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International Journal of Production Research

ISSN: 0020-7543 (Print) 1366-588X (Online) Journal homepage: http://www.tandfonline.com/loi/tprs20

Synergies between supply chain management and


quality management: emerging implications

B. B. Flynn & E. J. Flynn

To cite this article: B. B. Flynn & E. J. Flynn (2005) Synergies between supply chain
management and quality management: emerging implications, International Journal of
Production Research, 43:16, 3421-3436, DOI: 10.1080/00207540500118076

To link to this article: http://dx.doi.org/10.1080/00207540500118076

Published online: 22 Feb 2007.

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International Journal of Production Research,
Vol. 43, No. 16, 15 August 2005, 3421–3436

Synergies between supply chain management and


quality management: emerging implications

B. B. FLYNN* and E. J. FLYNN

Babcock Graduate School of Management, Wake Forest University,


PO Box 7659, Reynolda Station, Winston-Salem, NC 27109-7659
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(Received January 2005)

This paper examines the potential that quality management offers for improving
supply chain management performance. Based on the theoretical and descriptive
literature, four themes related to this topic are extracted. These are related to the
pursuit of supply chain and quality goals simultaneously, leading to the develop-
ment of cumulative capabilities, the relationship between quality management
practices and supply chain performance measures and the relationship between
a specific set of quality management practices known as co-makership and supply
chain performance measures. Hypotheses were developed and tested using an
existing database of information from 164 plants in the machinery, electronics
and transportation components industries in the USA, Germany, Italy, Japan
and England. There was strong support for all four hypotheses, indicating that
there is a relationship between quality management and supply chain manage-
ment. Practical implications and guidelines for managers focus upon leveraging
this relationship as a competitive weapon in the increasingly complex global
environment.

Keywords: Co-makership; Quality; Supply chain management; Total quality


management (TQM)

1. Introduction

As global markets evolve, supply chain managers are faced with many new chal-
lenges, as traditional approaches to managing supply chains prove increasingly
ineffective. The integration of quality management principles offers potential for
broadening the perspective of supply chain management from its traditional
narrow focus on costs and competitive relationships to a focus on cooperative rela-
tionships between members of the supply chain and the strategic importance of
supply chain management to the achievement of cumulative competitive capabilities.
Recent literature contains a number of suggestions for potential synergies
between supply chain management and quality management. These range
from prescriptive suggestions to case studies to studies of supply chain managers’
vision of the future. However, there is a lack of empirical evidence to support the
relationships they propose. This paper provides empirical evidence of some key

*Corresponding author. Email: Barb.flynn@mba.wfu.edu

International Journal of Production Research


ISSN 0020–7543 print/ISSN 1366–588X online # 2005 Taylor & Francis Group Ltd
http://www.tandf.co.uk/journals
DOI: 10.1080/00207540500118076
3422 B. B. Flynn and E. J. Flynn

issues relating to the emerging implications of the relationship between supply chain
management and quality management.
We begin by surveying the extant literature on this emerging relationship.
Four general themes are extracted and developed, and descriptive suggestions
are supported with theoretical literature. Hypotheses are tested using data from
manufacturing plants in five countries and three industries.

2. Relationship between supply chain management and quality management


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As global markets evolve, supply chain managers are faced with continuously chang-
ing market dynamics, new global markets and stressful competitive environments
(Mehra and Agrawal 2003, Mehra and Inman 2004). Organizations operating
beyond their national boundaries can no longer depend on previously proven domes-
tic quality practices (Mehra and Agrawal 2003). Dealing with traditional tradeoffs is
no longer an option, and firms are finding the need to optimize their supply chain
strategies over a much broader base (Meredith and Roth 1998). Because supply
chains extend across several functions and many organizations, each has its own
priorities and goals (Narayanan and Raman 2004). Additional challenges are pre-
sented by the availability of electronic links for improving supply chain performance
(Poulymenakou and Tsironis 2003), which makes it much more difficult for organi-
zations to observe other firms’ actions (Narayanan and Raman 2004) and causes an
increased focus on cost cutting and efficiency (Lee 2004, Liker and Choi 2004). Thus,
serious threats from competition and declines in markets have forced a change in
supply chain management. Initiatives such as quality management offer the potential
for dealing with these challenges (Levy et al. 1995, Carter and Narasimhan 1996,
Carter et al. 2000, Mehra and Inman 2004).
Traditional supply chain management, where suppliers are selected based on
price (Chen and Yang 2002), may lead to results that deter an organization from
competing in global markets. Suppliers are pitted against each other to obtain the
lowest price, buyers believe that their position is enhanced by having a large number
of competing suppliers, and Internet-based technologies have led companies to the
conclusion that the immediate benefits of low cost global suppliers outweigh the
long-term benefits of investing in relationships (Liker and Choi 2004). Supplier
development practices are traditionally perceived as uneconomical (Forker et al.
1999), exemplified by the existence of large supplier bases and arms-length relation-
ships. Low cost, efficient supply chains are often unable to respond to unexpected
changes in demand or supply, due to their scale economies (Lee 2004).
Traditional supplier selection practices take a vertical view (Kanji and Wong
1999) of the relationship between the buyer and the supplier, focusing on the per-
formance of upstream and downstream organizations. This is consistent with the
perspective of transactions cost analysis theory (TCA), which focuses on the cost of
conducting and maintaining relationships between organizations. Originally devel-
oped by Coase (1937) and expanded by Williamson (1975, 1985, 1996), TCA seeks
to minimise the sum of production and transactions costs (Joshi and Stump 1999)
through optimal allocation of make versus buy decisions (Heide 1994). Transactions
costs of a supply chain relationship include the costs of negotiating, implementing,
coordinating, monitoring, adjusting, enforcing and terminating exchange agreements
Synergies between supply chain management and quality management 3423

(Carr and Pearson 1999). TCA theory is illustrated particularly well by the US
automobile industry, which is characterized by bitter fighting among supply chain
members about implementation of best practices, such as continuous quality
improvement and annual price reductions (Liker and Choi 2004). Although TCA
theory is widely accepted and has proved useful in a variety of contexts, it may not
provide the appropriate perspective for supply chain management in the evolving
global business environment. Its emphasis on costs ignores other relevant factors,
particularly related to quality. For example, a supplier may have provided the lowest
bid by cutting corners (Chen and Yang 2002). Manufacturer–supplier relationships
in the USA are described as having deteriorated so much that they are now worse
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than when quality management began (Liker and Choi 2004), due to a perspective
that is consistent with TCA.
Rather than the vertical view presented by TCA, organizations which are suc-
cessful in today’s global environment take a horizontal view of supply chain manage-
ment, cutting across functions in an organization (Kanji and Wong 1999). This
perspective is consistent with resource dependence theory (RDT) (Pfeffer and
Salancik 1978), which views a relationship as a strategic response to conditions of
uncertainty, power and dependence (Heide 1994), focusing on the acquisition of
critical resources. Resource dependence theory has been examined and generally
supported in studies of inter-organizational relationships (Oliver and Elsers 1998),
but has not been examined extensively in a supplier–buyer situation. According to
RDT, organizations must acquire critical resources from other organizations,
because they are not internally self-sufficient with respect to those resources. Lack
of self-sufficiency creates dependence by the customer organization on its suppliers,
particularly when a large volume of the resource is acquired from a single supplier.
Greater dependence creates more power on the part of the supplier, since the buyer
has fewer alternative sources of supply; the more critical the resource, the greater
the dependence. This dependence relationship can be capitalized upon, with both
organizations working together in a coordinated manner to their mutual benefit,
because the buying organization can have countervailing power with the supplier.
Thus, integration of supply chain management with quality management is reflective
of RDT. By focusing on the relationships described by RDT, an organization takes a
broader perspective of the factors that are important in using supply chain manage-
ment to establish a competitive advantage.
In examining the literature on supply chain management, quality management
and other relevant areas, four general themes that are consistent with the perspective
of RDT emerged. Each provides a perspective that capitalizes on the dependence
between buyer and suppliers to create synergies.

Theme 1: Cumulative capabilities in supply chain performance and quality


One stream of literature focuses on the simultaneous pursuit of capabilities based on
supply chain performance and quality. The purchasing function is becoming more
and more important in its impact on a firm’s ability to compete, through its effect on
quality, cost, technology and supplier responsiveness (Chen and Yang 2002). Quality
performance and supply chain performance have been traditionally perceived as
tradeoffs, with speedy delivery of materials believed achievable only through
taking quality shortcuts. This is consistent with the tradeoffs perspective, which
maintains that a manufacturing organization cannot simultaneously achieve what
3424 B. B. Flynn and E. J. Flynn

Skinner (1969) calls inherently conflicting goals. It has led to increased attention
being paid to the role of manufacturing as a ‘formidable competitive weapon’
(Detouzos et al. 1989, Hill 1995), emphasising that manufacturing must not have
a neutral role in the achievement of competitive advantage, but must follow
its organization’s strategy by identifying the necessary tradeoffs to achieve
it (Hayes and Wheelwright 1984). Porter (1980, 1985, 1996) fully endorsed the
tradeoffs paradigm, stating that pursuit of simultaneous competitive advantages
results in being ‘stuck in the middle and eventually a path to mediocrity’.
However, the notion of tradeoffs may be irrelevant in an environment charac-
terized by advanced manufacturing technologies and global competition, which puts
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intensified pressure on plants to improve on all dimensions (Boyer and Lewis 2002).
The term ‘cumulative capabilities’ is defined as high performance in multiple cap-
abilities simultaneously (Noble 1995, Boyer and Lewis 2002, Flynn and Flynn 2004).
It is based on Schmenner and Swink’s (1998) Law of Cumulative Capabilities, which
states that improvement in certain capabilities enables improvements to be made
more easily in other capabilities, as well as evidence from Japanese manufacturers
(Schmenner and Swink 1998, Boyer and Lewis 2002).
There is strong support in the literature for cumulative capabilities related to
quality management and JIT (Flynn et al. 1995), which can be extended to cumu-
lative capabilities between quality and supply chain performance. This perspective is
supported by the sand cone model (Ferdows and DeMeyer 1990), which suggests
that quality forms the foundation for cumulative capabilities. Because it is necessary
to address all the underlying capabilities as a new capability is developed, quality
is simultaneously developed further with each additional capability, analogous
to sand being poured through a funnel to form a cone; as the cone gets taller
(the new capability), the base (quality) simultaneously expands to help support the
cone. Delivery dependability, speed and cost efficiency, all related to supply chain
management, are built on the foundation of quality.
Thus, supply chain management must move beyond the narrow, transactions
cost-based perspective, which focuses only on the cost of conducting and maintain-
ing the relationship between the buyer and supplier, to focus on a broader perspec-
tive. The integration of quality goals with supply chain goals may lead to cumulative
capabilities which better prepare the organization to face its dynamic, global com-
petition. The first hypothesis investigates cumulative capabilities in quality and
supply chain performance.
H1: Organizations that pursue goals related to supply chain management will also pursue
goals related to quality.

Theme 2: Relationship between quality management practices and supply chain


performance
The pursuit of cumulative capabilities is effective because of synergies not previously
believed to be compatible (Flynn and Flynn 2004). For example, the pursuit of
quality management practices is effective not only in achieving quality goals, but
also in achieving other strategic goals of the organization, such as supply chain
performance goals. This is illustrated by the examination of one key aspect of quality
management: establishment of a close relationship with customers. The aim of
supply chain management is to establish a link between production and distribution
channels, in order to satisfy customer requirements (Kuei et al. 2001). In an effective
Synergies between supply chain management and quality management 3425

supply chain network, members maintain and sustain a customer-driven culture,


offering the right product in the right place, at the right time and at the right
price (Kuei et al. 2001). Although customers may blame the final producer for
quality problems, they are often part of a broader problem related to how the
supply chain is managed (Trent and Monczka 1999). Thus, customers are the drivers
of supply chain management, just as they are the drivers of quality management.
Ascertaining customer requirements completely and accurately is of the utmost
importance (Crosby and LeMay 1998), and establishment of a close communication
loop is critical in establishment of what Ferdows et al. (2004) refer to as a super-
responsive supply chain. In fact, this is a two-way relationship: in addition to helping
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a buyer compete on speed, the best suppliers can also provide quality and design
insights to the buyer.
Quality management practices reduce process variance, which has a direct impact
on supply chain performance measures, including inventory and time measures, such
as cycle time and delivery dependability (Flynn et al. 1995). As process variance is
reduced, there is less need for safety stock and cycle stock inventory. Quality man-
agement practices, such as design for manufacturability, facilitate setup time reduc-
tion, allowing the use of smaller lots, which reduces cycle stock. Pipeline inventory,
which is held as a function of manufacturing, supply and delivery cycle times, is also
improved through variance reduction. Cycle times are shortened through the
improved flows resulting from quality management practices, correspondingly less
pipeline inventory is needed. As quality management practices reduce the number of
items requiring rework, cycle times are shortened by speeding product throughput
(Mefford 1989, Flynn et al. 1995), allowing improved schedule attainment and cor-
respondingly faster response to market demands (Goddard 1986). This allows a
greater extent of synchronization across the entire supply chain (Ferdows et al.
2004). The use of certified suppliers and long-term supplier relationships based on
quality criteria reduces pre-processing cycle time delays for incoming inspection
(Heiko 1990). In the processing and post-processing phases, quality at the source
(Hay 1988), feedback, statistical process control and effective product designs reduce
or eliminate time delays for rework and process inspection of in-process and finished
goods, respectively, and transportation times.
The quality management construct is complex, with many different formulations
(Westphal 1997). Several authors have noted that quality management has a set of
core characteristics (Dean and Snell 1991, Anderson et al. 1994), for instance, it is
‘characterized by a few basic principles—doing things right the first time, striving for
continuous improvement, and fulfilling customer needs—as well as a number of
associated practices’ (Dean and Snell 1991). The number of potential principles
and practices is daunting; Mehra et al. (2001), for example, identified at least
45 key elements of quality management from prior research. In putting into opera-
tion the components of quality management, we have taken the approach of adopt-
ing a well-established standard, the framework that underlies the Baldrige award,
consistent with an emerging trend in quality management research and supported by
other authors as well:

Although there are always going to be debates about how to categorize elements of a
holistic process and framework such as Total quality management (TQM), it is necessary
to decompose it in some way to facilitate analysis. Since the most pervasive and universal
3426 B. B. Flynn and E. J. Flynn

method has been awards criteria such as the MBNQA, we have chosen to follow that
framework. (Samson and Terziovski 1999).

Dellana and Hauser (1999) operationalized quality management using a question-


naire based on the Baldrige criteria, employing a well-known model to create key
constructs, in order to increase the validity of their research. Likewise, Dow et al.
(1999) and Handfield et al. (1998) used Baldrige items to create quality management
constructs.
Thus, in the second hypothesis test, the relationship between quality management
practices, using Baldrige constructs, and supply chain performance is examined.
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H2: There is a direct relationship between quality management practices and supply
chain performance.

Theme 3: Relationship between co-makership and supply chain performance


The concept of co-makership narrows the domain of quality management to a set of
practices believed to be particularly useful in improving supply chain performance.
Bessant (1990) describes co-makership as a radical shift in the nature of the relation-
ship between organizations. It represents a move away from the exchange based,
zero sum game relationships described by TCA to a horizontal and network-based
model more consistent with RDT, describing the sense of mutual development
within a buyer–supplier partnership. It emphasizes cooperation with suppliers,
rather than adversarial relationships, stating that, ‘when buyer and suppliers coop-
erate for mutual benefit, the results can be dramatic’ (Bevan 1987, Bevan 1989).
Partnerships are described as the ‘supply chain lifeblood’ (Liker and Choi 2004).
Salvador et al. (2001) illustrate the improvements in performance time that are
possible when an organization interacts with suppliers and customers on quality
management issues. In a co-makership relationship, organizations take pre-emptive
actions to ensure that their supply chains will be supportive, rather than engaging in
the fire-fighting tactics associated with traditional approaches (Levy et al. 1995).
Buyer–supplier linkages that were once confined to materials procurement have
been extended into design, financial information exchange, expertise, the provision
of specialist services, and distribution and marketing (Bessant 1990). Final assem-
blers that practice co-makership work with top-tier suppliers to encourage the use of
quality management practices (Choi and Rungtusanatham 1999), including extensive
supplier evaluation, supply base reduction to facilitate long-term relationships and
increased responsibilities of top-tier suppliers, including participating in final assem-
blers’ product design activities and proactively managing quality and delivery of the
parts that eventually go into the final assemblers’ parts. Through co-makership,
supplier relationships are perceived as strategic alliances (Tan et al. 1999, Mehra
et al. 2001), while quality management practices provide a framework for monitoring
suppliers’ processes and products (Lee and Oakes 1996). For example, shorter prod-
uct cycles and increasing development costs in the automobile industry have pushed
producers into a closer relationship with supplier firms (Levy et al. 1995), described
as an increasingly complex process of collaborative manufacturing. In fact, a recent
series of articles in Harvard Business Review focused strongly on strategic alliances
with suppliers and associated incentives (Ferdows et al. 2004, Lambert and
Knemeyer 2004, Lee 2004, Liker and Choi 2004, Narayanan and Raman 2004,
Slone 2004)). Such a relationship is typified by growing confidence in a supplier’s
Synergies between supply chain management and quality management 3427

quality, reduction of incoming goods inspection, delivery of parts to their point of


use, avoiding double handling and unnecessary storage, and a shift towards supplier
responsibility for quality. Suppliers provide added value to product development,
with numerous development activities outsourced to trusted suppliers (Trent and
Monczka 1999).
Supply chain managers predict that dominant supply chain players will
increase their sourcing influence at the design and development stage further
(Carter et al. 2000), with an emphasis on win–win negotiations. The complexity of
these relationships will increase as companies practise co-makership to their mutual
benefit, leading to the perception of suppliers as valuable intangible assets
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(Muralidharan et al. 2002).


The third hypothesis examines the relationship between co-makership practices
typically associated with quality management and supply chain performance.
H3: There is a direct relationship between co-makership practices and supply chain
performance.
Theme 4: Hierarchical relationship of practices supporting supply chain performance
Trent and Monczka (1999) suggest a hierarchy of quality management activities,
in support of supplier quality performance. At the base is basic supply chain activity,
including supplier performance measurement and supply base optimisation, charac-
terized by low implementation complexity and a gradual rate of quality improve-
ment. This relationship is embodied by the information provided by the supplier as
evidence of necessary activities. Activities include efforts to reduce the number of
suppliers, which seeks to compensate for environmental uncertainty, as buyers ascer-
tain supplier performance and establish norms for supplier availability (Mehra et al.
2001, Mehra and Agrawal 2003). At the intermediate level, the relationship between
buyers and suppliers is codified by formal certification and achievement of targets.
Activities include supplier certification, progressive improvement awards and estab-
lishment of aggressive supplier improvement targets (Mehra and Agrawal 2003).
At the highest level are activities related to supplier product and process design
involvement and performance development. The relationship between buyers
and its suppliers is direct, working together to improve supplier performance
and involving the supplier in product and process design decisions. These activities
represent high implementation complexity and an accelerated rate of quality
improvement, and it is critical that expectations and incentives are aligned with
them (Lambert and Knemeyer 2004).
This hierarchical perspective recognises that the best suppliers have much more
to offer than simply producing an item according to buyer-provided specifications
(Trent and Monczka 1999). A set of three hypotheses is designed to test this relation-
ship hierarchically.
H4a: Supplier performance measurement and supply base optimization are directly related
to supply chain performance.
H4b: Supplier certification, progressive improvement awards and aggressive supplier
improvement targets are directly related to supply chain performance, given supplier
performance measurement and supply base optimization.
H4c: Supplier product and process design involvement and supplier performance
involvement are directly related to supply chain performance, given supplier performance
3428 B. B. Flynn and E. J. Flynn

measurement, supply base optimization, supplier certification, progressive improvement


awards and aggressive supplier improvement targets.

3. Method

3.1 Sample
This study used data collected as part of the global World Class Manufacturing
(WCM) project, Round II (Flynn and Schroeder 1997). In building the database,
information was solicited from stratified sample of plants in the electronics, trans-
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portation components and machinery industries, located in the USA, Japan, Italy,
England and Germany. The sample was randomly selected from master lists
developed for each country and industry. Participating plants received a profile of
the plant’s practices and performance, and a global industry profile for comparison.
A total of 164 plants (4264 questionnaires) participated, representing 60% of the
plants contacted. Table 1 breaks the plants down by industry and type.

3.2 Approach
In preparing the questionnaires, a set of scales and objective items was developed,
measuring various aspects of performance and objective measures of practice.
A subset of these scales and a set of objective items were used for this study.
The scales and items were assembled into a battery of 12 different questionnaires,
each targeted at a different respondent or group of respondents, including direct
labourers, supervisors and various managers. All responses were aggregated into a
single response per item per plant; analysis was at the plant level. Aggregating
respondents across respondent category and collecting the same data from different
respondents helped to address the issue of common method bias.

3.3 Variables
Five-point Likert scales measured respondents’ perceptions of the extent to which
practices were employed. About one fourth of the original items were reverse-worded
and reverse coded; in every case, a higher scale rating indicates the use of better
practices. The items measuring quality management were created using measures of
the Baldrige constructs (Flynn and Saladin 2001). In developing these measures, the
set of items most relevant to each of the constructs was selected from the WCM

Table 1. Plants included in sample.

Country

Industry Germany Italy Japan England USA Total

Electronics 9 11 17 7 10 54
Machinery 11 13 14 7 10 55
Transportation components 13 10 15 7 10 55
Total 33 34 46 21 30 164 plants
Synergies between supply chain management and quality management 3429

Table 2. Measurement analysis.

Standard Cronbach’s Eigen-


Variable Mean deviation alpha value

Customer and market focus 3.79 0.34 0.84 3.67


Leadership 3.76 0.52 0.85 3.55
Information and analysis 3.47 0.50 0.85 4.32
1.23
1.01
Human resource development and management 3.44 0.36 0.72 7.44
1.11
Process management 3.56 0.39 0.87 5.07
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Strategic planning 3.69 0.53 0.80 3.05


Supplier quality control information 3.22 0.49 0.80 2.89
Cooperative relationship with suppliers 3.50 0.36 0.72 2.42
JIT delivery by suppliers 3.27 0.38 0.78 3.15
Involvement of suppliers in quality management 3.59 0.33 0.72 2.18

data set. Complete information about the construction of these scales is contained in
Flynn and Saladin (2001).
The co-makership construct was measured by a set of scales, including supplier
quality control information, cooperative relationship with suppliers, JIT delivery by
suppliers and involvement of suppliers in quality management. Objective measures
of co-makership included supply base reduction, the percentage of certified suppliers,
the percentage of incoming materials used without inspection, cycle time, inventory
turnover ratio and on-time delivery.
Table 2 contains a summary of the measurement analysis of the scales. Reliability
was measured by Cronbach’s alpha, with a minimum acceptable alpha value of 0.60,
both overall and within each country. Using correlation matrixes as a guide, the
items that did not strongly contribute to alpha values and whose content was not
critical were eliminated. Construct validity was established through the use of factor
analysis, demonstrating that all scales were one-dimensional, with eigenvalues
greater than 1.0 and factor loadings in excess of 0.40 for each scale item. Two of
the Baldridge construct scales had more than one factor with an eigenvalue slightly
greater than one. These were retained, in order to accurately reflect the content of the
subcategories.

3.4 Analysis
Analysis began with verification of the assumptions underlying regression analysis,
including constant variance, no influential outliers and normality (Neter et al. 1990).
The correlations within and between the Baldrige constructs and co-makership
measures were all statistically significant, indicating strong potential for multi-
collinearity, leading to the need for interpreting the results with caution.
The use of stepwise regression analysis was used to help reduce the potential
for multi-collinearity.
The first hypothesis was tested using stepwise regression of strategic goals on
supply chain goals, with 0.50 as the criterion for entering and 0.10 as the criterion for
3430 B. B. Flynn and E. J. Flynn

exiting. The test of the second hypothesis used stepwise regression of quality man-
agement measures on measures of supply chain performance. The third hypothesis
used stepwise regression to assess the relationship between co-makership practices on
the same supply chain measures used in testing the second hypothesis. The fourth
hypothesis was tested using hierarchical stepwise regression analysis. Cycle time was
used as the dependent variable, since it had the highest R2 value in the test of the
third hypothesis. Regression models were hierarchically constructed, with the steps
in their construction corresponding to the sets of co-makership practices described
by Trent and Monczka (1999). Analysis of variance of the change in R2 was used as
the test for significance of each model.
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4. Results

The results of the test of the first hypothesis are contained in table 3. All three
regression equations were statistically significant, indicating that there was a rela-
tionship between supply chain management goals and goals for other dimensions
of competitive performance. At least one quality goal (consistent quality or high
performance products) was significantly related to each of the supply chain manage-
ment goals, providing evidence that quality and supply chain goals are pursued
simultaneously. The goals of low unit cost and the ability to make rapid volume
changes were also related to the supply chain management goals, providing further
evidence of the pursuit of cumulative capabilities.
Table 4 contains the results of the test of the second hypothesis, revealing that
four of five of the regression equations were statistically significant and indicating a
relationship between quality management practices and supply chain management
performance. Process management was related to four of the five measures of supply
chain performance. Other key quality management practices included strategic
planning and information and analysis. Quality management constructs that were
not related to supply chain performance included customer and market focus,
leadership, human resource development, and management. The signs of all coeffi-
cients were in the predicted direction, with the exception of the coefficient for
the relationship between process management and cycle time. Overall, quality
management practices provide broad support for supply chain management, with

Table 3. Relationship of supply chain management goals to goals for other dimensions
of competitive performance.

Fast Dependable Low manufacturing


Goal delivery delivery cycle time

Low unit cost 0.24 (0.007)


Ability to rapidly introduce new products
Ability to make rapid volume changes 0.46 (0.000) 0.27 (0.000) 0.24 (0.000)
Consistent quality 0.50 (0.000)
High performance products 0.17 (0.013) 0.14 (0.020)
Adj. R2 0.29 0.16 0.22
F 58.37 15.91 16.26
Sig. 0.000 0.000 0.000
Synergies between supply chain management and quality management 3431

Table 4. Relationship of quality management practices to supply chain management


performance.

Supply chain management performance

Quality management Global Volume Cycle Inventory On-time


practice performance flexibility time turnover delivery

Customer and market focus


Leadership
Information and analysis 86.05 (0.000)
Human resource
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development
and management
Process management 0.49 (0.000) 0.52 (0.000) 51.39 (0.007) 19.29 (0.000)
Strategic planning 0.34 (0.000)
Adj. R2 0.24 0.09 0.26 0.22
F 27.07 16.83 24.03 n.s. 39.39
Sig. 0.001 0.000 0.000 0.000

Table 5. Relationship of co-makership practices to supply chain management performance.

Supply chain management performance

Global Volume Cycle Inventory On-time


Co-makership practice performance flexibility time turnover delivery

Supplier quality control 0.30 26.92


information (0.004) (0.011)
Supply base reduction 0.16
(0.001)
Percentage certified suppliers
Percentage incoming materials 0.32
used without inspection (0.030)
Cooperative relationship 297.36
with suppliers (0.004)
JIT delivery by suppliers 73.36 8.61
(0.000) (0.028)
Superior supplier relations 0.36 0.27
(0.000) (0.013)
Involvement of suppliers in 0.46 12.36
quality management (0.011) (0.002)
Adj. R2 0.22 0.12 0.34 0.06 0.17
F 20.41 10.58 15.02 8.72 13.10
Sig. 0.000 0.000 0.000 0.004 0.000

process management being particularly effective across measures of supply chain


performance. Thus, the second hypothesis was supported.
Results of the test of the third hypothesis are contained in table 5. All five of the
regression models were statistically significant. All of the co-makership measures
were related to supply chain performance, with the exception of the percent certified
3432 B. B. Flynn and E. J. Flynn

Table 6. Hierarchical relationship between quality management practices and supply chain
management practices.

Step

Change in R2

Adj. R2 F Sig. F Sig. Independent variable t Sig.

0.10 12.89 0.000 — — Supply base reduction 3.59 0.000


0.16 11.50 0.000 9.16 0.003 Supply base reduction 2.96 0.004
Percentage incoming materials 3.03 0.003
used without inspection
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0.30 16.93 0.000 23.10 0.000 Supply base reduction 2.99 0.003
Percentage incoming materials 1.78 0.078
used without inspection
JIT delivery by suppliers 4.81 0.000

suppliers. The signs of all coefficients were in the expected direction, with the excep-
tion of the coefficient for the relationship between supplier quality control informa-
tion and cycle time. Thus, the test of the third hypothesis was supported; there was a
direct relationship between co-makership practices and supply chain performance.
Table 6 contains the results of the test of the fourth hypothesis. The regression
equation for each of the three sets of co-makership variables was statistically sig-
nificant, indicating that each set of variables accounted for an increasing larger set of
the variance in cycle time and providing empirical support for Trent and Monczka’s
(1999) proposed hierarchical relationship. Within each set, a single variable entered
the model at each step. Supplier base reduction entered the model in the first step,
followed by percent incoming materials used without inspection in the second set
and JIT delivery by suppliers in the third set.

5. Discussion

The results provide evidence to support the need for integration of quality manage-
ment with supply chain management. This is noteworthy because, although there is
descriptive and theoretical support for this relationship, there has been little prior
empirical investigation. This study indicates that organizations pursue quality and
supply chain goals simultaneously, providing evidence of the pursuit of cumulative
capabilities. In doing so, they achieve a competitive advantage that is difficult to
imitate. In addition, integrating quality goals with supply chain management goals
enhances development of a foundation for achieving other strategic goals as cumu-
lative capabilities. These findings are in concurrence with the work of Flynn and
Flynn (2004), who found that there was a direct relationship between cumulative
capabilities and superior performance in the global environment.
The results of this study indicated that organizations with stronger quality man-
agement practices achieved better supply chain performance. Thus, the reduced
variances associated with the use of quality management practices translate into
improved supply chain performance. Using the Baldrige constructs to create quality
management provided a broad framework for quality management, and it is
Synergies between supply chain management and quality management 3433

expected that the relationship with supply chain performance will be robust across
various formulations of quality management.
The concept of co-makership focuses on a particular set of quality management
practices that are designed to strengthen the relationship between a buyer and its
suppliers. Focusing on this narrower perspective helps pinpoint particular relation-
ships and identifies the quality management practices most associated with supply
chain performance.
Trent and Monczka’s (1999) framework provides additional insight about the
co-makership concept and provides support for the notion that co-makership is a
sequential set of activities. At the first level are activities that deal with establishing a
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small base of suppliers that have the potential to become partners. Once a strong
base has been established, the partnership can be formalized, through developing a
set of suppliers whose quality is so reliably high that their materials can be used
without incoming inspection. The third step is the development of a true partnership,
where the buyer works closely with the supplier to ensure that the materials provided
will meet all specifications, and the supplier becomes an integral part of the buyer’s
product and process development.
One of the most intriguing aspects of this study is that it contradicts the
implications of transactions cost analysis (TCA) theory. TCA suggests that supply
chain management is a series of decisions to make or buy each resource based
on minimizing the acquisition, transformation and transactions costs for that
resource. This study suggests that the decision criteria are more subtle and complex.
It suggests that supply chain management is about establishing and building
supply bases that can evolve into partnerships, rather than function as exchange
mechanisms, that have the capacity to evolve with the changing nature of the
needs of the users of the final product and the development and refinement of quality
management practices.

6. Guidelines for managers

A number of guidelines arise from this research. First, do not be swayed by fear
of getting ‘stuck in the middle’. Managers should note that strength on
several capabilities at the same time is a powerful competitive weapon.
Organizations that relentlessly pursue a single capability will fall behind in the
global marketplace.
Second, continuing quality management efforts leads to two benefits. In addition
to leading to improvements in product quality, quality management practices are
associated with supply chain performance improvements, through their impact on
variance reduction. These include minimization of cycle time and improvement of
on-time delivery rates. These are improvements that drive cumulative capabilities.
Third, work to establish a strong partnership with a few suppliers, based on trust
and sharing of information. The approach known as co-makership will lead to
benefits in both quality and supply chain management, including reduced cycle
time, increase inventory turnover ratio and higher on-time delivery rates. Again,
these drive cumulative capabilities.
Finally, managers should follow a sequential process that starts with the basics
when implementing co-makership. Begin by working to reduce the number of
3434 B. B. Flynn and E. J. Flynn

suppliers. From there, move to leveraging their quality performance to where


their process can be trusted to provide materials without inspection. Finally, a
true partnership can be established, where buyers and suppliers are intimately
involved in helping each other product quality products and improving their
supply chain performance.

7. Conclusions and practical implications


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The results of this study have profound implications for managers of supply chains.
They reveal that the traditional vertical perspective, with its tradeoff orientation
(usually to minimize costs) and its tendency to create adversarial relationships
between buying and selling firms, has lost its performance advantage.
A new, horizontal perspective has emerged that is not only the backbone of
innovative cutting-edge organizations, but which also yields significant performance
benefits. A horizontal perspective exists when buying and selling firms view their
relationship as a partnership for producing the highest value product for consumers.
The horizontal perspective recognises that organizations have a symbiotic relation-
ship, where each contributes to the other’s success. This perspective can be identified
and encouraged by the adoption of quality management practices.
This research demonstrates the importance of taking a broad approach to supply
chain management. This is in sharp contrast with the traditional approach, where
organizations that select suppliers only on the basis of lowest cost, find themselves
less and less able to compete in the dynamic global environment. Similarly, the
establishment of a competitive, adversarial relationship with suppliers is not in an
organization’s best interest. These approaches may have been successful in the past
that was dominated by tradeoffs. However, the global competitive environment has
changed the game.
Today’s business environment, assisted by the predominance of quality manage-
ment practices, favours the development of cumulative capabilities, rather than
tradeoffs. As a result, successful managers incorporate a horizontal perspective in
their supply chains, capitalizing on the dependence between buyer and suppliers.
A strong, committed supplier can be a real asset to an organization. When key
suppliers get involved in product and process development at the buyer’s organiza-
tion, they are better able to serve the buyer. Its processes can be designed with
in-depth knowledge of the characteristics of the materials that will be purchased
from the supplier in mind. Suppliers may be able to provide useful inputs into the
design of products, before production even begins. An additional benefit associated
with the development of a small cadre of trusted suppliers is development of the
ability to accept incoming materials without inspection. Thus, quality improvement
can lead to cost reduction.
The good news is that many organizations are already well positioned to under-
take efforts to change relationships with suppliers. An existing foundation in quality
management can be leveraged into the development of close and cooperative
relationships with suppliers. Conversely, effective supply chain management will
reap benefits in terms of quality improvement. Quality management and supply
chain management go hand in hand—it’s as simple as that.
Synergies between supply chain management and quality management 3435

Developing a cumulative capability in quality management is an effective


competitive weapon. It positions an organization to compete on two fronts simulta-
neously, as well as leading to improved performance on both quality and supply
chain metrics.

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