Purchasing Improvement - Following in the Footsteps of the Quality Gurus

Author(s):

Peter Evans, PhD., FCIPS
Peter Evans, PhD., FCIPS, Director of Strategic Purchasing, ADR International Purchasing Consultants, Bracknell, Berkshire RG12 1RP, +44 01344/303078.
Gerrit Kasteel
Gerrit Kasteel, European Head of Purchasing, Cyanamid Agra GmbH and Co. KG, Ingleheim, Germany 55209, +49 6132/789259.

82nd Annual International Conference Proceedings - 1997 

Introduction. In the field of quality management, a number of distinctive "philosophies" have emerged. These have been closely associated with a relatively small number of celebrated "gurus".

As the demands on purchasing become more intense, it is necessary to improve the variety and effectiveness of the approaches and techniques utilized in supplier management activities.

We shall present a review of some of the approaches developed by the gurus and then illustrate with practical examples how they can be used to generate significant improvements in value delivery for the customer.

We shall also describe the benefits that accrue to suppliers when exposed to such progressive methods of approach.

Objectives. The objectives of this presentation are:

1. To review a selection of Quality Management gurus and their methodologies.
2. To relate how these approaches can be related to Purchasing situations.
3. To present practical examples where these techniques have been used to create purchasing improvement.

The Need. As purchasing increases its influence in organizational terms, the strategic importance of source selection and continuing supplier management becomes significant. We will present an overview of some of these "guru" approaches. The application of these techniques in purchasing scenarios will then be described.

We believe it is time that individuals form the purchasing world are accorded some of the accolades associated with the Quality gurus. In recent years, Mr. Lopez has probably been the most talked about purchasing "guru", not always with the most favorable impression.

Review of "Gurus" and Techniques. We have selected a number of topics from the following:

1. W. Edwards Deming:
Quality is the responsibility of everyone.
There is always a way of improving.
Prevention is better than cure; consider the process rather than the products.
Adopt a balanced approach; do not focus totally on price or technical elegance.
Provide training in statistical techniques.
Remember the Deming Cycle - PDCA -

• Plan - define what is needed
• Do - pilot scale trial
• Check - check that it works
• Act - implement and standardize

2. Joseph Juran
Concept of internal customers and suppliers
The Quality Trilogy
Total cost of quality

3. Phil Crosby
Concept of zero defects and setting the target at 100%
Price of Non Conformance"
The importance of communication (including listening)

4. Armand Feigenbaum
Total Quality
The "hidden factory, the proportion of capacity required for corrective action
Right first time

5. Kaoru Ishikawa:
The concept of "Quality Circles"
Statistical Process Control
The seven tools (see later)

6. David Garvin:
Concept of Quality Strategy
The eight Dimensions (which offer opportunities for competitive advantage)

7. Shigeo Shingo:
Just in Time
Pokayoke devices (idiot proof!)

8. Genichi Taguchi:
Quality through design
Specification limits
Concepts of "loss function", typified by the following: (graphic not available in text-only version of this paper)

Tools and Techniques. From the gurus, there are a number of tools and techniques which have proved enormously useful in the contest of supplier management. We particularly command the adaptation of the 7 tools of quality (Ishikawa).

1. Process Charting and Flow Charting using standard symbols, for example: (graphic not available in text-only version of this paper)
2. Pareto Analysis
   • 80 / 20 rule
   • ADC Analysis
   • Prioritization of effort
3. Ishikawa Diagrams
   • Cause and Effect relationship
   • Using "Fishbone" type charts (graphic not available in text-only version of this paper)
4. Histograms and Measle Charts:
   • Prioritizes causes of problems
   • Relates to causes of problems
5. Correlation Diagrams:
   • Explores relationships between events and time, problems and causes
   • Usually very simple to use
6. Statistical Process Control:
   • Use of statistically valid techniques
   • Rigorous application of formulae
   • Separates controllable parameters from "noise"
   • Need to establish capability
7. Check Lists:
   • Audit Sheets
   • Report Cards
   • Must detail correct procedures

Examples. We shall present a range of examples of how these approaches and tools have been adopted and used successfully in purchasing situations. These practical scenarios will demonstrate the benefits to be gained from adopting external management techniques for purchasing related activity.

Summary. A selection of gurus and some of their techniques have been reviewed. Case studies showing their successful application in purchasing and supplier management situations have been presented.

We recommend that purchasing professionals continue to bring outside thinking and practices into their working lives.

Acknowledgment. The authors would like to acknowledge that their review is drawn from previously published materials.

REFERENCES AND FURTHER READING

• Deming, W. Edwards. Out of the Crisis. Cambridge University Press, 1982.
• Deming, W. Edwards. Quality Productivity and Competitive Positions. MIT Center for Advanced Engineering Study, 1982.
• Gitlow and Gitlow. The Deming Guide to Quality and Competitive Positions. Prentice Hall, 1987.
• Juran, Joseph. Juran on Planning for Quality. The Free Press, 1988.
• Juran, Joseph. Juran on Leadership for Quality. The Free Press, 1989.
• Crosby, Phil. Quality is Free. McGraw Hill, 1979.
• Crosby, Phil. Let's Talk Quality. McGraw Hill, 1989.
• Feigenbaum, Armand. Total Quality Control. (third edition, revised) McGraw Hill, 1991.
• Ishikawa, Kaoru. "Guide to Quality Control." Asian Productivity Association, 1976.
• Ishikawa, Kaoru. What is Total Quality Control? The Japanese Way. Prentice Hall, 1985.
• Garvin, David. Merging Quality. The Free Press, 1988.
• Shingo, Shigeo. Zero Quality Control: Source Inspection and the Pokayoke System. Productivity Press, 1986.
• Taguchi, Genichi. System of Experimented Design. UNIPUB Kraus, 1985.
• Grain Stuart Peace. "Taguchi Methods: A Hands-on Approach." Addison Weekday, 1993.
• Jackson, R. and Evans, P. "POPP: Purchasing Opportunity Performance Program." NAPM Conference, 1996.

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