CHAPTER 8- PROCESS MANAGEMENT: JIT & TQM ISSUES IN SUPPLY CHAIN MANAGEMENT Principles of Supply...

CHAPTER 8- PROCESS MANAGEMENT: CHAPTER 8- PROCESS MANAGEMENT: JIT & TQM ISSUES IN SUPPLY CHAIN JIT & TQM ISSUES IN SUPPLY CHAIN

MANAGEMENTMANAGEMENT

Principles of Supply Chain Management:

A Balanced Approach

Prepared by Daniel A. Glaser-Segura, PhD

Principles of Supply Chain Management: A Balanced Approach by Wisner, Leong, and Tan. © 2005 Thomson Business and Professional Publishing

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Learning ObjectivesLearning Objectives

You should be able to:– Discuss the major elements of JIT & TQM.– Describe why JIT & TQM are integral parts of SCM.– List & describe the major elements of JIT & TQM.– Understand the importance of SPC & how to apply it to various

processes.


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Chapter Eight OutlineChapter Eight OutlineJIT & Supply Chain Mgmt.The Elements of JIT

Waste ReductionJIT Partnerships JIT LayoutsJIT InventoriesJIT SchedulingContinuous ImprovementWorkforce CommitmentJIT II

TQM & Supply Chain Mgmt.The Elements of TQM

Focus on the customer

Workforce Involvement

Deming’s Way

Crosby’s Way

Juran’s Way

The Malcolm Baldridge National Quality Award

ISO 9000 Quality Standards

The Tools of TQM

Flow Diagrams

Check Sheets

Pareto Charts

Cause-&-Effect Diagrams

Statistical Process Control


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IntroductionIntroduction

In 1990s, supply chain management combined: – Quick response (QR)- speed & flexibility – Efficient Consumer Response (ECR)- speed & flexibility – JIT – Continuous reduction of waste– Keiretsu Relationships- Including suppliers in JIT/TQM efforts

Quality is a necessary element and outcome of JIT to achieve low cost, high quality, & reduced lead times.

JIT & TQM are required throughout the supply chain!!!


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JIT & Supply Chain ManagementJIT & Supply Chain Management

JIT emphasizes: – Reduction of waste – Continuous improvement – Synchronization of material flows within the organization – Channel integration- extending partnerships in the supply chain

– Stage 1- Firm is internally focused & functions managed separately. Silo effect is reactive & short-term goal oriented.

– Stage 2- Firm integrates efforts & resources among internal functions.

– Stage 3- Firm links suppliers/customers with firm’s processes. – Stage 4- Firm broadens supply chain influence beyond immediate

or first-tier suppliers & customers.


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JIT & Supply Chain Management- Cont.JIT & Supply Chain Management- Cont.


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JIT & Supply Chain Management- JIT & Supply Chain Management- Cont.Cont.

The Elements of Just-in-Time– Waste Reduction– Firms reduce costs & add value by eliminating waste from the

productive system. – Waste encompasses wait times, inventories, material & people

movement, processing steps, variability, any other non-value-adding activity.


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The Elements of Just-in-Time– Just-in-Time Partnerships– Suppliers & customers work to remove waste, reduce cost, &

improve quality & customer service.– JIT purchasing includes delivering smaller quantities, at right

time, delivered to the right location, in the right quantities. – Firms develop JIT partnerships with key customers. Mutual

dependency & benefits occur among JIT partnerships.


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The Elements of Just-in-Time– Just-in-Time Layouts– Move people & materials when & where needed, ASAP.– Group technology (work cells)- process similar parts or

components saving duplication of equipment & labor – Work cells are often U-shaped to facilitate easier operator &

material movements.– JIT layouts are very visual (lines of visibility are unobstructed) with

operators at one processing center able to monitor work at another.


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The Elements of Just-in-Time– Just-in-Time Inventories– Reduction of inventory levels causes problems to surface in the

organization. – Once problems are detected, they can be solved.– The end result is a smoother running organization with less

inventory investment.


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The Elements of Just-in-Time– Just-in-Time Scheduling– Small batch scheduling drives down costs by:

• Reducing purchased, WIP, & finished goods inventories • Makes the firm more flexible to meet customer demand.

– Small production batches are accomplished with the use of kanbans a Japanese word for card. Although for JIT use, Kanban has come to mean a signal to order or release material in the production system.


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The Elements of Just-in-Time


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The Elements of Just-in-Time– Continuous Improvement (Kaizen) – Continuous approach to reduce process, delivery, & quality

problems, such as machine breakdown problems, setup problems, & internal quality problems.

– Workforce Commitment– Managers must support JIT by providing subordinates with the

skill, tools, time, & other necessary resources to identify problems & implement solutions.


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The Elements of Just-in-Time– Just-in-Time II– An extension of supplier partnerships & vendor-managed

inventories. – A supplier’s employee is housed in the purchasing department of

the buyer’s organization, acting as both buyer & supplier representative. This employee monitors inventory levels, places purchase orders, & participates on product design & value analysis teams.


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TQM & Supply Chain ManagementTQM & Supply Chain Management

TQM is an enterprise-wide philosophy, encompassing suppliers & customers.

The Elements of Total Quality Management– Focus on the Customer– “Meeting customer expectations” applies to external as well as to

internal suppliers & customers.– Workforce Involvement– Top management commitment. New role as facilitator. – Employee Empowerment- Think “out of the box”.– Teamwork is the quality circle concept


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TQM & Supply Chain Management-Cont.TQM & Supply Chain Management-Cont.

Deming’s Way1. Create constancy of purpose to

improve product & service.2. Adopt the new philosophy.3. Cease dependence on inspection

to improve quality.4. End the practice of awarding

business on the basis of price.5. Constantly improve the production

& service system.6. Institute training on the job.7. Institute leadership.

8. Drive out fear.9. Break down barriers between

departments.10.Eliminate slogans &

exhortations.11.Eliminate quotas.12.Remove barriers to pride of

workmanship.13.Institute program of self-

improvement14.Put everyone to work to

accomplish the transformation

The Elements of Total Quality Management


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The Elements of Total Quality Management– Crosby’s Way- – Four Absolutes of Quality1. The definition of quality is conformance to requirements2. The system of quality is prevention.3. Performance standard is zero defects.4. The measure of quality is the price of nonconformance


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The Elements of Total Quality Management– Juran’s Way– Quality Planning- Identify internal/external customers & their

needs, develop products that satisfy those needs. Mangers set goals, priorities, & compare results

– Quality Control- Determine what to control, establish standards of performance, measure performance, interpret the difference, & take action

– Quality Improvement- Show need for improvement, identify projects for improvement, implement remedies, provide control to maintain improvement.


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Objectives • Stimulate firms to improve• Recognize firms for quality

achievements, • Establish guidelines so that

organizations can evaluate their improvement & provide guidance to others

Categories Measured

1. Leadership

2. Strategic planning

3. Customer & market focus

4. Information & analysis

5. Human resource focus

6. Process management

7. Business Results

The Elements of Total Quality ManagementMalcolm Baldrige National Quality Award-


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The Elements of Total Quality Management

ISO 9000 Quality StandardsQuality Management Principles

1. Customer focus

2. Leadership

3. Involvement of people

4. Process approach

5. System approach to management

6. Continual improvement

7. Factual approach to decision making

8. Mutually beneficial supplier relationships


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The Tools of TQMThe Tools of TQM

Flow Diagrams- Annotated boxes representing process to show the flow of products or customers.

Check Sheets- to determine frequencies for specific problems.

Pareto Charts- for presenting data in an organized fashion, indicating process problems from most to least severe. Cause-and-Effect Diagrams (Fishbone or Ishikawa diagrams) used to aid in brainstorming and isolating the causes of a problem.


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The Tools of TQM- Cont.The Tools of TQM- Cont.


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Statistical Process Control (SPC)- Allows firms to visually monitor process performance, compare the performance to desired levels or standards, and take corrective steps quickly before process variability gets out of control and damages products, services, and customers Firms gather process performance data, create control charts to monitor process variability, then collect sample measurements of the process over time.


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Statistical Process Control (SPC) Cont.-

Variations- in process are either natural variation or assignable variations.

– Natural variation is random environmental noise that is expected.

– Assignable variations can be traced to a specific cause & fixed.

Samples- Sample measures are either variable or attribute data. – Variable data are continuous, such as weight, time, and length. – Attribute data indicate the presence of some attribute such as

color, satisfaction, workability, or beauty.


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Variable Control Charts- Two types of control charts to measure variable process data: – x-chart is used to track the central tendency of the sample means. – R-chart is used to track sample ranges.

1. Gather data if the process is already in control.2. Calculate the mean and the range for each sample.3. Calculate the overall mean of all the samples and the average range of all

the samples. Use the x means to calculate the upper and lower control limits.

4. Use the means and control limits to construct control charts.


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Process Capability

• The current process variation & future changes can be monitored using a process capability index, or Cpk.

• Cpk is the ratio of the desired process variation to the actual process variation. • The process must be under control (only natural variations)• A Cpk of 1.0- process is capable of producing within the control limits 99.73

percent of the time. • A Cpk greater than 1.0- even fewer defects. • Cpk of less than 1.0- process may be incapable of producing within control

limits.

Cpk=Smallest difference between UCL or LCL and center line

3σ


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Acceptance Sampling• When shipments of product are received from suppliers customers,

samples can be taken & measured against some quality acceptance standard.

• Sampling is less time-consuming than testing every unit to determine the overall quality of a shipment.

Producer’s risk- A buyer rejects a shipment of good quality units because the

sample quality level did not meet standards (type-I error). Consumer’s risk-

Buyer accepts a shipment of poor-quality units because the sample falsely provides a positive answer (type-II error).

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CHAPTER 8- PROCESS MANAGEMENT: JIT & TQM ISSUES IN SUPPLY CHAIN MANAGEMENT Principles of Supply...

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