Does Your Organization Really Benefit from Internal Audits? Time for a Change?

Re: Time for changes - Does your organization really benefit from internal audits?

Stijloor said:

Hello Confused1,

What you should add to your list is Potential Nonconformities (Risks).
Those are prime candidates for Preventive Action.

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In an effort to make audits more value added I have started (or attempted) to take a risk management approach to auditing. But I haven't got much of a handle on risk management principals or how to apply them to my workplace. (which is a distribution center for replacement parts). I have also begun to educate myself to do FEMAS.

One of my more enlightened clients (in the past) used 'Risk' and 'Impact' statements instead of the more compliance oriented non-conformance statements. When written, it made the issue very clear to management what was happening and, therefore, the action necessary. As a result, they were behind corrective actions all the way......as well as the audits!

Re: Time for changes - Does your organization really benefit from internal audits?

confused1 said:

In an effort to make audits more value added I have started (or attempted) to take a risk management approach to auditing. But I haven't got much of a handle on risk management principals or how to apply them to my workplace. (which is a distribution center for replacement parts). I have also begun to educate myself to do FEMAS.

Click to expand...

Hello Confused1,

If you work in a distribution center, I assume that one of the major risks is that the wrong parts go to the wrong location. I just use this as an example.

When you audit, the idea is to look at all provisions that exist in the process that prevent that from happening. Now, if you look closer at these provisions (controls, instructions, equipment, etc.) are there any weaknesses present that could possibly create problems for you and your customer?

See, that's the idea. Too often, audits are focused on what's already wrong (reactive) as opposed to looking at what conditions exist that could possibly go wrong (preventive).

Your desire to learn about FMEA is great. Lots of info here about FMEA.

A personal comment.

Auditing is a very loaded and emotional topic here at The Cove Forums. Just like religion and politics, people have extreme stong feelings about it. That's OK as long as we're willing to look at all sides of the issue. Maybe we can learn a few things.

Good luck!

Stijloor.

Re: Time for changes - Does your organization really benefit from internal audits?

Stijloor said:

Hello Confused1,

What you should add to your list is Potential Nonconformities (Risks).
Those are prime candidates for Preventive Action.

Stijloor.

Click to expand...

In an effort to add value to internal auditing ( I have been doing compliance auditing for a while and feel it is of limited value as it's a go-no-go guage) I have wondered if perhaps I should take a risk management approach.

I work in a distribution center for replacement parts (all we do is purchase, recieve, pack, stock, pick and ship).

I kinda wonder if risk management would be like using a sledge hammer on the head of a pin. -also have to wonder about management's perception.

All management wants is to get the $$$ out the door.

So we get a lot of returns - mabey that would be a good place to start.

Thoughts/ comments, please.

confused1

Re: Time for changes - Does your organization really benefit from internal audits?

confused1 said:

In an effort to add value to internal auditing ( I have been doing compliance auditing for a while and feel it is of limited value as it's a go-no-go guage) I have wondered if perhaps I should take a risk management approach.

I work in a distribution center for replacement parts (all we do is purchase, recieve, pack, stock, pick and ship).

I kinda wonder if risk management would be like using a sledge hammer on the head of a pin. -also have to wonder about management's perception.

All management wants is to get the $$$ out the door.

So we get a lot of returns - mabey that would be a good place to start.

Thoughts/ comments, please.

confused1

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That would be an excellent place to start because you have disappointed the Customer.

Customer returns are indicative of a system that has failed. Here is where serious corrective action is necessary. Once corrective actions (usually process changes) have been implemented, internal audits could be used to verify that the actions remain in place (old habits die hard) and that the modified methods are complied with.

To make a case, and to obtain Management's attention, possibly their commitment; you may want to calculate $$$$$$ wasted. That's the only language managers understand.

Let's continue the dialogue. Weekends are usually quiet here. I am sure others will chime in at some time. Trust me, it's never boring here...

Stijloor.

Re: Time for changes - Does your organization really benefit from internal audits?

Stijloor said:

That would be an excellent place to start because you have disappointed the Customer.

Customer returns are indicative of a system that has failed. Here is where serious corrective action is necessary. Once corrective actions (usually process changes) have been implemented, internal audits could be used to verify that the actions remain in place (old habits die hard) and that the modified methods are complied with.

To make a case, and to obtain Management's attention, possibly their commitment; you may want to calculate $$$$$$ wasted. That's the only language managers understand.

Let's continue the dialogue. Weekends are usually quiet here. I am sure others will chime in at some time. Trust me, it's never boring here...

Stijloor.

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Plant manager once told us that we wasted a lot of $$$$ in '06 because we can't count or read part #s.

We have stayed the course -'07 was no differnt!
Old habits may die hard but bad habits seem to get an extra life.

Just thinking out loud:
How to calculate the cost of returns - Cost of product + cost of 2 way shipping + ??

How do you put a value on:
Customer good will
Damage to reputation
Goods not returned (under a certain $ amt. we don't ask customer to return stuff)

Then I can apply the same to customer complaints - or can I? Not all customer complaints result in a return ,and not all returns are complaints.
I love my job.

Re: Time for changes - Does your organization really benefit from internal audits?

confused1 said:

Plant manager once told us that we wasted a lot of $$$$ in '06 because we can't count or read part #s.

We have stayed the course -'07 was no differnt!
Old habits may die hard but bad habits seem to get an extra life.

Just thinking out loud:
How to calculate the cost of returns - Cost of product + cost of 2 way shipping + ??

How do you put a value on:
Customer good will
Damage to reputation
Goods not returned (under a certain $ amt. we don't ask customer to return stuff)

Then I can apply the same to customer complaints - or can I? Not all customer complaints result in a return, and not all returns are complaints.
I love my job.

Click to expand...

There are always certain elements that are difficult to put a price tag on. I would certainly start with the knowable expenses such as the cost of nonreturnable product, shipping charges, labor involved, processing paperwork, etc.

Loss of goodwill and damage to reputation are difficult to measure in terms of dollars even though you know that it has a monetary effect. A best estimate is better than nothing.

There are some interesting threads about the Cost of Quality here at The Cove. You may want to check that out.

As far as customer complaints are concerned, you can put a dollar figure on those as well. Again based on knowable figures and best estimates. As long as the dollar figures are used for good purpose and not to beat people over the head, they can be used as a decent measurements. Those efforts should never be used as punitive measures. Trust me, people are very smart and they know numbers too.

Stijloor.

P.S.

Allow me to add a few quotes from Dr. W. Edwards Deming, one of which he attributed to Dr. Lloyd Nelson.

"The most important figures that one needs for management are unknown or unknowable (Lloyd S. Nelson, director of statistical methods for the Nashua corporation), but successful management must nevertheless take account of them."

Deming realized that many important things that must be managed couldn’t be measured. Both points are important. One, not everything of importance to management can be measured. And two, you must still manage those important things. Spend $20,000 training 10 people in a special skill. What's the benefit? "You'll never know," answered Deming. "You'll never be able to measure it. Why did you do it? Because you believed it would pay off. Theory." Dr. Deming is often incorrectly quoted as saying, "You can't manage what you can't measure." In fact, he stated that one of the seven deadly diseases of management is running a company on visible figures alone.

I have done/organized internal audits (When I was an MR) and have also done 3rd party audits on behalf of certifying bodies. The question of an organization benefiting (or not) by internal audit puzzles me. Going through the comments above I get the following impressions (please correct me if I am wrong)

1. Internal audits are done merely to satisfy the requirements of ISO 9001 (or other standards) not necessarily to verify to what extent QMS (or EMS) is being complied.
2. Internal auditors may not perhaps be trained enough to be able to distinguish between the essentials & superficials.

3. As a result of 1) and 2) above the job may not be taken up in all seriousness. This is more so since the auditors and auditees may know each other fairly well due to their day to day contacts.

4. Managements as a rule - with due apologies to the honorable exceptions - are not supportive of the whole exercise.

Having said that I must also mention that a good many consultants I have come across do not study adequately the systems and procedures that may already be in place (written or otherwise) prior to introduction of QMS due to their lack of knowledge of the industry/business - sadly due to lack of their own understanding of the requirements. I have come across people consulting without any worthwhile background in industry or business or quality! The idea is to get certification and fast and this reduces the internal audits - once in 3, 6 0r 12 months to a mere formality.

The point I am making is - if a system has been set up that satisfies the requirements of the Standard and earns the appreciation of the management for its usefulness, there is every chance of management encouraging internal audits for the feedback it would provide them for further action.

Jupitor said:

1. Internal audits are done merely to satisfy the requirements of ISO 9001 (or other standards) not necessarily to verify to what extent QMS (or EMS) is being complied.

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Apart from Audting Standard requirement, you can add Best and Bad practices seen across the Processes.

Will definitly add value to the Audit

sathis

Thanks Sathis. This is a good idea.

Jupitor:
agree: