Supply Chain Quality and Excellence in the New Economy: An Empirical Study of Hong Kong Based Firms

By Kuei, Chu-hua; Madu, Christian N. et al. | Multinational Business Review, Spring 2005 | Go to article overview

Supply Chain Quality and Excellence in the New Economy: An Empirical Study of Hong Kong Based Firms


Kuei, Chu-hua, Madu, Christian N., Chow, Wing S., Lu, Min H., Multinational Business Review


ABS There exists an association between Supply Chain Quality Management (SCQM) and supply chain competence. To verify such claims, data was collected from Hong Kong based firms. The data showed in most cases an association could be established between SCQM initiatives and the supply chain competence. Some firms with SCQM initiatives tend to perform better in terms of customer service or product quality. Supply chains managers may therefore, perform better when their managerial foci are consistent with recognized dimensions of supply chain quality and excellence. In today's global economy supply chain management is crucial in achieving organizational effectiveness.

INTRODUCTION

Businesses around the globe are becoming increasingly aware of the strategic role of supply chain quality management (SCQM) in an organization's overall success. Kuei and Madu (2001) defined Supply Chain Quality Management (SCQM) with three simple equations where each equation represents the letters that make up SCQM. The definition is as follows:

* SC = a production-distribution network,

* Q = meeting market demands correctly, and achieving customer satisfaction rapidly, and profitably, and

* M = enabling conditions and enhancing trust for supply chain quality.

The ultimate success of any firm is built upon a firm's capability and capacity to excel on all dimensions of supply chain quality and excellence that are important to the customer. To achieve such a goal, the system and structures of an organization must be changed to respond rapidly, correctly, and profitably to market demands and customers' needs. Supply chain quality management posits new challenges to the new economy. Kuei and Madu (2001) state that SCQM is a process which effectively subsumes a whole range of critical factors, including customer focus, the quality of IT systems, and supplier relationships. In order to survive in unfavorable global economic environment, companies across the globe must choose how to respond to the new reality in a timely manner. Global firms increasingly adopt continuous improvement strategies. To initiate supply chain continuous improvement projects, major initiatives adopted by multinational enterprises such as CISCO, Wal-Mart, Procter & Gamble, and Toyota include (Madu and Kuei, 2005): Collaborative Planning Forecasting and Replenishment (CPFR), Lean Supply Chains, Vendor Managed Inventory (VMI), Six Sigma programs, Enterprise Resource Planning (ERP) packages, Supplier Partnership projects, Customer Relationship Management (CRM), E-Supply Chain, Data Warehousing and Mining, Total Quality Management (TQM), Business Process Reengineering, and International Organization for Standardization (ISO). For the purpose of this study, three operations initiatives are considered for further analyses: Six Sigma programs, Enterprise Resource Planning (ERP) systems, and Supplier Partnership projects (see Figure 1). The essential features of those initiatives are described below.

RESEARCH BACKGROUND AND THEORY

In the past few years, much has been written and reported concerning Six Sigma as one of the most powerful and most effective customer focus practices for organizational cultural and process change (Breyfogle, 1999, Pande et al. 2000, Pyzdek, 2003, George, 2003, Snee and Hoerl, 2003, Joglekar, 2003, Kuei and Madu, 2003). The Six Sigma planning and implementation program involves designing or improving systems' architecture, identifying critical to quality (CTQ) metric, dealing with the root causes of variation and poor performance, preventing the defect from happening, and changing behaviors and mindsets of employees. Six Sigma is the salvation for both business and customer.

In today's faster-paced global market, reliable planning depends on the effective management of information. Global operations and the involvement of value chain partners such as suppliers and customers in delivering quality products and services has also become critical in achieving competitiveness.

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