SUPPLIER QUALITY ASSURANCE IN SUPPLY CHAIN MANAGEMENT (SCM) THROUGH QUALITY TOOLS AND TECHNIQUES P.P. Shah 1, R.L. Shrivastava 2 1 Acharya Shrimannarayan Polytechnic, Wardha(M.S.), India 2 Yeshwantrao Chavan College of Engineering, Nagpur (M.S.), India. e-mail: pps1971@rediffmail.com Abstract: Fierce competition forces organizations to implement different business improvement methodologies to improve the business performance. A Supply chain is an association of different facilities and distribution channels that includes the procurement of raw materials, production, assembly and delivery of finish products or services to the final user i.e. customer. The management of supply chain and the role and responsibilities of various persons involved differ from industry to industry. Due to which Supply chain management (SCM) has become a vital issue for manufacturer, professionals and researchers. It is felt that to manage the supply chain effectively, entire structure of supply chain must be understood properly. This paper attempts to provide a manufacturer, professionals and researchers a complete picture of supply chain management and explains the role of supplier in supply chain, describes the various quality tools and techniques if implemented properly assurance the quality of suppliers. Keywords: Supply Chain Management, Quality Management System, Supply Chain Integration, ISO 9001 Introduction: Industrial world over are trying to improve efficiencies in their operations. There is a need to re-evaluate business plans especially with respect to investments in new faculties, markets and products. Rising input resource prices and the economic uncertainty are forcing organizations to thing about the optimum utilization of resources to maximize the productivity and the profit. However, achieving operational efficiencies requires more than reducing costs, high utilization mandates, strict inventory control and rationalizing capacity or manpower. There is a single objective of the supply chain right product at the right place in the right quantity at the right time, which requires all operational units within the organization to be integrated through business processes and technological enablers. The aim of Supply Chain Management is to satisfy customers at the optimum cost. Due to globalization, liberalization and advancement in new technologies, supply chains have become more complex, more global and a more critical business function than ever before. At the same time, many leading firms have realized that a well run supply chain can be a source of distinct competitive advantage in the marketplace, and have been in the forefront in adopting practices that deliver superlative efficiencies in their supply chain functions. Supply Chain Management: The term supply chain management arose in the late 1980s and came into widespread use in the 1990s. Prior to that time, businesses used terms such as logistics and operations management instead. The one of the definition of a supply chain Management is given below: Systemic, strategic coordination and cooperation of the usual business functions within a particular organization and across organizations within the supply chain, for the purposes of improving the performance of the individual one and the supply chain which includes not only the manufacturer and suppliers, but also warehouses, transporters, retailers, and customers themselves as a whole. There is a basic pattern to the practice of supply chain management. The Five Major Supply Chain Drivers are: 1. Production what products does the market want? 2. Inventory what inventory should be stocked at each stage in a supply chain? 3. Location where should facilities for production and inventory storage be located? 4. Transportation how should inventory be moved from one supply chain location to another? 5. Information how much data should be collected and how much information should be shared? Every time company has to carry out the 5WH analysis for effective management of the supply chain drivers to enhance the utilization to maximize the productivity and profit. The right combination of responsiveness and 884
efficiency in each of these drivers allows a supply chain to increase throughput while simultaneously reducing inventory and operating expense. PRODUCTION INVENTORY LOCATION INFORMATION TRANSPORTATION Figure 1. Supply Chain Drivers Supply Chain Elements: Simplest form of supply chain is consisting of a company and the suppliers and customers of particular company. This is the basic elements that form a simple supply chain. Due to complexity of the business processes, the Supply chains were extended by adding three additional types of elements. First there is the supplier s supplier at the beginning of an extended supply chain. Then there is the customer s customer or final customer at the end of an extended supply chain. Finally there is a whole category of companies who are service providers to other companies in the supply chain. These are companies who supply services in logistics, finance, marketing, and information technology. In any given supply chain there is some combination of companies who perform different functions. There are companies that are producers, distributors or wholesalers, retailers, and companies or individuals who are the customers, the final consumers of a product. Supporting these companies there will be other companies that are service providers that provide a range of needed services. Simple Supply Chain Structure Supplier Company Customer Extended Supply Chain Suppliers Supplier Supplier Company Customer Final Customer Service Providers in areas Such as : Logistics Finance Market Research Product Design Information Technology Service Provider Figure 2. Supply Chain Structure Role of Supplier: Suppliers play important role in the quality management and it is the suppliers who can help a company to achieve excellence. Company should identify what are their internal and external suppliers? What are their true needs and expectations? How they communicate their needs and expectations to suppliers? Do their suppliers have the capability to measure and meet these needs and expectations? This helps the companies to improve their own quality by improving their supplier s product and service quality which is possible only through the integrating of the suppliers in quality system. Supplier has to play following different role: Improving transportation facilities Proper stocking and transportation of materials Improve delivery performance and time based agreements Fulfilling demand/requirements Inventory Management Funds Management Efficient supply of materials Reducing information fluctuations using IT tools Proper communication Continuous Monitoring Market know-how s Supplier Quality Assurance System: 885
In an effort to provide high quality, low cost products and services that meet and exceed customer s expectations, integration of Quality Tools and Techniques is needed in supplier s manufacturing process that will assist in reducing variation and waste in products and services by better controlling and standardizing processes. Quality Tools and Techniques: 1. Lean Manufacturing: Lean Manufacturing is simply a group of Strategies for the identification and elimination of the Waste inside the Value Stream. Waste exists at all levels and in all activities which are to be Identified and Eliminated by involving all the employees and department compromising the organization. Types of Waste: Type Definition Characteristics Causes Waste Producing more than is needed, faster than needed or before needed. * Idle Operator waiting for Equipment. * Production Bottlenecks. * Production waiting for Operators. * Unplanned Equipment Downtime. * Inconsistent Work Methods. * Lack of Proper Equipment. * Long Setup Times. * Low Man/machine Effectiveness. * Poor Equipment Maintenance. * Production Bottle Necks. * Skills Monopolies. Transportation Waste Any material movement that does not directly support immediate production * Endless Product/Process Refinement. * Excessive Copies/Excessive Information * Process Bottlenecks. * Redundant Reviews and Approvals. * Unclear Customer Specifications. * Decision Making at Inappropriate Levels. * Inefficient Policies and Procedures. * Lack of Customer Input Concerning Requirements. * Poor Configuration Control. * Spurious Quality Standards. Inventory Waste Any supply in excess of process requirements necessary to produce goods or services in a Just-in-Time Manner. * Additional Material Handling Resources. * Extensive Rework of Finished Goods. * Extra Space on Receiving material. * Long Lead Times for Design Changes. * Storage Congestion Forcing LIFO (Last In First out). * Inaccurate Forecasting Systems. * Incapable Processes. * Incapable Suppliers. * Local Optimization. * Long Change Over Times. * Poor Inventory Planning and tracking. * Unbalanced Production Processes. Motion Waste Any movement of people which does not contribute added value to the product or service. * Excess Moving Equipment. * Excessive Reaching or Bending. * Unnecessarily Complicated procedures * Excessive Tool gathering. * Widely Dispersed Materials/Tools. * Ineffective Equipment, Office and Plant Layout. * Lack of Visual Controls. * Poor Process Documentation. * Poor Work Place Organization. Defect Waste Repair or rework of a product or service to fulfill customer requirements as well as scrap waste resulting from materials deemed to be un-repairable or un-reworkable. Complex Material Flows. Excess Finished Goods Inventory. Excessive Floor Space/Tools/Equipment Excessive Manpower to Inspect /Rework/repair. High Customer Complaints/returns. High Scrap Rates. Poor Production Schedule Performance Questionable Quality. Reactive Organization. * Excessive Variation. * High Inventory Levels. * Inadequate Tools/Equipment. * Incapable/Incompatible processes. * Insufficient Training. * Poor Layouts/Unnecessary Handling. 2. Quality at the Source A quality philosophy that places the responsibility for meeting customer specifications and standards at the point of manufacture. To do this carry out the source inspection for purchased components, Operators self-inspect their work as well as inspecting (and/or rejecting) the work of previous operators, Poka -Yoke designed manufacturing devices, processes and products. 3. Poka -Yoke A design approach to quality that places the responsibility for preventing defects within the design of the product and/or production process. This done by design and process/fixture approach. Within the product design specifications replace those specs which require defect prone processes/components with those that require non- 886
defect prone processes/components. Within manufacturing replace those processes/fixtures which are defect prone with those that are not. Poka-yoke Characteristics includes- * Goals and reasons for installation are clear * Effective against recurrence never malfunctions * Stops flow without making, sending, or missing non-conforming material * Costs little or no money * Made with shop floor wisdom and ingenuity * Simple, durable, and easy to maintain * Can be widely used in other processes * Does not impair operability * Operator fully trained 4. 5S (Workplace Organization) A methodology for organizing, clearing, developing, and sustaining a productive work environment. WHY 5S? * Eliminate wastes that result from uncontrolled processes * Gain control on equipment, material, and inventory * Apply control techniques to eliminate erosion of improvements * Standardize improvements for maintenance * Improve delivery consistency * Improve quality * Improve safety * Improve reliability Sort Items which are not used in work area should be removed and items frequently used should be properly identified and stored out of sight. Set In Order Organize the work area. All production items and their storage locations should be clearly identified. Accessibility should be prioritized with reference to use. Cleaning materials/utensils must be stored in the work area. The sharing of cleaning materials/utensils between work areas should be discouraged. Shine - It is essential that enough attention be paid to the neatness of work stations so that the workers will be able to take pride in ownership. Standardize Establish written standards for order and cleanliness. Sustain Maintain the standards through training, empowerment, commitment and discipline 5. Cellular Manufacturing A manufacturing approach in which equipment and workstations are arranged in a bounded area to facilitate small-lot, continuous-flow production. The fundamental of cellular manufacturing includes- * Material Flow Cells are arranged in relation to each other so that material movement is minimized. * Capital proximity Expensive machines which cannot be easily relocated to cells should be located between the cells that use them (Point-of-Use). * Assembly line The layout of machines within each cell should resemble a small assembly line. * Mobility Quick positional adjustments should be used to arrange/rearrange the machines within a cell. * Layout proximity Sequential processes need to be placed side by side. * Unified Management Structure the productive resources need to answer to the same voice. The implementation of cellular manufacturing includes- * Better use of human resources * Easier to automate * Easier to control * Multifunctional workers * Reduced material handling and transit time * Reduced setup time * Reduced work-in-process inventory 6. Standardized Work The process of documenting and standardizing tasks throughout the value stream which includes process instructions and standard operating procedures. The benefits includes- * Increase in the Effectiveness of Cross-training. * Increased sustainability of product and procedural improvements. 887
* Less downtime due to absenteeism. * More Consistent production Schedules. * Reduced training costs. Proceedings of the National Conference on Process instruction contents part number and description, drawing revision, next use list, process instruction revision, process bill of material, tool/fixture list, miscellaneous specifications (Equipment settings, time requirements, etc.), Task instructions are the instructions that should be complete and adequate to enable a qualified equipment operator to perform the process. The liberal use of visual aids is highly desirable. 7. Kaizen A philosophy of continual improvement, emphasizing employee participation, in which every process is continuously evaluated and improved in terms of time, resources, quality, and other aspects relevant to the process. Kaizen is often confused with Kaizen Events. They are not the same. Kaizen events are artificial group setups to address single subjects/areas. They are usually one time only affairs. Kaizen is intended to be incorporated as a normal day by day approach to the improvement of the entire value stream. There are two types of Kaizen * Flow kaizen value stream improvement. * Point Kaizen elimination of waste. Finally and most important of all, it must be made clear that everyone will be participating. Quality Kaizen Tools * Process Mapping * Cause & Effect Diagram * Gage R&R * Process Capability Studies * Graphical Analysis Methods Pareto Analysis Histogram Scatter Diagram Correlation Analysis Check Sheet * Statistical Methods Correlation and Regression Design of Experiments (DOE) * Rolled Throughput Yield (RTY) * Failure Mode and Effect Analysis (FMEA) * Error Proofing * Control Plans 8. Kanban Kanban is Japanese for card Pull Scheduling combined with traveling instructions conveyed by simple visual devices in the form of cards, balls, carts, containers, etc. and can be applied to both material flow in the factory, information or project flow in the office, and material flow between suppliers and customers. Following are the benefits: * Reduced Inventories * Predictable flow of Materials * Simplified Scheduling * Visual Pull System at the Point of Production * Improved Productivity Conclusion: Supplier is the important element in the supply chain. Supplier quality is seen as a first step towards making supply chain more efficient. Companies understand the criticality of supplier quality management and considering them as their strategic business partners are making huge investments in this area. Suppliers are expected to have a high level commitment to quality which will be possible only through the integration of 888
different quality tools and techniques. If these tools and techniques are implemented and integrated properly in process, which gives confidence to supplier regarding the quality of their products and services. References: Altekar RV., 2005, Supply chain management: concepts and cases, New Delhi: Prentice Hall of India. Chandra C, Kumar S., 2000, Supply chain management in theory and practice: a passing fad or a fundamental change? Ind. Manag. Data Syst., Vol.100, No. 3, pp. 100-113. Cooper M. C., L. M. Ellram., 1993, Characteristics of Supply Chain Management and the Implications for Purchasing and Logistics Strategy, International Journal of Logistics Management, Vol.4, No.2, pp. 13-24. Ganeshan, R., and Harrison, P.T., 1995, An Introduction to Supply Chain management, Pennsylvania State University. Gunasekaran, A., Patel, C., and McGaughey, R., C., 2003, A framework for supply chain performance measurement, International Journal of Production Economics, 87, 333 347. Jauhar, S., Tillasi, P., Choudhary, R., 2012, Integrating Lean Six Sigma and Supply Chain Practices for Improving the Supply Chain Performance, Undergraduate Academic Research Journal (UARJ), Vol.01, No. 01, ISSN : 2278 1129 Juran, J. M., Gryna F. M., 1988, Quality Control Handbook, 4th Edition McGraw Hill. Laraia, Anthony, Moody, Patricia, Hall, Robert, 1999, The Kaizen Blitz, John Wiley & Sons. Lim, R.Y.G., Baines, T., Tjahjono, B., Chandraprakaikul, W., 2006, Integrated strategic supply chain positioning for SMEs: an empirical study, The International Journal of Logistics Management, Vol.17, No. 2, pp. 260-276. Power, D., 2005, Supply chain management integration and implementation: a literature review, Supply Chain Management: An International Journal, Vol. 10, No.4, pp. 252 263 S. Thomas Foster Jr., 2007, Towards an understanding of supply chain management, Journal of operations Management, Vol.6. 889