Quality Measurement in the Supply Chain
Quality Measurement in the Supply Chain
Omar Espinoza1*, Urs Buehlmann2, and Brian Bond2
1Department of Bioproducts and Biosystems
Engineering
University of Minnesota
Saint Paul, MN, 55108, U.S.
2Department of Sustainable Biomaterials
Virginia Polytechnic Institute and State University
Blacksburg, VA, 24061, U.S.A.
ABSTRACT
Supply Chain Management is the integration of business processes along the value chain, from suppliers to end
customer. Performance measurement of these processes has so far received little attention from researchers and
practitioners. This paper reports the results from a study of a discrete products supply chain and measures its
performance. In particular, a case study was conducted on a wood product supply chain, with a focus on quality
performance measurements. The research question was whether current practices were consistent with end
customer satisfaction and if improvements were possible. Interviews with quality management personnel and on-site
evaluations were conducted at all stages of the supply chain, and a new visualization tool was developed.
Quantitative and qualitative analysis tools were used to evaluate current practices. Opportunities for
improvement were found in external integration and information sharing between supply chain partners. Also, a
need for true measures of supply chain performance measures was identified. A 5-step process to develop such
metrics is proposed, and an application example is provided. The proposed supply chain performance
measurement system uses Six Sigma measures and facilitates collaboration between supply chain partners and
provides information that allows focusing on improvement projects more efficiently.
1. INTRODUCTION
Supply Chain Management (SMC) can be defined as “the strategic coordination of business processes within an
organization and across businesses within the supply chain, with the objective of improving performance of
individual organizations and of the entire supply chain” [1, 2]. SCM practices have been found to be associated with
superior product quality, delivery reliability, process flexibility, cost leadership, and higher levels of conformance
quality [3, 4]. Competition no longer occurs between individual companies but between supply chains, and the long-term
success of a firm will depend in part on its ability to successfully integrate its customers and suppliers [5].
In a similar way, performance measurement and process improvement have become primary concerns for
organizations of all kinds, from governments to global corporations because of increasing global and domestic
competition, continuous improvement initiatives, national and international quality awards, changing demand, and
developments in information technology [6]. Many firms have engaged in “continuous improvement” programs. It is
not uncommon to find companies to have personnel whose sole purpose is to identify and implement improvement
activities (“continuous improvement coordinators”). Two specific approaches for organizational and supply chain
improvement, Six-Sigma and Lean Manufacturing, have received considerable attention [7, 8]. Six-Sigma was
introduced by Motorola in the early 1980s [9] as an improvement methodology that focuses on the reduction of
variation through the extensive use of data and statistical tools as well as the use of standardized processes for
problem solving (e.g., the Define, Measure, Analyze, Implement, and Control, or DMAIC cycle). The ultimate goal
of Six-Sigma is to have a process that produces only 3.4 defects per million opportunities. Lean Manufacturing
(LM), which has its origins in the Toyota Production System (TPS), focuses on the elimination of waste, i.e.,
activities that do not add value to the product or service from the customer’s viewpoint. LM also focuses on
increasing process flexibility to generate the greatest possible value in the eyes of the customer [10]. Numerous
companies use a combination of Six-Sigma and LM, known as Lean Six-Sigma, because it is believed that LM alone
cannot bring statistical control and Six-Sigma cannot improve processes in a radical manner [11]. Sixty percent of
respondents to a 2006 survey among U.S. manufacturers cited Six-Sigma, Lean Manufacturing, and Lean Six-Sigma
as their primary improvement method [12]. Numerous articles and books have proposed using Six-Sigma and Lean
Manufacturing to improve supply chain performance [13-22], but very few focus on quality [16, 48]. Levels of use
* Corresponding author: Tel.: (612) 624-0770; Fax: (612) 625-6286; E-mail: espinoza@umn.edu