LNS Research Analyst, Dan Jacob tells why OpEx leaders attempting to build business cases for technology investments need to find justification...
Supplier Quality Management (SQM) is a top of mind consideration for quality leaders across industries. When done properly, aligned with best practices, it can also provide substantial increases in departmental, operational, and financial performance. Earlier we discussed the changing role of technology in SQM and introduced possibility of SQM technology as a disrupter.
Can SQM be disruptive? For it to be disruptive, it must be important and timely, and have demonstrated an ability to substantially differentiate a company’s operational performance.
SQM, a Top Cross- Industry Concern
As a part of our research, LNS captures the most important trends impacting multiple industries. Tracked trends include many industry-specific trends (think the “Smart Car” in automotive or “Managing shrinking defense budgets” in Aerospace & Defense); as well as many cross-industry trends, such as service-oriented business models, or “collaboration with complex supplier networks”.
In the chart below, we’ve identified the percentage of respondents that selected “collaboration with complex supplier networks” as a top trend within the respondent’s industry. This trend is one of the most important trends across the selected industries, and is the most selected trend in Aerospace & Defense. Clearly, industry sees SQM as a powerful force, similar to or even more important than, smart connected products. With something this important, it’s critical to arrive at the right approach.
Invest in SQM to Maximize Performance
Interestingly, our research into "Quality in the Boardroom: Building the Executive Business Case for EQMS" showed that SQM is one of the highest potential value areas for quality investment. The data provides a stark comparison in performance between those that have deployed SQM People, Process and Technology, and those that haven’t.
LNS identified 5 different types of justification metrics when performing the above research, two of which were siloed and operational. We’ll only consider these two types of justification metrics in this post. Siloed metrics included metrics primarily of interest to the quality department, such as “number of complaints” or “% of products in compliance.” Operational metrics include metrics that are more broadly of interest and applied to multiple functions, and included Overall Equipment Effectiveness (OEE) and On Time Delivery.
LNS Research then isolated 46 different Operational Excellence (People, Process and Technology) best practices currently tracked in the Quality Management survey. We used the Quality Management survey data to compare performance between those that had currently implemented the best practice and those that haven’t, and then ranked the relative impact of each best practice.
When the dust settled, the analysis showed that 7 of the top 10 best practices were SQM best practices. Not only is SQM important, it also provides a substantial competitive performance differentiator when executed and aligned with best practices.
Use SQM to improve Quality Maturity
In an earlier post, we discussed how the Executive Business Case is one positive and controllable compelling event for Executive Sponsorship. Here, we discussed how Executive Sponsorship is critical to breaking quality out of the silo, and to achieve cross-functional and corporate-wide quality.
Quality leaders looking to improve quality maturity should include SQM investment requests within their quality business case journey. SQM involves several internal functions as well as external organizations, and is a good candidate for those looking to improve maturity by embedding cross-functional quality.
Disrupt through SQM
SQM has passed our tests, and should be considered a potential disrupter. SQM is a top industry concern, and SQM best practices provide a substantial competitive performance differentiator. Quality leaders should invest in SQM best practices to achieve several goals: address top industry trends, achieve noticeable performance improvements, and increase quality maturity.
Don't miss out Quality leaders! Today's webcast, on Thursday, June 16, 2016 @ 1:00, will provide senior leaders with best practices for building a business case around quality and the foundational framework needed to gain executive commitment.
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