Running Head QUALITY IN A JOB SHOP 1 Qualit.docx

Running Head: QUALITY IN A JOB SHOP 1
Quality in a Job Shop: A Case Study
Dr. L.E. Taylor
American InterContinental University – Houston TX
QUALITY IN A JOB SHOP 2
Abstract
This is a case study of the quality management systems of a
small custom precision parts
manufacturing business. The name and location of the company
have been withheld to ensure
that confidentiality is maintained. This case study was
developed from personal interviews with

the principles and on-site observation. It is intended to help
students understand the unique
challenges faced by small businesses that must find cost
effective ways to sustain superior
quality in low volume high variety operational environments.
Quality in a Job Shop
The XYZ Machine Company is a contract manufacturer of
precision close tolerance
assemblies and parts for medical, high technology and
petrochemical industries. The company’s
customers order unique tools, assemblies or parts, created to
their exact specifications and
requirements. The parts are created from drawings and
information that the customer originates.
This type of business fits the classification of a “Job Shop.” In
this type of business model,
activity is driven by orders from the customer and there are few
opportunities for continuous

flow type operations. Order lead times vary from six to twelve
weeks based on the complexity of
the work and the availability of the materials. To be successful
in this type of business there are
four important keys; quality, precision, reliability and
flexibility. XYZ Machine Company has
been successfully meeting customer requirement s since 1973.
Figure 1: Shop Floor
Job shop operations rely upon skilled craftsmen and flexible
tools to meet the varying
demands of a diverse set of customers. In a repetitive or
continuous flow type production model
the material undergoes transformation into a finished product
through a specified set of steps. In
the continuous flow or repetitive model of manufacturing, the
machines are specialized and the
workers generally have lower skills, functioning mostly as
machine operators. In the Job Shop
environment, the machines must be capable of creating a broad
range of products and the

workers are typically craftsmen and women who have extensive
knowledge of a wide variety of
materials and manufacturing techniques. The skill of the
worker is needed to set up and create
the various products that may be demanded by customers. XYZ
Machine Company employs
qualified machinists to operate very flexible precision CNC
Milling Machines, Lathes and high
precision fabrication equipment. The skill of the operator is
defined in three levels; Level One
Machinist, Level Two Machinist and Level Three Machinist.
The differences in levels are
defined by demonstrated skills, knowledge and experience. The
company provides OJT and
Formal training opportunities to ensure availability of necessary
skills. Looking back to the four
keys to business success for a Job Shop, we see that quality,
precision, reliability and flexibility
are important factors. When applying these four elements to the
business at XYZ Machine
Company we see that the employees must be able to work with a
wide variety of materials
(Figure 2 Examples of Work) that will be needed by the various
industries that they serve.

Figure 2: Examples of Work
Additionally, the employees must be capable of working
effectively with specialty
engineering and professionals from a broad range of industries.
This flexibility must also be
reflected in the tools available to the craftsmen at XYZ Machine
Company. The tools must
allow the craftsman to efficiently and reliably create intricate
components from a wide variety of
materials and meet high precision tolerances. The applications
where the final products are used
are often either mission critical or medically critical
environments. Therefore, scheduling and on
time delivery of high quality products are of paramount
concern.

From a financial perspective the utilization of machines and
human resources are an
important aspect of the business, XYZ Machine Company
employs a “Scheduling” team with
responsibility for job planning and ensuring that machines are
highly utilized. The scheduling
group must understand the amount and type of Work Orders that
are pending in the system and
ensure that each order is scheduled with the correct type of
machine and a machinist with the
appropriate skill level. Customer delivery commitments are
also an important component of the
job scheduling activity. Customers are typically quoted specific
lead times and delivery dates at
the time the orders are accepted. Also, on time delivery is a
critical component of supplier
measurement for many of XYZ’s customers and therefore is a
driving factor of the quality image
of most customers. The scheduler must balance machine
capability, and machinist skill
availability to create a financially viable and timely production
schedule.

Quality products and processes are a basic requirement of XYZ
Machine Company’s
customer base. The customers are often either tier one
industrial companies or highly
specialized medical institutions who expect and require Six
Sigma Quality. XYZ maintains an
ISO 9001: 2008 Certified Quality System which we will review
at a high level in the following
sections.
A top in level flow of the customer orders is depicted Figure 3
below. This process
ensures that customer specifications, material requirements and
special instructions are all
carefully reviewed before an order is accepted and a customer
commitment is made.
1. Review of Customer
RFQ – FAX, Email, Letter or
Pick Up.

2. Will company quote the
Job?
3. Prepare the Quote and
Review it internally
4. Send Quote to Customer
5. Work Order, Materials,
and scheduling
Request for
Quote
Scheduling,

Material Order
and Processing
Prepare and
Review
Quotation
Send Quote
and receive
Customer
Acceptance
Bid
Decision
YES
NO
Send No Quote
to the Customer
Figure 3: Top Level Order Process

This helps to ensure that scheduled delivery dates will be highly
reliable and customers will be
able to depend upon the scheduled dates to coordinate with
other elements of their projects.
The Quality System is composed of the Quality Policy including
the Mission and Vision,
The Quality Procedures and Work Instructions. The Policies,
Procedures, and Work Instructions
are controlled documents and are maintained in an electronic
and paper form. The company has
assigned one individual (ISO/Document Control Manager) with
the responsibility of regularly
reviewing and maintaining the documentation. Changes and
updates are managed within a
system that requires departmental managerial review and
executive management approval.
Given the relative small size of the operation the document
control system is largely a manual
system that controls and coordinates various electronic files and
documents. These documents
include the confidential product descriptions, CAD drawings
and CNC Programs necessary to
produce the product. Earlier problems with control of drawing

and CNC program revisions were
solved through the implementation a centralized document
repository and control system that
ensures the approved revisions of the manufacturing documents
are tightly controlled and
reviewed before release to production.
Quality metrics are tracked by management for product quality,
internal scrap rates and
on time delivery. Issues relating to Quality are reviewed and
tracked by the management team
through a weekly Quality Meeting. This meeting is typically ½
hour in duration and focuses on
agenda topics that are selected and identified by the ISO
Management Representative or the
Plant Operations Managers. The first metric used is an
internally calculated Quality Score that
is based on the number and severity of defects versus the
number of parts delivered to customers
during a particular monthly. The defects are identified from
Customer Complaints and the
complaints are assigned a multiplier value based on severity;
scale 1, 3, or 9. Customer

identified defects are severity level 9, Minor Defects the
customer is willing to accept (labeling
etc.) are judged severity level 3 and Defects that are identified
and corrected in house are
severity level 1. For example; if customer a complaint is
received about five discrepant parts, the
five parts are multiplied by the severity level (9) and the result
is then divided by the total
monthly shipments and subtracted from one hundred percent and
graphed. In April, customers
found five defective parts from three hundred (300) monthly
shipments. Therefore, 100% - [5
(Defects) X (9 Severity Level)] / 300 (shipments) = 85% Part
Quality Score. (The first two
entries on the graph below are remnants from a prior
measurement process.)
Figure 4: Calculated Quality Score
The quality of internal production processes are tracked using
an Internal Conformity
metric. The metric is developed by dividing the number of In
House Scrap parts by the total
number of parts inspected over a monthly period and subtracting

the value from 100%. The
result is tracked on a monthly basis. In April, 138 parts were
scrapped out of 17,235 that were
inspected; 100% - [138/17235] = 99.2%. This provides the
management team with an
understanding of the relative amount of scrap that is being
generated and a metric that will signal
the need for additional investigation. The metric does not
provide a complete picture of internal
operations quality since the complexity or difficulty of
manufacturing the parts are not
differentiated. Within this metric all parts are counted equally.
(The first two entries on the
graph below are remnants from a prior measurement process.)
Figure 5: Monthly Part Conformity
Customer complaints are tracked by category on a monthly
basis. One must note
that customer complaints may not be received for several
months after a part is manufactured
and delivered. Therefore, some revisions to historical data may

be made and data trends may not
be apparent until the customer actually puts the part into service
or integrates it into a higher
level assembly. It is not uncommon for parts to remain in
customer inventories for several weeks
or months prior to use. Defects or nonconformance are tracked
based on five different
categories; In-House NCR, Customer Complaints, Total
Nonconformance, Customer
Concessions, Supplier nonconformance. The In-House NCR is a
problem that was identified and
corrected internally before it escaped the manufacturing
process. Customer Complaints are
traced by part, not by customer event. One contact or event
(email, phone call or fax) from a
customer may involve multiple parts. In some instances,
customers identify minor
nonconformities that can either be easily corrected by the
customer or worked around. These
types of quality problems are identified as Customer
Concessions and are tracked within the

Nonconformance, Customer Complaint Monthly Report.
Occasionally, suppliers provide raw
material that does not conform to requirements. These types of
nonconformity are also included
on this report. Total Nonconformances are the sum of all the
above types of nonconformance. In
the chart below we can see that there were seven total
nonconformances identified in April; 2
Supplier problems and five Customer Complaints.
Figure 6 Nonconformance Report
The Monthly Nonconformances are further evaluated by
identifying the areas of cause
and the operation that yielded the problem. As we can see
below, the five defects reported by
customers were the result of manual production process steps
such as Bench Work or
Conventional Lathe operations. The CNC Mills and Lathes
yielded no defective products. One
defect resulted from the inspection activity and is identified as
“Quality Control.” This type of

tracking allows the management team to quickly identify areas
within the business where defects
are originating. As we can see two defects are attributed to
“Supplier” sources.
Figure 7: Nonconformance by Department
In the Nonconformance Cause Chart we can see that the two
Supplier induced problems
were material based and additional work will be required to
identify preventive actions to assure
that the problems do not reoccur. The other defects are all
related to manufacturing and
machining process that were performed incorrectly and should
have been captured within the
process.
Figure 8 Nonconformance Cause
The final report that is included in the monthly management
reports is a top level

evaluation of shipping and deliveries. The On Time Shipments
report tracks the total shipments
to customers versus the committed delivery dates.
Predictability and reliability are key factors
in achieving and maintaining customer satisfaction. Therefore,
understanding the company’s
performance in terms of meeting committed delivery dates is
very important. As you can see in
the chart below the XYZ tracks total shipments, on time
deliveries and late deliveries. The
company has established an on time performance goal of 80%.
The performance goals for all of
the operations within the company are managed within a
continuous improvement model that
requires the management team to continually strive to achieve
higher performance in all aspects
of the business.
Figure 9: On Time Delivery
Current Business Challenges and Future Plans

Business Organization and Human Resources
XYZ Machine Company is a small business and is structured as
a closely held
corporation. The company has grown steadily over the past
thirty years and is now reaching an
age and size where the size, scope and complexity of business
must evolve from individualized
to systematic processes. Growth is driving expansion of the
management infrastructure. The
current organizational structure follows a typical Functional
format. This type of organization
typically evolves as business develops and expertise grows
within specific skill areas. At the
present time, XYZ is small enough to have very little exposure
to the limitations of this type of
organizational structure. Cooperation and working relationships
between functional areas seem
to be well established and a general air of cooperation and focus
on customer requirements still
seem to be strongly evident within the team. The executive
team of the company and the senior

managers are mostly family members.
The company is now working on a plan to expand their current
operations to include a
new site. The current site has been totally utilized and the
company needs to expand to meet the
growing demand for its services. The company has negotiated a
purchase agreement for a new
site that is located within two miles of their current shop and is
now working to develop building,
staffing and equipment requirements for the new site.
XYZ is considering the addition of a dedicated HR Manager to
its ranks to help ensure
that the company develops the infrastructure needed to manage
the larger business and to handle
Human Resource issues that need to be addressed; below are
some of the issues that face the
business.
1. Management Team – The management team members all
seem to have very
specialized knowledge and appear to be very good at their jobs.
This also appears to
be a “Family” operation with many blood ties between the
members. The senior

members of this team are generally older and are approaching
retirement or potential
job disruption due to health matters related to age. Therefore,
succession planning is
an important element facing the executive team.
2. Management Knowledge – Most the team developed their
ability through on the job
development. This is a very positive element since all have
deep knowledge of the
business. However, lacking knowledge of management science
leads to some trial
and error management learning and limits the optional strategies
that are considered.
3. Job Descriptions and Job Leveling - The company has a
consolidated Policy Manual
that provides a rough framework to guide the management team.
The executive
management team is preparing to implement a system of
coordinated Job
Classifications with a defined salary structure. This type of
structure will create Job

Grades and Job Descriptions for ALL positions in the company
and will provide clear
salary ranges and skill requirements for progression.
Summary and Conclusion
The ISO 9001 Certification process has driven a significant
focus on quality into the
organization. The system is management driven and supported
with high level measures that are
loosely aligned with the operational processes. The
organization seems to have a strong
commitment to high quality and is consistently focused on
satisfying customer requirements. The
customers of XYZ are satisfied with the quality of material and
services that they currently
receive. However, the customer base is made up of Tier 1
companies from around the world
whose requirements continuously evolve. XYZ must continue
to improve and work to surpass
required performance levels to ensure ongoing growth.
Overall, XYZ Machine is a well-managed business with a
cohesive and knowledgeable
management team. The organization itself is growing and is
approaching a point where the

management structures and processes must evolve from
individualized to systematic
processes. The organization expects to encounter some difficult
challenges as they make the
transition. Additionally, the team at XYZ Machine is searching
for process improvements that
will allow them to improve and strengthen the quality of the
products and services to achieve
world-class six sigma results with the budget and resource
limitations of a very lean small
business.
Figure 1: Shop Floor
...............................................................................................
...................................... 3
Figure 2: Examples of Work
...............................................................................................
.......................... 5
Figure 3: Top Level Order Process
...............................................................................................
................ 6
Figure 4: Calculated Quality Score
...............................................................................................

................ 8
Figure 5: Monthly Part Conformity
......................................................................................... ......
............... 9
Figure 6 Nonconformance
Report.....................................................................................
.......................... 10
Figure 7: Nonconformance by Department
...............................................................................................
. 11
Figure 8 Nonconformance Cause
...............................................................................................
................. 12
Figure 9: On Time Delivery
...............................................................................................
......................... 13
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