About This Blog
A QualitEvolution is intended to capture positions and experiences as a participant in the evolution of the Quality profession into the 21st century. From its origins as the brainchild of Corporate Industrial Statisticians, our profession has transformed and evolved to incorporate and adapt to the demands and expectations of our modern existence.
The scope of the subject matter within A QualitEvolution extends to the furthest ranges of quality, business transformation, management science, and quality issues especially pertinent to the members of ASQ in Canada.
Friday, September 21, 2012
Finance and Governance lessons from ASQ
In addition to being an ASQ Influential Voice, I am currently the chair of the ASQ Quality Management Division's Technical Committee for Finance and Governance. I have also recently joined the International Academy of Quality's Governance Think-Tank. As one of the active advocates of this domain of quality assurance, I felt that this was an area that I personally would explore and develop as "greenfield". I believe that we have saturated and exhausted the knowledge base for operational and tactical elements of quality, and need to advance and evolve our perception as a profession.
This is a brief post to keep current, and to share some insights I gained from the recent ASQ Press publication, The Certified Six Sigma Master Black Belt Handbook by Tom Kubiak. There are two sections in particular which are pertinent to Governance and Finance, which I would like to share and promote. I believe that the value of this handbook goes beyond exam preparation. This is an essential resource for anyone who aspires to a leadership role within an organization.
On pages 144-145 in Chapter 9, Organizational Finance and Business Performance Metrics, Kubiak indicated where Sarbanes-Oxley (SOX) rules connect with Lean Six Sigma.
1. SOX has four objectives to achieve
- Hold management accountable
- Increase public disclosure
- Increase regular regulatory reviews
- Hold accountants accountable
2. Internal controls should emphasize the following attributes:
- Prevention and detection
These attributes describing good governance could just as easily reflect a mature corporate quality system. Gains and improvements are positively correlated in quality and governance, such that better quality leads to better governance.
On pages 232-233 in Chapter 16: Project Financial Tools, Kubiak prepared a table of savings by category. This practical approach categorizes Value Stream items (Labor, Material, Overhead, Customer, Process, etc.) on the left margin, and has a concise set of options across the horizontal axis:
1. Cost (hard) savings
- Cost take out (bottom line)
- Revenue growth (top line)
- Working capital/ cash flow
2. Cost (soft) avoidance
- Cost avoidance (budget)
- Cost avoidance (non-budget)
This approach would address the ambiguity commonly found in Cost of Quality programs, and would instill consistency across the enterprise.
I am very encouraged that ASQ is publishing references which are pertinent and usable. In my current role, I am managing budgets and deliverables across several programs in multiple sites. This is why I am looking for the profession to evolve to reflect this activity level. An ideal situation would be for a robust "Community of Practice" to be formed within ASQ which continually explored and industrialized innovative approaches. The skillset and capabilities of quality practitioners need to be engaged and leveraged effectively in order to establish ourselves as thought leaders in this area.
I am enjoying the CSSMBB Handbook by Kubiak, and I hope that ASQ Press will continue to promote and publish in this niche.