How Compliance Can Benefit From Six Sigma -- And Gain An Executive Audience
Compliance and continuous improvement are two different disciplines that are rarely brought into the same conversation -- yet, they can and should sync up in order to hone in on a common audience: the executive level. Solutions are no longer measured by their ability to enable compliance. Having an eye toward continuous improvement and linking your Six Sigma program with quality/compliance systems will ensure visibility of your initiatives.
As a process-improvement methodology, Six Sigma has been employed across a variety of industry verticals. Originally, it was implemented within the engineering and manufacturing sectors, but today, its reach has expanded to include heavily-regulated spheres such as pharmaceuticals, medical device and the food and beverage industry.
A Delicate Balance
There is a fine balance that must be struck for a company to be not only compliant, but efficient. They must have an eye towards continuous improvement.
Sometimes, a company places an uneven emphasis on either compliance or efficiency.
Industries that are most impacted by compliance include:
- Pharmaceutical, Medical Device, Food and Beverage - These industries are held to a high, well-documented standard by such agencies as the FDA and EMA, governing the safety and risk levels of products. Before a product can safely be released to the market, it needs to undergo a battery of tests to ensure its compliance. Companies in this sector are under a watchful eye, which may sometimes translate to inefficiency in their process since they’re under such scrutiny. Quality is a higher priority than efficiency, particularly within the life science industries -- although more stringent regulations may likely be around the corner for the food and beverage market.
- ISO - Companies that self-regulate or adhere to ISO standards, take continuous improvement to the next level. They also struggle with making sure that they are well-documented and in control, but may have more of an eye towards continuous improvement. Standards are strict, but not as strict as the regulatory bodies that govern the life science / food and beverage industries.
- Electronics and Other Consumer Packaged Goods (CPG) -These industries often lack the regulation or high profit margins of the life sciences industry. While they certainly need to be compliant, their focus shifts more towards efficiency. There is greater value within the CPG space to beating the competition to the market rather than delay launch and risk losing market share in the name of perfection.
As it applies to the CPGs, driving down cost is the name of the game -- and becoming more efficient with supplier quality management is one way to win that game. This sector typically struggles with low margins, making it essential for a company to always have an eye on continuous improvement -- whether it’s improving your process or your service to customers.
The reverse is true in the life sciences world. Efficiency often takes a backseat to quality since they absolutely must be compliant with industry regulations. Proper research, testing, and (in some cases) retesting must be performed on a product prior to release as it concerns the well-being of patients. Sometimes, it’s as simple as making small changes to the documentation or labeling of a product to protect both the company and the patient. Making that change may not be an efficient part of the process -- however, more importantly, it may save lives.
Bringing the Two Together
The continuous improvement group is often separate from the quality group, yet having these two groups married to one another can be beneficial due to how tight product margins are. Quality and compliance groups focus on what went wrong, how it can be fixed -- not necessarily on how to make the process more efficient.
Many companies don’t give much thought to ensuring that their quality / compliance teams think in terms of continuous improvement. While the compliance team is focused on maintaining a high standard of quality for a company’s product for taste or reliability, they should also be thinking in terms of what is the most efficient way to achieve consistent -- and great -- results.
Six Sigma gets a lot of attention in an organization because those projects are always tied to cost-benefit - either giving back some spend or something that is creating revenue. On the other hand, quality teams typically aren’t tied to revenue generation or cost-containment. Rather, they’re viewed a cost center to ensure that the company stays compliant.
It’s not that compliance is interfering with efficiency, but rather, the two groups are often separated and don’t work in tandem. Linking those two programs gains your company visibility.
Quality and regulatory need to elevate their story to a corporate level
Compliance specialists have gotten very good at ensuring they deliver safe, quality products, yet it’s been a hot-button topic in the past few years as to how regulatory and quality groups can gain an executive audience. Quality / compliance does not always get the attention of the decision-makers. In fact, these divisions are often perceived as a utility. And in some companies, compliance is relegated to its own sector with personnel focusing solely on audits and change management documentation -- typically areas that many executives don’t seek detailed information about.
By contrast, continuous improvement groups that are being utilized to their fullest potential can easily call on an executive audience because their work is directly tied to revenue and or bottom-line dollars.
To illustrate this point, you may have a plant that is in charge of manufacturing the only product of its kind in the world for a particular company. Every day that they don’t ship a product could mean millions of dollars in lost revenue. Quality is often what holds up the distribution in the event that a quality issue has been identified with that product and must be reworked.
Quality is just doing its job, conducting investigations to ensure that a product meets all specifications prior to release. Yet, due to a break -- or sharp division -- in the process of communication, the only opportunity when management and other revenue-focused personnel has a chance to interact with compliance is when it concerns the delayed shipment of the product. While they recognize that quality serves a very necessary purpose within the organization, the dialogue only seems to begin when progress has slowed or when revenue-generation has been impacted.
The misconception that quality “holds up the process” needs to be righted. Not only does compliance ensure that faulty products don’t reach the public, but they’re also constantly reinventing the way a company does things to create greater efficiency. Because they’re not often tied to continuous improvement projects, they rarely get kudos for the work they do.
So how does compliance break out of its shell of being “just” a utility to a company and get a seat at the executive table? How can they provide valuable guidance and directional perspective to ensure their respective companies continue to innovate within their industry?
The answer lies within not just creating open communication between quality, continuous improvement, and executive groups -- but rather in creating strict, formalized communication at various points throughout the process between all three. Doing so encourages that everyone is on the same page with a clear goal in mind that they are working together to accomplish.
A lot of times, one person or group’s objective may get in the way of another. By making sure the executives are aligned with what the quality team needs to do and ensuring that quality works hand-in-hand with continuous improvement on the same projects, it can help increase revenue, as well as the quality of products and the processes used to create them. Quality professionals are often subject matter experts in many of the manufacturing techniques and their knowledge should be leveraged for continuous improvement.
Garnering Executive Attention Through Six Sigma Methodologies
Utilizing some of the main principles of a Six Sigma project can help compliance groups gain visibility in front of an executive audience. A Six Sigma project usually attacks a well-defined problem. Many times, issues arise when there is not a clear definition of the problem.
For instance, management or production may know that they are throwing away (and eating the cost) on a lot of parts/materials that don’t meet specifications, yet they may not know the exact count of those parts, why they cannot be used, or why the problem continues to happen. Six Sigma puts a formal process around identifying those issues and answering those questions.
One of the tenets of Six Sigma is project scoping through massive data collection and analysis. This collection of data can then be looked at to answer questions surrounding a problem: “How many times has this problem occurred?” “How common is this problem throughout our industry?” “Are we doing better or worse compared to our competitors in correcting this problem?”
To get to the root of the issue, data must be compiled to verify that a company is in (or out) of statistical control based on the volume of work done.
To collect all that data, however, is usually a project in itself since many companies do not regularly compile it. Those that are more automated will collect data as an outcome event. Conversely, companies that are manual within their processes may not have that level of data. Typically, that’s when they begin to undertake large scoping projects to clean data that exists across a number of systems, which then needs to be normalized to glean true analytical information from it. In many cases, companies that are still working with a manual process – or even a process with disjointed point solutions – may realize that taking stock of their data becomes a measure of "too little, too late." It's far more difficult – and potentially costly -- to take inventory of a process after the point where it seems broken beyond repair than it is to collect data throughout. Companies still stuck in a manual mode may be able to more quickly recover from a broken process by instituting an EQMS system to make for a smoother transition to a more effective process. In this case, an EQMS can become the lynchpin for not only the collection of data, but to serve as a "traffic cop" for other systems, including ERP and CRM.
Once companies have that data analysis in-hand, they can start putting a process around problems and understanding what needs to be attacked or corrected.
The data that these companies need exists in systems such as ERP, CRM, EQMS – pillar systems that companies use to run their business.
Taking a deeper look, these systems provide different ways to evaluate the day-to-day doings within a business:
- ERP (Enterprise Resource Planning) – A foundational manufacturing system, ERP’s primary focus is on transactional information between a company and a supplier. It manages the supply chain, the inventory of product and materials, and the creation of batches.
- CRM (Customer Relationship Management) -- CRM zeroes in on the sales system. Company sales representatives and customers alike may use it to provide feedback and information on transaction counts and more.
- EQMS (Enterprise Quality Management Software) – EQMS tracks and measures problems within a process. When a complaint or nonconformance materializes, EQMS allows professionals to compare that information to data that exists on other systems, and affords them the ability to evaluate how many products are reporting a problem versus how many were sold -- either in total or to a specific, geographic region.
Using Six Sigma methodologies to collect data from these three different systems, a conversation can happen at the executive level with quality and continuous improvement teams each contributing valuable insight.
Currently, a continuous improvement team may be gathering that data on their own separate from the quality organization, or quality may be just one of the providers of that data. They’re viewing it more from the standpoint of looking for projects around the organization. Ultimately, they will identify levels of return. Usually, projects that are given the greenlight have one of two attributes attached to them:
- The largest amount of cost-reduction or revenue
- Highest profile of risk
From there, teams of continuous improvement professionals go to work on attacking a problem or multiple problems, ranging from shipment to support of a product. Opening the floor to conversations between quality organizations and continuous improvement groups can be extremely productive. Companies should make sure that their quality groups are involved in critical decision-making around the manufacturing and sale of products because of their experience on the development and production of those products -- not just in terms of compliance, but within every other aspect of the company’s manufacturing process.
Using Six Sigma’s DMAIC Method To Attract the Attention of Executive Management
As a standard, Six Sigma aims for a 70% reduction in poor quality as the overall average of every well-defined project. Six Sigma uses a methodology known as DMAIC to discover, define and eliminate a problem. DMAIC uses a standard set of tools such as statistical charts, control charts and Pareto, among others to break down a problem in a specific way:
- Define - Determine what the problem or need for improvement may be.
- Measure - Measure how well or how poorly the process surrounding the problem performs.
- Analyze - Examine the process to get to the root of the problem. Analysis will lead to a conclusion as to if a process can be improved, or if it should be reconfigured altogether.
- Improve - Improve the process by targeting problem areas based on analysis.
- Control - Control the process to maintain quality and increase revenue.
It’s important for companies to have access to data, but it’s equally important for them to be able to manage and manipulate that data to provide insight. There are experts within the quality realm that do exactly that all the time -- but usually to identify that they are having issues with quality, rather than taking that conversation to the company across all levels. They have not used it to identify inefficiencies in a process.
It’s crucial for quality and continuous improvement teams to work together to ensure they spend the necessary time on both sides of the issue and are using the same set of data. By using the same tools and sharing insight, both will be more efficient.
Ultimately, it becomes a matter of tying quality to revenue, but at a deeper level, it’s about doing the right thing for the company and determining just what that means. In many cases, doing the right thing for the company also means servicing its customers, as well. The best way a company can take care of its customers is to keep prices low by staying efficient, but also ensuring that they stay safe or that the quality of the product continues to advance. To achieve these common goals, quality and continuous improvement must work together.
High-profile projects are important for both a Six Sigma organization within a company as well as a quality group. Finding projects that get buzz and that get executive management excited provides a greater chance to work together -- using your best and brightest to attack problems as a team. These projects offer opportunities to present to the executives and demonstrate how to pull cost from the process and bring substantial revenue to the company as a result.
A good standard-practice across project management is that teams should be multi-functional, cross-sectional, and engage management to help drive solutions. Quality professionals should be just as much a part of the team as sales professionals. The best projects will incorporate all spheres as integral parts of a larger team, making sure that everyone’s voice is being heard. With multiple teams working in the company’s best interest, potential problems and risks can be headed off or solved early on before costly mistakes are made further down the line and become harder to recover from.
Quality teams can benefit greatly from working alongside continuous improvement teams. While two different disciplines, they often use similar tools and should focus on the same audience -- the executive level -- ultimately benefiting the company as a whole.
About the Author Joe Goodman, Director of Solutions Consulting at Sparta Systems, leads the effort to strategically partner with clients and prospects to find the solution that best fits their business need. Joe is recognized as a thought leader in the fields of quality systems, regulatory compliance and the implementation of enterprise software across the life sciences industry. Prior to joining Sparta Systems Joe spent more than 7 years at Merrill Lynch as a Six Sigma Black Belt.