Supplier Quality Management: GSCF-Based Theory And Practices

Within today’s business environment, featured as the deepening of economicglobalization and on-going improvements of productivity, the division ofmanufacturing activities is getting much finer, and the standard of specialization isgetting much higher. It is normal that an enterprise is not likely to rely solely on itsown capabilities to produce all components of a complex product; rather, it prefers tocomplete the whole production function by collaborating with multiple suppliers.Enterprises become increasingly eager to develop and grow on the basis of tightersupply chain collaboration. The competition among companies is gradually shiftedinto the competition among supply chains. As the most critical component of supplychain management, the quality that a supplier can provide to its downstreamcustomers has already been, and will continuously be, one of the most importantcompetitive factors. In2011, the "quality" incident occurred in an Otis’ elevator,demonstrates the vulnerability of supplier quality management in Otis; thus,strengthening the supervision and management of supplier quality has become thecritical and necessary condition for the company to survive, and to develop. Undersuch a business environment where management is mitigating to moreprocess-oriented and customer requirement is becoming the number one priority indoing business, supplier quality management is being positioned as a key factor to acompany’s survival. A new and effective approach to managing supplier quality is inurgent and necessary demand for Otis.In this paper, a longitudinal case of Blue-light Otis Elevator Traction Machine(Tianjin) Co., Ltd., is empirically investigated, and problems of supplier qualitymanagement are scrutinized and analyzed. By combining a relationship-oriented,process-based supply chain management framework, with an efficiency-orientedquality management approach, we build a model of supplier quality management, andthen apply it in a quality improvement project initiated by Blue-light Otis (Tianjin).The model is validated in terms of the improvement of supplier quality performanceafter six months’ implementation. The proven solidness of the model in supplierquality improvement can provide management in the elevator industry, as well aspractitioners in other industries, with valuable insights and guidance in managing supplier’s quality.The paper is divided into six chapters. The first chapter introduces the researchbackground, meaning, methodology and contents. Chapter II conducts a literaturereview, and presents key findings in terms of prevailing theories and practices in thefields of supply chain management and quality management. Chapter III provides abrief overview of the history of Blue-light Otis, the quality issue it recentlyexperienced, and possible root causes of problems in quality management across itssupply chain. First, we provide the necessary backgrounds about the entrance of Otisinto China, the development of Otis suppliers, and the relationship between Otis andits suppliers regarding to their quality management practices. Next, we focus onanalyzing the organizational structures and management systems both in the companyand in its suppliers’ operations. Results show that main problems in the supply chainquality management at Blue-light Otis include: the lack of necessary resources in thedepartment of supplier quality management; internal management ineffectivenesswithin the department; and daily supervision and management of the quality practicesrelevant to suppliers. In the fourth chapter, the implementation of supplier qualitymanagement project is described, which is initiated to address these current qualityissues. Specifically, a model of supplier quality improvement is developed, on thebasis of the lean/six sigma philosophies and tools, and the supplier relationshipmanagement process, one of the eight supply chain management processes defined byGlobal Supply Chain Forum. Management infrastructure in Blue-light Otis isredesigned, and practices are reengineered at both the long-term strategic level and theday-to-day operational level. In Chapter V, we implement the model both inBlue-light Otis and in a few key suppliers. Improvements are evaluated andsummarized. In Chapter VI, we provide a couple of conclusions including that thecombination of the relationship-based supplier relationship management process andthe effectiveness–oriented lean/six sigma tools, provides unparallel effectiveness insolving supply chain quality problems. Valuable managerial insights, practicalrecommendations, and promising prospects of implementing the model are alsodiscussed. Limitations and potential direction for future study are finally provided.