Supply Chain Management: The Influence of SCM on Production Performance and Product Quality.

Volatility of the demands and sales of manufactured products has created intense global competition. The rapid rate of change in global markets has coerced many manufacturing companies to be more responsive to customers changing needs and requirements for higher value-added products and services. In the recent competitive market, producing valueadded, high quality and innovative products have emerged as the most vital strategy for manufacturing companies to survive. Many manufacturing companies in Malaysia have adopted numerous improvement programs and developed new operating philosophies to enhance the way they operate to stay competitive. However, among those improvement programs, SCM has become an integral part of corporate strategy and its adoption in manufacturing companies has steadily accelerated since the 1980s. Supply chain management (SCM) includes the integration of vision, culture, process and strategy to organize an optimal flow of high-quality, value-for-money raw materials, or components from reliable and innovative suppliers and ultimately providing customers with high quality products they designed and manufactured at competitive prices. Increasing global competition and the rising costs of natural resources today as well as customers? demands for higher product quality, greater product selection, and better customer service have created new challenges for manufacturing companies. Companies today are increasingly dealing with suppliers and buyers locally and from all corners of the globe. The new global business scenario has led many Malaysian manufacturing companies to adopt SCM in order to minimize wastage and defects, enhance business performance and to sustain or improve overall firm performance. The increased importance placed on SCM is because it is considered a powerful driver and a significant strategic tool for firms striving to achieve competitive success.

Moving the manufacturing companies toward genuine SCM requires management commitment and changes in strategic direction and planning. An initial step of integrating suppliers in the process also requires a major adjustment to internal processes and procedures that must be accepted throughout the organization before SCM can be successfully implemented. A good implementation of SCM can produce positive outcomes such as excellent product quality, low operating costs, on-time deliveries, and reduce wastage and inventory. The result demonstrates a new discovery of how important (magnitude and direction) is new technology and innovation as well as quality information exchange. By adopting new technical and innovative machineries and tools, production efficiency and effectiveness can be enhanced. In addition, quality products can be produced effectively with maximum utilization of precious and limited resources. The quality information exchange and collaboration among supply chain partners are very crucial in achieving long term benefits. To achieve high performance in SCM, manufacturing companies need to integrate their SCM partners into their operations. Therefore, participation and the operational commitment of all supply chain members and inter channel management are very pertinent for the success of SCM. However, considering the complexity of today's supply networks, it is very challenging to successfully execute SCM concepts due to increased communication requirements among the supply chain partners. Despite these challenges, the proper and effective implementation of SCM with the emphasis on technology & innovation, quality information exchange, strategic supplier partnership as well as elimination of waste under a lean production would improve production efficiency and effectiveness and ultimately product quality. For instance, having effective internal assessment systems in place that enable companies to choose and evaluate suppliers and allow suppliers to actively participate in the supply chain can have a positive effect on product quality, among other measures of company performance. When the supply management function integrates its decisions and operations with suppliers, they enable supply management to establish close relationships where appropriate with suppliers to improve the quality and delivery of materials to customers. Adopting early supplier involvement, operational activities, such as product development projects, can offer more cost-effective design choices, and select best available components and technologies, resulting in smoother production, improved product quality and reduction in lead time. Through strategic supplier partnerships, organizations can work closely with suppliers who can share responsibility for the success of the products. Such strategic supplier partnerships should enable successful SCM. In addition, lean production system makes worker production responsibility central to the continuous improvement of productivity and quality which will improve productivity through reduced lead times and elimination of waste. Moreover, by establishing effective inbound and outbound logistics systems, and managing lean production successfully across the supply chain, companies can secure high quality raw materials from few reliable suppliers as well as improve product quality by avoiding production wastage and error and reduce unnecessary spoilage and non-conformance. As a results company will have a stronger focus on maximizing productivity as well as production efficiency and effectiveness that leads towards ultimate performances. Many of the improvements in SCM would not have been possible without similar improvements in the technology and innovation as well as quality information exchange that are the backbone of the most well-run supply chains. New technology and innovations as well as information systems are changing the way supply chains perform. Internet, intranet and other electronic communications can synchronize a firm's supply chain with those of its supply chain members in producing, merchandising and transporting products more efficiently. Production collaboration using new technological decision support systems manages design across the lifecycle of a product, from introduction to service support, by having suppliers become part of the design process. This helps cut design and production times, improves product quality, and achieves a faster time-to-market. Achievement of these benefits requires changes in the way companies design and develop products and production processes using new technological tools. Using the latest design technology, the manufacturing companies may save huge amounts of time and money in bringing newly developed quality products to market faster.

Question 1 (15 Marks)

In the context of the case study, critically discuss the operation's and customer's views of quality and analyse how these views can be reconciled by the manufacturing companies in Malaysia. Use relevant examples to justify your analysis.

Question 2 (15 Marks)

Suppose you are a quality team leader. With reference to the case study, explain how you would convince your team members about implementing the principles of Total Quality Management (TQM) to ensure quality throughout the manufacturing company's operations.