In previous series of articles Part I and Part II, we discussed the benefits of using a closed-loop process for managing regulatory compliance (pictured below). I also showed how setting up Key Performance Indicators (KPIs) that monitor performance to goals is a good way to Check that processes are working properly, thus reducing the need to perform manual audits of a given operation.

Let’s now take a closer look at the Track Problems step. The primary goal of this step is to collect and analyze data related to operational problems. This is a vital prerequisite for the next step in the process: Improve. Remember our overall goal is to systematically and continuously improve regulatory compliance. So let’s first take a look at collecting data.

Collecting data about operational problems sounds like an easy task, but it turns out to be anything but. First of all, there is a cultural stigma associated with anything that is labeled as a problem. This is because, where there is a problem, there is blame. And where there is blame, there are consequences. Given the fact that we are talking about consequences associated with someone’s livelihood, this is not something to take lightly. Therefore it is important to set a “tone from the top” that let’s employees know that the data will be used to improve operational processes and not punish employees. It is also helpful to ask employees to suggest improvement ideas. I’ve even seen some companies acknowledge and reward employees for suggestions that result in positive actions.  These are all good ways to encourage problem reporting. You want to tip the scale in favor of logging problems as shown in the illustration.

The next question is, “What data should we be collecting?” Let me start by pointing out that some data is better than no data. Waiting to create the perfect system will result in the loss of valuable information that could have alerted you to looming problems. So at the very least, start collecting data any way that you can.

I have seen hundreds of problem tracking forms spanning many processes and many industries. I’ve created product issue forms, process problem forms, out of spec forms, suggestions forms for industries regulated by the FDA, NERC and the SEC. I’ve summarized four design tips in the next illustration.

Now that you are collecting problem data, what should you do with that data? The high level steps for processing issues are: Identification, Investigation, Immediate Actions, Analysis and Planning for Further Action.

This is a summary of what each of these steps involves:

Identify: Collect problem data from all sources. Route these to someone that can determine immediate actions and investigate the problem.

Investigate: Look into the problem beyond the initial problem report. Look for trends from other sources (employees, vendors, customer) and from similar product and problems.

Immediate Actions: This step may be performed in parallel with or before the Investigate step. Determine if there are any immediate actions that need to be taken to contain the problem. While you are looking for root causes you don’t want the problem to grow or continue to do damage.

Root Cause Analysis: This is different from the initial investigate step in that you now are trying to determine what actually caused the problem. During the investigation you may determine that the problem was a result of operator error. But the root cause analysis may reveal that the operating procedure is unclear and is in fact the root cause of the problem.

Plans for Further Action: Once you have established the root cause you can take actions to Improve operations. In this step you would plan out what those improvement actions will entail, who will implement them, and how long they will take to enact. Typically this Corrective Action project requires management approval to allocate the required resources.

One benefit of this process is that a single Corrective Action project can address multiple problems. See the following illustration.

The next step is to Improve operations through implementing the corrective action project. We will take look at that step in the next article.

Sal Lucido is Vice President, Enterprise Solutions at AssurX, Inc. You can follow him at http://twitter.com/ComplianceTips

In Part I, we took a high-level look at a process for automating regulatory compliance management. The closed-loop process starts with Documenting your processes followed by Monitoring or Checking that your processes are being followed. Next you provide a means of Logging or Tracking any problems that may arise and then take actions to Improve. This improvement should then result in a revision to the Documented process followed by notifying or training those affected by the process improvement.  This closed-loop process, which I call the Circle of Compliance, should be used to automate the process of complying with regulatory standards.

Now lets take a closer look at the Check step. The goal of this step is to eliminate the need to manually audit a process in order to determine its effectiveness. One way to do this is by defining a Key Performance Indicator (KPI). That’s a measure of performance that is used to help an organization monitor progress to goals. For example, a company may decide to improve responsiveness by reducing the number of late tasks. A company might also set a goal for reducing violations or incidents to improve conformance to regulations or standards. You can see an example dashboard showing these two KPI’s in the diagram shown below.

Key Performance Indicators for monitoring late tasks and monthly incidents. Traffic Light indicators provide a method for quickly showing progress to goals.

Let’s take a closer look at this KPI dashboard. Both measurements are listed: Late Projects and Monthly Incidents. Notice that the date the measurement was made along with the actual performance data are displayed. We can see that for the month of May there were two late projects and five incidents. Then on the right we see a trend arrow (more on this below) and a traffic light, which give us a quick indication of performance to goal. Green is good and red is bad. Of course in order to set the traffic light to the correct state (green, yellow or red) we need some goals.

For example if there are less than two late projects each month the light will be green. If there are between two and four late projects we would consider that a yellow light (or caution). And if there were more than four late projects in a given month we would set the light to red.

When implemented properly, KPI’s monitor performance over a given time period (day, week, month, etc.) and provide a visual indication (traffic light, flag, etc.) of performance to goal. So let’s dig a bit deeper to better understand how to do it right.

Since a KPI measures performance over a given time period there must be historical data, trends and state changes. Let’s start with historical data. By clicking on the KPI dashboard we can see past measurements (shown below).

A report of historical KPI data shows an improving trend. An email is automatically sent in May when the light changes state.

We can see from the historical data that the trend is moving from bad to good and that in May there was a state change to red and yellow respectively. This system is set up to automatically send an email to the KPI Owner whenever there is a state change.

Emails are automatically sent when the light changes state. This shows a notification indicated that things are getting worse given the light changed from green to yellow.

Also if you look back at the KPI Dashboard you see the Trend arrow is green and down. Down indicates that we have fewer late projects than in the previous reporting period. The arrow is green, which indicates that this is a ‘good’ or desirable trend.

In summary, setting up Key Performance Indicators that monitor your performance to goals is a good way to ‘Check’ that your processes are working properly. It also eliminates the need to perform manual audits of
a given operation reducing labor costs. The next step in this closed-loop process is ‘Tracking Problems’.

Next time: We’ll take an in depth look at the ‘Tracking Problems’ step.

Sal Lucido is Vice President, Enterprise Solutions at AssurX, Inc. You can follow him at http://twitter.com/ComplianceTips

The primary function of the compliance department is to ensure that the company complies with all of the applicable regulations, rules, and laws. Regardless of industry (life science, energy and utilities, financial services, etc.) this is a universal charter.

As someone who serves customers across many heavily regulated industries, I think I’ve got a unique perspective — and I’d like to share some of what I’ve learned along the way in the hopes that it helps you in some small way .

One particularly useful tool I see used across all industries is what I call the ‘Circle of Compliance’. Before I explain this concept, let’s take a deeper look at the job of the compliance department.

As I’ve already mentioned, the compliance department is put in charge of ensuring that all applicable compliance requirements are met. For example U.S. medical device companies must comply with the FDA’s Good Manufacturing Practices (GMP). Regulation 21 CFR Part 820.90 states that each manufacturer shall establish and maintain procedures to control product that does not conform to specified requirements. So the compliance department must determine if their company follows this process.

This is not so different from a U.S. power company that owns transmission lines. They must comply with Reliability Standard FAC-003 that mandates a clearance be maintained between transmission lines and vegetation. It also requires the company to report any vegetation related outages. These are different industries and different regulators (FDA, NERC), but each has the same fundamental task.

So how does the compliance department go about ensuring these regulations are met? Typically they audit the company for compliance. If there is a gap between the requirement and current practice, they work with the appropriate departments to close the gap. Take a look at this illustration for a visual representation of this ‘push’ exercise.

You can see from the illustration that this is a manual task. The problem is that it is a time consuming, never-ending job. As soon as the compliance department shifts their attention to another area of the company, compliance gaps can (and usually do) reappear. This is then addressed with ‘periodic’ audits. What we end up with is an endless and expensive merry-go-round of audits and fixes.

The solution? Set up a process that continuously ‘pulls’ the operations towards the regulations. I’ve illustrated this type of system below.

You can see the advantage of this system from the illustration. It does not require the constant and repeated attention of the compliance department.

So what is this process? I call it the ‘Circle of Compliance’ as illustrated below.

In a nutshell, this is a closed-loop corrective/preventive action process. While you might recognize the process as it relates to quality systems, you may not have considered its application to the job of regulatory compliance.

This is how the process works: Let’s look at the U.S. power company that must ensure that trees are kept away from transmission lines. Of course the compliance group would first check to make sure the vegetation inspection and removal procedure is ‘Documented’ adequately.

Next the compliance group would see if there is a ‘system’ in place for monitoring that the process remains effective. This is the ‘Check’ part of the process. Also they would ensure that there is a process for documenting problems such as vegetation related outages. Most compliance departments do a good job of auditing these two steps, but it is crucial that the next two steps are completed.

Any and all problems with the vegetation monitoring system must be ‘Tracked’. This means they must be documented in a system that links directly to the next step: Improve. All problems must be looked at to determine how the problem occurred and how the system can be ‘Improved’ to prevent reoccurrence. This improvement must then result in a change to the ‘Documented’ process followed by retraining of the workforce to the new process.

If implemented properly this closed-loop ‘Circle of Compliance’ will save the company time and money while improving its ability to comply with industry regulations.

Next time: I’ll explore each of these steps (Document, Check, Track and Improve) in more detail.

Sal Lucido is Vice President, Enterprise Solutions at AssurX, Inc. You can follow him at http://twitter.com/ComplianceTips

The 2009 Annual AssurX Electric Reliability Special Interest Group Meeting was a great success. This year we met in Denver on June 9-10, 2009 and kicked the event off with a networking reception that mixed business and great conversations. During the conference sessions, we discussed the latest product upgrades for CATSWeb ER, which makes it easier to import new and revised NERC Standards and RSAWs.

In our open forum we learned about how everyone is using the product to manage compliance to the NERC Standards and much more. Presentations on CIP Compliance, Compliance Framework and a customer presentation were loaded with important, useful information. I want to thank RRI Energy for a very informative presentation on their NERC compliance process: recurring evidentiary documentation/
gap analysis process.

I also want to thank our customers and partners who participated in this great event. We look forward to the next one!

The CATSWeb Measurements feature makes it easy to track performance to goals, monitor trends and automatically send performance-based alerts. Measurements can be added to executive and corporate dashboards to provide important, easy to read, quality metrics information. Not only does this give you feedback about your performance to goal and trends, it also allows you to focus your resources on the areas of the business that need attention. Detailed information can be easily accessed by clicking on the metric of interest. All this is done within CATSWeb without relying on any third party tools or add-ons.

Because most of us don’t have time to look at these dashboards every day, alerts may be configured to automatically send E-mail notifications when the metrics change. Measurements can link to any data source such as internal system data like queries and filters, and with all system reports and graphs in CATSWeb – the source data can even be ‘external’  – such as from ERP and HR systems – or other Oracle and Microsoft databases.

It’s easy to set up a measurement:

1. From the Manage page, click on Measurements and choose “Add” (or copy an existing one)
2. Enter your company goals
3. Then add the measurement to a Dashboard

The CATSWeb Measurements Feature provides an easy way to track progress to goals and alert you when thresholds are crossed. This helps your company to:

• Achieve its corporate goals
• Broaden visibility regarding those goals
• Reduce cycle times
• And ensure that tasks get completed on time

Let us know what corporate goals you are tracking (or would like to track) and how you are using the Measurements Feature in CATSWeb.