Auditing the Process

How to Prevent Costly Scrap, Rework, and Customer

Complaints While Fostering a Sustainable Culture of Quality

Introduction
In 2011, a major automotive manufacturer experienced a sudden spike in customer complaints
and warranty claims on a model that had consistently passed product inspections with high
marks. These issues prompted a process failure assessment which revealed that a key
component required bolts to be tightened in a specific order and when they werent, durability and
safety were seriously degraded. Product inspections couldnt detect this, and without adequate
process controls in place, the company experienced unexpected and costly recalls.
The underlying cause of most quality problems in high-complexity manufacturing and service
organizations, including the manufacturer mentioned above, is a lack of process standardization,
or a failure to follow existing standards. The key to improvement is to develop better processes
and leverage systems that ensure those processes are followed correctly.

Auditing the Process: Preventing Costly Waste and Fostering a Culture of Quality

Ensure Standardization and Reduce Variation

with Process Audits
The surest way to reduce variation is to verify that

Without the verifications from process auditing,

standard processes are followed. Process audits,

even the best operators deviate from standards and

also known as process verifications, help ensure a

work methods fluctuate, leading to quality issues.

process is followed consistently, unlike product

An experienced operator may not always follow the

inspections, which simply sample outputs. A robust

written procedure for conducting control plan

verification examines all parts of a process,

checks at an identified frequency, with correct

including the resources (equipment, materials, and

sample sizes, and using a specified form. Instead,

people), the environment, the methods followed,

he may occasionally rely on his experience to

and the measurements collected to ensure process

conduct smaller sample sizes at random

performance and compliance.

frequencies, work ahead, or otherwise vary his work.

This may not cause immediate issues but when a

Process audits verify that employees are performing

variation occurs that causes a nonconformance, its

tasks consistently and according to defined work

unlikely to be caught until the impact is more costly.

standards. They can even be used to assess the

adequacy of the standards themselves as
established by procedures, work instructions,
flowcharts, training, and process specifications.1
A standard process identifies the method that most
consistently results in a quality product. By verifying
that standard processes are being followed,
1
process audits drive
down the amount of rework,

scrap, and complaints. Nonconformances are

caught and corrected early, when theyre less
expensive to correct.

Auditing the Process: Preventing Costly Waste and Fostering a Culture of Quality

Add Layers to Provide Additional Verification

and Foster a Culture of Quality
Layered Process Audits (LPA) represent an enhancement to routine process audits. They
differ in that they require people from multiple levels in the organization, from team leads
to senior executives, to conduct the audits instead of relying on a single auditor or audit
team. This offers a number of benefits, and has a few implications for the audits
themselves, which we explore later.
The Automotive Industry Action Group (AIAG) has this to say about LPAs: [They are]
management tools used to verify that work is done according to established standards, to
emphasize the importance of those standards, and to identify opportunities for continuous
improvement. LPAs can be applied to verify any defined process within an organization.

Auditing the Process: Preventing Costly Waste and Fostering a Culture of Quality

A Look at a Typical LPA

The Audit Itself
A typical LPA consists of a checklist of specific, objective, and concise
questions, including a mixture of pass/fail, measurement, scoring, or
comment questions. Some organizations include only pass/fail questions in
their LPAs in order to simplify the audit. Audit checklists are usually short,
taking no more than 10-15 minutes to be completed, and written in such a
way that any layer of management can confidently conduct it, without
needing specific knowledge.

Who Are the Auditors?

Much of the value of LPAs comes from building an effective layering
system in which fresh eyes conduct audits on a routine basis. Auditors
should pull a variety of employees from across the organizationfrom
shop-floor operators to the quality team to executivesto verify that
standardized procedures are in place and are being followed consistently.
Organizations with robust LPA programs include multiple layers of
managementtypically three layers, and at least two. Usually, the first layer
of auditors comprises of supervisors from the manufacturing area, but can
also include operators. Layer two auditors are typically managers. The third
layer is often the plant manager or director of quality. If a fourth layer is part
of the system, these participants are drawn from the executive suites, and
scheduled at a reduced frequency.

When Are Audits Conducted?

Audits are typically scheduled with varying frequency according to the layer
of management. A typical schedule may include first-level supervisors
performing audits on every shift, while top-level management
representatives, such as a plant manager, complete at least one audit per
week. Given the number of people involved in LPAs, and the complexity
associated with different shifts and frequency, efficiently scheduling
multiple audits can become an administrative headache. To simplify the
task, many organizations turn to web-based LPA tools that streamline the
scheduling process.

Auditing the Process: Preventing Costly Waste and Fostering a Culture of Quality

Wide-reaching Benefits
When implemented fully and effectively, an LPA system is as an excellent mechanism for moving an
organization to the next level of performance. LPAs encourage and involve a cross-section of
employees who devote consistent attention to core processes, leading to wide-reaching advantages,
including:
Increasing capacity and throughput
Instilling a culture of quality by involving a cross-section of employees, including
management, in quality-related processes
Identifying process variation early, before it results in costly errors
Improving delivery performance and throughput
Mitigating safety incidents
Improved product quality and customer satisfaction
Identifying opportunities for employee training and process improvement
Increased employee satisfaction
Fostering communication between management and process users through
one-on-one feedback

Auditing the Process: Preventing Costly Waste and Fostering a Culture of Quality

Creating a Robust LPA System

If you are ready to take your organizations quality to the next level, you may consider implementing LPAs. A
well-rounded LPA program will add value to an organization if meaningful audits are conducted routinely and top
management visibly supports the LPA system.

Identifying Audit Areas

Writing Effective Questions

If you are in the early stages of planning an LPA

A robust LPA program must be straightforward.

program or are simply looking to improve your LPA

Write the audit questions in a fashion that can be

system, a key focus should be on identifying the

answered without a great deal of technical

activities to be covered by your audits. Your LPAs

knowledge, and simplify how auditors complete and

should focus on critical to quality (CoQ) processes,

submit their checklists. Structure your checklist so

and those that have been the subject of repeated

that each question focuses on something objective

corrective actions.

and specific to the process being verified.

The Luminous Group, a consulting firm that focuses

An example of a nonspecific audit checklist

on process audits, recommends also looking at

question that does not provide contextual detail is:

processes which are critical to customer

Are all red tags being done properly?

satisfaction, to meeting government regulations, or

to the performance of the organization. Moreover,

In this example, the auditor may not know what a

the focus should be on processes, that are in their

red tag is, and may not know what it means to be

final state, fully documented, and approved,

as there
3

completed. This question may be adequate for

must be a clear standard for the audit.

auditors that are familiar with the process, but it

doesnt provide enough context for an auditor from
a different area or layer.
An improved, more specific version provides details
on what the auditor should look for, as well as an
explanation of why this is important:
Verify that any parts with a red scrap ticket are
complete with all of the following: part number,
date, quantity, defect, and description. (Incomplete
tagging distorts scrap reporting and hinders root
cause analysis).

Auditing the Process: Preventing Costly Waste and Fostering a Culture of Quality

Documenting Your LPA System

Once questions have been written, auditors identified, and audit schedules defined you should formally document
your LPA program. Formal documentation will help define specific roles and responsibilities, remove ambiguity,
and also provide an objective measure of compliance to customer requirements if necessary. Software tools can
be particularly helpful here.

Launching Your LPA System

Communication is key to successfully launching an LPA system. Be sure to provide program details
to all employees on an ongoing basis. Key points to include in this communication:

The LPA program coordinates with existing quality systems and processes - it does not replace
them.
The audits are designed to verify that systems and processes are working as designed,
not to judge individual employees.

LPAs will help the organization control and maintain corrective actions.

Upper-level management supports the LPA program, and will participate in it.

Auditing the Process: Preventing Costly Waste and Fostering a Culture of Quality

Challenges of Using LPAs

Some organizations implement LPAs solely to satisfy customer
requirements rather than using the audits to drive continuous improvement,
and end up with partially implemented LPA systems. These systems may
check the box, but they are frequently burdensome and add little to no
actual value.
Although organizations often begin with a paper-based LPA system,
LPA-specific software will enable you to realize the full value from your
program. A web-based system ensures that valuable information isnt lost
in the paper shuffle, or left unused on a dry erase board. Unless an
organization has automated its LPA system, it is likely spending time
moving audit results to an electronic format for analysis. Or worse still,
these paper-based audits may be simply filed away, with valuable
information from those audits never fully recognized, or at least recognized
later and at much greater cost.

Auditing the Process: Preventing Costly Waste and Fostering a Culture of Quality

Using LPAs to Identify and Manage

Corrective Actions
When an auditor identifies a nonconformance as part of a layered audit, the auditor should issue a
corrective action. Sometimes, the appropriate corrective action is not clear to the auditor, and the
area supervisor or other team members should be included to determine it. Typically, however, the
action is clearand can even be identified within the question descriptionand should be handled
on the spot. This should still be logged, and if the same issue is detected repeatedly, a quality leader
should raise a red flag. The next steps are to conduct a thorough root-cause analysis to identify the
problem, create a new process that mitigates the issue, and issue a revised process audit that
ensures the mitigation remains in effect.

Getting to the Root of the

Matter
Though LPAs provide an excellent way to verify and
sustain quality controls, they are not a method to
determine how processes should be followed.
Problem-solving methods and root-cause analysis are

If a repeated nonconformance
occurs in an organization with
a robust LPA system, a quality
leader should raise a red flag.

essential to identifying lasting solutions for eliminating

product nonconformances.
You may find it useful to incorporate lean techniques
such as 5 Whys to determine root cause. By asking
why more than just once, you can often drill down to
the root of a nonconformance. This method is also useful
for discovering relationships between various root
causes of a single issue, and is a simple method that
does not involve statistical analysis. Other methods such
as 8D or PFMEA are also effective, but beyond the
scope of this document.
If identified correctly, you should be able to generate an
effective mitigation that addresses the root cause and
ultimately fixes the product nonconformance.

Auditing the Process: Preventing Costly Waste and Fostering a Culture of Quality

Holding the Gain

LPAs help ensure that nonconforming processes are corrected quickly and effectively,
returning them to their intended state. Critically, LPA questions should be reviewed and
updated to focus on problem areas to ensure that corrective actionswhether documented in
work standards or notare held in place to hold the gain achieved by the corrective actions.

Extending the Gain

As your LPA program matures, you should see marked improvements in audit results. Holding
the gain frees up time for you and other leaders to work proactively on potential issues,
extending those gains even further. Focus on detecting new opportunities to further refine
standardized processes and continually reduce variation in your key processes. Concentrate
on areas where past quality failures have occurred. Pareto charts can be particularly helpful in
identifying focus areas . Additionally, be sure to address any systemic weaknesses that have
been identified in your processes.

Auditing the Process: Preventing Costly Waste and Fostering a Culture of Quality

10

Auditors in your LPA program can even perform proactive checks of your processes when you identify
potential risks using a Process Failure Mode Effects Analysis (PFMEA) exercise. Thoroughly developed
PFMEAs are a key input to proactive LPAs, according to the Luminous Group. For example, your LPA
checklist should prioritize items based on their ranked values when multiplying severity by the likelihood of
occurrence. Paying close attention to your greatest potential risks will pay dividends by increasing overall
quality in your organization.

Foster Your Culture of Quality

The most valuable benefit of a robust, and
well-designed LPA system is its impact in fostering
an organizations culture of quality. The support of
senior leaders is a highly visible indication of the
importance of quality to the organization, and their
participation in conducting audits reinforces that
message.

History of LPAs

Just as importantly, a robust and sustained LPA

system introduces a change in mindset to one with a

The concept of LPAs originated with the automotive

conscientious view of quality. This explains why

industry in the early 2000s, spearheaded initially by

early audits find nonconformances primarily; while

audits in a mature LPA system frequently uncover
improvement opportunities.
A robust LPA program will help your organization

GM, and formalized by Chrysler to better manage

supplier quality in 2005. Manufacturing suppliers to
automotive original equipment manufacturers
(OEMs) often conduct LPAs as a requirement of
doing business with the OEM (the manufacturers
customer). Though LPAs are most prevalent in the

address both standardization and variation issues

automotive industry, countless other manufacturing

while changing your organization from a

organizations, particularly in the aerospace, defense,

detect-and-correct mindset to a proactive quality

gas, and oil sectors, appreciate their value as well.

culture with an emphasis on verification and

prevention.

Auditing the Process: Preventing Costly Waste and Fostering a Culture of Quality

11

References
1. Russell, J.P., editor, (2005), The ASQ Auditing Handbook, third edition, p. 17, Milwaukee, WI: ASQ Quality
Press.
2. CQI-8, Layered Process Audits, Version 2, (2014), p. 7, Southfield, MI: AIAG.
3. Training for the Implementation Team, (2014), West Bloomfield Township, MI: The Luminous Group.
4. http://www.umsetzer.com/fileadmin/eigene_Dateien/PDF/Themen/LPA_brochure.pdf

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Auditing the Process: Controlling Corrective Actions