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The Dangers of Excessive Supplier Diversity |
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Dean and Evans counsel against excessive supplier diversity, as they remind us of Dr. Deming's fourth point for management, which tells us to end price-tag decision making. In this extremely competitive business world, quality must be the major factor. Dr. Deming understood this point when he recognized the costs of poor quality, especially the costs of sub-standard inputs that are embedded in otherwise high quality products. Moreover, the cost-minimizing purchasing strategy is highly inefficient, and therefore expensive as well.
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Traditional Western management attempted to justify the use of multiple suppliers for small component parts over short contract periods, as a way to insulate their company from supplier strikes, natural disasters, and "seller's leverage". In fact, this strategy ignored the costs of increased travel to visit a greater number of suppliers, loss of volume discounts, more set-up costs and higher inventory and administrative costs. But more importantly for Dr. Deming, was the variation of inputs that invariably occurs when different suppliers are used. Variation is the major cause of poor quality, inconsistency, scrap, waste, rework and sometimes it can even damage your equipment.
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Dean, James W., Evans, James R. Total Quality: Management, Organization and Strategy. West Publishing Company. Minneapolis/St. Paul. 1994.
This incredibly detailed yet easily digestible text provides readers with a workable understanding of the Total Quality movement. Everything from the nuts and bolts to the grander scheme of a TQ effort are discussed in easy to understand terms. Dean and Evans use numerous diagrams, tables and case studies to clarify messages and deliver understanding. This is an excellent text for companies to use to conceptualize and launch their own comprehensive, systematic and scientific Total Quality Effort (not to be confused with the documentation-intensive efforts called for by ISO 9000 certification). This book is a how-to guide for real quality innovation.
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