The changing role of quality management in a world of competing …apolo.dps.uminho.pt/icqem/2018/jaume_ribera_presentation.pdf · 2018-07-23 · The changing role of quality management

The changing role of quality

management in a world of competing

supply chains

Prof. Jaume Ribera

July 2018

CONFIDENTIAL AND PROPRIETARY

Any use of this material without specific permission of IESE Business School is strictly prohibited

Quality characteristics

� Quality is a “lag” measure. It is the result of strategies

taken, and implemented in different areas of the supply

chain. Therefore, we also need some “lead” measures to

be able to manage it.

� Many of the strategies that have an impact on quality

are not “stroke-of-a-pen” decisions but “behavioral-

change” decisions.

� In this presentation I would like to review some known

concepts of quality in supply chain management and

introduce some behavioral concepts to manage it.

2

Refer to: C. McChesney, S. Covey and J. Huling

The 4 Disciplines of Execution (4DX), Simon & Schuster, 2015



Dimensions of quality in products

� Performance: Performance refers to a product’s primary operating characteristics

� Features: Features are the “bells and whistles”, those characteristics that

supplement their basic functioning.

� Reliability: Reliability is the likelihood that a product will not fail within a specific

time period.

� Conformance: Conformance is the degree to which a product’s design and

operating characteristics meet established standards.

� Durability: Durability can be defined as the amount of use one gets from a product

before it deteriorates.

� Serviceability: Serviceability is the speed, courtesy, competence, and ease of repair.

� Aesthetics: Aesthetics is the subjective dimension indicating how a product looks,

feels, sounds, tastes, or smells.

� Perceived Quality: Perceived Quality is the quality attributed to a good or service

based on indirect measurement.

3

Source: D. Garvin, Competing on the Eight Dimensions of Quality, HBR 1987



Interface between SCM and QM

E. Soltania, A . Azadegan, Y. Y. Liao, P. Phillips, Quality performance in a

global supply chain: finding out the weak link, IJPR, Vol. 49, 2011.



SC elements of quality

1. Sourcing quality (Madu and Kuei 2004, Gadde and Hulthe´n 2009): Supplier capability, supplier quality,

supplier–buyer relationship, procurement and inventory accuracy, transportation quality and delivery reliability.

2. Supplier relationship quality (Fynes et al. 2005, Vivek et al. 2009): Trust, adaptation, communication

and co-operation.

3. Product development quality (Madu and Kuei 2004, Rachuri et al. 2008): Concept design, prototype

testing and detail design.

4. Order fulfilment process quality (Forslund 2007): Promised lead time, on-time delivery, rush orders

(when needed), stock-out rate, undamaged deliveries, accurate orders, accurate invoices, availability of delay

information, and convenient order placement procedures.

5. Manufacturing quality (Garvin 1991): Performance, features, reliability, conformance, durability,

serviceability, aesthetics and perceived quality.

6. Distribution quality (Mentzer et al. 2001): Personal contact quality, order release quantities, information

quality, ordering procedures, order accuracy, order condition, order quality, order discrepancy handling and timeliness.

7. Customer relationship quality (Berry and Parasuraman 1991): Reliability, responsiveness, assurance,

empathy, and tangibles.

8. Reverse logistics quality (Madu 2004): Reduce, recycle, reuse, and disposal

9. E-quality (Madu and Madu 2003): Aesthetics, information content, accessibility, performance, serviceability,

features, dependability, purpose, usability, capability, and timeline.

Source: C. Kueia, C. N. Madua, C. Lin, Developing global supply chain

quality management systems, IJPR, Vol. 49, No. 15, 2011.



SC Quality parameters

� Agility

� Efficiency

� Coordination

� Integration

� Collaborative planning

• Product quality

• Customer satisfaction

• Supply chain information

• Flexibility

• Supplier quality

Source: A. Sharma, D.

Garg, A. Agarwal

Study of Supply Chain

Quality Parameters,

GJEIS, Vol 5, 2013



Tools in SC Quality Management

Source: S. T. Foster Jr., C. Wallina and J. Ogden, Towards a better understanding

of supply chain quality management practices, IJPR, Vol. 49, 2011.



QM practices and performance

measures in a SC

H. Kaynak, J. L. Hartley, A replication and extension of

quality management into the supply chain, JOM 2008



APICS frameworks (Oper. References)

Source: SCOR Version 12.0, APICS 2017



Level 1 processes for APICS

frameworks




SCOR Model




SCOR Hierarchical Model




SCOR Performance

STAGES of MATURITY




The Quality Maturity Curve

http://marketo.spartasystems.com/rs/spartasystems2/images/eBook%20-

%20Best%20Practices%20Supply%20Chain%20Quality.pdf



Uncertainty Management in SC

� Variability – buffering

o Inventory buffers

o Time buffers

o Resource buffers

o Feature buffers

� Known unknowns – risk management

o Contingency plans

� Unknown unknowns – crisis management



Visibility in the supply chain

of companies have

limited visibility to tier

1 partners

of companies have

limited visibility to tier

2 and tier 3 partners

http://marketo.spartasystems.com/rs/spartasystems2/images/eBook%20-

%20Best%20Practices%20Supply%20Chain%20Quality.pdf






Any use of this material without specific permission of IESE Business School is strictly prohibited19



Root causes of product recall

US Food and Beverages

Deloitte, Recall Execution

Effectiveness, 2010



The Operational Excellence model

TechnicalTechnicalTechnicalTechnicalExcellenceExcellenceExcellenceExcellence

ProcessProcessProcessProcess ExcellenceExcellenceExcellenceExcellenceServiceServiceServiceServiceExcellenceExcellenceExcellenceExcellence((((experienceexperienceexperienceexperience))))



The three axis of

Operational Excellence

Technical excellence

• Knowledge management

• Evidence generation

• New technology diffusion

• Managing the gap between

available knowledge and applied

evidence

• Infrastructure, equipment

• Talent management

• From individual tacit knowledge to

explicit collective knowledge

• Prototypes and pilots with

alternative hypothesis

• Alignment of processes with the

organizational strategy (cost, agility,

flexibility, service integration,…)

• Capacity management. Resource

analysis.

• Bottlenecks (physical, policies,

market, …)

• Lean - Waste (categorization,

detection and elimination/reduction)

• Variability reduction (in demand and

in activities)

• Reduce the overloading in facilities,

equipment, people

• Understanding customer needs and

wants (JTBD - job to be done)

• Customer journey maps (and, by

extension, employees, suppliers, ….)

• Stakeholders and interactions maps

• Critical element identification: contact

points, pain points, delays,

information, levels of control,

perceptions and expectations, etc.

• Human Service Design Thinking:

Exploratory (Empathize, Define),

Conceptual (Ideation, Hypothesis

definition), Trial (Prototype, Test)

Process excellence Experience excellence



Quality initiatives as innovation

Description

Technology-

based

innovations

These innovations are driven by the application of a new technology. Information

technologies are also very important, as they connect many separate islands of information

and hold the possibility of improving performance and costs.

These innovations aim at ensuring that the system uses the most effective technology based

on updated existing evidence.

Process

(integration)

innovation

These innovations aim at ensuring that there is a process-perspective of the service given,

independently of where or who provides it. Once the process is understood, we can look for

opportunities to standardize, eliminate or reduce waste, integrate (legally or virtually)

different providers that work in the process to eliminate duplicities, or to coordinate similar

providers to increase their economies of scale or scope. This dimension tries to ensure that

the different system agents do the things in the right way.

Experience

excellence

These innovations bring the customer perspective into play, by considering how the different

customers interact with the institutions and how these interactions can be improved. This

means making them less painful, less stressful, reducing the waiting times, reducing the

burden of dealing with the company, etc. This dimension tries to ensure that the different

system agents define the system taking the customer perspective into account.



Innovation factors (Regina Herzlinger, HBS)

1. Structure It refers to the stakeholders’ structure, in particular, who will help and

who will try to block the innovation, in Herzlinger words, friends and

foes. Who are they, what is their power and will they be likely to exert

it or not?

2. Financing In this factor, we look at two aspects: (a) the capital financing that the

innovation requires to make it to the market, who can do it, what are

the sources,… (angel funding, venture capital, debt, corporate

equity)? And, (b) the reimbursement, who will pay for the expenses

related to the use of the innovation? How will the price be

determined?

3. Public policy This factor refers to the regulations that exists regarding the use of

specific products and technology. Further, governments are usually

major purchasers of some services, such as healthcare. How will the

regulators respond to possible pressure from the public? And to the

pressure from the innovation’s foes?



Innovation factors (Regina Herzlinger, HBS)

4. Technology This factor includes several aspects: (a) Who are the possible

competitors?. How the innovation technology compares to theirs? (b)

How advanced is the technology that supports the innovation? Is it the

right time to invest on it?

5. Consumers Customers and their families may have strong feelings about the

innovation and can influence the success of it. How much easier,

simpler, more convenient or effective will the innovation be in

comparison with existing alternative solutions? Educating prospective

customers can help empowering them. Consumer associations can

lobby regulators.

6. Accountability There is an increasing demand for accountability for innovators. They

are expected to demonstrate that they achieve cost reductions without

diminishing the quality of service, that new products show cost

effectiveness and long-term safety, etc. An innovation proposal should

make sure that it provides the required accountability for acceptance.



Service (experience) excellence



The business investor

value equation

Value for

Investor (ROI)

Dividends Shares plusvalue=

+

Investment made Risk+



The customer value equation

Value for

customer

Results

(or solutions)=

Quality of customer

experience (process)+

Price Access costs+ Risk+

Emotional

/Brand

image+

How WhyWhat



The customer value equation

(for a pharmacy)

Value for

customer

Results

(or solutions)

=

Quality of customer

experience (process)+

Price Access costs+ Risk+

Brand

image+

Accurately

filled

prescriptions

Clearly

specified

doses

Little or no

waiting

Consultation

with

pharmacist

Pharmacist

supervisión

on joint drugs

effect

Trust on

the brand

Previous

recalls

Single visit

pick-up

Easy access

inside

supermarket

Extended

opening

hours

Suggestion

for generic

brands

Lowest in the

area

Adapted from: The Ownership Quotient, J. L. Heskett,

W. E. Sasser, J. Wheeler, HBS 2008



Awareness and curiosity

Trial

Satisfaction

Loyalty

Commitment

Apostle-like

Ownership

• % of customers offering constructive complaints

• % of new customers recommended by existing

customers

• % of customers testing and recommending new

products and services

• % of customers recruiting new customers

• % of customers willing to recruit new customers

• Frequency, duration of repurchase

• Stated level of satisfaction with product or

service

• Rate of customer trial of products and services

• Brand awareness

CUSTOMER MEASURESLevel of hierarchy

From: The Ownership Quotient, Heskett, Sasser & Wheeler, HBP 2008



Customer’s memorable sensations

� They know what they talk about (professionalism)

� Then can be trusted (credibility)

� They are consistent (reliability*)

� They know me (assurance*)

� They care about me (empathy*)

� They provide service in a timely manner (responsiveness*)

� They take care of the tangible elements (tangibles*)

� They let me keep the control (control)

� I will be better off …. because I can count on them (dependable)

understand make me feel understood

Adapted from: Parasuraman, A. Zeithalm, V.A. &

Berry, L. L. “Servqual”, Journal of retailing, 1988

ServQual in the age of e-commerce

e-SERVQUAL

� Efficiency

� Availability

� Fulfillment

� Privacy/Security

e-recovery SERVQUAL

� Responsiveness

� Compensation

� Contact

For a summary information of SERVQUAL and its adaptation to e-commerce, see:

A. Parasuraman, Finding Service Gaps in the Age of e-Commerce, IESE Insight, 2013.



Elements

of Value

To

Customer

The elements of

value,

E. Almquist, J.

Senior, N. Bloch,

HBR Sept. 2016



B2B

Elements

of Value

B2B elements of value,

E. Almquist, J.

Cleghorn, L. Sherer,

HBR March-April 2018



Customers…

35

and the other

stakeholders


Any use of this material without specific permission of IESE Business School is strictly prohibited 36

Awareness and curiosity

Trial

Satisfaction

Loyalty

Commitment

Apostle-like

Ownership

• % of employees offering ideas on how to improve

processes

• % of new recruits recommended by existing employees

• % of employees testing and recommending new

products and services

• % of employees recruiting new employees

• % of employees willing to recruit new employees

• Average employee voluntary turnover rates

• Stated level of satisfaction with job

• Rate of employee application for and self-selection of

job

• Awareness of Company as a good place to work

EMPLOYEE MEASURESLEVEL OF HIERARCHY

From: The Ownership Quotient, Heskett, Sasser & Wheeler, HBP 2008



Employee value equation

37

Value foremployee

Salary& other benefits

Quality of workplace

=

+

Time Effort(other costs)

Risk+ +

Capability to deliverresults for others

+

How WhyWhat



Employee value equation

38

Value foremployee

Salary& other benefits

Quality of workplace

=

+

Time Effort(other costs)

Risk+ +

Capability to deliverresults for others

+

Above market

salaryNo cluter

Expert advice

from seniorsLatitude to

satify

customers

Time to be with

customersAvailability of

drugs and

equipment

Packaging

encourage

correct

consumption

Conveniently

located stores

Enough staff,

no need for

extra time

Permanent

contract

Liability

insurance



Elements of employee value

� If you want to be trusted, you

must trust

� Give employees the opportunity

to get to know one another

� Create a cool space

� Give’em free stuff

� No jerks allowed

� Encourage growth and ownership

� Communicate, communicate,

communicate

Inc., June 2015.

39

� Leadership

� Communication

� Positive culture

� Rewards and recognition

� Professional and personal growth

� Accountability and performance

� Vision and values

� Corporate Social Responsibility

Achievers.� Tangible rewards

� The Opportunity

� The Organization

� The people

� The work itself

Forbes, January 2018



Documents

The changing role of quality management in a world of competing …apolo.dps.uminho.pt/icqem/2018/jaume_ribera_presentation.pdf · 2018-07-23 · The changing role of quality management