Page 252 - The Handbook for Quality Management a Complete Guide to Operational Excellence

238 P r o c e s s C o n t r o l S u p p l y C h a i n M a n a g e m e n t 239

Purchasers work with suppliers to prepare aesthetic and sensory stan-
dards. Test and measure ment methods are standardized.
Finally, finished product inspection and audit requirements are estab-
lished. Sampling requirements are specified as well as acceptable quality
levels. Lot identification and traceability systems are developed. Correc-
tive action and follow-up systems acceptable to supplier and purchaser
are instituted.
Contract administration is a cooperative effort. Both supplier and
purchas er participate in evaluation of initial samples of product. Systems
are implemented to ensure that design information and key information
about changes in requirements are rapidly and accurately communicated.
Provisions are made for routine surveillance of supplier processes.
All parties are involved in eval uating delivered product, and the data
collected are used for improvement and learning, not for judgment.
Action on nonconforming product is rational and based on what is best
for the end user. Supplier quality personnel are part of the team.
In Japan, “Keiretsu” is the name for the close coordination of compa-
nies, suppliers, banks, and many other companies that work together for
the good of the whole. Control is based on equity holdings of their suppli-
ers. The Japanese system, commonly called a cartel, is precluded by the
current U.S. antitrust laws. However, as described by Burt and Doyle
(1993), American firms have created Keiretsu-type relationships with sup-
pliers through strategic supply management. The focus is on value-added
outsourcing relationships. Significant efficiencies can be gained through
these approaches to strategic supply management. The basis for the
American Keiretsu-type relationships includes shared long-term objec-
tives and commitments. The key ingredients that must be present are stra-
tegic fit and mutual trust.
American Keiretsu-type relationships are compatible and interdepen-
dent with other corporate strategies, such as total quality management,
strategic cost management, just-in-time manufacturing, simultaneous
engineering, flexible manufacturing, core competencies, and value-chain
management. The approach can be applied to procurement of hardware
or nonproduction and service requirements, such as legal services, con-
sulting services, and mainte nance, repair, and operating supplies.
In these relationships, it is important that companies ensure protection
of a company’s core competencies through early agreements and during
subsequent discussions and actions. Disciplines to control interim con-
tacts at all levels are needed to ensure that the relationships stay focused
within pre-estab lished boundaries and do not flow over into product or
technical activities that are beyond the scope of the agreed cooperation.
The focus is on cooper ation, trust, and synergism; however, this does not
mean that executives can be careless in their business practices. They
should not contribute to the development of a new, stronger competitor.

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