‎Meaning and Basic

Chapter 2 - Modern Business Enviorment ‎Cost of Quality

‎Supply Chain - All activities
‎associated with flow &
‎transformation of goods from
‎ upply Chain Management -
S
‎Management of all activities
‎associated with flow &
‎ s per SCM, each of the above
A
‎activities are integrated & inter-
‎related to each other.
‎ t is a continuous effort where
I
‎commitment is required from top
‎to bottom
‎Objective of SCM is to meet
‎customer demand in cost
‎effective manner
‎raw material stage to end user. ‎transformation of goods from
‎Raw Material stage to end
‎user
‎ ost of Good Quality/
C ‎Cost of Bad Quality/ ‎Optimal COQ ‎Types of Supply Chain

‎Cost of Conformance/ ‎Cost of Non-

‎Push Model ‎Pull Model
‎Cost of Control ‎Conformance /Cost of ‎Financial Prospective ‎Non Financial Prospective
‎Failure of Control
‎Stock is produced on the basis ‎Stock is produced on the basis
‎Testing & Inspection, Audit ‎ here Combined Cost is
W ‎Where Cost of Bad Quality is
‎of estimated demand ‎of actual demand
‎of Material etc. ‎minimum. [Short-Term] ‎minimum, as it results in
‎Internal Failure Cost ‎External Failure Cost
‎increased customer ‎How relationship with suppliers
‎Equipment Accuracy ‎satisfaction & ‎are
‎checks ‎Scrap, Waste ‎Repairs & Servicing ‎sales. [Long-Term] ‎developed & maintained?
‎Prevention Cost ‎Appraisal Cost ‎Incurred During Production ‎Process/Field Testing ‎ Sources
‎ ework/Repair/
R ‎Warranty Claims
‎ No. of Suppliers
‎Rectification/ Retesting
‎Product Acceptance ‎ Cost, Quality, Time
‎Returns, Recalls ‎Supplier Relationship Management
‎Quality Planning ‎Testing ‎Incurred After Production ‎ Partnership with suppliers
‎Downgrading
‎but Before Delivery ‎Complaints, Litigation
‎Quality / Design Review ‎Procedure Verification ‎Benefits
‎Downtime ‎Cost
‎Quality / Staff Training ‎Service of Quality Control ‎Incurred after the product is
‎Rejection ‎Support / Customer Care ‎Upstream Supply Chain
‎Consultant ‎delivered due to quality ‎Ensures quality & innovation
‎Centre Cost ‎Management
‎Quality Circles ‎failure.
‎Contribution Loss ‎Enhances reliability in delivery
‎ upplier Review /
S
‎Incurred Before Production
‎Screening / Evaluation ‎E-Procurement is an electronic
‎Product Liability
‎Insurance ‎method which
‎Planned Preventive ‎Use of Information Technology
‎imposes speed & efficiency of
‎Maintenance
‎Expediting ‎procurement.
‎Design / Process Re-
‎engineering ‎Types of Supply Chain ‎E-Sourcing: Electronic method ‎E-Purchasing: Product ‎E-Payment: Electronic
‎Management ‎for finding ‎Selection & ‎Invoicing &
‎new suppliers ‎Ordering Online ‎Electronic Fund Transfer
‎Includes many components from
‎definition of services to ‎ Analysis of customers & their
‎termination of agreement. ‎behaviour

‎Customer Relationship ‎ Customer Account Profitability

‎Service Level Agreements
‎Plan – Establish Objectives / ‎Management
‎ ustomer
C
‎ n agreement between
A ‎Legally binding formal or
‎Develop Action
‎ upply Chain
S ‎Downstream Supply Chain
‎ Customer Lifetime Value
‎Lifetime Value ‎PDCA CYCLE FOR ‎Management
‎Management
‎customer & service provider. ‎informal contract. ‎Do - Implement ‎ Customer Selection, Extension
‎CONTINUOUS
‎Check - Measure ‎IMPROVEMENT ‎Use of Information Technology
‎Net Present Value of projected
‎cash flows from a lifetime of ‎Act – Take corrective action
‎customer relationship. ‎To collect orders ‎To record sales [Use of E-POS]
‎European Model used to achieve ‎Adopt new philosophy
‎Inbound Logistics
‎Sustainable Excellence
‎Create consistency of purpose
‎towards improvement ‎Operations
‎Purpose
‎Porter’s Primary Activities
‎Institute Training on Job ‎Outbound Logistics
‎Vision ‎Module 1 : Direction ‎in Value Chain
‎Institute Education & Self- ‎Marketing & Sales
‎Strategy
‎Improvement
‎Service
‎Engaging Stakeholders ‎set of 3 Modules ‎1. EFQM Excellence Model
‎Module 2 : Execution ‎Institute Leadership
‎ hilosophy for developing &
p ‎Supply Chain Management
‎Creating Sustainable Value
‎strengthening management ‎Drive out fear ‎Process
‎Stakeholder Perceptions ‎Module 3 : Results ‎system
‎Move towards single supplier for ‎ eeming 14 Point for
D
‎Analysing Result ‎Radar ‎ y developing Quality
b ‎any one item ‎Process Improvement ‎1. Plan / Production Planning ‎2. Procure ‎3. Make ‎4. Deliver / Logistics
‎Management Principles ‎Eliminate Slogans ‎Integrated System of Planning
‎Result ‎Approach ‎Deploy ‎Assess ‎Refine ‎and Control by Management
‎for achieving excellence in ‎Develop a plan to address ‎ aw Material is procured /
R ‎Manufacture the product ‎ eliver the product
D
‎Remove Workmen Barriers
‎requirement of customer ‎purchased from supplier in this ‎required by customer ‎manufactured for customer
‎2. Singapore BE Framework ‎Business Excellence ‎everything that an ‎ o Meet customer Expectation
T
‎and Organizational Objectives ‎step
‎Transformation is everyone’s Job
‎Leadership
‎Model ‎organisation does & also to ‎ roduction must be planned
P ‎As per Demand & Taste of ‎logistics – Inbound Logistics &
‎sustain it. ‎By Continuous Improvement in ‎based on Actual or Estimated ‎Keep good relations with supplier ‎customer ‎Outbound Logistics
‎Strategy
‎Some Business Excellence
‎Cease dependence on Inspection
‎TQM ‎Quality ‎Demand ‎to ensure timely delivery &
‎Tools ‎Shareholders ‎better quality ‎ xcellent system must be in
e
‎Eliminate Management by
‎Customers ‎Holistic tool which creates ‎Objectives ‎With the Aim of Achieving Zero ‎place to ensure movement of
‎Employees ‎Select quality suppliers ‎materials & goods is uninterrupted
‎3. Baldrige Criteria for ‎value for all ‎Defect in Quality
‎Measurement, Analysis & ‎Breakdown barriers between
‎Performance ‎stakeholders & not just ‎Customers
‎Knowledge Management ‎department ‎TQM is an Investment Rather
‎Excellence ‎owners ‎than Cost ‎In-house Logistics : Trained
‎Workforce ‎Society
‎Improve Constantly & Forever
‎Without additional Expenditure ‎Third Party Logistics : Tie up
‎Operations ‎Improve Product mix
‎Supplier Relationship
‎Results ‎ t is a contractual agreement
I ‎Introduce Employee Development ‎Information flow ‎Demand Management ‎Management ‎Cash Flow
‎where supplier agrees to supply ‎programme
‎4. Japan Quality Award Model ‎to customer with no guarantee ‎ ey Processes
K
‎of receiving payment, but
‎Ways in which Investment ‎in SCM Business
‎Empowering Empolyee
‎5. Australian BE Framework ‎payment of supply is based upon ‎in TQM can be made ‎Model
‎benefits that emerge to ‎Improve Top Management ‎Capacity & Skills Management ‎Customer Relationship ‎Service Delivery Management
‎customer. ‎Comittment ‎Management

‎It is a risky stance to supplier, ‎Monitering Performance

‎Benefits of SCM
‎as he may walk away with
‎nothing but if benefits to ‎Ensuring Customer Satisfaction
‎customer are substantial, he can ‎Minimise Waste ‎Reduce Supply Chain Cost ‎Better Customer Service ‎Better Delivery ‎Optimum Inventory ‎Generating Capability & Becoming ‎Improves Supplier Relationship ‎Ease & Transparency
‎get larger ‎Commitment
‎Meaning ‎Future Ready
‎return.
‎Culture
‎Gain Sharing Agreement ‎Gain/Benefit is not necessarily
‎Continuous Improvement
‎financial.
‎Six C's of TQM
‎REASONS FOR FAILURE ‎Co-Operation
‎win-win situation both supplier &
‎customer ‎Customer Focus

‎Unstructured terms of agreement ‎There should be pre-defined ‎Control

‎formula for sharing of
‎Error in Implementation ‎benefits & period thereof.

‎ ad relationship between
B
‎Supplier & Customer ‎Outsourcing

‎Cost Saving ‎Loss of Confidentiality

‎ t is also referred as
I ‎Advantages ‎Investment Saving ‎Disadvantages ‎Risk of losing sensitive data ‎How to address the above issues
‎‘Contracting Out’ ‎in Outsourcing
‎Business Flexibility ‎Quality Problems

‎shifting of Tasks/ Processes/ ‎Develop a Code of Conduct ‎Set up an Audit Team ‎Give list of outsourcing entities
‎Jobs ‎on website