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Quality Planning for the Manufacturing Supply Chain ROBERT G. BATSON AND KAREN D. MCGOUGH THE UNIVERSITY OF ALABAMA © 2006, ASQ

Quality as a supply chain performance measure has not been adequately explored in either the supply chain or quality management literature. Planning for quality in the manufacturing supply chain requires a context, and begins with documented customer needs. An original schematic model depicting the interrelationship between strategic production planning and strategic supply chain planning provides this context. Another result is a listing of the departmental customers for the manufacturing supply chain and their respective needs. The quality requirements for each supplied part or module, derived from these needs, should become critical criteria in supplier selection and other sourcing decisions when starting up a new plant. Although supply chains are being created today using planning processes that focus primarily on logistics and production planning, driven by cost and schedule considerations, the authors argue that there is a need to formally “plan quality in” as well. Key words: quality function deployment, quality planning, strategic production planning, strategic supply chain planning, supply chain management

INTRODUCTION The manufacturing supply chain uses production and delivery processes to provide raw materials, parts, and subassemblies to the point of product assembly. More generally, “A company’s supply chain comprises geographically dispersed facilities where raw materials, intermediate products, or finished products are acquired, transformed, stored, or sold and transportation links that connect facilities along which products flow” (Shapiro 2001). Chopra and Meindl (2001) list four main drivers that determine the performance of a supply chain: inventory, transportation, facilities, and information. When planning a supply chain, these four main drivers have to be evaluated and optimized in terms of flexibility, delivery performance, cost, and quality. Quality is a supply chain performance measure that has not been adequately explored in either the supply chain or quality management literature. Miller (2002) says, “We need the same (or better) levels of planning and communications with key suppliers as we have enjoyed inside the organization, in order to meet or exceed end-customer expectations for cost, lead times, quality, and demand flexibility.” The focus of this article is planning for quality in the manufacturing supply chain.

Supply Chain Quality Management In Juran (1989), quality management is defined as the application of the managerial processes of Juran’s Quality Trilogy: quality planning, quality control, and quality improvement. The planning phase of supply chain quality management is the activity of

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Quality Planning for the Manufacturing Supply Chain identifying supply chain customer needs and analyzing and developing a sourcing strategy to meet those needs. The focus is on identifying the supply chain customers and assessing the needs of these customers. The output of this phase is a set of quality-related requirements, at the original equipment manufacturer (OEM) and each supplier, for production and delivery subsystems. The derived quality requirements for each supplied part or module should be critical criteria in supplier selection and supplier plant site selection decisions during the sourcing process. Without quality planning, these quality requirements are subordinated to cost and schedule, and may even be taken for granted. At least two assembly industries, automotive and electronics, “have institutionalized quality management practices into the way their business is conducted,” according to Choi and Rungtusanatham (1999). Strategic quality planning and the method of advanced product quality planning (APQP) are two examples of common practices in the automotive industry. But when OEMs establish new plants as part of their strategic plan, they need to apply strategic supply chain quality planning to minimize quality-related problems at production start up. The control phase of Juran’s Quality Trilogy, as applied to the supply chain, involves evaluating supplier performance and acting to bring supplier performance in line with expectations, expressed both in technical specifications and business-related documents and verbal understandings. The improvement phase of Juran’s Quality Trilogy, applied to the supply chain, has an objective of developing a supply chain that acts as a single, well-performing entity. Showing the supplier the effect of poor quality on product costs and sales may be necessary to stimulate action by the supplier. Once the need for improvement is known, some problems can be solved by the supplier, while others may require joint quality improvement teams (Batson 2002). It has been found that the responsibility for supplier quality lies mostly with a company’s purchasing department. Purchasing departments have shifted their focus from transaction to process management, and are now facilitators of the sourcing process. One of the

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activities required to facilitate the interface between suppliers and end users is quality planning. Gryna (1988) mentions that joint quality planning that occurs after the supplier has been selected should include joint economic planning, joint technological planning, and joint managerial planning. Quality planning that occurs before supplier selection is “the activity of identifying customer needs and analyzing and developing a sourcing strategy to meet those needs” (Donovan and Maresca 1999). In this article, the authors identify the customers for the manufacturing supply chain and their categories of need, and show how quality planning may be viewed as a key activity within strategic supply chain planning.

Problem Statement Although supply chains are being created using planning processes that focus primarily on logistics and production planning and scheduling, there is a need to “plan for quality” in supply chain operations. A definition and concept of supply chain quality is needed, followed by a method that could be used by a corporation during the early stages of establishing a new manufacturing plant to plan for quality in the supply chain supporting the plant.

Research Objective and Scope The scope of this research is restricted to the earliest planning stages for a manufacturing supply chain, which will serve a hypothetical OEM manufacturer of an assembled product. While it is necessary to discuss strategic production planning, the focus of this research is strategic supply chain planning and, in particular, the quality aspects that have received little attention. An original schematic model depicting the interrelationship between strategic production planning and supply chain planning is developed. Then, an original listing of the OEM’s departmental customers and their needs is developed. These needs are the input for supply chain quality planning to be conducted in parallel with other supply chain planning activities depicted in the model.

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LITERATURE REVIEW In the introduction, the authors reviewed Juran’s Quality Trilogy and planning for supplier relations. When applied to the supply chain, the trilogy implies that effort expended on planning for quality in supply chain operations will more than pay for itself in avoidance of costly controls and unnecessary improvement activities. Planning for supplier relations helps establish the informational, contractual, and other business relationships between customer and supplier, but does not assure good quality—the processes embodied in joint quality planning and Juran’s Quality Planning Roadmap are needed. Joint quality planning enhances communication between the customer and supplier, and results in cooperative decisions that optimize overall supply chain costs. As mentioned previously, there are three areas of joint quality planning: joint economic planning, joint technological planning, and joint managerial planning. These are fully explained by Gryna (1988). Juran’s Quality Planning Roadmap (see Figure 1) can be applied to derive quality-related requirements for production and delivery subsystems, at both the OEM and supplier plants, to be demonstrated in this article.

ISO 9001 Production Realization ISO 9001 defines product realization as that “sequence of processes and subprocesses needed to achieve the required product or service.” Clause 7, Product Realization, contains Clause 7.1 “Planning of product realization,” which states that the organization shall plan and develop the processes needed for product realization. Clearly, the manufacturing supply chain is a system of such processes. In ISO 9001, a document specifying the processes of the quality management system and the resources to be applied to a specific product, project, or contract, can be referred to as a quality plan. Quality plans in ISO 9001 may refer to raw materials, modules and parts, or the final assembly. Quality

Figure 1 Juran’s quality planning roadmap. Subject matter of planning Identify customers List of customers Discover customers’ needs Customers’ needs (in their language) Translate needs Customers’ needs (in our language) Develop product features Product features Develop process Process features (process ready to produce) © 2006, ASQ

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plans include supply chain considerations such as quality requirements, inspection equipment, packaging, and product identification, handling, and delivery. Therefore, OEMs certified to the ISO 9001 standard may provide for some aspects of supply chain quality planning in their existing processes. If certification extends to their first-tier suppliers, there is a basis for confidence that much of what the authors term “strategic supply chain planning” and quality planning in that context, are occurring. The six-step models of strategic production and supply chain planning presented in the next two subsections of this article constitute generic models of a planning method for two key product realization systems: the production system and the supply chain. The level of detail to be presented in these sections is restricted to the assembled product and its modules (subassemblies).

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STRATEGIC PRODUCTION PLANNING OEMs use market research and competitive analysis to identify a new product to be produced and sold. Product form, function, and performance dictate the capabilities required at the OEM plant site. Demand for the product by location in the worldwide market often dictates potential locations if a new plant is warranted. This is because plant location determines distribution cost directly, and often influences sales volumes and, to some extent, unit manufacturing cost. As stated by Bowersox, Closs, and Cooper (2002), “The unique nature of each manufacturing process and the market served limit the practical range of alternative strategies.” Because the production department at the OEM is the major customer for the product’s supply chain, the authors are interested in this subsection and the next in describing strategic production planning and strategic supply chain planning. In the next section, they propose a model that depicts the interlocking nature of these two elements of strategic planning. Bowersox, Closs, and Cooper (2002) state that “The most common manufacturing strategies are make-to-plan (MTP), make-to-order (MTO), and assemble-to-order (ATO).” Because MTP strategies exploit economy of scale that results from long production runs, and these strategies are not appropriate for OEM equipment manufacturers, the authors focus on MTO strategies. ATO product finalization is performed in distribution warehouses; “Product components are manufactured in anticipation of future customer orders; however, products are not fully assembled or customized until a customer’s order is received” (Bowersox, Closs, and Cooper 2002). Dell Computers is an example of a company that has succeeded with an ATO strategy. All automotive OEMs follow an MTO, market-pull production strategy today. Just-in-time (JIT) techniques have naturally been highlighted in recent textbooks on supply chain management. Terms such as JIT purchasing, JIT delivery, and JIT production are common and well understood. Bowersox, Closs, and Cooper (2002) state, “The objective of JIT is to time-phase activities

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so that purchased materials and components arrive at the manufacturing or assembly point just at the time they are required for the transformation process.” A key point in a JIT supply chain is that the nodes and links in the chain are organized and scheduled in such a way that the timing requirements are met, even though the demand for components and materials depends on the finalized production schedule at the OEM. Regarding quality of supplies and logistics, Bowersox, Closs, and Cooper (2002) observed: “It is necessary to deal with suppliers who have high and consistent levels of quality, as their components will go directly into the finished product. Absolutely reliable logistical performance is required and eliminates, or at least reduces, the need for stocks of materials. JIT concepts have evolved from MTP manufacturing to accommodate MTO and ATO manufacturing as well.” The previous statement provides a rationale for this study of supply chain quality planning, because planning is the avenue to “high and consistent levels of quality” in the product, and to “absolutely reliable logistical performance.” The authors assume a JIT environment at their hypothetical OEM and in the required first-tier suppliers’ delivery processes. Furthermore, if supplied components or modules are preidentified to a specific customer’s equipment item, the authors call the delivery process just-in-sequence. The term modular design means that the OEM consciously designs the product for assembly by joining major subassemblies known as modules. These subassemblies are manufactured off-site and are delivered to the OEM in a just-in-sequence manner to match the sequence of final products being produced. Modular design and assembly offers cost and time savings, and is typical of OEM automotive manufacturing. The authors assume their hypothetical product is modular in design and use the term “module” to mean a major subassembly, ready to install in the product. The model of strategic production planning the authors developed in this research includes the following steps:

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Quality Planning for the Manufacturing Supply Chain 1. Identify product to be manufactured and sold 2. Forecast demand quantity: by location of customer sale or by options to be requested 3. Group product components into modules for potential outsourcing 4. Conduct a make-to-buy decision for each module 5. Identify quality requirements and delivery quantities and schedules for each module 6. Synthesize a product assembly and delivery model, using the flows of respective modules to the OEM plant as submodels. The sixth step links the supply chain function of providing required modules from external sources with the production function of delivering finished products to customers on time, and exactly as they ordered. As Bowersox, Closs, and Cooper (2002) observed: The efficient and effective coordination of manufacturing strategy with the procurement of materials and components ultimately relies on logistics…logistics link the supplier base with manufacturing processes. The next section reviews strategic supply chain planning, and provides a six-step process for this planning that the authors’ research suggests must be carried out in parallel with strategic production planning. This parallel (or concurrent) planning provides the best opportunity for seamless integration, high-quality supplies, logistics and products, and minimum cost.

STRATEGIC SUPPLY CHAIN PLANNING Strategic supply chain planning involves the longterm decisions about a company’s supply chain. These are decisions on how a company’s overall internal and external linkages are organized, not just one with one supplier. For example, Shapiro (2001) presents a “Framework for Manufacturing Strategy Formulation.” In this model, he sees product competitiveness as resting on supply chain design, in addition to product cost and differentiation (long recognized as the two key dimensions along which firms compete). In fact, since supply chain design in part determines the unit manufacturing cost, and because product

quality is a source of differentiation, the authors’ focus on strategic supply chain planning for quality is timely. Shapiro (2001) defines supply chain design as “decisions regarding the facilities owned and operated by the company, and the company’s relationship with its suppliers.” The model of strategic supply chain planning developed in this research incorporates the following six steps: 1. Define capabilities required of the OEM plant 2. Identify OEM plant site and production rate 3. Define capabilities for each module supplier, including production rate 4. Select supplier for each outsourced module 5. Simultaneously select supplier locations, mode of module transportation from supplier to OEM, and shipment frequency 6. Synthesize a network model of the flow of modules from first-tier suppliers to OEM, using the OEM assembly schedule as the driver There are three planning approaches to this problem: the operations research (OR) approach, the network simulation approach, and the quality planning approach. The OR approach uses optimization algorithms to identify the optimal network structure, using OEM total cost of supplies as the objective function. A mixed integer linear programming model is used to formulate the problem. The output of this model will determine which warehouses, factories, and suppliers will be chosen, their locations, and the mode of transportation between them, among other decisions. This provides a minimal cost network capable of meeting product demand, production and delivery efficiency, and other management constraints. The deterministic solution to the decisions listed in step 5 provides the network structural details. A network simulation model predicts how a certain supply chain design will operate under specific conditions over time. This allows for different supply chain design alternatives to be evaluated, with random processes (probabilistic events over time) included to add realism and dynamics. Therefore, step 6 is the

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Quality Planning for the Manufacturing Supply Chain Figure 2 Parallel strategic planning processes for production and the supply chain. Identify product to be assembled and sold

Define capabilities required at the OEM plant

Forecast demand quantity • By location of customer sale • By options

Identify OEM plant site and production rate

Group product components into modules for potential outsourcing

Define capabilities for each module supplier, including production rate, quality, and cost thresholds

Make or buy decision, for each module

Select supplier for each outsourced module

Identify delivery schedule and quality requirements for each module

Simultaneously, select supplier locations, mode of module transportation from supplier to OEM, and shipment frequency

Synthesize a product assembly and delivery model, using the flows of respective modules as submodels

Synthesize a network of the flow of modules from first-tier suppliers to OEM, using the OEM assembly schedule as the driver

place where risks and uncertainties in the supply chain can have their individual and combined effects measured, discerned in the performance statistics provided by a well-planned simulation experiment. Supply chain designers can propose actions to mitigate these effects and test them using a revised simulation. Persson and Olhager (2002) evaluated alternative supply chain designs using simulation with respect to quality, lead times, and cost. One objective of their simulation was to “increase the understanding of the interrelationships among these and other parameters, relevant for the design and operations of a supply chain.” The optimal model depicted how costs depend on quality levels and lead times, and how lead time is a function of quality levels and the supply chain structure. Neither of these approaches specifically tackles the quality planning aspect of strategic supply chain management. When applying quality planning in addition to the two planning approaches mentioned previously,

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additional quality-related issues are surfaced. Though the OR and network simulation approaches can determine the best solution with regard to cost, time, demand, and so forth, they do not explicitly plan to meet customers’ needs and quality standards. Without quality planning layered over existing supply chain planning approaches, the result might be an efficient supply chain, but one that cannot deliver on quality expectations without the addition of extensive controls or improvements. Quality planning approaches, such as Juran’s Quality Planning Roadmap, highlight these issues to supply chain planners at the time supply chain structural and logistics decisions are being made.

MODEL DEVELOPMENT Based on the discussion in the previous two sections, this section integrates the two six-step strategic planning processes into a model (see Figure 2), showing

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Quality Planning for the Manufacturing Supply Chain how closely linked supply chain planning is to production planning. Interfaces that carry information across the boundary between the two processes are shown as arrows. The parallel, interdependent nature of the two processes is evident. Viewing the direction of the cross-boundary arrows clearly shows that production planning decisions (for example, plant location, make-or-buy) drive supply chain planning. This same relationship, where production plans drive supply chain plans at the tactical and operational levels, has been noted by others. Hicks (1999) has observed that “Supply chain planning problems encompass industrial production process design, inventory control policy, transportation management, supply procurement, and demand planning…Although the first step of enterprise analysis is to reduce the problem to a manageable size by examining only one aspect (link) in the supply chain, it is now common knowledge that…simplifying the supply chain planning problem, or reducing it to parts, often renders the analysis itself moot. It is the complexity and interdependence of the operational links that result in the areas of interest for the typical industrial decision maker.” Hicks (1999) goes on to propose a four-step methodology for using optimization, simulation, and robust design technologies in strategic supply chain planning. Step 1 concerns itself with the proposed supply chain’s structure, with structural elements such as products, sites, shipments, transportation assets, machines, and workers. He proposes network optimization as a tool, and an “optimal” supply chain structure as a result of step 1 then states, “In order to predict exactly how a proposed supply chain design will operate, the design must be simulated in step 2.” These two steps match the last two steps the authors have indicated in the strategic supply chain planning model of Figure 2. The only difference is that the authors are not prescribing network optimization and network simulation as the tools to plan quality into the supply chain. In fact, the authors believe Juran’s Quality Planning Roadmap (or its Japanese-originated equivalent, quality function deployment (QFD)) is the best tool. This will be demonstrated in the next section. Hicks goes on to

recommend policy optimization and design for robustness to complete his four-step methodology. These methods optimize network behavior and minimize risk due to uncontrolled factors. Considering risk in supply chain design has been described before. There is a paper by Davis (1993) in which risk factors in supply chain management are described, for example, the variation in delivery times, quality, and condition of supplier parts. The paper addresses strategic issues in that entire product families at Hewlett-Packard were reevaluated for uncertainty in their supply and distribution chains. The methodology could be adapted to start-up of new manufacturing supply chains. Shapiro’s (2001) view of strategic supply chain planning, like Hicks’ (1999), ignores quality planning. Shapiro states, “Once the options associated with the supply chain design have been identified, the company must quantify and integrate them (with marketing and production strategies) when analyzing its supply chain strategy.” He believes that supply chain modeling incorporates concepts from several management disciplines: • Strategy formation and the theory of the firm • Logistics, production, and inventory management • Management accounting • Demand forecasting • Operations research The relevance and application of each of these is discussed in Shapiro’s text (2001). The research reported here focuses on the role of quality management, and, in particular, quality planning, in supply chain strategic planning.

QUALITY PLANNING APPLIED TO THE MANUFACTURING SUPPLY CHAIN An organizing model for supply chain strategic planning was introduced in the previous section. Here, the authors illustrate how to layer quality planning steps over the supply chain planning activities depicted in

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Quality Planning for the Manufacturing Supply Chain Figure 2, by flowing down quality requirements as each strategic decision about the supply chain is made. This will be done using a series of interlocking matrices, as suggested in Juran’s writings and similar to QFD, the Japanese-originated equivalent of Juran’s Quality Planning Roadmap. QFD “is a method for structured product planning and development that enables a development team to specify clearly the customer’s wants and needs, and then to evaluate each proposed product or service capability systematically in terms of its impact on meeting those needs” (Cohen 1995). In order to begin the requirements flow down process, a few assumptions must first be made. These are: • Discrete-part assembled product • MTO manufacturing strategy • JIT production and delivery system • Product consists of modules, many produced by tier 1 suppliers.

Who Are the Customers for the Supply Chain? The first step in the Juran quality planning process is to determine “Who are the customers?” This section discusses the customers of the supply chain and how they relate to the supply chain. The customers of the supply chain are: production, purchasing, production planning and scheduling, supplier quality engineering, logistics personnel, and the plant manager or president. The main customer of the supply chain is the production department. This department consumes what the supply chain delivers. The production department is responsible for assembling the product. It cannot complete products unless all supplies (for example, modules and parts) arrive on time, in the right quantity and type, with perfect quality, and are ready to use in assembly. The purchasing department is another customer of the supply chain. This department identifies the possible sources of the parts needed to be supplied.

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From those sources, the best source is selected and becomes the sole supplier for that part. Once the supplier has been selected, the purchasing department negotiates and enforces the terms of the contract with the supplier. Purchasing may also advise the supplier on the selection of their plant site. Production planning and scheduling (PP&S) is responsible for informing the suppliers of what exactly is needed and when it is needed. PP&S personnel are often involved in logistics planning, coordination, and control. PP&S often tracks inventory location and quantity, whether in transit or in stock (off or on site). They may select the mode of transportation and source (for example, truck line) of transportation of supplies. Supplier quality engineering (SQE) interprets quality requirements to each of the suppliers. They assure that suppliers can produce acceptable quality at the rate of production and that packaging and handling do not affect the quality of supplied parts. SQE tracks the quality of delivered parts and investigates issues with delivered parts that cannot be assembled, or fail in assembly. Logistics personnel include the logistics system engineers or planners, cross-company logistics personnel, internal logistics personnel, packaging engineers, the maintainers of parts’ containers and racks, and, finally, the internal conveyance engineers. Crosscompany logistics personnel are people such as drivers, loaders, and unloaders. Internal logistics personnel are the packaging, unpackaging, and conveyance personnel (for example, drivers). The conveyance engineers are those responsible for the design and installation of the means of conveying parts and materials within the plant. Finally, the plant manager or president is a customer of the supply chain. For the OEM, the plant manager or president is a customer because the aforementioned functions listed report to him or her, and affect the plant’s success. As for the supplier, he or she is a customer because timely and safe delivery of his or her production output depends on the supply chain. Once the supply chain customers and their needs have been determined (see Appendix), it is up to the

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Quality Planning for the Manufacturing Supply Chain OEM user of the authors’ supply chain planning model (see Figure 2) to apply Juran’s Quality Planning Roadmap (or QFD) to derive and document the quality requirements that should influence key decisions, such as: • OEM plant site location • OEM production and delivery system design • Supplier selection and plant site location • Supplier production and delivery system design Strategic supply chain quality planning, which determines and documents quality requirements in parallel with other supply chain planning activities, naturally supports such sourcing and site selection decisions.

CONCLUSIONS The objective of this research was to create a method that could be used by a corporation during the early stages of establishing a new manufacturing plant, to plan for quality in the supply chain supporting the plant. The focus was strategic supply chain planning, especially the quality aspects that have received little attention. An original schematic model was developed, depicting the interrelationship between strategic production planning and strategic supply chain planning. Then, following Juran’s Quality Planning Roadmap approach, supply chain customers and their needs were documented for the first time. REFERENCES Batson, Robert G. 2002. Getting started in a supplier improvement initiative. 2002 ASQ 56th annual quality congress proceedings. Milwaukee: American Society for Quality. Bowersox, Donald J., David J. Closs, and M. Bixby Cooper. 2002. Supply chain logistics management. Boston: McGrawHill/Irwin. Choi, Thomas Y., and Manus Rungtusanatham. 1999. Comparison of quality management practices: Across the supply chain and industries. Journal of Supply Chain Management 35, no. 1. Chopra, Sunil, and Peter Meindl. 2001. Supply chain management: strategy, planning, and operation. Upper Saddle River, N. J.: Prentice-Hall, Inc.

Cohen, Lou. 1995. Quality function deployment: how to make QFD work for you. Reading, Mass.: Addison-Wesley Longman, Inc. Davis, Tom. 1993. Effective supply chain management. Sloan Management Review 34, no. 4: 35-46. Donovan, John A., and Frank P. Maresca. 1999. Supplier relations. In Juran’s quality handbook, 5th ed., ed. J. M. Juran and A. Blanton Godfrey. New York: McGraw-Hill. Gryna, Frank M. 1988. Supplier relations. In Juran’s quality control handbook, 4th ed., ed. J. M. Juran and Frank M. Gryna. New York: McGraw-Hill. Hicks, Donald A. 1999. A four-step methodology for using simulation and optimization technologies in strategic supply chain planning. 1999 Winter Simulation Conference Proceedings, Volume 2. Atlanta: Institute of Industrial Engineers. Juran, J. M. 1989. Juran on leadership for quality: an executive handbook. New York: The Free Press. Miller, Charles R. 2002. Competing through supply chains: the rise of integrated supply chain management. Journal of the Reliability Analysis Center 10, no. 3: 1-4. Persson, Fredrik, and Jan Olhager. 2002. Performance simulation of supply chain designs. International Journal of Production Economics 77, no. 3: 231-245. Shapiro, Jeremy F. 2001. Modeling the supply chain. Pacific Grove, Calif.: Duxbury. Simchi-Levi, David, Philip Kaminsky, and Edith Simchi-Levi. 2000. Designing and managing the supply chain: concepts, strategies, and case studies. Boston: McGraw-Hill/Irwin. BIOGRAPHIES Robert Batson is a professor of industrial engineering at the University of Alabama (UA), where he teaches and performs research in quality engineering and operations research. In 21 years at Alabama, he has held research contracts and grants worth more than $2 million with organizations such as BellSouth, Mercedes-Benz, NASA, Army Materiel Command, and the FAA. Prior to joining UA, he worked for five years as a systems engineer with Lockheed Corporation. He received a master’s degree in mathematics from Florida State in 1974, and two degrees from Alabama in 1979: a doctorate in mathematics and a master’s in industrial engineering. Batson is a Registered Professional Engineer in California, and an ASQ Fellow. He can be reached by e-mail at [email protected] . Karen McGough is a research engineer with the Naval Surface Warfare Center in Panama City, Fla. At the time of this research, she was a graduate research assistant in industrial engineering at the University of Alabama, where she received the master’s degree in industrial engineering in 2004, and a bachelor’s degree in mathematics in 2002. She may be contacted by e-mail at [email protected] .

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APPENDIX Supply Chain Customer Needs The following is an original list of the needs for each customer in terms of the supply chain.

Production Needs Modules/parts/fluids needs: • Meet specifications (form, fit, finish, function) • Are identifiable • Available when needed, and in sequence if required • Available in right quantity and type • Are undamaged by shipment or handling • Are essentially ready to use Containers/pallets/racks needs: • Compatible with material handling systems within production • Compatible with space allocated for parts within the plant • Do not contribute to supply damage while in use

• Actual arrival time of orders • Back orders and their status • Lost orders and their status • Returned orders and their status Containers/pallets/racks needs: • Location of each, and under control of whom? • Properly identified • Undamaged or damaged properly repaired

Logistics (Internal and External) Needs • Unit loads compatible with transportation equipment • Unit loads compatible with material handling equipment • Transportation equipment with driver, at right location at right time • Material handling equipment with automatic controller or driver • Pick-up and delivery schedule, with description of the cargo

Protective packaging/wrapping needs:

• Easy to remove prior to assembly

Supplier Quality Engineering Needs

• Easy to dispose of or recycle

• Quality requirements for each module/part/fluid

• Prevent damage/deterioration of parts in transit or inventory

Production Planning and Scheduling Needs Modules/parts/fluids needs: • Location of each order, under control of whom? • Completeness of each order • Estimated arrival time of orders

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• A method of measuring conformance to requirement • A method of sorting, labeling, and tracking defective units • An advanced product quality plan for each part • A pre-production acceptance plan for each part • Traceability of a defective module or part to lower levels in supply-chain, methods and materials used, and so on.