Strategic quality management in supply chain performance
Author Mile Terziovski Published 17 August 2009
As supply chains become more integrated, a more strategic approach to supply chain management is required. The challenge for managers is to understand supply chain management from a strategic perspective as a means of adding value and improving supply chain performance. Garvin and Hermel both introduced the concept of strategic quality management (SQM) in the 1980s, emphasising that quality must be defined from the customer's point of view and understood and supported from the ‘top floor.’ Garvin also elaborated on strategic quality by stating that quality should be linked with profitability on both the market and cost sides; linked with the strategic planning process, requiring organisation-wide commitment; and viewed as a competitive weapon.
Tummala and Tang (1996) defined strategic quality management as: 'a comprehensive and strategic framework linking profitability, business objectives and competitiveness to quality improvement efforts with the aim of harnessing the human, material and information resources organization-wide in continuously improving products or services that will allow the delivery of customer satisfaction'. This definition firmly ties SQM to continuous improvement as is more sensitive to competitive needs and customer needs.
The increasing emphasis on SQM has created the need for researchers to rethink quality management concepts and principles within the context of the supply chain (Thirumalai and Sinha, 2005). Forker et al (1996) emphasised the need for empirical research in this area of operations management. ' Quality management studies have focused their attention on the practices and performance of manufacturers of finished goods, while studies of the supply chain have been concerned with the effects of integration on inventory levels.' (Garvin, 1988; Samson and Terziovski, 1999; Houlihan, 1987; Lee and Billington, 1992). Consequently, the following research questions have arisen and been qualitatively investigated:
- Does strategic quality provide a significant contribution to supply chain performance?
- Is there a set of critical success factors that characterise an effective supply chain? If so, why?
Answering these questions provides guidance to supply chain managers in allocating resources and achieving quality management supply chain success. The following results are based on French case studies of IBM, Xerox, Merck and La Poste.
With respect to the first research question, strategic quality management provides a significant contribution to supply chain performance. Managing a complex, integrated supply chain is highly dependent on activities in the supply chain being strategic rather than tactical. Cross-enterprise coordination and continuous improvement through reengineering of core processes in the supply chain was identified by all organisations studied to be a critical success factor . Supply chain management was for them a senior management position responsible for planning and controlling all activities related to materials that move from suppliers, through the production process and to customers.
The designation of supply chain management as a senior role provides unity of purpose and helps break down barriers between individuals and departments. Cross-functional teams helped to avoid situations in which everyone blamed everyone else for difficulties or delays related to materials. Suppliers were selected using a long-term view to improve product quality and delivery as well as their responsiveness to customer needs. Long-term contracts were used to guarantee supplier security and to provide incentives for developing trust and cooperation. Partnerships with suppliers produced better-quality products quicker and with minimum inventory.
The four organisations studied provide suppliers with information on customer orders and their due date, as well as training on their requirements for quality management and control. Much of this business-to-business information exchange took place over the internet, helping to keep costs low, shorten delivery timeframes and improve communication throughout the supply chain.
The second research question showed that a common set of critical success factors did exist:
- Support from top management is necessary for the successful development and implementation of an integrated supply chain
- Supply chain processes were organic units, matched to business strategy and set across functional areas
- Process mapping found opportunities to reduce waste and adopt standardisation to improve quality performance through cross-functional teams
- Reengineering of various nodes of the supply chain was necessary to respond to changing external environments (socio-cultural, technological, economic, environmental and political; STEEP)
- Supply chain partners need to co-operate and share knowledge
- Strategic and systemic thinking produced better results for the end consumer
- Suppliers should be selected on quality as well as price, and kept to a minimum
- A focus on supply chain performance rather than organisational performance produced better, cheaper products.
While the choice of supply chain model depends on the organisation and its suppliers, this set of critical success factors provides a significant contribution to the improvement and integration of all supply chains.
There are several implications for managers: supply chains need to be managed strategically rather than tactically, and managers need to understand supply chain concepts and the role of strategic quality in the supply chain. But the main lesson here is that supply chain activities must start and finish with the customer. Customer-driven metrics must be established that reflect business value and communicate horizontally and vertically within the integrated supply chain. The performance of supply chains is not simply technology driven. It is about integration of process, skill and leadership that articulates a vision to develop shared understanding and team work.