Standards and Standardization for SMEs and Subcontractors

1. Standards and Standardization for SMEs and Subcontractors Jose Edgar S. Mutuc mutucj@dlsu.edu.ph

2. Business Management • What does an owner/manager manage? • How does he know what is right or what is wrong with what he is managing? • Does everybody in the organization know what is right and what is wrong?

3. Supply chain management • Management as applied to suppliers and subcontractors • Management requires a basis • STANDARDS

4. What are standards?

5. What are standards? Standards are preferred output and/or performance • To make a stand and make operational a philosophy, principle or value • To maintain and improve • Internal organizational processes • Customer satisfaction processes • Attainment of other external requirements

6. Types of standards • Conceptual and concrete standards • Product and process standards • Internal standards and external standards • International, national and industry standards • Quantitative and qualitative standards

7. Product standards • Letter size bond paper = 8.5” x 11” • ATM and credit cards = 5.4cm x 8.5cm • A, AA and AAA batteries • Films 110, 135 • Big Macs and quarter pounders

8. Domestic & Commercial, Sports & Leisure Equipment • Other equipment for entertainment • Playgrounds • Theatre, stage and studio equipment and work stations • Toys • Furniture • Home economics in general • Home textiles. Linen • Items of art and handicrafts • Kitchen equipment • Cooking ranges, working tables, ovens and similar appliances • Cookware, cutlery and flatware • Dishwashers • Domestic refrigeratingappliances • Trolleys for supermarket use • Sports equipment and facilities • Musical instruments • Automatic controls for household use • Body care equipment • Cleaning appliances • Domestic commercial and industrial heating appliances • Electric heaters • Gas heaters • Heaters in general • Heaters using other sources of energy • Liquid fuel heaters • Solid fuel heaters • Domestic electrical appliances in general • Equipment for children • Equipment for entertainment • Camping equipment and camp-sites • Equipment for entertainment in general

9. REPUBLIC OF THE PHILIPPINESDEPARTMENT OF LABORManilaDEPARTMENT ORDER NO. 4 Pursuant to Section 2 of Republic Act No. 679, as further amended by Presidential Decree No. 148, commonly known as the Woman and Child Labor Law, the following occupations are hereby declared hazardous to young workers, without prejudice to other occupations that may subsequently be declared as such: HAZARDOUS OCCUPATIONS TO YOUNG WORKERS A. Farming, Fishing, Hunting, Logging, and Related Occupations • fishermen (deep sea and offshore) • divers of (sponge, pearl and shell) • logging (as cutter, sawyer, stripper, cable installer, feller) • charcoal burner (big scale)

10. REPUBLIC OF THE PHILIPPINESDEPARTMENT OF LABORManilaDEPARTMENT ORDER NO. 4 D. Craftsman, Production, Process and Related Occupations • spinners and winders (textile) • fiber and plastic preparers • bleacher, dyer and finisher of textiles using chemicals • tool maker, machinist, plumber, welder, flame cutter and plater • electrical and electronic fitter • sawyer and woodworking machine setter and operator • furnace and oven workers in brick making • furnace man and kilnman in the manufacture of glass and ceramics • distiller of alcoholic beverages • tanner • blacksmith, hammersmiths, forgeman • slaughtering and killing large cattle (carabao, cow, horses) • extraction of lard and oil

11. International Organization for Standardization The ISO 9000 family is primarily concerned with "quality management". This means what the organization does to fulfill: • the customer's quality requirements, and • applicable regulatory requirements, while aiming to • enhance customer satisfaction, and • achieve continual improvement of its performance in pursuit of these objectives.

12. International Organization for Standardization The ISO 14000 family is primarily concerned with "environmental management". This means what the organization does to: • minimize harmful effects on the environment caused by its activities, and • to achieve continual improvement of its environmental performance.

13. McDonald’s Standards of Business Conduct The promise of the Golden Arches “The basis for our entire business isthat we are ethical, truthful and dependable.It takes time to build a reputation.We are not promoters. We are business people with a solid, permanent, constructive ethical program that will be in style ...years from now even morethan it is today.”— R a y K r o c , 1 9 5 7

14. McDonald’s Standards of Business Conduct Personal AccountabilityWe accept personal accountabilityWe communicate openly/Business Integrity LineWe act in the best interest of the SystemOur Commitment to EmployeesHuman rights and the lawRespect and dignityHealth and safetyOur Commitment to CustomersCleanliness and safetyMarketingFair competition and antitrust Our Commitment to Business Partners                   and CompetitorsOwner/operator relationshipsSupplier relationshipsSharing informationCompetitor relationshipsGifts, favors & business entertainment

15. McDonald’s Standards of Business Conduct Our Commitment to Shareholders                           Corporate governance and internal controlsProtecting company assetsConfidential informationInside information and securities tradingBusiness records and communicationsOur Commitment to Communities                           The letter and spirit of the lawPolitical activitiesGovernment inquiriesEnvironmentCommunicating with the public

16. Wal-Mart’s ES Program Wal-Mart’s ES program has four fundamental objectives: 1. Ensure compliance with legal requirements, as well as the additional requirements embodied in the Wal-Mart Standards for Suppliers. 2. Verify that suppliers and factory management practices are in accordance with the Standards for Suppliers. 3. Ensure that the audit teams are executing the Ethical Standards program consistently. 4. Encourage adoption of changes through education of suppliers and factories that will result in an improved quality of life for the workers who make the merchandise we

17. Work standard GTE Directories customer-complaint resolution process Determine customer’s need If complaint, request customer’s records Receive & analyze customer’s record Not accept Update customer’s record Customer accepts resolution Provide info & propose resolution

18. Workplace standards • Furniture standards are guidelines, which serve as tools for developing the physical components of a work environment. • They also enable organizations to link their strategic goals with effective workplace design. • Ultimately, standards serve as guidelines to maintain a consistent approach to cost, quality, design, and health and safety issue.

19. Workplace standards From: Cornell University Ergonomics web http://ergo.human.cornell.edu/AHTutorials/typingposture.html

20. Workplace standards Workers maintain awkward shoulder, elbow, and wrist postures while sewing because of improper table height causing fatigue and health risks.

21. What are standards for? • “Create order out of chaos” • Ensure desirability • Uniformity and consistency • Interoperability and interchangeability • Anticipate and minimize problems • Predictability • Improve organizational measures such as efficiency, effectiveness, productivity and eventually profitability

22. Characteristics of standards • Anticipated or required performance • Involves an need and objective • Involves an agreement • Involves a set of conditions and/or circumstances • Involves a period of time

23. What is standardization? • Process of producing technical specifications or precise criteria to be used as rules, guidelines or definitions • Adapting and implementing these specifications to ensure that the materials, products, services, processes and systems are interconnected • the activity consists of the processes of formulating, issuing and implementing standards.

24. What and where to standardize

25. Standards for SMEs and subcontractors • Product • Process • Skill and training • Tools and equipment • Work place • Work environment • Government

26. Setting up standards • Identify the need, the area and objective • Determine quantitative and/or qualitative standard • Set up the standard and its conditions • Present and clarify the standard • Train • Implement conditions and standards • Monitor and revise accordingly

27. Standards at McDonald’s • Burger fat content is 17 – 22.5% (83% lean chuck and 17% choice plates) • French Fries scoop • Bag-in-box packaging for milk • 750 page franchisees operations manual • 32 slices of 1 lb cheese • French fries to be cut 9/32 of an inch thick • Everyday windows have to be cleaned

28. Setting Fries Standards at McDonald’s • Was not determined by temperature of oil in the vat • Variety of potato • Curing of potatoes • Solid contents • Storage facilities at the farms • Potatoes were perfectly cooked when the oil in the vat recovered by 3 degrees from its low point => automated potato frying

29. Wal-Mart Ethical Standards Program Milestones • Wal-Mart’s Factory Certification program was established, including Standards for Suppliers. Efforts were focused on Bangladesh and China. • 1993-96 First Factory Certification program manual was developed, and began auditing factories directly manufacturing for Wal-Mart. • 1997-2001 Factories in Egypt, Pakistan, India, and Nicaragua were added.

30. Wal-Mart Ethical Standards Program Milestones 2003 Wal-Mart began training its buyers, suppliers and factory managers on Wal- Mart Supplier Standards. More than 4,600 representatives of suppliers and factories were trained globally. A product quality assurance program was also established, including reviews by internal audit. 2004 Trained more than 7,900 suppliers and factory managers, including officials associated with the 1,100 new factories added to our program.

31. “While other food retailers were spending 90 percent of their time on the supply side of business, its suppliers allowed McDonald’s to spend more time on operations.”