It’s no secret that suppliers have become increasingly vital to quality and organizational success. Increases in outsourcing, globalization, and product complexity are three long-term drivers that have increased the role of suppliers as well as the assumption of increased supplier-generated risk.
LNS Research has published research on this important topic for several years, both to identify important Supplier Quality Management (SQM) trends and considerations as well as to determine best practices.
These topics will be further explored in our upcoming Quality Global Executive Council meeting on Tuesday, March 15 at 1:00 pm EDT. We’re excited to welcome our guest speaker, Michael Bennett, GSM Systems Analyst for Nexteer Automotive. Michael has been integral to Nexteer Automotive’s Supplier Quality Management journey and will be presenting lessons learned, benefits, and RFI process derived from its deployment of a single platform SQM system. We’ll discuss how to build a vision and roadmap for Supplier Quality Management and learn how deployment against this vision and roadmap can impact company culture and affect user adoption.
Low Adoption of SQM Automation Exposes Customers to Unknown Risks
According to current LNS Research data, 35% of respondents identify SQM as one of the quality processes most critical to their company’s success. However, one leading challenge industry must address is that a majority of companies still manage supplier quality in a manual way. Our research data shows that only 23% of 621 respondents have automated SQM processes with technology, and even fewer include suppliers in closed-loop processes or gather real-time quality data from suppliers (13% of 1,994 respondents).
This data indicates that supplier quality is at least inefficiently managed. Given that suppliers can provide 80% or more of the final product content, if supplier risks are poorly controlled, the customer may be assuming substantial and unquantified risk. Recent large recalls in the automotive industry highlight OEMs’ substantial risk and cost exposure from its supply chain.
Build a Supplier Quality Management Vision and Roadmap
The first step to addressing this challenge is to capture the current state. Why does the organization need a more mature approach to SQM? A clear Operational Excellence based assessment will identify strengths, weaknesses, opportunities, and threats.
Now that the current state is captured, what should be the end state? Again, leveraging Operational Excellence and people, process, and technology can be insightful. What improvements should be realized in training, adoption, leadership and culture? Which processes are most labor intensive, which are fragmented and can be harmonized, which should have greater supplier participation? How can technology be leveraged to improve visibility, guide efforts, reduce effort, streamline processes, improve adoption, and protect intellectual property?
Clearly Identify Expected Benefits
Capture and agree to expected benefits to internal and external stakeholders. Benefits can take the form of increased visibility and decision making, process enhancements, and cultural changes. Ideally, there will be correlation to core financial measures as well.
Don’t Forget Supplier Impact
Remember that while the customer is the primary beneficiary of a new SQM strategy, supplier adoption is crucial to ensuring accurate and up-to-date information. Consider strategies that let suppliers manage their own data, and provide them with a clear depiction of their status.
Select Appropriate Partners
Leverage the vision, roadmap, benefits, supplier impacts and lessons learned to construct a Request for Information (RFI) that will guide the organization to the most appropriate partners to assist in the process transformation. Lessons learned can come from other similar internal projects, other organizations that have completed deployments, and external experts.