Four Tips for Advancing Supplier Quality Development
August 25, 2021
Whether it’s managing numerous suppliers or just a handful, the ability to digitally transform your quality efforts by directly collaborating with suppliers is a game changer. Too often, manufacturers rely on manual methods of communication that limit the ability to track, manage, and report on supplier quality issues. Studies continue to indicate that a high percentage of manufacturers have limited or no visibility into their supplier network.
The Deloitte 2020 CPO Flash Survey highlighted that “only 50% of procurement leaders surveyed had high or very high visibility into their tier 1 suppliers, while 90% of organizations rated their visibility into their extended supply networks as moderate to very low.”
Manufacturers require that suppliers meet tight quality standards to ensure the timely flow of goods. Though, it’s often difficult to ensure quality standards and avoid the results of poor quality for a business. Back in 2013, Lululemon incurred outraged customers and a drop in share price after offering too-sheer yoga pants. Automakers recalled over 30 million cars in 2020 due to safety-related issues in the US. Even Tesla and medical device manufacturers were unable to avoid recent quality challenges.
Heightened customer expectations and strict regulations are just two factors that have increased the importance of working more closely with suppliers to address quality. Manufacturers also place quality at risk when selecting suppliers without conducting a full evaluation or reviewing an established performance record. Greater collaboration helps overcome some of these challenges. Today’s technologies allow for enhanced communication and visibility throughout the organization and with suppliers to boost quality compliance and capture issues before they harm the business.
For manufacturers, quality control topics continue to be a high priority. Let’s highlight four tips on the topic of supplier quality development:
Objective Supplier Selection
It’s still common for manufacturers to manage sourcing activities with a mix of spreadsheets, emails, phone calls and buyers’ memories to track hundreds of supplier details. Resulting issues from this reliance on manual efforts include a lack of process governance and overlooked supplier insights. Missed opportunities for manufacturers not only include an inability to address supplier quality during the evaluation process, but supplier performance and supplier development opportunities can be missed that could otherwise add business value.
Strategic sourcing is one area that is not overlooked by the recent wave of digital transformation efforts. By automating sourcing activities and introducing sourcing standards across the organization, manufacturers gain a systematic approach for accurately selecting the lowest cost and optimal source of supply for the many raw materials, products, and services they procure – including quality factors. Automation removes the guesswork from assessing and comparing costs, quality, capacity, services, and other important factors associated with various suppliers. A robust supplier evaluation and selection process that’s aided by digital tools can be a lifesaver for manufacturers to better ensure quality standards.
Ongoing Supplier Auditing
Beyond the initial selection and contracting process, supplier quality monitoring needs to include auditing and feedback to suppliers for continuous improvement to meet and exceed SLAs. Performing virtual and on-site inspections at supplier facilities proactively helps to ensure supplier quality. The most effective audit approach is to make it a continual effort to identify any issues and avoid disruption in supply.
Suppliers can better mitigate issues and maintain focus where efforts are working well. For the procurement team, the goal of mutual success is better supported, and quality performance data is readily available for future sourcing decisions to ensure the right supplier is selected whenever required.
Measure Supplier Quality Performance
Business visibility and advanced analytics are hot topics for manufacturers, especially those that currently rely on outdated processes or have overlooked the importance of rapid access to data for progressing quality improvements. Decision-makers require instant access to information in a personalized manner that allows manufacturers and their suppliers to make decisions based on the same set of information. This is unlike the scenario where manufacturers rely on manual efforts to access and share information, or where data resides across multiple technology systems.
With greater access to real-time data, manufacturers and their suppliers are in a better position to drive critical quality processes and rapidly respond to any quality incidents. Data is readily available and can be easily consolidated to measure quality performance. Based on the manufacturer, KPIs can be tailored to monitor quality defects by supplier, severity, SKU, and other factors.
Effective Supplier Development
Procurement executives are increasingly seeking innovative ways to maximize long-term and jointly-beneficial supplier relationships. Integrated supplier management is a key approach to connect manufacturers with suppliers and boost supplier development efforts. Ernst and Young research recently indicated that “enterprises urgently need to design a supply chain organization that will fit the new digital and autonomous-focused era.”
Proper supplier development improves a supplier’s capability to produce parts within specification tolerances and promotes a partnership of continuous improvement. The result is a foundation for direct material cost reductions, efficiency improvements and risk mitigation. With global supply chains, manufacturers work with suppliers located around the world, involving multiple time zones and extended geographic areas. An ability to develop and grow supplier relationships over time to meet and maintain established quality levels ensures that manufacturers are collaboratively addressing quality concerns, resulting in synergistic relationships and mitigation of quality defects that benefit both the manufacturer and supplier.
For many manufacturers, a winning strategy includes the use of digital technologies to enhance collaboration with suppliers and redefine the approach to quality excellence. Greater supplier quality development starts with supplier selection followed by ongoing performance monitoring and a tailored approach to supplier development. How effective and digital are your quality strategies today? How closely are you working with suppliers to proactively manage and rapidly respond to quality issues? Keep in mind that digital transformation is one key element for enabling the areas mentioned above – never overlook the right data, processes, and talented individuals for advancing supplier quality development.