What Are Layered Process Audits?
What Are Layered Process Audits?
Cost of Quality – The Hidden Truth About Your Ultimate Quality Metric
Organizations with robust LPA programs in place see significantly lower rework and scrap, fewer warranty holdbacks, and reduced customer complaints.
The underlying cause of most of these issues is a lack of process standardization or a failure to follow these approved processes. The key to improvement is to define these standards and create systems that ensure those processes are followed correctly.
A layered process audits program includes three critical things:
- Auditors pulled from across the organization, including all levels of management
- A set of simple audits, which do not require specialized knowledge to conduct, focused on high-risk processes
- A system of reporting and follow-up that exposes problem areas and ensures containment and corrections are put – and held – in place
Product Inspections are Not Enough
Process audits are an important, but often overlooked, part of a holistic quality system. Most standard quality systems are focused on product sampling and inspections – testing the actual output of a manufacturing or servicing process. This is necessary and important, but doesn’t go far enough.
Nonconformances will likely be caught, but because of the delay and small sample sizes, significant rework and scrap costs may have already been incurred. Catching nonconformances earlier can significantly reduce cost of quality.
Moreover, some quality problems, especially those related to durability, cannot be caught with standard product inspections. A part may look fine leaving the plant, but if it was built incorrectly, will exhibit quality issues later. This can lead to significant costs, including customer complaints, warranty costs – even recalls.
Start with Process Audits
Process audits look at how products are made and services are rendered, and they can expose the nonconforming processes much earlier. Most process audits are conducted ad-hoc or less formally, as in a Gemba walk. An LPA program introduces a systematized approach to process audits that moves the needle for good quality and better performance.
LPAs are Process Audits on Steroids
The key difference between a normal process audit and a layered process audit is who participates.
In a LPA program, auditors are drawn from the quality organization, but the team also includes individuals from other areas of the organization and from multiple levels of management, including executive leadership (the “layers” in LPA).
We’ve found that successful LPA programs often include as much as 40-50% of an organization’s headcount as auditors as the “culture of quality” becomes fully realized.
In a LPA system, audits are conducted at a pre-determined frequency depending on the level (or layer) of the auditor. Supervisors often conduct frequent process audits in their own area, while higher-level managers conduct the same audits less frequently and always over a broader range of areas.
By conducting multiple layers of the same audit, a LPA system helps ensure that the audits are conducted accurately because the auditors are essentially double-checking each other. And by including multiple layers of management, the company demonstrates that quality is important to everyone.
Simple Audits that Anyone Can Conduct
The questions that are part of a layered process audit are written to avoid the need for specialized knowledge because people from throughout the organization are involved in conducting the audits (learn more about writing good audit questions).
Audits usually focus on processes and devices where deviation from the standard represents the highest risk of deviations or defects. If, for example, an electronic scale continually makes critical measurements for ingredients in a sensitive chemical compound, problems that affect the performance and calibration of the scale could quickly cascade into bad product. The process for calibrating the scale is a good candidate for an audit: it should be examined frequently to ensure that it remains within tolerances.
Another example is a set of bolts that must be tightened in a specific order. The process audit should check that the standard work instructions are clear, and the operator is tightening the bolts in the specified order.
Containing the Problem and Closing the Loop
Layered process audit systems are only truly effective when they integrate action, analysis and improvements. If an audit area does not pass, the auditor conducting the audit should record their finding, and immediately take steps to prevent potentially defective products from getting out the door – containing the problem. Usually corrective action can be anticipated, and even taken immediately by the auditor. Many corrective actions, however, are more complex and involve other people.
The LPA system should account for this, track the assignment of the corrective action, and follow it through to completion – closing the loop on quality. Robust LPA systems capture all of this information and make it readily available for later analysis. A good system will highlight problem areas and help management recognize improvement opportunities.
Why Conduct Layered Process Audits?
Organizations face increasing complexity and change, and are finding it challenging to account for the full cost of quality, including realized risk events, to the tune of tens of billions of dollars in costs across the major industries.
Many organizations are missing a key opportunity to limit and control risk: they are not auditing their operations and processes as comprehensively as their products.
By looking beyond traditional product audits, which are reactive, and adopting process audits, which are inherently proactive, organizations can ensure that key activities are done properly and consistently, thereby improving quality at each and every stage of production. Layered process audits prevent issues that product audits either can’t identify or identify too late, requiring costly repair or scrapping, or even worse.
Further, a LPA system will help identify error-proofing systems that have become ineffective over time, highlight shortcomings before they become serious problems, and guide management on how to direct resources to review symptoms, identify problems and find root causes.
Most importantly, a well-implemented layered audit program will help instill a culture of quality within an organization, as senior level managers and executives actively demonstrate the importance of quality to the overall organization.
Measuring the Value of an LPA system
The value of a LPA system is fundamentally measured in error reduction, which shows itself in many ways:
- Direct Material costs – represent the raw materials used in production which have to be thrown away
- Maintenance error costs – although ongoing maintenance is required to keep delivering at the highest levels, errors here can increase production issues leading to scrap or, more directly, lead to costly acceleration of equipment failures
- Rework costs – including work that must be re-done because it was completed improperly in the first place. Because it occurs out of sequence, rework generally incurs significantly higher costs than normal straight line operations
- Warranty costs – these costs and similar reserves are used to pay for the defects that are identified post-delivery, typically initiated due to dissatisfaction by end customers
- Inspection costs – these reflect the total cost to the organization for dedicated and non-dedicated resources assigning, executing, managing, and reviewing audit and inspection activities
A good LPA programs can also deliver millions of dollars in annual savings. Find out more in our White Paper: Calculating the ROI of Layered Process Audits.Just getting started with layered process audits? We break down implementing an LPA program into 3 simple steps in our LPA 101 eBook.
Establishing a Robust LPA Program
There are a number of ways to implement layered process audits in your organization, but the most cost-effective way, by far, is to leverage LPA software. It is also the only solution that will help you realize the full potential of a layered audit program. For a more thorough guide to establishing a LPA system at your organization, please review these resources:
Best Practices in Creating a Layered Process Audit Program
3 Signs your company is ready for implementing a Layered Process Audit Program