Supply Chain Super Highway

Can you really use the Internet to gather intelligence on pricing, quality and delivery issues? You bet, and the results can change the way you manage your supply chain.


The total quality management (TQM) concept introduced in the late 1970s forced buyers to pay more attention to the quality of products in the supply chain. The prevention of defects instead of mere detection became one TQM mantra. Dr. W. Edwards Deming, the leading quality guru of that era, correctly noted, Failure of management to plan for the future and to foresee problems has nurtured waste of manpower, materials and machine time, all of which raise the manufacturer's cost and the price that the purchaser must pay. The consumer is not always willing to subsidize this waste.


The delivery of defect-free goods is vital to both the manufacturer and the end-user. Deming argued that quality excellence is obtained through prevention of defects by using statistical methods. Hence, a supply manager probably should have a working knowledge of how to assure a predictable flow of defect-free materials using statistical process control (SPC) and the closely related capability index (Cpk). Both are described in detail at www.pom.edu in a power point format. In addition, an SPC template is available as a spreadsheet.


The Cpk index facilitates buyer and supplier negotiations and production by providing quantitative parameters that both the buyer and the supplier can agree upon to ensure consistent quality.


 


Smooth Delivery


The ability to maintain a scheduled flow of materials is an important aspect of a purchasing and supply manager's job. If orders are coming in quickly and the supplier cannot deliver enough materials on time, the line may not run at capacity and production may slow or stop. So the buyer and his buyer/planner cohorts need to be adept at predicting capacity and needs requirements.


Again, the NAPM semiannual report may offer relief. It contains a delivery-forecasting tool that can help manage low on-hand inventories with an uninterrupted stream of materials to plant manufacturing operations. The NAPM report estimates production capacity and material requirements, surveying businesses and then ranking strategies taken in the previous period to address such issues as increasing production capacity.


The American Production Inventory Control Society's business index also provides information on the Internet. Located at www.apics.org, this monthly publication segments supply chain data into both current and future components. This segmentation can assist supply managers in the development of short-term (one day to six months) and aggregate (six to 18 months) production planning.


Valuable information that can be turned into intelligence is a click away. The purchasing and supply manager is fortunate to have the Internet to maximize supplier performance and improve supply chain efficiency. The supply manager can negotiate using pricing data, forecasts, production/manufacturing/operating capacity projections and informative statistical quality educational tools, all found online and updated frequently.

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