Non-Conformance

Non-Conformance Reporting – Just for ISO or something we should all be adopting within our business?

For most business owners and managers, we see the value in reporting, investigating, and closing out customer complaints to ensure we maintain customer satisfaction and more importantly customer retention.  For those that work within the ISO framework Non-Conformance Reporting is an integral part of compliance with the standards within Clause 10 of all ISO Standards within the Annex SL Structure, yet even within the ISO Framework many companies still do not adopt Non-Conformance Reporting into their business.

The process of Non-Conformance Reporting

The process of Non-Conformance Reporting is quite simple:

• A problem is identified within a business and reported as a Non-Conformance
• This is recorded and assigned an owner / investigator
• Investigator establishes why the issue has occurred
• Immediate Corrective actions and established and implemented
• Investigator establishes whether the issue is wider than the identified area
• A Root Cause is established
• Corrective Actions are established
• Corrective Actions are implemented, and a timescale set for establishing the effectiveness of the actions taken
• Audit the effectiveness of Corrective Actions

Challenges of Non-Conformance Reporting

• Time Burden – Non-Conformance Reporting requires a series of steps which does take some time to complete, and many people do not see the value in ‘wasting time in investigating Non-Conformances when they know what the issue was’
• Blame – Many people within an organisation do not like investigating non-conformances as they feel they are assigning blame to their colleagues for issues within the business
• Value – Many people do not understand Non-Conformance Reporting and do not therefore see the value in the process
• Incorrect process – Many organisations when they identify a non-conformance address the immediate issue and never ascertain the cause and this results in recurrence

Benefits of Non-Conformance Reporting

The benefits of Non-Conformance Reporting can generally be split into three different areas as follows: –

• Increased Customer Confidence – When an organisation identifies and actions issues before it develops into a complaint this inspires confidence with customers as it demonstrates a company in control of it’s processes
• Time Saving – Generally non-conformances within a business cost the business time through correcting issues and mistakes, communicating, investigating, etc…
• Money Saving – Non-Conformances often cost a business financially through additional required purchases, additional time to resolve issues and wastage through incorrect practices

How can Non-Conformance Reporting add value to my business?

Non-Conformances that are not investigated and not resolved can cause recurring problems within a business that will ultimately cost time and / or money and could lead to reputational issues if they affect operational delivery.

Non-Conformances managed well will ultimately lead to a cost and / or time saving and will inspire confidence with Suppliers, Customers and Employees that the processes within the business are being effectively managed.

Examples of Non-Conformance Reporting and how this can add value is as follows: –

Example 1 – A Joinery company with a turnover of approx. £12m per annum

• Stage 1 – Identifying Non-Conformance
  • Non-Conformance – Timber incorrectly cut for project
  • Immediate Correction – Re-order timber and cut properly
  • Impact – Identified Incident costs £850.00 for new timber and 4 hours for Joiner to Re-cut – Total projected cost
• Stage 2 – Reporting and Investigating Non-Conformance
  • Investigation – Timber is often cut incorrectly (Weekly Occurrence). The reason is two-fold sometimes the cutting list is incorrect, sometimes the joiners do not cut according to the cutting list due to incorrect measurements, lack of attention, mistakes, etc…
  • Corrective Actions – The cutting list once produced will be independently reviewed by a second responsible person prior to issue. The Joiners will have KPI’s put in place and performance measured against these which include cutting in accordance with the cutting list
• Stage 3 – Effectiveness of Actions
  • All similar incidents logged over a 6-month period post-actions, only a handful were raised
  • An audit undertaken at 3 and 6 months to check the effectiveness of the actions
  • Estimated saving – Calculation based on materials costs and time saved from re-cutting – £150k – £250k

Example 2 – An IT Project Management company with a turnover of approx. £5m per annum

• Stage 1 – Identifying Non-Conformance
  • Non-Conformance – Project detail not handed over adequately from Sales to Delivery Team
  • Immediate Correction – Arrange handover meeting and deliver against client requirements
  • Impact – IT installation in wrong locations and not to required specification, customer dissatisfaction – Estimated costs of £6,000 and reputational damage
• Stage 2 – Reporting and Investigating Non-Conformance
  • Investigation – There are 7 x Accounts Managers and most have admitted they have experienced this issue at different times for different reasons but each incident has been dealt with as a siloed approach and not communicated.  Ultimately there is no process for handover from the Sales team to the delivery team instead reliance is placed on notes taken in the system during the sales process
  • Corrective Actions – A handover meeting and handover notes is to be prepared for all new projects.  Any issues will be communicated across the whole team to remove the siloed approach
• Stage 3 – Effectiveness of Actions
  • All similar incidents logged over a 6-month period post-actions, only a handful were raised
  • An audit undertaken at 3 and 6 months to check the effectiveness of the actions
  • Estimated saving – Calculation based on installation and equipment cost savings – £50k – £100k

The principles of this Non-Conformance could be applied in any business, if something is going wrong then rather than stop at Stage 1 of identifying and implementing an immediate correction and then continuing Business as Usual (BAU) why not move to Stage 2 and Stage 3 and ensure the overall issue is resolved.  As we can see in the above examples our Stage 1 is just a cost to the business, our cost savings come though implementing Stage 2 and Stage 3.

So in summary, yes, Non-Conformance Reporting is an ISO requirement but leveraging this process within your business to drive change and improvement is something that all businesses should adopt to save cost, time and improve supplier, employee and customer confidence.

Please contact us if you would like to discuss non-conformance reporting for your business further.