2014

How Quality Plays on Wall Street

Supply Chain Management: A New Opportunity

Quality professionals have many of the right skills

by Greg Hutchins

To find what might be new career opportunities for quality professionals, I went to Google's information and search site1 and checked out the phrases "Six Sigma," "total quality management" and "supply chain management" on the Web.

Surprisingly, supply chain management had almost seven times as many pages as Six Sigma. I got 62,800 hits for "Six Sigma," 164,000 for "total quality management" and 407,000 for "supply chain management."

Supply chain management (SCM) is a field in which quality professionals can add organizational value and propel their careers.

What is SCM?

There is no universally accepted definition of a supply chain. APICS, the Educational Society for Resource Management, has one of the better ones:

The processes from the initial raw materials to the ultimate consumption of the finished product linking across supplier-user companies. The functions inside and outside a company that enable the value chain to make products and provide services to the customer."2

In total dollars, external suppliers provide a significant portion of a manufacturer's product. For U.S. firms, 80% or more of the final price of a product can be the cost of purchased goods. In Japan, the percentage can be even higher. SCM, therefore, is critical to a company's competitiveness and to your future success.

Value adding opportunities

Quality professionals can add supply chain value in the following areas:

  • Flowcharting (mapping) of supply chain processes. Before a supply improvement project is initiated, supply chain processes should be flowcharted.
     
    A supply flowchart shows the process chain as a series of steps or links. Each step has a customer and supplier. The flowchart can then be used to understand the supply process and identify redundancies, waste or other nonvalue added activities.
     
    The objective is to pursue lean initiatives. Specific techniques used to flowchart processes include block diagrams, input/output analysis, benchmarking and process redesign--all core capabilities of quality professionals.
     
  • Process standardization. Standardization throughout the value chain ensures consistency through such methods as simultaneous design, lean manufacturing processes, mistake proofing, total productive maintenance and collaborative teaming--all standard quality tools.
     
  • Process variation control. Supply chain processes have to be controlled, standardized and proceduralized. When a supply process has been stabilized, it can be improved. Traditionally, quality professionals improved processes within or across organizational silos. Now, it's essential for processes to be flowcharted and controlled across the value chain.
     
  • Supplier certification. Supplier certification was originally conceived and developed to evaluate supply processes and quality systems. QS-9000 and ISO 9001:2000 are two of the more popular customer-supplier certifications.
     
    The new ISO 9001:2000 is process based, customer focused and a supply development core process.
     
  • Total customer satisfaction. Total customer satisfaction and value production are the goals of all stakeholders, including management, suppliers, employees, stockholders, the community and the supply chain.
     
    Total customer satisfaction is achieved through managing controllable value factors, such as supply cycle time, quality and performance. Quality professionals have always had a customer focus.
     
  • Auditing and preventive and corrective action. SCM systems, processes and product must be audited for improvement and risk. If there are nonconformances or deficiencies, corrective action eliminates their root cause, and preventive action stops their recurrence. Quality professionals know this from ISO 9000 and other quality standards.
     
  • Supply performance measurement. How do we determine what "world class" means? Supply performance throughout the contract or product life cycle is continuously monitored.

Traditionally, commercial buying decisions were based on price, availability and delivery considerations. Now industrial and commercial buying decisions are more complex, based on such factors as verifiable quality, total cost, eye-catching design and environmental friendliness. Six Sigma is also being required of suppliers more frequently.

The future

In a recent survey of more than 200 companies, Deloitte Consulting3 found that while 91% of manufacturers rank SCM as either critical or very important to their company's success, only 2% rank their supply chains as world class.

This gap between world-class desire and present reality points to one of the great opportunities for career advancement and consulting opportunities for professionals in quality in the next five years.

My recommendations: Join the Institute for Supply Management (formerly the National Association of Purchasing Management).4 Ask for SCM speakers at your local ASQ section meetings. Read up on the topic. Why? Supply chain management is where quality was in 1987, and your window of opportunity is only going to be open for so long.

REFERENCES

1. www.Google.com.

2. James Cox and John Blackstone, APICS Dictionary, ninth edition (Alexandria, VA: APICS, 1998), p. 93.

3. www.dc.com.

4. www.napm.org.


GREG HUTCHINS is a principal with Quality Plus Engineering, a Portland, OR, based process management company. He recently authored and published Supply Management Strategies, which can be ordered through Amazon.com. Hutchins is a member of ASQ.


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