Manufacturers in the market supply chain are becoming increasingly vulnerable to online sales attacks and counterfeiting efforts. Therefore, a strong supply chain can also help companies minimize risks, eliminate business disruptions, and protect internal operations.
To improve supplier quality, many business owners rely on Supplier Quality Management, which requires significant investments in systems and processes. By implementing these best practices, manufacturers can significantly improve their supplier quality and achieve their own business goals.
The most successful supply chains are completely in sync with the company's long-term strategy and annual business plan. The following practices will enable any business owner or manufacturer to significantly improve their own supplier quality.
6 ways to evaluate suppliers
Method 1: Measure and track costs due to poor supplier quality
Using metrics, or Key Performance Indicators (KPIs), allows you to measure how well your business is performing. While these KPIs can be very useful, for some they can be very confusing if you don't understand how to interpret the data. Many of these metrics, such as inventory carrying costs, cash-to-cash cycle times, fill rates, etc.; can provide companies with valuable insights into their performance.
Method 2: Cost recovery analysis
To combat this, businesses can implement a cost recovery system, where suppliers are charged for providing poor quality components. It is important to note that more than half of these costs are immaterial, such as operator handling or quality department handling.
Method 3: Supplier reviews
To determine whether the process is consistent with the planned arrangements, customer-related processes should be evaluated at planned intervals. This will help determine whether the process is properly implemented and maintained and will provide information on process performance to senior leadership. To determine the level of compliance with each requirement set forth in the standard, it is important for manufacturers to engage suppliers in all aspects of their quality management system. This ensures that the supply base is fully integrated into the Quality Management System (QMS) being implemented.
Method 4: Supplier scorecard
The supply chain system must align with the company's overall strategy. Focusing on key performance metrics, manufacturers can rank suppliers' relative performance and track their quality over time using key performance indicators. This supplier scorecard can generate data that can be used in future business negotiations.
Method 5: Closed-loop corrective action
Reducing the cost of poor quality can be achieved systematically by implementing a QMS that provides an integrated and closed-loop corrective action process. Information must flow out of the corrective action process with high accuracy and speed without being overlooked. Auditing is a core driver in the corrective action process and becomes the primary tool for continuous improvement.
Method 6: Involve suppliers in the quality system
Collaboration outside the organization considers relationships with key partners, suppliers and customers. Communication with customers is very important. It helps businesses understand the needs and desires of customers. Organizations that stay in touch with partners and suppliers are more likely to receive products in a timely manner for production and/or fulfill customer orders. Information technology practices can also create virtual supply chains, where data is collected on demand, thereby increasing the transparency of the entire supply chain.
Implementing the six best practices will enable supply chain businesses, such as manufacturers, to improve the quality of their suppliers and thereby improve their business objectives.
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