This presentation presents key findings from LNS Research's yearlong benchmark study of over 500 global quality executives. It details how market leaders are leveraging EQMS software, and makes recommendations for executives looking to learn more or invest in this space.

1. Global State
of EQMS
Matthew Littlefield
President and Principal Analyst
#GlobalEQMS

2. EQMS Adoption
Major adoptions of EQMS is coming.
#GlobalEQMS

3. Agenda
•About LNS Research
•Why Quality Matters
•Benchmark Data
•Strategic Objectives
•Our Biggest Challenges
•Building a Model of Operational Excellence
•EQMS Best Practices
•Recommendations for Success
#GlobalEQMS

4. Understanding LNS
LNS is research and advisory firm that helps
clients innovate and achieve operational
excellence.
We deliver the market intelligence and
thought leadership needed to capture the
value of technology through:
 Experienced analysts
 Primary research
 Deep industry contacts
 Interactive data visualizations
#GlobalEQMS

5. Global Quality Advisory Council
 Starbucks - VP of Global Quality and Regulatory Affairs
 Onyx Pharmaceutical - VP of Global Quality
 Whirlpool - Director of Quality
 Lindt Chocolate – VP R&D and Quality
 Oriflame - Corporate Quality Lead
 Champion Technology - VP Quality and EH&S
 Gurwitch Products - VP Research and Quality
 Newell Rubbermaid - Director of Quality
 Hygia Health Service - VP of Operations
 Discount Tire - VP of Quality
 Daikin McQuay - Director, Corporate Quality
 Bio-Rad Laboratories – Director of Quality Assurance
 Owens-Illinios – VP of Global Quality
 Harley Davidson – Director Corporate Quality
 Alcoa – Director Corporate Quality
#GlobalEQMS

6. Research Model
#GlobalEQMS

7. Research Demographics
•450+ Respondents to LNS Research Quality Survey
from June 15, 2012 – March 31, 2013
#GlobalEQMS

8. Why Quality Matters
#GlobalEQMS

9. The Changing Customer and Speed of News
Changing preferences regarding where news is
received, where research is conducted, and how
opinions are formed
LA Times, Boston Globe:
For Sale
Google Reader:
Shuts Down
Facebook and LinkedIn:
News Feeds Transformed
#GlobalEQMS

10. The Changing Customer
Social Proof is the New Paradigm
•People are starting the buying process online
•Everything is ranked, rated, and reviewed
•Buyers are interested in what others are interested in
•They trust other people in their network
•Good and poor quality are hard to hide
Breaking News: Company X Recalls
1,000,000 Cars in U.S.
4/4/13
Boston, MA – After several incidents, Company X has
decided to recall model 302z from its 2010 fleet. Owners
are asked to return their automobiles to dealers for faulty
#GlobalEQMS

11. Global Scale for Products and Operations
275 subsidiary companies, in 60
countries with 146 manufacturing sites
250+ brands, 26 Billion Dollar brands,
100+ manufacturing sites, consumers in
180 countries
50+ manufacturing sites in 25+ countries
with almost 10,000,000 units sold across
70 models
#GlobalEQMS

12. Top 5 Financial Objectives
•Growing revenue is top for the majority of all companies
#GlobalEQMS

13. Top 5 Operational Objectives
•Improving manufacturing efficiency is top but not well
aligned to financial goals
#GlobalEQMS

14. Top 5 Quality Management Objectives
•Quality goals are synched with operations but not
necessarily financial goals
#GlobalEQMS

15. Top 5 Quality Challenges
•The top challenges are around Culture, metrics, and
systems - all important elements of Operational Excellence
#GlobalEQMS

16. EQMS Explained
#GlobalEQMS

17. Why Enterprise Quality Management Software
•Disparate systems and business process
•Lack of visibility into performance, compliance, and
risk
•Nearly impossible to collaborate across
departments, trading partners, or the supply chain.
•Quality and non-conformance data, as well as best
practices, are not shared across the organization
•Connecting Risk and Compliance as part of a
quality platform
#GlobalEQMS

18. Current System Landscape
•ERP – Financial data, inventory data, production routings,
recipe management
•BI – Reporting, Analytics, Visibility
•CRM – Customer complaints, trade promotions
•PLM – Labeling management, packaging management,
quality specifications, sampling plans
•LIMS – Measurements and testing of Fats, solids, bacteria
counts, etc.
•MOM – In line and at line testing, statistical process control,
manufacturing non-conformances
•SCM – Supplier risk scorecards, delivery scheduling,
inspection
•EHS – Carbon management, energy management,
reporting
#GlobalEQMS

19. EQMS Architecture
#GlobalEQMS

20. Adoption of ERP
•ERP is well adopted across the industry
#GlobalEQMS

21. Adoption of BI
•BI is emerging, complements data and
reporting in ERP
#GlobalEQMS

22. Adoption of EQMS
Major adoptions of EQMS is coming.
#GlobalEQMS

23. Adoption of EQMS of Functionality
•Because, Life Sciences companies view
functionality as disparate systems: Doc Control,
CAPA, Compliance, Risk and more
#GlobalEQMS

24. Interconnecting Quality Processes
Identification Investigation Escalation Correction Prevention Efficacy
Assess Quantify Prioritize Mitigate
Establish Criteria Assessment Reporting Communication Follow up
Design Monitor Control
CAPA
Process
Risk
Management
Audit
Management
Good
Manufacturing
Practices
#GlobalEQMS

25. Proving the Value of EQMS – Metrics that Matter
#GlobalEQMS

26. Understanding a Box Plot
Box plots help to easily
visualize the distribution
of benchmark survey data
#GlobalEQMS

27. PROCESS
HEALTH
Use of FMEA
and ECO
Supplier
Audits
Product
Compliance
CAPA
Closure
Customer
Complaints
Leading and Lagging KPIs
PROCESS
RESULTS
Engineering
Change
Orders
Supplier
Defect Rate
OEE
On Time
Shipments
Successful
NPI
#GlobalEQMS

28. The Cost of Quality
•CoQ = CoGQ + CoPQ
•More than just failure costs
•Measured as a share of revenue for
benchmarking purposes
•Can be thought of as an optimization problem –
non linear
•Is a major contributor to operating margin
©LNS Research 2013
#GlobalEQMS

29. The Cost of Poor Quality
©LNS Research 2013
•CoPQ = IFC + EXC, where:
•IFC = Internal Failure Costs = Scrap Costs +
Rework Costs
•EFC = External Failure Costs = Returned
Product Costs + Warranty Costs + Product Recall
Costs
#GlobalEQMS

30. The Cost of Good Quality
©LNS Research 2013
•CoGQ = AC + PC, where:
•AC = Appraisal Costs = % of labor, software, and
equipment costs focused on appraisal activities
•PC = Prevention Costs = % of labor, software,
and equipment costs focused on prevention
activities
#GlobalEQMS

31. The Cost of Poor Quality
©LNS Research 2013
•Measured as a % of revenue.
#GlobalEQMS

32. The Cost of Good Quality
©LNS Research 2013
•Measured as a % of revenue.
#GlobalEQMS

33. Overall Equipment Effectiveness (OEE)
•Measures availability, efficiency, and quality (differs
by company)
•Must be put in context of supply chain
#GlobalEQMS

34. Improving OEE
•Establishing quality as a top executive priority
improves median OEE by over 9%
#GlobalEQMS

35. Improving OEE
•Establishing real-time visibility of quality metrics in
manufacturing improves median OEE by >7%
#GlobalEQMS

36. Improving OEE
•Establishing closed-loop processes to connect quality
across the value chain improves median OEE by >9%
#GlobalEQMS

37. Improving OEE
•Implementing EQMS improves median OEE
by >7%
#GlobalEQMS

38. Complete and On-Time Deliveries
•Percentage of products delivered on time with no
errors or re-promise dates
#GlobalEQMS

39. Improving On-Time Deliveries
•Ability to identify risk factors across operations
improves median OTD by >3%
#GlobalEQMS

40. Improving On-Time Deliveries
•Establishing closed-loop processes to connect quality
across the value chain improves median OTD by >3%
#GlobalEQMS

41. Improving On-Time Deliveries
•Collecting quality data automatically through a web-
based portal improves median OTD by >3%
#GlobalEQMS

42. Successful New Product Introductions (NPI)
•Measures the number of new products introduced
hitting time, volume, and quality targets
#GlobalEQMS

43. Improving New Product Introductions (NPI)
•Establishing a formal risk management framework
improves median successful NPIs by >32%
#GlobalEQMS

44. Improving New Product Introductions (NPI)
•The ability to identify risk factors across operations
improves median successful NPIs by >24%
#GlobalEQMS

45. Improving New Product Introductions (NPI)
•Including suppliers in design for quality initiatives
improves median successful NPIs by >9%
#GlobalEQMS

46. Improving New Product Introductions (NPI)
•Establishing real-time visibility of quality metrics in
manufacturing improves median successful NPIs by >16%
#GlobalEQMS

47. Percentage of Products in Compliance
•Measures effectiveness of internal education
programs/SOPs
#GlobalEQMS

48. Improving Products in Compliance
•Easily understood compliance processes
improves median Products in Compliance by >5%
#GlobalEQMS

49. Improving Products in Compliance
•Establishing closed-loop processes to connect
improves median Products in Compliance by >3%
#GlobalEQMS

50. Improving Products in Compliance
•Establishing a formal NC/CAPA process improves
median Products in Compliance by >3%
#GlobalEQMS

51. Improving Products in Compliance
•Establishing a formal audit management process
improves median Products in Compliance by >3%
#GlobalEQMS

52. Recommendations for Success
•Define the role of quality in your
company’s strategic objectives.
•Identify the relationships between
leading and lagging KPIs across
the value chain
•Benchmark performance in KPIs
and track progress
•Create closed-loop quality
management process with EQMS
•Integrate quality business
processes, like: CAPA, Audit
Management, Risk Management,
and more
#GlobalEQMS

53. Thank You!!
For More Information -
Contact:
Matthew Littlefield
President and Principal Analyst
matthew.littlefield@lnsresearch.com