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Chapter 3 Global Supply Chain Quality and International Quality Standards Copyright © 2013 Pearson Chapter 3 Global Supply Chain Quality and International Quality Standards Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall. 3 -1

Global Supply Chain Quality and International Quality Standards Chapter 3 Ø Ø Ø Ø Global Supply Chain Quality and International Quality Standards Chapter 3 Ø Ø Ø Ø Managing Quality for the Multinational Firm Quality Improvement: The American Way Quality Improvement: The Japanese Way Quality Improvement: The European Way ISO 9000: 2000 Quality Improvement: The Chinese Way Are Quality Approaches Influenced by Culture? Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall. 3 -2

Global Supply Chain Quality and International Quality Standards Managing Quality for the Multinational Firm Global Supply Chain Quality and International Quality Standards Managing Quality for the Multinational Firm Ø Ø Licensing Exporter Partnering Globalization Ø Ø Ø Physical Environment Task Environment Social Environment U. S. Trade 1960– 2010 Source: U. S. Department of Commerce Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall. 3 -3

Global Supply Chain Quality and International Quality Standards Managing Quality for the Multinational Firm Global Supply Chain Quality and International Quality Standards Managing Quality for the Multinational Firm Ø Changing the Physical Environment Wages and Costs in Mexico (Average Hourly Compensation for Manufacturing Workers in U. S. Dollars) Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall. 3 -4

Global Supply Chain Quality and International Quality Standards Managing Quality for the Multinational Firm Global Supply Chain Quality and International Quality Standards Managing Quality for the Multinational Firm Global Factors that Affect Quality-related Decisions Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall. 3 -5

Global Supply Chain Quality and International Quality Standards Managing Quality for the Multinational Firm Global Supply Chain Quality and International Quality Standards Managing Quality for the Multinational Firm Export Quality Model Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall. 3 -6

Global Supply Chain Quality and International Quality Standards Quality Improvement: The American Way Ø Global Supply Chain Quality and International Quality Standards Quality Improvement: The American Way Ø The Baldrige Performance Excellence Program Ø Ø Focuses on business results Nonprescriptive and adaptable Supports company-wide alignment of goals and processes Permits goal-based diagnosis The Baldrige Award Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall. 3 -7

Global Supply Chain Quality and International Quality Standards Quality Improvement: The American Way The Global Supply Chain Quality and International Quality Standards Quality Improvement: The American Way The Baldrige Award Framework Seven Categories Ø Ø Ø Ø Leadership Strategic Planning Customer Focus Measurement, Analysis and Knowledge Management Workforce Focus Operations Focus Results Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall. 3 -8

Global Supply Chain Quality and International Quality Standards Quality Improvement: The American Way The Global Supply Chain Quality and International Quality Standards Quality Improvement: The American Way The Baldrige Process Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall. 3 -9

Global Supply Chain Quality and International Quality Standards Quality Improvement-The Japanese Way Deming Prize Global Supply Chain Quality and International Quality Standards Quality Improvement-The Japanese Way Deming Prize ØPolicy Deployment ØNew Product Development ØMaintenance and Improvement ØManagement System ØInformation Analysis ØHuman Resources Development Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall. 3 - 10

Global Supply Chain Quality and International Quality Standards Quality Improvement-The Japanese Way Lean Production Global Supply Chain Quality and International Quality Standards Quality Improvement-The Japanese Way Lean Production ØAnything that does not add value for the customer should be eliminated ØGroup of techniques or systems focused on optimizing quality processes ØA productive system whose focus is on optimizing processes through the philosophy of continual improvement Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall. 3 - 11

Global Supply Chain Quality and International Quality Standards Quality Improvement-The Japanese Way Shingo’s seven Global Supply Chain Quality and International Quality Standards Quality Improvement-The Japanese Way Shingo’s seven wastes 1. 2. 3. 4. 5. 6. 7. Waste of overproduction Waste of waiting Waste of transportation Waste of processing itself Waste of stocks Waste of motion Waste of making defective products Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall. 3 - 12

Global Supply Chain Quality and International Quality Standards Quality Improvement-The Japanese Way Japanese Total Global Supply Chain Quality and International Quality Standards Quality Improvement-The Japanese Way Japanese Total Quality Control (TQC) Ø Ø Ø Visibility In-process Inspection N = 2 Technique Total Involvement of the workforce The five S’s Preventive Maintenance Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall. 3 - 13

Global Supply Chain Quality and International Quality Standards Quality Improvement-The European Way European Quality Global Supply Chain Quality and International Quality Standards Quality Improvement-The European Way European Quality Award Ø Ø Leadership Strategy People Partnerships and Resources Ø Ø Ø Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall. Processes, Products, a Services Customer Results People Results Society Results Key Results 3 - 14

Global Supply Chain Quality and International Quality Standards ISO 9000: 2008 Ø Focus is Global Supply Chain Quality and International Quality Standards ISO 9000: 2008 Ø Focus is for companies to document their quality systems in a series of manuals to facilitate trade through supplier conformance ØRegistration states a quality system is in place and being adhered to ØStandards are very broad and nonspecific, so they can be adapted to many different industries and cultures ØRecognized international quality standard that businesses can follow Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall. 3 - 15

Global Supply Chain Quality and International Quality Standards ISO 9000: 2008 Three Standards: 1. Global Supply Chain Quality and International Quality Standards ISO 9000: 2008 Three Standards: 1. ISO 9000: 2008—Quality management systems: Fundamentals and vocabulary 2. ISO 9001: 2008—Quality management systems: Requirements 3. ISO 9004: 2008—Quality management: Guidelines for Performance Improvement Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall. 3 - 16

Global Supply Chain Quality and International Quality Standards ISO 9000: 2008 Five Clauses: 1. Global Supply Chain Quality and International Quality Standards ISO 9000: 2008 Five Clauses: 1. 2. 3. 4. 5. Quality Management System Resource Management Product Realization Measurement Analysis and Improvement Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall. 3 - 17

Global Supply Chain Quality and International Quality Standards ISO 9000: 2008 Five Clauses: 1. Global Supply Chain Quality and International Quality Standards ISO 9000: 2008 Five Clauses: 1. Quality Management System ØGeneral Requirements- establish, document, implement, and maintain a quality management system and continually improve its effectiveness in accordance with the requirements of the international standard ØDocumentation Requirements- include a quality policy and quality objectives; a quality manual; documented procedures; documents to ensure effective planning, operation, and control of processes; and records required by the international standard. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall. 3 - 18

Global Supply Chain Quality and International Quality Standards ISO 9000: 2008 Five Clauses: 2. Global Supply Chain Quality and International Quality Standards ISO 9000: 2008 Five Clauses: 2. Management System ØTop management shall ensure that customer requirements are determined and are met with the aim of enhancing customer satisfaction ØManagement shall establish a quality policy ØManagement shall ensure that quality objectives shall be established ØManagement shall ensure that responsibilities and authorities are defined and communicated. ØManagement shall review the quality management system at regular intervals Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall. 3 - 19

Global Supply Chain Quality and International Quality Standards ISO 9000: 2008 Five Clauses: 3. Global Supply Chain Quality and International Quality Standards ISO 9000: 2008 Five Clauses: 3. Resource Management Ø Determine and provide needed resources Ø Workers will be provided necessary education, training, skills, and experience Ø Determine, provide, and maintain the infrastructure needed to achieve conformity to product requirements Ø Determine and manage the work environment needed to achieve conformity to product requirements Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall. 3 - 20

Global Supply Chain Quality and International Quality Standards ISO 9000: 2008 Five Clauses: 4. Global Supply Chain Quality and International Quality Standards ISO 9000: 2008 Five Clauses: 4. Product Realization Ø Ø Develop processes needed for product realization Determine requirements as specified by customers Plan and control the design and development for its products Ensure that purchased product conforms to specified purchase requirements Ø Plan and carry out production and service under controlled conditions Ø Determine the monitoring and measurements to be undertaken and the monitoring and measuring devices needed to provide evidence of conformity of product to determined requirements Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall. 3 - 21

Global Supply Chain Quality and International Quality Standards ISO 9000: 2008 Five Clauses: 5. Global Supply Chain Quality and International Quality Standards ISO 9000: 2008 Five Clauses: 5. Measurement Analysis and Improvement ØPlan and implement the monitoring, measurement, analysis, and improvement process as needed ØMonitor information relating to customer perceptions ØEnsure that product that does not conform to requirements is identified and controlled to prevent its unintended use or delivery ØDetermine, collect, and analyze data to demonstrate the suitability and effectiveness of the quality management system ØContinually improve the effectiveness of the quality management system Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall. 3 - 22

Global Supply Chain Quality and International Quality Standards IS 0 9000: 2008 ISO 9000: Global Supply Chain Quality and International Quality Standards IS 0 9000: 2008 ISO 9000: 2008 Eight Principles: 1. Customer focus 2. Leadership 3. Involvement of people 4. The Process approach 5. A systems approach to management 6. Continual Improvement 7. Factual Approach to Decision Making 8. Mutually beneficial supplier relationship Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall. 3 - 23

Global Supply Chain Quality and International Quality Standards IS 0 9000: 2008 An Example Global Supply Chain Quality and International Quality Standards IS 0 9000: 2008 An Example of the ISO Registration Process Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall. 3 - 24

Global Supply Chain Quality and International Quality Standards IS 0 9000: 2008 ISO 14000: Global Supply Chain Quality and International Quality Standards IS 0 9000: 2008 ISO 14000: Ø International standard for environmental compliance Ø Adoption in many countries is slow Ø Firms with little environmental exposure will adopt ISO 14000 first Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall. 3 - 25

Global Supply Chain Quality and International Quality Standards IS 0 9000: 2008 ISO 14000 Global Supply Chain Quality and International Quality Standards IS 0 9000: 2008 ISO 14000 Eight Elements Ø Ø Ø General Requirements Environmental Policy Planning Environmental Aspects Legal and other Requirements Objectives and Targets Environmental Management Programs Implementation and Operation Structure and Responsibility Training, Awareness, and Competence Environmental Management System Audit Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall. Ø Ø Ø Ø Ø Communication Environmental Management System Documentation Document Control Operational Control Emergency Preparedness and Response Checking and Corrective Action Monitoring and Measurement Nonconformance and Corrective and Preventative Action Records Management Review 3 - 26

Global Supply Chain Quality and International Quality Standards Quality Improvement-The Chinese Way Ø Socialist Global Supply Chain Quality and International Quality Standards Quality Improvement-The Chinese Way Ø Socialist market economy Ø Low quality goods due to: Ø Low Education of Workers Ø Lack of Experience Ø Unfamiliar with Goods Ø Short-term Workers Ø GUANXI or Influence Ø Personal Relationships Ø Bribery Total Volume of Trade between the United States and China Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall. 3 - 27

Global Supply Chain Quality and International Quality Standards Are Quality Approaches Influenced by Culture? Global Supply Chain Quality and International Quality Standards Are Quality Approaches Influenced by Culture? Ø United States Ø Command-Control Oriented Ø Results Oriented Ø Japanese Ø Based on Ethic of Consistency Ø Emphasis on Reduction of Waste Ø Europeans Ø adopted broad standards that can be adapted to the diverse nation-states in the European Union Ø Satisfy Employees Ø Care for the Environment Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall. 3 - 28

Global Supply Chain Quality and International Quality Standards Chapter Summary ØManaging Quality for the Global Supply Chain Quality and International Quality Standards Chapter Summary ØManaging Quality for the Multinational Firm ØQuality Improvement: The American Way ØQuality Improvement: The Japanese Way ØQuality Improvement: The European Way ØISO 9000: 2000 ØQuality Improvement: The Chinese Way ØAre Quality Approaches Influenced by Culture? Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall. 3 - 29

All rights reserved. No part of this publication may be reproduced, stored in a All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall. 3 - 30