Global-scale events have tested the bounds of a supply chain system. The coronavirus, for example, has made it clear how critical an efficient supply chain is for continuity and survival. It is a real-world example of how important it is to have an enterprise-wide system that utilizes a quality management system (QMS) as the hub of truth.
Organizations that demonstrate poor or lack control of supplier quality management (SQM) are likely struggling to manage risk effectively. Poor controls can result in audits, warning letters, injuries, recalls, and negative revenue.
This article looks at 5 common traits that together, can enable high-performing supplier quality management practices in regulated industries.
1 – SQM Automation
A manual or spreadsheet-centric approach to supplier quality management is an opportunity for process gaps and increased risk. Moving to an automated supplier quality management software solution takes the manual work out of adding suppliers to your system. An automated SQM system enables suppliers to upload their own certificates and quality policy information directly into your system. This eliminates the laborious tasks of compiling supplier information and manually inputting it.
Centralization of electronic records replaces sorting through files or sorting columns in spreadsheets. For example, manufacturers and suppliers can be auto notified of upcoming certificate expiration, required training, process changes, and new documentation. Dashboards can show open tasks by level of importance at the click of a button Supplier Corrective Action Request (SCAR) forms can be electronically sent to notify suppliers of quality issues. All this data can be tracked and traced from the SQM application.
Not only does automation foster better collaboration through your supply chain (See #4); it keeps suppliers informed of and aligned with your quality expectations and processes.
2 – Harmonization
An automated SQM system becomes vastly more effective when it connects with all related processes within a quality management system (QMS) and further downstream into the supply chain. Within an integrated QMS, the SQM process can trigger CAPAs that may require subsequent process changes, training, supplier audits, or other actions.
Further, into a more mature system, a centralized QMS can act as the hub of task automation and cross-functional collaboration with manufacturing operations management (MOM), supply chain management (SCM), product lifecycle management (PLM), and enterprise resource planning (ERP). The result is enterprise alignment and control over the quality of the products that are delivered to the market.
Integration with other systems creates an ecosystem that fully addresses internal and external challenges. Within a QMS, for example, a shop floor issue observation can trigger an investigation and/or corrective action. Further, if the corrective action requires adding a new component to a part, the new part number, updated documentation, required training, and internal/external communications routed through the appropriate change and approval processes. There is one input for each step in one unbroken chain of execution that closes the quality loop.
It is important to emphasize that the harmonization of systems requires extensive planning and expertise. It is the most mature model of SQM. The more connected the systems, the greater the return in terms of efficiencies, product insights, and time-to-market is vastly increased.
3 – Visibility
Managing supplier quality within an automated system provides visibility to the entire organization to the extent that systems are harmonized. People have instant access to the information that is relevant to them; from a birds-eye view of problem issues to deeper insight into long-term supplier performance.
In addition, having connectivity to your suppliers’ quality processes enables you to efficiently measure issue management and resolution. Keeping ahead of supplier issues requires insights into their processes and practices. Conducting supplier audits and maintaining that information in a centralized system directs the right people will validate that supplier processes are aligned with yours.
Digitized supplier quality management enables incoming inspections (receiving inspections) to be documented, investigated, and resolved during pre-production. The data from the receiving inspection can be analyzed for trends and risk (and potential audit) based on declining quality. At the enterprise level, the ability to integrate supply-chain data with QMS data drives more accurate risk assessments.
Automation provides visibility through reports and analytics allow you to quickly see which suppliers are performing—and those that aren’t. Without visibility into your supplier’s processes, it becomes difficult for you to ensure that you are minimizing risk and producing a high-quality product with consistency.
4 – Collaboration
Poor communication with your supply chain can result in quality gaps and result in low-quality products and a higher Cost of Poor Quality (COPQ). Success relies on a collaborative effort with your suppliers that streamlines CAPA related to investigating, remediating, and preventing nonconformances.
For example, a recent article from Industry Week pointed out the unpredictability of a supply chain, even among the most reliable suppliers. The article explains that an OEM and its supplier in China coordinated weekly work through weekly teleconferences. However, in February 2020, “the Chinese company’s personnel failed to show up for the teleconference. Since then, that supplier has been incommunicado, not only failing to attend the net meetings but also to answer or otherwise reply to phone calls.” In sum, if there is no communication, the supply chain starts to degenerate. In this scenario, it collapsed.
Collaboration is critical. If a disconnect in bi-directional communication occurs, a manufacturer needs to take action to contract a new supplier or increase procurement from an existing supplier. In a mature model, a contingency plan would be in place, as well as controls to determine accountability.
5 – Accountability
Qualification and audits of suppliers, manufacturers, labs, and other providers are integral to maintain the level of quality you expect. Product quality and process efficiencies are very often at the mercy of your suppliers and contractors.
Developing your own set of best practices and KPIs that support your goals ensures that your standards are met by your suppliers. Real-time KPIs allow you to keep track of important supplier activities including the number of returned products, missed orders, and completed orders. All of these variables factor into the total ‘Cost of Quality’.
Using supplier scorecards allows you to rate the performance of each of your suppliers, so you can substantiate that you are working with the best suppliers. Supplier response and service play a large part. Use supplier scorecards to identify areas where improvement is needed to bring the supplier back up to your quality standards or substantiate contracting a new supplier. An integrated system will provide your suppliers with visibility into their performance to identify the areas that need improvement.
Finally, automating the Supplier Corrective Action Request (SCAR) process is critical to rapid issue resolution, supplier accountability, and FDA/ISO compliance. Increasing upstream visibility through supplier-specific CAPA allows your company to reduce the occurrence of nonconforming materials or services.
In the event of an audit observation, regulatory authorities will assign responsibly to the company that markets the product. Therefore, control and insight into the supply chain are critical for compliance by monitoring supplier performance and providing products that meet the expectations of your customer base. The more connected a quality supply chain becomes, the more efficient it is at exchanging the right data from the right applications to the right people at the right time. Ultimately, a mature supplier quality management process can be the driver of higher quality and greater collaboration that extends down the supply chain where your customers will reap the rewards as well.