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How to implement management review according to IATF 16949

Do you see the IATF 16949 requirements for Management Review as less of a benefit and more of a waste of time? Many companies see Management Review as an unpleasant necessity of maintaining compliance with IATF 16949 but, if used properly, this is far from the truth. However you choose to organize your management review, either through routinely scheduled meetings or through a more continuous review process, the act of reviewing the available data can be one of the biggest drivers of improvement in the QMS (Quality Management System).

The standard defines mandatory inputs and outputs for the management review, but the organization can also add some other elements if it finds them important for the QMS.

What are the required Management Review Inputs?

Although other inputs could be added as desired by the company, ISO 9001 has a minimum list of seven required inputs that top management needs to review. Additionally, there are 11 other inputs required by IATF 16949. This can help to not only assess the health of the QMS, but also to find areas where improvement is needed or desired to improve the processes and customer satisfaction. This article will focus only on additional requirements of IATF 16949. For more information about ISO 9001 mandatory inputs for management review, see: How to Make Management Review More Practical.

Cost of poor quality: This is the cost associated with providing poor quality products or services. There are four categories: internal failure costs (associated with defects found before the customer receives the product or service), external failure costs (associated with defects found after the customer receives the product or service), appraisal costs (incurred to determine the degree of conformance to quality requirements) and prevention costs (incurred to keep failure and appraisal costs to a minimum).

Measures of process effectiveness: The organization needs to measure the process performance to specified customer requirements. Every process should have a purpose that includes a winning value proposition for the customer.

Measures of process efficiency: The organization needs to measure the inputs and resources consumed by the process versus established standards. A profitable enterprise understands the efficiency with which it transforms inputs to valuable outputs.  Less efficient organizations operate at a competitive disadvantage that manifests itself in many ways. These can include higher costs (often leading to noncompetitive prices), less reliable and dependable products and services, and slower response times. Process Efficiency measures characteristics such as process reliability, first pass yield, throughput, and value-added ratios.

Product conformance: It is unnecessary to discuss the importance of product conformity to the requirements. The organization needs to ensure product conformance to applicable customer, statutory and regulatory requirements. If the level of compliance is unsatisfactory, the appropriate action needs to be taken.

Assessment of manufacturing feasibility made for changes to existing operations and for new facilities and products: These studies are generally performed prior to making any changes to an existing condition/infrastructure/product/process. The assessment will check to see whether the change is feasible (possible) without affecting the effective operation of current infrastructure/product/process. Changes should help to improve, rather than hinder these processes. If changes are feasible, then necessary changes are made. The results of these feasibility studies should be reviewed by Management to help decide  whether or not to implement the changes.

Customer satisfaction: The organization needs to measure how products or services supplied by a company meet or surpass a customer’s expectation. Customer satisfaction is important because it provides marketers and business owners with a metric that they can use to manage and improve their products and service.

Review of performance against maintenance objectives: Management needs information about maintenance performance for planning and controlling the maintenance process. The information needs to focus on the effectiveness and efficiency of the maintenance process, its activities, organization, cooperation and coordination with other units of the organization.

Warranty Performance (where applicable): Warranty data consists of claims data and supplementary data. Claims data are the data collected during the servicing of claims under warranty and supplementary data are additional data such as production and marketing data. This data can help determine product reliability and plan for future modifications.

Review of customer scorecards (where applicable): The Customer Scorecard is the tool that is being used to measure customer satisfaction. The organization needs to determine the methodology for administering the surveys and collecting completed forms. This will ensure that you don’t inundate customers with surveys, and that the organization incorporates components of the Customer Scorecard in their measurement process.

Identification of potential failures identified through risk analysis (such as FMEA): All identified risks and potential failures need to be examined by the top management in order to define actions to avoid their occurrence or consequences.

Actual field failures and their impact on safety and the environment: The top management needs to consider information about field failures and their impact of the occupational safety and environment, then take actions to address them.

What are the Required Management Review Outputs?

The three headings below are the mandatory outputs of Management Review. Records of the above queries need to be maintained to show that management review successfully addressed them and identified the outputs for the QMS.

Improvement of the effectiveness of the system. Improvement is the big driver of the QMS, and it can be the largest benefit for a company that implements a good QMS. Process improvement is measured by savings in time, money and resources. This can be fed back into greater profits or driving the system to improve even further.

Improvement of product related to customer requirements. Again, by improving the product or service to make it better meet the requirements of the customer, you can have greater customer satisfaction. This means more customers will return for your product or service again, or tell their friends about it.

Resource Needs. Assigning resources, such as deciding to hire new employees or spend money on machinery or tools that will make the processes work better, is one of the key duties of management. Using Management Review to try to focus on improvements can help drive savings in costs and resources by making sure they are applied in the right place the first time.

Management Review can be a key driver of improvement

The Management Review process highlights all areas to make sure the top management are monitoring and controlling the necessary resources to make the company function. Instead of being a burden, Management Review should become one of the main elements of QMS improvement. Management Review is all about reviewing the available data to confirm that adequate resources are present to ensure customer satisfaction and improve the QMS and the product.

Use this free IATF 16949:2016 Implementation Diagram to see in which phase to perform the management review.

Advisera Strahinja Stojanovic
Strahinja Stojanovic

Strahinja Stojanovic is certified as a lead auditor for the ISO 13485, ISO 9001, ISO 14001, and OHSAS 18001 standards by RABQSA. He participated in the implementation of these standards in more than 100 SMEs, through the creation of documentation and performing in-house training for maintaining management systems, internal audits, and management reviews.