Real-Time Quality Management in the Automotive Industry:

A Case Study on the Strategic Initiatives for Reducing Costs and Remaining Competitive

Copyright © 2008 InfinityQS International

 Table of Contents
I. Continuous Improvement in the Automotive Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

II. Statistical Process Control: A Scientific Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

III. A Case Study in SPC for Continuous Improvement: Cooper Tire . . . . . . . . . . . . . . . . . . . 4

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I. Continuous Improvement in the Automotive Industry
Over the last 30 years, the manufacturing industry has undergone a notable shift in terms of pushing
geographic and cultural boundaries. An increased dependence on global trade, offshore labor and
a worldwide supply chain are the determining factors for where, what, when and how produced
goods reach consumers in an increasingly level global playing field. This shift has been particularly
prevalent in the automotive sector, as automotive manufacturers obtain parts from hundreds of
suppliers, and the standards for quality are becoming more stringent.

A complex organizational structure is therefore required to line up the end-to-end logistics of supply
chain management, financials, customer relations and human resources. With a centrally developed
and coordinated manufacturing strategy, individual facilities must execute the various tactics for
quality management.

In this environment, opportunities for business success can be fleeting. Even under ideal
circumstances, an unforeseen, outlying factor can determine whether a company wins or loses an
important contract. It is critical to establish a competitive advantage in order to simply maintain
profits, let alone increase revenues. Businesses can simultaneously reduce costs and remain
competitive by investing in process improvements that increase quality. For example, identifying and
implementing efficiencies in production methods can result in reduced scrap, rework and even labor
costs. Automotive manufacturers are rapidly adopting technologies for the automation of not only
processes, but quality control functions.

Methodologies such as statistical process control (SPC), six sigma, lean manufacturing, and
total quality management (TQM) have arisen out of the steadily emerging culture of continuous
improvement. They are key aspects of the operations management strategies that help manufacturers
gain the competitive advantage needed to remain profitable. In the automotive industry, focusing on
comprehensive process improvements leads to the creation of more precise parts with less variability.

Many companies have adopted a hierarchy system to organize and execute six sigma and continuous
improvement efforts according to Kaizen.1 The hierarchy is built around a champion, whose
responsibility is to define and coordinate business objectives and provide the necessary resources
to team members. The champion organizes team responsibilities and determines the scope of
involvement necessary to execute tasks. The “black belt,” an expert in engineering process
improvement, works in conjunction with the champion to identify innovations that contribute to
quality initiatives.

II. Statistical Process Control: A Scientific Methodology

More and more manufacturers are implementing automated Statistical Process Control (SPC) systems

1 Kaizen is Japanese for improvement. In business, the term applies to the culture of applying continuous quality improvement
functions.
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as part of their continuous improvement efforts. Simply stated, SPC uses statistical equations and
graphs to create acceptable limits for process variation—“control limits”. Control limits fall well
within product specification limits so that unstable processes can be identified before problematic
product characteristics are produced. With real-time SPC, operators monitor processes on the
production floor. Typically, there is an alarming system in place to alert operators of processes that
have exceeded the defined control limits, so that they can take an immediate corrective action.

The core objectives of SPC are to provide productivity and quality information about production
processes in real-time. The principles of SPC take into account the following:
All processes have unique characteristics or hidden personalities that are inherent within them

Data analysis provides in depth understanding of process variations and identifies improvement
opportunities

Success in real-time SPC requires that measurement data be accurate, and collected in a timely
manner. Various gauging devices are used to ensure that a specific measurement is taken and recorded.
SPC software programs collect and store this data, analyzing it and creating graphs instantaneously.

As a factory floor application, that can be extended up to corporate offices and throughout the
enterprise, SPC software delivers vital quality data upstream to Manufacturing Execution Systems
(MES). By integrating live production data into enterprise-wise systems, SPC plays a vital role in the
business’ continuous improvement strategy.

SPC solutions are designed to allow companies to plan and structure long-term strategies and bring
short term quality improvements into view. The scope, detail and accessibility of quality data helps
manufacturing facilities avoid unscheduled downtime. Analyzing tool wear metrics gives quality
departments the opportunity to minimize downtime by creating detailed maintenance schedules that
extend out for many years.

To execute process improvements, workers participate in the PDCA cycle – as in Plan Do Check
Act, also known as the Shewhart cycle. PDCA involves planning a process adjustment, executing
the adjustment, reading the results of the process adjustment to validate results, and taking corrective
action if the results don’t align with the original goals. This pattern is repeated until there is a
minimal statistical margin of error.2

The PDCA cycle illustrates one of the most valuable concepts of SPC: out-of-control processes
present opportunities for improvement. When applied correctly, control charts and limits identify an
inconsistency that manufacturers need to know about. Control limits denote what is normal behavior,
and conversely, what’s abnormal. By addressing inconsistencies properly, manufacturers proactively
approach process changes that, if ignored, could potentially disrupt future operations.3

2 Statistical Method from the Viewpoint of Quality Control. Shewhart, Andrew. New York: Dover, 1939.
3 Taming the Control Freak. Fair, Douglas C. Quality Digest - Quality Insider, October, 2007.
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III. A Case Study In SPC for Continuous Improvement: Cooper Tire
Background
Cooper Tire & Rubber Company is a global organization that specializes in the design, manufacture,
marketing and sales of passenger car, light truck, medium truck tires and subsidiaries that specialize in
motorcycle and racing tires. With headquarters in Findlay, Ohio, Cooper Tire has 67 manufacturing,
sales, distribution, technical and design facilities within its family of companies located around the
world.

In 2007, Cooper reported record sales of $2.9 billion with an operating profit of $134 million, a
marked improvement since restructuring and other cost saving initiatives were undertaken in 2006.
Cooper delivered $100 million in cost savings and profit improvement initiatives while successfully
launching the CS4 line and ramping up production of Cooper Kenda Tire.

The Cooper brand is one of the most well established names in the automotive industry. The company
always ensures that it is on the leading edge of industry innovations for quality improvement and
production efficiencies in high-volume environments that produce thousands of tires each day..
Although the functional purpose of a tire has remained the same for over a century, improvements to
materials and design are allowing Cooper to bring a more effective, longer lasting tire to the market.
To maintain its competitive advantage, Cooper is working to establish long term strategies for
continuous improvement, operational effectiveness and product differentiation.

Cooper differentiates its products with a winning portfolio of high performance tires marketed under
the brand name Zeon. This portfolio also includes the Cooper CS4, Discoverer and Roadmaster lines
as well as associate brands Avon, Mastercraft, Dean and Kenda. The Cooper brand is distributed
and well positioned in passenger, light truck, sport utility vehicle, commercial and high performance
markets.

Challenge
Along with creating cost effective operations, Cooper has sought to streamline its supply chain with
low-cost, high quality raw materials that include natural rubber, synthetic rubbers, carbon black,
reinforcing fabrics and steel.

Cooper’s continuous improvement activities are leading the company to continue to develop
innovative quality improvements. To achieve their objectives for establishing highly efficient
production processes, they first had to understand and benchmark their baseline capabilities. One goal
was to make better use of production data and, from an operations standpoint, use the data to help
guide the decision making process. They needed a quality solution that could satisfy their scalability
needs while offering insight into potential quality improvements.

“We were trying to gain a perspective about what the data is telling us. What does it point to about

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opportunities we have? We wanted to do less troubleshooting and work on improving processes
rather than resolving production issues,” said Donald S. Bruce, Director of Reliability Engineering.

Logistically, Cooper needed an enterprise-wide standard for reports in a system that would initially
be implemented in North American, with the ability to go world wide. As a global entity, Cooper’s
implementation would take place in phases, so they needed a solution that was flexible with training,
consulting and support. One of Cooper’s objectives was to employ a quality expert at each location to
oversee the implementation and ensure the stability of corporate standards.

Solution
To achieve their process improvement goals, Cooper standardized with InfinityQS Statistical Process
Control (SPC) software.

“Because quality is synonymous with the Cooper brand, we looked to InfinityQS to ensure that every
process met the Cooper standard,” said Bruce. “We investigated a few different options and decided
that InfinityQS provided the best SPC solution to handle the complexities of our manufacturing
operations.” InfinityQS integrates with MES and ERP systems to provide real-time detailed quality
analysis capabilities at the process level that MES and ERP products were never designed to provide.
The unique capabilities of InfinityQS solutions contribute to more fluid processes and allow the
quality personnel to take a proactive approach to improving the capabilities of the various processes
throughout the operations.

As opposed to the other real-time SPC solutions that Cooper was initially considering, InfinityQS uses
a relational database structure, a simple, flexible format that was able to give Cooper the versatility
they needed for a thorough analysis of parts across various production processes. InfinityQS’ unique
relational databases allows users to quickly and easily manage thousands of parts in a single set-
up (project) as opposed to the hundreds of thousands of data files other SPC systems force users to
configure. This structure allows Cooper to conduct comparative analysis of any part running across
any process with just a few clicks of a mouse.

InfinityQS International is currently helping Cooper instill a culture of innovation throughout all the
manufacturing sites. Rather than a reactive approach that dedicates resources to putting out fires,
Cooper is bringing about change with a data-driven culture. InfinityQS’ data analysis functions give
Cooper a full grasp of their process capabilities. InfinityQS control charts illustrate process control
limits, and create automated alerts when a process exceeds these limits. Instituting process control
across production lines helps ensure that each Cooper tire is produced to the highest quality standards.

This robust data analysis allows Cooper to shift resources away from processes within specification
and control limits toward areas that can enhance the overall operations. The first phase of Cooper’s
corporate-wide InfinityQS implementation took place in four North American facilities. Work has
also begun to install the software package at Cooper manufacturing sites in China.
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 Results
Cooper was able to drive and sustain continual improvement using the InfinityQS SPC system. The
software gave them additional tools to help them as they head down the path to become ISO 9001
certified in 2008. With InfinityQS, Cooper effectively monitors processes to ensure effectiveness,
keeps adequate records, checks output for issues and applies CAPA where necessary – all
requirements of ISO 9001.

Cooper Tire & Rubber Company was able to use InfinityQS software to drive operational process
improvements with significant cost savings and increased productivity. In one plant, Cooper realized
$400,000 in annual savings on the belt line by analyzing the dimensional data of components. These
cost savings represent just one line in one plant. Similar savings were recognized on other production
lines and throughout other facilities using InfinityQS software. Cooper also attained measurable
process performance index improvements in the inner line, extrusion, and cutting processes.

Cooper’s road to success is driven by a combination of lower production costs and increased
productivity. The significant annual savings on the belt line alone demonstrates how Cooper is
able to significantly reduce its costs of production. In addition to cost savings, Cooper also made
substantial improvements in process performance index. With the InfinityQS solution, Cooper Tire
is systematically driving process improvements that ensure the optimal quality levels that consumers
have come to expect from the Cooper brand.

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Copyright © 2008 InfinityQS International