Quality Control Business Process | Standard Retail Inbound Needs | Approach to D365 for Commerce with Adv WH Mgmt

Hi Guys, Hope you have read my previous post on the Retail Inbound process flow and the process of palletizing. In this blog, we are going to visit the quality control area. First we will talk about QC sampling and figuring out when something needs to go there. Secondly what happens once it actually gets there and the QC associate has to perform the various tests on the merchandise.

QC is responsible for ensuring that recently received product needs specs. What that means is a little sample of every product that comes into this warehouse will be directed over to the QC area, where it will be evaluated against specific tests that are laid out by the merchant for that particular goods. You can see in the quality control area, Quality tester get a box of sample that’s coming from the receiving dock, and she’s opening it up, and evaluating those goods against specific criteria.

She’s looking to see is it clean? Is there any places that have holes in any of the garments? Is there anything with frayed edges? Was the sewing quality good? There’s a series of tests, and she uncovers things like defects that she needs to record in the system. She needs to get not only the information about what she needs to test, but she needs to be able to record, for example, if this product, which she found was too dirty, she needs to be able to write that and capture that inside the system so that it’s available for the historical record for this particular good. In the event that things are good, she needs to be able to return it so it’s available to sale and it can be put away up in storage. There’s a couple of unique requirements that go along with QC. Let us look at them.

QC Sampling

The discussion about quality control needs to start with just talking about how product even gets there. A lot of people in the Retail Warehousing business refer to this as the QC sampling methodology. Now, QC sampling is important to retailers because they don’t make the products that they sell. They buy them from somebody else and so they need to be particularly sensitive to making sure that those goods meet their internal specifications. The processes that they use have really grown out of processes that have been around for 70 years, and these processes for what we call QC sampling are fairly sophisticated because they’re based around some statistical techniques.

MIL STD 105 approach | QC Sampling Technique

During World War II, there was mass production of munitions that were going on and it was really important, to ensure that, the artillery shells that were being manufactured actually would work once they got out into the field. And you can imagine, you can’t go out and test every single artillery shell to make sure it works before you send it. Otherwise, you won’t have any artillery shells. So they adopted some statistical methodologies that had been researched and developed, to help people decide to sample a subset of those shells and evaluate just those and make some assumptions about whether or not the overall population of shells are really good or not. For example, if you had 40 artillery shells and you’re receiving those from a vendor, do you take them or not? So they would set a minimum acceptable level of quality, and they would sample based on that minimum desired level of quality. And that is QC sampling or the rationale for QC sampling. This ended up driving into standard industry and into retail, in particular, later on to safeguard retailers against vendors shipping product that just wasn’t up to snuff.

So today, this sampling process that developed out of the military munitions industry is known as MIL STD 105. It’s important to talk about it further because, probably 20 to 30 percent of the retailers out there use this to determine how many units of a given PO line they need to sample to make sure that the overall receipt quantity is good. To understand it, you have to think back to the 1940s, before there were computers or calculators. Back then, people were given cards with tables on them to help make difficult decisions. In this case, the quality control card had two tables on it.

Front card shows the Sample quantity table, and it worked a little bit like this. Imagine if you order 300 blue shirts, and now you’ve got to figure out how many should I sample to make sure that the overall 300 are good? I don’t want to check every one of them. I just want to check a sample. So what would happen is you’d take your quality control card, you’d look on the front side of it. You would see that you’ve got 300 units. Going down through the card, I see that if I have between 280 and 500 units on a PO line, then I need to use inspection level H. So, what does that mean? Well, then you’d have to flip it over and look on the back side of this card where you would see that there is another table, the how many can fail table. And then you would look on that card to find inspection level H. It says the sample size ought to be 50. So you would take 50 of those 300 blue shirts and you would test them. And as long as no more than five of those blue shirts failed the QC test then you would accept the total quantity of 300 because you’d know that statistically it’s very, very unlikely that there’s any more than the minimum acceptable quality of two and a half percent failure rate. So that’s the MIL STD 105 approach.

% of a PO Line Qty| QC Sampling Technique

And a lot of retailers have drifted away from MIL STD 105 approach because it was complicated to understand, and not all the systems were set up to support it, and they didn’t want to keep the cards out there any longer. So they went to one of two other more simpler approaches. The first one is just a percent of a PO line quantity. So let’s say we order the 300 blue shirts and we want ten percent inspection. So when it shows up, we need to make sure that 30 shirts get diverted over to QC to be inspected. And if 500 come in, then we make sure that 50 go over to QC. It’s all just a percentage of the total quantity, and it’s very simple to calculate.

Fixed # of units of a PO Line Qty| QC Sampling Technique

In that spirit, there’s another one where it’s just a fixed number of units. Every time it comes in, regardless of the quantity that we bought, we want to sample ten units of that given PO line. And, you know, this doesn’t matter if it’s a thousand units that we bought or a hundred units. We still want to only sample not more than ten.

So that’s the QC sampling methodology. Now let us turn our attention to the expectations retailers have around how QC relates to the putaway process and making things available for sale.

QC Sampling and Diverting Product to QC

Now let us discuss about what retailer expectations are on how product actually will get to QC and how the QC product, once it’s been QCed, can be made available for sale. So imagine that we’ve got a hundred units of a given Product A and a very simple ten percent sampling methodology. Most retailers will tell you that their expectation for that particular item is that when you unload those hundred units, you’re going to send ten of them straight over to QC. However, the other 90 aren’t going to go to QC and they’re not going to sit on the dock either. Instead, the expectation that most retailers will have is that those 90 units will go back and be put away into case storage.

Now, they won’t be available for sale yet. They’ll be on QC hold, awaiting the results of the quality control inspection of the ten that we sent to QC. Now, the minute the quality inspector declares that the ten units are good, the retailers expect to be able to push a button that will make the 90 units available for sale immediately. And while they expect that the ten will be brought over to join the 90 at some point in the future, they don’t want to wait for that to happen to make the 90 available for sale. Now, why do they want to do this? Well, the reason is because you can imagine products that have a short life cycle, let’s say it’s going to be a skirt that’s only going to be sold for six weeks or 30 days. Well, one day of wasted time could be as much as three percent lost sales, and that’s a lot of money, especially if it’s on a popular item. So if you wait for that merchandise to get from the QC area to the case putaway before you make the overall hundred available, you may lose a day of sales and they don’t want to do that. They want to make it available for sale, either to be transferred to stores or to be put up on the website and made available to consumers as soon as possible. And this is something that has to be kept in mind when thinking about the QC functionality that you need to deliver.

Qualitative Tests

Let us talk about what happens inside of the quality control area once the sample merchandise gets there. Most retailers want the system to assist the quality inspector in their jobs, to make sure that all of the tests for a given category or product are executed and that the results are captured in the system. Because you can imagine, if you’ve got tens of thousands of SKUs, it’s going to be very difficult for any quality inspector to remember all the inspections that he or she needs to do, and you don’t want them flipping through a giant book, back and forth, trying to figure out what tests to run and so forth. You want it to be a very straightforward procedure. So this means that the system needs to be able to define or have set up of the series of tests for a given item that need to be conducted in QC. And so there are two kinds of test questions that need to be answered by a quality inspector, and you need to be able to set these up.

Qualitative Tests | QC Testing Types

The first kind of test or question is a qualitative test. So imagine you’ve got a skirt and it gets directed to the quality control area to be inspected. Well, you may have a series of qualitative questions that the inspector needs to answer about that sample.

• For example, is it clean or is it dirty?
• Is the sewing quality poor, good, or excellent?
• Does the box that it came in, does it adhere to the specifications for the dimensions or the labeling?
• Are those correct or not?

Most of the qualitative tests have very distinct, fixed answers. They’re like multiple choice questions. You know, it’s yes or no, true, false, A, B or C.

Quantitative Tests | QC Testing Types

The second type of test that you need to be able to set up and execute in the QC area is what they call a quantitative test. So this is one where you’re going to get some measurements.

Imagine the same skirt that need to be tested to make sure that the waist will expand a certain amount. Now, it needs to be able to expand at least a minimum amount, but you don’t want it to expand too much. Because then if it’s too much, it’s too loose. It will fall off the woman. So this is an example of a quantitative test where you would stretch it out and then measure how far it stretched and compare that to a benchmark and enter that into the computer. And then the system can decide whether or not the skirt passes or fails that given test or, in certain instances, the retailer may want the operator or the QC inspector to record that information or determine whether it passes or fails.

So you have to keep in mind before you talk to a Quality Manager during any D365 for Commerce implementation utilizing Advance Warehouse management about these two types of testing that may or may not be able to set up in D365 F&O to meet the requirements of quality control for qualitative tests and quantitative tests.

In our next blog we will look at the Prep side of the Retail Inbound area. What are the two ways product gets to Prep? What has to happen or how can you get it and divert it to the prep or inbound value-added services area.

Feel free to reach out for any clarifications. If you like my blog posts then comment and subscribe to the blogs.

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