High level intro to lean thinking for supply chain operations.

1. TQM
Best
Practices to
improve
quality in the
supply chain
4Introduction
1 Quality Risks
in the Supply
Chain2 The Big
Challenge
3 Conclusion
5
Four Best Practices To Improve
Quality In The Supply Chain

2. TQM
Introduction
Today’s manufacturing operations are
now more focused on cost than ever
before.
As we continue to focus on reviving
stalled businesses and refining our cost
model to become more competitive, its
becoming increasingly more important
for us look deeper within each operation
and its overall Supply Chain to identify
and eliminate those inefficiencies that
drive “hidden costs”.
1 Introduction 2 Quality Risks in the
Supply Chain
3 4 5 ConclusionThe Big Challenge
Best Practices to improve
quality in the supply chain

3. TQM
Quality Risks in the Supply Chain
Ineffectivematerialcontrolsaccountforthe largestpercentage
 Cosmetic defects (scratches, dents)
 Dimensionally out of spec parts
 Stagnant inventory of defects
 Failure to control rejected material
 Ineffective supplier cost recovery
 Raw material control
 Line-down (revenue loss, capacity loss, penalties)
 Security risks (lost or stolen materials)
Inefficiencies in
processes &
systems, coupled
with traditional
Costs of Quality,
often account for
losses equivalent to
30% of a
company’s
revenue.
Material is the largest contributor to waste in the Supply Chain
1 Introduction 2 Quality Risks in the
Supply Chain
3 4 5 ConclusionThe Big Challenge
Best Practices to improve
quality in the supply chain

4. TQM
Quality Risks in the Supply Chain
Ineffectivematerialflows& logisticroutesproducewaste..
 Extra movements due to layout
 Equipment costs – forklifts, trolleys or other vehicles
 Fuel & Energy Costs – costs of fueling motorized
vehicles, or re-charging electric vehicles
 Higher delivery fees
 Security risks – lost or stolen property
 Repairable and un-repairable damages due to
excessive handling
 Lost time
Movement of material within and between production levels
The responsibility of the
Quality organization
must extend beyond
that of the finished
product to include
systematic focus on
minimizing waste
throughout the entire
manufacturing process
1 Introduction 2 Quality Risks in the
Supply Chain
3 4 5 ConclusionThe Big Challenge
Best Practices to improve
quality in the supply chain

5. TQM
Quality Risks in the Supply Chain
 In-line re-touch/rework (de-burring flash, etc.)
 Over inspection of parts or products
 Facilities & Energy costs
 Ineffective qualification processes
 Under Design (complex assembly)
 Over Design (BOM cost)
 Field failure, latent reliability issues
 Product recalls
 Ineffective communication between departments or
suppliers
Other examples of waste
Each production
process and material
flow must be examined
for all aspects of
WASTE.
Each category of
waste must be
quantified in dollar$
and prioritized for
elimination.
1 Introduction 2 Quality Risks in the
Supply Chain
3 4 5 ConclusionThe Big Challenge
Best Practices to improve
quality in the supply chain

6. TQM
The Big Challenge
How Do You Prevent Quality Issues & Eliminate Waste in the Supply Chain
How do I get
better visibility
to my overall
Cost of Quality?
How do I more
effectively manage
both internal &
external suppliers?
How do I limit waste
and rework due to
Supplier Quality
How do I limit
manage out of
stocks, capacity loss
and line-downs due
to Quality issues?
With a more diverse
supply chain comes
greater risk.
Reducing this risk
requires that we
increase focus on
productivity, utilization
of equipment & people,
and elimination of
waste in all forms.
1 Introduction 2 Quality Risks in the
Supply Chain
3 4 5 ConclusionThe Big Challenge
Best Practices to improve
quality in the supply chain

7. TQM
Best Practices For Managing Quality In
The Supply Chain
1 Introduction 2 Quality Risks in the
Supply Chain
3 4 5 ConclusionThe Big Challenge
Best Practices to improve
quality in the supply chain
 Dedicated 6 Sigma Office, with specific charter focused on identifying and eliminating waste.
1. Formalize LEAN thinking, waste elimination & continuous improvement programs.
2. Establish common KPI’s, and processes that drive accountability for operational
excellence.
 Business Analytics function focused on providing business owners with a more actionable view
of their true manufacturing Cost & Operational Efficiency.
3. Invest in or develop infrastructure that supports visibility into the supply chain.
 IT Tool strategy & development function focused on the development and deployment of tools
that improve organizational and operational efficiency.
4. Close the loop with internal & external suppliers
 Common Enterprise level Quality Management system that provides real-time material
traceability and connects each operation not only to each other, but to our suppliers.

8. TQM
Best Practices For Managing Quality In
The Supply Chain
1 Introduction 2 Quality Risks in the
Supply Chain
3 4 5 ConclusionThe Big Challenge
Best Practices to improve
quality in the supply chain
Current State
 Independent BU level KPIs
 Product focused Quality
 Unique systems, spreadsheets and
manual traceability
 Manual time-intensive reporting
 Ineffective communication
between departments & suppliers
 Limited visibility to direct and
hidden costs
 Reactive Improvement Programs
 Aligned CQ site-level KPI’s
 True End2End LEAN focus
 Common/connected systems with
real-time visibility
 Automated/consolidated reporting
 Enterprise level Quality
Management System
 Comprehensive business analytics
and reporting
 Proactive Improvement Programs
Desired Future State

9. TQM
1 Introduction 2 Quality Risks in the
Supply Chain
3 4 5 ConclusionThe Big Challenge
Best Practices to improve
quality in the supply chain
1. Visibility – Identify issues early before they become costly quality incidents
2. Traceability – Understand the root cause and source of quality issues and
hidden costs in your supply chain
3. Accountability – Ensure supply chain partners understand issues and
resolution requirements in a timely manner
4. Profitability – Mitigate quality related financial risk and improve overall
supply chain efficiency
Conclusion
Benefits from extending quality management practices
into the supply chain

10. TQM
1 Introduction 2 Quality Risks in the
Supply Chain
3 4 5 ConclusionThe Big Challenge
Best Practices to improve
quality in the supply chain
Conclusion
The Quality Maturity Curve
Point Solutions
Multiple systems
Disconnected Processes
Q Q Q
Q Q
Level 1
Site Level Processes
Unique/different Quality
Systems
Level 2
Integrated Processes
Single Solution
Cross-functional
integrated Quality
Management Systems
Level 3
QMS
EDMS ERP CRM
End2End Integrated
Enterprise Quality Solution
Integrated into the supply
chain, with consolidated
reporting & analytics
Level 4
External
Suppliers
Internal
Suppliers
EQMS
EDMS ERP CRM
Enterprise Integration