GORDON COLLEGE

OLONGAPO CITY
COLLEGE OF HOSPITALITY AND TOURISM MANAGEMENT

HPC 104
Supply Chain Management in Hospitality Industry

“SUPPLY CHAIN QUALITY MANAGEMENT”

Submitted by:
Group 8
Mangilit, Angelica D.
Efe, Princess Elaine
Palomata, Cristian Angelo
Tulio, Kyla Nicole
Gutierrez, Antonin Rodet
Diño, Menandro

Submitted to:
Mr. John Vincent G. De La Cruz
Instructor

December 5, 2019
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COLLEGE OF HOSPITALITY AND TOURISM MANAGEMENT

A. DEFINITION AND IMPORTANCE OF SUPPLY CHAIN QUALITY MANAGEMENT

DEFINITION OF TERMS:
According to Foster -SCQM is defined as a systems-based approach to performance
improvement that leverages opportunities created by upstream and downstream linkages with
suppliers and customers.
Supply chain quality management (SCQM) involves delivering the best quality products
or services to clients through collaborative quality management of the supply chain by its
members, such as buyer and supplier. In other words, to gain competitive advantage and improve
business performance, enterprises must monitor their internal efficiency and simultaneously
manage companies within their chain or network.
SCQM is the orientation, coordination, and implementation of all activities smoothly
occurring in the supply chain. It is useful for improving operational quality and product quality as
well as increasing customer satisfaction.
Supply chain quality management is official coordination, integration of business
processes, of all organizations that are members of a supply network for measurement, analysis,
and continuous improvement of products, services, and processes to create value and achieve the
satisfaction of all middle and end users of markets (Benaisa, 2010).
Lin etal. (2013) define Supply Chain Quality Management as a way to prevent unwanted
deviations, create system-level optimization, ensure accountability of channel partners and build
competent supply networks concerned with designing, linking, and managing tactical and strategic
activities of the supply chain network.
Quality and supply chain management need to be integrated and incorporated into
managers decision-making as Supply Chain Quality Management.
The Definition of Supply Chain Management in Equation Form
1. SC - A production network up to the phase of distribution.
2. Q - Appropriate meeting of market demand, rapid customer satisfaction.
3. M - Providing conditions and increase in confidence for the improvement of supply chain
quality.
QUALITY MANAGEMENT
 It is also referred to as total quality management (TQM).
 Quality management in supply chain can be defined as conformance to requirements.
 It is the act of overseeing all activities and tasks needed to maintain a desired level of
excellence.
 Includes the determination of quality policy, quality planning and assurance, and quality
control and improvement.
 Quality management is focus not only on product and service quality, but also on the means
to achieve it.
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 Quality management, therefore, uses quality assurance and control of processes as well as
products to achieve quality that is more consistent. What a customer wants and is willing
to pay for it determines quality.

IMPORTANCE OF SCQM:
Quality management improvements in reducing process variation directly impact on
several supply chain performance measures. With continuous quality management improvement,
defects - and therefore, process and production variation, are reduced. In turn, as consistency in
the supply chain improves due to the variation reduction, cycle times are reduced (the time between
two successive replenishments) and on-time delivery improves (Flynn & Flynn, 2005).
Supply chain management directly impacts product quality and the overall profitability of
a company. Quality control in the supply chain is critical for maintaining a competitive edge in
the marketplace and reducing operating costs. Without quality control, waste becomes prevalent
beyond a tolerable amount.

Defects and Scrap

If raw materials are flawed, it can make entire production lines inefficient and increase defect rates
in finished goods inventory. Also, inferior materials may require extra machining or refining,
which adds to employees’ workloads and total manufacturing costs. Vendors and the materials
they provide are often audited by supply chain staff members to ensure raw materials meet
specifications. By controlling the quality of production inputs, supply chain managers are
protecting the integrity of their company’s operations.
External Failures
When supply chain quality control is poor, products are more likely to break or wear out
before their warranty period expires. There are a large number of failures that can occur once a
product leaves a manufacturing facility, depending on the nature of the business. Customers who
are forced to return items may lose respect for the company from which they purchased the
product. Quality control in the supply chain ultimately helps to protect a company’s reputation.
The better the control over supplier inputs, the less risk of returns and potentially hazardous
product failures.
Inspections
Companies that experience large quantities of defects and other forms of waste produced
during manufacturing, often implement manual inspections to ensure product quality. Inspections
raise operating costs and are unnecessary if quality controls are functioning properly. Quality
control procedures and audits of supplier relationships are critical for avoiding continual
inspections on the production line. Otherwise, labor hours will be lost inspecting materials and
finished-good inventory that could be allocated to value-added activities.
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Toxic Materials
Hazardous materials are used throughout the world for various purposes in manufacturing,
especially in defense-related industries. Quality control helps to protect employees and other
stakeholders from being exposed to the harmful side-effects of toxic materials. The U.S.
Department of Transportation prescribes important rules for the transport of hazardous substances.
Non-compliance can lead to penalties or fines, which makes quality control imperative. The more
efficiently and effectively toxic materials are handled in the supply chain, the better for all internal
and external stakeholders.
B. POSITIVE RELATIONSHIP OF QUALITY MANAGEMENT & SCM
FOUR MAIN COMPONENTS OF QUALITY MANAGEMENT
Quality Control Planning
The first step of quality management is planning. You need to take the time to identify your goals
and what you want your baseline to be. You should determine what your quality standards are, the
requirements necessary to meet these standards, and what procedures will be used to check that
these criteria are being met. In this planning stage, you will want to consider:
 What your stakeholder’s expectations and priorities are, if applicable
 What your company’s definition of success is
 What legal standards or requirements are in place that must be abided by
 Who will handle each role in the quality management process (supervision, testing, etc.)
 How often processes will be evaluated for improvement
Quality Control
Once you have a plan in place, quality control comes into play. This is the process of physically
inspecting and testing what you laid out in the planning stage to make sure it is obtainable. You
need to confirm that all the standards you have put into place are met, and you need to identify any
mishaps or errors that need to be corrected. The sooner you can catch these errors, the better. As
such, you should be paying attention to all aspects of the product, including both the materials used
and the process of putting them together.

Once the inspection data has been collected, it should be displayed in a way that makes it easy to
analyze. You can create histograms, run charts, or cause and effect displays, and then easily share
them through your document management software to make sure everyone has access to them.

Quality Assurance
While quality control involves inspecting the actual products or services in the field, quality
assurance is reviewing the delivery process of services or the quality management manufacturing
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of goods. By inspecting your goods or services at the source, you can catch mistakes before they
reach the customer. You can also fine tune your processes to prevent errors in the future. When
reviewing your product or service during this stage of quality control management, you will want
to follow these steps:
 Confirm that everything is operating as it was agreed upon during the quality planning
stage
 Measure how effective your pre-determined processes are and confirm that all compliance
needs are being met
 Take note of any lessons learned
 Identify areas where there is an opportunity for a smoother process
 To be effective, quality assurance must be completed regularly through independent audits.
For the best results, have the audit completed by a third-party that is not financially or
emotionally invested in the outcome.
Quality Improvement
Finally, after completing the quality control process, you need to thoroughly review your findings
and come up with a way to improve your methods going forward. Quality control management is
fruitless if you are not willing to make changes when they are necessary. The desire for continual
improvement is the goal for every successful company. So, gather all your data, re-evaluate both
the processes and the product—always keeping compliance in mind—and then begin the quality
control management process again. With each cycle, you will end up with a better product, happier
customers, and more profit in your pocket.
Total quality management is a set of quality practices that seek to continuously improve
quality in processes. The eight key principles of total quality include (Monczka et al., 2009):
1. Define quality in terms of customers and their requirements.
2. Pursue quality at the source.
3. Stress objective rather than subjective analysis.
4. Emphasize prevention rather than detection of defects.
5. Focus on process rather than output.
6. Strive for zero defects.
7. Establish continuous improvement as a way of life.
8. Make quality everyone's responsibility.
Supply chain management is an approach to integrating suppliers, manufacturers,
distributors and retailers, such that products are produced and distributed at the right quantities, to
the right location, at the right time, with the mutual goals of minimizing system wide costs and
satisfying customer service requirements (Simchi-Levi et al., 2008).
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In other words, supply chain management synchronizes a firm's processes with its suppliers
and customers with the goal of matching the materials, services and information with customer
demand (Krajewski et al., 2010).
Critical supply chain processes include product design, production, delivery, support, and
supplier-customer relationships. To succeed in today's environment, managers need to integrate
their goals effectively to compete in the dynamic, global economy and focus on the final customer
as the driver for improvements. Supply chains compete based upon cost, quality, time and
responsiveness. Supply chain improvement tools include, but are not limited to process
improvement tools of flow charting, flow diagrams, service blueprints, process analysis, process
re-engineering, link charts, multi-activity analysis, backward chaining, and Gantt charts.
Quality is one of the most important factors for companies in their relationship between
suppliers and customers. In fact, quality is so critical that today's executives question whether their
companies should be participating in global sourcing as many global suppliers are not able to meet
quality requirements (Brockwell, 2011).
Positive relationships between quality management and supply chain management exist.
Quality management practices, such as design for manufacturability, whereby product and
process decisions are developing in new products simultaneously, and effective product designs
geared toward the final customer requirements result in less product and process variation. While
variance reduction in the processes obviously leads to quality improvements, consideration to the
processes used during design enables management to switch from one product to another quicker.
Therefore, design for manufacturability leads to quicker setup times between products (Flynn &
Flynn, 2005). Quicker setup times allows companies to reduce lot sizes as less cycle (inventory
needed between two successive replenishments) and safety stock (the amount of inventory
required to protect against deviations from average demand during lead time) is required (Simchi-
Levi et al, 2008).
As fewer defects are created, the amount of inventory in the supply chain is reduced.
Supply chain members move only 'good' units, and not 'defective' units through the supply chain.
Quality management practices reduce process variance, which has a direct impact on supply chain
performance measures, such as inventory and time measures (Flynn & Flynn, 2005). As process
variation is reduced, leading to more quality units and fewer defective unit moving through the
supply chain, the cycle time will also improve. With fewer defective units moving through the
supply chain, delivery dependability improves. Similarly, cycle time improvements result in less
inventory 'in the way' of supply chain movement as there is less need for safety and cycle stock
inventory, and fewer defective units need to be scrapped or replaced (Simchi-Levi et al., 2008).
Quality efforts to reduce variation have many positive results, including pipeline inventory
reduction (Flynn & Flynn, 2005). Pipeline inventory (the amount of inventory between members
of the supply channel including work in process inventories between manufacturing operations) is
held as a function of manufacturing, supply and delivery cycle times. Through quality
management, as the number of defects in the supply chain decreases and cycle times are shortened,
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simultaneously the total and pipeline inventory are reduced (Simchi-Levi et al, 2008). As already
noted, pipeline inventory is also improved through variance reduction.
A quality improvement leading to a reduction in defective units, and therefore a reduction
in rework, has a positive impact upon the supply chain as cycle times are reduced, schedules are
met and customer response times improve (Flynn et al., 1995; Mefford, 1989). Fewer defective
units in the system allow the remaining units to move through the supply chain faster, which is
noted by improved cycle times. As companies are able to move product faster through the supply
chain, schedules and the customers' demands can be met faster. This allows an improved
synchronization and integration across the entire supply chain (Ferdows et al., 2004).
Utilizing statistical process controls throughout the supply chain aids in variation
reduction, ensures quality inputs and reduces work-in-process in the supply chain system. Quality
at the source, feedback and process controls ensure quality throughput in the system and therefore,
reduces inspection time for raw materials, in-process inventory, and finished goods (Flynn &
Flynn, 2005.
C. EXAMPLE OF QUALITY TOOLS
QUALITY TOOLS
 A designation given to a fixed set of graphical techniques identified as being most helpful
in troubleshooting issues related to quality.
 They are called basic because they are suitable for people with little formal training in
statistics and because they can be used to solve the vast majority of quality-related issues.

1. Flowchart
Most of us are familiar with flowcharts. You have seen flowcharts of reporting
relationships in organizational structures.
Flowcharts are also used to document work process flows.This tool is used when trying to
determine where the bottlenecks or breakdowns are in work processes.Flow-charting the steps of
a process provides a picture of what the process looks like and can shed light on issues within the
process. Flowcharts are also used to show changes in a process when improvements are made or
to show a new workflow process.
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2. Check Sheet
A check sheet is a basic quality tool that is used to collect data. A check sheet might be
used to track the number of times a certain incident happens. Check list also helps employees to
identify problems which prevent an organization to deliver quality products which would meet and
exceed customer expectations. Check lists are nothing but a long list of identified problems which
need to be addressed. Once you find a solution to a particular problem, tick it immediately. . Check
sheet (Tally Sheet)

A check sheet can be metrics, structured table or form for collecting data and analysing
them. When the information collected is quantitative in nature, the check sheet can also be called
as tally sheet.
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The very purpose of checklist is to list down the important checkpoints or events in a
tabular/metrics format and keep on updating or marking the status on their occurrence which helps
in understanding the progress, defect patterns and even causes for defects.

3. Cause and Effect (fish bone) Diagram

A cause and effect diagram, also known as a fish-bone diagram shows the many possible
causes of a problem.

To use this tool, you need to first identify the problem you are trying to solve and simply write it
in the box (head of the fish) to the right.Next, you will list the major causes of the problem on the
spine of the fish.
Once all of the possible causes are identified, they can be used to develop an improvement
plan to help resolve the identified problem. The very purpose of this diagram is to identify all root
causes behind a problem.
Once a quality related problem is defined, the factors leading to the causal of the problem are
identified. In manufacturing industry, to identify the source of variation the causes are usually
grouped into below major categories:

 People
 Methods
 Machines
 Material
 Measurements
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 Environment

4.Pareto Chart
A Pareto chart is a bar graph of data showing the largest number of frequencies to the smallest.
Pareto chart revolves around the concept of 80-20 rule which underlines that in any process, 80%
of problem or failure is just caused by 20% of few major factors which are often referred as Vital
Few, whereas remaining 20% of problem or failure is caused by 80% of many minor factors which
are also referred as Trivial Many. The very purpose of Pareto Chart is to highlight the most
important factors that is the reason for major cause of problem or failure.
Pareto chart is having bars graphs and line graphs where individual factors are represented
by a bar graph in descending order of their impact and the cumulative total is shown by a line
graph. Pareto charts help experts in following ways:

 Distinguish between vital few and trivial many.

 Displays relative importance of causes of a problem.
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 Helps to focus on causes that will have the greatest impact when solved.

5. Control Charts
Control charts or run charts are used to plot data points over time and give a picture of the
movement of that data. These charts demonstrate when data is consistent or when there are high
or low outliers in the occurrences of data. The very purpose of control chart is to determine if the
process is stable and capable within current conditions.
In Control Chart, data are plotted against time in X-axis. Control chart will always have a
central line (average or mean), an upper line for the upper control limit and a lower line for the
lower control limit. These lines are determined from historical data.
By comparing current data to these lines, experts can draw conclusions about whether the
process variation is consistent (in control, affected by common causes of variation) or is
unpredictable (out of control, affected by special causes of variation). It helps in differentiating
common causes from special cause of variation.
Control charts are very popular and vastly used in Quality Control Techniques, Six Sigma
(Control Phase) and also plays an important role in defining process capability and variations in
productions. This tool also helps in identifying how well any manufacturing process is in line with
respect to customer’s expectation.
Control chart helps in predicting process performance, understand the various production
patterns and study how a process changes or shifts from normally specified control limits over a
period of time.
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6. Histograms
Histograms are bar chart pictures of data that shows patterns that fall within typical process
conditions. Changes in a process should trigger new collection of data. The very purpose of
Histogram is to study the density of data in any given distribution and understand the factors or
data that repeat more often.
Histogram helps in prioritizing factors and identify which are the areas that needs utmost
attention immediately.
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7. Scatter Diagrams
Scatter diagrams are graphs that show the relationship between variables. Variables often
represent possible causes and effect. Scatter diagram or scatter plot is basically a statistical tool
that depicts dependent variables on Y – Axis and Independent Variable on X – axis plotted as dots
on their common intersection points.
The very purpose of scatter Diagram is to establish a relationship between problem (overall
effect) and causes that are affecting.
The relationship can be linear, curvilinear, exponential, logarithmic, quadratic, polynomial
etc. Stronger the correlation, stronger the relationship will hold true. The variables can be
positively or negatively related defined by the slope of equation derived from the scatter diagram.

D. CONSIDERATION FOR QM AND SCM IMPROVEMENT

1. Design

The design process, which is critical for company and supply chain survival, includes all
activities that translate customer requirements, new technology and past learning into functional
specifications for a product, process, or service. With supply chains growing to include global
partners, time elements squeezing the quality attributes of items and development speed
increasing, it is not surprising that the design process has received considerable attention in the
past decade. It is imperative that the products and processes to deliver the item to the final customer
are jointly designed. A wide variety of quality methods can be used to improve supply chains
during the design phase including concurrent engineering, design for assembly, value engineering,
and quality function deployment.
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As supply chain management competition increases, a current design trend is to draw

upstream suppliers into the new product development processes (which we will address in greater
depth shortly). Due to technological and innovation demands, supply chain concurrent
engineering, for products such as electric cars, required suppliers further up the supply chain
(beyond Tier 1 suppliers) to participate in the design process to increase competitiveness, reduce
time to market and increase quality (Pilkington & Dyerson, 2002). As supply chains increase
participation of all members in design efforts, it is imperative that hidden costs of new product
development acceleration, such as the form of skipping steps - particularly information
communication and allocation of resources toward non-profitable, trivial innovation that drives
out more profitable ones, be carefully monitored. Also, it is imperative that during the design
phase, splitting design and production of coupled processes should be avoided.

Design for manufacturability provides a method for designing parts that are easy to
manufacture and assemble, with cost and cycle time reduction and quality improvements as a
result. Continuing in this vein of simultaneous activity, an emphasis on synchronizing product
design decisions with supply chain management decisions, extends the concept of design for
assembly to 'design for supply chain' (Hulta & Swan, 2003; Joglekar & Rosenthal, 2003; Lee &
Sasser, 1995) and 'design for logistics' (Simchi-Levi et al., 2008). Design for supply chain
addresses the simultaneous design for materials across the different supply chain levels, while
design for logistics emphasizes consideration during design to the processes used to move the
items through the supply chain, such as packaging, transportation, timing of value-added processes
and standardization. Using design for manufacturability, the automotive industry analyzed the
make/buy decision with a focus on supply chain processes which resulted in product and
production capability optimization, concluded that simpler products should be outsourced while
complex designs remain in-house, and supported the strategic importance of the product in the
make/buy decision .

Integration in the design process can lead to cost reduction, supply chain competitiveness and
improvements in quality, product safety, resource planning and materials management.

2. Production/ delivery, and support processes

The production process is responsible for manufacturing the product from inputs through
processes to outputs, while delivery processes are responsible for delivery of the product to the
customer.
Useful quality management tools in production, delivery and support processes include
(but are not limited to) process improvement techniques, Six Sigma quality, performance
measurement, Kaizen, benchmarking, value stream mapping, value analysis, and re-engineering.
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Value analysis and value engineering are useful methods to improve the product, processes or both
during new product development to ensure that the product or service fulfills its intended function
at the lowest total cost.
Defense, life cycle costs are reduced through value engineering processes focused on low-
cost systems for equipment, procedures, and supplies that are safe, reliable, and maintainable
(Benstin et al., 2011). Value analysis and value engineering were successful used in the chemical,
plastic, electronic, transportation and packaging industries to improve production performance,
product quality, safety, and customer service while reducing transaction costs and inventory costs.
Benchmarking, whether informal or formal, is an effective method to improve quality,
decrease costs, decrease lead time, improve dependability, and reduce shortages. Benchmarked
firms improved their supply chains significantly on various measures over firms that chose not to
benchmark (Heizer & Render, 2006). A benchmarking study of supply chain processes from
different industries that used dependency analysis and data envelopment analysis favored efficient
supply chains as higher financial performers (Reiner & Hofmann, 2006).
3. Supplier-customer relationship management
Quality is the most important factor for companies in their relationship between suppliers
and customers .
Therefore, supplier and customer relationship management processes can enhance or
inhibit competition.
Critical processes to this relationship include communication, mutual assistance on new
product development, and training. Strong relationships develop win-win relationships, trust,
openness and honesty.
Supplier evaluation and supply base rationalization processes can assist with improving
supply chain quality throughout the system as variation between suppliers is reduced and product
quality can be improved,
Supplier certification programs incorporate quality and delivery factors into the vendor
selection process, which improves quality and delivery while reducing costs. Similarly, when
applied to supply chain processes, a certification process assists with supplier selection and supply
base optimization, a process to find the optimal number and mix of suppliers.
The supplier-buyer relationship between supply chain members requires that quality start
at the top. That is, it is imperative that company visions, goals and strategies be aligned for the
betterment of both companies. Joint projects, shared technology, buyer-supplier councils, and
collaborative relationships can enhance the relationship. The end result is a culture of continuous
improvement throughout the supply chain, and as a result, a highly effective, competitive one.
The supplier-buyer relationship between supply chain members requires that quality start
at the top. That is, it is imperative that company visions, goals and strategies be aligned for the
betterment of both companies. Joint projects, shared technology, buyer-supplier councils, and
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collaborative relationships can enhance the relationship. The end result is a culture of continuous
improvement throughout the supply chain, and as a result, a highly effective, competitive one.