Customers, Customer Expectations, Processes and Audits

An insightful look at 5.2 Customer Focus, 7.0 Product Realization, and 8.2.2 Internal Audits, including a discussion of how these ISO/TS 16949:2009 elements are linked via customer expectations and process measurables. By Chad Kymal With contributions from Joseph Macko

ISO/TS 16949:2009's three elements of 5.2 Customer Focus, 7.0 Product Realization and 8.2.2 Internal Audits (customer focused process audits) are significant departures from QS-9000. In fact, 5.2 Customer Focus is not an explicit part of QS-9000. Furthermore, though many of the requirements or "shalls" in 7.0 Product Realization are present in QS-9000, the significant change in ISO/TS 16949:2009 is the process approach. 7.0 Product Realization is the implementation of the processes to make the product. This article will show that 5.2 Customer Focus and 7.0 Product Realization are linked via customer expectations and process measurables. The article also shows how the customer focused process audits of 8.2.2 support customer satisfaction.

Customer Focus

How do we check if our system meets ISO/TS 16949:2009? ISO/TS 16949:2009 suggests measurement and monitoring of customer satisfaction, internal audits, and analysis of processes and products. Internal audits of the system, processes and products have become an important first line of defense for most organizations. For this defense to be successful, trained internal auditors with the sanction from top management need to carry out audits. Without a doubt, the continuous improvement of the Business Management System (BMS) is greatly aided when trained auditors carry out effective internal audits.

Whatever way you look at QS-9000 or TS 16949:1999, neither has the explicit customer focus of ISO/TS 16949:2009. ISO/TS 16949:2009, 5.2 Customer Focus, states, "Top management shall ensure that customer requirements are determined and are met with the aim of enhancing customer satisfaction." The Quality Management System (QMS) begins with the customer. It requires that organizations understand customer needs and expectations (ie. "Requirements" [ISO 9004:2002]) and fulfill them to achieve customer satisfaction.

Organizations gather information from their customers through many different departments, including sales, engineering, quality and management. Many contact points between the customer and the organization are made through these conduits. Companies need to identify customer expectations and analyze them to strategize how they can fulfill them. Customer expectations and requirements need to be ascertained for the purposes of product quality, delivery, lead time, communication, etc. Ideally, these expectations should not only be met, but also need to be surpassed to improve customer satisfaction. It might be helpful to use the technique of gathering, grouping and ranking expectations. Objectives are first established for the customer expectations that are ranked most important to the customer (see Figure 1 for an example of establishing objectives for on-time delivery).

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Figure 1

The example customer focus process presented in Figure 1 is an effective way to satisfy ISO/TS 16949:2009 requirements. Does your current system accomplish this? What process are you using? The process illustrated in Figure 1 shows that Customer Need and Expectation (Clause 5.2, Management Responsibility - Customer Focus) are driving the Goal and Objective (Clause 5.4, Planning) for the organization. The Goal and Objective are then translated into what are called "result measurables" -- metrics used in management review.

Key processes that impact goals and objectives are identified and tracked through process measurables. The key processes need to be improved to impact the goals and objectives. The process measurables satisfy the requirement of measuring the processes as described in Clause 4.1e.

An example that illustrates the customer focus process is a typical customer expectation of on-time delivery (OTD - Figure 1). An organization translates this to an objective in this manner: "100 percent of shipments will be received by all customers on scheduled day." This is measured by a result measurable-percent on time. The organization studies the objective and identifies three key processes that drive OTD: maintenance, shipping and training. Process measurables, such as percent downtime, shipment accuracy and setup jobs filled, are then tracked for each of the key processes. What the customer focus process accomplishes is the translation of a customer requirement into an objective which is then converted within the company into metrics and processes. The key to overall improvement is the identification and improvement of processes. Organizations cannot directly improve the results; they can only improve the processes that improve the results.

In fact, in a note1 at the bottom of 5.4.1.1, ISO/TS 16949:2009 explains, "Quality objectives should address customer expectations and be achievable within a defined time period." Therefore, Figure 1, showing the relationship between customer expectations and objectives, is aligned with the suggestion in the 5.4.1.1 note. This is how an organization truly becomes customer focused: by setting business objectives focused on what the customer wants and then fulfilling them.

Recent ISO/TS 16949:2009 implementations show that most companies believe that they successfully gather customer needs and expectations, but the truth may be that they are not. In fact, a general manager of just such an organization said, "Of course, we are customer-oriented. Why, I have lunch with our customers regularly. Our personnel go to meetings regularly with the customer." However, when pressed for a formal process that gathers and implements customer requirements, the general manager had no answer. Frequently, organizations get confused about the difference between product requirements, business requirements and customer satisfaction. When talking to customers, organizations get a mixture of both business-related and product-related expectations, and objectives can be set against both of these. However, do not confuse discussions with the customer on contract requirements with the process described in 5.2 Customer Focus. The detailed gathering process for customer requirements on each contract is detailed in 7.2. Customer Related Processes; that is what synchronizes with the requirements for contract review in the old QS-9000 standard. Also, do not confuse 8.2.1 customer satisfaction with 5.2 Customer focus. The 8.2.1 asks, "How am I doing?" whereas 5.2 asks, "What do you want from a good supplier?" Figure 2 shows the relationship between 5.2 Customer Focus, 7.2.1 Customer Related Processes and 8.2.1 Customer Satisfaction.

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Figure 2

7.0 Product Realization (Organizational Processes)

The product realization processes and support processes in Section 7 need to deliver product to the customer. Section 7 includes not only six clauses that specify processes that run the gamut of an organization's production cycle (i.e., from 7.1, Planning of Production Realization, to 7.6, Control of Monitoring and Measuring Devices), but also includes the support referred to in Clause 4.1.

Although TS does not require the use of process maps or flows, an effective way to ensure that all necessary processes are included in the QMS is through process mapping and process flows. Process flows will be the most critical method of effectively meeting the requirements of Section 7.

In QS-9000, organizations were only required to implement procedures that met all the requirements specified in the "shalls" and "shoulds"2. In ISO/TS 16949:2009, the organization must "identify the processes needed [and] determine the sequence and interaction of these processes" (4.1a and b). In addition, the processes need to fulfill all the customer requirements as discussed above. Processes that start with customer input and result in outputs delivered to the customer are known as customer oriented processes or COPs. These processes, along with management oriented processes (MOPs) and support processes need to be defined, and it recommended that the COPs be documented. See Table 1 for a list of COPS and MOPS identified from a recent large corporate implementation.

Table 1

Customer Oriented Processes (COPS)

• New Product Development
• Customer Complaints
• Product Design
• Order Fulfillment
• PPAP
• Bid / Proposal

Management Oriented Processes (MOPS)

• Capacity Planning
• Continual Improvement
• Corrective/Preventive Action
• Market Analysis
• Process Development
• Process Deployment
• Quality Management
• Training

Additionally, the organization must have processes that fulfill the "shalls" of ISO/TS 16949:2009. These include management review (5.6), control of measuring and monitoring devices (7.6) and product realization processes (e.g., design and development). In other words, the implementation team must carefully study what processes are required by the organization to fulfill ISO/TS 16949:2009 requirements, its own organizational needs, and the needs of customers and/or interested parties.

ISO/TS 16949:2009 mandates that all of the processes required to fulfill the needs of organizational and customer/interested party must be defined. The drafter of ISO/TS 16949:2009, the International Automotive Task Force (IATF), has conveyed that documentation of COPs is an effective method of audit planning and process validation. The ISO/TS 16949:2009 auditor training requires auditors to analyze the following process characteristics for each process:

1. A process owner exists;
2. The process is defined;
3. The process is documented (recommended for all COPs);
4. Process linkages are established;
5. The process is monitored and (where possible) improved; and Records are maintained.

Figure 3

A good way to satisfy numbers one, two and four (and thereby satisfy trained auditors) is to use process flows. A suggested format is shown in Figure-3.

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Figure-4 shows the relationship between customer needs and expectations (requirements), objectives, business planning and processes. It shows that processes are an integral part of meeting customer needs and expectations.

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When determining which customer expectations need focused attention, the implementation team will decide whether it is only going to look at "customers" strictly by the definition or take an ISO 9004:2000 (or Baldridge) view of customers as "interested parties". ISO 9000:2000, Quality Management Systems-Fundamentals and Vocabulary, defines an interested party as a "person or group having an interest in the performance or success of an organization." Thus, an organization could consider some or all interested parties as customers with expectations to be met.

As the number of expectations grows or varies, what would they impact? Figure-1 showed that your organization has to set objectives around expectations and then design processes that can deliver these expectations. The implementation team will evaluate the need to consider the expectations of interested parties in designing processes, but some interested parties (e.g., community, employees, and suppliers) may play a key part in the organization's success. In some cases, these parties may be as important as the end customer. If interested parties who aren't end customers have the potential to influence an organization's success or even existence, the implementation team should include the expectations of those interested parties when developing the QMS.

Your organization might find it useful to develop a template (table) that links customer expectations to organizational processes, strategic objectives and process control methods. This table can be used to align customer expectations with an organization's Quality and Business Management System (QBMS) activities. Table 2 provides an excerpt of what this table would look like if completed for a hypothetical organization. Organizations may adapt this table to their operations and include it as part of their quality manuals.

Table 2. Customer Expectations Alignment with Organizational Activities

To understand the linkage between 5.2 and Section 7, Product Realization (processes in the organization planned in Clause 4.1, Quality Management System - General Requirements, and 5.4.2), you need only to study the QMS process model (page x of the ISO/TS 16949:2009 requirements manual). Customer requirements are an input into an organization's processes (i.e., product realization and support processes), which translate these inputs into product (which is an output). Thereby, we see a linkage between what customers want as determined in 5.2, the objectives set by the organization in 5.4.1 and the processes performed in Section 7.

The only way organizations can ensure that they are capable of satisfying requirements is to translate a customer requirement into a process requirements and objectives for their organization. This expectation must be translated to a process measurable, as shown in Table 2, and then measured and improved as required by Clause 4.1d, e and f.

8.2.2 Internal Audits

Internal Audits are required by ISO/TS 16949:2009 to check (in the PDCA cycle) whether the organization is truly meeting all of the requirements of its own QMS and the ISO/TS 16949:2009 requirements. The standard requires three types of audits: quality system audits, process audits and product audits. What is the intent of the standard, and what are the similarities and differences between each of these audits?

Quality System Audit

The intent of this audit is to ascertain whether the overall system is effective. This is the formal audit, which needs to be conducted in the same way as the external audit. In this audit, the auditors are ensuring that the organization is moving toward its goals and objectives, and that customer satisfaction metrics are satisfied.

Audit planning is key in the quality system audit trail. The need is to audit processes rather than elements. The process approach recommends using operational customer complaints and management review data to identify processes that must be included in the audit plan. Additional processes should also be sampled to validate effectiveness.

Good auditors look for three items: intent, effective implementation and effectiveness in practice. Intent refers to whether an organization properly interpreted the standard and customer requirements and has translated the proper intent into its processes. Effective implementation means that the documentation has been implemented as planned (in other words, "Are they doing what they are saying?"). Effectiveness in practice analyzes if the organization is implementing the process as planned and getting the results from the implementation. Is the process delivering customer satisfaction? Is the organization delivering customer satisfaction?

In an internal audit situation, the registrar has probably already reviewed the intent. Internal auditors can look for effective implementation and effectiveness in practice. Effective implementation checks the observed process against the process documentation/requirements.

Examine the records, (ie. objective evidence) generated by the process over time. Do the records show that the process is being followed consistently? Follow the audit trail of the process and standard audit linkages. Also, it is critical to choose the right samples when following the audit trail. See Figure 5, the audit trail of new product development. The samples in this audit trail were new products that recently underwent PPAP, products that were released a few months ago, and/or new product still in the pipeline. In this way, the process can be audited in three different timeframes.

Process Audit

ISO/TS 16949:2009 requires that each manufacturing process be audited. How does this audit differ from the quality system audit? The quality system audit is able to assess the overall system performance as well as the system's effectiveness in meeting organizational goals and objectives. The process audit performs a "deep dive" into how each process actually works. This examination takes place at a work instruction level. The auditor should start with customer complaints, rework, scrap and CPk data within the manufacturing process and begin sampling the "operations" to audit in the process flow.

A process flow, PFMEA and Control Plan should be used during this audit. This audit should ensure that weeks of data generated from the process are sampled. This audit should also sample all pertinent elements from the plant floor. The audit should not be element-focused, but process-focused.

When auditing the process, the following areas should be sampled:

• Work instructions and the operator's knowledge of them
• Inspection carried out against the control plan (check several weeks of data)
• Calibration of the gages/tests
• SPC charting and out-of-control conditions
• Operator's knowledge of what he/she is charting
• Nonconforming material and how it is handled
• How nonconforming material is reported and information collected for cost of poor quality
• Operator preventive maintenance
• Product identification and traceability (if applicable)
• Housekeeping
• Verification of changeovers and new setups
• How inventory is stored and amount of inventory - FIFO and/or LIFO

When auditing the plant floor, some process linkages may take the auditor to other areas of the plant, including training/competency, gage lab (calibration), purchasing (for materials purchased in department) and other areas.

When TS auditing processes become mature, the recommendation is to extend the process audit from manufacturing processes to all the organization's processes. The process audit can examine in detail whether the organization's process goals and objectives are accomplished.

Product Audits

The intent of the product audit is verification that the control plan controls in different stages of production, including the shipping dock. The process audit verifies that the process is followed, whereas the product audit verifies that the control plan is followed.

Many years ago, this used to be the job of the inspector, who would randomly sample products and verify that the operator was indeed doing the necessary inspection.

The product audit asks the question: How does the organization know if the product checks as required by the control plan are carried out? This is the intent of the product audit. Organizations must sample products and manufacturing processes, including the dock, to ensure that the product dimensions, functionality, packaging and labeling are occurring as planned.

Auditor Training

It is important that the auditors conducting both system audits and process audits are fully trained. It is recommended that they attend a formal auditing course that will teach them audit planning using COPS, turtle analysis and audit trails. In addition, it is important for the auditor to understand the overall auditing process, including conducting opening meetings, writing non-conformances and conducting closing meetings. Most importantly, auditors must understand how to close out non-conformances.

Conclusion

In conclusion, 5.2 Customer Focus and 7.0 Product Realization are inherently linked. Customer needs and expectations drive the need for processes that can support the customer requirements. Both of these requirements are significant changes in ISO/TS 16949:2009 as compared to QS-9000. Overall, ISO/TS 16949:2009 has a lot to offer organizations. The key changes are the focus on the customer and the process.

Organizations implementing ISO/TS 16949:2009 believe that four changes in ISO/TS 16949:2009 will significantly pay off for them:

(1) Linkages between the entities in the corporation - corporate, business unit, design and the plant;
(2) Customer-oriented processes;
(3) Linkage between customer expectations, objectives and management review; and
(4) Customer satisfaction measurables.

Organizations are encouraged to implement ISO/TS 16949:2009 as a value-added process, rather than a compliance-driven process. Try to seek advantages when implementing ISO/TS 16949:2009. Try to strategize on where your organization will get the payoff from implementation. Try to find these savings when implementing, because the savings are there.

Chad Kymal is chief executive officer of Omnex, Inc., an international consulting, training and software organization. He assists organizations worldwide in his capacity as a consultant and trainer and also serves as a lead auditor for AQSR, an accredited registrar qualified to conduct ISO/TS 16949:2009 assessments. Kymal served the past two years on the Malcolm Baldrige National Quality Award Board of Examiners.

Joseph Macko is president of AQSR and has more than 30 years in the automotive and manufacturing industries. Macho's experience ranges from the tool shop floor to a corporate director for quality assurance at Magna International, where he worked for more than 18 years. Macko is RAB-registered and an AIAG QS-9000 and T/E certified auditor.