by Grace L. Duffy
Today’s audit environment is truly global. Gone are the days of small, local teams working on focused audits within a single department. Seldom are all audit members in the same time zone or even the same continent.
Preparing for an audit in a decentralized function takes complex planning and attention to detail. Effective decentralized management audits require the right skills focused on the right data within manageable time frames. Modular Kaizen is an integrated systems approach to organizational performance that supports the complex planning required for decentralized audits.
What is Modular Kaizen?
Modular Kaizen is a modification of the traditional kaizen improvement process that provides the same rapid results without removing critical personnel from daily operations. It’s conducted over a series of short activities designed to fit into a highly driven work environment.
Modular Kaizen was developed as a method for implementing a culture of quality improvement within an agency of the U.S. federal government during the H1N1 flu virus response in 2009. The agency was deeply involved in both the global preparation for and response to the effects of the H1N1 virus. Key personnel involved in the development of the cultural quality framework were leading scientists in the efforts surrounding the H1N1 epidemic. I was challenged with leading globally dispersed teams with subject matter experts busy working on life-saving activities.
Improvement relies on a system of processes
A management audit is an effective tool for process improvement. Faster process cycles and associated agility often suggest a decentralized auditing event. Auditors must be prepared to support this decentralized structure through remote communication.
One purpose of a management audit is to assure that the correct information is fed back to the appropriate parts of the organization to facilitate sustainability. The example described in this article shows how planning for a decentralized audit identified underlying process problems.
The emerging requirement to conduct decentralized audits fits well into the concept of Modular Kaizen. Modular Kaizen places heavy focus on planning, considering the availability of team members and subject matter experts. Critical to any successful audit is the availability of supporting documentation, often stored remotely under differing levels of security and access. Tools can be employed to structure complex activities to minimize disruption and maximize audit success.
What the audit tells us about a process
Figure 1 illustrates the concept of “accept, adjust, or abandon” in auditing processes. The least disruptive condition is to have the current process flow smoothly from one task to another, as illustrated in flow 1. Occasionally, processes will veer off expected target performance and exhibit a slight variation as shown in flow 2. This variation is still within the expected range of performance for the current process, so the process simply adapts to the minor variation identified in an audit and returns to the expected flow.
Occasionally a special cause strongly disrupts the flow, as exhibited in flow 3. Here process performance is outside the expected variation of the process. At this point, the process must adjust operations to return to the current process flow.
Finally, in flow 4, external pressure may be so strong on the current process that it’s no longer capable of meeting customer requirements. In this situation, the current state is abandoned and a new process is designed.
Auditing process performance relative to the four flows in figure 1 is a challenge when all the players are in the same room. Achieving an accurate image of how processes are followed during a remote audit can be downright frustrating. Unless the auditor and auditees think clearly through the audit steps well ahead of time, the event can fail miserably.
An example from real life
I recently served as a senior quality consultant to the electric utility industry. During this time, I designed quality assurance systems for protection and control departments. I was asked to complete a project closeout audit as follow-up for corrective action. One issue was the failure to follow documented procedures for engineering checklists and peer reviews before releasing an electrical design package to the client.
When planning for a decentralized audit, the following items are critical to a favorable outcome:
- The right skills
- The right standard
- In the right place
- At the right time
- With the right documentation
Although the right skills were assigned to the process being audited at the electric utility, several other requirements were not as simply addressed.
The office being audited and the subject matter expert were in Birmingham, Alabama, along with the project coordinator and director responsible for the client. The auditor and project manager work out of headquarters near Orlando. We used online virtual meeting software for audit meetings. Keep in mind that this example is influenced by only one time zone. Imagine what happens when the audit is with locations on the other side of the globe!
Obstacles in this decentralized audit appeared quickly. Because the subject matter expert continued to have daily responsibilities for technical upgrades at client substations, I needed to schedule audit virtual sessions in between his work activities in Alabama. The Birmingham office was small with no backup for specialized engineering work.
Road blocks also appeared during documentation planning. Accessing standards and documentation across different servers became an issue. I use Microsoft Windows 10; the auditee location uses Windows 7. Windows 10 defaults to Microsoft Edge; Windows 7 uses Internet Explorer. IT access rules prevented the subject matter expert from having field access to corporate files, so we needed to download copies to a tablet we carried with us. Even with this workaround, we couldn’t always access the files we needed.
The reference standard for auditing the process was contained in a series of control manuals, but they weren’t all located in the same office or in the same format. Companywide standards were housed in electronic format at the headquarters location outside Orlando. Client-specific standards were maintained at the Birmingham office in electronic or hard copy files. Project-specific information was maintained in Birmingham across several software applications and files. MS Project files were kept by the project coordinator in Birmingham.
The standard for design packages follows generic electrical engineering protocols. A series of checklists and peer reviews are required before delivering the final package to the client. A common flowchart was maintained at headquarters for all company protection and control design packages. The Birmingham office had modified the flow for minor changes in client communication during design and acceptance.
Checklists for preliminary design, engineering package assembly, and final package delivery were available as standard templates with slight modifications for client preferences.
I developed a tracking sheet to record scheduled and completed dates of checklists and peer reviews for each of the three phases of project design. Event completions by the required date were used as project key performance indicators. When I compared the dates on the checklist and peer review documents with the project schedule based on the standard flowchart, I discovered serious discrepancies. When I asked about this, I was told, “Well, we don’t use the standard checklists. We wait to review until issue for acceptance.” This was a big clue for the audit.
Because I didn’t have access to company MS Project files, the project coordinator offered to create a PDF version of the project schedule to use during the virtual audit. Figure 2 is the PDF file. Problems with this approach were apparent quickly. When I maximized the font size by 400 percent to see the text, I couldn’t see sequencing throughout the project. The schedule includes individual dates for all three checklist and peer review phases that weren’t met, but instead left for the end of the project.
Apply data access and Modular Kaizen project scheduling tools
The project team and I quickly came to the root cause analysis of the corrective action situation. The local office had accepted more client work than time allowed and was cutting corners to meet deadlines. Resolving obstacles to performing the decentralized audit highlighted the discrepancies between the standard and the utility’s compliance.
As a result of this experience, I worked with the project coordinator and director to establish firm expectations for meeting key performance indicators. I used the Modular Kaizen model to suggest planning tools for an effective decentralized audit.
Figure 3 illustrates the major tools recommended by Modular Kaizen. The tools identified for this audit activity were:
- Quality at the source
- Modular flow
- Pull technology
- Project management
As we become less preventive and more reactive, the cost of correction increases in dollars and reputation. Planning to have all materials and personnel available for a remote audit is critical. We learned from our mistakes during this example.
The checklists and peer review templates provide a description standard for deliverables. The Birmingham team established the project schedule, modified standard checklists to meet the nuances of its client contract, and performed tasks as identified in the process flowchart. The local team was augmented with corporate project management and quality assurance for key performance tracking and the closing audit.
Modular flow: Schedule separately using pull technology
Modular flow assumes there is no need to have team members in the same room at the same time to perform a closing audit. Advanced planning ensures data are available in the correct format, in the right place, and with access authority for each scheduled activity.
Figure 4 illustrates the modular activities possible through effective planning.
Note that the project coordinator schedules the project kickoff meeting and builds the project schedule based on information from the project lead. The design engineer performs engineering activities, including three phases of checklists to meet content and due dates. Once the checklists are performed, the director is queued to perform the associated peer review. When the package is accepted by the customer, the director performs final signoffs for project close.
All members of the team don’t need to be present for the closing audit. If the project coordinator can present all materials to meet audit requirements, it’s done.
A Modular Kaizen approach to the decentralized audit
The decentralized audit requires significant advanced planning. Modular Kaizen focuses on the preventive nature of planning rather than the reactive nature of correction. Anticipating the skills, data, standards, and timing required for a decentralized audit allows both auditee and auditor to use their time effectively. In this fast-paced and highly disruptive world, using tools to assure that an audit is done right the first time is worth the work.
About the author
Grace L. Duffy has more than 40 years of experience in successful business and process management in corporate, government, education, and health care. She uses her experience as a former president, CEO, and senior manager to help organizations improve. She has authored 13 texts and many articles on quality, leadership, and organizational performance. She is a frequent speaker and trainer.
Grace holds an MBA from Georgia State University. She is an ASQ CMQ/OE, CQIA, SSGB, and CQA. Grace is a Lean Six Sigma Master Black Belt, ASQ Fellow, and Distinguished Service Medalist. Grace is the 2014 Quality Magazine Quality Person of the year and the 2016 recipient of the Asia-Pacific Quality Organization Milflora M. Gatchalian International Woman in Quality Medal.