The essential components of TQM

The two most essential components of TQM are:

• Commitment

• Leadership.

TQM is an approach to improving the competitiveness, effectiveness and flexibility of an organization for the benefit of all stakeholders. It is a way of planning, organizing and understanding each activity, and of removing all the wasted effort and energy that is routinely spent in organizations. It ensures the leaders adopt a strategic overview of quality and focus on prevention not detection of problems. Whilst it must involve everyone, to be successful, it must start at the top with the leaders of the organization.

All senior managers must demonstrate their seriousness and commitment to quality, and middle managers must, as well as demonstrating their commitment, ensure they communicate the principles, strategies and benefits to the people for whom they have responsibility. Only then will the right attitudes spread throughout the organization.

A fundamental requirement is a sound quality policy, supported by plans and facilities to implement it. Leaders must take responsibility for preparing, reviewing and monitoring the policy, plus take part in regular improvements of it and ensure it is understood at all levels of the organization.

Effective leadership starts with the development of a mission statement, followed by a strategy, which is translated into action plans down through the organization. These, combined with a TQM approach, should result in a quality organization, with satisfied customers and good business results.

The 5 requirements for effective leadership are:

1. Developing and publishing corporate beliefs, values and objectives, often as a mission statement
2. Personal involvement and acting as role models for a culture of total quality
3. Developing clear and effective strategies and supporting plans for achieving the mission and objectives
4. Reviewing and improving the management system
5. Communicating, motivating and supporting people and encouraging effective employee participation
   

The task of implementing TQM can be daunting. The following is a list of points that leaders should consider; they are a distillation of the various beliefs of some of the quality gurus:

• The organization needs a long-term commitment to continuous improvement.
• Adopt the philosophy of zero errors/defects to change the culture to right first time
• Train people to understand the customer/supplier relationships
• Do not buy products or services on price alone – look at the total cost
• Recognize that improvement of the systems must be managed
• Adopt modern methods of supervising and training – eliminate fear
• Eliminate barriers between departments by managing the process – improve communications and teamwork
• Eliminate goals without methods, standards based only on numbers, barriers to pride of workmanship and fiction – get facts by studying processes
• Constantly educate and retrain – develop experts in the organization
• Develop a systematic approach to manage the implementation of TQM
  

6 Principles of Total Quality Management (TQM)

Jonas Hansson,2003, classified 6 main principles in implementing TQM;

1. Top Management Commitment
2. Focus on Customer
3. Fact Based Decision Making
4. Focus on Processes
5. Continuous Improvement
6. Everybody’s Commitment

Top Management Commitment
The management must initiate planning for implementation and participate in the work including evaluation of processes and results. All senior leaders in the organization must create a customer orientation.

Focus on Customer
A central principle in TQM is that all products and processes should always have a customer focus. Quality should be valued by the customers and should always be put in relation to their needs and expectations. The organizations need to be dedicated to satisfying customers. This effort must be long-term and continuous. To focus on the customer means, therefore, that one tries to find out the customers’ needs and value by conducting market analysis and then trying to fulfill the market expectations while systematically developing and manufacturing the product.

Fact Based Decision Making
An important principle in TQM is to make decisions based on facts that are well founded and to not allow random factors to be of decisive importance. This calls attention to the importance of knowledge regarding variation and ability to handle and control variation.

Focus on Processes
Much of the work within an organization can be looked upon as a process, which means a repetitive sequence of activities. The goal of the process is to produce products or services, which should satisfy the customer. The process generates data that indicates how well the process is satisfying its customers. This means that we should not look upon every single piece of data, for instance a customer complaint, as something unique but instead as a part of the statistics, which can give information about how well the process is working and how it can be improved.

Continuous Improvement
It is not enough for an organization to do better than it did previously. The external demands an organization faces are continuously increasing. Consequently, an organization needs to continually try to improve the quality of its product and process. The continuous improvement of the process leads to customer satisfaction, also leads to fewer defect. The Deming cycle, or the PDSA-cycle, is a model for process analysis and serves as a symbol for continuous improvement. The PDSA-cycle consists of the four phases; plan, do, study and act.

Everybody’s Commitment
All of the organization’s employees should be engaged in the work of satisfaction the customer with a continuously improved quality. Everybody’s commitment means that continuous improvement should be practiced everywhere in the processes and that the involvement of all employees at every level should be facilitated. Educating and training all employees provides the knowledge needed on the mission, vision, direction, and strategy of organization.

Emerging Key of Supply Chain Trends

The importance of supply chain management and efficiency is reflected the growing levels of investment in this area. A number of drivers can be identified that are core to this investment emphasis, these are:

• Globalization of markets, manufacturing and distribution businesses are increasingly relocating manufacturing facilities to places of lowest cost of production. These facilities, remote from major markets, require distribution to be capable of linking any point to any point globally in the service of the world market

• Shifting demand patterns rapid shifts in taste, fashion and overall demands means that supply chains have to be capable of ensuring efficiencies are maintained in a dynamic environment via all channels of trade.

• Service fulfillment is a key differentiator. The supply chain has to be able to rapidly trade off overall efficiency with maintaining service levels. This flexibility impacts inventory and transportation choices in a dynamic way.

• High market share not high margin is important efficiencies gained in production, distribution and new market access provide increased levels of consumption with more flexible margin management.

• Rapid entry of new competitors. The ability of new competitors to leverage information and customer market access in support of new business models is forcing traditional companies to engage in rapid supply chain upgrades and strategies focused on supply flexibility.

The ultimate achievement of addressing these trends is that a business can dynamically achieve the lowest cost position in regards to production, focus distribution to provide the lowest time to consumer at the lowest cost, increase efficiency with each trade cycle and provide response to market better than traditional or emerging competitors. Information is replacing inventory. Companies competent in the management of the entire information resource from initial customer contact to the points of fulfillment and post sales support have less inventory costs. Information replaces inventory as the process becomes integrated to a single flow from raw material through production and distribution plus post sales support of the end use

12 of Key Components of Supply Chain Management

Based on experience & researching, key components of SCM can be divided into 12 areas:
1. Location
2. Transportation and logistics
3. Inventory and forecasting
4. Marketing and channel restructuring
5. Sourcing and supplier management
6. Information and electronic mediated environments
7. Product design and new product introduction
8. Service and after sales support
9. Reverse logistics and green issues
10. Outsourcing and strategic alliances
11. Metrics and incentives
12. Global issues.

Key-1: Location
Pertains both qualitative and quantitative aspects of facility location decisions. This includes models of facility location, geographic information systems (GIS), country differences, taxes and duties, transportation costs associated with certain locations, and government incentives. Exchange rate issues fall in this category, as do economies and diseconomies of scale and scope. Decisions at this level set the physical structure of the supply chain and therefore establish constraints for more tactical decisions.

Key-2: Transportation and logistics
Category encompasses all issues related to the flow of goods through the supply chain, including transportation, warehousing, and material handling. This category includes many of the current trends in transportation management including vehicle routing, dynamic fleet management with global positioning systems, and merge-in-transit. Also included are topics in warehousing and distribution such as cross docking and materials handling technologies for sorting, storing, and retrieving products. Because of globalization and the spread of outsourced logistics, this category has received much attention in recent years. However, we will define a separate category to examine issues specifically related to outsourcing and logistics alliances. Both deterministic (such as linear programming and the traveling salesman problem) and stochastic optimization models (stochastic routing and transportation models with queuing) often are used here, as are spreadsheet models and qualitative analysis. Recent management literature has examined the changes within the logistics functions of many firms as the result of functional integration and the role of logistics in gaining competitive advantage.

Key-3: Inventory and forecasting
These components include traditional inventory and forecasting models. Inventory costs are some of the easiest to identify and reduce when attacking supply chain problems. Simple stochastic inventory models can identify the potential cost savings from, for example, sharing information with supply chain partners, but more complex models are required to coordinate multiple locations.

Key-4: Marketing and channel restructuring
These components include fundamental thinking on supply chain structure and cover the interface with marketing that emerges from having to deal with downstream customers. While the inventory category addresses the quantitative side of these relationships, this category covers relationship management, negotiations, and even the legal dimension. Most importantly, it examines the role of channel management and supply chain structure in light of the well-studied phenomena of the bullwhip effect that was noted in the introduction.

The bullwhip effect has received enormous attention in the research literature. Many authors have noted that central warehouses are designed to buffer the factory from variability in retail orders. The inventory held in these warehouses should allow factories to smooth production while meeting variable customer demand. However, empirical data suggests that exactly the opposite happens. Orders seen at the higher levels of the supply chain exhibit more variability than those at levels closer to the customer. In other words, the bullwhip effect is real. Typically causes include those noted in the introduction, as well as the fact that retailers and distributors often over-react to shortages by ordering more than they need.

Key-5: Sourcing and supplier management
While marketing focuses downstream in the supply chain, sourcing and supplier management looks upstream to suppliers. The location category addresses the location of a firm’s own facilities, while this category pertains to the location of the firm’s suppliers. Some firms are putting part specifications on the web so that dozens of suppliers can bid on jobs. GE, for instance, has developed a trading process network that allows many more suppliers to bid than was possible before. The automotive assemblers have developed a similar capability; and independent Internet firms, such as Digital Market, are providing services focused on certain product categories. Other firms are moving in the opposite direction by reducing the number of suppliers, in some cases to a sole source. Determining the number of suppliers and the best way to structure supplier relationships is becoming an important topic in supply chains. Much of the research in this area makes use of game theory to understand supplier relationships, contracts, and performance metrics.

Key-6: The information and electronic mediated environments
This category addresses long-standing applications of information technology to reduce inventory and the rapidly expanding area of electronic commerce. Often this subject may take a more systems orientation, examining the role of systems science and information within a supply chain. Such a discussion naturally focuses attention on integrative ERP software such as SAP, Baan and Oracle, as well as supply chain offerings such as i2’s Rhythm and Peoplesoft’s Red Pepper. The many supply chain changes wrought by electronic commerce are particularly interesting to examine, including both the highly publicized retail channel changes (like Amazon.com) and the more substantial business to business innovations (like the GE trading process network). It is here that we interface most directly with colleagues in information technology and strategy, which again creates opportunities for cross-functional integration.

Key-7: Product design and new product introduction
These are deals with design issues for mass customization, delayed differentiation, modularity and other issues for new product introduction. With the increasing supply chain demands of product variety and customization, there is an increasing body of research available. One of the most exciting applications of "supply chain thinking" is the increased use of postponed product differentiation.

Traditionally, products destined for world markets would be customized at the factory to suit local market tastes. While a customized product is desirable, managing worldwide inventory is often a nightmare. Using postponement the product is redesigned so that it can be customized for local tastes in the distribution channel. The same generic product is produced at the factory and held throughout the world.

Key-8: The service and after sales support
This category addresses the critical, but often overlooked, problem of providing service and service parts. Some leading firms, such as Saturn and Caterpillar, build their reputations on their ability in this area, and this capability generates significant sales. Stochastic inventory models for slow-moving items fall into this category, and there are many papers on this topic related to inventory management and forecasting. While industry practice still shows much room for improvement, several well-known firms have shown how spare parts can be managed more effectively.

Key-9: Reverse logistics and green issues
These are emerging dimensions of supply chain management. This area examines both environmental issues and the reverse logistics issues of product returns. Because of legislation and consumer pressure, the growing importance of these issues is evident to most managers. Managers are being compelled to consider the most efficient and environmentally friendly way to deal with product recovery, and researchers have begun significant effort in modeling these systems.

Key-10: Outsourcing and strategic alliances
This category examines the supply chain impact of outsourcing logistics services. With the rapid growth in third party logistics providers, there is a large and expanding group of technologies and services to be examined. These include fascinating initiatives such as supplier hubs managed by third parties. The rush to create strategic relationships with logistics providers and the many well-published failures have raised questions about the future of such relationships. In any case, outsourcing continues to raise many interesting issues.

Key-11: Metrics and incentives
This category examines measurement and other organizational and economic issues. This category includes both measurement within the supply chain and industry benchmarking. Because metrics are fundamental to business management, there are many reading materials outside of the supply chain literature, including accounting texts for instance. Several recent articles concentrate on the link between performance measurement and supply chain improvement.

Key-12: Global issues
Examines how all of the above categories are affected when companies operate in multiple countries. This category goes beyond country specific issues, to encompass issues related to crossboarder distribution and sourcing. For example, currency exchange rates, duties & taxes, freight forwarding, customs issues, government regulation, and country comparisons are all included. Note that the location category, when applied in a global context, also addresses some of these issues.

The basics of the Supply Chain

Today most supply chains are a connected group of ad hoc and fragmented processes aligned to the supply and support of customer value. Errors and inadequacies in each process of this alignment cumulate to an overall inefficiency for the supply chain participants and the end customer.

Most product supply chains contain on average twice the inventory needed to provide competitive service levels. The processes also suffer stop start cycles, due to information and planning inadequacies that prevent a seamless flow of goods and services to the next process in the chain.

In the emerging field of supply chain management, information is focused on as the key to aligning, integrating, informing and gearing preceding and follow on processes in order to maximize overall supply chain efficiencies. To manage this complex set of relationships in support of customer satisfaction and profitability a business must be capable of requiring effective management and coordination of information, materials and finance at all stages of the supply process. For each the following are important:

• For Information the business must have access to precise customer requirements and demand forecasts, effective order and error information transmission plus the dispatch, progress and delivery status of the product of each process in the chain.

• For material flows information and payments in support of the requested activities must be supplied in a manner designed to allow supply production and any re-tooling required. Equally it is increasingly critical for any process supplier to be able to manage reverse material flows (product returns), product servicing, recycling of returns or increasingly packaging and disposal of the goods once the consumer has finished with them.

• Financial information in relation to credit terms, terms of payment, means and method of payment, discounts, incentives, consignment and title ownership plus variable factors such as responsibility for duties and taxes in relation to cross border trading are critical to the effective management of the supply chain.

Advances in applications and supply chain theory are providing the capabilities for supply chains to maximize efficiencies and increase participant asset use and profitability. However the gains available are not just in asset use and profitability. Service levels, product and process quality, time and overall satisfaction are key drivers in the implementation of supply chain management

Who are Supply Chain Managers?

Supply Chain Managers are people at various organizational levels who integrate supply and demand management within and across companies. They are in charge of planning and managing activities including sourcing and procurement, conversion, and all logistics management activities — inbound and outbound transportation management, fleet management, warehousing, materials handling, order fulfillment, logistics network design, inventory management, supply / demand planning and management of third party logistics services providers.

Supply chain managers also coordinate and collaborate with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers.

Benefits of implementing Total Quality Management (TQM)

There are 5 main benefits of implementing TQM, they are:

• Encourages a strategic approach to management at the operational level through involving multiple departments in cross-functional improvements and systemic innovation processes
• Provides high return on investment through improving efficiency
• Works equally well for service and manufacturing sectors
• Allows organizations to take advantage of developments that enable managing operations as cross-functional processes
• Fits an orientation toward inter-organizational collaboration and strategic alliances through establishing a culture of collaboration among different departments within organization

INTRODUCTION of Total Quality Management (TQM)

TQM is the way of managing for the future, and is far wider in its application than just assuring product or service quality – it is a way of managing people and business processes to ensure complete customer satisfaction at every stage, internally and externally. TQM, combined with effective leadership, results in an organization doing the right things right, first time.


The core of TQM is the customer-supplier interfaces, both externally and internally, and at each interface lie a number of processes. This core must be surrounded by commitment to quality, communication of the quality message, and recognition of the need to change the culture of the organization to create total quality. These are the foundations of TQM, and they are supported by the key management functions of people, processes and systems in the organization.

INTRODUCTION of Supply Chain Management (SCM)

Supply Chain Management (SCM) is about managing the flow of materials, information & finance as they move in a process from supplier trough production, distribution and delivery of finished product to wholesaler and retailer and ultimately to the consumer, furthermore it often includes after-sales service and returns or recycling.

Supply chain management involves coordinating and integrating these flows both within and among companies. It is said that the ultimate goal of any effective supply chain management system is to reduce inventory (with the assumption that products are available when needed).

Flows in supply chain management can be divided into three main flows:

• Product flow

Includes the movement of goods from a supplier to a customer, as well as any customer returns or service needs.

• Information flow

Involves transmitting orders and updating the status of delivery

• Finances flow

consists of credit terms, payment schedules, and consignment and title ownership arrangements

Effective supply chain management demands comprehensive information systems allow the company to synchronize plans with customers and suppliers, collaborate in real time both inside and outside the enterprise, execute plans, adapt to a dynamic environment, and measure performance to objectives.

A recent study in the United States showed that the application of Supply Chain Management tools can result in the following benefits to a company as follow:

• 50% Reduction in inventory
• 40% Improvement in on-time delivery
• 27% reduction in order cycle time
• Nine fold reduction in out-of-stock-rates.

As the result, SCM leads an organization to provide a better service at a lower cost.

Who are Industrial Engineers?

Industrial engineers determine the most effective ways to use the basic factors of production -- people, machines, materials, information, and energy -- to make a product or to provide a service.

Industrial engineers are the bridge between management goals and operational performance. They are more concerned with increasing & improving productivity through the management of people, methods of business organization, and technology than are engineers in other specialties who generally work more with products or processes. Although most industrial engineers work in manufacturing industries, they may also work in consulting services, healthcare, and communications, etc.

To solve organizational, production, and related problems most efficiently, industrial engineers carefully study the product and its requirements, use mathematical methods such as operations research to meet those requirements, and design manufacturing and information systems. They develop management control systems to aid in financial planning and cost analysis and design production planning and control systems to coordinate activities and ensure product quality. They also design or improve systems for the physical distribution of goods and services. Industrial engineers determine which plant location has the best combination of raw materials availability, transportation facilities, and costs. Industrial engineers use computers for simulations and to control various activities and devices, such as assembly lines and robots.

Industrial engineers also develop wage and salary administration systems and job evaluation programs. Many industrial engineers move into management positions because the work is closely related.

The work of health and safety engineers is similar to that of industrial engineers in that it deals with the entire production process. Health and safety engineers promote worksite or product safety and health by applying knowledge of industrial processes, as well as mechanical, chemical, and psychological principles. They must be able to anticipate, recognize, and evaluate hazardous conditions as well as develop hazard control methods. They also must be familiar with the application of health and safety regulations.

INTRODUCTION of Industrial Engineering

Industrial Engineering is concerned with the design, improvement and installation of integrated system of people, materials, information, equipment, energy, capital and managerial know-how into a system that will deliver high quality, less expensive product or service faster..

It draws upon specialized knowledge and skill in the mathematical, physical and social sciences together with the principles and methods of engineering analysis and design to specify predict and evaluate the results to be obtained from such systems.

In a way, you might think of industrial engineers as the people who look after the health of organizations. They are responsible for the quality of the finished product, the efficiency and productivity of the operation, and the safety and morale of the employees. Most of all, industrial engineers are responsible for change – improving the effectiveness, and the competitiveness, of the organization. The Industrial Engineering (IE) major includes the following fields of study:

§ Manufacturing Systems Engineering

Apply modern manufacturing technologies to ensure the best economic manufacture of a product. Topics include manufacturing processes, automation, robotics, lean manufacturing, ergonomics and occupational safety and health.

§ Engineering Service Systems

Develop quantitative methods in order to help managers make better decisions. Topics include engineering economy, quality control, scheduling, inventory, computer simulation models, customer satisfaction and product design and usability.

§ Engineering Information Systems

Consider the physical and mental design of information technology systems required to develop applications in Industrial Engineering. Topics include enterprise information modeling, analysis of data bases, data mining, internet technologies and human-computer interfaces.