Currently, you are definitely living and existing in a global economy, and business is no longer merely conducted with individuals and businesses in a close geographic location. Consumers and businesses are dealing with others from all corners of the world. This brings about certain challenges to the business regarding the sales process.
Primary Task Response: Within the Discussion Board area, write up to 350–500 words that respond to the following questions with your thoughts, ideas, and comments. This will be the foundation for future discussions by your fellow classmates. Be substantive and clear, and use examples to reinforce your ideas:
Keeping in mind the United Nations Convention on Contracts for the International Sale of Goods (CISG), what are the implications for businesses that wish to operate within countries that have not agreed to this platform from the UN?
The purpose of business is to make money. Should a business engage in commerce in countries that have not accepted the CISG platform? Why or why not?
Process Improvement Analysis in Supply Chain Management
Concept. Juran established the quality trilogy that focuses on three key aspects: quality planning, control, and quality improvement (Godfrey & Kenett, 2007). Company A should conduct quality-planning concurrent with ABC Manufacturing. Quality planning should involve all vendors such that each vendor can provide useful insights. Some of the key steps in quality planning involve defining the project, customer identification, establishing customer needs, and development of programs to meet customers’ needs. Quality control involves ensuring that all processes and programs are working, just as they ought to work in order to meet the target levels (Godfrey & Kenett, 2007). Some of the quality control initiatives include defining performance targets, assessing performance and goal achievement, and providing clear definitions of quality. Quality improvement involves introducing new ideas that help the organization to go beyond the current performance levels.
Methodology. Juran developed a ten-step quality improvement program that can act as a methodical guide for organizations. The first step is to develop an awareness or need for improvement in the organization (Mukherjee, 2006). Company A can achieve this by highlighting why there is need for quality improvement. The second step involves identifying specific goals for improvement. This should follow a Pareto analysis approach. The third step involves identifying a quality council to spearhead the project (Mukherjee, 2006). The fourth step is to provide training for the entire quality improvement team. Training focuses on advanced problem-solving techniques. In the fifth step, the quality council should brainstorm to identify the root cause of the problems. The sixth step involves suggesting solutions to the problems (Mukherjee, 2006). The seventh step involves testing the proposed solutions to ensure they work best. The eighth step is to convince all stakeholders to adopt the new changes. The ninth step involves providing recognition to those involved in the project. Lastly, the quality council implements appropriate control mechanisms to ensure that the project delivers benefits in the long-term.
Pros and cons. A key benefit of Juran’s quality improvement approach is aligning of the organization’s production efforts to the market needs. Juran’s quality improvement program enables firms to identify and satisfy specific market needs. Another benefit is quality improvement. Juran’s quality approach can enable the firm improve quality of products and services by shaping employee attitudes towards a quality orientation. Another benefit involves identifying and rectifying serious problems in the production process. Juran’s quality program can help the company to improve its competitiveness. Lastly, the program can help in improving communication among employees. On the other hand, it is costly for the company to implement the quality program. Secondly, employees may resist change leading to tension especially when the employees fail to perceive any benefits from the quality program. The program could lead to production disruption by requiring employees to undergo intensive training. Employees may need to take time off.
Concept. Philip Crosby developed the ‘quality is free’ approach. His major focus was on zero-defects. He emphasized on doing something right the first time. This can eliminate waste. Crosby saw quality as absolute conformance to the requirements of the customers. According to Crosby, the production of quality products can save the company both money and time (Jiju & Preece, 2002). Crosby identifies the key to development of quality goods as the implementation of preventive mechanisms rather than relying on inspection for errors and defects in products. By implanting preventive mechanisms, it is possible to eliminate various costs including inspection costs, warranty costs, rework costs, and others (Jiju & Preece, 2002). Crosby asserts that it is possible to measure quality as the price of non-conformance.
Methodology. Crosby identified 14 steps to quality management. There are a number of key points to note from these steps. The first step emphasizes on top leadership commitment towards improving quality. The second to fourth steps involve appointing quality teams from within departments, identifying the existing problems and sources, and assessing quality costs (Jiju & Preece, 2002). The other two steps involved improving awareness and correcting the current problems within the organization. The seventh step is to develop a zero defect program (Jiju & Preece, 2002). There should also be a ‘zero defects day’ in the organization in order to build awareness among employees. Another important step is to recognize employees for their efforts.
Pros and cons. Crosby’s zero defects emphasis reduce wastes. This can enable the company save on costs associated with high wastes such as costs from product defects. Another benefit is improved quality of products for companies that adhere to Crosby’s principles. The program can help in eliminating non-productive activities and those leading to waste in the production process. The program can improve customer loyalty due to improved quality of products. On the other hand, Crosby’s zero defects emphasis seems unrealistic and controversial. It is difficult or almost impossible to achieve zero defects. Another drawback is loss of employee morale due to constant failure to achieve the unrealistic zero defects target. Crosby’s program may lead to high inspection costs for the company. Another drawback is high costs involved in implementing the program.
Concept. Deming asserted that firms could rely upon certain managerial principles to improve quality and consequently reduce costs (Charantimath, 2012). Cost reductions emanate from low wastes in the production process and low employee turnover. Deming emphasizes on continuous improvement in organizations as the key to success. Deming conceptualized the manufacturing process as a seamless process (Charantimath, 2012). Deming asserts that by focusing on quality, costs automatically go down. However, a focus on costs results to an increase in the overall costs over time.
Methodology. Deming developed a four-phase cycle for enhancing continuous process improvement. The four phases include plan, do, check, and act (Charantimath, 2012). The first phase involves analyzing the particular problem or opportunity. The second phase is to implement the plan and to assess the performance. The third phase is check, which entails assessing the effectiveness and reporting to the policymakers. The last phase is act, which involves establishing needs for changes. Deming further enumerated 14 critical points for management (Charantimath, 2012). A key thing to note is the need for the company to cease relying on mass inspection. Another important thing is for the company to introduce modern supervision methods.
Pros and cons. One benefit of the Deming approach is the continuous improvement on quality. This is a realistic approach to improving quality in the company. The Deming approach can enable the company identify and solve problems, for instance, scheduling problems. Deming’s quality approach can help in guiding new product development. It is highly applicable in project management and can lead to better project results. Lastly, Deming’s quality approach can help in establishing a management routine for an individual or team. On the downside, it is expensive for the company to adopt the Deming’s philosophy. Another drawback is that Deming did not suggest any tools that the company may use to implement the 14 points of management.
Concept. Total Quality Management (TQM) is a management approach that focuses on continuous quality and process improvements in organizations (American Society of Quality (ASQ), n.d). TQM aims at bringing improvements in the long term rather than focusing on the short-term gains. The major goals of TQM are to increase production efficiencies and eliminate waste in the production process. TQM also aims at changing the culture of employees (ASQ, n.d). TQM is customer-focused in that it aims at improving customer satisfaction levels.
Methodology. There are various guiding principles for companies that wish to implement total quality management programs. The first principle is customer focus. Quality improvement initiatives aim at satisfying the customers’ needs (ASQ, n.d). Another element is employee involvement. TQM approach focuses in bringing together all employees to work towards achieving common goals. TQM is a process-centered approach. This concerns how inputs are turned into outputs. Another element is integrated system. TQM assumes that there exists an interconnection among all organizational processes (ASQ, n.d). Another TQM element is continual improvement. Other elements include communications, strategic approach, and decision-making based on facts.
Pros and cons. A key benefit of TQM programs is quality improvement in organizations. Another benefit relates to lower costs. Lower costs in organizations that implement TQM programs result from reduced wastage. TQM helps in identifying non-productive activities in the organization. TQM programs helps in meeting the needs of customers, thus developing customer loyalty. TQM also improves communication within the organization. A major drawback of TQM high cost of implementation. This is because it requires consultation, upgrading of infrastructure, training, and other things. TQM programs can disrupt normal flow of activities in the organization. Lastly, the standardization of products and processes under TQM may kill creativity in organizations.
Concept. The six sigma approach is a data-driven approach to quality improvement and problem solving in organizations (Charantimath, 2012). Six sigma approach aims at improving quality and performance by reducing product variations by a certain percentage. Under the six sigma approach, the company may choose various levels of precision to apply in the production process. For instance, the company may opt for 99.9997 precision level, which leaves a very small margin for error.
Methodology. Six sigma approach entails establishing precision rates for the manufacturing processes. The company should aim at achieving the precision rates. In the recent period, the precision level is often set at 3.4 defects per million opportunities (Charantimath, 2012). This is in response to the higher customer higher customer expectations of increased product quality. Six sigma concept focuses on a few proven tools and techniques in improving quality.
Pros and cons. Six sigma improves product quality and reduces defects per million opportunities. Six sigma approach develops organizational resilience to react to market shocks or unforeseen forces in the environment. Six sigma improves response time needed for inquiries. This increases the speed of clearing materials and inventory (Charantimath, 2012). Another benefit concerns its ability to align the organization to its goals and objectives. Six sigma improves customer relationships and customer responsiveness. Six sigma approach is not without drawbacks. First, it is expensive to implement the sigma due to training and other costs. Another drawback concerns complexity during implementation (Charantimath, 2012). Employees who do not fully understand six sigma may face challenges in trying to implement the approach.
Supply Chain Management
Communication is critical in the supply chain process. Good communication can help in nurturing the relationship between ABC Manufacturing and vendors. There are many opportunities for improving supply chain management in ABC Manufacturing. The company should integrate modern supply chain management software in its communication process with vendors. Supply chain management software can enable the company to communicate easily with a single vendor or multiple vendors simultaneously. By standardizing the communication platform with vendors, the complexities involved in the communication process will disappear. For instance, the company will be able to communicate to all vendors about production forecasts instantly, in addition to the option of focusing on some select vendors. Some of the supply chain management software are QuickBase, Megaventory, Logistically TMS, and among others.
ABC Manufacturing should do away with the traditional forecasting method, which is often unreliable owing to the complexities partly brought about by globalization. Rather, the company should implement an Advanced Planning and Scheduling System (APS). APS is an advanced form of manufacturing planning whereby decision-making is supported by data-driven analysis of the entire production process, market, and other factors (Lupeikiene et al., 2014). APS is a more advanced form of material requirements planning (MRP). Although it still utilizes materials planning, inventory levels, and orders to estimate demand, the new concept recognizes the critical role played by capacity. For instance, the APS system estimates demand by including various factors such as machine capacity and labor availability.
ABC’s final product goes through multiple stages along the supply chain. The monitoring system in ABC Manufacturing is outdated. ABC should invest in modern monitoring system such as the APS system. This may solve the updating issues evident in the current materials requirements planning (MRP) system. MRP is one of the earliest production planning and control system as was later replaced by manufacturing resource planning (MRPII) (Lupeikiene et al., 2014). The concept of APS emerged later in the 1990s effectively replacing the MRPII.
ABC Manufacturing should ensure maximum utilization of its transportation system by developing effective logistical strategies. Optimization of transportation networks will lead to huge cost savings for ABC Manufacturing. ABC should adopt transportation and logistics software solutions that can enable it to manage the transportation network effectively. By adopting modern transportation management systems, ABC will be able to implement a single transportation system for optimization purposes. For instance, ABC can do away common carriers and instead optimize its own fleet to deliver finished goods to customers and parts from vendors to the company. This will provide huge cost savings since there will be spending on the common carriers.
Process Control, Performance, and Variability
ABC can improve on process control, performance, and variability by implementing lean manufacturing approaches. Lean manufacturing simply involves continually working on eliminating waste in the entire production process. Lean manufacturing can eliminate various sources of wastes in the manufacturing process. For instance, it can eliminate excessive transportation, defective products, unnecessary movements, reduce waiting time, overproduction, and among other sources (Rafique, Ab Rahman, Saibani, Arsad, & Saadat, 2016). Lean manufacturing is a way of implementing continuous improvements in the system.
Negative and Positive Cash Flow
ABC Manufacturing should reconsider its inventory purchasing habits. The company should introduce just-in-time (JIT) inventory approach. The JIT approach increases operational efficiency by ensuring that the firm purchases only the materials that are needed in the production process and in the right time. The JIT approach can help in eliminating supply inefficiencies whereby excessive materials are purchased leading to capital being tied up as inventory cost.
Quality Program Chart
|Total Quality Management (TQM) is a management approach that focuses on continuous quality and process improvements in organizations
|· Promotes quality improvement in organizations
· Lower operating costs.
· Reduced wastage
· Helps in identifying non-productive activities
· Building customer loyalty
· Improves communication
|· High cost of implementation
· Disruption of normal flow of activities during implementation
· Standardization of products and processes under TQM may kill creativity in organizations
|Juran’s trilogy focuses on the idea that quality problems within organizations result from lack of effective quality planning initiatives
|· Aligns organization’s production efforts to market needs
· Quality improvement
· Helps to identify and rectify serious problems in the production process
· Improves competitiveness
· Improving communication among employees
|· it is costly for the company to implement the quality program
· employees may resist change leading to tension
· The program could lead to production disruption by requiring employees to undergo intensive training
|Deming asserted that firms could rely upon certain managerial principles to improve quality and consequently reduce costs
|· Supports continuous improvement of quality
· The Deming approach can enable the company identify and solve problems, for instance, scheduling problems
· Deming’s quality approach can help in guiding new product development
· Applicable in project management and can lead to better project results
· Deming’s quality approach can help in establishing a management routine for an individual or team
|· It is costly for the company to adopt the Deming’s philosophy
· Deming did not suggest any tools that the company may use to implement the 14 points of management.
|Philip Crosby’s quality is free approach emphasizes on zero-defects and that developing quality products is free or does not cost anything
|· Crosby’s zero defects emphasis reduces wastes
· Improved quality of products
· The program can help in eliminating non-productive activities and those leading to waste
· The program can improve customer loyalty due to improved quality of products
|· Crosby’s zero defects emphasis seems unrealistic and controversial
· Loss of employee morale due to constant failure to achieve the unrealistic zero defects target
· Crosby’s program may lead to high inspection costs for the company
· High costs involved in implementing the program.
|· Six sigma improves product quality and reduces defects per million opportunities
· Six sigma approach develops organizational resilience to react to market shocks or unforeseen forces in the environment
· Six sigma improves response time needed for inquiries
· Align the organization to its goals and objectives
· Six sigma improves customer relationships and customer responsiveness
|· It is expensive to implement the sigma due to training and other costs
· Complexity during implementation
· Employees who do not fully understand six sigma may face challenges in trying to implement the approach
A formal process improvement program can help at both vendor locations and inside ABC’s factory. Formal process improvement programs can help in improving quality and reducing lead-time. The major goal of the formal process improvement programs is to improve on quality. By improving on quality, various costs decrease because there is less rework, less scrap, few delays, less inspection, and better utilization of materials. This leads to improved productivity, high quality products in the market, and improved customer loyalty. Vendor certification programs involve an independent analysis of the vendor’s ability to meet or comply with the company’s specifications on quality, safety, delivery, and other aspects. There are some benefits of creating a vendor certification program. First, the program provides an assurance that the system will operate as expected. Second, certification improves interoperability of components. Third, certification supports continuous improvements in specifications as it highlights ambiguities in standards. Fourth, it provides a recourse to the firm if the products fail to meet standards. Lastly, it lowers risks and reduces costs involved in decision making during component acquisition.
There are various opportunities in ABC’s internal workings. The vast opportunities lies in the implementation of continuous quality improvement programs. This will help in improving quality and reducing the high waste and reworks the company is experiencing. In this case, it would be prudent to implement one of the formal improvement programs such as lean manufacturing or Toyota Production System. It is possible to get ABC to adopt a more continuous improvement mentality through training that aims at developing a new culture. Training can help in changing the organizational culture at ABC. Nevertheless, it is worth noting that this may take some time.
Mukherjee, P. N. (2006). Total quality management. New Delhi: Prentice-Hall of India.
Godfrey, A. B., & Kenett, R. S. (2007). Joseph M. juran, a perspective on past contributions and future impact. Quality and Reliability Engineering International, 23(6), 653-663. doi:10.1002/qre.861
Crosby, P. B. (1979). Quality is free: The art of making quality certain. New York: McGraw- Hill.
Jiju, A., & Preece, D. (2002). Understanding, managing, and implementing quality: frameworks, techniques, and cases. Psychology Press.
Charantimath, P. M. (2012). Total quality management. Delhi: Pearson.
American Society of Quality (ASQ). (n.d). Learning about quality. Retrieved from http://asq.org/learn-about-quality/total-quality-management/overview/overview.html
Lupeikiene, A., Dzemyda, G., Kiss, F., Caplinskas, A., Institute of Mathematics and Informatics, Vilnius University, & Research Institute of the Foundation for Information Society. (2014). Advanced planning and scheduling systems: Modeling and implementation challenges. Informatica, 25(4), 581-616. doi:10.15388/Informatica.2014.31
Rafique, M. Z., Ab Rahman, M. N., Saibani, N., Arsad, N., & Saadat, W. (2016). RFID impacts on barriers affecting lean manufacturing. Industrial Management & Data Systems, 116(8), 1585-1616. doi:10.1108/IMDS-10-2015-0427