An examination of quality performance at different levels in a connected supply chain: a preliminary case study

This paper is a preliminary case study that examines a connected supply chain. The chain studied consists of the North American Appliance Division of the Whirlpool Corporation, the Stanley Engineered Components (SEC) division of Stanley Works, Inc. and SEC’s suppliers. Specifically the paper examines the two related questions: first, are there differences in quality definitions between levels of a supply chain? Second, does the higher level entity in the supply chain understand the quality requirements imposed on their suppliers? Examined and written from the point of view of SEC (the middle of the chain), the paper concludes that the definitions and implementation of these definitions differ markedly at each level. Lack of understanding about the effects of quality requirements between levels also prevails. The case also examines why these results occurred. Received March 1999 Revised August 1999 Accepted October 1999 supply chain was chosen because it represents many of the connected supply chains within the USA. The end users, homeowners, are at the top of the chain. It is at this level that the ultimate sense of customer satisfaction is realized through the purchase and use of a range for the home. All levels of the supply chain below the end user, the manufacturing supply chain, must work toward the goal of satisfying the end user. The top of the manufacturing supply chain is called the customer. In this case, the customer is the range division of the Whirlpool Corporation. The customer sells ranges to the end user, the homeowner. The middle of the manufacturing supply chain is SEC, a supplier to Whirlpool. SEC provides stamped metal assemblies to their customer, Whirlpool. The bottom of the chain consists of sub-suppliers to SEC. Sub-suppliers provide raw materials and components to the supplier, SEC. The relationships between these four entities are shown in Figure 1. The relationships shown are not unique to these four entities. Relationships similar to the Whirlpool supply chain are formed during the manufacturing of other products. Customer ± Whirlpool In 1997, Whirlpool Corporation was an $8.35 billion company and the world’s leading manufacturer and marketer of appliances. Whirlpool manufactures in 12 countries and markets products in over 140 countries. The range appliance division of Whirlpool, located in Tulsa, Oklahoma, manufactures freestanding gas and electric ranges. A range has four cooking elements on top and one oven cavity below. The freestanding ranges are marketed under the Whirlpool, KitchenAid and Roper brand names. The Tulsa manufactured ranges are Whirlpool’s latest effort to introduce a product line that exceeds customer expectations. Whirlpool has been a customer of SEC for over 20 years and it is SEC’s largest customer, representing 40 per cent of SEC’s total sales. As of 1996, Whirlpool and SEC became partners in a long-term agreement. Supplier ± Stanley Engineered Components In 1997, SEC was the smallest division of the Stanley Works, a $3.5 billion worldwide supplier of hand tools, hardware and hardware products. SEC had approximate sales of $20 million and they have been a domestic supplier of products to the appliance industry for the last 30 years. SEC’s main products are oven door latching mechanisms and oven door hinges. The oven door latching mechanism is an integral part of the oven assembly that locks an oven door during the self-cleaning cycle in both the gas and electric ranges. SEC manufactures three types of latching mechanisms for US consumers: bi-metal, motorized and solenoid. In the USA, SEC controls all of the bi-metal latch business, 20 per cent of the motorized latch business and 30 per cent of the solenoid latch business. SEC controls 20 per cent of the oven door hinge business. SEC’s customers include Whirlpool, General Electric, Frigidaire, Amana and Maytag. Sub-suppliers ± a wide array of 60 SEC uses approximately 60 sub-suppliers in this particular supply chain. These suppliers cover a wide range of capabilities and expertise. Component suppliers provide products that include rolls of steel, springs and electric motors while tooling suppliers provide stamping dies and assemblies that enable production on the manufacturing line. Some of the sub-suppliers are well versed and willing to comply with the methods of quality while others are less knowledgeable and more hesitant to comply with SEC’s quality requirements. Some of the sub-suppliers have worked with SEC for over 30 years, while others are just starting relationships. Although a few of SEC’s sub-suppliers have total sales that are higher than SEC, most of these sub-suppliers are much smaller than SEC. The manufacturing supply chain in Figure 1 will primarily be used to show how the three levels (customer, supplier and subsuppliers) interact with each other on quality issues. We will ascertain whether or not differences exist in quality definitions between each of these levels. We will also Figure 1 Total supply chain [ 127 ] Paul Mangiameli and Christopher J. Roethlein An examination of quality performance at different levels in a connected supply chain: a preliminary case study Integrated Manufacturing Systems 12/2 [2001] 126±133 determine if the customer level of the supply chain truly understands the quality requirements that they impose on the suppliers and sub-suppliers.