Just as with any other type of relationship, those with suppliers should provide a value to both sides. An original equipment manufacturer (OEM) may need a supplier for materials, for example, to keep operations running smoothly and on-time. What many don’t consider, however, is how much suppliers need the OEM as well. A supplier’s customers are providing it with business and contributing to brand image through the ratings and feedback provided.
Both partners in the relationship benefit from good quality management and corrective action procedures. Therefore, it is important that these systems are efficient and allow collaboration. An OEM can better control the overall quality of its products by taking a holistic approach to quality management and integrating all suppliers into the process.
Suppliers and Quality
Supplier relationships need the same attention as the rest of the quality management processes. To successfully manage suppliers, there must be two key attributes in a company’s quality management process that are present from the beginning to the end: visibility and accountability. Suppliers are the catalyst for the entire manufacturing process; what happens from that first step on determines how quickly, smoothly, and efficiently the rest of the manufacturing process unfolds.
- Visibility: Having high visibility in supplier relationships means that all those involved are fully aware of the general operations and their specific responsibilities. Communicating openly with suppliers is the best way to avoid quality issues before they arise and maintain high visibility. Otherwise, suppliers may continue to send parts that are no longer in accordance with specifications if they were never made aware of the changes.
Other times, the quality of some supplies may not be up to standards or may no longer fit the needs of a company’s products. If that is the case, communication is even more crucial. The suppliers must be made aware of these situations immediately, and should have access to feedback and reports in real time. When all parties in the manufacturing process are well-informed and involved, they can act more efficiently on their own and for the benefit of the relationship.
- Accountability: Just like in other types of relationships, suppliers and manufacturers need to be accountable for their actions. Accountability means carrying out actions in a way that is in line with agreements and standards. It also means taking the responsibility to correct situations if they are not within compliance. This is a key component of quality that is often overlooked when analyzing supplier relationships. Not every aspect of manufacturing is perfect all of the time. What will set a manufacturer apart are the steps it takes to prevent adverse events and how they are dealt with if they happen. How quickly communication can be executed with the team plays a significant role in how accountable the company and that team are.
Maintaining those levels of visibility and accountability allows an OEM to get ahead of quality standards rather than ending up in a defensive position, catching up to standards, and correcting adverse events. If there is a nonconformance or a situation that needs corrective action, the OEM and its suppliers will be prepared and able to handle it quickly and efficiently.
With these basic terms explained, the next question that must be addressed is, “What is the best way to develop and maintain visibility and accountability within supplier relationships?”
Linking the Supply Chain to the QMS
A holistic quality approach links the supply chain to existing aspects of quality management. Using quality management tools for the supplier relationships is beneficial for a company’s business in many ways. Even though suppliers are external, using the features of a quality management system (QMS)—tracking changes, rating performance, and issuing corrective actions—fosters visibility and accountability.
- Tracking Changes: Products and processes are always going to be evolving and changing. It is important that these changes are tracked in real time and people that may be affected are notified immediately. That way, the supply chain is as efficient as possible and the lines of communication are clear. For that to happen, it is best to integrate the supply chain into the QMS. An automated solution is ideal for this task because it can instantly notify the people involved about any changes. Instead of counting on unreliable offline methods, sending out action items and using comment threads keeps the entire team updated.
- Reports and Performance Ratings: Using the data tracking tools available in a QMS, everyone can see reports of how many issues or incidents have occurred on all ends. A company may be currently using this tool internally to track issues with its own products or compliance. However, it is a valuable tool for managing suppliers as well. Allowing suppliers to view relevant reports provides them with a good assessment of their performance and what they can do to improve their operations. An automated QMS generates these reports automatically. Suppliers gain valuable insights into their performance rating and manufacturers better understand the effect different suppliers have on overall quality and compliance.
- Corrective Actions: A reality of the industry is that something may go wrong, either internally with the products or externally with the suppliers. This may be a product issue, or a problem with communication of standards. Either way, being able to immediately notify the responsible party and set a plan of action to resolve the issue is critical. For an internal problem, this is typically accomplished using a corrective action, which can easily be applied to the supply chain by providing action items based on the corrective action. For example, if the part from the supplier no longer fits the updated specifications of a product and what they provide cannot be used, a corrective action can be issued. It would include action items to review the new specifications and send new products. The supplier will be notified and will have a record of exactly what needs to be changed. This system lets a company and its suppliers collaborate for more efficient operations.
Putting supplier management under the QMS umbrella is a wise move. If supplier management is not integrated into other quality processes, a company can fall victim to the weaknesses of other methods like emails or hard-copy paperwork. Other approaches lack:
- Instant, centralized, and organized communication methods that keep all parties updated.
- Collaborative tools for projects such as corrective actions, action items, and a virtual feed of comments.
- Speedy reaction and turnaround time on assigned tasks, updates, or performance reports.
Many people are hesitant to incorporate supplier management into their QMS for security reasons. Understandably, people do not want external organizations to have access to sensitive and confidential information. However, using a cloud-based portal on a QMS provides suppliers separate access to everything they need, but not to the sensitive information they do not require. The OEM will have the control to restrict suppliers from internal information, but the suppliers will be able to see relevant reports and action items.
The purpose of a QMS is to keep track of all quality and compliance requirements. Suppliers have a huge part in that, so why would a company want to keep them out of that system? Taking a holistic approach to quality—including supply chain in the quality system—can improve the efficiency and quality of a company’s relationships with its suppliers.
Supplier management is a unique facet to manufacturing operations; it deals with externally outsourced suppliers, but it greatly impacts a company’s internal affairs. It only makes sense then to manage suppliers in a way that is consistent with the standards set for internal quality and compliance matters. Taking a holistic approach to supplier management gives an OEM the desired control and the efficiency necessary to produce the highest quality products with the help of its suppliers.
Alexa Sussman is a marketing content writer for ETQ . She is responsible for developing and writing content for EtQ, a leading enterprise quality and compliance management software vendor, as well as traqpath, EtQ’s compliance and event-tracking solution.