_in_time.htm2 http://www.lean.org/WhatsLean/History.cfm
The first, and in my opinion, most important phase of any inter-nal quality audit is the planning stage including the desk audit. In order to perform an effective audit, the auditor must determine the requirements of the system, including the inputs and the pro-cesses that transform these inputs into the outputs desired by the customer. The checklist is a good tool to organize thoughts in planning what needs to be examined during the audit:
The define, measure, analyze, improve, control (DMAIC) pro-cess from Six Sigma or the plan-do-study-act (PDSA) process from lean can be very effective during all the phases of the audit. For this article, I will break down how the PDSA process can be utilized:Plan: Define audit objectives and develop plan to achieve objectivesDo: Execute the audit planStudy: Did your audit achieve the desired results?Act: Analyze steps in the process, and look for areas to continually improveOther helpful tools that can be used during the planning or execution phase are tools such as SIPOC or value stream map-ping. Value stream mapping is a great tool to recognize the flow of production, identify critical process steps, and identify waste within the system. The map includes the flow of communication, resources, and products between departments. It also determines which steps in the process are value added (from the customer’s perspective), nonvalue added, and business necessary. It also shows where inventory is building up (remember inventory is a waste). The tool can be utilized during the audit and also after the audit when trying to improve.The SIPOC diagram is a scaled-down macro view version of the value stream map where you focus on the suppliers, input, pro-cesses, output, and customers. Some people call this the COPIS diagram because everything starts with customer demand in a lean management system.3
3 http://www.100pceffectivetraining.com/blog/need-sipoc-process-map/
Auditor
Area to be examined
Resource(s) ISO standard reference
Process steps
Verification method
Evidence/Findings
Comments
Continued on page 7
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During the execution phase, it is helpful to look for the eight wastes. Note, I mentioned the seven traditional wastes (muda) from TPS earlier. Lean has added an eighth waste for non-utilized human potential. This is not only an important addition that mirrors muri, which is overburden, another form of tradi-tional Japanese waste, but it also allows us to describe the eight wastes by the mnemonic DOWNTIME: defects, overproduction, waiting, non-utilized human potential, transportation, inventory, motion, extra processing. Let me further define these concepts for clarity. Defects is self-explanatory. Overproduction refers to producing more than the customer (final or next process) requires. Overproduction is insidious because it leads to all the other wastes! Waiting refers to downtime waiting for resources. Non-utilized human potential means that people are performing nonvalue-added tasks or are performing tasks that don’t utilize their full range of skills. Remember, one of the tenets of lean is respect for people. Transportation refers to the movement of materials (raw, work-in-process, or finished goods). Inventory is self-explanatory. Motion refers to unnecessary human movement
(think ergonomics). Extra processing means rework or any other processing that is not beneficial to the customer. Also, note while we have been talking about lean and waste from a manufacturing stand-point, these apply to service and administrative processes as well. Everything is a pro-cess that can be improved using these concepts. Toyota deploys these tools throughout every aspect of their facilities.Statistical process control (SPC) is another tool from Six Sigma that can be uti-lized when investigating a process. SPC is a statistical technique developed at the Bell Laboratories in the 1920s. You can analyze a control chart of production utilizing the Western Electric rules to see if the variation is due to common causes (noise) or special condi-tions. Special conditions need to be investigated. Noise can only be reduced by reengineer-ing the entire process. This is an important distinction. A lot of variation is caused by trying to reduce noise. This is known as “tampering” and actually causes more variation to the point where a defective product may be produced.
Other Lean Six Sigma tools that can be utilized after the audit for corrective and preventive action include pareto, 5 Whys, fishbone diagram, quick changeover, heijunka, and poka-yoke. Pareto is a means of identifying the 20 percent of causes that lead to 80 percent of the unproductivity. Management can focus on improving the critical few causes that create the most defects. 5 Whys is a method to determine the true root cause. It entails asking “why” until you cannot dig another layer deeper. It can be used in conjunction with the Ishikawa diagram, which I will discuss next. A good check to ensure that you have found the true root cause is to ask “so what” questions about the solution, improvement, waste reduction, defect elimination, or other strat-egy that could resolve the problem.4 The fishbone (Ishikawa) diagram aids in breaking down and categorizing potential causes of defects (see figure on next page).
4 http://www.isixsigma.com/industries/government-non-profit/going-beyond-5-whys/
ControlOrders
SupplierOrders
Customer
Information
Identify thecustomer tobe invoiced
Check thecustomercontract
Writeinvoice
Send aclient
invoice
Print invoiceand address
labelPost invoice
Shipping
Information Information
Shipschedule
II I I
Customer demandpieces per month(Takt time minutes)
Total cycle time =Total VA cycle time =Total NVA cycle time =Lead time =WIP time =Total distance =
Suppliers• Accounts department• Sales• Contracts• Stationery suppliers• Post of�ce
Inputs• Payment system end
of month report• Customer contracts
information• Pro-Forma Invoice• Customer contact
information• Tax rules• Address labels• Paper• Stamps and envelopes
Outputs• Invoice• Updated payment system• Updated customer contract
on system• Debtor list update• Updated sales data
Customers• Customer• Sales• Accounts
Process
SIPOC Example: Sending an Invoice
Continued on page 8
The Audit Report ■ May 2016
8
Quick changeover was developed at Toyota to quickly switch from production of one part to another. It entails looking at each process step and separating internal and external steps, switching as many internal to external, and then reducing time for both internal and external steps and mechanizing where possible. Note, production must be halted to make an internal adjustment, so you want to minimize or eliminate these steps. Failure mode and effects analysis (FMEA) is a risk mitigation tool that involves breaking down process steps and evaluat-ing each for severity, occurrence, and detection in order to calculate a risk priority number (RPN). The process step with the highest RPN is the step at the most risk and needs to be addressed first. Let me further explain the meaning of severity, occurrence, and detection to give you a better understanding of how this tool works. A group of experts evaluates potential risks for each of these criteria, normally assigning a number from 1-10. For severity, a 1 means that it would have no impact on the customer whereas a 10 means it would be dangerous and catastrophic if not eliminated. For occurrence, a 1 means it would never occur whereas a 10 means that it would occur constantly if the risk is not addressed. For detection, a 1 means it would always be caught, and a 10 means it would never be caught. Therefore, the highest risk score of 1,000 means a
catastrophic issue that occurs constantly and is not caught! From a risk management standpoint, you want to address the items with the highest RPN first. Heijunka translates to load leveling. In order to aid constant flow, it is important to level the load across process steps and eliminate overburden on some employees and wasteful waiting on the part of other employees. The value stream map described earlier is a good input into the heijunka process. Finally, poka-yoke means mistake proofing. This entails elim-inating problems where practical, or increasing early detection wherever elimination is impractical. A good example of poka-yoke from real life is the safety plug, where one prong is larger than the other such that the plug can only be inserted in the socket in the correct direction. Another example is a sign hanging
at the same height as a bridge positioned before the entrance to the underpass that says, “If you hit this sign, then you will hit that bridge.”The audit process itself can be improved. You need to ensure you close out the PDSA cycle. Specifically, did the audit achieve the desired results? If so, then create standard work to ensure the pro-cess is repeatable, and more importantly, trainable to other internal auditors. If you did not achieve the desired results, then develop countermeasures to ensure the issues that crept into the audit pro-cess do not recur or can be resolved quickly and easily. Plus, you can use any of the tools we previously discussed to examine and refine your process: Remember, lean is geared toward continu-ously improving processes, and auditing is a process. Mapping and poka-yoke are easy ways to start improving the process.In conclusion, I would like to leave you with some parting thoughts: 1. Both lean management system and ISO 9001 deal with
improving processes and maintaining quality. 2. Use the Lean Six Sigma tools to empower your employees to
solve their own issues and improve their own circumstances. 3. Remember lean can be applied in any area or any type
of business.4. Utilize the audit to identify opportunities for improvement.
Mother nature Measurement Machines
Method Manpower Material
Defect/Deviation
Cause 1
Cause 2
Cause 3
The Audit Report ■ May 2016
9
Setting the Foundation for E-Auditingby Shauna Wilson
How many times has a supplier audit been canceled due to budget cuts, weather-related travel, or worse, sup-ply chain aspects not captured because remote locations were excluded from the audit scope? Yet businesses continue to outsource service, labor, research and development, and manufacturing without clear means to verify performance, or be notified of part changes or process modi-fications. Remote auditing, or e-auditing, is the solution to this growing global con-cern, and is changing expectations. In this article, I’ll introduce five foundational steps to prepare for going virtual with communication and e-auditing.To be clear, e-auditing is not a desk audit, or email, or searching through a company’s records unattended. An e-audit is a systematic, independent, and documented process for obtaining sufficient audit evidence through elec-tronic means. Audit evidence is gathered remotely to determine if the audit criteria are fulfilled. Similar to standard audit requirements, a defined audit process is followed. The e-auditor has passed asso-ciated ISO standard tests, is qualified to conduct an e-audit, and understands how to facilitate virtual communication and operate collaborative software.Many forces are driving change in audit-ing. These include emerging global supply chains; increased ISO standards to mitigate economic, social, and envi-ronmental issues; and pressure to reduce company expenses, specifically travel costs for audits at remote locations. Companies struggle to find an acceptable solution to meet regulatory requirements to certify quality systems. Desperate companies cut auditing budgets and venture out on their own. Because they have experience with Skype talking to family members, they conduct a virtual audit that cannot be validated. A trial and error approach in conducting virtual audits leads to distrust in the validity of objective data collected remotely, thus becoming a self-fulfilling prophesy. To
break that cycle (figure 1) and prove the validity of an audit, e-audit training, prac-tice, and adequate technology are needed.Many auditors claim difficulty in trusting others from a computer terminal. They are unable to resolve technical issues or understand complex processes often found in audits. If an auditor doesn’t know how to build trust and solve com-plex problems online, it illustrates the auditor’s inexperience to facilitate and participate in virtual meetings. Video conferencing and collaborative software offer affordable technology to collabo-rate, according to leading virtual team
specialists. With e-auditing, it’s possible to build consensus, audit manufacturing lines, and solve problems. Building trust and solving problems becomes less of a concern as team members gain virtual experience. In the following Figure 2, technology is matched with the ideal type of collaboration. For example, simple technology like email is commonly used to share information, ideas, and viewpoints. For solving problems, col-laborative software is a good match and sometimes a better tool than meeting face to face.
Continued on page 10
Figure 2 Matching Technology to Type of Collaboration, The Handbook of High-Performance Virtual Teams
Degree of Collaboration (technology)
Low High
Simple EmailTeam bulletin boards
Instant messagingTeleconference
Complex VideoconferenceCollaborative software
To Tasks (collaboration)
Low High
Simple Sharing information, ideas, and viewpointsPlanning, brainstormingRecognizing others and socializing
Evaluating options
Complex Building consensus, product development, solving problems, making decisions
Face to Face Resolving conflicts, familiarizing, socializing
Sustains thedisbelief andquestions the
validity of e-auditing
Nonacceptance byan authority �gure
Facilitation andsuccess in virtual
team goals
Conductinge-audits; obtainingobjective evidence
e-auditing trainingand mentoring
Training infacilitating virtual
meetings
Desire to keep audits:“Boots on the Ground”
Figure 1 Self-Fulfilling Prophecy Diagram
The Audit Report ■ May 2016
10
Three key components are claimed by successful virtual teams. These include cooperation by remote members, secure technology, and solid structures, such as virtual meeting training, defined commu-nication processes, and clear management support. ANAB released “Computer Assisted Auditing Techniques” outlining specific structural areas to be addressed when a CB conducts an e-audit. Here are five beginning steps:1. Create a management plan detail-
ing agreements between interested parties, including audit schedules, auditor training needs and audit methods, practicing risk-based think-ing, and defining policies in supply chain management.
2. Set Internet security standards and policies for use of password- protected Wi-Fi, reputable collaborative meet-ing rooms, and virus protection.
3. Adopt hybrid audit models to broaden validated auditing meth-ods and successfully conduct
audits searching for compliance, performance results, and continual improvement that ensure the audit will move forward.
4. An auditor training plan begins with a gap assessment looking for: experience in facilitating virtual meetings, the ability to use the func-tions in collaborative software, and understanding of audit processes and ISO standards. Advanced cer-tifications like (CQA, CQIA, CPA) provide additional knowledge to review organizational performance and continual improvement.
5. Get started! Practice an active role in your next virtual meeting. Conduct staff meetings online. Continual improvement teams give members a safe space to learn to use collabora-tion technology in larger dimensions. In figure 3, a simple daisy diagram template pasted on a collaborative whiteboard was used to brainstorm ideas for conducting online meetings.
Figure 3 Daisy Diagram Brainstorming Online Meetings, “Successful Online Meetings”
Moving to or improving virtual meet-ings and conducting e-audits offers companies cost savings from reduced travel, improved access to remote information, and auditing efficiencies. Companies that are co-located can still benefit from practicing virtual meetings to enhance customer communication and e-auditing external providers. The release of ISO 9001:2015 as a quality standard, meant to be a framework sus-taining companies for the next 10 years, is a bold step to support innovation and standardization. It is time to think big-ger, outside our norm, to grasp the full opportunity the new ISO 9001:2015 has to offer. When we think in these terms, our internal audits need to perform greater functions. We need auditing systems that will provide better results; e-auditing is one step toward that goal.
ReferencesCianfrani, Charles A., and West, John E., ISO 9001:2005 Explained Forth Edition, 2015, ASQ Quality Press, Milwaukee, WI.
Nemiro, Jill, The Handbook of High-Performance Virtual Teams: A Toolkit for Collaborating Across Boundaries, 2008, Jossey-Bass, San Francisco, CA.
Russell J.P., and Wilson, Shauna, eAuditing Fundamentals: Virtual Communication and Remote Auditing, 2013, ASQ Quality Press, Milwaukee, WI.
Wilson, Shauna, “Successful Online Meetings,” 2009, Infoline, ASTD, Alexandria, VA.
The Audit Report ■ May 2016
11
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