Quality Management

Even though high-tech companies are creating pervasive wealth and contributing mightily to the longest economic expansion in US history, the lack of business systems and defined processes are also hurting faster growth By Chad Kymal

There is no question that high-technology companies are responsible in large part for the pervasive wealth throughout today's American economy. Traditional manufacturing companies like General Motors and Ford are gradually being overtaken by new companies like Cisco and Sun Microsystems -- the market capitalization of which far surpasses that of the older companies. For example, the market capitalization of General Motors is $48.2 billion, significantly less than Cisco, which rings in at $469.6 billion.

One reason for the strength of these companies is that the semiconductor and software content of most products is growing. In many products, the value added to semiconductors and software has reached 50 percent. High-tech companies, however, typically run by technical specialists and entrepreneurs, may fall short in adhering to quality standards. Semiconductor manufacturers have by and large adopted quality standards such as ISO 9001, ISO 9002 or QS-9000 Semiconductor Supplement. However, US software and high-technology companies generally have been slow to adopt the ISO standards.

Startups Lack Historical Precedent

The lack of business systems and defined processes is hurting many of today's high-technology companies. Missed project deadlines and poor software quality often result in missed windows of opportunity in the race to be first to market. Many hardware companies, including semiconductor manufacturers, have not included software management into their business systems. This unlucky omission has prevented significant value addition to the product.

Although the hands-on, entrepreneur-led company can be highly innovative and flexible, its very lack of structure can lead to confusion and chaos during growth stages. Often these companies are saved from extinction by managers brought in from the outside, who adapt systems proven in more established companies. If, on the other hand, a startup had its own custom-designed and homegrown business system, the entrepreneur who founded the company could more easily incorporate his or her own vision and mission into the company's quality efforts.

New and established high-technology and software companies could look to the recently released DIS ISO 9001:2008, as well as the SEI-CMM model (for software companies only). Additionally, semiconductor and hardware-related companies should investigate QS-9000, the latest standard being embraced by the world's leading companies

ISO 9001:2008

The latest, long-awaited revision of the ISO 9001:2008 standard has just been released as a Draft International Standard (DIS). This standard defines quality as the ability of products or processes to meet customer needs and expectations, a standard that has been fundamentally restructured into a process model (see Figure 1).

Tasks included in the Management Responsibility area are setting business objectives, planning the business and regularly reviewing business metrics. The Resources emphasis is on providing the needed resources for meeting customer satisfaction. Product Realization includes all the business processes utilized to deliver the product and services into the customer's hands. The final requirement of management is to measure, analyze and improve the company. This new revision of the standard can be used as a model for both high technology and software companies to use

Leadership Principles

The new standard is based on the following eight management principles: customer focus, leadership, employee involvement, process approach, system approach to management, continual improvement, factual approach to management and mutually beneficial supplier relationships (See figure 2).

These principles represent the latest management philosophies. As long as managers believe in these eight principles, ISO 9001:2008 is the right standard for them.

SEI-CMM: The Capability Maturity Model

The capability maturity model is designed to improve a company, elevating it from an ad hoc and chaotic state to become a mature software organization. This model represents five different levels of software development. Each level except the first identifies key process areas that an organization needs to incorporate. Levels two through five are as follows:

• Repeatable - The second level represents key processes that relate to project management controls.
• Defined - The third level institutionalizes software engineering and management processes across all projects.
• Managed - The fourth level requires metrics of the software process and of product quality.
• Optimizing - The fifth and final level represents the most mature organizations, those that employ continuous improvement and utilize techniques such as defect prevention and processes for new technologies.

Studies conducted on the 1994 revision of the ISO 9001 standard described CMM and ISO 9001:1994 as compatible. According to Mark C. Paulk of the Software Engineering Institute (SEI), results of the analysis indicate that, although an ISO 9001-compliant organization would not necessarily satisfy all of the Level 2 key process areas, it would most of them -- and even many Level 3 goals. With the advent of ISO 9001:2008, the compatibility of these models should increase. Now it is possible to be ISO certified and have a capability index of Level 4 or 5.

QS-9000 Semiconductor Supplement

The QS-9000 Semiconductor Supplement was written by Visteon, Delphi and Daimler Chrysler for their semiconductor supply base. QS-9000 is the most stringent quality system standard in the world and has resulted in products that have quality levels of 15 to 30 parts per million defective. This standard is built around both the ISO 9001:1994 and QS-9000:1995 standards.

The key characteristics of this standard include requirements for business plans, customer satisfaction, continuous improvement, a structured new-product development process, product release disciplines and disciplined problem-solving methods. This standard has been adopted by companies like Motorola, AMD and Phillips Semiconductor as well as their supply bases across Asia.

There is a high correlation between business success and disciplined management systems. Typically, companies start off as entrepreneur led, with the hands-on manager calling all the shots. As the company grows, continued success is only possible with the addition of disciplined processes to run the business. As one business owner recently remarked, "They never taught you how to run a business in engineering school." So if your business is successful, yet you feel that things are out of control; or if your software team is missing deadlines; or if your software development requires too much reworking, the quality systems discussed here can help.

Chad Kymal is president, senior consultant, and trainer of Omnex, Inc. Ann Arbor, Michigan. Kymal conducted the first worldwide witness audit for QS-9000. He is an RAB-certified lead auditor whose broad experience includes TQM, setup reduction, technology assessment and inventory analysis, statistical process control, and quality function deployment.

Under Kymal's leadership, Omnex has pioneered the use of ISO 9000, PFMEA, Control Plan, and disciplined problem-solving techniques in service environments such as construction, software, architecture, contract labor, and hospitals. He has co-authored or championed most of Omnex's service classes. He is also on the Malcolm Baldrige Board of Examiners. Chad has achieved a BSME from General Motors Institute, a master's degree in Industrial and Operations Engineering from the University of Michigan, and an MBA from the University of Michigan