Its main effect is to focus the organisation on the delivery of value to its customers and its stakeholders as described in its organisational context.
It does this through the concept of the Value Chain: an idea which goes back to 1985, when Professor Michael Porter introduced it in his widely-acclaimed book “Competitive Advantage”. It has since become the preferred model for business transformation or operational excellence and is behind the design of most of the world’s leading businesses.
The value chain looks at a business from its highest level processes—those which deliver end to end value from its supply chain, through its core operations to its customers. It does this in preference to describing a business in terms of its functions (e.g. engineering, manufacturing, distribution etc.) since the latter confers no understanding of the creation and flow of value. If written correctly, processes do.
If for example, the organisational context was ‘the manufacture of electronic aerospace products’; the value chain might represent some sort of product lifecycle: showing value increasing at each step from business acquisition to product withdrawal. At the outset the value is minimal: consisting of individual electronic components which do little until they are joined together. As they are combined they firstly become a circuit board: increasing the value slightly; individual boards may then be added to switches and dials to become a complete unit; increasing the value even more and finally the units are packed and shipped, ready for being sold. At each part of that production chain, value is added.
But the value is also dependent on the quality of the parts as it is on the unit’s use at the customer.
Take Bosch for example: who operate The Rule of Ten. This states that it is not just rapid error detection that is vital to quality improvement. The key is solving problems as they arise at the earliest points in the value chain. For example, solving a simple inventory logging issue in Goods Inwards could create an on-going saving which is tenfold greater than the solving of an issue in the product assembly/ manufacturing process.
So for a value chain to be optimised; its incoming supply chains also need to be optimised: one at a time. That is more than configuration management – it is about optimisation of the entire supply chain process: right down to the separate processes that each supplier uses to manufacture its own particular component. Whilst in the past most organisations have measured the quality of their products, very few have measured the quality of the processes that create them. Rev D provides a real opportunity to do this.
It is also about the maintenance of value when the customer uses the product: which implies optimisation of the customer experience too. That might involve an extension of the manufacturer’s service processes into its customers’ operations and even a shared use of parts of its management system.
If you would like to know more about the importance of the Value Chain in the changes to AS9100 D then please click on the link below for more information.
Alternatively we are currently running a series of free webinars that will go into more depth on the subject as well as covering other areas to do with the standards transition. Just click on the link below to sign up.
The quality of the goods you produce depends on the quality of your production process. At each step of the value chain, fixing a problem is approximately 10 times faster and cheaper than doing so in the next phase. Process quality management is essential to the continuous improvement of your production operations.