Supply Chain Vector [Electronic resources] : Methods for Linking the Execution of Global Business Models With Financial Performance نسخه متنی

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Supply Chain Vector [Electronic resources] : Methods for Linking the Execution of Global Business Models With Financial Performance - نسخه متنی

Daniel L. Gardner

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Critical-to-Quality Tree Diagram

Under most circumstances, the SIPOC diagram is designed to provide the team with a visual representation of a process and is the last step in the define stage. In some cases, an SIPOC map does illustrate blatant areas of concern, and it is at that time when a detailed process map is prepared. Once identified by the detailed process map, problems can be quickly rooted out and immediate gains achieved. Even if a team is fortunate enough to harvest incremental gains early in a project, it must continue through the entire methodology. This is particularly true during the measure stage, when critical-to-quality characteristics (CTQCs) are defined, sigma levels determined and cost of poor quality calculated.

Critical-to-quality (CTQ) trees are what translate voice of the customer needs to specific and measurable product/service characteristics. Based on outputs that are identified in the SIPOC diagram, CTQ trees not only identify a need but also describe what the drivers of the need are. Based on this cause-and-effect relationship, the CTQ tree is then able to quantify what the CTQCs of a customer requirement are. It is this transition from the abstract to absolute that makes the CTQ tree exercise important to an overall project.

Figure 9.2 illustrates a CTQ tree diagram for a company that is experiencing invoice problems from its suppliers. Although willing to pay, the company in question continuously receives invoices from vendors that are late or contain the wrong information. As part of a lean supplier management initiative, the customer is trying to rationalize the billing process and keep days payable outstanding at 21 days.


Figure 9.2: Critical-to-Quality Tree for Invoicing Process

Beginning on the left-hand side of the diagram, the need is defined as timely and accurate receipt of invoices from suppliers. Although a valid requirement from the rare customer that wants to pay its bills, at this time it still lacks definition. In an effort to identify the drivers behind the need, the customer has defined four areas: invoices arrive on time, the ability to match invoices to corresponding orders, quantity received matches what is on an invoice and the price billed matches the contract price. This is an important step in the process insomuch as general requirements are being supported by specifics. With this level of information, the customer is now ready to quantify exactly what its CTQCs are.

With regard to the first driver, invoices arrive on time is defined to mean that the customer receives a bill within five business days of receipt of the order. For ability to match invoice to correct order, the customer has decided that the sales order number from the vendor must reference the client's original purchase order number on the invoice 100% of the time. In order to assure that the client is not paying for goods not received, the third driver calls for a 100% match between billed and received merchandise. Finally, the fourth driver is concerned with accuracy between the price for a component on the invoice and the original contract price. In this instance, accuracy of billed versus contract pricing must be 100%.

Although it has established high CTQC standards, the customer feels that, in exchange for its willingness to pay early, it deserves information that is 100% accurate. The client must work with suppliers to achieve this level of excellence, but the CTQ tree has kick-started the process by allowing the client to articulate a need, identify its drivers and assign a value to the services it requires. From that point, continuous process improvements can be uncovered and applied to the accounts payable process.

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