SUPPLY CHAIN QUALITY MANAGEMENT
SUPPLY CHAIN INTEGRATION IN PORTS
SEMESTER – 2
NAME – VIKRANT PHOGAT
ID – 19437642
MASTER OF SUPPLY CHAIN MANAGEMENT
In order to survive in the competitive world, seaports need re-examination factors for sustenance in the long run. As seaports further integrated and embedded in supply chain, issue related to quality management also increased. This paper will going to enhance understanding of theoretical knowledge on quality management.
Although global financial crisis has come and gone, but financial crisis is still evident and deeply affecting a number of major developed and developing economies. In such situation management would like to take some harsh decisions for the betterment of company by launching new business or by merging with existing good companies.
Quality management has over the time played vital role in enhancing the statues of the company in the international market and providing competitive advantage over competitors. To identify the relevant quality management practices for ports, it is necessary to review the evaluation of both quality and seaport management and how quality analysis is differ at different stages and changed relationship with stake holders. A deductive approach is used to select relevant quality management practice.
1 Quality Check at port:- In quality management there are five evolution namely Quality Inspection, Quality Control, Quality Assurance, Total Quality Management (TQM), excellence model and Lean manufacturing and Six Sigma. While seaports have gone through four general evolution.
In order to support first generation prior to 1960 where seaports were viewed as point of exchange between land and sea with basic functions like loading, discharging, cargo handling, storage and service around navigation and quay and waterfront area. In this generation only quality inspection which used to take place at initial stage.
After the 1970, the scope of activities expanded, by seaports enlarging their precincts to facilitate cargo flow and transformation such as ship provisions or repair or spare parts. In this generation seaports started acknowledging the needs for attracting and retaining the customers and developing a good reputation with transportation department. ISO (International Standards Organisation) was the major emergence in second generation. However ISO standards were implemented on basic scale goods. Thus quality control tend to detect which area are below expectations and standards of the company.
In 1980 third generation which was expansion of activities including logistics and customer services. Seaports were on their way to become dynamic in supply chain logistics and distribution centres and providing high value services. Seaports have increased their horizon from being shipping focus and cargo and information distribution to providing terminal activity. Quality assurance ensured quality management occurred during redesign process and relied on continuous improvement as key quality management process.
In fourth generation some of the experts recognised need for seaports to be lean and agile with more flexible role in developing distribution network. Since ports involved too much activities related to logistics and cargo flow, so smooth services required in order to reduce lead time and unnecessary wastes thus leading to reduction in cost and price. Total Quality Management tends to have greater focus on organisational culture with self assessment being critical instead of external audits. Similarly, Chlomoudis and Lampridis use excellent models practices; leadership, policy and strategy, partnership and resources and key performance results to evaluate quality services and product.
Fifth generation of seaports is being introduced as international supply chain. The seaports not simply competes on operational efficiency but how they are embedded in chains to offer shippers greater values. Researchers are no longer choosing a seaport but rather choosing supply chain in which seaport is just an element. Seaports and inland terminals are adopting active role in being extended distribution centre. As per experts, seaports should constantly adopt new methods in order to cope up with the changing market environment.
Lean manufacturing and Six Sigma approach to quality management, is used by most of the manufacturers in order to eliminate waste collected in the process. Main purpose of lean manufacturing and six sigma is to minimize organisational structure and provide JIT (Just In Time) services. However, there is no evidence in literature that this check is taken by port authorities.
2 Seaport Supply Chain:- As per recent seaports being seen as logical platform can make significant contribution in supply chain due to integral position. Seaport can be a bottleneck where potential for congestion is real, therefore maintaining good relationship with stake holders via collaboration and coordination and using effective communication and technology is critical. Upstream entities include material suppliers, manufacturing plants, product processing centres, work in process inventory, manufacturers and producers. Downstream entities include retail outlets, finished products and distributers and end users. These stakeholders are connected by transportation and storage activities. These transitional relationships require stakeholders in these processes to be closely collaborating to ensure timely delivery of products.
The relationship between stakeholders in a supply chain should be mutual and interrelated. All stakeholders serve the same material management and movement process but performs different functions, for example an output of one stakeholder is the input of the other, therefore effective collaboration and coordination in supply chain are of significant importance. Collaboration and coordination among stakeholders facilitate the movement of production, reduce wastes and remove unnecessary inefficiencies in each transaction. It is here that the integral role of seaport in global supply chain in particular becomes evident in relation to the coordination of multinational and multicultural entities in the supply chain.
This cannot be forged without the mutual consent of the parties. The logical inference is that an organisation needs to communicate its business policies, plans, and information to its upstream and downstream partners in consultative manner. Developing quality management approaches throughout a supply chain, which is external to the organisation’s boundaries is often beyond the current thinking of many managers who often take an internal approach to quality management. An external driven approach to quality will require quality policies and plans of one organisation in supply chain to be communicated and shared with other supply chain stakeholders. The internal and external approach to quality management along the supply chain is currently under represented in the literature and possibly within management practice.
3 Quality check in ports and logistics supply network:- Quality management practices on ports are found on their web page rather in the academic literature. Some examples include Australian seaports such as Fremantle and port of Brisbane. Fremantle uses environmental related ISO 14001, ISO 9001 (quality) and AS 4801 for safety audits certified by SAI Global. While Brisbane has implied ISO 14001 for environmental management. Port Everglades is a leading container seaport and trade gateway to Latin America and Caribbean that has earned ISO 9001:2008 certification for Florida International Terminal. In Vietnam, many major ports are certified with quality assurance compliance such as Port of Haiphong with the ISO 9001:2000 certified with the Quality Certification Centre of Vietnam (QUACERT) and the United Kingdom Accreditation Service (UKAS).The ISO quality series sets out the requirements to be formally recorded and ready for inspection or audit either by the organisation itself, its customer, or by an independent quality system certification body such as Bureau Veritas. American Society for Quality, ABS Quality Evaluation, Det Norske Veritas. The ISO quality assurance series depend largely upon documentation without requiring a devotion to the quality culture within organisational culture. In practice, for example if an organisation takes shortcuts even though records are still kept to meet ISO quality assurance requirements. Seaports may adopt this approach for the purpose of having certificate to benefit marketing and promotional activities rather than building quality culture in their work culture, thus making the implementation of good working practice. ISO quality assurance series does not automatically enables organisation including seaports to apply fundamental quality management practices to achieve good organisational outcomes.
In the wider literature, there has been some exploration of quality management in logistics and supply chain network when compared to seaports. The issue of quality management in logistics services has been examined with the logistics industry of Hong-Kong. The researchers purpose a ten step approach to implement quality management practice discussed in the earlier literature such as management commitment, having a quality improvement team, quality measurement and continuous improvement. However, beyond the findings that on time delivery is the most important aspect of quality logistics.
Discussing quality management across supply chains, Lambert and Cooper suggest the practices of planning, control, work structure, organisational structure, product flow facility and reward structure, cultural factors and attitude. However, their framework does not conclude how these practices should be arranged in order to have more effective and efficient supply chain structure. The impact of information technology and communication has been included as an important practice among supply chain participants to speed up the process, reduce product life cycle and developing closer long term relationship and coordination in the supply chain.
Overall, it appears that the quality management practices commonly recommended by researchers are leadership, customer focus, process, information and technology, with special emphasis on managing relationships and integration of business process with supply chain partners. These practices appear to be included because they assist stakeholders in supply chain to manage major flows including material, finances and information smoothly and with minimal cost errors. What is also of interest in academic literature is the scarcity of research on quality management in seaports, even though there is evidence that it is being undertaken by managers, focus being on ISO related certification. There is less evidence that as seaports have evolved to some being recognised as logical platform firmly integrated within supply chain, that seaport quality has extended beyond the boundaries to along the supply chain.
As a result of changing role of seaport, this paper argues that quality management must take a wider perspective and consider (i) how quality is managed across the supply chain (ii) the role of seaports. A conceptual framework has been derived from outcomes of research on quality management practices currently being implemented in seaports and across supply chain. It also proposes critical practice for seaports if they are to be successfully integrated in supply chain. The internal practices shown in the horizontal plane is where a seaport looks within the organisation itself and encompasses practices that are applied within the seaport context. The external practices shown in the vertical plane is where a seaport looks out along the supply chain that run through the ports.
In comparison with quality management in other service organisation, quality management for ports tend to focus more on environment (ISO 14000), security (ISPS code) and emphasizing human resource factor such as education, training and leadership. Although supply chain network integration and quality management has been addressed, the focus tend to be more on internal operational aspects of a seaport rather than external relationship with other network partners. As discussed in the previous section, the major practices of supply chain quality management such as JIT, waste elimination, process optimization, and lean and agile structural design do not appear to have been included in seaport context, thus they are included in the external dimension.
This paper proposes internally and externally focused quality management practices that may be used by seaports integrated within supply chain. This conceptual development is based on synthesising the literature on quality, seaport development and supply chain management. More specifically, eight internal practices are developed from ISO quality assurance while four external practices were based on supply chain quality management practices and factors that make seaport successfully integrated in supply chain.
In terms of the managerial implications of this paper, the advantages of having quality systems and practices has been repeatedly recognised both in industry and research as an most economical means for sustainable business growth in the challenging business environment. The challenge for managers will be whether they have the inclination to assert their quality practices on supply chain partners and how this may be operationalized or indeed penalized.
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