By: Paul Van Metre

Non-Conformances (NCs) are unavoidable in any job shop or manufacturing process. Some are related to setting up and proving out new jobs or processes. Others happen during production when processes go out of control, tools break, humans make an error, etc. When parts need to be scrapped, reworked, or remade, costs can skyrocket! All manufacturing companies should endeavor to minimize scrap, root causes of scrap, and the cost of scrap, and data found in Non-Conformance Reports (NCRs) is the key to doing this.

When a non-conformance (NC) is identified, many shops consider those parts scrap immediately, and throw them in the garbage, the recycle bin, on the bottom of the cart, or otherwise don’t do any formal process to document what happened. When that happens, valuable information is lost that can help to improve the process to reduce NCs in the future. And also, parts that could possibly be reworked or use-as-is may be discarded unnecessarily. This is more understandable when the overhead cost to generate and manage a report of the non-conformance is too high. If filling out a paper NCR, submitting it to QC, scanning, filing, collating data in an Excel sheet takes a lot of time, the value may be questionable at first glance. In some shops, the decision to make an NCR or not is left to the discretion of the people involved, which means that there is no system, and some employees will create NCRs more often compared to others, skewing the data. If you ask these shops how much scrap costs them every year, or which reasons are the most frequent or costly, they likely will have nothing better than a gut feel.

Every time an NC happens, whether it’s “planned” (ie. setup pieces) or “unplanned'' there is a root cause for that occurrence. Maybe it’s because a new CNC program has an error in it, or the wrong tool was selected from the tool crib. Maybe it’s because a part was misloaded in the fixture, a tool wore out and started cutting out of tolerance, or a part got dropped on the floor and damaged. There are many reasons NCs happen, some far more often than others. Regardless of the reason, NCs can be a very expensive problem. To help determine what the total cost is, and why the NCs are happening, it’s important to always make a non-conformance report (or an NCR for several parts of the same reason). A quote I like that best describes why this is important comes from the famous British physicist, Lord Kelvin: “What is not defined cannot be measured. What is not measured, cannot be improved. What is not improved, is always degraded.” With that in mind...

Top 7 reasons to make an NCR at the moment a non-conformance is identified:

  1. It provides a mechanism for immediately identifying a non-conforming part so it doesn’t accidentally get mixed in with good parts.
  2. It can help identify some immediate changes which can reduce more NCs in the same production run.
  3. It allows a reason to be identified and recorded in the moment, which may be lost or not remembered if the NCR is not created right away.
  4. It allows for an NCR code to be assigned which will be helpful later in the process.
  5. It enables the company to identify which people or departments make the most non-conformances.
  6. It makes it possible to assign a cost to be associated with the non-conformance. Was it the first operation of a $1 piece of stock, or was it on the final assembly operation of a $3500 assembly? Big difference!
  7. Most importantly, it enables root cause analysis of the NC and the variables that culminated in the non-conformity.

Depending on the cost of the material, how far along in the manufacturing process the NC occurs, the cost to replace or remake the part, etc. the cost can vary considerably. If the data for the cause code of an NCR code is collected and analyzed on a Pareto chart, it will become apparent that some causes are much higher than others and far more expensive. These are likely the “lowest hanging fruit” and the best ones to focus on right away to reduce the cost of NCs. It’s through a formal MRB (Material Review Board) process, or a Management Review on a monthly or quarterly basis where those larger trends will be revealed.

In order to reduce the transactional and overhead costs of creating and dispositioning NCRs, the process should be digital. NCR creation should be tied into the inspection process and software should identify immediately if an inspection result is out-of-tolerance and allow instant creation of an NCR, and the software should pull all the meta-data about the part and job onto the NCR, including part number, work order number, client, work cell, operation, operator, dimension tag number, and more. When this is done, an alert should be sent to quality or management staff so that help can be immediately mustered if warranted. When all the NCR data is digital, has all the corresponding meta-data, and took just seconds to produce, it makes it very easy to then analyze that data on dashboards, helping management make the best and most timely decisions on what actions to pursue to reduce the cost of non-conformances in the shop. This can have immediate and positive effects on the bottom line of any shop, and the money that used to go towards dealing with NCs and scrap can be used to invest in the growth of the company.

How does ProShop help:

Not surprisingly, the advice in that last paragraph about making the inspection and NCR process digital is exactly how ProShop works. Considering that the manufacturing staff is directly interfacing with ProShop at the work cell, the NCR creation process can be virtually instantaneous, getting machines running again while collecting that critical data needed for root cause analysis. When alerts are sent, quality staff or leads can be dispatched immediately to help support production and disposition parts right away when warranted. ProShop even allows for giving employees permission to only disposition to scrap, if the parts are clearly bad, but requiring QC staff or a lead to make the decisions about use-as-is or rework during an MRB process. Our Training Access Control feature even allows the ability to lock employees from editing the disposition field (or any field) until sufficient training is provided to the employee. Auditors love this feature!

When the time comes to evaluate NCRs at a monthly Management Review Meeting and take action, Improvement activities can be identified, NCRs can be assigned to staff, and Corrective Action Requests (CARs) can be generated with a tap of a button. NCRs can be easily and instantly analyzed from a part number perspective, by the machine, by the client, by the employee, by shift, and of course by cause and NCR code. This reduced overhead burden makes easy work on the administrative side of quality control, freeing up vast time from Quality Managers. In fact, many clients report freeing up about 50% of their Quality Manager’s time, allowing them to actually work on more strategic and money-saving activities and implementing measures to reduce NCs and the associated cost in the first place.

By: Lacey Hill

For a prospective or existing customer, a shop tour is an excellent way to connect with their supply base and review the operations, systems and processes of a given supplier. For a supplier, this is your opportunity to shine; showcasing your capabilities, workflows, daily operations, ERP system, quality management systems, skilled staff, etc…...OR this can be a moment where you fail fast.

Paul Van Metre recently wrote a blog post titled Use Your Machine Shop Management System as a Sales Tool that directly relates to this. In that post, he states “shops can’t just promise great quality and delivery. They need to prove they have the processes and systems to guarantee they will execute. This will open doors to more discerning clients.” Paul, and a few of our ProShop clients, go on in that article to talk about how showing customers their ERP system, and discussing the workflows that are supported by it, can be an excellent sales tool. Also, I can attest to that from the first-hand experience, from the customer perspective.  

Before joining the ProShop team, my career was in the supply chain field as a Buyer, Purchasing/Planning, and Supply Chain Manager, and I conducted a lot of supplier onsite tours in that time. I quickly learned that with some very simple questions I could glean a lot of information about key areas of a supplier’s business. Also, I could see how robust their shop management systems were. 

If you aren’t using your ERP system as a sales tool yourself, OR if you lack a solid ERP system (or any structured system) to run your business with, then hopefully the following 4 examples will help you see how those can be key to maintaining your current customer base and growing it!

Below are 4 examples of simple questions, broken out by a subject area, that demonstrate what information can be obtained from how the supplier answers the question, and what steps they use in answering it. 

1) Resource Planning 

Customer question: “Can you tell me where job # 1234 is?” Does it look like it's on track to deliver on time?”

What information can be obtained from this question: 

Steps followed to answer, using shop management tools:

  1. With one or two clicks in the system, you can look up a Customer Purchase Order (PO) # or Part Number and see the Work Order (WO) # or job traveler # associated with it.
  2. From there in the system, you can pinpoint what stage of completion the order is in. In addition, you can provide the customer with an outline of the remaining processes and operations still outstanding, the lead time to complete them, and how you are tracking to complete them. 
  3. If the customer would like to see the parts in work, you can walk them to the exact workcell that the order is running in.

Steps followed to answer, without shop management tools:

  1. Locate a daily sales report (DSR), usually, a physical report, generated daily, and distributed across departments.
  2. Look up the Customer PO # or Part Number on the report and the WO# or job traveler # associated with it.
  3. And then, go physically find the WO in the shop. 
    1. Hopefully, there is a status board that provides what workcell the WO was last reported in, however, on more than one shop tour I’ve walked the entire shop with the owner to find a specific job traveler. I can tell you that with each workstation that the job traveler WASN’T found at, my confidence in the supplier’s system and processes deteriorated. 
  4. Often to then provide an estimate on the lead time remaining for the outstanding processes left for the job, a “best guess” was used, instead of well-documented lead times.

This example clearly outlines how drastically different the customer’s experience can be given an ERP system, and other workflow processes, are in place in your business versus not. 

2) Prioritization of Orders 

Customer question: “What orders are due to ship out this week? And how do you prioritize jobs?”

What information can be obtained from this question:

Steps followed to answer, using shop management tools

  1. Using a production schedule or dashboard, directly in the system, show the customer where their orders are located in relation to all those in your shop. You can highlight and sort orders by the due date and articulate how you manage your production schedule, all while demonstrating it live.

Steps followed to answer, without shop management tools:

  1. Using a daily sales report (DSR) and blackout chart, sometimes upwards of two to three versions of the report exist: one sorted by delivery dates, another copy sorted by customer, another by past due deliveries, maybe another for orders at outside processing. Hopefully, in each version of the report, the priority of the orders is consistent.
    1. AccompanyingAccompany physical DSR reports is usually a daily meeting that requires department managers/leads to attend to review the reports. The physical DSRs are marked up in that meeting and then used to prioritize the day’s activities for each department. If a job, however, is re-prioritized throughout the day, at that point the DSR immediately becomes obsolete or requires a re-print/circulation throughout the company. Oftentimes that reprint isn’t done,  communicated across departments doesn’t happen, and departments are working on different, and often conflicting, priorities. 

I’ll add, in paper-based shops, where travelers can be found throughout the shop floor, as I’d walk the floor, I’d often look for customer due dates on the WOs. If the majority of the due dates were in the past, that was a warning sign that the supplier didn’t have processes or systems in place to prioritize work throughout their shop. 

3) Metrics/Key Performance Indicators (KPIs) 

Customer question: “What’s your current on-time delivery percentage for this month?”

What information can be obtained from this question:

Steps followed to answer, using shop management tools:

  1. In most shop management systems, the on-time delivery metric is located centrally in the system (either on the homepage or a dashboard), so with the click of a button, you can show the customer that metric.
  2. If the customer wants to dive into the data driving the metric that data is typically linked directly to the metric, and can be accessed quickly. The data can further be filtered by a specific date range or customer.

Steps followed to answer, without shop management tools:

  1. Without a system in place, on-time delivery is tracked, often it's via a physical report that is run at month-end, and then circulated or displayed centrally in the organization. The report is not current to date, often unclear what exact data was used to calculate the metric, and not available to be filtered by customer.
  2. If the customer wants to view on-time delivery for just their orders, this may not be data that can easily be pulled and supplied if it’s requested on the fly. Data may have to be pulled and analyzed and then a report sent to the customer post-visit. 

On-time delivery is one of the crucial components to customer satisfaction and the success of a business, and it was the driving metric for the departments I worked for and managed. So I expected the same from the suppliers I worked with. How they answered this question and how laborious the steps were to supply that answer told me a lot about how important meeting my company’s delivery dates were to them. 

4) Inventory Management

Customer question: “How do you know what this material is, how much you have on hand, and how long it’s been in your inventory?”

What information can be obtained from this question:

Steps followed to answer, using shop management tools:

  1. An inventory screen displays the on-hand quantity for a given material, storage location, purchase & receipt history, etc. 
  2. Physically the inventory has been labeled with data (PO # and material description or part #) that ties back to the ERP system, which houses the traceability information for the material. Certs are scanned and saved in the ERP system and can be provided as requested.

 Steps followed to answer, without shop management tools:

  1. Physically the material has (hopefully) been labeled with a PO#, material description & part #, supplier, delivery date, etc. Oftentimes the labels are 2-3x larger than they’d need to be if the material traceability could be instead referred back to in an ERP system.
  2. To determine how long inventory has been on hand, or supply the certs for the material to prove it is in fact the material type listed on the label, often this information has to be pulled from a physical PO or cert packet that is filed in a filing cabinet. 

I remember, on one site tour, I had gotten a call from my Quality department letting me know we were missing some certs on an order that had recently been delivered from the supplier I was visiting. So on the tour, I asked if a copy of the certs could be supplied to me before I left. The tour lasted an hour, and in that time the supplier couldn’t locate the requested paperwork. Two days later they called and confirmed they couldn’t determine what material was used for that order. We had to scrap the finished parts, and the supplier had to re-make them using material that had cert traceability. We lost 2 weeks of lead time on our own production schedule and missed our delivery date to our own customer. 

How Does ProShop Help?

ProShop’s tools are geared to address these, and many more questions that customers will ask on shop tours. Whether it’s the on-time delivery metrics that we displayed on the ProShop homepage, or the dedicated Scheduling module designed to quickly and efficiently schedule work through your shop and provide visibility of that order of jobs in real-time throughout the organization, ProShop is here to help you fly high instead of fail fast during a customer site tour! 

A nearly perfect case study of this phenomenon was outlined in this article from Modern Machine Shop Magazine, featuring a ProShop customer East Branch Engineering in CT. The article describes how, after visiting 2 suppliers who were dual sourced on a large project, East Branch won the entire project because of how well they could answer questions and demonstrate their digital system compared to the other vendor and their paper-based system with its inherent problems.

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