SPECIFICATIONS AND STANDARDIZATION

1. Chapter 11 SPECIFICATIONS AND STANDARDIZATION

2. Specification and Standards World Class Supply Management requires supply management professionals and suppliers to be actively involved in the tactical and strategic development of specifications and standards to proactively reduce total costs of products and services.

3. Purposes of Specifications Communicate what to buy (user to buyer) Communicate to suppliers what is required Establish the tangibles to be provided Establish the intangibles to be provided Establish the standards for inspections, tests, and quality checks Balance the diverse goals of individual departments & suppliers with product performance & cost

4. Considerations

5. Categories of Specifications

6. Simple Specifications Performance Specifications Easy to prepare � works for complex items Let�s expert (supplier) figure out best way to achieve desired performance � facilitates concurrent design Allows supplier greater flexibility in meeting cost targets Fit & Function Specifications Same advantages � used for interfacing parts Brand or Trade Names good for off-the-shelf items Samples Works only for simple, robust designs Danger in not knowing what attributes are critical Market Grades � great if market grades have been established Qualified Products � works only if item is extremely stable over time

7. Complex vs. Simple Specifications Complex or detailed specifications are descriptions that tell the seller exactly what the buyer wants to purchase A simple specification for buying ketchup might be �12 ounce plastic bottle of Heinz tomato ketchup� In contrast, ketchup specifications become complex if the actual recipe is given with ingredients and production procedures A complex specification often goes beyond the design of a product, to include specifications regarding methodology, packaging, transport, delivery schedules, warranty and service

8. Complex Specifications Commercial Standards This actually belongs under �Simple Specs� Commercial Stds. are often included in more complex specs. (e.g., make an item per drawing using Comm. Std. xyz steel) Design Specifications Written descriptions Engineering Drawings A picture�s worth a thousand words Material and Method-of-Manufacture Makes it very difficult to assign fault when things go wrong

9. Combination of Methods Most industrial products require two or more methods of quality descriptions The combination of Design Specifications and Engineering Drawings is very common

10. Organizational Approaches Informal Approach Engineers do specs. w/ informal SM involvement Supply Management Coordinator Approach �materials engineer� liaisons Early Supply Management Involvement (EPI) Early Supplier Involvement (ESI) EPI and ESI most often involve cross-functional teams Consensus Development Approach Non-team approach to cross-functional involvement Cross-Functional Approach

11. Supply Management Research SM pro takes lead in investigating sources & alternatives Availability of standard products suitable to need Simultaneously compare specs, quality, and prices Applicable trade provisions, restrictions or laws Performance characteristics and quality Information on the satisfaction of other users Any costs or problems associated with integration Distribution & support capabilities of potential suppliers

12. Writing Specifications Must be comprehensive, accurate, clear Design and marketing requirements Manufacturing requirements Inspection & test requirements Stores' requirement to receive, store, issue SM's requirement for competition reliable source Production's requirement to list substitutes Blanket requirement for quality and lowest TCO Standardization requirements

13. Common Problems Lack of Clarity Limiting Competition Unreasonable Tolerances Remember � the best chance to reduce cost is in the design / specifications

14. Standardization A uniform identification that is agreed on is called a standard Two types exist: Industrial standardization --- the process of establishing agreement on uniform identifications for definite characteristics of quality, design, performance, quantity, service, and so on Managerial standardization --- deals with such things as operating practices, procedures, and systems

15. History of Standardization Eli Whitney Muskets for the U.S. Government 1904 Baltimore Fire Lack of standard fire hose couplings Henry Ford Assembly line production of automobiles Standardized at product level rather than at component level Dell Mass-customization through modular design

16. Types and Sources of Standards Types International standards (e.g., ISO) Industry or national standards Company standards

17. Types and Sources of Standards Sources International Organization for Standardization National Bureau of Standards American National Standards Institute American Society for Testing and Materials American Society for Quality Society of Automotive Engineers Society of Mechanical Engineers American Institute of Electrical Engineers Federal Bureau of Specifications National Lumber Manufacturers' Association

18. Benefits of Standardization

19. Simplification Simplification is a corollary of standardization Simplification means reducing the number of items a firm uses in its product design and carries in its inventory Savings result primarily from: Reduced inventory investment Fewer SKUs and less safety stock More competitive prices Greater quantity discounts Reduced clerical costs Reduced handling costs

20. Standardization Programs Standards Team Importance of Supply Management Materials Catalog Improved quality Reduction in design time Reduction of non-standard parts Reduction of standard parts Reduction of inventory Benefits of centralization Electronic Materials Catalogs

21. Concluding Remarks Specifications and standardization improve quality and value, while resolving design conflicts Balanced specifications optimize the supply chain Standardization refines and streamlines systems Such refinement permits the production of low cost, high quality, differentiated products that are competitive in the global marketplace