IMPROVEMENT OFINBOUND LOGISTICS USING
QUALITY CHECK TRIGGER (QCT) METHOD
1S. Jaisankar,
2C. Julian GnanaDhas,
3Dr. Manivel,
1Associate Professor, Department of Management, Kumaraguru College of Engineering, Coimbatore,
Tamil Nadu, India,
2Research Scholar, School of Management, Sri Krishna College of Engineering and Technology,
Coimbatore,Tamilnadu, India.
3Professor, Department of Mechanical Engineering, Kumaraguru College of Technology, Coimbatore,
Tamil Nadu, India.
ABSTRACT
Competitive landscape has forced the companies to embrace lean approach in their
supply chain. New challenges now include a focus on supply to determine the right time and
place for product delivery (Chin et al., 2004; Robinson &Malhotra, 2005). International business
competition is no longer limited to organizations but now includes supply chains (Kuei et al.,
2001). The aim of this study is to visualize the inbound logistics of OEMs from Tier-1 suppliers
by adopting VSM to explore the possibilities of reducing supply lead time. The literature
evidences indicate that in recent past, Value Stream Mapping (VSM) technique has been used in
Supply Chain Management (SCM) to eliminate non-value adding activities to optimize the
supply chain performance. An attempt has been made through this study to introduce the VSM in
inbound logistics and improving the supply process by automating the inward quality check
using Quality Check Trigger (QCT) method. This QCT model would reduce the quality check
lead time without compromising the quality of the supplier and helps to increase the efficiency of
the inward logistics. The current paper also explains how standardization and flexibility optimize
International Journal of Pure and Applied MathematicsVolume 119 No. 17 2018, 2411-2424ISSN: 1314-3395 (on-line version)url: http://www.acadpubl.eu/hub/Special Issue http://www.acadpubl.eu/hub/
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the inbound process by identifying waste elimination through eliminating non-value adding
motions and waiting time.
Keywords: Supply Chain, Value Stream Mapping, Inbound Logistics, Quality Check Trigger
1. INTRODUCTION
Supply chain management is gaining momentum among the business community in
recent decades. One of the most significant paradigm shifts of modern business management is
thatindividual businesses no longer compete as solely autonomous entities, but rather assupply
chains. Business management has entered the era of inter-network competition. Inthis emerging
competitive environment, the ultimate success of the single business willdepend on
management's ability to integrate the company's intricate network of businessrelationships
(Drucker, Peter F, 1998). Understanding the importance of managing the network across the
supply chain, the companies are directly overseeing the entire supply chain network.
Dealing with the dynamics between delivery of product / service along the chain and
offering a quality product / service to the customer or end user is a critical issue in managing
today‟s organization. The Original Equipment Manufacturers (OEM) positioned in the middle of
the supply chain are facing the challenges of product variety, lower cost and better quality. Lean
thinking which aims eliminating wastes, reducing cost and improvementcontinuously provides a
strategic guiding tool for OEMs so as to gain competitiveadvantages (M.A. Lewis, 2000).
Therefore, the lean production approach pioneered by Toyota is beingadopted by lots of OEMs.
The term 'lean' embodies a system that uses less of all inputs to createoutputs similar to the mass
production system but offering an increased choice to theend customers (J.P. Womacket al.,
1994). For full effectiveness, the lean production system must beextended down through the
supply chain (M. Ronan, 2001).
Lean Manufacturing uses Value Stream Mapping (VSM) as a necessary tool to eliminate
muda (waste) from organizations (Suarez et al., 2016).However, both in literature and in practice
there are few tools that allow a visualization of the supply chain from the perspective of Lean
Thinking or Kaizen (continuous improvement) (Vokurka et al., 2007). Understanding and
visualizing (Irfan Ahmed Mohammed Saleem, Dr. S. Jaisankar2018),supply chain management
is a crucial practice for all managers seeking to deliver quality products and / or services. Lee
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(2004) goes even further by indicating that only organizations that devise agile, adaptable and
aligned supply chains will be able to continue competing in today's environment.
The purpose of this study is to (M. Lawanyashri,G.Priya, M.B.Benjulaanbumalar, Deepa
Mani, K.Santhi 2017) describe the implementation of VSM in inbound logistics of the supply
chain by mapping the inbound process. An attempt has been made to eliminate muda (waste)
from Tier I supplies to OEM. Further,this paper proposes to automate the inward quality check
using Quality Check Trigger (QCT) model to improve the supply process. In this study along
with QCT model, importance of lean characteristics such as standardization and flexibility in
optimizing the inbound supplies are also recommended.
2. PROBLEM STATEMENT
The inbound logistics of OEM is constrained because large number of parts are getting
flowing into the company which are supplied by Tier 1 suppliers. All the components delivered
by these Tier 1 suppliers are being loaded, transported and delivered to the manufacturer. Once
the materials are received the inward inspection department undergoes a rigorous inspection
process before taking into factory production line. Critical parts are inspected 100% and non-
critical items are inspected using acceptance sampling method. The inspection process takes
longer duration due to presence of non-value added activitieswhich greatly affect the efficiency
inward supply chain logistics. There is no strong evidence from the literatureon reduction of non-
value adding activities in the inspection process.ManyOEMs are facing problems in inward
logistics or adoptinganinward inspection policy based on the combination of factors likerejection
rate, inward frequency and critical aspects of the incoming components that largely affects the
efficiency supply chain.
The lack of pull system and distance between the Tier 1 supplier and OEM forced the
companies to carry large amount of inventory. There is a need to address these issues as most of
the literatures of value stream mapping are focusing on reducing the non-value added activities
in the production process and not the upward stream of the supply chain. The present paper
attempts to analyze the non-value adding activities in the inbound logistics using value stream
mapping (supply stage between Tier 1 suppliers and OEM) in order to enhance the supply chain
efficiency.
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3. Application of VSM in Inbound Logistics
Originating from Toyota's production management optimisation, VSM is a tool that
allows visualisation of transport, material and information flow throughout all processes in the
supply chain or a part of it. Mapping the current situation, the total time of production and total
value adding time can be assessed (Liker J. K., 2004) as well as attention to hidden problems or
waste of time/resources can be discovered (Liker J. K. 2006)
Following the mapping of current value stream and defining of the bottlenecks, the suggestions
for avoiding waste can be suggested. Eliminating the sources of waste is a process following the
defining of the structure and details on selected types of wastes (Liker J. K. 2006).
4. Methods of Implementation
The methods of implementing VSM as anoptimisation tool involve modeling the
movement/flow of activities, information and material (Liker J. K. 2006). Among the mapping,
assessment of processes involves measuring time use of the activities as well as stating whether
the process is a value adding or non-value-adding process (Rother, M, Shook, J., 2003); the first
involving material unpacking or delivery of materials and the latter involving mainly assembling,
folding, painting (Lasa, I. and et al, 2009). The results are in addition to calculations, presented it
visually.
The method involves mapping the current value stream and suggesting a future value
stream. The map of the future value stream can be compiled through consultations with all
stakeholders, such as production participants, operations managers and company's management
(Liker J. K., 2004).
Current State Map
The first step is to define the current map as shown in fig. 1. A typical value stream
between Tier 1 supplier and OEM is mapped in the figure.
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Figure 1: Current State Mapping of Tier 1 supplier and OEM
The Tier 1 suppliers produces products based on the forecast and supply parts to OEM
mostly based on push system. Once the goods are delivered by the supplier, the parts are stored
before carrying out the inspection. The map stated bottlenecks and wastes in the process due to
the non-value added activities storage and inspection before taking up the components for final
assembly. At inspection stage most of the parts are being inspected 100% and no inspection
policy being followed based combination factors like rejection rate, inward frequency and
critical aspects of the incoming part. This has resulted in adding wastes in the production
process, extending the cycle time and inefficiency in the supply chain.
5. QUALITY CHECK TRIGGER (QCT) METHOD
The mapping of current status of OEM in the previous section states that non-value added
activity of 100% inspection is undertaken before using the parts in final assembly. Hence there is
a need to develop a mechanism to trigger the quality check based on inspection policy which in
turn reduces the cycle time of production and improve the supply chain efficiency. A study had
been carried-out using quantitative research design to develop a Quality Check Trigger (QCT)
Method with the help of secondary data available with ERP system of a leading OEM in
Coimbatore.
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The main objective of this study is to assess the quality level of the supplier based on their
rejection rate and to develop an inspection policy based the combination of factors likesupplier
quality, inward frequency, criticality and non-criticality of the parts. The inward data of all Tier 1
suppliers for the last one year were retrieved from the ERP system of the organization in MS-
Excel worksheet format. The raw data obtained from the system look like,
MS-Excel was used to carry out two analysis on the collected secondary data from the system.
Analysis 1 - creation of inward trigger based on material inward frequency.
Analysis 2 – creation of inspection plan based on material criticality and rejection rate.
Analysis 1 – Creation of Inward Trigger Based on Material Inward Frequency
From the analysis, it was observed that the frequencies of a single item are different and
there is no symmetrical pattern in material entry was found. By considering the most occurring
frequency, final frequency of each and every item has been arrived using Excel spreadsheet
analysis. The frequency ranges from daily, weekly, fortnight, monthly, bimonthly, quarterly and
annually.
Analysis 2 – Creation of Inspection Plan Based on Material Criticality and Rejection Rate
With the help of rejection rate analyzed using Excel spreadsheet and material criticality, a
new inspection plan has been created to minimize the non-value added activities in inspection
process.
The new inspection plan for each and every item is as follows:
Figure 2:Data on inward items
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Critical
100% inspection recommended for critical parts
Non-critical
If rejection rate is 75% & above - 100% inspection recommended for at least next
quarterly and then repeat the recommended class.
If rejection rate is 50% to 75% - 80% inspection recommended for at least next quarterly
and then repeat the recommended class.
If rejection rate is 25% to 50% - 60% inspection recommended for at least next quarterly
and then repeat the recommended class.
If rejection rate is up to 25% - 30% inspection recommended for at least next quarterly
and then repeat the recommended class.
If rejection rate is 0% - Inward without inspection until next rejection identified.
Working of QCT
This new inspection plan for critical and non–critical parts forms the basis for modeling Quality
Check Trigger with the aid of MS-Excel. The QCT will act as a trigger once a part is getting
inwarded and furnish the criticality status, rejection rate, the recommend action and the model
picture.
Figure 3Quality Check Trigger Sheet
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The inspection in-charge may act according to the trigger and do the quality check as
suggested by the trigger.
Calculation of time taken to do quality check using the old inspection plan and the new one
for all the critical and non-critical parts reveals that 43 hours is saved if the new inspection plan
and QCT method is used. Time saved in inspection would bring down the non-value added
activities during inward quality check and could enhance the efficiency of supply chain.
6. LEAN PHILOSOPHY
In short lean is a systematic approach to enhance value to the customer by identifying and
eliminating waste through continuously improving the flow of the product to the customer
(Manrodt et al., 2008). The lean concept as we know it nowadays is the result of the evolution of
the Toyota Production System (TPS), developed and gradually evolved from 1948 onwards.
The term „lean production‟ was first used by Krafcik in 1988, but it did not become globally
known in the academic world until the book „The machine that changed the world‟ (Womack et
al., 1990) was released. In this book lean production is seen as the next paradigm of
manufacturing beyond mass production, of which the TPS was considered the best-known
example and thus became the model on which the book‟s description was based (Lander et al.,
2007). Within the TPS system it became clear that the only activities which count within a
production system are the activities that add value for the customer, and thus eliminate all other
activities which were labeled as waste (Ohno, 1988).
Two Lean principles from the study conducted by (Yuheng Zhu), standardization and
flexibility are applied in inbound logistics to optimize the Tier 1 supplies to OEMs.
Standardization
A „lean‟ organization means „an organization which uses its entire action principles of
leanness and flexibility‟ (Kosonen, 1994). The basic idea is to do all the organization‟s activities
as lean as possible. Standardization has been seen as a fundamental building block for the lean
philosophy; it supports and maintains organizations‟ lean workplace and structure. Successful
implementation of standardization will determine whether the organization is able to transform to
a sustainable lean structure. It improves flow, simplifying the management of the physical
inventory, reduces mistakes and motion. Standardization should also be used as an indicator to
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check daily performance and identify infraction. Furthermore, it helps to develop organization
internal reliability.
Standard Procedure
In the lean philosophy, standard procedure is regarded as a useful tool to reduce waste. In
5S systems, standardization is described as maintain cleanliness and order – perpetual neatness
(Slack, 2004). Standard procedure could help to eliminate all types of waste, such as waste
related to uncertainty, waiting, searching and so on. By eliminating what is unnecessary and
making everything clear and predictable, clutter is reduced, hence, the work process is made
easier and faster. In order to reach this step, the process needs to be designed; standard procedure
should be easy and simple. The whole complex process can be broken down into a group of ease
procedures, and standardize them to make sure the procedures are kept simple and waste free.
Behind this concept, the operation needs to focus on simplicity, repetition and experience breed
competence (Slack, 2004). The internal organization needs to focus in each process on limited,
manageable sets of products, technologies and volumes. And between all the standard procedures
there should be a coherent structure, rather than inconsistency and conflicts.
Standard Time
Standard time in a process means trying to satisfy the customer‟s demand in time. This is
to reduce waste such as waste of inventory, unnecessary waiting time, and so on. Amongst the
lean philosophy, the JIT production system is a key method to achieve significant reductions in
production lead times by having all processes produce the necessary parts at the necessary time
with the minimum stock, which is necessary to hold the processes together (Reichhart, Holweg,
2007). In lean processes, any stoppage will affect the whole process. The waste in a process can
be measured by the throughput time. The longer items are being processed, are held in inventory,
moved, checked orsubject to anything else that does not add value, the longer they take to
progress through the process. Hence, paying attention at what exactly happens to the items
within a process is a good method to identify the waste. Setup time reduction could also help to
reduce waste in the process, and it supports the standard time. Setup time reduction is a process
of reducing the time taken to change a process from one activity to the next (Slack, 2004).
Standard time helps the organization to reduce the waste by creating a smooth, continues flow
and holding less inventories.
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Flexibility
The lean philosophy focuses on enriching value from the customer perspective (Harrison
and van Hoek, 2008). The aim of lean production is to increase efficiency, by means of
decreasing total lead time and increasing flexibility in processes. Hence, a high level of
standardization is not the only key for elimination of rework and waste, but it also opens the way
for capacity and flexibility (Balle, 2005). Flexibility is the degree to which an operation‟s
process can change what it does, how it is doing, or when it is doing (Slack, 2004). According to
Womack (1990), the basis of a lean enterprise is dynamic, multi-skilled groups. These groups do
the main part of work and they carry the responsibility of these tasks. This makes the entire
organization more flexible. Furthermore, flexibility shows in employees‟ involvement. By
instituting observations as practical learning, employees can provide more feedback about how
regular daily operations can be executed more efficiently and result into lean practice, in order to
reduce the number non-value adding activities.
7. CONCLUSION
The present paper proposed a roadmap to enhance the supply chain efficiency by
introducing value stream mapping for OEM to tier-1 supply chain optimization using quality
check trigger method. The current status of inward process was mapped and found non-value
added activities during the inspection process of inward parts quality check. This study has
developed a quality check trigger (QCT) method using MS-Excel. This QCT proved to be
reducing the quality check lead time without compromising the quality parts supplied by the
suppliers and thus increases the efficiency of the inward logistics. The conceptual study on Lean
principles in this article suggests, OEMs may adopt standard procedures and standard time to
continually eliminate waste, create value and improve material flow between Tier 1 supplier and
OEM. Furthermore, this paper also discussed that the standardization is the basic of flexibility.
Standardization reduces the waste, thus, lead to more resource to dealing with flexibility. The
current paper clearly stated how standardization and flexibility optimize the inbound process by
identifying waste elimination through eliminating non-value adding motions and waiting time.
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