Integrating iso 9001 2015 standard and lean six sigma tools into a quality management system the case study of a furniture manufacturing company

VIETNAM NATIONAL UNIVERSITY HO CHI MINH CITY HO CHI MINH CITY UNIVERSITY OF TECHNOLOGY PHAN LE MINH PHUONG INTEGRATING ISO 9001:2015 STANDARD AND LEAN SIX SIGMA TOOLS INTO A QUALITY MANAGEMENT SYSTEM THE CASE STUDY OF A FURNITURE MANUFACTURING COMPANY Major: Industrial Engineering Major code: 8520117 MASTER’S THESIS HO CHI MINH CITY, July 2023 THIS THESIS IS COMPLETED AT HO CHI MINH CITY UNIVERSITY OF TECHNOLOGY – VNU-HCM Supervisor: Dr Nguyễn Vạng Phúc Nguyên Examiner 1: Dr Lê Đức Đạo Examiner 2: Dr Đỗ Thành Lƣu This master’s thesis is defended at HCM City University of Technology, VNUHCM City on 8th July 2023 Master’s Thesis Committee: Chairman: Assoc Prof Dr Đỗ Ngọc Hiền Secretary: Dr Lê Song Thanh Quỳnh Reviewer 1: Dr Lê Đức Đạo Reviewer 2: Dr Đỗ Thành Lƣu Member: Dr Trần Quỳnh Lê Approval of the Chairman of Master’s Thesis Committee and Dean of Faculty of Mechanical Engineering after the thesis being corrected (If any) CHAIRMAN OF THESIS COMMITTEE HEAD OF FACULTY OF MECHANICAL ENGINEERING VIETNAM NATIONAL UNIVERSITY HO CHIMINH CITY HOCHIMINH CITY UNIVERSITY OF TECHNOLOGY SOCIALIST REPUBLIC OF VIETNAM Independence – Freedom - Happiness THE TASK SHEET OF MASTER’S THESIS Full name : PHAN LÊ MINH PHƢƠNG 2170119 Date of birth : 18/01/1982 Major : Industrial Engineering 8520117 I Student ID : Place of birth : Gia Lai Major ID : THESIS TITLE: Integrating ISO 9001:2015 Standard and Lean Six Sigma Tools into a Quality Management System The Case Study of a Furniture Manufacturing Company (Tích hợp Tiêu chuẩn ISO 9001:2015 công cụ Lean Six Sigma vào Hệ thống quản lý chất lƣợng công ty sản xuất đồ gỗ nội thất) II TASKS AND CONTENTS: Create a concept map for integrating the quality management system of a furniture manufacturing company with the ISO 9001:2015 Standard and Lean Six Sigma methodology Establish a methodology to implement the integrated system of ISO 9001:2015 and Lean Six Sigma tools into the furniture manufacturing company's quality management system III THESIS START DAY: 06/02/2023 IV THESIS COMPLETION DAY: 11/06/2023 V SUPERVISOR: Dr Nguyễn Vạng Phúc Nguyên Ho Chi Minh City, date month year 2023 SUPERVISOR (Full name and signature) HEAD OF DEPARTMENT (Full name and signature) DEAN OF FACULTY OF MECHANICAL ENGINEERING (Full name and signature) i ACKNOWLEDGEMENTS Firstly, I would like to express my sincere gratitude to my thesis advisor Without his invaluable help and dedicated involvement at every step of the process, this thesis would not have been possible Secondly, I would like to extend my heartfelt thanks to all the teachers in the Department of Industrial Engineering who have enthusiastically imparted a wealth of knowledge to me during these two years Lastly, and most importantly, I would like to express my deepest appreciation to my husband and my two children for their unwavering support and assistance throughout my journey of studying and writing this thesis I take full responsibility for any errors or inadequacies that may be present in this work ii ABSTRACT ISO 9001:2015 and Lean Six Sigma methodologies are widely adopted by companies worldwide nowadays While there have been studies integrating these approaches into a single framework, they have generally remained at a generic level without delving into specific sectors In Vietnam, there is a growing need to implement ISO 9001:2015 and Lean Six Sigma as a means to assess a company's readiness to join the global supply chain However, many small and medium Vietnamese companies are facing difficulties in applying the above systems due to the lack of available guidance to facilitate the integration of these practices This research focuses on developing an integrated system of ISO 9001:2015 and Lean Six Sigma tailored specifically for the furniture manufacturing industry The aim is to enhance the industry's capabilities and improve its competitiveness in the market Building upon previous integration frameworks, this research provides a detailed examination of each ISO 9001 requirement and identifies the appropriate processes and Lean Six Sigma tools to complement them The proposed integrated system has undergone review and been accepted for implementation at a furniture manufacturing company It is specifically designed for the furniture manufacturing industry, enabling the application of ISO 9001:2015 and Lean Six Sigma with greater ease and efficiency It also reduces the risk of misapplying ISO standards and Lean Six Sigma tools This tailored integrated concept map can be further developed and extended to other leading industries in Vietnam, such as textiles, footwear, and food processing By doing so, it will contribute to improving the competitiveness of Vietnamese companies in the market iii TÓM TẮT LUẬN VĂN THẠC SĨ Hiện nay, hệ thống quản lý chất lượng theo tiêu chuẩn ISO 9001:2015 phương pháp Lean Six Sigma cơng ty tồn giới áp dụng rộng rãi Mặc dù có nghiên cứu để tích hợp cách tiếp cận thành hệ thống nhất, chúng dừng mơ hình chung chung mà khơng sâu vào lĩnh vực cụ thể Tại Việt Nam, nhu cầu triển khai ISO 9001:2015 Lean Six Sigma cách thức để đánh giá mức độ sẵn sàng tham gia chuỗi cung ứng toàn cầu công ty ngày tăng Tuy nhiên, nhiều công ty vừa nhỏ Việt Nam gặp khó khăn việc áp dụng hệ thống thiếu tài liệu hướng dẫn thực tích tiêu chuẩn ISO 9001:2015 công cụ Lean Six Sigma vào hệ thống quản lý có cơng ty Nghiên cứu tập trung vào việc phát triển hệ thống tích hợp ISO 9001:2015 Lean Six Sigma thiết kế riêng cho ngành sản xuất đồ nội thất Mục đích để tăng cường khả nâng cao khả cạnh tranh thị trường Dựa mơ hình tích hợp đề xuất trước đó, nghiên cứu thực xem xét chi tiết yêu cầu ISO 9001 xác định quy trình cơng cụ Lean Six Sigma thích hợp đáp ứng yêu cầu tiêu chuẩn, qua bước hình thành hệ thống quản lý tích hợp Hệ thống tích hợp đề xuất xem xét chấp nhận để triển khai công ty sản xuất đồ nội thất Hệ thống thiết kế đặc biệt cho ngành sản xuất đồ nội thất, cho phép áp dụng ISO 9001:2015 Lean Six Sigma cách dễ dàng hiệu hơn, giúp làm giảm nguy áp dụng sai tiêu chuẩn ISO công cụ Lean Six Sigma Mơ hình khái niệm tích hợp phù hợp hình thành nghiên cứu tiếp tục phát triển mở rộng sang ngành công nghiệp hàng đầu khác Việt Nam, chẳng hạn dệt may, da giày chế biến thực phẩm Qua góp phần nâng cao lực cạnh tranh doanh nghiệp Việt Nam thị trường iv THE COMMITMENT OF THE THESIS’ AUTHOR I hereby declare that the master’s thesis titled ―Integrating ISO 9001:2015 Standard and Lean Six Sigma Tools into a Quality Management System The Case Study of a Furniture Manufacturing Company‖ is the research work that I have personally undertaken and completed I received scientific guidance from Dr Nguyen Vang Phuc Nguyen at Ho Chi Minh City University of Technology to support and guide me in writing my thesis The results of this study have not been published in any other separate studies I have followed the appropriate rules and guidelines when incorporating results and quotations from other authors' documents into my essay The citations and references from books, newspapers, and websites have been presented in accordance with the reference list of the thesis Author Phan Le Minh Phuong v TABLE OF CONTENTS Chapter OVERVIEW 1.1 Introduction 1.2 Problem description 1.3 Research goal 1.4 Research question 1.5 Research objective 1.6 Research structure Chapter LITERATURE REVIEW 2.1 ISO 9001:2015 Quality management system Requirements 2.2 Lean & Six Sigma methodology 2.3 The integration between ISO 9001:2015 and Lean Sigma Chapter INTRODUCTION OF RESEARCH SUBJECT 13 3.1 Introduction of Minh Duong Furniture Corporation 13 3.1.1 History 13 3.1.2 Company’s achievements: 13 3.1.3 Company organization 14 3.2 Minh Duong’s Quality management system 14 3.2.1 Current documentation system 14 3.2.2 Gap analysis 16 Chapter METHOD 21 4.1 ISO 9001:2015 Standard and Lean Six Sigma Methodology Integration Model 21 4.2 Approach ISO 9001:2015 Requirements and Applicable Tools 22 4.2.1 ISO 9001:2015 Requirements 22 4.2.2 24 4.2.3 Lean Six Sigma Tools and Strategic Tools 24 vi Chapter ANALYSIS OF ISO 9001 REQUIREMENTS AND SUGGESTED LEAN SIX SIGMA TOOLS ON QUALITY MANAGEMENT OPERATIONS 33 5.1 Context of the organization (ISO Clause 4) 33 5.2 Leadership (ISO Clause 5) 37 5.3 Planning (ISO Clause 6) 39 5.4 Support (ISO Clause 7) 44 5.5 Operations (ISO Clause 8) 46 5.5.1 Operational planning and control (Clause 8.1) 46 5.5.2 Requirements for products and services (Clause 8.2) 47 5.5.3 Control of externally provided processes, products, and services (8.4) 47 5.5.4 Production and Service provision (ISO Clause 8.5) 48 5.5.5 Release of products and services (ISO Clause 8.6) 51 5.5.6 Control of nonconforming outputs (8.7) 51 5.6 Performance evaluation (ISO Clause 9) 51 5.6.1 Monitoring, measurement, analysis, and evaluation (9.1) 51 5.6.2 Internal audit (ISO Clause 9.2) 53 5.6.3 Management review (ISO Clause 9.3) 54 5.7 Improvement (ISO Clause 10) 55 5.7.1 General (ISO Clause 10.1) 55 5.7.2 Nonconformity and corrective action (ISO Clause 10.2) 55 5.7.3 Continual improvement (ISO Clause 10.3) 57 Chapter A PROPOSED DESIGN of integrated QMS and LSS 59 6.1 Propose the Integration Approaches of ISO 9001:2015 and Lean Six Sigma methodology into Minh Duong’s quality management system 59 6.2 Propose Integrated QMS Process matrix 60 6.3 Designation of Operating procedures for the Integrated QMS 64 vii 6.3.1 Manufacturing management Process 64 6.3.2 Facility/Equipment/Tooling management: 78 6.3.3 Labor management 80 6.3.4 Material management 82 6.3.5 Technical management 84 6.3.6 Quality Control 85 6.3.7 Nonconforming product management 88 6.3.8 Scheduling and Order management 89 6.3.9 Purchasing and Supplier management 92 6.3.10 Document and Change management 94 6.4 Overall Process metrics 97 Chapter CONCLUSIONS AND RECOMMENDATIONS 105 7.1 Conclusions 105 7.2 Recommendations 105 REFERENCES 107 VITA 110 viii Process step/ Main task Document retains as evidence (Record) Mandatory rule/ Requirement with record keeping an awareness training to foster the compliance Establish list of documents retained as evidence, is protected from alteration with retention time and method for disposition How (Documented information) Master List of Record Roles/ Competence requirement Department Manager Change management Change request Any request to change with the facility / equipment, process, product Change request must be raised to relevant level for form review Change requester Change review A board is established to review and approve the change request and decide necessary actions arising from the review The form of the review board depends on the change scope The approval level in Delegation of authority categorizes by cost and scope of the task Department manager Board of Director Delegation of authority Change review record Table 6.27: Document and Change management – process metrics Metric Operational Definition Collection Method Frequency Department Document control process Document change request response time To measure the time taken to review and respond to document change requests = Average actual time Quarterly Quality System Document change request resolution time Calculates the time required to implement approved document changes = Average actual time Quarterly Quality System Change management process 96 Operational Definition Collection Method Frequency Department Change request response time To measure the time taken to review and respond to change requests = Average actual time Quarterly Quality System Change request resolution time Calculates the time required to implement approved changes = Average actual time Quarterly Quality System Metric In total, there are twenty operational processes established for the integrated QMS These processes play a role in creating an initial prototype system for constructing and operating the integrated system Through the process of operating the procedures and continuous adjustments to align with actual production, they will help maximize the efficiency of the system Table 6.28: List of prototype operational process No Process No Process Manufacturing management 11 Quotation Facility /Equipment management 12 Order management Tooling management 13 Scheduling Labor management 14 Customer satisfaction Training management 15 Purchasing Material management 16 Supplier selection Technical management 17 Document control Quality Control management 18 Change control 10 Finished goods delivery Nonconforming product management 19 20 Internal audit Nonconformity and Corrective action 6.4 Overall Process metrics The detailed analysis of operational processes in 6.3 enables the identification of process metrics that are essential for controlling the performance of the processes The comprehensive table below 97 presents a collection of all the necessary metrics for monitoring the effectiveness of the business through the performance of its operational processes Table 6.29: Overall Process metrics Metric Operational Definition Collection Method Frequency Department Manufacturing process To measure the time that is not spent on valueadded tasks or processes = total amount of Non-productive time / total time consumed at production Weekly Production Schedule adherence of Finished Goods (%) To measure the ability to adhere to schedule of at production = total number of Finished Goods delivered on time / Finished Goods delivered Weekly Planning Schedule adherence of material delivery (%) To measuring the ability to deliver material / semi-product / consumable from Warehouse to Production on time = # material batches fully delivered on time / total batches of material delivered Weekly Warehouse Total output (USD) & (hr) To measure the total output of Production by value (USD) and by standard allowed hour (hr) =Total output value in one week Weekly Production Labor Productivity To measure the value generated per unit of labor input within a =total output specific period It value / total manquantifies the efficiency day consumed and effectiveness of labor utilization Weekly Production Nonproductive time (%) 98 Metric Unplanned Over time Operational Definition To measure the amount of unplanned overtime, which is also related to the ability of production in scheduling & monitoring To measure how effectively resources are Productivity consumed (total Efficiency manhours) to generate output (total standard allowed hour) Facility / Equipment management To measure the total Downtime equipment breakdown (%) time To measure how OEE (%) efficiently the equipment is used To measure the Maintenance plan completion rate Tooling management To measure the Tooling availability of required Availability tools and fixtures when needed for production To measure the overall costs associated with Tooling Costs tooling (purchase, refurbished) Maintenance completion % Tooling Lifespan To measure the lifespan or durability of tooling before it is replaced or refurbished Collection Method Frequency Department = total amount of Unplanned Over time Weekly Production =total standard allowed hour / total manhours consumed Weekly Production Daily Maintenance Weekly Production = Total downtime/ total available time = Availability x Performance x Quality = Total plan completion on time / total plan Monthly Maintenance = (# unavailable tools x waiting day) / total # tools issued Monthly Maintenance =Total value of tool/ working period (USD/h) Monthly Maintenance Monitor (by group of tools) the lifespan of tools in relative with its value, = average lifespan / average value of tools Monthly Maintenance Labor management 99 Metric Operational Definition Absenteeism (%) To measure the amount of unplanned overtime Turnover (%) To measure that quantifies the rate at which employees resign and are replaced by new hires over a specified period To measure the lead time of supplying headcount Labor providing lead time Collection Method = total amount of Unplanned Over time = (Number of Employees resign / Average Total Number of Employees) Frequency Department Weekly HR Quarterly HR = average time of supplying headcount Quarterly HR Training management Training completion rate To measure the % of employees who complete the assigned training = # of employee actual attend assigned training / # planned Quarterly HR Plan completion To measure the level of completion the Training plan = Actual training courses taken place / Plan Quarterly HR =Total inventory value Monthly Warehouse Material Management Total inventory value To monitor total inventory value by material group Aging date Monitor material by = Inventory value aging date according to at each aging the set criteria period Monthly Warehouse Cycle count completion plan (%) To measure the progress of regular check activities in Warehouse Target to complete full check every quarter = Number of cycle count done / plan Weekly Warehouse Material (solid wood) usage (%) To measure the level of material usage = (Value of material used in actual - value of material in Monthly Production 100 Metric Operational Definition Collection Method BOM)/ Value of material in BOM Frequency Department Consumable usage (%) To measure the level of consumable usage = (Value of consumables used in actual - value of consumables in BOM)/ Value of consumables in BOM Monthly Production Inventory accuracy (%) To measure the discrepancy between data in a warehouse and the actual counting = Value of material in counting / value generated by Warehouse data Yearly Warehouse Technical management Leadtime to prepare technical package To measure time from request with sufficient information until completion the package Organizational knowledge built-up plan (%) Technical training = Average Leadtime Monthly Technical To measure the level of = Actual result / completion the Plan Organizational knowledge built-up plan Monthly Technical To measure the level of completion the technical training plan Monthly Technical = Actual result / Plan Quality Control process Incoming Inspection (%) To measure # of qualified =total qualified units in total unit units / total received received units Weekly Quality Control In-process Inspection (%) To measure # of units that pass through the process without any rework or defects (random check) Weekly Production =total qualified units / total produced units 101 Metric Operational Definition Collection Method Frequency Department Post painting To measures the opposite Quality rate of the error rate, which (%) are the number of products meet quality standards after Painting = total number of quality units /total number of units produced Daily Production Final Check to AQL 2.5, inspection rate calculate the rate (%) between defect number divided by the total number checked Nonconforming product management = defect number / the total number checked Daily Quality Control CONQ Cost of Non-Quality caused by Production: calculate extra cost need to spend to fix quality issues during production Total cost of non-quality Monthly Quality Control # of NCR Total number of NCR Monthly Quality Control Quotation process Quotation processing time To measure time from customer request until quotation sent = Average Quotation process time Monthly Sales To monitor the ability Number of new to increase sale buy customers calculating the new customer = Number of new customers in Quarter Quarterly Sales To measure time from customer, accept the quotation until order confirmed = Average Order process time Monthly Sales Ontime delivery (%) The percentage of order delivered on time = number of orders delivered on time / total orders delivered Monthly Planning Lead time The total time required to fulfill a customer order, including Average lead time Quarterly Planning Order management process Order processing time 102 Metric Collection Method processing, production, and delivery Operational Definition Day of WIP To measure the average amount of WIP Frequency = average value of WIP / average value of output at Painting Department Weekly Planning Quarterly Sales Annually Sales Customer satisfaction monitoring process Customer lifetime value To anticipate customer's behavior through measuring the accumulate total sales to a customer Customer Satisfaction Score To measure the satisfaction level of customers based on a survey = Average survey score from all customers Customer To monitor the % of = Implemented feedback customer feedback feedback / total Quarterly Sales implementation implemented for feedback rate improvement Purchasing management Monitor actual lead Leadtime of Average lead time of material (by Quarterly Purchasing outsourcing time group) = # of PO with The percentage of Ontime outsourced material received on delivery of material time (based on Agreed Weekly Purchasing outsourced received on time lead time for outsources material (%) / total PO materials & date on PO) received Cost saving of material calculated by the variance between the = (new cost Cost saving total cost of material old cost) / old Quarterly Purchasing (%) purchased with new cost price and the cost by old price with the same 103 Metric Operational Definition Collection Method Frequency Department quantity have been purchased Supplier management Qualify at least Complete the selection suppliers for & evaluation to qualify each group of new suppliers material Document control process Number of suppliers for each group of material Quarterly Purchasing Document change request response time To measure the time taken to review and respond to document change requests = Average actual time Quarterly Quality System Document change request resolution time Calculates the time required to implement approved document changes = Average actual time Quarterly Quality System To measure the time Change request taken to review and response time respond to change requests = Average actual time Quarterly Quality System Calculates the time Change request required to implement resolution time approved changes = Average actual time Quarterly Quality System Change management process 104 CHAPTER CONCLUSIONS AND RECOMMENDATIONS 7.1 Conclusions The thesis aimed to develop a model for integrating ISO 9001:2015 Standards and Lean Six Sigma methodology for a furniture manufacturing company and establish the method for implementing the integrated systems between ISO 9001Standard and LSS methodology into the Company's QMS Based on the research findings, all the requirements of the ISO 9001 Standard were thoroughly reviewed The QMS and its processes were structured to align with LSS methodology, incorporating the applicable Lean Six Sigma tools These foundations provided process owners sufficient information to develop procedures that effectively control and manage operations while still aligning with the overall purpose of the system The integration of these processes resulted in the establishment of an Integrated Quality Management System, aimed at improving quality, 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