Supply Chain Best Practices

TQM

Best Practices to improve quality in the supply chain

4Introduction1 Quality

Risks in the Supply Chain

2 The Big Challenge3 Conclusion5

Four Best Practices To Improve Quality In The Supply Chain

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Introduction

Today’s manufacturing operations are now more focused on cost than ever before.

As we continue to focus on reviving stalled businesses and refining our cost model to become more competitive, its becoming increasingly more important for us look deeper within each operation and its overall Supply Chain to identify and eliminate those inefficiencies that drive “hidden costs”.

1 Introduction

2 Quality Risks in the Supply Chain

3 4 5 ConclusionThe Big ChallengeBest Practices to improve quality in the supply chain

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Quality Risks in the Supply Chain

Ineffective material controls account for the largest percentage Cosmetic defects (scratches, dents) Dimensionally out of spec parts Stagnant inventory of defects Failure to control rejected material Ineffective supplier cost recovery Raw material control Line-down (revenue loss, capacity loss, penalties) Security risks (lost or stolen materials)

Inefficiencies in processes & systems, coupled with traditional Costs of Quality, often account for losses equivalent to 30% of a company’s revenue.

Material is the largest contributor to waste in the Supply Chain

1 Introduction



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Ineffective material flows & logistic routes produce waste.. Extra movements due to layout Equipment costs – forklifts, trolleys or other vehicles Fuel & Energy Costs – costs of fueling motorized

vehicles, or re-charging electric vehicles Higher delivery fees Security risks – lost or stolen property Repairable and un-repairable damages due to

excessive handling Lost time

Movement of material within and between production levels

The responsibility of the Quality organization must extend beyond that of the finished product to include systematic focus on minimizing waste throughout the entire manufacturing process

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In-line re-touch/rework (de-burring flash, etc.) Over inspection of parts or products Facilities & Energy costs Ineffective qualification processes Under Design (complex assembly) Over Design (BOM cost) Field failure, latent reliability issues Product recalls Ineffective communication between departments or

suppliers

Other examples of wasteEach production process and material flow must be examined for all aspects of WASTE.

Each category of waste must be quantified in dollar$ and prioritized for elimination.

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The Big ChallengeHow Do You Prevent Quality Issues & Eliminate Waste in the Supply Chain

How do I get better visibility to my overall

Cost of Quality?

How do I more effectively manage

both internal & external suppliers?

How do I limit waste and rework due to Supplier Quality

How do I limit manage out of

stocks, capacity loss and line-downs

due to Quality issues?

With a more diverse supply chain comes greater risk.

Reducing this risk requires that we increase focus on productivity, utilization of equipment & people, and elimination of waste in all forms.

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Best Practices For Managing Quality In The Supply Chain

1 Introduction



Dedicated 6 Sigma Office, with specific charter focused on identifying and eliminating waste.

1. Formalize LEAN thinking, waste elimination & continuous improvement programs.

2. Establish common KPI’s, and processes that drive accountability for operational excellence.

Business Analytics function focused on providing business owners with a more actionable view of their true manufacturing Cost & Operational Efficiency.

3. Invest in or develop infrastructure that supports visibility into the supply chain. IT Tool strategy & development function focused on the development and deployment of tools that improve organizational and operational efficiency.

4. Close the loop with internal & external suppliers Common Enterprise level Quality Management system that provides real-time material

traceability and connects each operation not only to each other, but to our suppliers.

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Best Practices For Managing Quality In The Supply Chain

1 Introduction



Current State Independent BU level KPIs Product focused Quality Unique systems, spreadsheets

and manual traceability Manual time-intensive reporting Ineffective communication

between departments & suppliers

Limited visibility to direct and hidden costs

Reactive Improvement Programs

Aligned CQ site-level KPI’s True End2End LEAN focus Common/connected systems with

real-time visibility Automated/consolidated reporting Enterprise level Quality

Management System Comprehensive business analytics

and reporting Proactive Improvement Programs

Desired Future State

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1 Introduction



1. Visibility – Identify issues early before they become costly quality incidents

2. Traceability – Understand the root cause and source of quality issues and hidden costs in your supply chain

3. Accountability – Ensure supply chain partners understand issues and resolution requirements in a timely manner

4. Profitability – Mitigate quality related financial risk and improve overall supply chain efficiency

ConclusionBenefits from extending quality management practices into the supply chain

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1 Introduction



ConclusionThe Quality Maturity Curve

Point SolutionsMultiple systems

Disconnected Processes

Q Q Q

Q Q

Level 1

Site Level Processes

Unique/different Quality Systems

Level 2

Integrated Processes Single

SolutionCross-functional

integrated Quality Management Systems

Level 3

QMS

EDMS ERP CRM

End2End Integrated Enterprise Quality

SolutionIntegrated into the supply chain, with consolidated

reporting & analytics

Level 4

External Suppliers

InternalSuppliers

EQMS

EDMS ERP CRM

Enterprise Integration

Engineering

Supply Chain Best Practices