Given the size and scope of their operations, heavy manufacturing companies face unique challenges when it comes to quality management. On top of typical quality concerns like product consistency and regulatory compliance, heavy manufacturing companies must navigate complex supply chains, large-scale production processes, precise engineering tolerances, and significant safety risks.
In this environment, quality isn’t just important — it’s imperative. As managers strive to balance business goals with quality efforts, many manufacturers implement a quality management system (QMS). A QMS platform provides the tools manufacturing companies need to ensure compliance, standardize quality processes, and enhance operational efficiency in spite of complex challenges.
Overview of Industry Challenges
Many of the challenges of heavy industry are related to the sheer scale and complexity of the products and supply chains involved. When things go wrong, they can go wrong in big ways and can lead to costly consequences, including:
Rework and Scrap Costs
When products fail to meet quality standards, they often require rework to rectify defects and achieve compliance. The rework process consumes additional labor and material resources, and it can significantly delay production timelines.
Additionally, defects can lead to scrapping some parts or products entirely, wasting resources, and losing potential revenue. There are also often steep costs associated with the storage and disposal of scrapped material.
Hidden Factory Work
Hidden factory work includes efforts and resources workers expend to correct defects, address quality issues, or compensate for inefficiencies in manufacturing processes. Experts estimate this work accounts for 20-40% of an organization’s total capacity.
Hidden factory work is a challenge for multiple reasons. First, there’s no documentation, so it’s nearly impossible to monitor or optimize. Hidden factory work also isn’t focused on long-term fixes or sustainable solutions. Instead, it tends to be reactive and ad hoc and may resolve immediate problems without addressing root causes.
Identifying and eliminating undocumented, side-process work is essential for improving operational efficiency and reducing costs in heavy manufacturing.
Brand and Financial Implications
Quality problems in heavy industry can have significant brand and financial implications that extend beyond the costs associated with rework and hidden work. For example:
- Warranty costs can skyrocket if many customers need repairs or replacements of faulty products.
- Dissatisfied customers may abandon the brand altogether, leading to decreased revenue and loss of market share.
- Poor sustainability practices can tarnish a brand’s reputation and lead to increased regulatory oversight and penalties.
- Product recalls are extremely costly and erode customer trust.
- Safety issues in the manufacturing environment can lead to increases in spending on worker’s compensation, medical expenses, and administrative costs. In the US in 2021, workplace injuries and fatalities cumulatively cost companies more than $167 billion.
The financial and reputational consequences of poor quality can have substantial and long-term impacts on a company’s overall profitability and sustainability.
The Financial Toll of Inefficiencies
When you add up the costs of poor quality, the total is significant. According to a study by Bain & Company, up to 20% of every dollar spent in the manufacturing industry is wasted on rework, scrap, and other quality-related issues. This waste directly impacts growth potential and inhibits innovation.
These findings underscore the urgent need for heavy manufacturing companies to prioritize quality management, invest in eQMS solutions, and enhance overall operational efficiency.
To reduce the costs of poor quality, mitigate risks, and improve efficiency, organizations need a holistic approach to quality. That means integrating quality processes and tools across all departments and facilities and imbuing a strong culture of quality and continuous improvement throughout the organization.
In a quality-focused company, employees can take ownership of quality efforts and contribute to the ongoing improvement of processes, including:
Risk Management and Compliance in Heavy Industry
Heavy industry manufacturers must adhere to strict regulatory compliance requirements in order to satisfy laws and industry standards, protect brand integrity, and keep employees and customers safe. Advanced eQMS facilitate proactive risk identification and mitigation, helping organizations address potential hazards before they cause problems.
A proactive approach to risk management prevents product failures and safety incidents. Doing so reduces compliance costs by minimizing regulatory penalties and other costs associated with quality issues.
Improving Supplier Quality Integration
Enhancing internal quality efforts is one thing, but heavy manufacturers also need to integrate suppliers into the overall quality management framework. Methods for enhancing supplier quality include:
- Implementing clear communication channels
- Using real-time data exchange systems to monitor supplier performance
- Establishing metrics for measuring supplier quality
- Conducting regular supplier audits to ensure compliance
Improving supplier collaboration is essential to ensure the quality of raw materials and minimize defects and production delays in heavy industry.
Leveraging Data for Operational Excellence
Advanced QMS solutions help heavy manufacturers harness the power of data analytics to drive continuous improvement efforts across operations, including:
- Identifying inefficiencies, reducing bottlenecks, and optimizing processes on the factory floor
- Minimizing resource consumption, reducing waste, and improving sustainability
- Determining factors that contribute to product defects and implementing preventive measures to enhance product quality
The beauty of a QMS is it collects data from a variety of sources and consolidates it into a single, centralized platform. This feature makes it much easier for quality professionals to obtain the insights they need to identify trends and opportunities for improvement.
ETQ’s Role in Quality Improvement
Heavy manufacturers across various industries — from automotive and locomotive to aerospace and mining — use ETQ Reliance® as their QMS of choice. ETQ Reliance is a flexible, cloud-based QMS platform equipped with a suite of features to enhance quality management while offering benefits like cost reduction, increased efficiency, and brand protection.
Cost Reduction through Quality Enhancement
ETQ Reliance reduces scrap costs and improves inventory management, helping manufacturers track raw materials and components through the entire production process. The platform also facilitates process standardization, reducing variability and errors that can lead to scrap and inventory inaccuracies. Reliance further reduces costs through proactive risk assessment and environmental, health, and safety (EHS) features.
Trane Technologies, a leading manufacturer of HVAC and refrigeration systems, was looking for a solution to identify and eliminate recurring issues across multiple manufacturing locations. They chose ETQ Reliance and rapidly deployed applications to address non-conforming materials, process and product deviation, and internal and supplier corrective action.
With Reliance, Trane’s quality team achieved a 32% reduction in scrap and rework and a staggering 70% reduction in overall warranty costs — all while halving the average cycle time. These results represent substantial cost savings and an impressive return on the company’s investment in the ETQ Reliance platform.
Operational Efficiencies and Brand Protection
In addition to cost reduction, ETQ Reliance helps manufacturers increase revenue through enhanced operational efficiency and brand protection. The platform enables real-time monitoring of production processes so quality teams can identify issues as they arise and take corrective action promptly.
Focusing on consistency and higher product quality can lead to increased customer satisfaction, brand loyalty, and positive word-of-mouth referrals. These factors – satisfied customers, loyal customers, and positive word-of-mouth – all contribute to higher revenue generation for the organization.
As a leading manufacturer of products for locomotives, freight cars, and other railroad equipment, Wabtec was looking for ways to reduce chronic and costly product failures that cost the company upwards of $100 million annually. Their former quality management system, a blend of more than 30 siloed tools in more than 60 locations, wasn’t up to the task.
Wabtec replaced their previous solutions with a single, enterprise-wide QMS — ETQ Reliance. They have since achieved a massive reduction in defects per unit and a 35% decrease in the total cost of quality. ETQ Reliance has saved Wabtec tens of millions of dollars, all while improving product quality and enhancing brand reputation
Transforming Challenges into Opportunities with ETQ
Heavy manufacturing companies face a myriad of challenges when it comes to compliance and quality management, but implementing the right solution turns those challenges into opportunities for differentiation and competitive advantage.
ETQ Reliance supports organizations in heavy industry by streamlining compliance, improving supplier quality management, and enabling real-time data analysis. To experience ETQ Reliance for yourself, request a demo.
