Critique Of Quality Management And Global Supply Chains Management Essay
Quality can be described as an aspect of the product that meets or exceeds what the consumer expects from the product (Daniels, Radebaugh, Sullivan 2008:703). Quality is crucial when producing and selling a product as the customer might not return or not even make the initial purchase should quality be unacceptable (Boddy 2005:632). In general craftsman will have pride in their craft and the product they produce and will do whatever it takes to improve on their product and methods, from the evolution of industrialisation and mass production, manufacturing has been broken up into tasks to be performed by teams of workers (Boddy 2005:632). It is now accepted that to achieve excellence in business performance an organisation should make continuous long term improvements to their business (Stankard 2000:19). Therefore this has brought about the need for the management of workers and quality; it has also brought the realisation that all members of a manufacturing organisation are responsible for the quality of a product (Boddy 2005:633).
In the years after World War II the demand for manufactured goods grew so much that manufacturing industry began to focus on ultimate productivity, from this demand whatever they could produce would be sold, Quality was not an issue (Beckford 2002:4). Later the markets grew and matured and faced challenges of increasing labour and energy costs along with added competition, manufacturers began using methods of off shoring to reduce costs (Beckford 2002:4). This created a boom in eastern countries with cheaper labour becoming industrialised and producing products to ship around the world. It was later seen that by improving the quality of the product and the process of production costs would be reduced and productivity increased (Beckford 2002:7). Quality is now seen as an essential part of a product offering and if quality is not ensured a firm can lose their customers to an overseas supplier (Beckford 2002:7). As industrialisation brought the need for the management of quality in mass production so globalisation is bringing forward the need for quality management within the global supply chain.
In simple terms globalisation can be defined as a fast paced growth of trades of capital, commodities, technology and goods between many nations in the world (Weis 2002:140). Quality becomes an issue and an important focus in the supply chain as organisations embrace globalisation (Daniels et al 2009:699). Daniels et al (2009) indentifies quality as one of the key factors in the manufacturing strategy of the supply chain and is dependent on the success of the supply chain. In order to achieve a cost and quality advantage an organisation needs to effectively manage all aspects of the supply chain and not just the manufacturing aspects (Weiss 2002:145). There are many different cultures, personal preferences, business practices and approaches when it comes to managing quality around the world (Daniels et al 2009:704). For example the Europeans focus more on standards of quality, the Japanese focus on lean processes the minimise waste and promote efficiency while the Americans approach is more statistical (Daniels et al 2009:704). This can cause problems within a global supply chain and therefore the various approaches to quality management will be investigated, analysed and criticized in an effort to identify the better way the manage quality within the supply chain.
1.2 Literature Review
This essay looks at quality and how it is and can be managed within the supply chain, quality is most applicable in the manufacturing side of the supply chain however can also be applied to logistics. The literature on the different approaches to Quality management such as Total Quality Management with the Deming Approach and the Six Sigma approach will be reviewed along with Global Manufacturing Strategies, Globalisation and Industrialisation. The essay looks to critically analyse these approaches and use real life examples where they have been used and what the results of their use were. Lastly to conclude the essay the approaches will be compared against each other and the ultimate conclusion on whether Quality Management is the solution and which approach is best in each circumstance. As stated by Avery & Zabel (1997) the coverage of their literature on quality management has been limited English Language Material with an international scope. This paper will cover similar literature while looking more depth in certain literature that has a supply chain focus while keeping a global scope.
Quality management plays an important role in the global supply chain and can be applied to both services and manufacturing (Daniels et al 2009:703). In this case we can define quality as exceeding or meeting of set standards and specifications set within the organisation (Daniels et al 2009:703). The movement of quality management was initially introduced into manufacturing aspect of the supply chain but with an increasing focus on quality has begun to move into all aspects of manufacturing and service industries (Avery & Zabel 1997). The concept of quality we see today originated from both the UK and USA statisticians that developed ways of controlling quality using statistics (Avery & Zabel 1997:1). The basic concept was to look for defects in the products produced and then looking to rectify the problem, this then evolved in proactively looking at the processes to prevent defects and therefore begun saving on production costs (Avery & Zabel 1997:1). In the 1950’s the author Feigenbaum who worked for General Electric at the time developed a publication called Total Quality Control, at the same time W. Edwards Deming worked on his own approaches to quality control with the Japanese (Avery & Zabel 1997:1).
Three levels of quality standards can be identified in the approaches to quality management, namely General level, Industry specific and company specific (Daniels et al 2009:705). The “Deming Award” and the “Malcolm Baldridge National Quality Award” are given to firms that display quality in their strategies and achievements and are examples of the general level standard (Daniels et al 2009:706). A more important general level standard would be certification of quality and the best example of this is International Organisation for Standardization or ISO which sets global quality standard for all aspects of business (Daniels et al 2009:706).
The Industry-specific level of quality standard is a standard that is specific to one Industry, for example the Automotive manufacturing industry uses the standard QS9000 which comes from ISO 9001 and issues guidelines that they and their suppliers must follow (Daniels et al 2009:707). The QS9000 quality standard was initially set up by the three biggest automotive manufacturers in the USA, namely Chrysler, General Motors and Ford; from this they expect all their suppliers to be compliant (Luo, Y 2001:104). Korean tyre manufacture Hankook passed the QS9000 certification in 1997 and has allowed them to supply the American market while exposing them to additional markets that are beginning to follow in the steps of QS9000 (Luo, Y 2001:104). QS9000 is a good example of an Industry Specific level of quality standard and its impact on the Supply chain.
Lastly we have the Company-Specific level of quality which are standards set by the manufacturer aimed at their specific suppliers in order to meet their expected level of quality (Daniels et al 2009:707). In order to set theses standards into effect the organisation will need to integrate and work with their suppliers. It has been found that organisations could increase their competitive resource, quality and customer satisfaction without increasing costs by integrating with their suppliers (Altekar 2004).
APPROACHES TO QUALITY MANAGEMENT
3.1 Acceptable Quality Level vs. Zero Defects
Many firms used to operate on the quality approach of an Acceptable Quality Level or AQL which allowed them to operate on an acceptable level of poor quality (Daniels 2009:703). Then the concept of Zero Defects was perfected by the Japanese as they would not tolerate any defects in their products or processes (Daniels et al 2009:703). AQL allowed firms to produce and push products through their supply chains quickly, however had the drawbacks of having to have repair facilities and honouring more warranties (Daniels et al 2009:704). AQL would not survive in a competitive environment where the competitor is using a zero defects policy (Daniels et al).
3.2 The Deming Approach to Quality Management - Deming’s 14 Points
During the 1970’s Japanese companies had a serious quality advantage over the American companies and as previously stated W. Edwards Deming worked on his own approaches to quality control and from this he developed the Deming’s 14 Points which he used in training the Japanese (Daniels et al 2009:704). These 14 Points set out to create the idea that the responsibility of quality lie in the policies and practices of managers (Daniels et al 2009:704). This emphasis on managing quality is a source of competitive advantage and is a major part of companies with global supply chains (Daniels et al 2009:704).
3.3 Baldrige Award
The Malcolm Baldrige National Quality award became a part of an effort within the USA to improve American products and services by encouraging firms to place emphasis on quality and to share their strategies of success (Grandig & Harris 1994). This was done to promote TQM and to acknowledge achievements of quality of US firms which will ultimately allow them to better compete globally (Grandig & Harris 1994). The issuance and judging for the award is done by the “U.S Department of Commerce National Institute of Standards and Technology” and each applicant receives a report from the judges which assists in their goal of improving quality within their borders (Grandig & Harris 1994). This is a country specific set standard of quality of which does not fully apply to a global supply chain, however can provide evidence that a specific approach to quality management is successful.
The International Organisation for Standardization was founded in 1947 in Geneva and is used to co-ordinate and unifies standards in industry on a global level (Daniels et al 2009:706). ISO role is to develop and encourage the creation of international standards (Avery & Zabel 1997:165). There are two sets of standards that are most common in quality management and are referred to as a family of standards these are ISO 9000 and ISO 14000 (Daniels et al 2009:706). ISO 9000 standards of quality were initially created in 1987 with the national standards from seven countries playing a role and have a focus on quality assurance in the processes of manufacturing (Avery & Zabel 1997:165). From the ISO 9000 family we find five subsets starting with the ISO 9000 with the role of determining which set in the series a firm should use (Aver & Zabel 1997:165). The second, the ISO 9001 set of standards is the standard for firms involved in their own R&D, manufacturing, logistics, installation and aftermarket service (Avery & Zamel 1997:165). The ISO 9001 is directly applicable to the global supply chain.
3.5 Total Quality Management (TQM) Approach
The concept of TQM is a style of management used to improve the performance of the firm while meeting customer expectations; this is done by continuous analysis and refining of processes (Avery & Zabel 1997). TQM achieves its objective by eliminating all defects using a focus on bench-marking world class standards, service design, product design, process design and purchasing practices (Daniels et al 2009:704). In every part of the supply chain, TQM seeks continuous improvement and can be seen as a proactive strategy that uses the best practices of other organisations therefore TQM enables an organisation to be better than the best (Daniels et al 2009:705). TQM was based on incremental change leading to gradual changes in organisational culture, once the organisation introduces a philosophy of quality management over the entire supply chain will it begin to transform into a more effective organisation (Avery & Zabel 1997:1).
In Strategic Human Resource Management (SHRM) it can be part of policy to hire high Quality and flexible employees to ensure a high quality of goods and services and meet the goals of the organisation (Torrington, Hall, Taylor 2008:36). This shows us that quality can not only be managed through supervision and innovation but through Strategic HRM as well.
3.6 Six Sigma
Introduced by Motorola in the 1980’s Six Sigma is gaining popularity and being used by MNE’s such as GlaxoSmithKline, General Electric and Lockheed and Martin (Daniels et al 2009:705). Motorola were losing market share and were losing customers due to dissatisfaction, to compound the problem operating costs were high resulting in low profits (Larson 2003:7). In the attempt to improve on this Motorola found that they needed to make changes in all areas of operation including manufacturing and logistics (Larson 2003:9). Six Sigma and Motorola provides us with a good example of how mass production and a global supply chain require quality management.
Six Sigma can be described as a disciplined and integrated approach at bettering business performance using improving processes backed by data and the control of the variants in the process ultimately resulting in a more predictable business (Carreira & Trudell 2006). A Six Sigma System is where the entire workforce is committed to the meeting of the customer’s requirements and expectations by their collective focus at acquiring these goals (Larson 2003:20). It is a strategy toward total business improvement with the focus on improving processes, goods and services and ultimately profit; this is done by removing inefficient processes and defects from products (De Feo & Barnard 2004:1). Six Sigma can also be described as the methodology that gives an organisation the methods they can use in order to improve on their capability in the business processes (Yang & El Haik 2003:21).
Six Sigma involves creating a culture within the organisation containing a diverse workforce, Training of required skills, an understanding of roles, unified workforce, Mutual respect and workforce committed to success (Larson 2003:5). The approach uses a Five Step Logic “DMAIC” Define Measure, Analyse, Improve and Control in order to improve business processes (Carreira & Trudell 2006).
This where the problem is identified and the objectives of solving the problem are determined, management then approves this and assigns a champion and project leader to initiate the project (Carreira & Trudell 2006:7). The persons responsible will use methods such as benchmarking and process mapping in order to initieate this step (Carreira & Trudell 2006:7). In order to gain improvements in all aspects of the business Benchmarking can be used as an effective tool (Larson 2003:21).
This step looks at forming the information on the current situation, by gathering data, measuring of processes and creating metrics (Carreira & Trudell 2006:7). The idea to measure is that when there is a change in the metrics there will have to be a corresponding change in the financials of the organisation (Carreira & Trudell 2006:8).
These measurements are used to creat dashboards which are continually developed and used in teams to create a focal point to review and discuss progress and to review what needs to be done for further improvements (Carreira & Trudell 2006:8). These dashboards are the tools used to measure, such as control charts, flow diagrams, failure modes and effects analyse; all of which are used within the manufacturing part of the supply chain (Carreira & Trudell 2006:8).
In the Analyse step the organisation sets out to identify the underlying cause of the problem by Analysing the data to develop a theory of what the problem is which is the tested to confirm (Carreira & Trudell 2006:8). This information is then used to create solutions and improvements in the next step which is the Improvements step (Carreira & Trudell 2006:8). The tools used here can be a combination of the following; Brainstorming, Cause and effect diagrams, Statistical process control, frequency plots, hypothesis tests, process maps and other tools of a statistical nature (Carreira & Trudell 2006:8).
The Improve step is the implementation of the solutions and possible solutions identified and results in the output of an improvement plan that reduces the amount of times the problem comes up or improves the process (Carreira & Trudell 2006:8). The improve step uses many of the same tools as the analyse step but includes tools like stakeholder analysis, sampling, force field diagrams and project management tools (Carreira & Trudell 2006:9).
Control is the final step in the process and is used to assess the progress of the solutions and thereafter initiate controls to be installed in the process and ensure that there are no future problems (Carreira & Trudell 2006:9). This step uses Sampling, Standardisation reporting systems and set standards like ISO set of standards to control quality in the improved process (Carreira & Trudell 2006:9).
Results from the application of Quality Management and the different approaches organisations follow in order to gain improvements in their supply chains can be found in the research of others in this literature review. These results are therefore constructed from secondary research. A way to determine the long term effects of a quality initiative is to look at the amount of improvement over a period of time in comparison with the competition in that industry (Endres 2000:3). The results whether Qualitative or Quantitative will be a direct reaction of the quality initiative introduced.
4.1 The Supply Chain Operations Reference (SCOR) Framework
One method of measuring the effectiveness of the supply chain processes is the Supply Chain Operations Reference (SCOR) Framework, even though it does not focus on quality, it can still provide results of initiatives with in the supply chain. Created in 1996 the Supply Chain Council an NGO and independent initiative aimed at creating a model that can be used in measurements of performance of Supply Chain management initiatives within the supply chain (Bolstorff & Rosenbaum 2003:2). The council was co-founded by 69 of the world’s leading companies with the main purpose being the promotion of the use of the SCOR framework by conducting research, developing techniques, educating and arrange conference events (Bolstorff & Rosenbaum 2003:2).The SCOR framework takes the best aspects from business process engineering, benchmarks and best practices and puts them together to form one framework; from this the SCOR framework defines supply management as the integrated process of Plan, Source, Make, Deliver and Return (Bolstorff & Rosenbaum 2003:2). The framework has three different levels to define the process detail, the first identifies how many supply chains there are within the organisation as well as the way in which the performance of each supply chain is measured (Bolstorff & Rosenbaum 2003:4).
The second looks at the planning of, configuration of and execution of processes in the flow of materials while the third level identifies the business process behind sales order processing, purchase order processing, replenishment order processing and lastly forecasts (Bolstorff & Rosenbaum 2003:4). The model covers all aspects of the supply chain from the supplier to manufacturing to the customer and back (Bolstorff & Rosenbaum 2003). The SCOR Framework addresses four different phases in its execution namely; operational strategy, material, work, and information flow (Bolstorff & Rosenbaum 2003). There are different variations of the SCOR framework and its phases
In Simple terms the SCOR framework is used to integrate its processes within the supply chain in order to measure and define a best practice to follow and to use as a benchmark toward continuous improvement (Lapide 2009). In the framework there is no specific measurement to use or order in which to prioritize, however all measures are just as relevant as they are important (Griffis, Goldsby, Cooper & Closs 2007).
4.2 Balanced Scorecard
The Balanced Scorecard was developed by the Harvard Business School and has been one of the more popular approaches when it comes to measuring the performance of a firm (Neely 2002:17). The Balanced Scorecard has numerous aspects that make it suitable at creating a number of performance measures, the balanced scorecard links the organisations quality initiative and the performance measures used to control and monitor the progress of the initiative (Neely 2002:17). It is a simple and logical approach to assessing performance of an organisation and therefore has been widely used and accepted globally (Neely 2002:149). It is therefore one of the methods organisations can use when measuring the performance of their approach to quality management.
There has been a definite link identified between improving an organisations results and the improvements in customer loyalty which is the result of customer satisfaction which is then directly linked to improving product and service quality (Neely 2002:279). In some cases it has been found to be cheaper to source a higher quality raw material than to adapt the machinery used in manufacturing to work with a lower quality raw material (Soffer & Wand 2007). One possible problem when introducing a quality management approach in a supply chain is that the correct quality of materials may not be available to supply the production process (Soffer & Wand 2007). In this case the firm would have to look further for a more expensive option to source the right quality or alternatively produce a lower quality product (Soffer & Wand 2007). This is a good example of AQL in a supply chain.
5.1 Baldrige Award
In order to assess the performance of the Baldrige award we can look at some quantitative results in the form of financial performance indicators supplied by the National Institute of Standards and Technology hereafter known as NIST. NIST is the American government department that operates the Baldrige award and from 1988 to 1999 they have been running a fictitious mutual fund made up of the firms that are publically trading and recipients of the award (Stankard 2002:41). This gives us a direct result of the benefit of using quality management initiatives as recipients of this award are using one of the approaches covered in this literature review. In their 1999 study they found that their whole-company winners during that period experienced a 1000 percent ROI (Stankard 2002:42). There are however cases of recipients of the award going out of business that shows even a company that can receive this award are still exposed to shock and lower cost competitors (Stankard 2002:43). This shows us that even the best quality product can still fail and the best quality management approach is still vulnerable to environmental risk.
5.2 Six Sigma
The Six Sigma Process has begun to show some good results and significant organisational culture changes however still not as widespread as some companies are still only now looking at using the Six Sigma Process (Pande, Neuman & Cavanagh 2000:41). Six Sigma is showing potential that goes beyond the amount of improvement found in the achievements of Total Quality Management and is building on the initial process improvements of TQM (Pande et al 2000:42). Since the 1990’s the process has been credited with saving billions of dollars in organisations and has been the fastest growing business management initiative in the industry of quality management (Yang & Haik 2003:21). The Baldrige award was given to Motorola in 1988 and was among the first to receive this award; the Bladrige Award is considered to be the corresponding equal business award to that of the Pulitzer price or academy award (Grandig & Harris 1994). Motorola began using their Six Sigma approach before receiving this award which does provide qualitative evidence that Six Sigma can be successful.
Six Sigma does have its problems too, when the defects or problems become small and many and the closer you get the performance of the process to be perfect, the more measuring, time and resources are needed to continue to gain improvements (Pande et al 2000:201). Therefore for Six Sigma to carry on improving it has to sacrifice disruption of the process, time and resources along with continuously having to capture data (Pande et al 2000:201).
In the Measure step of the Six Sigma Process, the measuring and collecting of information only looks at Good and Bad results, this may cause key information to be overlooked within the data (Pande et al 2000:219). Like all Quality Management Approaches Six Sigma can be timely and costly to implement therefore the organisation needs to justify its need. In most cases some sort of quality management is required depending on the organisation and the complexity of its supply chain.
In the mid 1990’s TQM was identified as the biggest trend in the workplace as many firms were looking into using these initiatives (Avery & Zabel 1997:2). TQM has however been criticised for not providing adequate results on the organisations bottom line but is said to continue to develop and evolve as organisations learn to apply the concepts of quality to their processes (Avery & Zabel 1997:3). It has been reported that some companies find TQM to be slow in initiating change; which has led firms to pursue other techniques (Avery & Zabel 1997:3). TQM has however been widely accepted and allowed quality to become the central theme in a firms supply chain, TQM will always remain in some form even if disguised with another name as TQM is the father of all other approaches (Avery & Zabel 1997).
It has been found that firms that adopted the Zero defects philosophy within their TQM approach achieve decreasing production costs in long production lines as the defects decline over time (Daniels et al 2009:705). The key to the success of this approach is in making the continuous improvement of every aspect of the supply chain a part of every employee’s job (Daniels et al 2009:705).
The results of a study published in 1997 which investigated all companies that had won awards for quality management and used these companies results against a control group of companies (Stankard 2002:43). The study looked at the previous six years from the time the particular company won an award and looked at the marginal income, income to asset ratios and income to sales ratios (Stankard 2002:44). From this the found that the companies studied had operating income of over 106% above that of the control firms in the studies (Stankard 2002:44). The study also concluded that companies that used TQM had a 9% increase on capital investment, 17% increase on employment and total assets increased by 45% (Stankard 2002:44).
ISO is making continuous improvements to their different set of standards which is allowing companies from around the world to strive for the best performance possible (Stankard 2002:19). ISO is seen as a great way to begin quality management in the Supply chain, however will not achieve full business excellence and a sustainable competitive advantage as its scope is too narrow (Stankard 2002:19). This means that a combination of the other approaches must be used in conjunction with ISO set standards in order to achieve results.
An ISO set of standards is limited the product, the process and customer aspects of the organisation it looks to certify and does not look at the business system as a whole, ISO is however a good approach for a narrow scope of purposes (Stankard 2002:21). ISO 9000 does not cover competitive comparisons, integration and continuous improvements within the supply chain (Endres 2000:5). Registering with the ISO 9000 family of standards is an attractive prospect for an organisation, it is however insufficient in increasing the performance of the organisation and the management of its supply chain (Endres 2000:4).
CONCLUSION AND RECOMENDATIONS
The focus on quality is something that has been at the forefront of organisational strategies for decade and will remain as a part of their approach to a global supply chain management in the future. There are many approaches with most being covered in this essay as there will be many more to come in the future. The approaches can be summarised in three categories, firstly as a form of recognition for an excellence in supply chain and quality management such as the Deming or Baldrige awards. Secondly as an approach in the form of a model or framework that can be adapted to and followed such as TQM and Six Sigma approaches. The third category being a certification approach such as ISO set of standards and other industry specific standards.
All the approaches to quality management in the supply chain have their pro’s and con’s however in most cases the pro’s outweigh the con’s making any of the approaches an attractive route to follow for any organisations with a global Supply Chain. However from the findings we see that a combination of approaches should be used to get the best results from the organisations supply chain. With each organisation using a different combination of methods, as one set of approaches will not be as effective on one organisation as it will be on another.
Each method has its unique attributes and limitations and every organisation would need to create and manage their own approach form the approaches discussed. So in order to make quality management in the global supply chain successful an organisation will make quality management a part of the culture of the organisation with each employee and process being part of the initiative. In addition to this quality management needs to become part of the supply chain strategy and be constantly measured, controlled and monitored.
Need help with your literature review?
Our qualified researchers are here to help. Click on the button below to find out more:
In addition to the example literature review above we also have a range of free study materials to help you with your own dissertation: