DETERMINATION AND MANAGEMENT OF QUALITY SUPPLY CHAIN:
Introduction to concepts in quality management:
Quality: ISO 8402 defines quality as the totality of features and characteristics of a product that bears on the ability to satisfy stated or implied needs. In this definition, features and characteristic of product ‘ implies the ability to identify what quality aspects can be measured, or controlled, or constitute an acceptable quality level (AQL) and ability to satisfy given needs relates to the value of the product or service to the customer including economic value as well as safety, reliability, maintainability and other relevant features.
Crosby defines quality as conformity to requirements not goodness. He also stresses that the definition of quality can never make any sense unless it is based on what the customer wants i.e. a product is a quality product only when it conforms to the customer’s requirements.
Juran defines quality as ‘fitness for use’. This definition implies quality of design, quality of conformance, availability and adequate field service. Garvin has identified five approaches to defining quality and eight dimensions of quality.
Five approaches of quality:
- The transcendent approach: quality is absolute and universally recognisable.
- The product-based approach: quality is precise and measurable variable.
- The use-based approach: quality is defined in terms of fitness for use or how well the product fulfils its intended functions
- The manufacturing-based approach: quality is conformance to specifications i.e. targets and tolerances determined by product designers.
- The value-based approach: quality is defined in terms of cost and prices. Here, a quality product is one that provides performance at an acceptable price or conformance at an acceptable cost.
Eight dimensions of quality:
- Performance: The product’s operating characteristics
- Reliability: The probability of a product surviving over a specified period of time under stated conditions of use.
- Serviceability: the speed, accessibility and ease of repairing the item or having it repaired.
- Conformance: The degree to which delivered products meet the pre determined standards.
- Durability: Measures the projected use available from the product over its intended operating cycle before it deteriorates.
- Features: ‘The bells and whistles’ or secondary characteristics which supplement the product the product’s basic functioning.
- Aesthetics: personal judgements of how a product looks, feels, sounds, tastes or smells.
- Perceived quality: Closely identified with the reputation of the producer. Like aesthetic, it is a personal evaluation.
- Factors to consider when determining quality :
- Specification and standardization:
Specification: A specification for an item has been defined as ‘a statement of the attributes of a product or service. It is basically a description of an item, its dimensions, analysis, performance or other relevant characteristics in sufficient detail to ensure that it will be suitable in all aspects for the purpose for which it is intended.
There are two main approaches to specification that are performance and conformance.
- The idea of performance specification is that a clear indication of the purpose, function, application and performance expected of the supplied material or service is communicated and the supplier is allowed or encouraged to provide an appropriate product. In this case, the detailed specifications is in the hands of the supplier where applicable, performance specifications are to be preferred in that they allow a wider competition and enable suppliers to suggest new or improved ways of meeting the requirements.
- Conformance specifications apply in situations where the buying organisation lays down clear and unambiguous requirements that must be met (In this case the specification is of the product, not the application). This type of specification is necessary where for example items for incorporation in an assembly are required or where a certain chemical product is to be acquired for a production process. It has been said that specifications restrict innovation.
Additional methods of specification:
- Use of brand or trade name: This will be applicable under the following circumstances:
- When manufacturing process is secrete or covered by a patent
- When manufacturing process of the vendor call a high degree of skill that cannot be exactly defined in a specification
- When only small quantities are bought so that the preparation of the specifications by the buyer is impracticable
- By sample: The sample can be provided either by buyer or seller and is useful method of specification in relation to printing and some raw materials e.g. cloth. When sample specifications are used:
- The bulk must correspond with the sample in quality
- The buyer must have a reasonable opportunity of comparing the bulky with the sample
- The goods must be free from any defect making their quality unsatisfactory which a reasonable examination of the sample would not reveal.
The value of specifications:
Specification will ensure that:
- All commodities specified will be suitable for their intended purpose when put in place
- Materials is of a consistent quality at all times
- The inspection or testing to be applied to goods purchased is notified in advance to the inspection section and to suppliers
- In respect of the purchase of the specified items, all suppliers will have the same date on which to base the quotations
Preparation of specifications:
- Avoid over-specification: This may lead to goods becoming more expensive and also may be difficult to find a manufacturer willing to quote
- Avoid under-specification since this may lead to inferior goods and services
- In order to be practicable, pay attention to convenience in handling and storage
- If there is to be inspection after delivery, the specifications ought to state what tests are to be applied
- If any special marking or packing is wanted, include the relevant instructions in the specifications.
Factors determining quantity to buy
- Inventory policy
- Independent/dependent demand
- Service level
- Market conditions
- Production method
Methods used in determining quantity to buy
- Economic Order quantity (E.O.Q) Economic order quantity:
The economic order quantity (EOQ) is the optimal ordering quantity for an item of stock that minimizes cost. To calculate the EOQ a mathematical model of reality must be constructed. All mathematical models make assumptions that simplify reality. The model is valid only when the assumptions are true or nearly true. When an assumption is modified or deleted, a new model must be constructed.
Assumptions of E.O.Q:
- Demand is uniform, i.e. certain, constant and continuous over time
- The lead time is constant and certain
- There is no limit on order size due either to stores capacity or to other constraints
- The cost of placing an order is independent of size of order. The delivery charge is also independent of the quantity ordered
- The cost of holding a unit of stock does not depend on the quantity in stock
- All prices are constant and certain. There are no bulk purchase discounts
- Exactly the same quantity is ordered each time that a purchase is made
Setting of stock levels:
There are several categories of Stock levels:
Maximum stock: The most stock that the firm is willing or able to hold.
Minimum stock: This is the stock below which it is felt to be unsafe for the firm to operate.
Re-order level: The point at which the firm will re-order stock.
Re-order quantity: This is the number of new items that will be bought in when stocks fall to the re-order level.
- Simple average.