Lecture 7

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Lecture 7

Ch.10 Supply Chain Quality Management and Development

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Agenda

• 1. Traditional Views on QualityQuality • 2. Traditional Views on Quality ManagementQuality Management• 3. Defining Supply Chain QualitySupply Chain Quality• 4. SCQMSCQM• 5. Deming’s 14 Principles• 6. Deming’s PDCA Cycle• 7. Supply Chain Excellence• 8. Questions to Ponder• 9. New Initiatives (optional)

Deming conceptin SCQM

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1. Traditional Views on Quality

To many organizations, quality is regarded as conformance to standards.

To others, however, quality lies in the eyes of the beholdersbeholders.

Typically, quality may constitute by a number of attributes …such as. .. (to p4)

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Traditional Views on Quality

• Evans and Lindsay (2002) suggest five different perspectives:

Judgmental – goal/image in mind

product-based – emphasis on production attributes

user-based – driven by the users’ needs

value-based – usefulness or satisfaction at a lower price

manufacturing-based – conformance to specifications

All these attributes are serving as the “result” of the outcome of products/services.

Evans, J. R., and Lindsay, W. M., The Management and Control of Quality, 2002, South-Western, Cincinnati, Ohio.

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2. Traditional Views /History on Quality Management

However, QM is a set of attributes serving as an “input” factor to quality, and that it can be evaluated based on four stages of approaches (Garvin (1988)):

1. inspection,

2. statistical quality control,

3. quality assurance, and

4. strategic quality management. Since, TQMTQM was then used as a format to study quality

ManagementGarvin, D.A., Managing Quality, The Free Press, 1988, New York, NY.

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Traditional Quality Assurance

Driven by Products

Priorities Cost and output

Objectives Detect errors

View of Q’s impact on $

Increase cost

Explanation of Errors

Workers’ mistakes and inefficiency

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Traditional Views on Quality Management

Wilkinson and Witcher (1993) defined TQM with three simple equations :

• Total = participation of everyone,• Quality = meeting customer requirements

exactly, and• Management = enabling conditions for total

quality.

Still then, TQM is still mainly emphasizing ..Wilkinson, A., and Witcher, B., “Holistic TQM must take account of politic

process,” Total Quality Management, 4(1), 1993, pp.47-56.

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Traditional Views on Quality Management

In the traditional quality management paradigm, firms are concerned with company-centeredcompany-centered issues such as price, product quality, and delivery time.

Conventional way that differs from SCM …… do you know what then SCM emphasized in our last few lecture??

Evident of proof of these traditional views of QM …

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Traditional Views on Quality Management

• Optional Internet Assignment: Visit and explore the Internet site for the American Society for Quality (http://www.asq.org). Review the past issues of Quality Management Journal, select one article from the site, give a brief summary of what the article is about, and provide the complete citation of the article.

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3. Defining Supply Chain Quality

In the 21st century global village, competitive priorities have been shifting away from traditional enterprise-centered concerns such as productivity and quality toto system-wide operational efficiency, and overall supply chain quality and success.

In such, when quality applies to SC, it gives .. (to p11)

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Defining Supply Chain Quality

• Supply Chain Quality (SCQ)

• SC = a production-distribution network,

• Q = meeting market demands correctly, and achieving customer satisfaction rapidly, and profitably

• Again, in comparison to TQM, SCQ is ..(to p12)

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TQM in general is input factors.

and

SCQ is the result.

How is then these related to SCQM? (note that, SCQM is also an input factors to SC)

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4. SCQM

To ensure that quality is built up in all processes and at all levels, Supply Chain Quality Management (SCQM) addresses concerns of the socialsocial components of the supply chains and the activitiesactivities across company boundaries.

SCQM driving forces

SCQM conceptual model

A real life SCQM in industry

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SCQM

Driven by Market demands and requirements

Priorities Relationships, information, and innovation

Objectives Endorse Q throughout supply chain

View of Q’s impact on $

Reduces cost over whole life of products

Explanation of Errors

Narrow view of quality

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A General Model of Supply Chain Quality Management

SCQM Initiatives

e.g. Continuous Improvement Projects Performance

Measure

SCQM – Critical Success Factors

Operational Efficiency

Co-making Quality Products

Supplier –Customer Relationship

SC Capabilities

Purchasing/Replenishment

Transportation/Fulfillment

Service/Production

SCQM Infrastructure

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Example in Point

The Kellogg Company has been evaluating its potential suppliers based on the following four quality-related criteriaquality-related criteria:

supplier diversity certification outlines of services and capabilities quality standards awards and recognitions

http://www.kelloggs.com(to p13)

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5. Deming’s 14 Principles

Deming’s fourteen points are adapted to reflect a are adapted to reflect a focusfocus on supply chain quality management and development in the text.

Deming’s 14 Principles in SCQM ..

Sample application of Deming’s principles to SC environment (to p19)

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Revision of Deming’s 14 Principles in SCQM (pp. 167-168)

• 1. Create its objective and involve everyone along the chain to win• 2. Adopt new philosophy and practices, such as use of IT as a competitive tool• 3. upstream information from suppliers and downstream information to customers• 4. stop making decision based on the basis of price tag• 5. keep improving event 3 above• 6. all parties should be involved in training in using statistical thinking approach• 7. provide guideline as to how to do more jobs with lesser resources required• 8. Drive out fear that no one should be blamed for any failed results• 9. working toward long-term relationship with suppliers• 10. Prepare trading partners to deal with problem of tomorrow.• 11. Focus on expanding the market• 12 Pride of workmanship for all trade partners• 13. Continuous improvement at the aim of quality and technology enhancement• 14. Involved everyone to work together to make a change.

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Integrating Continuous Improvement, SC Structures, and Decision Science Models

SC Structure

SC Planning Process

Product Development

Process Development

Improvement Process

Daily Operations

Decision Science Models

Suggestion System

Deming’s 14 Principles

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Best Practices

• Optional Internet Assignment: Lands’ End has posted its eight principles of doing business in its Web site. Those principles center on product quality, pricing strategy, service guarantee, delivery service, customer focus, supplier capability, process efficiency, and unconditional promises. Visit and explore Lands’ End’s Web site (www.landsend.com) and show how those principles can be employed to help organizations to excel on all dimensions of supply chain quality.

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6. Deming’s PDCA Cycle

Deming’s PDCA is referred to:• Plan – conceptual design of quality

• Do – Piloting quality

• Check – verifying quality

• Act – implementing quality

• Our goal is to apply this concept in SCQM that involved all trading partners Deming’s PDCA cycle and SCQM Tools (see

next slide)

Malcolm Baldrige National Quality Award

ie ongoingprocess

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Xvi: Vital Few Factor I.Zi: Target Value for Xvi

Customer needs (Y)/Benchmarking/Performance Gap

Experimental Design plan

Y=F(X1…Xn)

Trials (Small scale production)/

Pilot

Data collection

ANOVA probability plot (Xvi)

Production

plan Xvi=Zi

Full scale production

SPC (Xvi=Zi)

Variation reduction

Flowchart, Fishbone,,

Pareto chart (X1,…,Xn)

PLAN (Design Concept) DO (Piloting) Check ACT (Go Live)

Linear graph/

Orthogonal array

Sequential House of Quality

CustomersDeming’s Cycle and SCQM Tools

Integrated EnterpriseTrading Partners

Note: it is an ongoing process

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Best Practices

• Optional Internet Assignment: Visit http://www.quality.nist.gov to review the Malcolm Baldrige National Quality Award recipients’ case stories. What have you learned from those best-in-class organizations?

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7. Supply Chain Excellence

Evidences of Excellence of SCQM practices:

1. SCQM practices in Taiwan and Hong Kong

2. The Social Side

3. The Technical Side

Conclusive Remarks

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1. SCQM practices in Taiwan and Hong Kong

• Kuei et al. (2002) support the notion that how well quality and technology are introduced and managed within the framework of the social and technical systems of a supply chain is the key to increased quality and supply chains’ overall success.

Kuei, C., Madu, C. N., Lin, C., and Chow, W.S., “Developing supply chain strategies based on the survey of supply chain quality and technology management,” The International Journal of Quality & Reliability Management, 19(7), 2002, pp.889-901. (to p24)

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Experiences of organizations like IBM, Toyota, and Ritz-Carlton Hotel have shown that the practices of quality management do have significant impacts on key aspects of social systems.

The Social Side

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The Technical Side

Experiences of organizations like Bank of New York and Domino’s Pizza have also shown that Enterprise Resource Planning (ERP) is important to provide specific functionality to achieve integration of the technical systems in the supply chain environment.

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Mission Critical Systems + Supply Chain Quality Management = Supply Chain Excellence

Supply Chain Excellence

See next slide for interactive components that contribute to SC Excellence

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SCQM and Mission Critical System: Partners for Profit, Kaizen (Continuous Improvement), and Competitive Position

Policy Deployment Process Management

PLM

14 Principles

Supplier –Customer Relationship

Co-making Quality Products

Operational Efficiency

SC Capabilities

Plan

Act Do

Check

$

Competitive P

osition

SCQM Infrastructure

IT Infrastructure

ERP

CRM

E-business The Social SideThe Technical Side

Sample of Audit Check List

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SCQ Audit Checklist

Customer serviceMaterials receipt, location, and inventory

managementStock integrity and condition monitoringStock issues, order assembly, packing and

labelingOrder DeliveryThe management of peopleUtilization of equipment and other resources

Seaver, Handbook of QM, 2003

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8. Questions to Ponder

• How does “Best Buy” address supply chain quality issues?

• How does “Wal-Mart” address supply chain quality issues?

• How does “Lands’ End” address supply chain quality issues?

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9. New Initiatives

• Optional Internet Assignment: Search on-line for the term Lean Six Sigma and compare this initiative with that of SCQM.

• Optional Internet Assignment: Visit and explore the Internet site for the Six Sigma Academy (http://www.6-sigma.com). What is the definition of Six Sigma? What are the key objectives of this initiative? What is its significance to any organization? What does it involve?

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