Supplier Quality Management – ppt video online download

Presentation on theme: “Supplier Quality Management”— Presentation transcript:

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Supplier Quality Management
Chapter 8 CENGAGE LEARNING Monczka – Handfield – Giunipero – Patterson

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Purchasing & Supply Chain Management, 4e
Chapter Overview Overview of supplier quality management Factors affecting supply management’s role in managing supplier quality Supply quality management using a TQM perspective Pursuing Six Sigma supplier quality Using ISO and the MBNQA criteria Purchasing & Supply Chain Management, 4e

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What Is Supplier Quality?
The ability to meet or exceed current and future customer expectations or requirements within critical performance areas on a consistent basis Keys to supplier quality: Meet or exceed Current and future requirements On a consistent basis Purchasing & Supply Chain Management, 4e

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Supplier Quality Concerns
Supplier impact on quality Continuous improvement requirements Outsourcing of purchase requirements Purchasing & Supply Chain Management, 4e

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Factors: Supply Management’s Role
The ability of a supplier to affect a buyer’s total quality The resources available to support supplier quality improvement Ability of a buying firm to practice world-class quality Purchasing & Supply Chain Management, 4e

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Factors: Supply Management’s Role
A supplier’s willingness to work jointly with the buyer to improve quality A supplier’s current quality levels A buyer’s ability to collect and analyze quality-related data Purchasing & Supply Chain Management, 4e

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Purchasing & Supply Chain Management, 4e
A TQM Perspective Defining quality in terms of customers and their requirements Deming’s 14 Points Pursuing quality at the source Stressing objective measurement and analysis Emphasizing prevention rather than detection of defects Purchasing & Supply Chain Management, 4e

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Purchasing & Supply Chain Management, 4e
A TQM Perspective Focusing on process rather than output Basics of process capability Striving for zero defects Cost of quality Establishing continuous improvement as a way of life Making quality everyone’s responsibility Purchasing & Supply Chain Management, 4e

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Quality: The Customer’s Perspective
Nonconforming supplier quality is often due to inconsistent communication and resultant misunderstanding of specifications, expectations, and requirements within the supply chain Need for clear specifications and performance requirements Sharing of final product requirements Purchasing & Supply Chain Management, 4e

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Purchasing & Supply Chain Management, 4e
Developing Clarity Ability of the buying company to succinctly identify, clearly define, quantify, or specify its technical and sourcing requirements Buyer’s ability and initiative to effectively communicate these requirements to the supplier Purchasing & Supply Chain Management, 4e

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Purchasing & Supply Chain Management, 4e
Deming’s 14 Points Create a vision and demonstrate commitment Learn the new philosophy Understand inspection Stop making decisions based purely on the basis of cost Improve constantly and forever Purchasing & Supply Chain Management, 4e

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Purchasing & Supply Chain Management, 4e
Deming’s 14 Points Institute training Institute leadership Drive out fear Optimize the efforts of teams Eliminate exhortations Purchasing & Supply Chain Management, 4e

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Purchasing & Supply Chain Management, 4e
Deming’s 14 Points Eliminate numerical quotas and measurement by objective Remover barriers to pride in workmanship Encourage education and self-improvement Take action Purchasing & Supply Chain Management, 4e

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Summary of Deming’s Philosophy
Variation is the primary source of quality nonconformance To reduce variation, the search for improved quality is a never-ending cycle of design, product, and delivery followed by surveying customers – then starting all over again Purchasing & Supply Chain Management, 4e

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Summary of Deming’s Philosophy
Although quality is everyone’s responsibility, senior management has the ultimate responsibility for quality Interacting part of a system must be managed together as a whole, not separately Purchasing & Supply Chain Management, 4e

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Summary of Deming’s Philosophy
Psychology helps manager understand their employees and customers, as well as interactions between people Intrinsic motivation is more powerful than extrinsic motivation Predictions must be grounded in theory which helps to understand cause-and-effect relationships Purchasing & Supply Chain Management, 4e

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Purchasing & Supply Chain Management, 4e
Quality at the Source Evaluate key value-adding points in a process where defects could occur, including supplier facilities Product and process design Early supply management involvement (ESMI) Early supplier design involvement (ESDI) Issue of proprietary information Purchasing & Supply Chain Management, 4e

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Objective Measurement and Analysis
Make decisions on facts, not feelings Need for a rigorous evaluation system Develop a preferred supplier list Award future business Identify continuous improvement opportunities Provide feedback to support corrective action Track results from improvement initiatives Purchasing & Supply Chain Management, 4e

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Prevention of Nonconformance
Need for process consistency Reduce process variation Reduce reliance on appraisal, inspection, and detection activities Supplier certification program Use of corrective action requests Purchasing & Supply Chain Management, 4e

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Focus on Process, Not on Output
Move from product orientation to process orientation Quality processes  quality output Supplier must provide evidence of process capability Structured, companywide supplier evaluation and selection system Purchasing & Supply Chain Management, 4e

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Focusing on Sample Inspections
What supplier would knowingly submit a poor sample? How many parts did the supplier produce to get an acceptable sample? Are the samples representative of the process under normal conditions? Purchasing & Supply Chain Management, 4e

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Focusing on Sample Inspections
Did the supplier use the same process, methods, and materials that will be used in normal production? Or was the sample made under controlled laboratory conditions? Did the supplier actually produce the sample or use a subcontractor? Do the samples show evidence of capacity or process capability? Purchasing & Supply Chain Management, 4e

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Basics of Process Capability
Process capability is the ability of a process to generate outputs that meet engineering specifications or customer requirements Outputs must fall between pre-established upper and lower specification limits No special causes of variation exist in the process Purchasing & Supply Chain Management, 4e

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Basics of Process Capability
99.73% of all output fall between ± 3 standard deviations of the process mean A stable process and in statistical control can be expected to produce virtually all of its output within these natural tolerance limits A process’s natural limits must fall within specification limits to be capable Purchasing & Supply Chain Management, 4e

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Process Capability Specification Natural Variation (a) (b) (c) (d)
Source: MANAGING FOR QUALITY AND PERFORMANCE EXCELLENCE, 7e, © 2008 Evans and Lindsay – Thomson South-Western

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Purchasing & Supply Chain Management, 4e
Zero Defects Conformance to requirements (Crosby) Key metrics to identify improvement opportunities Supply base rationalization and optimization Average supplier quality improves as lower performers are eliminated from the supply base Purchasing & Supply Chain Management, 4e

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Purchasing & Supply Chain Management, 4e
Cost of Quality Appraisal costs Direct costs of measuring quality Failure costs Internal – occur before product or service is provided to customer External – occur following production or after customer takes possession Prevention costs Prevent defects from occurring Purchasing & Supply Chain Management, 4e

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Appraisal Cost Examples
Laboratory testing of samples Inspection activities during production Supplier quality audits Incoming material inspections Other forms of monitoring Purchasing & Supply Chain Management, 4e

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Internal Failure Cost Examples
Troubleshooting Reinspection following detection of defects Production downtime caused by defects Scrap Process waste Purchasing & Supply Chain Management, 4e

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External Failure Cost Examples
Warranty costs Replacement of defective products Product liability lawsuits Loss of customers Purchasing & Supply Chain Management, 4e

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Prevention Cost Examples
Quality planning Equipment calibration Quality training Maintenance of a quality management system Purchasing & Supply Chain Management, 4e

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Continuous Improvement
Value analysis/value engineering (VA/VE) Supplier development Supply base rationalization and optimization Supplier incentive and reward systems Purchasing & Supply Chain Management, 4e

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Purchasing & Supply Chain Management, 4e
Supplier Incentives Longer-term contracts Higher share of purchase volume Public recognition and awards Shared cost savings Access to new technology from buyer Early insight to new business opportunities and product development plans Purchasing & Supply Chain Management, 4e

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Purchasing & Supply Chain Management, 4e
Supplier Incentives Early participation in new product and process development projects Use of buyer’s supply agreements to obtain favorable pricing Participation in executive buyer-supplier councils Listed as preferred supplier with first opportunity for new business Purchasing & Supply Chain Management, 4e

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Quality: Everyone’s Responsibility
Aligned vision and goals Physical co-location Executive-level buyer-supplier councils Shared technologies Joint projects More collaborative buyer-supplier relationships Purchasing & Supply Chain Management, 4e

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Purchasing & Supply Chain Management, 4e
Six Sigma Quality Proven quality principles and techniques Virtually error-free business performance Expressed as 3.4 errors (or defects) per million opportunities (DPMO) Increasing expectations from customers Focus on defect prevention, cycle time reduction, and cost savings Use of Six Sigma Black Belts Purchasing & Supply Chain Management, 4e

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Purchasing & Supply Chain Management, 4e
The DMAIC Model Define Measure Analyze Improve Control Purchasing & Supply Chain Management, 4e

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Purchasing & Supply Chain Management, 4e
The DMAIC Model Define improvement activity and goals Measure existing system, establish metrics, and identify performance baseline Analyze system and develop hypotheses Improve – develop ideas, test solutions, and implement new process, structure, and system Control – measures and procedures to ensure system stays in control Purchasing & Supply Chain Management, 4e

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Using ISO and MBNQA Criteria
Widely accepted quality management frameworks ISO 9000:2000 ISO 14000 Malcolm Baldrige National Quality Award Criteria are often used as the basis for supplier certification programs Purchasing & Supply Chain Management, 4e

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Purchasing & Supply Chain Management, 4e
ISO 9000:2000 Originally developed in the European Common Market in 1987 Updated in 1994 and 2000 Expected to be updated again in 2008 Third-party registration process Internationally accepted and recognized quality process standards Purchasing & Supply Chain Management, 4e

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Eight Principles of ISO 9000:2000
Customer focus Leadership Involvement of people Process approach System approach to management Continual improvement Factual approach to decision-making Mutually beneficial supplier relationships Purchasing & Supply Chain Management, 4e

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Buyer’s Benefits of ISO 9000:2000
Few firms have sufficient resources to develop and implement their own comprehensive supplier certification audits Supplier assumes responsibility for meeting the ISO 9000:2000 standards and paying its own registration fees Supplier demonstrates higher quality Purchasing & Supply Chain Management, 4e

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Purchasing & Supply Chain Management, 4e
ISO 14000 Established in 1993 to promote environmental protection and pollution prevention Used to analyze a supplier’s ability to proactively manage its environmental impact Range from environmental management systems to addressing auditing, labeling, and product standards Purchasing & Supply Chain Management, 4e

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Purchasing & Supply Chain Management, 4e
ISO 14000 Set of voluntary standards Classifications Process-oriented standards Product-oriented standards But, it does not: Build on existing governmental regulations Establish emissions and pollution levels Detail any specific testing methods Purchasing & Supply Chain Management, 4e

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Purchasing & Supply Chain Management, 4e
Benefits of ISO 14000 Fewer pollutants generated Reduced liability risk Improved regulatory compliance Better public and community relations Lowered insurance premiums Enhanced profitability through: Improved resource management Reduced waste generation Purchasing & Supply Chain Management, 4e

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Purchasing & Supply Chain Management, 4e
The MBNQA Established in 1987 A de facto definition of TQM and competitive set of criteria More comprehensive set of quality-related criteria than ISO 9000:2000 Implies that an organization excels not only in quality management but also in quality achievement Purchasing & Supply Chain Management, 4e

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Purchasing & Supply Chain Management, 4e
The MBNQA Much of current application is for internal use as a quality management tool and not for award purposes May take 8 – 10 years to adequately prepare a competitive quality system Built upon a continuous improvement philosophy Both process and results oriented Purchasing & Supply Chain Management, 4e

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Purchasing & Supply Chain Management, 4e
MBNQA Criteria Items Leadership Organizational leadership Public responsibility and citizenship Strategic planning Strategy development Strategy deployment Customer and market focus Customer and market knowledge Customer satisfaction and relationships Purchasing & Supply Chain Management, 4e

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Purchasing & Supply Chain Management, 4e
MBNQA Criteria Items Information and analysis Measurement of organizational performance Analysis of organizational performance Human resource focus Work systems Employee education, training, and development Employee well-being and satisfaction Purchasing & Supply Chain Management, 4e

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MBNQA Criteria Items Process management Business results
Product and service processes Support processes Supplier and partnering processes Business results Customer focused results Financial and market results Human resource results Supplier and partner results Organizational effectiveness results

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Supplier Certification at Alcoa
Meet and Plan The Supplier Self-Survey Strategy Planning The Trial Audit The Formal Audit Recommendation Review Purchasing & Supply Chain Management, 4e