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Supply Management

(CUSCM208)
Quality In Purchasing
Overview
 Definitions
 Garvin ‘s Eight dimensions of Quality
 Performance Quality and Conformance
Quality
 Cost of Quality
 ESI and Quality
 Conclusion
Definitions
 The term ‘quality ’ has got different meanings. Some
people view quality as:
Conformance to specification – measures how well
the product/service meets the targets and tolerances
determined by its designers. Conformance to
specifications is directly measurable.

 Fitness for use – focuses on how well the product


performs its intended function or use. Fitness for use
is a user-based definition.eg, Mercedes Benz and Jeep
Cherokee both meet a fitness for use definition of
transportation but the Jeep becomes more specific if
the use is for transportation in mountainous roads
and carrying fishing rods.
Cont’d
 Value for price paid – is a definition of quality
that consumers often use for product or service
usefulness.
 Support services – these often determine how
quality of a product or service is judged. Quality
doesn’t apply only to the product or service itself;
it also applies to the people, processes, and
Organization environment associated with it.
 Psychological criteria – is a way of defining
quality that focuses on judgemental evaluations of
what constitutes product/service excellence.
Garvin’s 8 dimensions of Quality
 Performance – the primary function of
the product or service.
 Features – The bells and whistles or
secondary characteristics that support
the product’s basic functioning.
 Reliability – The probability of a product
surviving for a specified period of time
under stated conditions of use.
Cont’d
• Durability – measures the projected use available
from the product over its intended operating
cycle before it deteriorates.
• Conformance – the meeting of specifications.
• Serviceability – the maintainability and ease of
fixing.
• Aesthetics – personal judgement about how a
product looks, feels, sounds, tastes or smells.
• Perceived quality – closely identified with the
reputation of the producer and, like aesthetics, it
is personal evaluation.
Performance quality and
Conformance quality
The procurement function in an
Organization is concerned with quality from
two points of view;
• Quality of design/ specification – specifying
the right material for the job and
communicating requirements to the supplier
with as much clarity as possible (avoid
ambiguity).
• Conformance quality – materials provided by
the supplier in accordance with
specifications.
Differences between Manufacturing
and Services Organisations quality
 Defining quality in manufacturing
Organisations often differs from that of
services.
 Manufacturing Organisations produce a
tangible product that can be seen,
touched and directly measured.
 Quality definition in manufacturing usually
focus on tangible product features.
Cont’d
• The most common quality definition in
manufacturing is conformity, which is the
degree to which a product characteristic
meets present standards.
Other common definitions include:
• performance – such as acceleration of a
value.
• reliability – that the product will function as
expected without failure.
• features – the extras that are included
beyond the basic characteristics
Cont’d
• durability – expected operational life of a
product.
• serviceability – how readily a product can be
repaired
- In contrast to manufacturing, service
organisations produce a product that is
intangible.
- The product can’t be seen or touched but
rather experienced, e.g, delivery of health
care, experience of staying at a vacation of
resort.
Cont’d
- definition of quality in service
organisations include;
• responsiveness to customer needs.
• courtesy and friendliness of staff.
• promptness in resolving complaints.
• time.
• consistency.
• atmosphere.
Cost of Quality
• Organisations have gained an understanding
of the high costs of poor quality.
• Quality affects all aspects of the
Organisation and has dramatic cost
implications.
• The 1st category consists of costs necessary
for achieving high quality which are called
quality control costs.
• There are 2 types of quality control costs;
prevention costs and appraisal costs.
Cont’d
 The 2nd category, consists of cost
consequences of poor quality; which are
called quality failure costs.
 There are 2 types that is, external failure
costs and internal failure costs.
Cont’d
 Prevention costs – are all costs incurred in
the process of preventing poor quality from
occurring. These include costs of developing
and implementing a quality plan, employee
training in quality and costs of maintaining
records of information.
 Appraisal costs – costs incurred in the
process of uncovering defects. These include
the cost of quality inspections, product
testing and performing audits.
Cont’d
 Internal failure costs – are associated with
discovering poor product quality before the
product reaches the customer. These include
costs of scrap, rework and material losses.
 External failure costs – are costs associated
with quality problems that occur at the
customer site. They include customer
complaints, product returns, repairs,
warranty claims, recalls, litigation costs, lost
sales and customers.
Early Supplier Involvement and
Supplier Assessment in Quality.
 The involvement of suppliers is important
especially when there is a new product to be
developed.
 Inputs from both sides are included so as to
come up with a quality product.
 The right kind of material inputs to be used
in production is agreed upon in the initial
stages.
 ESI makes it possible to proactively act on
quality issues due to the contribution of the
supplier in the design stages of the product.
Cont’d
 It helps come up with a suitable product
before production.
 Assessment of suppliers helps in elimination
of suppliers who are not capable of
performing the Organisation’s requirements.
 Suppliers are assessed on a number of
aspects the 1st one being the basic 6Rs of
purchasing.
 Quality forms the basics and so assessment
of suppliers on quality helps do away with
non-performing suppliers before
engagement.
Value Analysis and Value Engineering
 Value Analysis compares the function
performed by the purchased item with the
cost in an attempt to find a better value
alternative.
 The standard value analysis approach is to be
pose and provide detailed answers to a
series of questions about the item currently
purchased.
 Unnecessary costs, those that do not
provide quality, extend product or service
life, or provide features desired by
customers can be avoided or eliminated.
Cont’d
 Value Engineering – refers to the
application of this analytical process to
the design stage of a product or service.
 The focus of Value Engineering is on value
improvement applications in the design
stage.
Quality Management Tools and
Techniques
Total Quality Management
 TQM is a philosophy and system of
management focused on long-term
success through customer satisfaction.
 It was developed in Japan after W. Edward
Deming taught statistical control to the
Japanese in 1950.
 In TQM all members of an Organisation
participate in improving processes,
products, services and the culture in
which they work.
Cont’d
 TQM stresses quality as the integrating
force in the Organisation.
 The core concept in implementing TQM
is Deming’s 14 points.
Quality Function Deployment
 Is an important aspect of TQM.
 It is a method for developing higher
quality new products at less costs and in
less time. Toyota has used this successfully.
 QFD is a comprehensive quality design
method that:
Seeks both spoken and unspoken
customer needs
Cont’d
 Identifies positive quality and business
operations
 Translates these into actions and designs
by using transport analytic and
prioritization methods.
 Empowers Orgs to exceed normal
expectations.
Cont’d
 QFD method can be used for both
tangible products and non tangible
services across business sectors.
 QFD is based on teamwork and customer
involvement.
 It integrates marketing, design, engaging
development, manufacturing and
procurement in NPD from conception
stage through final delivery.
Cont’d
 QFD allows the end customer needs and
wants to be communicated at the product
stage and then drive the design and
production stages.
Six Sigma
 Six sigma approach to quality focuses on
preventing defects by using data to reduce
variation and waste.
 It was developed by GE and Motorola.
 Six sigma quality means there are no more
than 3.4 defects per million opportunities.
 It is a philosophy based on the view that all
work is processes that can be defined,
measured, analyzed, improved and controlled.
If u control the inputs you will control the
outputs.
Cont’d
 It is a set of tools, including statistical
process control (SPC), control charts,
Failure Mode and Effect Analysis, and Flow
Charts.
 It is a methodology with 5 steps: define,
measure, analyse, improve and control
(DMAIC)
Quality Circles
 A quality Circle is a small group of
employees.
 Thy volunteer to meet regularly to
undertake work related projects designed
to advance the Company, improve
working conditions and spur mutual self
development
Cont’d
 They tend to select their own projects
for investigation and can generally count
on the support of management in
implementing their recommendations.
Membership in QC circles is voluntary,
and there are no direct cash incentives.
 Personal satisfaction and recognition at
regional and national meetings are cited
as the principal reasons for belonging to
the group.