Operations Management / Supply Chain Management

Module 05: Managing Quality

Module 01 summarized the overall structure and linkage of business processes in the extended Supply Chain.  Remember the slide “Supply Chain Management is all About Stuff?”  Business Process Improvement is critical to the long-term success of any organization and becomes the foundation of any continuous improvement effort – regardless of the complexity and regardless of what the initiative is labeled (Lean, Six Sigma, TQM, TOC, etc.).    Each process has a supplier, customer, resources, requirements and process steps.

Business process improvement is best done in a team environment, consisting of stakeholders and those responsible for managing the process day-to-day.   The improvement initiative should be well documented and include the following elements:

  • Select the process to be studied
  • Record and collect data in a useful form
  • Analyze the data to generate improved methods
  • Evaluate alternatives and select method
  • Install as standard practice
  • Maintain the new method

In this Module we will look at many of the common approaches to Quality Management / Business Process improvement that are used on a daily business throughout all industries.

Leaders often believe / expect that business process improvement will provide instant results.  Productivity will increase, costs will decrease, customer service and satisfaction will improve, and “life will be good”.  However, in fact, at the beginning, productivity may suffer as the result of a lack of training, understanding, or motivation.  Thus, the operation / company will go through a learning curve.  This can either be steep or gradual.  The challenge for leaders is to provide all the resources and support to ensure that full performance is achieved as quickly as possible.

 

The text defines Total Quality Management as: managing the entire organization so that it excels on all dimensions of products and services that are important to the customer.  From an Operations Management perspective, there are two fundamental operational goals:

  • Careful design of the product or service
  • Ensuring that the organization’s systems can consistently produce the design

There are many different approaches to continuous improvement presented in the literature.  Total Quality Management is often the umbrella term that actually covers most of these.   Deming, Juran, and Crosby were some of the early pioneers that brought Total Quality Management principles to the forefront of industry.  Deming showed how statistical methods could be applied to reducing process variability.  His approach still lives today in Six Sigma process improvement initiatives.  Juran brought business process analysis and improvement to the forefront and Crosby coined the phrase “Quality is Free” and introduced the world to the concept of “Cost of Quality” and the advantage of “Doing it right the first time.”  Many different quality awards have been institutionalized and ISO9000 certification programs are used across many industries to show that a business follows good quality management processes.

These earlier developments, have been adapted to many of the current methods companies employ to improve their process, systems, products and performance: Lean Manufacturing (Just-in-Time), Six Sigma, Theory of Constraints, Business Process Analysis, and others.  While different in approach, there are several underlying drivers:  Strong and dynamic leadership, customer focus, empowered employees, involved employees, open communications, excellent reward systems, focus on continuous improvement, measurement and benchmarking.

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Regardless of the approach, or combination of approaches taken, it is clear that improved quality of products, services and processes results in improved profitability.  Sales are improved through providing better response time, flexible pricing and improved reputation.  Costs are reduced by increased productivity, lower rework and scrap costs and lower warranty costs – just to name a few.

Quality improvement progresses from the establishment of Organizational Processes through a focus on creating happy customers.

Thus an Operations Manager’s objective is to build a total quality management system that identifies and satisfies customer needs.   There are different ways to view quality:

  • User-based: better performance, more features
  • Manufacturing-based: conformance to standards, making it right the first time
  • Product-based: specific and measurable attributes of the product

However, it is clear that quality improvement can improve a Company’s reputation through improvement in perception of new products, employment practices and supplier relations.  Quality Improvement can also reduce the risk of product liability and improve the ability of a company to compete in the Global Marketplace.

In following sections, we will review the basic fundamentals of the different approaches to quality management as well as cover the elements of Total Quality Management (TQM), Benchmarking, Six Sigma and other major organizational initiatives.  We will also review many tools that are used to facilitate accomplishment of any continuous improvement effort.