Supply Chain Quality Management : Exploring performance of manufacturing organizations

Abstract: This thesis addresses the issue of quality performance in supply chains in the manufacturers’context. Research shows that the management and performance of supply chains play a major rolein gaining competitive advantage, especially in times of decreasing international trade barriers andquickly evolving information technology. Some researchers claim that it is the supply chain itselfthat competes on a market and not merely the organisations with their specific strategies andgoals. Supply chain performance has been widely discussed in the research literature in recentyears. However, this research points out that supply chain quality management (SCQM) and itsimpact on firm performance (both inter-organisational and intra-organisational) have not beensufficiently understood. Further studies are needed to identify the direct and indirect impact ofSCQM practices on firm performance at multiple levels.A problem that many organisations face is the lack of resources and knowledge on how to managesupply chain quality performance (i.e., which performance to measure, how to controlperformance, and how to improve performance). Studies show that often even large companiesmeasure effectiveness using key performance indicators (KPI) and that these indicators often donot depict key characteristics critical to organisational performance or customer behaviour.Therefore, such indicators might be inadequate for fully capturing the performance of supplychains. As quality management standards evolve, managers need to adapt to changingrequirements. To fulfil the new version of ISO 9001, organisations are required to determinecriteria and apply methods to ensure effective operation and control of their processes (both intraorganisationaland inter-organisational performance). This includes monitoring and measuringperformance indicators. The quality performance of a supply chain is dependent on its ability toimprove and thereby enable organisations to stay competitive over time. Good measurements ofsupply chain quality performance must reflect this ability. To do so, organisations need to knowwhich measures and metrics to use and how to analyse performance of their supply chains.From the seven studies presented in this thesis we are able to draw a number of more generalconclusions that bear on the main research question: What improves quality performance of supplychains that include manufacturing? At the process level, it has been found that manufacturersshould focus on the quality and delivery performance of each process within the organisation. Atthe internal, integrated supply chain level, a manufacturing organisation should focus on quality(conformance), delivery performance (on-time delivery), and cost cutting in the internal supplychain. Collaboration using cross-functional teams seems most appropriate when working withproduct development. The use of a process-oriented mapping tool was found to facilitatedescription of information flows and physical material flows and also to identify disturbances thatcould be improved and rationalized to generate a better flow in the total supply chain. At both theupstream and downstream sides of the supply chain, one-sided measures that depict performanceover organisational boundaries were found to be the most common. At the downstream side of asupply chain, suppliers could be chosen based on cost, conformance, speed, and flexibility. At theupstream side, procedures that handle changing requirements and information about delays orincorrectness of materials were found to influence flow. The results from these seven studies arethe basis for the development of a supply chain quality improvement model. In the literature,supply chain performance is often discussed on a strategic level with measures for quality,flexibility and delivery. Managers also need metrics that can be followed up on at a detailed level(e.g., capacity load, breakdown rates, claims, cost of poor quality, and lead-times). To bridge thisgap, a Key Performance Indicators Matrix of supply chain quality performance indicators formanufacturers is proposed.