Everyone is on the quality improvement
bandwagon these days. Quality has been a hot topic in the
manufacturing arena for years. In the 1990s, all links of the
product supply chain must quickly embrace the quality improvement
philosophy. The objective of this presentation is to provide an
overview of the essential elements of Total Quality Logistics
tools, and how companies can use these tools to significantly
improve customer service, inventory management, and overall
The term Total Quality Logistics describes the
systems and procedures involved in improving the ability to more
effectively serve customers. The sections of the presentation will
focus on the efforts to improve important quality and logistics
functions through implementation of Business Process Reengineering
(BPR), Distribution Resource Planning (DRP), Electronic Data
Interchange (EDI), and Supplier Quality Management.
The tools described here are not meant to be
used simply to improve upon current logistics processes, such as
order processing, replenishment or traffic management. They are
meant to be used to radically alter the way that logistics
organizations conduct business. World class logistics
organizations are already utilizing Total Quality Logistics tools.
Organizations aspiring for world class status must quickly move to
adopt these tools or risk falling further behind the competition
in the race for customer satisfaction.
Business Process Reengineering
Business Process Reengineering is to the 1990s
what the TQM movement was to American business in the 1980s. No
longer is it enough to apply quality management techniques to
reduce errors, defects and cycle times of a given process. BPR
shakes at the foundations of a company's organization by asking,
"Should this process exist at all?"
Don't Automate, Obliterate
Consultant Michael Hammer is credited with
developing the phrase "reengineering." His observations
were that companies have used technologies to simply mechanize old
ways of doing business. His challenge was to
"reengineer" our businesses using the power of modern
information technology to radically redesign business processes in
order to achieve dramatic improvements in performance. Only after
business processes are reengineered can quantum leaps in
performance be achieved.
Companies use BPR to examine key business
processes in order to streamline the process by eliminating steps
or activities that do not add value to the completion of the
process. The basis for value is from the "customer"
perspective, whether the customer is internal or external.
Candidates for BPR are typically processes that span departmental
or other organizational boundaries.
BPR in Action
The essential elements of BPR are described below.
The first step in BPR is to identify candidate
processes to reengineer. Candidate processes targeted for analysis
typically will have characteristics such as relatively large
numbers of full-time equivalent employees involved in the process
cesses that span multiple departments. Often
the process will contain signs of "hand-off work, which may
contain redundant activities, or have large time lags across the
Typical logistics processes that are candidates
for BPR include customer support functions, inventory
replenishment functions and warehouse picking and staging
Value vs. Non-Value-Added
After the processes have been targeted for
analysis and redesign, the employees actually involved in the
process, the "process owners" are assembled into a
project team. The team utilizes group facilitated work sessions to
analyze the current procedures and brainstorm new process
improvement actions. It is through the direct participation of the
process owners that the major deliverables from BPR are produced.
A key concept of BPR is to analyze each step in
a process to look at the value of each activity from the
customer's perspective. Each activity is either value-added or
non-value-added, and the key determinant is would the customer be
willing to pay for this activity.
For example, a customer would likely be willing
to pay for having their purchase order entered into a system, the
order printed in the warehouse for shipment, and the invoice
automatically generated. However, the customer probably would not
be willing to pay to have the order manually reviewed by a
supervisor (it should have been entered right) or to have the
order information entered into a manual log for further analysis.
Process Improvement Actions
Activities that add cost and time to a process
with no value added are candidates to be eliminated. Again, simply
automating existing manual activities is generally not the answer.
Typical BPR solutions seek to: eliminate the need to perform the
activity, reduce the number of times the activity is performed,
reduce the number of steps involved performing the activity, and
reduce the complexity of the steps.
The results of BPR are new, redesigned processes that are
radically different from the original process. The processes often
utilize new technologies, such as EDI, to dramatically alter the
way that work is accomplished. Many logistics organizations now
realize that old ways of doing business are no longer good enough.
BPR is a proven tool for transforming logistics processes into
value added operations for world class companies of the 1990s.
To be Continued
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