NOTES PROCUREMENT CHAPTER 6

CHAPTER 6: MANAGING QUALITY

Important of Managing Quality in Procurement

• Quality is an important part of the supply chain, whether it is quality inspections during manufacturing
process, quality checks before goods arrive at the customer, or checking quality as raw materials and parts
enter the factory.

• Before any part or raw material is used in a manufacturer of a finished good that will be delivered to a
customer, it is the responsibility of the purchasing department to ensure that the materials that arrive
are of the correct quality specification.

Why is quality important for grass roots organization?

• Quality makes a group more effective at meeting the needs it’s concerned with.

• Quality adds strength and credibility to your organization or initiative.

• Ethically, you’re bound to provide the absolute best quality of service or advocacy you can.

• Quality is always more economical in the long run.

Advantages of implementing QMS in procurement

• It is widely acknowledged that proper quality management improves business, often having a positive

effect on investment, market share, sales growth, sales margins, competitive advantage and avoidance
of litigation.

Implementing ISO often gives the following advantages:-

Creates more efficient effective operation.

Increases customer
satisfaction&retention

Reduces audits.

Improves employee

motivation,

awareness and

morale.

Promotes international trade

Reduces waste and

increases

productivity.

Common tool for
standardization.

​

Enhances marketing.

​

Increase profit.

Three types of quality requirement on suppliers

a. Quality Assurance Expectation

• A quality system is defined as the organizational structure, responsibilities, processes, procedures and resources for
implementing quality management.

• Quality management includes those aspects of the overall management function that determine and implement the
company quality policy and quality objective.

• The quality assurance is one of the parts of quality management.

What is Assurance?

• Assurance is nothing but a positive declaration on a product or service, which gives confidence.

• It is certainty of a product or a service, which it will work well.

• It gives a guarantee that the product will work without any problems as per the expectations or requirements.

What is Quality Assurance (QA)?

• Quality Assurance popularly known as QA Testing, is an activity to ensure that an organization is providing the best possible

product or service to customers.

• QA focuses on improving the processes to deliver Quality Products to the customer.

• An organization has to ensure, that processes are efficient, and effective as per the quality standards defined for software
products

• Quality assurance has a defined cycle called PDCA cycle or Deming cycle. The phase of this cycle are:-

> Plan

> Do

> Check

> Act

• In the Plan step, state the desired goals for your product and how they will be achieved.

• The Do step is your implementation of the plan.

• Once the product is in production, it is time to Check to make sure it is meeting the standard you set in the Plan step.

• Act requires you and your team to make necessary corrections when the product is not meeting the correct standards.

• Supplier quality assurance encompasses the following key activities:-

> Development of a strategic vision that details the scope and role of suppliers.

> Defining a planned approach to supplier quality assurance.

> Formalizing supplier risk assessment, risk reduction and risk monitoring.

> Implementing a supplier evaluation and rating process.

> Defining and pursuing supplier “ship to stock” & “ship to line” processes.

> Having in place an effective and efficient supplier corrective & preventative action process.

b. Quality Target Commitment

• Each operation in the manufacturing process, which has an effect on the conformance of the end product to the

customers specifications, is assigned a Quality Target value.

• The objective of this step is to determine the quality required for the products of the project.

• At the outset, quality targets should be set for each Deliverable, which will be used to ensure that the deliverable

produced by the supplier meets the requirements defined by the buyer. In this perspective quality targets can be
defined by:-

> Describing the product or service in detail. A well organized, comprehensive description of the product or

service provides a blueprint to follow as well as a reference point, which you can compare with actual

accomplishment.

> Stating the functional requirements of a product or by defining and if possible quantifying the characteristics

that the product or service should posses in term of:-

- Performance

- Reliability

- Accuracy

- Maintainability

- Practicability

- Expandability

- Security

- Cost

- Compatibility

- Implementation date

• Considering and adopting any standards that are specific to the product/service or infrastructure provided by the project. Industry wide standards exist for many products and services, e.g. for construction, for automotive, for health and safety as well as for aerospace, building code software, electrical/electronic, government/military, medical, petrochemical, quality, telecommunications, welding and metals, etc.

c. Corrective and Preventive Action (CAPA)

• Problems can arise with suppliers not meeting performance expectation. In such situations it is critical that an efficient, effective corrective and preventative action process is in place to identify the non- conformance, to address any immediate impacts of the non-conformance, to commence a process to investigate and understand the reason for the non-conformance and to agree appropriate actions to correct and to prevent any repetition.

• Defective product or services from suppliers that result in adulterated/misbranded products become the

responsibility of the (purchasing) manufacturer by default. For example:-

• The name of the final manufacturer/service provide, not the sub-suppliers will be in the mind of the end customer. Hence potential reputation damage.

• Where there is regulatory oversight, the final manufacturer, will need to address regulatory agency concerns.

• Corrections and removals may be required to address a risk to customers or users.

• Recall actions may be necessary to address volatile product remaining on the market.

* There is a need to work collaboratively with suppliers if they are involved and to provide on-going,
timely feedback to the supplier if the supplier is not directly involved in the CAPA investigation.

Quality and inspection method

a. Certified Quality Control

•The basic objective is to have quality control procedure performed by the vendor and eliminates the traditional inspection procedures used
by the buying firm inspection department.

b. Zero Defect

•Zero defects ensures that there is no waste existing in a project. Waste refers to all unproductive processes, tools, employees and so on.

•Anything that is unproductive and does not add value to a project should be eliminated, called the process of elimination of waste.

•Eliminating waste creates a process of improvement and correspondingly lowers costs.

•Common with the zero defects theory is the concept of “doing it right the first time” to avoid costly and time-consuming fixes later in the
project management process.

•Zero Defects is based on four elements for implementation in real projects:-

i. Quality is a state of assurance to requirement. Therefore, zero defects in a project means fulfilling

requirements at that point in time.

ii. Right the first time. Quality should be integrated into the process from the beginning, rather than solving

problems at a later stage.

iii. Quality is measured in financial terms. One needs to judge waste, production and revenue in terms of budgetary

impact.

iv. Performance should be judged by the accepted standards, as close to perfection as possible.

c. Supplier Quality Assurance

• Supplier Quality Assurance (SQA) is the process intended to ensure that a supplier reliably supplies goods or services that satisfy the

customers needs.

• This process is collaborative to ensure the suppliers offerings meet the agreed-upon requirements with minimum inspection or

modification.

• Effective quality assurance should incorporate a combination of process and product audits that manage external and internal

checks and focus on supplier management, quality conformity of the product through its life cycle, production and equipment
quality and effectiveness and pre-shipment inspections.

• According to Joseph Moses Juran, the renowned quality management evangelist, the supplier quality assurance process can be

divided into nine key steps as follows:-

 Define the products quality requirements.
 Identify and evaluate available suppliers for the necessary parts
 Choose the most reliable suppliers that fit the productions needs
 Conduct joint quality planning
 Establish cooperation and collaboration during relationship period
 Validate compliance to requirements and regulations
 Certify qualified suppliers
 Conduct quality improvement plans
 Develop and implement supplier ratings-scorecards

d. Poka-Yoke

• Poka-yoke is a technique for avoiding simple human error in the workplace.

• Also known as mistake-proofing, goof-proofing and fail-safe work methods, poka-yoke is simply a system designed to

prevent inadvertent errors made by workers performing a process.

• The idea is to take over repetitive tasks that rely on memory or vigilance and guard against any lapses in focus.

• Poka-yoke can be seen as one of the three common components of Zero Defect Quality Control performed by

Japanese companies.

• Poka-yoke is based on prediction and detection.

• That is, recognizing that a defect is about to occur or recognizing that a defect has occurred.

Two basic types of Poka-Yoke systems

• First, the control poka-yoke doesn’t allow a process to begin or continue after an error has occurred. It take response

to a specific type of error out of the hands of the operator.

• Second type of poka-yoke provides some type of warning when an error occurs. This doesn’t prevent the error, but

immediately stops the process when an error is detected.

Quality control process

• The quality control process is divided into three separate processes, which are IQC (incoming quality control), IPQC

(in-process quality control) and OQC (outgoing quality control).

• Incoming quality control is the process to inspect the raw and component materials

from suppliers upon arrival.

• When detective parts are found, you need to negotiate with the supplier for return

or exchange and the final purpose is to make sure your product quality will not be
affected.

Incoming Quality Control

(IQC)

• IPQC refers to the quality control during the assembly process.
• It is very important because you can detect and handle the problem that occurs

ahead of time.

In-process Quality Control

(IPQC)

• OQC is the inspection of products before shipping.
• It’s crucial step in ensuring the shipment is defect-free.

Outgoing Quality Control

(OQC)

When and where to inspect

• Deciding when and where to inspect depends on the value added at each stage. Inspection (audits) can take place at any of the

following:-

1.At supplier’s plant while the supplier is producing
2. At your facility upon receipt of goods from your supplier
3. Before costly or irreversible processes
4. During the step - by steps production process
5. When production or service is completed
6. Before delivery to your customer
7. At the point of customer contact

When to inspect?

1. Before shipment at vendor’s plant 2. Before shipment to customer’s place 3. During production process 4. When shipment arrive at the buyer’s place

Where to inspect?

1. Visit to vendor’s plant
2. Stationing an inspector in the vendor plant or near to the vendor plant