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International Journal of Production Research Vol. 49, No.

1, 1 January 2011, 8797

A few measures for ensuring supply chain quality

Li Zhanga, Song Wang*b, Fachao Lic, Hong Wangd, Li Wange and Wenan Tanf

College of Economics and Management, Beijing Jiaotong University, Beijing 100044, China; b School of Management, Xian Jiaotong University, Xian 710049, China; c College of Economics and Management, Hebei University of Science and Technology, Shijiazhuang 050018, China; dSchool of Business and Economics, North Carolina A&T State University, Greensboro, NC 27411, USA; eSchool of Economics and Management, Beijing University of Aeronautics and Astronautics, Beijing 100191, China; f Shanghai Second Polytechnic University, Shanghai 201209, China (Final version received 25 May 2010) A major tenet of quality co-ordination and assurance in global supply chains is to ensure continuous quality improvement through strategic planning, tactical employment and operational tools. This study intends to provide a retrospective synopsis on supply chain quality co-ordination, technology application, supply chain risk management and reliability control to promote further exploitation on the quality co-ordination research in supply chains. We found that supply chain co-ordination, technology application, risk management, and reliability assurance are a few important measures for continuous supply chain quality improvement. Keywords: quality co-ordination; technology; risk management; reliability; supply chain quality

1. Introduction The operation of global supply chains is challenging due to the complexity in products, diversity of suppliers geographical distribution, and the intertwined business relationships and processes among suppliers, manufacturers, distributors, retailers, and customers needed for co-ordination and control (Li and Li 2000, Xu 2000, Staley and Warfield 2007, Warfield 2007, Foster 2008). According to Li (2007), supply chain management is a set of synchronised decisions and activities utilised to efficiently integrate suppliers, manufacturers, warehouses, transporters, retailers, and customers so that the right product or service is distributed at the right quantities, to the right locations, at the right prices, in the right condition, with the right information, and at the right time, in order to minimise system-wide costs while satisfying customer service level requirements. Supply chain co-ordination issues can be classified into two categories: design-oriented configuration issues that relate to the basic infrastructure on which the supply chain operates, and execution-oriented co-ordination issues that relate to the actual execution of supply chains (Swaminathan and Tayur 2003). Furthermore, supply chain co-ordination is a management activity that is locally controlled by various independent organisations or decision-making units in the globalisation of markets (Schneeweiss and Zimmer 2004).

*Corresponding author. Email:

ISSN 00207543 print/ISSN 1366588X online 2011 Taylor & Francis DOI: 10.1080/00207543.2010.508965


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In this sense, the traditional supply chain quality assurance measures have to be renovated to incorporate customer focus and be mutually beneficial to supplier relationships. However, recent product recall events and notorious disruptions of supply chains warn us that quality management in global supply chains has not reached the necessary level. Thus, constructing an effective quality co-ordination system to provide lasting and stable quality assurance is crucial for supply chain quality management. Research in quality management has often focused on an internal rather than external view of quality, with the internal view focusing on process and the external view focusing on the customer. As firms adopt the systems approach implicit in supply chain management, they must merge these views as they internalise upstream and downstream processes with their own (Foster 2008). A major tenet, as pointed out by this special issue, is that quality co-ordination and assurance in global supply chains need theoretical paradigms and innovative research ranging from social factors to technologies, from the policy level to operational practice. This study intends to provide a retrospective synopsis on supply chain quality co-ordination, technology application, supply chain risk management and reliability control to promote further exploitation on the quality co-ordination research in supply chains.

2. Supply chain quality co-ordination Supply chain management is an effort to achieve a higher level of co-ordination. Thus, co-ordination became the core concept in supply chain management (Simatupang and Sridharan 2002, Kanda and Deshmukh 2008). Co-ordination refers to the integration of different parts of an organisation or of different organisations in a supply chain to accomplish a collective set of tasks and to achieve mutual benefits (Xue et al. 2005). Although supply chain quality co-ordination (SCQC) has attracted much attention from both researchers and practitioners, there is still a lack of formal SCQC models for facilitating quality management in practice. Borras and Toledo (2003) proposed a quality co-ordination framework in the food supply chain. In this study, we extended the model suggested by Borras and Toledo and propose a more general model for supply chain co-ordination (Figure 1). The co-ordination agent that is in the centre of the SCQC model

Figure 1. General vision of quality co-ordination in supply chain.

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passes risk management requirements, quality co-ordination methods, and regulatory and environmental requirements to the supply chain channel members. Co-ordination is an activity that runs in the entire supply chain. Co-ordination efforts in supply chain can be classified into four categories (Simatupang et al. 2002): (1) (2) (3) (4) Logistics co-ordination. Information sharing. Incentive alignment. Collective learning.

Better co-ordination among business functions and companies effectively improve the competence of organisations and generally result in better performance. Continuous quality improvement and supply chain management (SCM) are two widely recognised quality management strategies that advocate some degree of partnership between suppliers and customers. Houshmand and Rakotobe-Joel (2000) attempted to investigate potential synergies of continuous quality improvement and SCM by applying the integrated supply chain structural analysis method that includes: (1) Analyse the structure of the supply chain by determining the connectivity between members. (2) Conduct a quality assessment of the supply chain in order to identify the issues that concern each channel member. Thus, the prescribed method is conducted through six steps: (1) Perform a supply chain structural analysis. (2) Conduct a quality assessment of the supply chain. (3) Perform a structural analysis of the supply chain based on the results of the quality assessment. (4) Derive conclusions and prioritise improvement tasks. (5) Implement improvement. (6) Review results. All of these provide us with a useful referential quality co-ordination framework for practice and research. When firms outsource more product design and manufacturing processes, the quality co-ordination becomes complex and risky. These complexities include cultural and linguistic differences, foreign exchange rate fluctuation, duty/customs regulations, quality problems, and political and economical instability (Lockamy III and McCormack 2010). Chao et al. (2009) discussed two contractual agreements by which product recall costs can be shared between a manufacturer and a supplier to induce quality improvement efforts. For the case in which information about the quality of the suppliers product is not revealed to the manufacturer (information asymmetry), they found that developing a menu of contracts can both decrease the manufacturers cost due to information asymmetry and improve product quality. Zhu et al. (2007) illustrated the roles of different parties in a supply chain in quality improvement. Via mathematic modelling, they proved that turning quality improvement investments into a contact game to negotiate shares of quality costs can have a significant impact on the profits of both parties (supplier and retailer) and on the supply chain as a whole. They also show how quality-improvement decisions interact with operational decisions, such as with the buyers order quantity and the suppliers production lot size. Such contracts differ on the basis of the contractual


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clauses between buyers and suppliers and whether they primarily concern quantity, time, or revenue-sharing (Giannoccaro 2004, Paul and Bose 2004, Hou et al. 2009).

3. Operational practice and technologies for quality assurance To co-ordinate numerous supply chain partners, advanced technology can be used to improve physical product flow and information flow. Advanced manufacturing technology (AMT) is bolstered by information technology (IT)/control engineering and can be used to link various departments in a firm for better co-operation requirement. AMT can also underpin the co-ordination and integration tasks in the supply chain context to further achieve an overall performance improvement (Gules and Burgess 1996, Lewis and Boyer 2002). E-commerce approaches are a powerful tool in backing up supply-chain co-ordination and integration activities (Lancioni et al. 2003, Naim 2006, Hsu and Wallace 2007, Li and Wang 2007, Li et al. 2008). The acquisition of additional business activities at the same level of the value chain is referred to as horizontal integration. Enterprises can strengthen their core competence via horizontal integration to acquire external resources. Thus, the quality of products is formed during the upstream or downstream activities and can fluctuate, depending on horizontal partners. So the quality co-ordination under AMT modes in supply chains should be taken into consideration. Sha et al. (2007) explore which alignment strategies of AMT with e-commerce settings can develop adequate conditions to meet different business strategy requirements in practice, and they found five strategies of AMT and e-commerce that can be adopted to improve all co-ordination activities of the supplier and customer. Agent-based contract is another approach. Supply chain as a distributed production system consists of several product lines collaborating to solve problems that are usually too complex for a single production. Such a system is assumed to be a complex process that requires the collaboration of more than one organisation unit. The use of intelligent software agents offers a new perspective of autonomy, interactivity, and pro-activity among these business interactions in an attempt to speed up the communication, calculation, and computation in a supply chain. This agent-based approach along the supply chain has been investigated by many researchers (Swaminathan et al. 1998, Caridi and Cavalieri 2004, Nissen and Sengupta 2006). An agent is a self-adaptive program capable of independent decision making and acting based on its perception of its environment, in order to meet one or more goals (Feng et al. 2003a, b, Zhang and Bhattacharyya 2007). A community of agents coming together to solve a problem that is too complex to be tackled by a single agent in a system is referred to as a multi-agent system (MAS) (Wooldridge 2002). MAS technology provides new means for supply chain co-ordination. Researchers attempted to replicate actual market settings coupled with halal food quality requirements. Through simulation of a halal food supply chain with a certification system, multi-agent system architecture was simulated to meet specifications of the halal food supply chain. In order to integrate web services and intelligent agents in a supply chain for securing sensitive messages, Moradian (2008) applied meta-agents to monitor the software agents actions to provide e-supply chain security assurance. Xue et al. (2006) presented a multi-agent-based, multi-attribute negotiation framework for supply chain co-ordination in large-scale construction projects (LCP) to ensure co-ordination quality. From a system design respect, Xue et al. (2005) developed an agent-based framework for supply chain

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co-ordination in construction to realise automation in construction projects. Three construction supply chain (CSC) management types, primary supply chain, support chain and human resource supply chain, are taken into account in an integrative manner in this agent-based framework. Rahman et al. (2008) broaden the multi-agent co-ordination in supply chains with a focus on the -calculus, a mathematical notation that can be used to describe interactions among processes both sequentially and in parallel. Via -calculus, some behaviour of agents and communication processes amongst agents are defined and formalised in order to build MAS. Radio frequency ID system (RFID) provides a device to improve traceability in a supply chain. A generic definition for traceability is given by ISO (1995) as follows: traceability is the ability to trace the history, application or location of an entity, by means of recorded identifications. The tracking capability allows identification for any product and its actual location at any given time. These capabilities formed the function of a tracking and tracing system. Tracking and tracing capabilities could be confined to the internal activities of firms, focusing on enterprises along the inner value chain, or be on the supply chain level. Both approaches are composed of a comprehensive tracking and tracing scheme (Kelepouris et al. 2007). In product liability considerations, the tracking or tracing systems can be divided into two categories: one minimises the number of potential sources of deficiencies in backward tracing, and the other keeps the number of potentially affected products in forward tracing as small as possible (Kelepouris et al. 2007). In principle, the tracing capability allows companies to identify the initial source (backward tracing) and, eventually, its final destination (forward tracing) for any product and from any stage within the value chain (Fritz and Schiefer 2009). Tracking and tracing technologies help to distinguish between: (1) Available analytical methods. (2) Electronic product tags, e.g. RFID. (3) Information system networks (Fritz and Schiefer 2009). The key issues in a tracking and tracing scheme are the isolation and identification of production and trade units and the monitoring of their movements through enterprises and between enterprises, from an initial point until its destination. Tracking and tracing capabilities support the identification and elimination of sources of quality deficiencies through backward tracing from deficient product batches. This combination of backward and forward tracing is an inherent capability of tracking and tracing schemes (Schiefer 2006). RFID is now widely used in logistics and has great potential for aiding supply chain co-ordination in assuring quality covering all members (Angeles 2005, Asif and Mandviwalla 2005, Hsu and Wallace 2007, Zang and Fan 2007). The process for shipping components from suppliers to OEM is very complex and can create many quality problems in logistics and manufacturing. Wibbelmann et al. (2008) investigated how quality propagates through supply chains and proposed a model for the design of a distributed quality management system that facilitates traceability, optimisation and quality assurance. Kim et al. (2008) developed a fuzzy cognitive map (FCM) model of supply chain to mine bidirectional cause-effect knowledge from state data via RFID. By using the genetic algorithm, the weight matrix of the FCM model is discovered with past state data, and forward (what-if) analysis is performed. To deal with two challenges in the application of RFID, dramatically increasing data rates and query processing in real time, Ahmed and Ramachandran (2009) proposed load shedding mechanisms that use the spatial and


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temporal properties of RFID deployments. The mechanisms are piggy-backed on a middleware called RF2ID that deals with the error-prone nature of the physical RFID readers.

4. Risk and uncertainty issues in supply chain quality assurance Risk is defined as the adverse consequences of exposure to uncertainty. To acquire competitive advantages, many firms exploit various initiatives such as outsourcing and product variety. These initiatives could make supply chains more vulnerable to various types of disruptions (Tang and Lu 2002, Juttner et al. 2003, Miller and Engemann 2008). Supply chain risk sources include any variables which cannot be predicted with certainty and from which disruptions can emerge. From an inter-organisational supply chain perspective, Mason-Jones and Towill (1998) classified supply chain risk sources into five overlapping categories: . . . . . environmental risk sources, demand risk sources, supply risk sources, process risk sources, and control risk sources.

Tang and Lu (2006) reviewed various quantitative models for managing supply chain risk and provided detailed conclusions of risk management in supply chains encompassing everything from supplier relationship to operational management, such as demand, product and information management. They also reviewed various related supply chain risk management (SCRM) strategies examined in the research of actual practice. Canbolat et al. (2008) analysed risk in sourcing design and manufacture of components and sub-systems to emerging markets. With the process failure mode effects analysis (PFMEA) structure, they framed and quantified local and global sourcing risk factors in order to create a risk management tool, enabling companies to support their global sourcing decisions. To help in monitoring the frequency and magnitude of an event in the supply chain, Wu et al. (2009) presented a single statistical process control (SPC) chart (called the rate chart) for simultaneously monitoring the time interval (T ) and magnitude of the event (X ) based on the ratio between X and T. The new chart is more effective than the conventional single T or X chart for detecting the out-of-control status of an event, and especially for detecting downward shifts. Within the influenza vaccination industry, Chick et al. (2008) studied quality risk management under the supply chain co-ordination context. Influenza vaccine supply chains have characteristics, such as nonlinear value of sales and random production yield that distinguish them from many other supply chains. Several existing supply contracts are insufficient to provide incentives ensuring the co-ordination in the influenza vaccine supply chain. With analysis tools of game theory, Agrell et al. (2004) used a minimal agency model to contrast known optimal mechanisms with actual practice in the telecommunications industry. A three-stage supply chain under a stochastic demand and varying co-ordination and information asymmetry is modelled, and the authors found that observed pricequantity contracts under limited commitments are inadequate under realistic asymmetric information assumptions.

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5. Reliability in supply chain quality management Reliability has now become an important performance measure for evaluation of supply chain safety, especially when considering changes in supply chain operation conditions (Cao and Li 2008). Thomas (2002) has presented a simple supply chain model to calculate the system failure probability of many suppliers to one buyer. When referring to the reliability engineering practice, there are various understandings of reliability. The United States Advisory Group on reliability of electronic components gives the definition of reliability as referring to products within the required timeframe and the conditions, to complete the trouble-free function of probability. In Vidal et al.s (2000) research, supply chain reliability can be reflected by indices of the capacity of the enterprise supply chain to fulfil commitments. Another approach to evaluate supply chain reliability is topological. Shen et al. (2008) divided the different scale enterprise nodes in the supply chain system into equal nodes with the same producing level, assuming that their technical levels are the same, and used the majority voting system model to analyse the typical irreparable supply chain system and Markov repairable supply chain system with reliability. Lin (2009) suggested that supply system reliability is the probability that the maximum flow is not less than the demand. As a result, businesses involved in global supply chains around the world now face the task of enforcing security. Supply chains are complex economic and organisational systems, and achieving a reasonable level of security will require a systemic policy in order to guarantee their economic feasibility (Harrald et al. 2004, Sekine et al. 2006). In this context, tradeoffs naturally arise as the organisations involved in the supply chain pursue different and often conflicting goals. One of the most salient is the fact that assessing the uncertainty of such rare events based on little or no empirical observations is extremely difficult, and expert input (when available) can be unreliable and subjective (Sekine et al. 2006). The main function of a production/quality chain is to postpone the production of the non-standard components to be as late as possible in the production procedure, which can reduce cost and improve quality control. Due to the complex interdependence among production processes, it is very difficult to detect and diagnose quality problems while multiple products are being processed. In Tsai and Chaos (2007, 2009) papers, the techniques of postponement design and production process postponement have been applied to mixed production problem domains associated with multiple supply chain management. As electronic products become feature-rich, the amount of manufacturing testing required grows rapidly, and similar tests repeated at various stages of supply chain increase manufacturing costs. To reduce cost and enhance reliability, Fisher and Fortune (2007) presented a computational scheme that allows test strategists to investigate, and optimise, the non-intuitive trade-offs between test cost and product quality along the entire manufacturing chain.

6. Conclusions Firms seeking a competitive advantage should recheck how they produce and deliver products to their customers hands and, more importantly, how they can effectively respond to customers requirements and ensure that their customers get qualified products (goods or services) as expected. Thus, quality formation through member co-operation


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within whole supply chains becomes crucial to customers satisfaction, and perhaps even to their safety. Quality co-ordination and quality assurance have become the fundamental requests of supply chain management, but some serious quality issues have invoked blame from customers. Therefore, an overall and systemic retrospect on supply chain quality co-ordination will need to be instructive and constructive. A strategic focus on managing supply chain co-ordination represents a top-level management initiative to integrate quality assurance activities across both functional and organisational boundaries (Schmidt and Wilhelm 2000). Although the TQM and SCM have different starting points, they evolved and developed to merge towards a final goal: customer satisfaction (Li et al. 2008). Therefore the strategic, tactical and operational actions of quality co-ordination in supply chains should be taken into consideration in an integrative manner. Activities like building a quality-based relationship and forging a quality-focused alliance, which differs from the conventional member alliance, provide an effective incentive mechanism to stimulate all members to contribute quality assurance efforts to the supply chain. Fawcett et al. (2008) proposed that people issues such as culture, trust, aversion to change, and willingness to collaborate are more intractable but are the key bridge to successful collaborative innovation in supply chains. Effective co-ordination of different organisational members, and therefore their staffs and employees, is the guarantee of successful quality management of supply chains. Quality co-ordination and assurance in SCM is never an outdated topic, for globalisation has brought us into an era of global supply chain competition. Suppliers, retailers and customers are involved in supply chain quality activities. With the mindset of continuous supply chain quality improvement, strategic planning, tactical employment and operational tools can reduce the negative quality issues and provide satisfactory supply chain quality to all parties.

The research was partially supported by the Changjiang Scholars Program and the National Natural Science Foundation of China (NSFC) under grant numbers 70890080, 70890081 and 70971107.

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