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Part I – Making Supplier Quality Management Pay

iBASEtblogPart I – Making Supplier Quality Management Pay

Aug

27

Part I – Making Supplier Quality Management Pay

Bottom line: Designing quality management into supply chains is the single most effective strategy for reducing the bad cost of quality in complex manufacturing today.

Quality trumps cost in complex manufacturing industries, especially when it comes to winning and keeping customers long-term. Without a passion for quality, any company begins to slowly die.  Supplier quality management needs to become a passion not just a nice-to-have.

The passionate pursuit of product quality, predicated on managing suppliers to high standards, using audits, inbound inspections and full traceability, is no longer optional.  It’s necessary to stay competitive and grow profitability in a turbulent, tough global market.

Instead of just taking incremental, piecemeal steps that don’t quite get quality management goals accomplished, it’s time for manufacturers to get serious about integrating quality management and supply chain management into a single cohesive strategy.

Taking The First Steps To Making Supplier Quality Management Pay

The payoff for complex manufacturers who take the bold step of integrating quality management frameworks and techniques into supply chain management include the following:

  • Integrating supplier quality directly into supply chain management reduces costs faster than any other strategy in complex manufacturing. Integrating supplier quality into supply chain management improve the accuracy of project planning, compliance, reducing product errors and lower sourcing costs (Bandyopadhyay, 2005) (Humbert, 2009).
  • Tight integration of supplier quality and supply chain management can deliver insights and information more valuable that revenue.  A fascinating study of the Toyota Production System showed that when supply chain management systems and workflows accelerated product quality, the information generated was more valuable than revenue in managing a diverse supply chain (Dyer, Nobeoka, 2000).  Dyer & Nobeoka observed that when quality performance data is shared throughout a supplier network, suppliers become self-enforcing of quality standards, helping each other attain challenging quality performance goals.  Peer pressure works in supply chain quality management.
  • Managing risk through the use of quality management-based data combined with predictive analytics is taking supply chain quality management to a new level.  The future of supply chain quality management is at the intersection of enterprise compliance and quality management data and advanced predictive analytics applications that can deliver manufacturing intelligence to optimize the use of production resources for optimized yields.  Dyer & Nobeoka’s (2000) excellent analysis of the Toyota Production System shows where predictive analytics based on supplier quality management data could make a major contribution to accelerating new product development, reducing costs while improving quality.

 

Bibliography:

Bandyopadhyay, J. K. (2005). A model framework for developing industry specific quality standards for effective quality assurance in global supply chains in the new millennium. International Journal of Management, 22(2), 294-299.

Dyer, J. H., & Nobeoka, K. (2000). Creating and managing a high-performance knowledge-sharing network: The Toyota case. Strategic Management Journal, 21(3), 345-367.

Humbert, E. R. (2009). The impact upon key performance measures in applying lean enterprise initiatives by defense contractors. (Order No. 3381836, University of Phoenix). ProQuest Dissertations and Theses, 148-n/a.

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