The Supplier within TQM

Total Quality Management
Internationally,  total quality management (TQM) is best defined through the criteria for the Malcolm Baldrige National Quality Award, or the European Quality Award, or the Deming Prize.  In India, the two available TQM models are based on the criteria for the CII Exim Business Excellence Award or the IMC Ramkrishna Bajaj National Quality Award. These awards are clones of the international awards.

The following essentials for total quality are embodied in the IMC Ramkrishna Bajaj National Quality Award criteria:

1. Customers define quality.

2. Senior corporate leadership must create clear values and build them into company operations.

3. Companies must develop goals, as well as, strategic and operational plans to achieve quality leadership.

4. Companies must strategically aim to export their products and services.

5. Excellent quality evolves from well-designed and well-executed systems and processes.

6. Design quality and error prevention must be key elements of quality systems.

7. Operations and decisions of the company must be based on facts.

8. Continuous improvement must be integrated into the management of all systems and processes.

9. Shortened response time for all operations and processes must be part of quality improvement efforts.

10. Companies must communicate quality requirements to suppliers and work to elevate their performance.

11. All employees must be appropriately trained, developed, and involved in quality improvement activities.

12. The value of the Late Shri Ramkrishna Bajaj must form an integral part of executive leadership.

13. Companies must plan to create an impact on society in the areas of education, women’s welfare, rural development, rural healthcare and business ethics.

Management of Supplier Performance
Many large organizations use hundreds or even thousands of suppliers. If this is true of your company, you may want to identify who your most critical ten to fifty suppliers are, and discuss your efforts with them rather than trying to include all of them.

Once you have identified your critical suppliers, list the critical quality requirements for perhaps the top ten or so.  Next, list requirements the critical measures or indicators you use to monitor and evaluate supplier performance. All this information could be neatly summarized in a chart as presented below.

Your company should also make sure that the quality indicators and requirements are clearly communicated to suppliers. You should also have mechanisms in place to provide regular feedback to key suppliers on how they do in meeting quality requirements. Basically, this means that you need a supplier quality.

All organizations have suppliers, but in some they play a more important role than in others.  For instance, a manufacturing company may buy all of the components for the products it produces from outside suppliers.  Hence, supplier performance is critical to the quality of final products.  A service business such as a bank may have relatively few suppliers who perform non-critical services or sell supplies to the bank. The effort your organization invests into ensuring quality from its suppliers should be directly proportional to the degree to which you rely on suppliers for your services.

Suppliers always tend to get the blame when things go wrong. Often, it is the buyer who is at fault for failing to communicate requirements to suppliers, or for failing to keep them abrest of changes that will inpact their products or services. The ideal situation would be to get feedback from two sources:

• Internal customers who use procurement to get them the goods and services they need to do their jobs
• External suppliers who must interact with procurement to do business with your company.

Procurement functions in many companies seem to forget their role is to help others in the company obtain the materials and services they need from outside suppliers in a cost-efficient and timely fashion.  Procurement people often see themselves as more of a policing function to prevent managers in the company from selecting those suppliers that take them out of lunch and provide them with tickets to cricket matches. Part of procurement’s role is to serve this policing function and to be aware of unethical practices. However, their primary role is to serve the needs of the managers in the organization that need to buy goods and services from outside suppliers.

Procurement people also tend to be obsessed with making sure that all the correct forms are filled out and all the appropriate procedures are followed. If you got your parts late because the P.O. did not go out on time, it was probably your fault because you did not fill out a few lines on the Request for Purchase Order Form.

Not all procurement functions work this way. If the requesting manager does not fill out the forms correctly or completely, the buyer or purchasing agent will call him or her and complete it over the phone. The same thing happens if a supplier happens to fill out the forms incorrectly. The manager, who needs the supplies, and the supplier, who sells the supplies, are both coached through the process by the procurement people. Ideally, procurement should seek regular feedback from employees who use their services.

Strategy Development
A quality plan should not be a separate document prepared in isolation. Quality and customer satisfaction goals should be addressed with the same importance as financial goals in the overall business plan of the organization.

Quality goals must not be set arbitrarily. Goals must be both reasonable and relevant to what customers expect, and to what is possible. Sometimes what customers want and expect is just not feasible, so you must look at performance levels that competitors in your same price range are able to achieve.

Often an organization has an overall business plan that is not shared with most employees, while individual and departmental plans are developed without knowledge of what is in the macro-plan for the organization. This leads to conflicting goals and poor results.

Many organizations develop their strategic business plans without ever considering current or future customer requirements. Or they may think they know what customers want and require, but they never really as the customers themselves. In particular, quality improvement goals and strategies outlined in the plans should be based upon and tied to customer requirements.

Process capability data should also be considered in the planning process. Many large organizations develop unrealistic goals and plans because they do not know or do not understand the limitations of their existing processes and technology.

The final type of data that should be used as an input to the planning process are data on supplier capabilities. This is especially important for organizations that depend heavily upon suppliers for goods and services. Just using supplier data in the planning process is not enough.  The most relevant supplier data relates to process capability.