Lecture Purchasing and supply chain management (3rd/e): Chapter 12 - W. C. Benton
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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.
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Content
1.
2.
Basics of TQM
Statistical process control
(SPC)
3.
Quality awards
4.
Other quality related activities
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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
Purchasing is a critical process of total quality
management
•
Need highquality raw materials or component parts from
suppliers
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Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
Traditional vs. TQM
Organizations
•
Traditional view of quality
•
•
Looks only at the quality of the final product or services
TQM view of quality
•
Looks at the quality of every aspect of the process that produces
the product or service
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Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
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
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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
•
Lack of the buying organization’s employees’ integration and
involvement
•
Lack of longterm view
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Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
Quality Requirements for Suppliers
Convey quality expectations
1.
•
Suppliers’ quality assurance systems must be consistent with the
inhouse quality requirements of the customer
Specify the agreedupon quality targets in detail
2.
•
PPM target agreement
•
Field failure and reliability requirements
•
Warranty agreement
•
Urgency to solve problems
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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)
•
Six Sigma
•
Taguchi Method
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Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
Statistical Process Control
(SPC)
•
•
Samples of incoming materials are checked if they lie
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
Over time, the samples are analyzed to detect trends that
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Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
may predict the disposition of the process
•
Statistical Process Control
(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)
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Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
SPC and Control Limits
•
•
SPC is used to detect when the process is (becoming)
out of control
Control Limits
•
Set to determine the probability of the units within the incoming
materials falling within the control limits
•
Example:
•
With the control limits set as plus and minus two standard
deviations away from the mean…
•
95% of units fall between the control limits
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Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
SPC Chart Examples
•
Xbar chart
example
Upper
Control
Limit
•
Lower
Control
Limit
R chart
example
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Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
Six sigma
•
A way to measure supplier quality
•
•
Control the process so that only 1 out of a million fall out of the
control limits
Sixsigma suppliers focus on:
1.
Defects per million as a standard metric
2.
Extensive employee training
3.
The reduction of nonvalueadded activities
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Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
Taguchi Method
•
Characteristics:
•
Complex and can be difficult to implement
•
Short term: increases overhead without offering benefits that can
immediately be quantified
•
Long term: gives the firm strong competitive advantage
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Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
Quality Awards
•
The Deming Award
•
The Malcolm Baldrige National Quality Award
•
ISO 9000
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Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
Quality Awards (cont.)
•
•
The Deming Award
•
Named for the quality guru Dr. W. Edwards Deming
•
2 types of awards: The Deming Prize, The Deming Application
Prize
The Deming Prize
•
•
Given to a person or group of people who have advanced the
practice and furthered awareness of TQC
The Deming Application Prize
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Given to companies based on successes attributable to
Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
•
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
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Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
Questions?
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Purchasing and Supply Chain Management, 3rd edition, Copyright © 2013, W. C. Benton Jr., All rights reserved.
