Markets and manufacturing practices have evolved and companies now work with an increasing number of global manufacturing and supply partners. As companies have pursued this broadened supply chain strategy, the ability to manage quality risk has become more challenging. Quality issues can surface at any point in the supply chain and production process. It is imperative to catch quality issues as early as possible in the supply chain. The costs of unresolved supplier quality issues can be devastating if they are discovered after a product has been introduced into the market. Therefore, it is critical to identify quality issues early in the supply chain to manage quality related costs and mitigate risk. In this new paradigm, quality management does not end at traditional corporate boundaries. As companies become more and more dependent on suppliers and partners, they must assess and manage quality in the supply chain to reduce business risks and revenue losses. Here are four best practices for effectively managing quality across the enterprise and beyond the four walls of the factory. 1. Broaden the Scope of Supplier aSSeSSmentS Most companies restrict supplier performance measurement and monitoring to less than 1/3 of the total supply base. Organizations typically focus supplier measurement and monitoring on: • Suppliers that comprise the largest portion of spend • Suppliers that have a strategic relationship with regard to a key product • Suppliers that have a strategic relationship with the client company Failing to measure the majority of the supplier base means companies lack visibility on the level of quality in the supply chain. As a result, companies are more exposed to potential quality incidents and cost increases that can negatively impact revenue, profit and brand reputation. Companies need to invest in infrastructure that enables broader visibility across the supplier base. 2. Define Clear MeasureMent PrograMs The majority of companies measure supply chain partner performance in specific areas such as: • Quality/PPM • Correctness of delivery (qty/time) • Service level • Price • Total cost • Contract compliance • Responsiveness However, measuring these performance areas can be challenging if the organization has a large number of suppliers, disparate data sources, and/or limited systems and analytical tools. To ensure consistent goals and metrics for supply partners, it’s important to have an effective quality management system in place that provides the ability to trace, manage and report on supplier performance through standardized score cards. According to a study conducted by Aberdeen, just over half of enterprises leverage automation tools to support measurement and monitoring of suppliers. 3. Invest in infrastruCture A key challenge of ensuring quality in the supply chain is communication. Many companies maintain decentralized supplier quality functions to be responsive to needs of a specific functional area or business unit. While this approach can ensure responsiveness to issues, it’s often characterized by limited information/best practice sharing that could provide better economies of scale. Furthermore, many companies still maintain processes that are supported with email and fax, and maintain data in isolated and siloed repositories. In short, the tools and techniques for managing quality in the supply chain have not kept pace with the evolution of the supply chain itself. Leading manufacturing companies are investing in infrastructure that more tightly connects their supplier ecosystem and automates what were manual or disconnected processes. By implementing an Enterprise Quality Management Solution (EQMS), these companies are now enabling process-based communications such as escalations and approvals, and automating quality workflows delivering improved visibility and control. This in turn translates into a lower cost of quality from reduced detection costs, remediation costs, and avoided recalls. 4. Closing the looP Managing supplier related non-conformances, deviations/incidents, and corrective actions is a key challenge for manufacturers. Many companies attempt to manage these critical interactions with old communication methods (e.g. email) or other business cntical pillar systems (e.g. ERP, PLM) that are not designed for or built to manage quality issues. Leading companies are leveraging technology to connect and integrate suppliers into quality management processes. These companies are extending the features and benefits of internal quality management systems to suppliers with the aim of streamlining communication and facilitating faster resolutions. Integrating the supply chain stakeholders into the quality management ecosystem provides a single record of truth for both suppliers and manufacturers, and a trusted source from which manufacturers could easily extract data for purposes of supplier evaluation, development and management. Workflows and processes to support quality would be standardized for all the members of a supply chain, so that it would be easy for everyone concerned with a CAPA to understand where things stood. In addition, communications would be centralized, including automated notifications related to moving a process forward (e.g. reminders or approvals). With these best practices in place, manufacturing organizations can detect and resolve quality issues before they become costly, thereby making impactful decisions proactively, thus improving supply chain efficiency and profitability. In the cloud: Quality acroSS the ecoSyStem From a technology perspective, cloud computing – and particularly the software-as-a-service (SaaS) model – provides an ideal medium for collaboration on quality. In the SaaS model, suppliers essentially log in to a manufacturer’s existing EQMS system and enter data via the same screens and in accordance with the same business rules as those that prevail internally (with strict access and privilege restrictions). Communications related to specific quality processes like CAPAs take place within the same environment so they can be appropriately routed and tracked in a timely manner. Cloud computing can turn the concept of fully integrated quality management for supply chains into a reality. Sparta Systems, Inc. For more information about enterprise Quality Management solutions and how to improve efficiencies across the supply chain: www.spartasystems.com  The Supplier Performance Measurement Benchmarking Report, Aberdeen Group, 2002
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