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Lecture 7

Lecture 7. Ch.10 Supply Chain Quality Management and Development. Agenda. (to p3). 1. Traditional Views on Quality 2. Traditional Views on Quality Management 3. Defining Supply Chain Quality 4. SCQM 5. Deming’s 14 Principles 6. Deming’s PDCA Cycle 7. Supply Chain Excellence

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Lecture 7

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  1. Lecture 7 Ch.10 Supply Chain Quality Management and Development

  2. Agenda (to p3) • 1. Traditional Views on Quality • 2. Traditional Views on Quality Management • 3. Defining Supply Chain Quality • 4. SCQM • 5. Deming’s 14 Principles • 6. Deming’s PDCA Cycle • 7. Supply Chain Excellence • 8. Questions to Ponder • 9. New Initiatives (optional) (to p5) (to p9) (to p13) (to p17) Deming concept in SCQM (to p21) (to p24) (to p31) (to p32)

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

  4. 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. (to p2) Evans, J. R., and Lindsay, W. M., The Management and Control of Quality, 2002, South-Western, Cincinnati, Ohio.

  5. 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)): • inspection, • statistical quality control, • quality assurance, and • strategic quality management. Since, TQM was then used as a format to study quality Management (to p6) (to p7) Garvin, D.A., Managing Quality, The Free Press, 1988, New York, NY.

  6. Traditional Quality Assurance (to p5)

  7. 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 .. (to p8) Wilkinson, A., and Witcher, B., “Holistic TQM must take account of politic process,” Total Quality Management, 4(1), 1993, pp.47-56.

  8. Traditional Views on Quality Management In the traditional quality management paradigm, firms are concerned with company-centered issues such as price, product quality, and delivery time. (to p10) (to p2) Conventional way that differs from SCM …… do you know what then SCM emphasized in our last few lecture?? (to p9) Evident of proof of these traditional views of QM …

  9. 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. (to p8)

  10. 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 to system-wide operational efficiency, and overall supply chain quality and success. In such, when quality applies to SC, it gives .. (to p11)

  11. 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)

  12. 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) (to p2) (to p13)

  13. 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 social components of the supply chains and the activities across company boundaries. SCQM driving forces SCQM conceptual model A real life SCQM in industry (to p14) (to p15) (to p16) (to p2)

  14. SCQM (to p13)

  15. A General Model of Supply Chain Quality Management SCQM – Critical Success Factors SCQM Infrastructure • Operational Efficiency SC Capabilities SCQM Initiatives e.g. Continuous Improvement Projects Co-making Quality Products Performance Measure Supplier –Customer Relationship Purchasing/Replenishment Transportation/Fulfillment Service/Production (to p13)

  16. Example in Point The Kellogg Company has been evaluating its potential suppliers based on the following four quality-related criteria: • supplier diversity certification • outlines of services and capabilities • quality standards • awards and recognitions http://www.kelloggs.com (to p13)

  17. 5. Deming’s 14 Principles Deming’s fourteen points are adapted to reflect a focus 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 p18) (to p19)

  18. 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. (to p17)

  19. Integrating Continuous Improvement, SC Structures, and Decision Science Models Deming’s 14 Principles SC Planning Process SC Structure Product Development Decision Science Models Suggestion System Process Development Improvement Process Daily Operations (to p2)

  20. 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.

  21. 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 ongoing process (to p22) (to p23) (to p2)

  22. Deming’s Cycle and SCQM Tools Customers Flowchart, Fishbone,, Pareto chart (X1,…,Xn) Experimental Design plan Y=F(X1…Xn) Trials (Small scale production)/ Pilot Production plan Xvi=Zi ANOVA probability plot (Xvi) Data collection SPC (Xvi=Zi) Variation reduction Linear graph/ Orthogonal array Full scale production PLAN (Design Concept) DO (Piloting) Check ACT (Go Live) Sequential House of Quality Note: it is an ongoing process Customer needs (Y)/Benchmarking/Performance Gap Integrated Enterprise Xvi: Vital Few Factor I. Zi: Target Value for Xvi Trading Partners (to p21)

  23. 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? (to p21)

  24. 7. Supply Chain Excellence Evidences of Excellence of SCQM practices: • SCQM practices in Taiwan and Hong Kong • The Social Side • The Technical Side Conclusive Remarks (to p25) (to p26) (to p27) (to p28)

  25. 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)

  26. The Social Side 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. (to p24)

  27. 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. (to p24)

  28. Supply Chain Excellence Mission Critical Systems + Supply Chain Quality Management = Supply Chain Excellence (to p29) See next slide for interactive components that contribute to SC Excellence

  29. 14 Principles Operational Efficiency IT Infrastructure SCQM Infrastructure Plan Act Do Check Supplier –Customer Relationship Competitive Position SCQM and Mission Critical System: Partners for Profit, Kaizen (Continuous Improvement), and Competitive Position Policy Deployment Process Management ERP CRM SC Capabilities E-business Co-making Quality Products The Social Side The Technical Side $ PLM (to p2) Sample of Audit Check List (to p30)

  30. SCQ Audit Checklist • Customer service • Materials receipt, location, and inventory management • Stock integrity and condition monitoring • Stock issues, order assembly, packing and labeling • Order Delivery • The management of people • Utilization of equipment and other resources (to p29) Seaver, Handbook of QM, 2003

  31. 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? (to p2)

  32. 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? (to p2)

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