Supplier Quality Management: 3 Tips to Keep Upstream and Downstream Partners Happy

In industries such as manufacturing and medical devices, where precision, safety, and compliance are paramount, Supplier Quality Management (SQM) plays a pivotal role in ensuring overall product excellence.

At ComplianceQuest, we published a detailed eBook titled “The Ultimate Guide to Next-Generation Supplier Management”. Download it here: https://www.compliancequest.com/whitepaper/next-gen-supplier-management/

In this eBook, we cover the following topics:

• A step-by-step approach to design and implement a robust supplier qualification and onboarding process.
• The art and science of building a resilient supply chain that is focused on quality, continuous improvement, and innovation.
• The criticality of implementing an AI-enabled Supplier Performance Management (SPM) process to ensure suppliers are treated as partners in the entire journey.

Here’s some data (from McKinsey Quarterly) to ponder over:

• Over 80% of the product value of a car comes from external suppliers. In a typical CPG company, over 70% of the product value comes from suppliers.
• According to Toyota, a single car has over 30,000 parts including some smaller parts like screws. The majority of these parts come from a wide range of external suppliers.
• In the pharma industry, the percentage of value outsourced to suppliers is 40 to 50%.
• In medical devices, while the number of components and input content varies based on the device, one thing is certain: bad-quality input components will certainly result in a poor-quality medical device.

Also, it is important to note that companies are constantly innovating and working on new offerings for their customers. A car manufacturer may want to add telematics and electronics-based components to enhance the driver experience. It may have to cater to new emission norms, which may require additional parts. A medical device company may want to add additional suppliers as the product is upgraded. This is a continuous, ongoing process.

Irrespective of how evolved your supply chain is - supplier qualification, re-qualification, onboarding, and continuous improvement (CI) are critical elements of supply chain management. Qualifying and onboarding the right suppliers (think of them as partners, not just suppliers) is fundamental for your supply chain success.

The key is to automate the entire supplier management process, ensuring your ecosystem of suppliers meets your “clearly defined” expectations. Adopting a quality-first approach is paramount. At the same time, a “partner mindset” is crucial - you need to make life easier for your suppliers as well.

Common Pitfalls when it comes to Supplier Quality Management

The path to effective Supplier Quality Management (SQM) is fraught with challenges that can impact both upstream and downstream partners. To navigate this successfully, it's essential to recognize and address these common issues that can hinder the seamless flow of quality across the supply chain.

• Lack of Supplier Visibility: One of the primary challenges faced by organizations in SQM is a lack of transparency in their supplier network. Inadequate visibility into supplier operations can lead to disruptions in the supply chain, quality deviations, and increased compliance risks.
• Quality Control Variability: Maintaining consistent quality standards across a diverse supplier base can be challenging. Variability in quality control processes and standards can result in product defects, rework, and regulatory non-compliance.
• Regulatory Compliance Gaps: Evolving regulatory requirements in the manufacturing and medical device industries demand ongoing training and audits. Supplier-related compliance issues, such as incomplete documentation or subpar quality practices, can lead to expensive audits, fines, and reputational damage.
• Communication Breakdowns: Effective communication between organizations and their supplier partners - both upstream and downstream - is critical. Breakdowns in communication can lead to misunderstandings, delays, and a lack of alignment on quality expectations, ultimately affecting product quality. Having clearly documented quality requirements, with a robust supplier program management process that is data and metrics-driven is critical.
• Risk Management: Identifying and mitigating supplier-related risks is a constant challenge. Issues like supplier financial instability, geopolitical factors, or unforeseen events can disrupt the supply chain and threaten product quality and delivery timelines.

Supplier Quality Checklist: Keeping Upstream and Downstream Partners Happy & Accountable

The key is to tackle these challenges with agility, with the help of the right automation tools. Below is an exhaustive checklist to ensure upstream and downstream partners/suppliers are happy, while at the same time they take the necessary steps to meet quality requirements:

Get Supplier Qualification and Onboarding Right

• Ensure you understand supplier-related risks
• Define your success criteria
• Convert ‘success criteria’ into a set of formal requirements and develop the qualifying steps
• Properly Research and Compile Candidates (Shortlist of Suppliers/Partners)
• Categorize suppliers as critical, high-risk, medium-risk and low-risk
• Ongoing vendor assessments
• Selecting the right suppliers and onboarding them based on data-driven metrics
• Supplier Agreements, Periodic re-qualifications, and continuous improvement

Ongoing Supplier Management - Automate and Streamline

• Supplier document management
• Supplier Audits and Inspections
• Supplier Corrective Action Requests
• Incoming Inspection and Certificate of Analysis
• Robust PPAP (Production Part Approval Process)
• Key quality metrics from suppliers
• Supplier deviation request process
• Change handling
• Compliance documentation

Ongoing Performance and Program Management: Optimize for Win-Win

• Detailed Performance Metrics, KPIs and Continuous Improvement (CI) targets
• Incentives for meeting targets
• Digital tools to ensure real-time tracking of supplier performance
• Procedures to ensure management has oversight of key supplier operations
• Processes in place to conduct upfront analysis of supplier capabilities
• Contract governance processes

The bottom line: At the end of the day, goal alignment, transparency and collaboration will ensure a win-win partnership between the buyer and supplier. An effective supplier program and performance management effort must be optimized for the same. This is the only way to keep both upstream and downstream partners happy.

To find out more about CQ EQMS with our integrated Supplier Management Solution, request a demo: www.compliancequest.com/online-demo