Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall. 3 - 1 Chapter 3 Global Supply Chain Quality and International Quality Standards

Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall. 3 - 1

Chapter 3

Global Supply Chain Quality and

International Quality Standards


Managing Quality for the Multinational Firm Quality Improvement: The American Way Quality Improvement: The Japanese Way Quality Improvement: The European Way ISO 9000:2000 Quality Improvement: The Chinese Way Are Quality Approaches Influenced by Culture?


International Quality StandardsChapter 3


Because of globalization, companies are facing more challenges.

Firms seek to be global to gain new markets.


International Quality Standards1- Managing Quality for the Multinational Firm

U.S. Trade 1960–2010 Source: U.S. Department of Commerce


There are variety of mechanisms that firms use in globalizing:

Licensing: a US corporation can allow foreign firms to sell in restricted markets while using the design of the original designer. It involves the sale of some product with another trademark in different countries.

Partnering: this agreement is often reached when 2 firms have technology, products or access to markets that each other wants.

Globalization: an approach to capture international markets. It consists of changing the nature of a firm business by establishing production and marketing facilities in foreign markets. These firms encounter changes in:

Physical EnvironmentPhysical Environment:: firms locate themselves near or far away from natural resources.





Task Environment: Task Environment: firms find themselves having to deal with complex regulatory structures when establishing operations in foreign countries. Firms should understand international law.

Ex: regulations concerning tobacco vary a great deal from one country to another.

Social Environment:Social Environment: it refers to cultural factors such as language, business customs, customer preference…

Exporter: Firms produce their products and ship them internationally. Exportation has a high shipping costs, but helps avoid problems.


International Quality StandardsManaging Quality for the Multinational Firm



Global Factors that Affect Quality-related Decisions




Example of Changing the Physical Environment:



Wages and Costs in Mexico (Average Hourly Compensation for Manufacturing Workers in U.S. Dollars)


Export Quality Model


International Quality StandardsManaging Quality for the Multinational Firm


The Baldrige Performance Excellence ProgramThe Baldrige Performance Excellence Program: the

success of this model influenced international practice. It applies on small and large firms in the manufacturing, health care, education not-for-profit, and service sector.

Focuses on business results: firms should show outstanding results concerning performance, customer satisfaction…

No prescriptive and adaptable: the criteria of the results do not specify which tools or techniques a company should use to improve.


International Quality Standards2- Quality Improvement: The American Way

The Baldrige Award


Supports company-wide alignment of goals and processes: alignment between strategic goals and operational plans helps foster a learning-based system.

Permits goal-based diagnosis: By assessing approach, deployment, and results in several areas, firms are able to assess their current strenghts and areas for improvement. Once areas for improvement are identified, these can prioritized and tackled one by one.


International Quality Standards2- Quality Improvement: The American Way

The Baldrige Award


The Baldrige model consists of

seven interrelated categories:

1. Category 1: Leadership: evaluate to what extent management is involved in reinforcing goals, values, customer involvement…

2. Category 2: Strategic planning: focuses on how the company establishes strategic directions and tactical action plans.


International Quality StandardsQuality Improvement: The American Way


1. Category 1: Leadership:2. Category 2: Strategic planning:

3. Category 3: Customer Focus: the company should be successful in serving the customer.

4. Category 4: Measurement, Analysis and Knowledge Management: relates to the firm’s selection, management and use of information to support and improve company performance.

5. Category 5: Workforce Focus: the goal of the company is to use the full potentiel of its workforce.

6. Category 6: Operations Focus: it includes customer focus, work system, design for services and products…

7. Category 7: Results: consists of graphs and tables that demonstrate the results of the firm.




The Baldrige Process




The Baldrige Process:

1st stage: 1. 1st step is eligibility determination: for Baldrige only firms chartered in

US are eligible for National Institute of Standards and Technology.

Once eligibility is established , the applicant send the application to NIST.

2. 2nd step is Review: the applicant is subject to the 1st round review of Baldrige examiners.

3. 3rd step is Consensus: during this phase, between 5 and 8 examiners participate in a conference to determine a consens




The Baldrige Process: 2nd Stage

4th step is Consensus review: once consensus reached, the judges receive consensus report.

5th step is Judge site visit: applicants with a high scoring granted a site visit.

3rd Stage

6th step is site visit review: 4 to 6 examiners of judges visit the firm for one week: 2 to 3 days in the form and 2 to 3 days in the hotel to write the report. The report consist of: strengths, area for improvement…

7th step is review and recommand winners: the feedback report include the scoring summary, the individual scoring range, the scoring distribution, the examiner comments.




Even if a company is not selected for the award, the

intensive investigation will supply invaluable information.

Being a Baldrige examiner is a very prestigious and time-consuming distinction. The job is intensive and requires a dedication to the end-product. It is also performed gratis – for no pay.

Baldrige examiners must be willing to give up approximately 10% of their time during an entire year to fulfill their responsibilities




Deming Prize

Policy DeploymentNew Product DevelopmentMaintenance and ImprovementManagement SystemInformation AnalysisHuman Resources Development


International Quality StandardsQuality Improvement-The Japanese Way


Lean Production

Anything that does not add value for the customer should be eliminated

Group of techniques or systems focused on optimizing quality processes

A productive system whose focus is on optimizing processes through the philosophy of continual improvement






Shingo’s seven wastes

1. Waste of overproduction2. Waste of waiting3. Waste of transportation4. Waste of processing itself5. Waste of stocks6. Waste of motion7. Waste of making defective products




Japanese Total Quality Control (TQC)

Visibility In-process Inspection N = 2 Technique Total Involvement of the workforce The five S’s Preventive Maintenance

Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall.

European Quality Award Leadership Strategy People Partnerships and Resources Processes, Products, and Services Customer Results People Results Society Results Key Results

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International Quality StandardsQuality Improvement-The European Way


European Quality Award

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International Quality StandardsQuality Improvement-The European Way


Comparision



International Quality StandardsISO 9000:2008

Focus is for companies to document their quality systems in a series of manuals to facilitate trade through supplier conformanceRegistration states a quality system is in place and beingadhered toStandards are very broad and nonspecific, so they can be adapted to many different industries and culturesRecognized international quality standard that businesses can follow




Three Standards:1. ISO 9000:2008—Quality management systems:

Fundamentals and vocabulary2. ISO 9001:2008—Quality management systems:

Requirements3. ISO 9004:2008—Quality management: Guidelines for

Performance Improvement




ISO 9000:2008 Five Clauses:

1. Quality Management System2. Management System3. Resource Management4. Product Realization5. Measurement Analysis and

Improvement





1. Quality Management SystemGeneral Requirements- establish, document, implement, and maintain a quality management system and continually improve its effectiveness in accordance with the requirements of the international standardDocumentation Requirements- include a quality policy and quality objectives; a quality manual; documented procedures; documents to ensure effective planning, operation, and control of processes; and records required by the international standard.




ISO 9000:2008 Five Clauses:2. Management System

Top management shall ensure that customer requirements are determined and are met with the aim of enhancing customer satisfaction Management shall establish a quality policy Management shall ensure that quality objectives shall be established Management shall ensure that responsibilities and authorities are defined and communicated. Management shall review the quality management system at regular intervals





3. Resource Management Determine and provide needed resources Workers will be provided necessary education,

training, skills, and experience Determine, provide, and maintain the infrastructure

needed to achieve conformity to product requirements

Determine and manage the work environment needed to achieve conformity to product requirements





4. Product Realization Develop processes needed for product realization Determine requirements as specified by customers Plan and control the design and development for its products Ensure that purchased product conforms to specified

purchase requirements Plan and carry out production and service under controlled

conditions Determine the monitoring and measurements to be

undertaken and the monitoring and measuring devices needed to provide evidence of conformity of product to determined requirements





5. Measurement Analysis and ImprovementPlan and implement the monitoring, measurement, analysis, and improvement process as neededMonitor information relating to customer perceptionsEnsure that product that does not conform to requirements is identified and controlled to prevent its unintended use or deliveryDetermine, collect, and analyze data to demonstrate the suitability and effectiveness of the quality management systemContinually improve the effectiveness of the quality management system



International Quality StandardsIS0 9000:2008

ISO 9000:2008 Eight Principles:1. Customer focus2. Leadership3. Involvement of people4. The Process approach5. A systems approach to management6. Continual Improvement7. Factual Approach to Decision Making8. Mutually beneficial supplier

relationship




An Example of the ISO Registration Process




ISO 14000: International standard for environmental compliance Adoption in many countries is slow Firms with little environmental exposure willadopt ISO 14000 first


General Requirements Environmental Policy Planning Environmental Aspects Legal and other Requirements Objectives and Targets Environmental Management

Programs Implementation and Operation Structure and Responsibility Training, Awareness, and

Competence Environmental Management System

Audit

Communication Environmental Management

System Documentation Document Control Operational Control Emergency Preparedness and

Response Checking and Corrective Action Monitoring and Measurement Nonconformance and Corrective

and Preventative Action Records Management Review

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ISO 14000 Eight Elements



International Quality StandardsQuality Improvement-The Chinese Way

Socialist market economy Low quality goods due to:

Low Education of Workers

Lack of Experience Unfamiliar with Goods Short-term Workers

GUANXI or Influence Personal

Relationships Bribery

Total Volume of Trade between the UnitedStates and China



International Quality StandardsAre Quality Approaches Influenced by Culture?

United States Command-and-Control Oriented Results Oriented

Japanese Based on Ethic of Consistency Emphasis on Reduction of Waste

Europeans adopted broad standards that can be adapted to

the diverse nation-states in the European Union Satisfy Employees Care for the Environment



International Quality Standards Chapter Summary

Managing Quality for the Multinational FirmQuality Improvement: The American WayQuality Improvement: The Japanese WayQuality Improvement: The European WayISO 9000:2000Quality Improvement: The Chinese WayAre Quality Approaches Influenced by Culture?


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Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall. 3 - 1 Chapter 3 Global Supply Chain Quality and International Quality Standards