Lecture Purchasing and supply chain management (3rd/e): Chapter 12 - W. C. Benton

Chapter 12 is entitled “Total quality management (TQM) and purchasing.” Preliminary studies indicate that assembly time is roughly proportional to the number of parts assembled. It has been shown that the number of parts in a design can be decreased by 20–40 percent when engineers are told to design the product to minimize the number of parts.

Chapter 12: Total Quality Management (TQM) and Purchasing Purchasing and Supply Chain Management 3rd edition Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.            Purchasing and Supply Chain Management, 3rd edition, Copyright 2013, W.  Content Basics of TQM Statistical process control (SPC) Quality awards Other quality related activities Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.            Total Quality Management (TQM) • • TQM • A continuous improvement process • Beyond the traditional quality view  • The entire organization works as a team Purchasingisacriticalprocessoftotalquality management Needhighưqualityrawmaterialsorcomponentpartsfrom suppliers PurchasingandSupplyChainManagement,3rdedition,Copyrightâ2013,W.C.BentonJr.,Allrightsreserved. Traditionalvs.TQM Organizations Traditionalviewofquality Looksonlyatthequalityofthefinalproductorservices TQMviewofquality Looksatthequalityofeveryaspectoftheprocessthatproduces theproductorservice PurchasingandSupplyChainManagement,3rdedition,Copyrightâ2013,W.C.BentonJr.,Allrightsreserved. TQM and Supply Chain  • • Supply chain TQM can lead to a competitive advantage  for the supply chain as well as the members To be effective, buying organizations must:  • Select suppliers with a TQM philosophy • Replace suppliers that ignore the TQM • Investigate customer requirements  • Include suppliers in the new product development process Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.            TQM Implementation Failures • Factors associated to failures: • Lack of a quality focus throughout the supply chain • Lack of a sense of urgency for change throughout the buying  organization • Lack of a strategic plan for change • Lack of a customer or supplier focus • Lack of positive communications throughout the buying  organization Lackofthebuyingorganizationsemployeesintegrationand involvement Lackoflongưtermview PurchasingandSupplyChainManagement,3rdedition,Copyrightâ2013,W.C.BentonJr.,Allrightsreserved. QualityRequirementsforSuppliers Conveyqualityexpectations • Suppliers’ quality assurance systems must be consistent with the  in­house quality requirements of the customer Specify the agreed­upon quality targets in detail  • PPM target agreement • Field failure and reliability requirements • Warranty agreement • Urgency to solve problems Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.            Manufacturing Process Control • The traditional approach • • Reactive and expensive • Select production samples and examine for defectives • Either rework or scrap defectives TQM approach • Statistical Process Control (SPC) • SixSigma TaguchiMethod PurchasingandSupplyChainManagement,3rdedition,Copyrightâ2013,W.C.BentonJr.,Allrightsreserved. StatisticalProcessControl (SPC) Samplesofincomingmaterialsarecheckediftheylie within control/specification limits The control charts: • Sample mean (X­bar) chart • • Sample mean is plotted Sample range (R) chart • Range of the sample is plotted Overtime,thesamplesareanalyzedtodetecttrendsthat PurchasingandSupplyChainManagement,3rdedition,Copyrightâ2013,W.C.BentonJr.,Allrightsreserved. maypredictthedispositionoftheprocess StatisticalProcessControl (SPC)(cont.) Specification A description of the required output, including specific  characteristics • • e.g., weights and measurements Flexibility in specifications • The upper control limit (UCL) • The lower control limit (LCL) 10 PurchasingandSupplyChainManagement,3rdedition,Copyrightâ2013,W.C.BentonJr.,Allrightsreserved. SPCandControlLimits SPCisusedtodetectwhentheprocessis(becoming) outofcontrol ControlLimits Settodeterminetheprobabilityoftheunitswithintheincoming materialsfallingwithinthecontrollimits Example: Withthecontrollimitssetasplusandminustwostandard deviationsawayfromthemean 95%ofunitsfallbetweenthecontrollimits 11 PurchasingandSupplyChainManagement,3rdedition,Copyrightâ2013,W.C.BentonJr.,Allrightsreserved. SPC Chart Examples • X­bar chart     example Upper Control Limit • Lower Control Limit Rchart example 12 PurchasingandSupplyChainManagement,3rdedition,Copyrightâ2013,W.C.BentonJr.,Allrightsreserved. Sixsigma Awaytomeasuresupplierquality Control the process so that only 1 out of a million fall out of the  control limits Six­sigma suppliers focus on: Defects per million as a standard metric Extensive employee training The reduction of non­value­added activities 13 PurchasingandSupplyChainManagement,3rdedition,Copyrightâ2013,W.C.BentonJr.,Allrightsreserved. TaguchiMethod Characteristics: Complexandcanbedifficulttoimplement Shortterm:increasesoverheadwithoutofferingbenefitsthatcan immediatelybequantified Longterm:givesthefirmstrongcompetitiveadvantage 14 PurchasingandSupplyChainManagement,3rdedition,Copyrightâ2013,W.C.BentonJr.,Allrightsreserved. QualityAwards TheDemingAward TheMalcolmBaldrigeNationalQualityAward ISO9000 15 PurchasingandSupplyChainManagement,3rdedition,Copyrightâ2013,W.C.BentonJr.,Allrightsreserved. QualityAwards(cont.) TheDemingAward NamedforthequalityguruDr.W.EdwardsDeming 2typesofawards:TheDemingPrize,TheDemingApplication Prize TheDemingPrize Giventoapersonorgroupofpeoplewhohaveadvancedthe practiceandfurtheredawarenessofTQC TheDemingApplicationPrize 16 Giventocompaniesbasedonsuccessesattributableto PurchasingandSupplyChainManagement,3rdedition,Copyrightâ2013,W.C.BentonJr.,Allrightsreserved. • Quality Awards (cont.) • ISO 9000 • Standards originated in manufacturing  used to certify a variety of  organizations and business concerns • ISO 9001 • • A set of standards that document the implementation of a quality  program  In order to be certified, suppliers need to provide documentation  to an external examiner that they meet the ISO 9001 requirements 17 Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.            Questions? 18 Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.            ... 17 PurchasingandSupplyChainManagement,3rdedition,Copyrightâ2013,W.C.BentonJr.,Allrightsreserved. Questions? 18 Purchasing and Supply Chain Management,  3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.           ... the product or service PurchasingandSupplyChainManagement,3rdedition,Copyrightâ2013,W.C.BentonJr.,Allrightsreserved. TQMandSupplyChain SupplychainTQMcanleadtoacompetitiveadvantage forthesupplychainaswellasthemembers... With the control limits set as plus and minus two standard  deviations away from the mean…   • 95% of units fall between the control limits  11 PurchasingandSupplyChainManagement,3rdedition,Copyrightâ2013,W.C.BentonJr.,Allrightsreserved.