SCM AND TQM, QUALITY MANAGEMENT AND QFD

VIPIN V P

ROLL NO:28MBA(INTERNATIONAL BUSINESS)

SCHOOL OF MANAGEMENT STUDIESCUSAT.COCHIN 22

E-mail:vipinpsrt@gmail.com

ABSTRACT: The degree to which a set of inherent characteristic fulfil requirements is referred to as quality. Quality management is an approach to management which requires establishing quality policies and procedures and practices and then outstanding systems on regular basis. It includes ensuring proper quality for the company’s output. Quality management is an important marketing strategy. The three aspects of assuring quality are assurance of incoming raw materials quality, assurance that proper processes are operating on the raw materials, assurance of the quality of the outgoing finished goods. Failure modes and effects analysis is a step by step approach for identifying all possible failures in a design, a manufacturing or assembling process of a product or service. Total Quality Management, TQM, is a method by which management and employees can become involved in the continuous improvement of the production of goods and services. It is a combination of quality and management tools aimed at increasing business and reducing losses due to wasteful practices. TQM is a management philosophy that seeks to integrate all organizational functions (marketing, finance, design, engineering, and production, customer service, etc.) to focus on meeting customer needs and organizational objectives. Quality Function Deployment (QFD) is a structured approach to defining customer needs or requirements and translating them into specific plans to produce products to meet those needs. QFD is designed to help planners focus on characteristics of a new or existing product or service from the viewpoints of market segments, company, or technology-development needs. The technique yields charts and matrices.QFD helps transform customer needs into engineering characteristics for a product or service, prioritizing each product or service characteristic while simultaneously setting development targets for product or service.

KEY WORDS: SCM, TQM, QM, QFD

1.0 INTRODUCTION

By now, the supply chain management outcomes of better customer service, lower costs and higher quality should be starting to sound familiar. To sustain and improve competitiveness, firms must offer higher quality products and services than their competitors. TQM is an enterprise- wide philosophy encompassing suppliers and customers. It emphasizes a commitment by the organization to strive toward excellence in the production of services and products that customers want. Firms implementing a TQM program have made a proactive decision to understand, meet and then strive to exceed customer expectations and this is the overriding objective in all TQM programs. Quality Management is an approach to management, which requires establishing quality policies, procedures and practices, and then auditing the systems on a regular basis. It encompasses all the processes in the organization and seeks to ensure the quality of products through systematic adherence to quality management procedures and practices.Quality function deployment (QFD) is a methodology for the development or deployment of features, attributes, or functions that give a product or service high quality. Quality Function Deployment (QFD) is a structured approach to defining customer needs or requirements and translating them into specific plans to produce products to meet those needs.

2.0 SCM AND TOTAL QUALITY MANGEMENT

The phase from 1990s onward is recognized as the era of supply chain management, which has been defined by the Global Supply Chain Forum of 1994 as: “The integration of key business processes from the end user through original suppliers that provides products, services and information that add value for customers”. Supply chain management is the process of planning, organizing and controlling the flow of materials and services from suppliers to and users or customers. This integrated approach incorporates suppliers supply management, integrated logistics and operations.

In other words, SCM is an integrated management of various functions in the areas of materials, operations, distributions, marketing and services after sales with a customer focus in perspective so as to synergize various processes in the organization with a view of optimizing the total costs, that is it refers to managerial process of all supply chain participants to design, develop and operate a system which responds to customer expectations by making available the right quantity of quality products at the right time and place in the right physical form at a right cost. Hence, SCM facilitates to offer best customer service in a cost- efficient manner.

Total Quality Management is a management approach that originated in the 1950's and has steadily become more popular since the early 1980's. Total Quality Management, TQM, is a method by which management and employees can become involved in the continuous improvement of the production of goods and services. It is a combination of quality and management tools aimed at increasing business and reducing losses due to wasteful practices.

TQM is a management philosophy that seeks to integrate all organizational functions (marketing, finance, design, engineering, and production, customer service, etc.) to focus on meeting customer needs and organizational objectives. Some of the companies who have implemented TQM include Ford Motor Company, Phillips Semiconductor, SGL Carbon, Motorola and Toyota Motor Company etc.

TQM is the foundation for activities, which include:

Commitment by senior management and all employees

Meeting customer requirements Reducing development cycle times Just In Time/Demand Flow Manufacturing Improvement teams Reducing product and service costs Systems to facilitate improvement Line Management ownership Employee involvement and empowerment Recognition and celebration Challenging quantified goals and benchmarking Focus on processes / improvement plans Specific incorporation in strategic planning

Table 1 .differences and similarities of TQM & SCM

2.1 Philosophical perspective

TQM has been defined in many ways particularly as a management philosophy “that encourages cost reduction, the creation of high quality goods and services, customer satisfaction, employee empowerment, and the measurement of results”. Similarly, SCM could also be understood as a management philosophy definition, which states that “SCM is an integrating philosophy to manage the total flow of a distribution channel from supplier to ultimate customer.” Since management philosophy tends to be intangible and aims to describe an ideal, TQM and SCM could be further developed to include innovative management practices, tools, techniques, applications and anything else that would be in line with both conceptual approaches. However, the fact that there is still no consensus on conceptual definitions for TQM and SCM poses obstacles to practical implementation. Therefore, there is a need for a new framework, especially for SCM, since it is particularly difficult to clearly define and therefore, to implement.

2.2 Goal

Ultimate goal

Both TQM and SCM aim to achieve customer satisfaction. There are many strategies to accomplish this ultimate goal. Basically, customers require better product quality, faster delivery and cheaper costs, or quality-delivery-cost (QDC). Organizations must meet these requirements to achieve customer satisfaction.

Primary goal

TQM focuses more on quality conformance by aiming to deliver error-free products and services. A term that embraces a wider scope for defining quality is the “big Q”, which includes additional customer requirements such as product safety, flexibility, and prompt delivery. Unlike TQM, SCM basically satisfies customers in terms of delivery or time-based performance. Efficient delivery always leads to cost effectiveness in the supply chain. SCM aims to respond to customers as quickly as possible, at the right time and place at the lowest cost possible. SCM aims to achieve speed-to-market, agility and the flexibility to respond quickly to customer requirements at minimum cost. Moreover, several SCM researchers have agreed that SCM emphasizes the flow of materials and information throughout the entire supply chain. This might be because traditional SCM focused on physical distribution. Several other methods/tools applied in SCM practice include the following: the quick response (QR) in the textile industry; efficient consumer response (ECR) in the grocery industry and the just-in-time (JIT) approach in the automotive industry.

Although TQM and SCM share the same ultimate goal, which is customer satisfaction, their primary goals are different, as implied by the emphasis on “quality and supply.”Better quality and a faster delivery always lead to lower costs. Finally, better QDC enhances customer satisfaction and the competitiveness of the whole supply chain. In some cases, there may be a trade-off if conflict arises between quality and delivery performance, and this is when the difference in primary goals can present potential problems in implementing an integrated TQM and SCM approach. On the other hand, there is synergy in the ultimate goal, since both TQM and SCM aim to achieve customer satisfaction. Therefore, more research needs to be done to further explore the potential areas of conflict and synergy that practitioners need to be aware of in terms of methodology.

2.3 Origin and evolution

From quality inspection to TQM

Quality management (QM) first focused only on quality inspection, and then included QC, quality assurance (QA) and finally TQM. The traditional QM approach was reactive and result-oriented, whereas the modern approach to QM is broader and now also emphasizes quality at source or process control, at every stage, to prevent any errors that could cause defects. The latter is a proactive process-oriented approach .Quality inspection deals with counting, grading and sorting to ensure that customers do not receive defective products.

2.4 Supply chain quality management

TQM and SCM are still being developed in terms of scope and applications. TQM in particular, has been broadened in scope to include all best practices. Thus, as a TQM framework, the MBNQA criteria represent dimensions of performance excellence. Since TQM was introduced and developed as a concept earlier than SCM, there are more universally accepted TQM frameworks now than there are for SCM. Widely accepted quality standards such as the ISO 9000 have led to a greater diffusion of QM approaches, while there is still no comparable standard framework for SCM.TQM and SCM have evolved along similar paths, even though they emerged from different starting points. They diverged in terms of the degree of integration. They both emerged in response to the need to develop tactical strategies for operational functions (inspection and logistics). They then were broadened in scope to gain synergy by integrating the concerns of all interrelated parties. These parties included all internal primary and supportive functions as well as the external business partners. Then, there was a shift in focus from operational concerns towards strategic issues. Consequently, supply chain quality management (SCQM) emerged as a new management concept that combined aspects of TQM with SCM When TQM and SCM are integrated, the business processes and the organizational structure will become more complex. For example, some focal organizations in the supply chain may need to establish a supplier development department to work with suppliers in quality improvement projects. The SCM department may need to include QA unit or vice versa. The quality policy of individual supply chain members may need to be aligned for consistency together to ensure a common quality policy of the entire supply chain. There is a need, therefore, for more research into the implications of integrating business processes into the organizational structure.

2.5 Integration (participation and partnership)

Both TQM and SCM offer unique frameworks to integrate participation and partnership, since they require participation from all internal functions and continuous collaboration with all external partners. However, TQM focuses more on internal participation, where as SCM places more emphasis on external partnerships.

Internal participation

“Total” in TQM refers to every department and every person at every level in an organization. Although TQM requires involvement from customers and suppliers, it places more emphasis on employee participation. The focus is on both internal primary and supportive functions in an organization’s value chain. In the TQM environment, all employees (including executive management) are treated as internal customers. If the internal customers are not satisfied, external customer satisfaction is difficult. Therefore, TQM emphasizes employee involvement and ownership . Human resource management issues received the highest coverage in TQM frameworks. The external focus receives less attention and quality improvement efforts only concentrate on internal matters. However, customer satisfaction could be achieved more effectively where quality was built into the whole supply chain. Therefore, the focus of modern TQM has shifted from the traditional organization-centred setting to the whole supply chain.

External partnership

SCM requires internal and external business process integration across the whole supply chain.SCM effectiveness and efficiency depend significantly on the degree of integration. Therefore, SCM aims to improve not only the performance of the individual organization but also that of the whole supply chain .This external focus may be due to the fact that the organization itself must work with the customer and the supplier within the same SCM

framework. SCM focuses on primary functions as opposed to supportive functions in an organization’s value chain. Most of the literature and SCM frameworks emphasize the relationship with business partners and almost ignore the human resource component, such as the SCM frameworks of the global supply chain forum 2002. Although SCM emphasizes external integration, the actual implementation must begin by integrating internal functions and then moving on to external integration among business partners. Moreover, practical SCM focuses on only a few strategic suppliers and customers. This is because most supply chains are too complex to achieve full integration of all business partners. This difference in emphasis can be a potential problem when implementing a synthesis of TQM and SCM, and more research is needed to explore these implications.

3.0 QUALITY MANGEMENT

Quality Management is an approach to management, which requires establishing quality policies, procedures and practices, and then auditing the systems on a regular basis. It encompasses all the processes in the organization and seeks to ensure the quality of products through systematic adherence to quality management procedures and practices.

• Quality management includes ensuring proper quality for the company’s output.

• Quality management is an important long term marketing strategy.

• Quality management is important not only for its survival in the market, but also to expand its market or when it wants to enter the new market and various other marketing ventures.

There are three aspects of assuring quality. These include

• Assurance of incoming raw materials quality.• Assurance that proper processes are operating on the raw materials• Assurance of the quality of the outgoing finished goods

RAW MATERIALS → PROCESSES → FINISHED GOODS

Are the raw Are the right processes Are finished goodsmaterials ok ? operating on the raw okay to be sent to the

materials? customers?

Fig 1.three aspects of assuring quality

The task of exercising control over the incoming raw materials and the outgoing finished goods is usually called ‘Acceptance Sampling’, and the control over the processes operating on the raw materials or the semi finished goods is called Process Control.

3.1 Principles

Quality management adopts a number of management principles that can be used by top management to guide their organizations towards improved performance. The principles include:

Customer focus

Since the organizations depend on their customers, therefore they should understand current and future customer needs, should meet customer requirements and try to exceed the expectations of customers. An organization attains customer focus when all people in the organization know both the internal and external customers and also what customer requirements must be met to ensure that both the internal and external customers are satisfied.

Leadership

Leaders of an organization establish unity of purpose and direction of it. They should go for creation and maintenance of such an internal environment, in which people can become fully involved in achieving the organization's quality objective.

Involvement of people

People at all levels of an organization are the essence of it. Their complete involvement enables their abilities to be used for the benefit of the organization.

Process approach

The desired result can be achieved when activities and related resources are managed in an organization as process.

System approach to management

An organization's effectiveness and efficiency in achieving its quality objectives are contributed by identifying, understanding and managing all interrelated processes as a system.

Continual improvement

One of the permanent quality objectives of an organization should be the continual improvement of its overall performance.

Factual approach to decision making

Effective decisions are always based on the data analysis and information.

Mutually beneficial supplier relationships

Since an organization and its suppliers are interdependent, therefore a mutually beneficial relationship between them increases the ability of both to add value.

These eight principles form the basis for the quality management system standard ISO 9001:2008.

4.0 QUALITY FUNCTION DEPLOYMENT

Quality must be designed into the product, not inspected into it. Quality can be defined as meeting customer needs and providing superior value. This focus on satisfying the customer's needs places an emphasis on techniques such as Quality Function Deployment to help understand those needs and plan a product to provide superior value. Quality function deployment (QFD) was developed in Japan during the 1960s by Akao as a method for incorporating consumers’ demands into product development. Akao and Mazur defined QFD as a method for defining design qualities that are in keeping with customer expectations and then translating those customer expectations into design targets and critical quality assurance points that can be used throughout the production/service development phase. QFD is a widely used systematic process utilized by cross-functional teams to identify and resolve issues arising from the provision of products, processes, services, and strategies intended to enhance customer satisfaction) By employing QFD, manufacturers and service providers are able to translate customer expectations into measurable quality characteristics and create products and services which satisfy those requirements. Quality function deployment (QFD) is a methodology for the development or deployment of features, attributes, or functions that give a product or service high quality. The two fundamental purposes of QFD are:

• to improve the communication of customer expectations throughout theOrganization;

• to improve the completeness of specifications and to make them traceable directly to customer expectations and needs

4.1 QFD primary objectives:

• Keeping a Customer focus.• Product Development Specifications - Requirements Capture.• Reduction in the product development cycle.• To increase Customer satisfaction.

4.2 QFD benefits

• Customer driven products.• Reduced time to market - Up to 50% reduction.• Improved Communications throughout the product development process.• Improved cross functional communications.• 30 to 50% reduction in engineering / design changes.• 30 to 50% in design cycle time.• 20 to 60% reduction in production start-up costs.• 50% reduction in warranty claims.• Increased Customer satisfaction.

4.3 QFD METHODOLOGY FLOW

The basic Quality Function Deployment methodology involves four basic phases that occur over the course of the product development process. During each phase one or more matrices are prepared to help plan and communicate critical product and process planning and design information. This QFD methodology flow is represented below.

Fig 2. Four phase QFD approach

4.4 Tools of QFD

Matrix diagrams, which are very useful to organize the data collected, help to facilitate the improvement process. They can be used to display information about the degree to which employee expectations are being met and the resources that exist to meet those expectations. The structure in which QFD uses to organize information is known as the House of Quality.

In its broadest sense, the QFD House of Quality displays the relationship between dependent (WHATS) and independent (HOWS) variables

This House of Quality should be created by a team of people with first-hand knowledge of both company capabilities and the expectations of the employee. Effective use of QFD requires team participation and discipline inherent in the practice of QFD, which has proven to be an excellent team-building experience.

5.0 CONCLUSION

There are many similarities and differences between TQM and SCM. Understanding and comparing them could identify potential areas of future research as well as the development of a management framework that integrates the two concepts. First, both TQM and SCM could be viewed as management philosophies and from this perspective, there is an unlimited potential for scope and applications. In practical terms however, implementation is made difficult by the range of unclear definitions. Therefore, a new well integrated framework should be developed to facilitate implementation, especially since there is still no universally accepted SCM

framework. The traditional approach to TQM emphasizes specification-based performance while SCM tends to focus on time-based performance. However, the ultimate goal of both is customer satisfaction. There can be synergy as they share the ultimate goal, but conflict can arise from the different primary goals. There is a need therefore for more research into these potential contradictions to explore how they can be reconciled.

Although TQM and SCM emerged from different starting points, they evolved in similar ways. Both originated at the tactical level of operational functions, which are the primary activities in an organization’s value chain and then widened in scope to cover all interrelated parties at the strategic level in order to gain synergy. When TQM and SCM are integrated, both business processes and the organizational structure will become more complex. Therefore, more research needs to be conducted into the alignment of business processes and organizational structure. Other management issues worth exploring include investigations into the following: management’s role in TQM in SCM; information systems and technologies to support TQM in SCM; the organizational structure and its impact on TQM in SCM; how education and training can support TQM in SCM; and both the cultural and behavioral issues that can influence the application of TQM in SCM. Future research into SCM and its potential contribution to TQM applications include developing universal SCM standards or certificates. Although TQM and SCM require both internal and external integration, TQM emphasizes the participation of all in-house employees, whereas SCM focuses on the external partnerships with business partners. Since these different approaches could cause potential conflicts when TQM and SCM are integrated for a simultaneous implementation, there is a need to explore how the strengths of both frameworks could be integrated into a new management concept that would be more effective than either framework on its own.

QFD is a good system to be implemented in organization or industry, which can be seen from the examples mentioned above. QFD does not design to replace the existing organization design process by any means, but rather support the organization’s design process. And it also helps bring the customer’s voice into the production process to reduce the unnecessary cost. Cutting production time is also very beneficial to the companies.

However, QFD has not been widely accepted in the USA compared to Japan (42% or more of Japanese companies have adopted QFD to improve their quality). In the future we hope QFD can be more adopted and researched in the American manufacturing and service organizations.

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