Why Automating your QMS improves your Supply Chain Performance

[Transcript]

Jan Griffiths: 00:03

Welcome to the Auto Supply Chain Prophets podcast where we help you prepare for the future in the auto supply chain. I'm Jan Griffiths, your co-host and producer.

Cathy Fisher: 00:13

I'm Cathy Fisher, your podcast host. Our mission is to help automotive manufacturers recognize, prepare for and profit from whatever comes next in the auto supply chain.

Terry Onica: 00:23

I'm Terry Onica, your podcast host. Will be giving you best practices and key supply chain insights from industry leaders.

Jan Griffiths: 00:29

Because the auto supply chain is where the money is. Let's dive in.

Jan Griffiths: 00:36

Hello, and welcome to another episode of Auto Supply Chain Prophets. We have been talking a lot lately about the integration of quality systems into the overall supply chain itself. And we've talked about MMOG/LE and the integration with IATF. And it all sounds great. But when the rubber meets the road, and you have to integrate, implement and integrate a quality management system, and apply all the latest technology, what does that look like and feel like? Well, we're going to find out today because we've got the man who implemented the QAD EQMS system at PennEngineering, Mike Payionk. By the way, you'll find a case study on his EQMS implementation in the show notes. Mike, welcome back to the show.

Mike Payionk: 01:27

Hey, thanks for having me back. I feel like this is my second time I should have my own intro music or something.

Cathy Fisher: 01:34

Like I want to jump in and just mention that your episode that you did with Rocky, which was, "Silos are four letter word" was our number one, listen to episode last season. And it's still at the top of the charts, by the way. So that's what we're so thrilled to have you back with us again, on our show on the Auto Supply Chain Prophets. And we wanted to get a chance to hear from you a little bit more about the experience that your organization went through in automating your Quality Management System. And I think the first thing I wanted to kind of ask about is what was behind that decision to automate your quality management system? What motivated that?

Mike Payionk: 02:12

You know, our company is kind of a patchwork of different companies, you know. We had this decentralized model that we worked against. So, as we acquired new companies, or as we built new plants of manufacturing, it kind of had their own independent system. So, we took a look at that. And that was one of the biggest things that we looked at and said, you know, we need to kind of standardize our processes, if not everything, at least a few key things need to be standardized across our board. So that was one of the big factors in deciding to do this.

Cathy Fisher: 02:42

So, in moving towards that standardization, was it more to get everybody following the same processes? Or was it more to have visibility? What was behind that decision of having that that consistency across the sites?

Mike Payionk: 02:58

You know, one of the decisions was we had, we wanted to control our documentation across the board, right. So, we had some plants that were still maintaining documents and files, paper files, online, it was it was local to their network somewhere using Cloud, we just wanted to be able to have one, one location for all of our documentation, and have that accessible by all of our other plants so that we can share best practices. Another key factor was our customer concerns, right? Like some were still doing paper-based method. Some were using Cloud, some were sharing it on a network between two plants. But we weren't really capturing all of our data in one place to be able to look at it and see what's happening day to day, at each plant globally.

Jan Griffiths: 03:43

There's a lot of companies out there that struggle with that, that problem, right having, maybe the company has grown through adding multiple acquisitions, different plants have different systems. And everybody's got a slightly different interpretation of what something means. And so, it's standardization, not for the sake of standardization. So, you get a common core understanding of the behaviors that go along with the processes.

Mike Payionk: 04:10

Absolutely. It goes deeper when we start talking about our customer issues, right of how those are being handled and how they're being corrected. Right, how our corrective actions happening, what tools are we using all of that that's what we wanted to find out from each plan. How was being done, and then how we could combine those into one system and capture that.

Cathy Fisher: 04:30

And I think that's great from first of all organizational knowledge perspective, getting those best practices shared from a systemic standpoint across your different locations. But then, secondly, from the customer complaint investigation standpoint, you may have a problem happen at one location, but your processes likely have some similarity because you're sharing those best practices. So, we want to learn from those failures that are happening elsewhere so that we can leverage that knowledge and be more proactive. So, I think that's fantastic.

Mike Payionk: 05:01

Absolutely, it gets thicker. I mean, for us for PennEngineering, I mean, we had, at one time, you could have three different plants globally making the same exact part number, right? Because we have catalog products. So not everything is specific to, you know, say the automotive industry, but we have catalog products, and one plant was seeing issues. And the other plant was seeing issues, but they weren't communicating. So, they're both trying to solve the problem independently. And it's like you said this, the processes are similar. So, it was easy to connect them and say, Hey, you're having the same problem as this plant?

Cathy Fisher: 05:32

Yeah, just not only I think about the efficiency behind that, but also the experience of your customers. On the other side, if you have catalog products, your customers don't really care where they came from, they but they expect that when they ordered that product, regardless of where it comes from, it's going to be the same level of quality, consistently. So, what are some challenges, Mike, that you guys ran into during this process of automating your quality management system?

Mike Payionk: 05:59

Basically, when we started, we had 10 different manufacturing sites. So, we were trying to implement a standardized system in 10 different places, but also combine them so that it was controlled. So, we did have some of the similarities between them. As we got into it, it was looking at legacy data, and implementing that into a new system. That was one of our biggest challenges. You know, it's that old phrase of, you know, we've always done it this way, type thing. That's not just what the people that's what the process is, as well taking a look at our processes, and streamlining them as we implemented them into a new EQMS system.

Jan Griffiths: 06:35

We talk about QMS, we've been talking about the customer side of it, but how broad is QMS? When you talk about a QMS system, it's much more than just customer quality, right?

Mike Payionk: 06:44

Oh, absolutely. For us, we wanted it to encompass everything, all aspects from inception to delivery, right. So, it does handle, you know, some of our customers customer specific requirements, we've uploaded that in there. But we've also started to use it for some supplier development, right. And, and we're using it not just for our external suppliers of say raw material or processes or things of that nature, we're using it for each other's plants as well, right. So, plants that supplies, so we call them "Interco", plants that's applied to other plants, I have plant A issuing a scar to plant B, they're working through it, and entering it into their side of the EQMS and working through a cause analysis tools. And then and then vice versa. But we're also developing our external suppliers the same way, giving them logins to our system, using it as a portal, working through the same corrective action tools as well.

Cathy Fisher: 07:36

And I just want to call out this best practice, I applaud your organization for holding the same level of standard for your intercompany transactions as you do for your external suppliers. It's very rare to hear that unfortunately, there tends to be kind of a blind eye turn to the intercompany stuff. And that can create a lot of loss for businesses and a lot of frustration for people inside of the organization as well. So yeah, good. Good to hear about that. So, Mike, tell us a bit about the measurable benefits that your organization has experienced from automating your quality management system processes.

Mike Payionk: 08:13

Yeah, so it's some of the benefits are have been huge. One being we have now visibility for our customer concerns across the globe, right. So, before it was, you know, like I said, spreadsheets or some kind of file system or an email that was sent out once a month, now we can get real time access to what's happening. You know, we run a report once a day, or we just on the system, and it's, it's live as it goes in. So as somebody in terms of customer concern, it's there, you know, it's in the system, and we can see it no matter where on the planet. It's, it's happening. So, like I said before too, one key benefit was tracking things intercompany through the scar module. And then best practices like that's we've seen huge, you know huge improvements at each plant, because now they're sharing information of, "Hey, I saw this happen. How did you guys fix that?" We'll try the same thing.

Cathy Fisher: 09:27

Have you ever been able to quantify some of these benefits like in terms of maybe reduction of customer complaints or efficiency and processes through that?

Mike Payionk: 09:35

As we keep track of the data as we collect more and more data, and as we keep track of our cost of poor quality? We've seen a decrease in the cost of poor quality for sure. One plant I think went from 1.62% of our cost of poor quality down to 1.32. And with an increase in sales, I mean, we're still increasing our sales, and we're decreasing our COPQ. I've said this in the past, it's hard to put in number on it, right like a quantitative number on, hey, we implemented this EQMS, and here's the exact number that we've saved. But you can see all the numbers slightly go down as we start to keep track of things the certain way. We started reporting things a certain way. We start to get in the mindset of this is our culture now of when a customer calls, we do this, and then we do this, and then we do this, you can just see that no steps are being missed, because it's automated. Because you have to do step one, before you can do step two, and work through the process. We've seen that we're actually getting to the actual root causes of issues and correcting them in the field, which has been fantastic. So that's, that's the biggest thing. The biggest ROI for me is seeing that those numbers decrease.

Cathy Fisher: 10:42

Yeah. And I think, Mike, you also mentioned that your external audits are a lot easier. Tell us a little bit about that.

Mike Payionk: 10:49

Yeah, so we, because the system that we chose, because we're using the system, it's based off of AIAG, right. So, all of the requirements coming out of AIAG, it pretty much answers the question. So, when you talk about, hey, you need to do this in this clause. Here's the resolution for it in the system. So, the plants that had legacy systems and then implemented this, their onsite audits have gotten dramatically easier, you know, because then they can, they can take out the low hanging fruit or the easy auditable offenses, and say, the system takes care of that this is where it's taken care of in the system, the system does that. So, it's taken, for example, on a document, the standards call out that it must have control process, and you must be able to control it and review this document on an X amount of terms, right. So, we say, hey, this document or this document type needs to be reviewed every six months. And then that's it, once we load the document six months from that point, it sends out an alert to the owner, the owner reviews it, the whole process is just it's simplified. So, you don't have to go back and say, hey, when did we make this document official you know, put something in Outlook? No, it's all taken care of, I mean, everything from doing a task within the system in a cap say I have a corrective action task. There's a timeframe for all that, and there's a responsibility, and it's all captured within that particular task. You know, it goes as far as hey, you know, you have seven days to do this, Hey, it's due today, hey, you're seven days late. And then it goes as far as, hey, you're 14 days late, you know, and now it's emailing your boss, right? So, your boss is getting something that says, Hey, someone saw was supposed to take care of this 14 days ago, and they haven't, please follow up. You know. So there's, there's really that open side of it to just countability for independent departments, right, not just the quality group. But now it's really spread out to different, different departments.

Cathy Fisher: 12:44

Yeah, that visibility is also really beneficial.

Jan Griffiths: 12:47

We talked about product quality products that are in production. What about more on the advanced side? So APQP? Is their APQP element built into this? Or is it all postproduction after launch?

Mike Payionk: 13:01

No, it's we've adopted the APQP module as well in our EQMS system. So, we're using that again on, I would say most of the sites are using it, we're still implementing it at some because legacy systems are a little different. And, and how they're launching products is a little different between automotive which is pretty stringent on what needs to take place in APQP and some of our catalog products. But for the most part, most of our sites are using this. And yeah, it's really, it's really taken out the "who question" or the, you know, "what are we going to do question" because we've built these templates. So now we know, hey, if this product is for a new customer, we use this project type. And we put that in and all of the questions, all the tasks, follow the timelines, all of that durations, the dependencies, anything that has to deal with a project is implemented in there. So, we start the project, we tell it when we want to start at the date, it calculates all the time out, and it spits out an end date, hey, if you start on this date, it's supposed to end on this date. And then it has all of our tasks. For most of our, says, we use the five phased approach of APQP. And it says, for each phase, you're supposed to be done by this time. And then within that phase, there's tasks and responsibilities and timeframes get pretty much all automated once you set it. And I will say that that was that's probably the biggest part of setting this up as is building the templates and saying, "Okay, here's phase one, what do we do in phase one? How long does it take? Is this task dependent on this task?" You can't order tooling before you design tooling, right. So, there's all of that set up in the system. But once you set that up, and you have a coordinator do that, or, you know, whoever, you know, has basically set it and forget it. It goes.

Cathy Fisher: 14:42

That's a great use of automation to really support the organization, especially in managing customer requirements on the front end so that you can be successful with the launch and that's so important, of course, in the automotive space as well. Along those lines, the automotive some of the automotive customers now are actually mandating the use of automation for certain portions of their suppliers’ activities, for instance, Ford last year now requires their suppliers to utilize an automated system for FMEA and control plan development. Are you seeing that trend happening with some of your customers as well, where they are expecting that you're using some level of automation in certain aspects of your quality management activities?

Mike Payionk: 15:26

We haven't really seen anything directly other than like you mentioned Ford, putting it in their customer specific requirements, but we're not the ones to say, hey, you know, we'll do it. When we're asked to do it, we're kind of looking at it like saying, okay, Ford was the first one to do it. It's going to come right, the way we move the way industries are moving with industry 4.0. And how we get more and more connected. We're looking towards that in the future of just implementing it already. So that by the time our customers come and say, “hey, you have to do that.” We've already been doing it. Because of the EQMS we chose, it does have a built-in function of creating your manufacturing documents in the system already, from your flow diagram to your failure modes to your control plan.

Cathy Fisher: 16:09

That's amazing. Speaking of the future vision, one of the questions I wanted to ask you is, how do you anticipate kind of expanding the automation of your Quality Management System? It sounds like you're using quite a few, the automation capabilities on quite a few of your quality management processes. Are there kind of some future developments, so to speak in automating additional quality management processes in your organization?

Mike Payionk: 16:33

Yeah, I mean, we're taking a look at right now, we didn't talk about gauge module, but we also have quite a few plants that are using our gauge module, which is part of our package. And it does the same thing. You know, it captures our gauge times our calibration times. Calibrations, MSAs is I mean, it's capturing all your MSAs. So, if you have to do a gauge r&r, or some study long line to that, it's all there. You can pre-program it. So, it's set time. So, it alerts the gauge champion to say, hey, look, these calibrations do it alerts them, like I think we have 30 days, so 30 days before it's due, they get an alert to go into the system, find the gauge calibrated. So, we're automating that, we're in the process of automating our audit module. So, we've now brought in the audit module. So, we want to start doing our LPA audits, our internal audits, things like that thing of that nature, in the system as well. So that that can be just set up. Again, I use the term set and forget it. But that's typically what it is, we just want to set this thing up, build it out so that it's robust, and then let it do its own thing and alert whoever it needs to alert to do the audit. And then if things need to change the background, say we need to change the template, things like that we have admins on each site that have the ability to change that so.

Jan Griffiths: 17:46

I didn't think it was as comprehensive as it actually is. Until now I'm listening to you talk and all the features and all the benefits that are embedded into this thing. But before you selected your technology provider for this QMS, what are some of the things that you thought about before you pick the company to work with?

Mike Payionk: 18:05

One of the biggest challenges for us was we wanted to make sure that it was cloud based, right, something that I could see information across the globe at any time. That was key for us, we wanted to make sure we weren't storing it in some file or some folder on a computer, we wanted to make sure that we could see all of our data globally, because we are a global company, we have now 12 manufacturing sites globally. I need to be able to access that. And this, the solution side has been fantastic because now I can access it from my computer from my mobile phone from pretty much anywhere that has internet access. We used to joke around with the plants as we launched, if your printer has internet access and a browser, you can get to the QMS. So that was key for us. We wanted to make sure that we could access our data. And then we wanted to make sure as we access our data that our sites were using the same processes to conquer things to do document control, right. I know, it's weird, but we wanted to make sure that they were using the same process for document types. So, we have our level one through level four documents. And those are categorized. We want to make sure that when we did customer issues that things were being captured, as categorized as a customer issue or an internal issue or a supplier issue, whereas they weren't before. So those were those were key things for us. And then APQP because we're bringing on new plants, because we're bringing on new products, that's her mantra at PennEngineering is you know, we want to bring on new product because we're doing that with new customers. Obviously, customer specific requirements are a big thing. We wanted to make sure no matter what plant we are launching that product at, they were following pretty much the same roadmap to get to completion and shipment that all the other sites were doing and so those were some of the bigger ones. I would say if I had to pick another one, growth would probably be another one. We wanted some kind of system that was easily added on for each location, because like I said, when we started, we had, I think, 9 or 10 locations. Now we have 12 manufacturing locations, we brought in sales teams and sales offices as well. We wanted something that was easy enough to say, I need to turn this site on, and get them in the system using it in. And that's where we went. Those are some of the key things that we looked at.

Cathy Fisher: 20:19

Excellent. Well, speaking about being proactive. How does automating your quality management processes help you kind of look in the crystal ball and predict the future?

Mike Payionk: 20:31

One, like I said, capturing all that data in one spot, now allows us to look at it right. So now we're like, it took us a better part of five years to implement this at all of our locations or bring us up to speed on all of our locations. Now we have this vast knowledge of data, right? So, we can look at everything from, hey, this this type of issue was peaking in this industry. At this time, we've started to look at quarterly on a quarterly basis, hey, what are these issues that are happening at each plant in their internals, not customer issues, but their internal issues that they're seeing. So, we're taking those and we're printing those out, and we're saying, "Hey, this is your biggest outlier." Let's take a look at this. And let's run a project on that to understand why. And then share your information with the other side so that they can do the same thing. We've started looking at this, you know, they use the term AI, right, everybody's using the term AI or ML for machine learning. So, started to look at using some applications to take our data, put it in there and then have the AI look at it and say, "Hey, these, these are your biggest issues here." Or, you know, somebody might call something one thing, and somebody calls it the other. But the AI is looking at it and saying, "Hey, these two are very similar. They're the same thing. They're just called something different." So, we're starting to look at that information as well. But we couldn't do that without having all of our information in one spot to look at.

Cathy Fisher: 21:51

Yeah, I think that's so important. And, you know, that's yet another plug for getting away from the Excel spreadsheets, which are disjointed, not kept up to date, not full visibility, right?

Mike Payionk: 22:02

Right. Not controlled. Yeah.

Cathy Fisher: 22:03

Yeah, not controlled, and having it in one place in such a way that you can utilize, leverage this technology, AI and that that's available today, to be able to go through and look for patterns and be able to predict future performance based on those patterns as well. So, I'm curious, is automating your Quality Management System worth it? If you had to give advice to other manufacturers out there that are kind of with it, you know, should we put that money into automating our QMS? Is it really that important? What would you say?

Mike Payionk: 22:38

Oh, absolutely. So I've worked in quality, I've seen everything from an access based program where you're putting in data to Excel spreadsheets, to keeping books, you know, with a pen and pencil, the benefits you will see from an Enterprise Quality Management System, far outweighs anything that you can even imagine. It has been so beneficial for our company. Like I said, just standardizing certain ways we do things has just transformed our entire business. We don't even worry about that anymore. When we acquire a new company, or we build a new plant, the quality management system is this furthest from the minds of those doing the work of the project managers, because they know we have such an established system. And it's so easy to bring on new plants, that it it makes it so much worth it. And then like I said, for best practices, like I think that's one of the biggest things, especially plants with multiple sites, doing multiple of the same process or the same product, not having best practices not having, plant A talk to plant B, understand that, you know, "hey, we make the same product or it's similar. How did you fix this? Or how did you fix this?" Not having that as you're basically running different plants or different organizations.

Jan Griffiths: 23:53

Yeah, you're not getting the benefits. You're not leveraging the systems and the information across the enterprise. And when you get into m&a type activity, and people are always talking about, oh, we get to leverage the infrastructure and leverage this and leverage that. You can't do it if you're doing it all with a pencil and paper. Y'all, need some technology people.

Mike Payionk: 24:13

Absolutely, absolutely. And that's the way the world's working, we're seeing some organizations that are still trying to fight that. But then, I mean, we have it that's why we're calling it industry 4.0. That's why that's such a big term now is because everything is going that way, and the ones that don't jump on the train or they don't try to adapt to that. They're either going to be left behind or they're going to be struggling to catch up.

Cathy Fisher: 24:36

I do also want to say clearly your organization has been successful in automating your quality management system. What would be one specific action or piece of advice that you would give other manufacturers to ensure that they are as successful in automating their quality management systems?

Mike Payionk: 24:54

Clarity. Clarity with the teams, right. Understanding the EQMS before you implement it and explaining it very clearly to the teams that you're implementing it to. When I came on, I had never used this, this EQMS. before. So, I was learning at the same time they were learning. And I think that was a struggle of myself, trying to learn it, made it my life. So, five years, so I know it inside and out now. But I think things would have been a lot smoother if I went in knowing it and how to apply it to our business model. And to do that, because I was getting questions in the beginning that I just didn't know how to answer. So, I would say, if you're, if you're looking to do this, study up on it, understand what you're trying to sell to your plants, right, because that's what you're doing, you're ultimately trying to sell them a new system or a new way of doing things. And if you don't have it set, or if you don't have a good understanding of what you're trying to tell them, you're going to get some pushback. And I did, I got a lot of pushbacks in the beginning. Now, not so much. But in the beginning, it was Yeah.

Cathy Fisher: 25:54

Yeah, it sounds like you guys have certainly been very successful, despite some of the constraints that you had. But I applaud the automation efforts that your team has taken going forward. And certainly, hope that your message can encourage other manufacturers, especially in the automotive industry, and more importantly, getting our industry standards writers to really emphasize the value of moving towards automation of these quality management processes as we're doing with other aspects of the business.

Mike Payionk: 26:25

Yeah, absolutely.

Cathy Fisher: 26:25

Thank you so much, Mike.

Jan Griffiths: 26:27

The money is made in the supply chain. And that is not going to happen without technology, and without understanding what it's going to take to work with speed and agility. And, Mike Payionk, you have got that figured out. Thank you so much for being on the show with us today.

Mike Payionk: 26:42

You're welcome. Thanks for having me. I look forward to season three. Maybe I'll get a guest spot. I don't know.

Cathy Fisher: 26:47

Absolutely. You're always welcome, Mike.

Jan Griffiths: 26:52

Are you ready to find the money in your supply chain? Visit www.autosupplychainprophets.com To learn how or click the link in the show notes below.