Module 5

Quality Systems - ISO and Six Sigma and SCM

ISO: Its role and Functions, Quality System Family Series ISO 9000, ISO 14000,
ISO21000.
Six Sigma: Features of six sigma, Goals of six sigma, DMAIC, Six
Sigma implementation.
Supply Chain and Operations: Supply Chain “KEIRETSU”, Core Competency,
POM and Objectives of Supply Chain, Purchasing and Supply Chain, Sources,
Service Quality and Supply Chain.
Founders of ISO, London 1946
International Organization for Standardization (ISO)

• International Organization for Standardization (ISO) is an

international standard setting body.
• ISO was established on February 23, 1947. The headquarter of ISO is
in Geneva, Switzerland.

• ISO is the world’s leading developer and publisher of standards. In

addition to quality standards, ISO has issued two sets of standards.
These are ISO 9000 to govern manufacturing process and their quality
management and ISO 14000 to govern environmental protection.
 Introduction to ISO
• The International Organization for Standardization (ISO) is an
international nongovernmental organization made up of national
standards bodies; it develops and publishes a wide range of
proprietary, industrial, and commercial standards and is comprised of
representatives from various national standards organizations.
• The organization's abbreviated name—ISO—is not an acronym; it
derives from the ancient Greek word ísos, meaning equal or
equivalent. Because the organization would have different acronyms
in different languages, the founders of the organization decided to
call it by the short form ISO.
• History of ISO
• The organization began in the 1920s as the International Federation of the National
Standardizing Associations (ISA). After being suspended during World War II, the United Nations
Standards Coordinating Committee (UNSCC) proposed a new global standards body and the
International Organization for Standardization was formed. The ISO works in 165 countries.
Members of the organization are the foremost standards organizations in their countries; there
is only one member per country. While individuals and companies cannot become members of
ISO, there are various ways that industry experts can collaborate with the ISO.
• ISO develops and publishes standards for a vast range of products, materials, and processes.
The organization's standards catalog is divided into approximately 97 fields, mainly include
healthcare technology, railway engineering, jewellery, clothing, metallurgy, weapons, paint,
civil engineering, agriculture, and aircraft. In addition to producing standards, ISO also
publishes technical reports, technical specifications, publicly available specifications,
technical corrigenda, and guides.
• Roles of ISO
• The ISO plays an important role in facilitating world trade by providing common
standards among different countries. These standards are intended to ensure that
products and services are safe, reliable, and of good quality. For the end-user and
consumer, these standards ensure that certified products conform to the minimum
standards set internationally.
• The ISO has been credited with setting more than twenty thousand standards, ranging
from manufactured products and technology to food safety, agriculture, and healthcare
standards.
• In some cases, "ISO" is used to describe the product that conforms to an ISO standard
as a result of the ubiquity of these standards.
• For example, the speed of film, or the sensitivity of a photographic film to light, is
referred to by its ISO number (ISO 6, ISO 2240, and ISO 5800).
Importance of ISO
• ISO certification can enable a company to streamline their
productivity, positively augment their resource procurement and
grow internationally.
• Increased efficiency fosters innovation and operation growth.
• The productivity boost will heighten a company's competitive
advantage and increase market share.
• The ISO’s tendency towards environmental consideration has
culminated in the development of efficiency-based methodology.
• Streamlined internal operations cuts costs and leave less room for
expensive errors.
• Example: Custom metal fabrication is one such industry, one that has
experienced undeniable technological, economic and societal
benefits as a result of standardization. A company cannot be
considered truly standardized until it has earned its ISO Certification.
The Function of ISO
• ISO is an independent non-governmental organization that was established
in 1947. With a head office in Geneva, Switzerland, it has a membership of
163 national standard organizations all across the world. It has 783 technical
committees and subcommittees that gather and distribute information all
across the world in order to maintain international standards that are:
• voluntary
• consensus-based
• market-relevant
• innovative
• designed to solve global challenges.
 ISO Standards
• ISO standards are designed to make products and services better and to make companies, governments and
other organizations more efficient. Some standards are designed for specific industries, like the food industry,
or designed to help improve the environment. It includes
• ISO 9000 is a family of Quality Management System (QMS) standards to ensure organizations produce quality
products and services. This family includes the ISO 9001 standard. The ISO 9000 family is the world's best-
known quality management standard for companies and organizations of any size.
• ISO 14000 establishes requirements for an Environmental Management System (EMS) that is based on
continuous improvement.

• ISO 21000: requirements in educational organizations

• ISO 27000 is a family of standards for information technology, with the
aim of improving information security and protecting company assets.
• ISO 22000 is for implementing a food safety management system.

• ISO 50001 is a newer standard released in 2011. It is for companies

requiring an Energy Management System (EMS) for improving energy
use and efficiency.
Quality Management System
• A quality management system (QMS) is defined as a formalized system that documents
processes, procedures, and responsibilities for achieving quality policies and objectives. A QMS
helps coordinate and direct an organization’s activities to meet customer and regulatory
requirements and improve its effectiveness and efficiency on a continuous basis.
BENEFITS OF QUALITY MANAGEMENT SYSTEMS
• Implementing a quality management system affects every aspect of an organization's performance. Benefits of a
documented quality management system include:
• Meeting the customer’s requirements, which helps to instil confidence in the organization, in turn leading to more
customers, more sales, and more repeat business
• Meeting the organization's requirements, which ensures compliance with regulations and provision of products and
services in the most cost- and resource-efficient manner, creating room for expansion, growth, and profit
These benefits offer additional advantages, including:
Defining, improving, and controlling processes; Reducing waste; Preventing mistakes; Lowering
costs; Facilitating and identifying training opportunities; Engaging staff; Setting organization-wide
direction; Communicating a readiness to produce consistent results
 ELEMENTS AND REQUIREMENTS OF A QMS
• Each element of a quality management system helps achieve the overall goals of meeting the
customers’ and organization’s requirements. Quality management systems should address an
organization’s unique needs
The elements have in common include:
• The organization’s quality policy and quality objectives
• Quality manual
• Procedures, instructions, and records
• Data management
• Internal processes
• Customer satisfaction from product quality
• Improvement opportunities
• Quality analysis
 ISO 9000
• ISO 9000 is a set of international standards on quality and quality assurance developed to help companies
effectively document the quality control system elements to be implemented to maintain an efficient quality
control system. They are not specific to any industry and can be applied to organization of any size.
ISO 9000 history and revisions: ISO 9000:2000, 2008, and 2015
• ISO 9000 was first published in 1987 by ISO, It was based on the BS 5750 series of standards from BSI (The
British Standards Institution) that was proposed to ISO in 1979. The standards underwent major revisions in
2000 and 2008. The most recent versions of the standard, ISO 9000:2015 and ISO 9001:2015, were
published in September 2015.
Scope of ISO 9000
• ISO 9000 can help a company satisfy its customers meet regulatory requirements and achieve continual
improvement. However, it should be considered to be a first step, the base level of a quality control system
and not a complete guarantee of quality control. It serves many different industries and organizations as a
guide to quality of products, services and managements. An organization can be ISO 9000 certified if it
successfully follows the ISO 9000 standards for its industry.
ISO 9000:2000
•ISO 9000:2000 refers to the ISO 9000 update released in the year 2000.
•The ISO 9000:2000 revision had five goals:
•Meet stakeholder needs
•Be usable by all sizes of organizations
•Be usable by all sectors
•Be simple and clearly understood
•Connect quality management system to business processes
•ISO 9000:2000 was again updated in 2008 and 2015. ISO 9000:2015 is the
most current version.
ISO 9001
• ISO 9001 is the internationally recognized Quality Management System
(QMS) standard that can benefit any size organization. Designed to be a
powerful business improvement tool, ISO 9001 Quality Management
certification can help to:
• Continually improve, streamline operations and reduce costs
• Win more business and compete in tenders
• Satisfy more customers
• Be more resilient and build a sustainable business
• Show you have strong corporate governance
• Work effectively with stakeholders and your supply chain
ISO 9001
 ISO 14000
• ISO 14000 is defined as a series of international environmental management standards,
guides, and technical reports. The standards specify requirements for establishing
an environmental management policy, determining environmental impacts of products
or services, planning environmental objectives, implementing programs to meet
objectives, and conducting corrective action and management review.
PROMOTING ENVIRONMENTAL MANAGEMENT SYSTEMS WITH ISO 14000
• The primary objective of the ISO 14000 series of standards is to promote effective
environmental management systems in organizations. The standards seek to provide
cost-effective tools that make use of best practices for organizing and applying
information about environmental management.
• With different organizational approaches to environmental management, comparisons
of systems and collaboration. ISO 14000 standards and practices can be applied to any
organization, regardless of size or industry.
ISO 14000 history
• The first environmental management system standard, BS 7750, was
published in 1992 by the BSI group.
• In 1996, the International Organization for Standardization
(ISO) created the ISO 14000 family of standards.
• ISO 14001 underwent revision in 2004.
• The current revision of ISO 14001 was published in September 2015.
 ISO 21000 and its family ISO 21001
• ISO 21001 is an international standard developed by the ISO which provides management
tools for organizations that offer educational products and services.
• It intends to help educational providers meet students requirements and needs.
• ISO 21001 is based on ISO 9001 - Quality Management Systems, but it provides a specific
framework for educational organizations that aim to enhance the satisfaction of their
learners by improving the educational processes and ensuring conformity to learners’
requirements.
• The standard can be applicable to all organizations that provide a curriculum for the
development of knowledge, skills and attitudes by means of different lecturing methods.
• The ISO 21001 certification will enable to provide educational services in a more effective
and efficient manner, and to offer a more personalized experience to all learners,
particularly to those with special education needs and distance learners.
Benefits of ISO 21001 Educational Organizations
Management
• By becoming Professional Evaluation and Certification Board (PECB)
ISO 21001 certified, will be able to:
• Improve the education system
• Enhance the reputation of the educational institution
• Promote equal opportunities for all students regardless of their religious
background, ethnic or cultural origin, gender, ability/disability
• Provide personalized training and effective response to all learners
• Stimulate excellence and innovation
• Make education more accessible (physical or online settings)
Six Sigma
 Six Sigma
• Six Sigma is a set of techniques, and tools for process improvement. It was
developed by Motorola in 1986.
• Sir Bill Smith, “ the Father of six sigma” introduce this quality improvement
Methodology to Motorola. He Born in Brooklyn, New York. U.S.
• Six Sigma is now an enormous 'brand' in the world of corporate
development.
History
• Since the 1920's the word “sigma”(s) has been used by mathematicians and
engineers as a symbol for a unit of Measurement in product quality
variation.
• In the mid-1980's engineers in Motorola in the USA used “Six Sigma”(S) an
informal name for an in-house initiative for reducing defects in production
processes, because it represented a suitably high level of quality.
• In the late-1980's Motorola extended the Six Sigma methods to its critical
business processes, and significantly Six Sigma became a formalized in-house
'branded' name for a performance improvement methodology, i.e, beyond
purely 'defect reduction.‘
• In 1991 Motorola certified its first 'Black Belt' Six Sigma experts, which indicates
the beginnings of the formalization of the accredited training of Six Sigma
methods.
• In 1995, Six Sigma became well known after Mr. Jack Welch made it a central
focus of his business strategy at General Electric, and today it is used in different
sectors of industry. (General Electric, or GE, is an American multinational
conglomerate corporation incorporated in New York )
• By the year 2000, Six Sigma was effectively established as an industry in its own
right, involving the training, consultancy and implementation of Six Sigma
methodology.
Six Sigma: [Link]
• Six Sigma is a set of management techniques carried out to improve
the business processes by reducing the probability that an error and
defect will occur.
• Six Sigma is a disciplined and in demand method, which uses
statistical based data driven approach. The concept of Variation
states “NO two items will be perfectly identical.”
• Six Sigma can be applied to any process in any industry to establish
a management system for identifying errors and eliminating them.
It provides methods to improve the efficiency of business structure
and quality of processes, enhancing the profitability of the business.
This increase in performance and decrease in process variation helps
lead to defect reduction and improvement in profits, employee
morale, and quality of products or services.
• A six sigma process is one in which 99.9999966% of the products manufactured
are statistically expected to be free of defects (3.4 defects per million).
• Six Sigma is a very clever way of branding and packaging many aspects of Total
Quality Management.
• Manufacturing methods of six sigma are used in Batch production, Job
production & Mass production. Note: Defects Per Million Opportunities
Principles of Six Sigma
Success of Six Sigma implementation is based upon five main principles:
[Link] on customer requirements
[Link] accurate measurements to do error-less statistical analysis to
understand improvement opportunities for building a solution for
identification of root cause of problems (variations)
[Link] efficient and capable to eliminate variation to continually
improve the process.
[Link] manpower in Six Sigma cross-functional teams.
[Link] thorough and being flexible
Main concepts in Six Sigma
• 1. DPMO (Defects Per Million Opportunities)

2. Critical to Quality:
Critical to quality is one of the major concept in Six Sigma methodologies because the
quality can affect the whole business objective or Goal.
Critical to quality means the measurable characteristics of a product or service which
must match the customer requirement of product or service.
3. Defect:
The defect is defined as a failure in product or service characteristics which are
completely
4. Process Capability:
Process capability can be defined as an ability of the business processes to deliver or
produce a service or product which meets the customer demands.
5. Variation:
•Variation term is a bit different in Six Sigma methodology, here
variation means after delivering service and product, the control
person can measure the difference between the what customer sees
and what they actual feel after acceptance of product or service.
6. Stable Operations:
•Stable operations means not only the stabilizing the process but
businesses have to ensure that the process of business in consistent to
reduce the gap between what customer sees and feels.
 Features of Six Sigma
• Six Sigma is designed to avoid waste and in efficiency, thereby increasing customer satisfaction by delivering
what the customer is really expecting.
• Six Sigma is strictly structured and disciplined methodology, which is very specific for the particular participants.
• Six Sigma is statistical data driven methodology which requires accurate or error-less data to perfectly analyse
the process.
• Six Sigma is not just about the improving quality and increase the sale; it’s about changing results in the
financial statements also.
• By applying Six Sigma in business can achieve the below milestones - also known as business success facts:
• Improving Process
• Lowering Defects
• Increased Profit
• Increased Customer Satisfaction
• Reducing Costs
• Reducing Process Variability
Six Sigma implemented for
• The main purpose of Six Sigma is to achieve customer
satisfaction, in that order focuses on understanding their
needs, collect information, and through statistical analysis
find opportunities for improvement, a consistent
improvement. The procedure for the six sigma
implementation includes Define, Measure, Analyse, Improve,
Control.
Procedure to implement Six Sigma
DMAIC: Six Sigma uses the DMAIC methodology (Define, Measure, Analyse,
Improve, Control), which consists of:
D - Define-(Defining the problem, opportunities, business objectives,
customer demands)
•Here, define what opportunity are looking for or what problem trying to fix
or simply what new business objective or customer demand trying to
complete.
M - Measure performance
•This is the crucial step for professional who are seeking out any opportunity
to improve the service, process or product. Measurement is critical in the
step and it must be accurate because are trying to build solution on the basis
of that measurement. In this process the measurement team has to focus on
the process and what customer actually cares about.
A - Analyse opportunities
•In this step the team has to analyse what is causing the problem and where there will be the
opportunity to improve the process or service quality or cost or product. In this step team spend
their time on finding root causes of problem and building the solution depending upon the results.
•In this step mostly experienced and Six Sigma Green belt certified person analyse. The teams have
to develop hypothesis according to finding and results and then define then work to prove or
disprove the hypothesis.
I – Improve Performance
•After implementing solution into process the teams have to concentrating on the factors which are
crucial for improving the process or service or product. In this step the team have to collects data
to check if there is measurable improvement or not if yes then the team will follow these process
as a core process than pilot process and then finally improve the baseline ultimately it leads to
improve the service quality or product quality which finally meets the customer satisfaction.
• C - Control performance
• This is the step in which team have to control the process and sustain
the changes and improvement they made in the process or service.
This is one of the most important activity required by the business
because sustaining the improved process is very important to hold
the service quality or product quality ultimately to hold the customer.
 Benefits of Six Sigma to Businesses:
1. Lowering Defects:
•Six Sigma completely revolves around only one principle i.e. reducing defects and ultimately increase
the quality of product or service. So when an organization have Six Sigma implemented in their
process, then the business will totally focus on that one principle based statistical data driven
approach.
2. Reducing Cost:
•This is one of the final and long term benefits businesses get when they have implemented Six Sigma
in their process because Six Sigma implementation ultimately leads to reducing the defects which
means saving of time, resources, power, manpower efforts and ultimately money.
3. Increased Customer Satisfaction:
•Six Sigma and DMAIC implementation starts with measuring the variation which means measuring the
gap between what the customer actually sees and feels. Over the successful Six Sigma implementation
completion and if it is sustainable for business, then it will ultimately reduce the variation in the
services or product which will automatically increase the customer satisfaction and customer loyalty.
Supply chain
Operations and Supply chain
• Operations and Supply Chain Management (OSCM) includes a broad area that covers both
manufacturing and service industries, involving the functions of sourcing, materials management,
operations planning, distribution, logistics, retail, demand forecasting, order fulfilment.
• A supply chain is involved in processing or using these materials or even providing services to customers
using these materials. Professionals in these fields also work with processes and increasing efficiencies
with processes. Operations and supply chain professionals have a place in all of these environments.
• Keiretsu is a business network composed of manufacturers, supply chain partners, distributors and
financiers who remain financially independent but work closely together to ensure each other’s success.
• In Japanese, the word keiretsu means “group.” In business, the word is often used as a synonym for
partnership, alliance or extended enterprise. The formation of a keiretsu allows a manufacturer to
establish stable, long-term partnerships, interlocking commercial relationships and shareholdings which
in turn helps them to stay lean and focus on core business requirements.
Evolution of Supply chain
• During the last 20 plus years, many businesses migrated from vertical integration
to a virtual model, outsourcing all their non-core functions (see Figure 1). This
has created challenges in aligning the strategies and activities of all these
functions dispersed across the supply chain, each in separate legal entities. The
next phase of evolution to emerge is the ‘Dynamic Federation,’ or Federated
supply chain which is governed differently than both vertical and virtual
businesses.
The underlying Supply Chain technical core competencies are skills,
knowledge and characteristics that support the effective performance as
Supply Chain professional.
• Capacity Planning
• Demand Management
• Order Processing
• Master Production Scheduling
• Inventory Management & Optimization
• Materials Replenishment Planning
• Logistics, Warehousing and Distribution
• Knowledge of Continuous Improvement Processes or Methods
POM Objectives and supply chain
• The supply chain has the same objectives as the discipline of POM.
This statement may appear like linguistic redundancy. But the point is
that in a supply chain the very same objectives get accentuated
(highlight, underline). The objectives of a supply chain are,
• 1. Service orientation (i.e. service to the customer) and thus ensuring
that the customers gets value,
2. Systems orientation i.e. looking at the supply chain as a whole and
not in terms of its constituent parts (partner companies) and
3. Competitiveness and efficiency
The objectives of supply chain management are: Greater efficiency,
Lower costs, Enhanced flexibility and agility, Higher standards of
customer service, Optimized value chain
 Supply Chain Management
• Supply chain management (SCM) manages the movement of goods and materials
throughout the supply chain, from obtaining to delivery.
• Role Of Supply Chain Management
• The role of supply chain management is to ensure that all components of the
supply chain work together efficiently and effectively.
• Components of the supply chain include suppliers, manufacturers, distributors,
retailers, and customers.
• Supply chain management is responsible for coordinating and managing all the
activities necessary for the supply chain to run smoothly.
• An essential part of supply chain management is ensuring that the products and
services supplied meet the customer’s needs.
Role of Planning in Supply Chain Management?
Planning is essential to supply chain management because it allows managers to anticipate problems and find
solutions before they cause disruptions. By understanding the different components of the supply chain, managers
can develop plans to optimise efficiency and minimise cost.
The primary aim of supply chain management is to create a system responsive to customer demand while maximising
efficiency.

Role of Sourcing in Supply Chain Management

Sourcing entails finding and acquiring goods and services to meet the needs of a company. In supply chain
management, sourcing refers to the activities and techniques necessary to procure goods and services from
suppliers.
The sourcing process begins with identifying potential suppliers, followed by selecting suppliers based on
criteria such as quality, price, and delivery time.
Role of Transportation in Supply Chain Management
Transportation is responsible for moving goods from suppliers to customers. An effective transportation
system is essential for businesses to maintain efficient operations and compete in the marketplace.
Various factors must be considered when designing a transportation system, including the type of goods
transported, the geographical areas served, and the frequency of shipments.
Role of Delivering in Supply Chain Management
It ensures that goods reach its customers on time and in good condition. This requires coordination between
different parts of the supply chain, including suppliers, manufacturers, logistics providers, and customers.
Delivering also involves managing risks, such as the risk of delays or damage to goods.
An effective supply chain management system should be able to track and monitor the progress of deliveries
and provide alerts if there are any delays or problems.
Why is Supply Chain Management Important in Operations
Management?
• Both operations management and supply chain management are expected to add
value to the business, supporting more efficient processes and ultimately driving
better revenue for the company.
• Many industries require both supply chain management and operations
management, whether the business is moving services, products, raw materials,
data or money into the hands of its customers.
• In smaller organizations, it’s also possible for these roles to overlap or be fulfilled by
a single person or department, as the necessary skillset for both roles is similar,
including:
• Organization
• Decision-making
• Goal-setting
• Cross-functional leadership
• Communication
Purchasing and Supply Chain
• Purchasing is responsible for the procurement process. This means it
ensures the supply of goods, production materials and equipment so
that a smooth production and sales process can take place. For this,
goods must be procured at the right time, in the right quantity, and of
the right quantity.
• Procurement is the process of getting the goods and materials your
company needs, while supply chain management is the process of
transforming those goods into products and distributing them to
customers as efficiently as possible.
Sources of Supply Chain

• Sourcing, also known as procurement, is the practice of locating and

selecting businesses or individuals based on set criteria.
• Effective sourcing processes within a firm can improve profits for the
firm, as well as total supply chain surplus, in a variety of ways. Better
economies of scale can be achieved if orders within a firm are
aggregated. More efficient procurement transactions can significantly
reduce the overall cost of purchasing.
Service Quality and Supply Chain.
• Service quality generally refers to a customer's comparison
of service expectations as it relates to a company's performance. A
business with a high level of service quality is likely capable of
meeting customer needs while also remaining economically
competitive in their respective industry.

• The service supply chain is the part of the supply chain dedicated to
providing service on products. It addresses the supply of parts,
materials, personnel and services needed to provide timely and
effective product service, such as repair and maintenance.
• Service quality in supply chain can be defined as how well an organization
meets or exceeds the customer expectations in unidirectional or bidirectional
for each element of a supply chain i.e. supplier, manufacturer, distributor,
retailer and customer or end consumer. In today’s global market place,
individual firms no longer compete as independent entities rather as an integral
part of supply chain links.
• Service quality refers to collective effort of service performance, which
determines the degree of satisfaction of user of all the services. The degree of
consumer satisfaction bears a direct relation with quality of service where good
quality of service gives better customer satisfaction and bad quality of service
lead to dissatisfaction of the customers.
 Factors that affect the service quality :
a) Delivery of service often involves some form of contact between the consumer and
service provider. The behaviour of the service provider. The behaviour of the service
provider influences the consumers perception of quality also what the firm intends
to deliver may be entirely different from what the consumer receives.
b) Service operations depend on consumers to articulate their needs or provide
information. The accuracy of the information and the ability of the service provider
to interpret this information correctly have a significant influence on the consumer’s
perception of service quality.
c) The priority and expectation of the consumer may very each time he or she use the
service. Priority and expectations may change during the delivery of the service.