Global Supply Chain Quality and International Quality Standards Chapter 3 Global Supply Chain Quality and International Quality Standards 3 - 1

Globalization Difference market or region has difference requirement of quality level Difference regions have difference quality approaches and quality award Globalization (or globalisation) is the process of international integration arising from the interchange of world views, products, ideas and other aspects of culture.

Africa

Japan

Product Origin Made in Japan Made in Indonesia Made in Vietnam Made in Malaysia Made in Egypt

Global Supply Chain Quality and International Quality Standards Chapter 3 Managing Quality for the Multinational Firm Quality Improvement: The American Way Quality Improvement: The Japanese Way Quality Improvement: The European Way Quality Improvement: The Chinese Way ISO 9000:2000 3 - 8

Global Supply Chain Quality and International Quality Standards Managing Quality for the Multinational Firm Firm must cope with more diversity because of diversity challenge has been increased on international trade (Import and exports) Mechanisms that firms use in globalizing: Licensing Partnering Globalization What mechanism for going globalizing? 3 - 9

Global Supply Chain Quality and International Quality Standards Managing Quality for the Multinational Firm Allow foreign firms to sell by using the design of the original designer Sales products with another trademark in different countries Reach international market without international supplier chains or marketing arms. Licensing Partnering Globalization Naza-kia Produa and dihatsu Proton and mistubishi The verb license or grant license means to give permission. 3 - 10

Global Supply Chain Quality and International Quality Standards Managing Quality for the Multinational Firm Licensing Partnering Globalization Joint ventures Two firms have technology, products or access to market that each others wants. Example: Produa and Daihatsu 3 - 11

Global Supply Chain Quality and International Quality Standards Managing Quality for the Multinational Firm Licensing Partnering Globalization Firm fundamentally changes the nature of its business by establishing production and marketing facilities in foreign countries Multinational corporations (MNC) 3 - 13

Global Supply Chain Quality and International Quality Standards Managing Quality for the Multinational Firm By globalization, firm has to change; The Physical Environment The Task Environment The Social Environment 3 - 15

Global Supply Chain Quality and International Quality Standards Managing Quality for the Multinational Firm Globalization The Physical Environment The Task Environment The Social Environment Location from natural resource Manufacturers should view the total cost such as component costs, supplier chains and wages. Often overemphasized on labor cost. Compare us to Mexico. 3 - 16

Global Supply Chain Quality and International Quality Standards Managing Quality for the Multinational Firm Globalization The Physical Environment The Task Environment The Social Environment Review operating structure or procedure when globalization. Economic structure, skills, technologies and governments, international law are vary when globalizing. Regulatory structure must be based on international law. 3 - 17

Global Supply Chain Quality and International Quality Standards Managing Quality for the Multinational Firm Globalization The Physical Environment The Task Environment The Social Environment Cultural factors such as language, customs, customer needs and communication. Company must adapt their products to the markets they are serving through culture-specific research and development (R&D) 3 - 18

Comment by customer: Sound system is weak Comment by customer: Noise sound

Export Quality Model Based on export quality model (Barringer, 1999) Quality leads to lower price and greater export success. Thus, quality is important in globalization. Meet international standards of quality.

Quality Improvement. The American Way Japanese Way European Way Chinese Way

Global Supply Chain Quality and International Quality Standards Quality Improvement: The American Way Quality Improvement: The American Way Important model for quality management The Malcolm Baldridge National Quality Award (MBNQA) America-Birthplace of modern quality. Many gurus come from us such as Shewhart, Deming, Juran. The main interest quality in America is in application of statistics Team based approach 3 - 22

Global Supply Chain Quality and International Quality Standards Quality Improvement: The American Way The Malcolm Baldridge National Quality Award Management needs a tool for assessing the approaches it has employed to improve operating performance. Self assessment mechanisms Influence and as basis for several international award For small and large companies: Manufacturing, health care, education and service sectors. Not open to public sectors and not for profit organizations. 3 - 23

Global Supply Chain Quality and International Quality Standards Quality Improvement: The American Way MBNQA characteristics of quality award: Focus on business results (25% to 45%). Must outstanding in financial, CS, quality, productivity, supplier performance. Viewed as strategically prescriptive such as benchmarking or analyzing of customer data Alignment of goals and processes based on the strategy. Consistency of purpose. Goal based diagnosis and assessment (based on the criteria and scoring guidance). By assessing approach, deployment and results, firms are able to assess their current strength and areas for improvement. Definitions of prescriptive adjective of or relating to the imposition or enforcement of a rule or method. "these guidelines are not intended to be prescriptive" synonyms: dictatorial, narrow, rigid, authoritarian, arbitrary, repressive, dogmatic 3 - 24

Global Supply Chain Quality and International Quality Standards Quality Improvement: The American Way The Malcolm Baldridge National Quality Award Seven Categories Leadership Strategic Planning Customer and Market Focus Measurement, Analysis and Knowledge Management Human Resource Focus Process Management Business Results 3 - 26

Global Supply Chain Quality and International Quality Standards The Malcolm Baldridge National Quality Award Seven Categories 1. Leadership: Leadership The extent of top management in creating and reinforcing goals, values, direction, mission, visions. Fulfill its responsibility as a corporate citizen Definition of 'Corporate Citizenship' The extent to which businesses are socially responsible for meeting legal, ethical and economic responsibilities placed on them by shareholders. The aim is for businesses to create higher standards of living and quality of life in the communities in which they operate, while still preserving profitability for stakeholders.  3 - 27

Global Supply Chain Quality and International Quality Standards The Malcolm Baldridge National Quality Award Seven Categories 2. Strategic Planning: Strategy Development (how to establish strategy and action plan) Strategy Deployment (how they deploy the strategy and action plan) 3 - 28

Global Supply Chain Quality and International Quality Standards The Malcolm Baldridge National Quality Award Seven Categories 3. Customer and Market Focus: Must understand the product or service that are important to customers. Listening and learning from customers. Improve customer satisfaction: gather and analyze customer satisfaction data. 3 - 29

Global Supply Chain Quality and International Quality Standards The Malcolm Baldridge National Quality Award Seven Categories 4. Measurement, Analysis and Knowledge Management: Measurement, Analysis and Review of Organizational Focus: relates to the firm’s selections, management and use of information to support process and to improve performances such as financial data and non-financial data. People must deploy the data in information system to achieve action-plan 3 - 30

Global Supply Chain Quality and International Quality Standards The Malcolm Baldridge National Quality Award Seven Categories 5. Workforce Focus: Work Systems : Develop and use its full potential, aligned with company objective. Create Internal conducive environment. Employee Learning and Motivation: Skill sharing and open communication for understanding customer needs and requirement. Compensation and recognition. Monitor employee Well-Being and Satisfaction 3 - 31

Global Supply Chain Quality and International Quality Standards The Malcolm Baldridge National Quality Award Seven Categories 6. Process Management Value Creation Processes : Design must be changed and upgraded to reflect changes in customers needs. Example: Digital broadcasting Support Processes and Operational Planning 3 - 32

Global Supply Chain Quality and International Quality Standards The Malcolm Baldridge National Quality Award Seven Categories 7. Business results Customer Focused Results Financial and Market Results Human Resource results Organizational Effectiveness Results Leadership and Social Responsibility Results 3 - 33

Global Supply Chain Quality and International Quality Standards The Japanese Way -- The Deming Prize Deming Prize Deming prize was established in 1951 by Japanese Union of Scientists and Engineers (JUSE) Awarded to individual or groups who have contributed to the field of quality More focus to process compare to MBNQA, rather than business results. 3 - 34

Global Supply Chain Quality and International Quality Standards The Japanese Way -- The Deming Prize Deming Categories Policy Deployment New product development Maintenance and improvement Information analysis Human resource development 3 - 35

Global Supply Chain Quality and International Quality Standards The Japanese Way -- Lean Production Anything that does not add value for the customer should be eliminated. 3 - 36

Global Supply Chain Quality and International Quality Standards The Japanese Way -- Shingo’s seven wastes Lean Production: Productive system whose focus is on optimizing processes through continuous improvement. Waste of overproduction Waste of waiting Waste of transportation Waste of processing itself Waste of stocks Waste of motion Waste of making defective products 3 - 37

Global Supply Chain Quality and International Quality Standards The Japanese Way TQC: Everybody in the company is responsible to secure and improve quality in every aspect of process Visibility: Problem must be made visible before they can be addressed. Example: andon (warning lights). Team are used to identify and eliminate the cause and improve. Line will be stoped when problem occured. 3 - 39

Global Supply Chain Quality and International Quality Standards The Japanese Way In process Inspection: All work is inspected at each stage of the process and the workers inspect their own work. N=2 technique: Only a sample size of 2 is needed for acceptance inspection. When supplier processes are in control and capable. Total involvement of workforce: Gaining organization commitment to quality. Horizontal deployment (all departments) and Vertical deployment (all level of workers) 3 - 40

Global Supply Chain Quality and International Quality Standards The Japanese Way -- The Five S’s Seiri: Organizing by getting rid of the unnecessary Seiton: Neatness that is achieved by straightening offices and work areas Seiso: Cleaning Plant and Equipment Seiketsu: Standardized locations for tools and equipment Shetsuke: Discipline in maintaining the four prior S’s 3 - 41

Global Supply Chain Quality and International Quality Standards The Japanese Way Quality control circles (QCC): Teams made up of workers who are identify problem at work place and improve it. Preventive Maintenance (PM): Machine can work well by maintaining scheduled maintenance and improve equipment's. 3 - 47

Global Supply Chain Quality and International Quality Standards The Worldwide Way ISO 9000:2000 ISO: Organization for international standards of Geneva, Switzerland. International standards for documentation of quality systems. ISO 9000:2008 ver has three standards: ISO 9000: 2008-Fundamental and vocabulary ISO 9001: 2008-Requirements ISO 9004:2008-Guidelines for performance improvement 3 - 48

Global Supply Chain Quality and International Quality Standards The Worldwide Way ISO 9000:2000 Five Clauses: Quality Management Systems Management System Resource Management Product Realization Measurement Analysis and Improvement 3 - 49

Global Supply Chain Quality and International Quality Standards The Worldwide Way IS0 9000:2000 Eight Principles: Customer focus Leadership Involvement of people The Process approach A systems approach to management Continual Improvement Factual Approach to Decision Making Mutually beneficial supplier relationship 3 - 50

Global Supply Chain Quality and International Quality Standards The Worldwide Way IS0 9000:2000 3 - 51

Global Supply Chain Quality and International Quality Standards Chapter Summary Quality Models Baldridge Deming European Quality Award ISO 9000 3 - 52

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