Process Performance and Process Audits — From Lagging KPIs to the True Implementation of the Process Approach

1. Process Performance: Shifting from "Outcome KPIs" to "Process KPIs"

Many quality monthly reports look like this: customer complaints ↓, PPM ↓, costs ↓ — all are lagging indicators (Lagging Indicators). By the time the numbers turn red, nonconforming products have already been shipped, and customers have already stopped their lines.

Process performance (Process Performance) focuses on whether the process is stable, controllable, and predictable:

• Is the Cpk of critical processes up to standard?
• What is the first pass yield (FPY)?
• What is the defect rate in the first hour after a changeover?
• What is the cycle time from ECN approval to implementation on the shop floor?

When process performance is managed well, outcome KPIs often improve naturally; chasing outcomes alone will always result in firefighting.

Process audits (Process Audit) verify whether the process is operating as designed and whether the design is reasonable — forming a triangle with product audits (checking the product) and system audits (checking the clauses).

This article provides guidance on designing process performance indicators, collecting data, conducting process audits, and managing the interaction between these two.

2. Process vs. Outcome: Indicator Stratification

Design Principles:

1. Each end-to-end value stream (e.g., O2D, NPI) should have at least 3 process KPIs, with a designated Owner.
2. Process KPIs must be frequently updated (shift/daily/weekly), not just at the end of the month.
3. Each process KPI should define action thresholds (yellow/red), not just for reporting.

3. Process Performance Indicator Library (Manufacturing Reference)

3.1 Production and Processes

• FPY / RTY (first pass yield / right the first time)
• OEE breakdown: availability, performance, quality
• SPC: Cpk/Ppk of critical characteristics, number of out-of-control occurrences, time to correct
• Changeover time (SMED) and defect rate of the first piece after changeover
• Number of process parameter deviations (preferably automatically collected)

3.2 Quality Function

• NCR closure cycle time and rate of repeated NCRs
• Trend of deviations/concessions by risk level
• LPA audit compliance rate and rate of findings closure
• Number of overdue MSAs and calibration overdues

3.3 Supply Chain and NPI

• Incoming PPM and SCAR response cycle time
• NPI phase gate on-time rate and design change implementation cycle time
• Trend of supplier audit scores

More indicators are not necessarily better — 5 to 7 core process KPIs per value stream are sufficient, with the rest going into a diagnostic pool.

4. Process Performance Dashboards and Management Rhythm

It is recommended to use three-tier dashboards:

Rule: Red items on the dashboard must have a DRI + due date; if the same reason is marked red for 3 consecutive days, it should be escalated to QRQC.

Data should be automatically collected (MES, SPC, QMS) as much as possible; manual entries should define SLAs and verification.

5. Process Audits: Positioning and Methods

5.1 Differences from System Audits and Product Audits

The VDA 6.3 method is the benchmark for process audits in the automotive industry; for non-automotive industries, the P1～P7 concepts (project management, product/process development, supplier management, production, customer service, etc.) can be simplified and used, selecting processes based on risk.

5.2 Six-Step Process Audit Method

1. Select Process: Based on risk (safety, special characteristics, customer complaints, low Cpk)
2. Review Planning: Check if the Control Plan, FMEA, and inspection plans are consistent and up-to-date
3. Review Performance: Examine SPC, FPY, and audit historical trends — use data to set focus
4. On-Site Verification: Gemba observation, interviews, sample traceability (see process-specific audit walk-through)
5. Scoring and Grading: Score each process element from 0 to 10 or A/B/C nonconformities
6. Improvement and Re-audit: Implement corrective actions, verify effectiveness, and set re-audit cycles based on risk

5.3 Capabilities of Process Auditors

• Understand processes and can interpret control charts and CPs
• Ask effective questions without preconceived notions
• Distinguish between "occasional" and "systemic" nonconformities

Internally training 2 to 3 Lead Process Auditors is more sustainable than hiring external consultants annually.

6. Process Performance × Process Audits: Linked Closed Loop

Process Performance Anomaly (KPI turns red)
        ↓
  Trigger Enhanced Process Audit / Special Diagnostic
        ↓
  Audit Findings → Corrective Actions → Update FMEA/CP
        ↓
  Process KPI Recovery → Reduce Audit Frequency

Conversely: If a process audit identifies B/C class nonconformities, they should be linked to process KPIs (e.g., "Number of LPA findings not closed") to prevent audit reports from being ignored.

It is recommended that the quality department maintain a "Process Register":

7. Relationship with Maturity and Layered Audits

• Low process maturity + red performance → Highest priority for improvement and audit
• LPA verifies whether daily operations follow the CP; process audits verify whether the CP is adequate — complementary, not redundant
• Maturity models (see 2.2.3) can provide a basis for setting audit frequencies: Level 2 requires at least one full-element audit per year, while Level 4 can extend the cycle but with stricter performance monitoring

8. Common Pitfalls

Pitfall 1: Process KPIs are only for the Quality Department

The process Owner must be the value stream leader (production, engineering), with the quality department providing methods and independent assessments.

Pitfall 2: No audit if Cpk is good

There may be a disconnect between documents and the shop floor; good performance could also result from overly lenient inspection standards.

Pitfall 3: Copying VDA tables to fill in scores

Scoring is not the goal; improvement projects and performance recovery are.

Pitfall 4: Data falsification / manual SPC adjustments

Audit trails and automatic data collection are the defenses; data falsification should be treated as misconduct.

Pitfall 5: Separate meetings for audits and performance

Combine them into the value stream daily management meeting to reduce meeting fatigue.

9. Launch Recommendations (90 Days)

10. Checklist for CQO

1. Do process KPIs precede customer complaints/PPM in daily reports?
2. Is there a process register and is it linked to the audit plan?
3. Does the most recent process audit reference at least 6 months of SPC/FPY data?
4. Are red KPIs addressed in writing within 48 hours?
5. Are all process audit findings 100% entered into CAPA or improvement projects?

Process performance tells you "what is happening in the process"; process audits verify "why it is happening and whether it should be this way". Together, they form the true implementation of the process approach (Process Approach) — the essence of IATF 16949.

Good process management does not wait for customer PPM alerts to hold meetings; instead, when a control chart first shows a trend deviation, the value stream team is already standing by the process.

Knowledge Number: 2.2.2

Version: v20260630

Author: Quality Excellence Think Tank Quality Excellence Think Tank is dedicated to providing systematic knowledge, methodologies, and practical tools for quality management professionals, helping companies continuously improve their quality capabilities.