Total Quality Management(TQM) Principles

TQM PRINCIPLES

LEADERSHIP DEFINED

Leadership is interpersonal influence exercised in a situation and directed through communication process, towards the attainment of a specialized goal or goals. Thus leadership is a process of influencing the activities of an individual or a group for goal achievement in a given situation.

LEADERSHIP CONCEPT

Leadership requires in order to become successful as a leader , he needs an intimate and insightful understanding of human nature – the basic needs, wants and abilities people, a leader needs to know and understand the following;

1. People need both security and independence at the same time.

2.People are sensitive and do respond to external rewards or punishments. They are also strongly self-motivated.

3.Peoples sometime value a kind word of praise more than any monetary reward.

4. They trust their gut reaction more than statistical data.

5. A leader should simplify the task

ROLE OF SENIOR MANGEMENT

^Ø   Senior management must practice the philosophy of Management By Wandering Around (MBWA). They should get out of the office and visit customers, departments, and plants within the organization and suppliers

^Ø   Encourage subordinates to write only important messages that need to be part of the permanent record.

^Ø   Senior management role is no longer to make the final decision, but to make sure the teams decision is aligned with the quality statement of the organization

^Ø   Problem solving and decision making to the lowest appropriate level by delegating authority and responsibility.

^Ø   Senior managers must stay informed on the topic of quality improvement by reading books and articles attending seminars and talking to other TQM leaders.

^Ø   The needed resources must be provided to train employees in the TQM tools and techniques, the technical requirements of the job and safety.

^Ø   Must be visibly and actively engaged in the quality effort by serving on teams, coaching teams and teaching seminars.

^Ø   They should lead by demonstrating, communicating, and re-in forcing the quality statements.

^Ø   They should spend about one third of their time on quality

^Ø   Senior managers are listening to internal and external customers and supplies through visits, focus groups and surveys.

^Ø   To create awareness of the importance of TQM and provide TQM results in an ongoing manner.

^Ø   Senior managers should be able to drive fear out of the organization, break down barriers, remove system roadblocks, anticipating and minimize resistance to change and in general change the culture.

QUALITY CIRCLE

Meaning

Quality council is composed of the chief executive officer, the senior managers of the functional areas, such as design, marketing, finance, production and quality and a coordinator or consultant. Individual selected for the coordinated position should be bright young person with execution potential.

Objectives of quality council:

To raise the quality consciousness in the organization through seminars, study tours and using forms of promotion.

To ensure effective functioning of the organization on the quality statement and plan.

To encourage basic and applied research and development in the field of quality and dissemination of its results to the organization.

To raise the level of training of personnel engaged in quality activities including the assessors and trainees.

To facilitate upgradation of testing and calibration facilities and laboratories as well as to encourage the overall quality of the organization.

DUTIES OF QUALITY COUNCIL

^q   Develop with input from all personnel; the core values Vision statement, Mission statement, and Quality policy statement.

^q   Develop the strategic long term with goals and the annual quality improvement program with objectives

^q   Determine and continually monitor the cost of poor quality.

^q   Create the total education and training plan.

^q   Determine the programme measures for the organization.

^q   Continually determine those projects that improve the process.

( internal and external customers)

^q   Establish or revise the recognition and reward system to account for the new way of doing business.

QUALITY STATEMENT

In addition to the core values and concepts, the quality statement includes the Vision statement, Mission statement and Quality policy statement. Once developed they are occasionally revised and updated. They are part of the strategic planning process, which included goals and objectives.

VISION STATEMENT

The vision statement is a clear declaration of what an organization aspires to be in the future (in long term). Its purpose is to provide a platform for the managers for thinking strategically. A vision statement is usually an ideal condition, that might never be reached but that will inspire the people to achieve.

Example: “THE HAPPIEST PLACE ON EARTH”         - Disney Theme park.

MISSION STATEMENT

The mission statement answers the following questions. Who we are, who are the customers, what we do and how we do it. This statement is usually one paragraph or less. It is easy to understand and describe the functions of the organization. It provides a clear statement of purpose for employees, customers and supplies.

EXAMPLE: BEN & JERRY‟S ICE CREAM – MISSION STATEMENT

PRODUCT MISSION: TO make, distribute and sell the finest quality natural ice cream and related products in a wide variety of innovative flavors made from Vermont dairy products.

QUALITY POLICY STATEMENT

QPS serve as a guide for everyone in the organization. This statement clarifies the employees about how the products and services must be provided to the customers. The CEO of the company writes quality policy statement after a careful study and analysis of the feedback from the workforce. Finally the quality council must approve the statement.

EXAMPLE:

Meet the requirements of the customers (both internal and external)

Go ahead competition

Complete utilization of the entire workforce.

STRATEGIC PLANNING

Organizations are finding that strategic quality plans and business plans are inseparable. The strategic planning is three to ten years and short term planning is one year or less. It consists of goals and planning.

SEVEN STEPS TO STRATEGIC PLANNING.

1.  Identification of customer needs.

2.  Determination of customer positioning

3.  Predict the future.

4.  Gap analysis.

5.  Closing the gap.

6.  Aligning the plan to the mission and vision.

7.  Implementation of the plan.

1. Identification of customer needs.

This steps provides a  focus on customer satisfaction.

There needs and wants have to be identified and satisfied.

The profile of the customers are identified. Questions like who are our customers? Will they change in future? What will they want in future?.

2. Determination of customer positioning

The planners determine where the organization wants to be in relation to the customers.

Expand the customer base products or services.

Products with poor quality performance should be removed or eliminated and replaced by better ones.

The organization needs to concentrate its efforts on areas of excellence

3. Predict the future

Predict the future conditions that will affect their product or service Using effective tools for analyzing and predicting future

Some products or services have become absolute because it failed to foresee the changing technologies.

The mangers in the organization anticipate a change in the first place, and then they can make necessary arrangements by making investments on resources and be prepared to take on the future.

The rate of change is continuously increasing.

4. Gap Analysis

The planners to identify the gaps between the current state and future state.

  The present position of the organization in the market in relation to competition, profits, customer satisfaction employee satisfaction, etc. to the intended position.

  If any there is gap identified future strategies must be formulated taking this gap in to consideration.

5. Closing the Gap

  After gap analysis plans must be formulated to reduce or close the strategic gap.

To close the gap by establishing goals and responsibilities.

All stakeholders should be included in the development of the plan.

6.     Alignment

      It must be aligned with the mission, vision, and core values and concepts of the organization.

7.     Implementation

a.     Resources must be allocated to collecting data, designing changes and overcoming resistance to change.

b.     To monitoring activities to ensure that progress is being made.

Monitoring by the steering committee and periodical assessments are required for an effective and speedy implementation

CUSTOMER SATISFACTION

CUSTOMER SATISFACTION MODEL:

CUSTOMER:

A customer can be defined as one who purchases a product or service. There are two distinct type of customer.

Customer satisfaction is achieved when their expectations are matched by what is offered to them by the organization. It is important for the organization to listen to the voice of the customers to ensure that is marketing, production, R&D , distribution and service truly meet the expectations of the customers.

There are two distinct types of customers; they are external and internal customers.

A)External Customers:

External customers can be defined as the one who purchases the product of the organization for end usage or for reselling or to use the product in his production process as raw material.

B) Internal customers:

Internal customers are the employees of the organization. As far as the top management in concerned they have an obligation to keep internal customers satisfied.

CUSTOMER PERCEPTION OF OUALITY:

An American society for quality (ASO) survey on end user perception of important factors that influenced purchases showed the following ranking.

1.  Performance

2.  Features

3.  Service

4.  Warranty

5.  Price

6.  Reputation

1.  PERFORMANCE

Performance of the product is the ―fitness‖ the product or service by the customer at the time of sale.

It indicates that the product can be used as such without any further modification.

Availability, which is the probability that a product will operate when needed.

Reliability is the consistent performance of the product every time is used Maintainability which is the ease of keeping the product operational is also important.

2. FEATURE

Features are the secondary characteristics or added facilities available with the core product.

FOR EXAMPLE:

Primary function of an automobile is transportation where as stereo system is a feature.

3. SERVICE:

Service is emerging as a method for organizations to give the customer added value.

  The product may work fine but if the service which is attached to the product is not managed properly then it will lead to customer dissatisfaction.

FOR EXAMPLE:

Purchase of Air conditioner, the seller has to come to your home to install and run the A/C machine. After that he must come and service the A/C with regular internal and incase of any problem immediately come and repair the problem.

4. WARRANTY:

The warranty encourages customer to buy a product a service by reducing the risk of the purchase division.

5. PRICE:

Customer is willing to pay a higher price to obtain value. he evaluating product and services against those of its competitors who provides the greatest value.

6. REPUTATION:

Find organizations by our overall experience with them.

Customer satisfaction is based on the entire experience with the organization not just the product.

FEEDBACK:

Customer feedback must be continually solicited and monitored. Customer continually changes. They change their minds, their expectations and their supplies. Customer feedback is not a one-time effort it is a ongoing and active probing of the customer‘s mind.

IT ENABLES THE ORGANIZATION:

Discover customer dissatisfaction.

Discover relative priorities of quality.

Compare performance with the competition.

Identify customer‘s needs.

Determine opportunities for improvement.

TOOLS USED:

1.          COMMENT CARD –attach with warranty card.

Comment cards are simple cards usually in the form of prepaid postage card which can be attached with the product manual or the warranty card. or just included with the product the time of purchase.

2.          Survey.

It is more effective and also popular tool for obtaining opinions and perceptions about an organization and its products and services.

Customers are asked to furnish the answers related to the quality of the product and service.

3.                            Focus group.

The focus group is like an in depth interview, except that it involves a group rather than an individual. It is a group interview that tries to stimulate people to talk freely about the products.in a typical focus group, a few customers are invited to attend a group discussion at a central interviewing location.

4.                            Toll-free telephone numbers.

Toll free phone numbers (1600 – inIndia, /800/888 in US) are an effective technique for receiving customer feedback. Organizations can respond faster and more cheaply to a complaint on receiving a complaint call.

5.        Customer visits.

Company personnel visiting customers at their place will provide valuable information and feedback on the product.

6.        The Internet

Web home pages and e-mails have become very popular these days that they are fast replacing the conventional methods of feedback mechanism.Customers also find it very easy and cheaper to provide feedback to the supplier.

Using customer complaints:

Every single complaint should be accepted, analyzed and acted upon for its represents.

Information on customer dissatisfaction is received into

the organization at the highest level, there by providing a fast response.

Complaints can be seen as opportunity to obtain information and provide a positive service to the customers.

Activities of the customer complaints:

Investigate customer‘s experiences by actively soliciting feedback both positive and negative and then acting it promptly.

Develop procedures for complaint resolution.

Analyze complaints but under stand that complaints do not always fit in to neat categories.

Survey response is received a senior manager should contact the customer and strive to resolve them.

Establish customer satisfaction measures and constantly monitor them. Provide a monthly complaint report to the quality council for their evaluation and improvements.

SERVICE QUALITY

CUSTOMER SERVICE is the set of activities an organization used to win and retain customer‘s satisfaction. It can be provided before during or after the sale of the product or exits on it‘s own.

ELEMENTS OF CUSTOMER SERVICE:

ORGANIZATION:

Identify each market segment.

Write down the requirements.

Communicate the requirements.

CUSTOMER CARE:

Meet the customer expectations. Get the customer point of view. Deliver what is promised.

Make the customer feel valued. Respond to all the complaints. Over respond to the customer.

Provide a clean and comfortable customer reception area.

COMMUNICATION:

Optimize the trade-off between time and personal attention.

Minimize the number of contact points.

Provide pleasant knowledgeable and enthusiastic employees.

Write documents in customer friendly language.

FRONT-LINE PEOPLE:

Serve them as internal customer.

Hire people who like people.

Give them the authority to solve the problem.

Challenge them to develop better methods.

Be sure they are adequately trained.

Recognize and award performance.

LEADERSHIP:

Lead by example.

Listen to the front-line people.

Strive for continuous process involvement.

CUSTOMER RETENTION

Wheather retail or industrial customer, are constantly watching out for better cheaper products and when a competitor is able to offer the product better, that the customers usually switch.

Any organization should develop a very personal relationship with individual customers, so that they do not switch over to the competitors.

CUSTOMER RETENTION represents the activities the produce the necessary customer satisfaction that creates customers loyalty, which actually improves the bottom line.

EMPLOYEE INVOLVEMENT

TQM requires everybody‘s involvement in the process and everyone should feel that the company belongs to them. Employee involvement results in improved quality and productivity.

MOTIVATION:

MEANING/DEFINITION:

1.  Motivation is a process that starts with a physiological or psychological deficiency or need that activates behavior or a derive that is aimed at a goal or an incentive.

2.  Motivation is the result of processes internal and external to the individual that arouse enthusiasm and persistence to pursue a certain course of actor.

THEORIES OF MOTIVATION:

MASLOW THEORY

According to this theory every individual is depicted as a wanting organism with a desire to rise from one level to another level in the society. Maslow suggests five levels for every individual with differing needs at every level.

1. Basic  or physiological needs

The first need of a person is physiological in nature. physiological needs are the necessities for survival. Once this need is satisfied, they no longer act as motivators for the employee. These factors when available are taken for granted and employees look for the next level as motivators.

2.          Security or safety needs.

Employees now strive to achieve the next level which is safety needs. These needs include safe place of work and job security, which are very important for employees.

3. Social needs.

Since a man is social being, he has a need to belong and to be accepted by the various groups. When social needs are dominant, a person will strive for meaningful relationship with others. He gets a fear of being rejected.

Conversely when an individual has an opportunity to be a part of a group by feeling important and needed will motivate that person.

4. Esteem needs.

Self esteem needs are concerned with self respect, recognition, self worth and feeling of being unique.

5. Self- actualization.

Individuals in an organization must be given the opportunity to go as far as their abilities will take them. Many organizations have a policy of promoting employees from within. This motivates employees to contribute their maximum to the organization.

HERZBERG‟S TWO-FACTOR THEORY:

He identified that people were motivated by recognition, responsibility, achievement and job advancement. He labels these factors as motivation.

He also identified that bad feelings were associated with low salary, minimal fringe benefits. Power working environment and ineffective supervision.

These factors were labeled as dissatisfaction or hygiene factor

It should note that the presence of extrinsic (hygiene factors) results in dissatisfaction, but the absence of motivating factor does not make employee dissatisfied.

EMPLOYEE EMPOWERMENT

MEANING:

Employee empowerment is making a person completely responsible for a particular task; the individual who is empowered becomes the process owner.

In the empowerment the individual in given complete authority required to execute the process and ownership is created.

Condition:

·        Every one should understand the need for change in culture and attitude.

·        The system must change to the new paradigm.

·        People should be provided with necessary resources.

Empowerment is an environment in which people have the ability the confidence and the commitment to take the responsibility and ownership to improve the process and initiate the necessary steps to satisfy customer requirements within well-defined boundaries in order to achieve organizational values and goals

TEAMS

T-together E-everyone A-achieve M-more

A team is defined as a group of people working together to achieve common objectives or goals.

Teamwork is the cumulative actions of the team during which each member of the team subordinates his individual interests and opinions to fulfill the objectives or goals of the group.

TYPES OF TEAM

1. Process improvement team.

Here, five to six members from various disciplines of the organization are brought together to solve a problem. Usually the scope of the team is limited to the work unit.

The life cycle of the team is usually temporary. The team is disbanded after the problem (process improved) is solved.

2.  Cross-functional team.

Here the team is constituted by the number of different functional areas such as production, engineering, marketing, finance, e etc. it may also include customers and suppliers.

3. Natural team.

This type of team is not voluntary in nature as it was with other teams. Here all members of the work unit are in the team and the manger is also part of the team.

4. Self-management work groups.

They are an extension of natural work team without the supervisor. These teams are the essence of the empowered organization. These teams not only do the work but also manage it.

STAGES OF TEAM DEVELOPMENT:

1. Forming.

Forming is the fist and beginning stage of the life cycle of a team.

A facilitator is appointed by the quality council and he meets with the senior management to charter the path the solution of the problem should take.

Once team is assembled, a meeting is called and the facilitator briefs the problem to the team, and then determine the type of training the team members may need and identify an appropriate team leader.

2. Storming.

In this stage all members of the team are fully aware of the quality problem they are faced with.

They will be interested in proving themselves by exhibiting their individual skills.

3. Norming.

In this stage members have understood each other well. Everyone knows each others strengths and weakness and capabilities and limitations.

The roles of the members are clearly defined, mission and objectives are clear and the course to be taken to solve the problem is also clear.

4. Performing.

In this stage, the team members have understood the project better and begin performing by diagnosing and solving problems and choosing and implementing changes.

BARRIES OF TEAM PERFORMING:

1.  Poor training for the group members.

2.  Improper reward schemes.

3.  Lack of planning.

4.  Lack of management commitment in monitoring the team program.

5.  Poor communication.

6.  Too many members in team.

Role of team leader:

1.  Ensure the smooth and effective operation of the team.

2.  Handling and assigning the responsibilities.

3.  Good record keeping.

4.  Preparing and presenting the report.

5.    Prevents other members from dominating.

6.  Use positive interpersonal dominating.

7.  Serve as a contact point between the team and qty council.

8.  Monitors the status and accomplishments of member assuming firmly completion of assignments.

9.  Prepares the meeting agenda i.e. time, date, location.

Role of team member:

1.  Contributes best.

2.  Sharing knowledge.

3.    Listen carefully and ask question.

4.  Negotiate important points.

5.  Supports the decisions of the team.

6.  Trust support concern for other team members.

7.  Understands and is committed to team objectives.

8.  Respects and is tolerant of individual differences.

9.  Acknowledges and worker through conflict openly.

10.Carries out assignments between meetings such as connecting data observing charting data and returning report.

11.Gives honest sincere appreciation.

Recognition and reward:

Recognition and reward are basic motivational tools used to motivate employees to encourage them to maintain and improve their present level.

Publicly acknowledging the contributions of an individual is called recognition.

This acknowledgement may be in the form of a certificate or a verbal praise.

On the other hand the rewards are tangible such as cash reward, gold coins etc

Reward can be delayed but the recognition of the contributions must be done immediately.

Purposes:

1.  Reward system reminds the continual improvement required for the TQM journey.

2.  Serves as a platform for encouraging the super performances.

3.  Serve as a goal for the employee.

4.  Serve as a morale booster.

Performance appraisal

Performance appraisal is the judgement of employee‘s performance in the organization.

Performance appraisal is defined to show the employees how they are doing. This serves as a basis for promotion, salary increases etc those who are rated poorly should be allowed to undergo special counseling and skill up-grading programmer.

It should help people to assess themselves and improve.

Appraisal format:

1.  Ranking- compares employees by ranking from highest to lowest.

2.  Narrative- gives a written description of employee‘s strength and weakness.

3.  Graphic-indicate the major duties performed by the employees and rate each duty with a sale, which is usually from 1(poor) to 5(excellent).

4.  Forced choice-places each employee‘s in a category with a predetermined percentage for example excellent 10%, very poor 25%, grave 30%, fair 25%, poor10%.

BENEFITS

1.  PROMOTION

2.  SALARY INCREASE

3.  BONUS

4.  INCENTIVES

5.  INDENTIFYING TRAINING NEEDS

6.  IMPRORING SKILLS OF THE EMPLOYEE‘S

7.  TO IMPROVE EMPLOYEE PERFORMANCE

8.  TO RATING THE CUSTOMERS.

CONTINUOUS PROCESS IMPROVEMENT

CPI is the care of TQM. CI in the business process as war as production process is desired for the growth of the organization.

CPI is possible by

1.  Making all process effective and adaptative.

2.  Accepting the change in the customer requirements and tuning ourselves to meet demand.

3.  Improving the productivity by eliminating waste.

4.  Permanently eliminating the ‘non-value adding activities‘.

5.  Our self with the best player in the field.

6.  Using advanced tool like DOE(design of experiments), SPC, quality function development etc .

JURAN‟S TRILOGY

Juran‘s trilogy consists of three managing process quality planning, quality control and quality improvement.

Quality planning:

The quality planning starts with identifying external customers of a business.

Identify who are the customers.

·        Determine the needs of those customers

·        Translate those needs into the business possibility

·        Develop a product that can respond to those needs

·        Optimize  the  product  features so  as  to  meet  the  organizations needs and customer‘s needs.

Quality Improvement

Develop a  process which is able to produce the Product.

Optimize the process.

Quality control:

Prove that the process can be producing the producet under operating conditions with minimal inspection.

Transfer the process to operations.

The quality control involves checking the products produced with specification.

QUALITY IMPROVEMENT STRAREGIES

1.  REPAIR:

There are two levels of repair.

a)   In the first level the team or an individual working in the process identifies the problem and eliminates the root cause of the problem. This brings in permanent solution for the problem.

b)  In the next level the faulty product reaches the customer. The customer then indicates that he has received a bad product and the product is either replaced or repaired. This is temporary solution to the problem.

c)   It is important to note that the repair strategy will not make the process better than the original design.

2.  CONTINUOUS IMPROVEMENT/ REFINEMENT:

Refinement is doing things a little bit, faster, better, easier, or with less waste.

It is the process products and services are required to keep the quality improvement process alive. But management may fail to notice the small improvement and influence fail to reward the improvement efforts. This will result in dissatisfaction and loss of involvement.

3.  INNOVATION:

The processes and products by innovative methods.

For example: automation of process.

4.  PARADIGM SHIFT (RE-INVENTION):

When a company understand that the existing processes cannot ensure the customer satisfaction it is better to reinvent the process.

PDSA CYCLE

STEWART developed the plan-do-check-act (PDCA) cycle and late Deming modified it to plan-do-study-act (PDSA) cycle.

Plan: By management. Do: By the operator. Study: quality manager Act: management

Plan

 It is important to establish the stage of the change to be introduced.

 Plan on how you are going to collect the information about the differences that occur after the implementation of the plan.

 What is to be done and how to achieve.

Do:

Put the plan into practice.

There may be changes that should only be measured over long periods.

Record any unexpected event, problems and other observations. Star analyzing the data.

Study

Review and reflect on the data collected in the previous step

Find out whether there has been any improvement in the process. Did your expectations match the reality of what happened?

Find out what could have been done differently.

Act

Carry out an amended version of what happened during the ―Do" stage and measure any differences

PROBLEM SOVING METHOD FOR PROCESS IMPROVEMENT.

5s-concept

1. Seiko (Proper arrangements)

This is the proper identification of materials, equipments and tools, data and information which are necessary or not necessary,.

Provide the necessary space for the required or necessary items which you require to perform the necessary task.

2. Seiton (orderliness)

Every equipment or data or anything should be placed in its appropriate and unique place.

So that a simple eraser or pencil can be found at the same place every time by everybody in the organization.

This reduces confusion and avoids wastages of time.

The place in which it is stored should be easily accessible and appropriate.

3. Seiso (Cleanliness)

The shop floor should be free of wastage, oil spills, cotton wastes etc., The tools also should be clean, the machines should be clean and the entire organization should be free from dirt and any unexpected objects lying around.

Keep the work place clean and make data and information easily available and constantly updated in order to support decision making.

4. Seiketsu (personal cleanliness).

A person should be clean and his cloths should be clean. Only a clean person can be conscious about keeping his workplace clean and neat. Moreover unclean person present a work situation were co-workers become uncomfortable to work in.

Personal cleanliness automatically creates a favourable condition at work place for physical and mental health, free from dirt, pollutants etc.

5. Shitsuke (Discipline).

This may not only be the jobs related to the organization but also personal work.

Job discipline is the habit and skill development to perform the job according to standards, to observe company rules and policies at all times.

This habit of discipline is developed as a result of excursing mental, moral and physical strength.

KAIZEN

The philosophy that defines management role in continuously encouraging and implementing small improvements involving everyone.

It is the process of continuous improvement in small increments that make the process more efficient, effective, under control and adaptable.

Improvements are usually that make the accomplished at little or no expenses without sophisticated techniques or expensive equipment. It focuses on simplification.

Kaizen is possible only when the management is able to hear the workers. It requires an effective communication in both the directions.

KAIZEN REQUIRES THE USE OF THE FOLLOWING:

1.  The data about value adding and non-value adding activities.

2.  The knowledge about various types of waster (Muda). Over production, delay, transportation, processing, inventory, wasted motion and defective parts.

3.  Documentation of the operating procedure.

4.  Principles of time study.

5.  Following the 5s concept.

6.  Fewer inventories – use JIT.

7.  Mistake proofing- to prevent or detect errors.

8.  Effective use of teams to solve problems and to improve the performance.

SUPPLIER PARTNERSHIP

The relationship between customer (company) and the supplier. Customer and supplier have the same goal to satisfy the end user. Both the customer and the supplier have limited resources they must have work together as partners to maximize their return on investment.

Principles of customer-supplier relations:

1.  Both the customer and supplier are responsible for the quality control.

2.  Supplier and customer should be independent of each other.

3.  The customer must communicate to the supplier about his requirements.

4.  There should be agreement with respect to quality, price, mode of delivery and payment mode.

5.  The supplier should supply quality materials that will result in customer satisfaction.

6.  Provisions for the easy settlement of the disputes.

7.  Mutual exchange of information.

PARTNERING

Meaning:

Partnering is a long-term commitment between two or more organization for the purpose of achieving specific business goals and objectives by maximizing the effective of each participants resources.

Benefits:

1.  Improve quality.

2.  Increased efficiency.

3.  Lower cost.

4.  Opportunity for innovation.

5.  Continuous improvements of product and services.

KEY ELEMENTS OF PARTNERING:

1.  LONG-TERM COMMITMENT:

Long-term commitment provides the needed environment for both partners to work toward continuous improvement.

Problems require time to solve or process need constant improvement.

Each partner contributes its unique strengthen to the processes.

Investment in new equipment or systems may be required.

These must be a to far organization involvement from the CEO to the workers.

2. TRUST:

Mutual trust forms the basis for a strong working relationship.

Open and frequent communication avoids misdirection and disputes while strengthening the relationship.

The parties should have access to each other business plans and technical information.

They may share or integrate resources such as training activities, administration systems and equipment.

Both parties become mutually motivated when win-win solution not rather than win-lose solution.

3.  SHARED VISION:

 Shared goal and objectives ensure a common direction and must be aligned with each parties.

 Employees of both parties should think and act for their common good.

Understand each other‘s business so that equitable decision are made

Sharing of business plan.

SOURCING

SOURCING is the process of identifying the suppliers for the items required by an organization for produce or manufacturing the product. There are three types of sourcing

1.  Sole sourcing:

The organization is forced to use only one supplier. Only one organization producing the item.

2.  Multiple sourcing:

Two or more suppliers are available for the required item.

It eliminates dependency.

Usually these suppliers are chose in term of price, quality and delivery.

It will result in better quality low cost and better service.

If there is a strike going on in one of the supplier‘s company the manufacturer need not wait for him.

3.  Single sourcing:

 Though there are number of suppliers available for a particular commodity selecting a single vendor for the organization to supply the item is called single sourcing.

It results in long-term product.

Supplier Selection

The company before going for selecting a supplier should finalize on ―Make or Buy‖ decision. The following questions must be answered before

proceeding with the suppliers.

1.  How critical is the item to the final product/ service

2.  Is it possible to produce the item internally? Do we have technology to produce it? If not, can we develop it?

3.  Are there any specialized suppliers for the item? Or can we develop such a supplier?

Finally the decision is made to outsource, the following points must be considered for evaluating the suppliers.

a.   The supplier‘s ability to understand the management philosophy of the organization.

b.  The technical expertise available now and the ability to cope up with the future technical requirements.

c.   The supplier‘s ability to consistently supply the raw materials that meet the specifications of the purchaser.

d.  The supplier‘s ability to meet the demand and ability to increase the volume of production when demanded.

e.   The credibility of the supplier in maintaining the corporate secrets.

f.    System of delivery and communication systems available with the supplier.

g.   The track record of the supplier with the company.

Supplier Rating.

To assess the performance of the suppliers with respect to quality, speed if delivery, and service, the supplier rating is done. Supplier rating is the process of categorizing the suppliers on the basis of quality, prompt delivery, and services.

1.         Supplier rating enables the company to obtain an overall rating of the supplier performance.

2.        It ensures complete communication with customers on all the key areas.

3.         It enhances the customer- supplier relationship by providing an objective feedback of the supplier‘s performance.

4.        It provides the supplier‘s with a factual record of mistakes, so that the suppliers can eliminate them in future.

For example

Supplier Rating System. - Scorecard.

The above the clearly show - the supplier –A having more score comparing with the B and C. so it is conclude that the supplier –A is good performance.

RELATIONSHIP DEVELOPMENT

Sustaining the relationship with the suppliers is important after initiating the customer supplier partnering process. To keep the relationship alive and growing the following activities are carried out.

1. Inspection

The purpose of this inspection process is to gain confidence in each other‘s performance and finally automating the inspection activity. There are four phase in the inspection process.

a.   100% inspection

b.  Sampling inspection

c.   Audit

d.  Identity Checks.

2. Training

It is always better to educate the suppliers on what we expect from them and what quality means to us in the business process. This is possible by allowing the suppliers to undergo training programmes conducted by the senior officials at customer‘s sites.

3. Team Effort

In all the possible areas the teams must involve officials from the suppliers side also. This will enhance the understanding of the suppliers and their role in the business process will be clear to them.

The team meeting must be arranged at both the customer and the supplier premises.

4. Recognition

The customer should recognize the supplier‘s performance by awarding them with a place in the preferred suppliers list. A certificate of contribution to the business must be given to them. This recognition will surely develop the relationship between the customer and the supplier