RELATIONSHIP BETWEEN QUALITY AND SUPPLY CHAIN MANAGEMENT

Introduction

In today's economy, it is no longer business versus business, but rather supplying chain versus supply chain. To compete, supply chain members must learn to seamlessly integrate, grow, and develop business functions. Traditional quality management practices have been and will continue to be used to address many of these supply chain integration issues. With this in mind, current managerial thinking is advancing the notion of supply chain quality management. Supply chain quality management is a systems-based approach to performance improvement that integrates supply chain partners and leverages opportunities created by upstream and downstream linkages with a focus on creating value and achieving satisfaction of intermediate and final customers (Robinson & Malhotra (2005). The intent of the chapter is to

1. Review the positive impact of quality management on supply chain management,
2. Present cases of supply chain improvements through quality management with a focus on the processes of design, production, delivery, support, and supplier-customer relationships, and
3. Discuss the best practice recommendations, relationship between total quality management factors and transition to supply chain quality management that follows from these results.

(Before starting the real article let me describe that I work as a lecturer for supply chain management degree courses, diploma in supply chain management and supply chain management courses at institute of supply management in London so my article is based on different study notes of my colleagues and friends)

Positive relationship between quality management and supply chain management

Although there are several definitions of quality, simply put, quality can be defined as meeting or exceeding customer expectations (Evans & Lindsay, 2002). According to the American Society for Quality, the definition of quality is "A subjective term for which each person or sector has its own definition. In technical usage, quality can have two meanings:

•         The characteristics of a product or service that bear on its ability to satisfy stated or implied needs;
•         A product or service free of deficiencies. According to Joseph Juan, quality means “fitness for use;” according to Philip Crosby, it means “conformance to requirements.” (American Society for supply chain management degree) Quality tools exist and include, but are not limited to: cause analysis (analysis collected from several students of supply chain management courses), evaluation and decision-making tools (decision matrix and multi-voting), process analysis (flowchart, failure modes and effects analysis, mistake-proofing, and spaghetti diagrams), data collection and analysis (box and whisker plot, check sheet, control chart, design of experiments, histogram, scatter diagram, stratification, and surveys), idea creation (affinity diagram, benchmarking, brainstorming, and nominal group technique), an improvement project (Gantt chart and Plan-Do-Study-Act continuous improvement model), and management tools (relations diagram, tree diagram, matrix diagram, L-shaped matrix, arrow diagram, and process decision program chart) (Teague, 2004).

Total quality management is a set of quality practices that seek to continuously improve quality in processes. The eight key principles of total quality include:

• Define quality in terms of customers and their requirements.
• Pursue quality at the source.
• Stress objective rather than subjective analysis.
• Emphasize prevention rather than detection of defects.
• Focus on process rather than output.
• Strive for zero defects.
• Establish continuous improvement as a way of life.
• Make quality everyone's responsibility. (Xara, Tokyo institute of supply management)

Image Courtesy: AIMS College UK

Supply chain management is an approach to integrating suppliers, manufacturers, distributors and retailers, such that products are produced and distributed at the right quantities, to the right location, at the right time, with the mutual goals of minimizing system wide costs and satisfying customer service requirements.

In other words, supply chain management synchronizes a firm's processes with its suppliers and customers with the goal of matching the materials, services and information with customer demand. Critical supply chain processes include product design, production, and delivery, support, and supplier-customer relationships. To succeed in today's environment, managers need to integrate their goals effectively to compete in the dynamic, global economy and focus on the final customer as the driver for improvements. Supply chains compete based upon cost, quality, time and responsiveness. Supply chain improvement tools include, but are not limited to process improvement tools of flow charting, flow diagrams, service blueprints, process analysis, process re-engineering, link charts, multi-activity analysis, backward chaining, and Gantt charts.

Quality is one of the most important factors for companies in their relationship between suppliers and customers. In fact, quality is so critical that today's executives question whether their companies should be participating in global sourcing as many global suppliers are not able to meet quality requirements.

The adage 'garbage in, garbage out' advocates strong relationships between suppliers and buyers with respect to quality. Supplier certification programs and registration systems, such as ISO9000, assist companies to obtain quality items at the source. Product variation and information accuracy is negatively impacted. Certified suppliers and long-term relationships can positively impact on both quality and supply chain initiatives In these relationships, suppliers and buyers reap joint improvement driven by mutual interdependence, open and complete exchange of information, and win-win shared rewards. In these relationships, due to improved and increased exchange of information, supplier's product design changes are minimized, visibility to future purchase volume requirements is increased, and access and visibility to new product requirements is improved. Suppliers gain from a reduction in new product development time, production lead time, ethical treatment, and accurate, timely payment of invoices.

To summarize, quality management practices are associated with supply chain performance improvements. Therefore, quality management and supply chain management strategic goals and initiatives need to be pursued simultaneously as customers drive supply chain management and quality initiatives.

(At the end I would like to thanks my friends of institute of supply management and my group of diploma in supply chain management).

Islamic Finance – Types of Risks

As far as teaching field concerned I always try to pick knowledge from different articles and then combine them to make unique notes which will become useful for my students who are studying in my institute of Islamic banking and finance . I will mention in my article which topic is useful for which courses or levels now let’s begin the article.

First let us know that how many types of risks are there in Islamic finance and what are their names then we will go for detailed definitions. According to several institute of Islamic banking and finance and experts (PhD in Islamic finance) there are six types of risks named:

•  Credit Risk
•  Market Risk
•  Liquidity Risk
•  Operational Risk
• Legal Risk
• Capital Structure Risk

(First let me tell you as far as aptitude tests are concerned the above list of types is important for aptitudes of Islamic finance qualification, diploma in Islamic finance and mba Islamic finance.)

Now let’s start with detailed definitions

Credit risk

Under Islamic finance, credit risk refers to the probability that a third party or counterparty fails to meet its obligations in accordance with the terms agreed, e.g. a customer fails to meet monthly repayments. As a result, loss of revenue and principal due to default on the part of customers may arise from financing, dealing and investment activities. The risk management techniques used by conventional banks can be used to mitigate this risk (for example, by using good-quality data on the past performance of the counterparty to gauge this risk and by determining the probability of default). Collateral and pledges can be used as security against credit risk, as well as personal and institutional guarantees.

Market risk

Market risk for an IIFS arises in the form of unfavorable price movements, such as regarding equity and commodity prices (price risk), benchmark rates (interest rate risk), foreign exchange rates (FX risk), yields (rate of return risk) and volatility in the value of tradable or leasable assets. For example, under an ijarah operating lease contract, an IIFS might be exposed to market risk due to a reduction in the residual value of the leased asset at the expiry of the lease term or, in the case of early termination, due to default. Another example would be the price risk involved when the price of a commodity fluctuates during the period between the date of delivery and the date on which it is sold at the prevailing market price. In order to mitigate this risk, an IIFS must have in place an appropriate framework for managing the market risk (and related reporting) of all assets held, including those that do not have a ready market and/or are exposed to high price volatility.

Liquidity risk

Similar to conventional institutions, IIFSs also face the challenge of managing their asset and liability mismatches. Typically, liquidity risk can occur under two scenarios. In the first, due to a lack of liquidity, the IIFS is constrained in its ability to meet liabilities and financial obligations by illiquid assets. In the second, the IIFS is unable to borrow or raise funds at a reasonable cost when required. Therefore, it is paramount to ensure that sufficient Shari’ah-compatible money market instruments and interbank facilities are available to support IIFSs in their liquidity risk management. (These three definitions are very useful in exams or papers of Islamic finance qualification and diploma in Islamic finance)

Operational risk

Operational risk is the risk of loss resulting from external risks or from the inadequacy or failure of internal processes related to people or systems. Operational risks also include the risk of failure of technology, systems and analytical models. It is argued that operational risks for IIFSs can be significant due to specific contractual features (e.g. the cancellation risks related to non-binding murabahah contracts) and the issue of the enforceability of Islamic contracts in a wider legal context. Therefore, having an end-to-end Shari’ah-compliant process is crucial with regard to mitigating operational risk. This would include having systems that recognize the specificities of Islamic contracts, talent that understands and executes Islamic contracts in the correct manner, and internal processes that mitigate the risks associated with any potential non-compliance.

Legal risk

Legal risk (which can also be categorized as part of operational risk) refers to the potential loss that may be incurred by an IIFS as a result of insufficient, improperly applied, or simply unfavorable legal proceedings in the country in which it operates. The lack of a legal framework to support the products and services that IIFSs offer may stunt the growth of the Islamic finance industry and reduce stakeholders’ confidence in the viability of Islamic financial solutions. Specific measures that can be undertaken to mitigate this risk would include amending existing laws or guidelines in favor of the industry, appointing Shari’ah experts to provide advice on IIFS’s operations, preparing legal documentation that is enforceable and which conforms with existing laws and the Shari’ah, and ensuring that the talent behind Islamic finance operations is well-versed in Islamic contracts.

Capital structure risk

Both an IIFS and its conventional counterpart face capital structure risk, which refers to how a firm finances its overall operations and growth by using different sources of funds. Both types of institutions use a combination of debt (short and long-term) and equity (common equity and preferred equity) for funding. Nevertheless, the instruments issued by IIFSs, as mentioned in IFSB Exposure Draft 15 that will make up an IIFS’s additional capital, would be required to meet the necessary requirements in order to ensure Shari’ah compliance. The risks associated with such instruments would therefore be assessed differently than those of conventional instruments.

(At the end let me confess that I grabbed last three definitions from my friends thesis of PhD in Islamic finance and overall article is taken from Islamic finance certification syllabus and mba Islamic finance syllabus)

The Four Phases of Project Management

This blog is based on my academic career’s knowledge I wrote this blog because of some reason that I will describe later in this blog.

This blog provides a sketch of the traditional method of project management. The model that is discussed here forms the basis for all methods of project management. Later chapters go into more depth regarding a model that is particularly appropriate for IT-related projects. Dividing a project into phases makes it possible to lead it in the best possible direction. Through this organization into phases, the total work load of a project is divided into smaller components, thus making it easier to monitor. The following paragraphs describe a phasing model that has been useful in practice. It includes four phases:

• Design phase
• Development phase
• Implementation phase
• Follow-up phase

Courtesy of AIMS College UK

As a professor in project management institute I personally felt that these four phases are important for every human being who is in business or not because project management helps you in your personal life as well so I wrote that blog which is based on several topics some of them are taken from PMP certification syllabus, diploma in project management books and some of them are from masters in project management I will mention in topic’s heading as well so this mixture is now became almost complete basic guide for every human being.

Design phase (topic from PMP Certification)

The list of requirements that is developed in the definition phase can be used to make design choices. In the design phase, one or more designs are developed, with which the project result can apparently be achieved. Depending on the subject of the project, the products of the design phase can include dioramas, sketches, flow charts, site trees, HTML screen designs, prototypes, photo impressions and UML schemas. The project supervisors use these designs to choose the definitive design that will be produced in the project. This is followed by the development phase. As in the definition phase, once the design has been chosen, it cannot be changed in a later stage of the project.

Development phase

During the development phase, everything that will be needed to implement the project is arranged. Potential suppliers or subcontractors are brought in, a schedule is made, materials and tools are ordered, and instructions are given to the personnel and so forth. The development phase is complete when implementation is ready to start. All matters must be clear for the parties that will carry out the implementation.

In some projects, particularly smaller ones, a formal development phase is probably not necessary. The important point is that it must be clear what must be done in the implementation phase, by whom and when. (Whole definition is noted from my diploma in project management student’s notes prepared by them)

Implementation phase

The project takes shape during the implementation phase. This phase involves the construction of the actual project result. Programmers are occupied with encoding, designers are involved in developing graphic material, contractors are building, and the actual reorganization takes place. It is during this phase that the project becomes visible to outsiders, to whom it may appear that the project has just begun.

Follow-up phase (taken from masters in project management syllabus offered by AIMS project management institute)

Although it is extremely important, the follow-up phase is often neglected. During this phase, everything is arranged that is necessary to bring the project to a successful completion. Examples of activities in the follow-up phase include writing handbooks, providing instruction and training for users, setting up a help desk, maintaining the result, evaluating the project itself, writing the project report, holding a party to celebrate the result that has been achieved, transferring to the directors and dismantling the project team. The central question in the follow-up phase concerns when and where the project ends. Project leaders often joke among themselves that the first ninety per cent of a project proceeds quickly and that the final ten per cent can take years. The boundaries of the project should be considered in the beginning of a project, so that the project can be closed in the follow-up phase, once it has reached these boundaries. It is sometimes unclear for those concerned whether the project result is to be a prototype or a working product. This is particularly common in innovative projects in which the outcome is not certain. Customers may expect to receive a product, while the project team assumes that it is building a prototype.