Tuesday, March 6, 2012

Supply and Quality Go Hand In Hand

Most companies who want to improve the efficiency of their supply chain focus efforts only on the supply chain process itself. Few realize the impact that quality can have an on the efficiency and speed of the supply chain. Ensuring the quality of incoming raw materials, in-process work, and final product before it is shipped increases the responsiveness throughout the supply chain.

With more than 60 percent of the cost of manufactured goods coming from the supply chain, supply chain performance is a core competence that must be mastered. No matter how tightly we manage our processes to proactively control quality, we can still face a series of challenges if the components that we are receiving from our suppliers aren’t meeting specifications. Managing the performance of the supply chain helps eliminate cost and improve quality.

The quality management policies and practices of suppliers must be aligned with the standards of the company and the product. Companies are increasingly setting standards of quality management systems and worker treatment for their suppliers to avoid problems. This is because failures in the supply chain are passed down the line to the companies ultimately marketing the products to consumers. Such failures can result in consumer dissatisfaction, regulatory noncompliance and, in some cases, public criticism of the corporate management practices.

It’s becoming more and more critical for manufacturers to work with suppliers to ensure the quality of the materials that they are producing. Instead of threatening to use another supplier if the quality is unacceptable, manufacturers are trying to work more collaboratively with their select suppliers to ensure that they are meeting requirements and the product is usable. More specifically, the best value supply chains target high quality performance. In this case quality refers to the relative reliability of chain activities.

Perhaps it is easy to see how quality improves the supply chain efficiency compared to the converse. But the effectiveness of the supply chain can directly impact your quality due to the linkage of the chain itself. Therefore I say supply and quality go hand in hand. You really can’t have one without the other.

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  1. Very true, Tim. I am seeing companies reaching out to their suppliers to improve their supply chain with an eye on both quality and cost efficiency. It is certainly difficult if not impossible to meet quality standards when suppliers are sending garbage ingredients. Substandard ingredients will often be a cost issue even if you are able to find a way to make it work.

  2. Good points Tim. It is critical to ensure that incoming material is right the first time, every time. Vendor management is obviously a key component in the supply chain process, so i agree that quality and supply chain are a package deal. There are a host of measures to manage this; I prefer vendor scorecards and controlling through an A,B,C rating system. A naughty vendor will quickly be added to the incoming inspection list and have flawless delivery for a long duration to be removed. A vendors reputation relies on one metric, 100% accurate and on time delivery of product.