Effective Use of Process Capability Indices for Supplier Management
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Abstract
Process capability indices were originally invented to enable an organization to make economically sound decisions for process management. Process capability is a comparison of the voice of the process with the voice of the customer. Current practice is to use Cp and Cpk regardless of the validity of the underlying assumptions necessary for their use. Even if all necessary assumptions are satisfied, important problems can be missed if these indices are the sole process evaluation examined. Customer-supplier axioms are introduced to motivate more useful process evaluations and foster long-term harmonious relationships. This paper explores the alternative capability indices Cpm, Cpmk, Cjkp, Cθ, and Cs and loss function approaches including Taguchi's unbounded quadratic loss function and the multivariate upside-down normal loss function. Illustrative case studies are presented.
