Pandemic has affected a lot of business, and more than hundreds of companies have made Chapter 11 filings i.e., bankruptcy. This bankruptcy can be caused for several reasons which includes
- Poor Quality management & not upgrading the quality in supply chain
- Expenditure went higher and sales did not grow as desired
- Increasing margin pressure
- Increasing Cost of sales
- Evolving backend processes maturity
- Evolving quality practices for addressing product return
All these above reasons can be eliminated through maintaining a proper Quality Management System. However, till now, our traditional transactional method of Quality Control Services will add more value to the buyers, and it may not add much value to the many of the supply chain partners, which will indirectly affect the buyers.
Hence, the buyers need to overcome from that traditional transactional method to the focused and transformational approach on the Quality Control Service area, which will help the buyers to create a WIN – WIN situation for all the members in their supply chain ecosystem.
So, here in this blog, we will see what all the necessary steps or actions which buyers we need to take, to get maximum value and output from Quality Control Services/Inspections.
Actions:
Consider your Client Factories as a Partner:
Create a mindset among the supply chain ecosystem that all of them are your(buyer’s) supply chain partners and an extended team. This will create a sense of ownership over the quality of goods among them.
Implementing the Focused approach right from the initial stage and updating buyer’s quality goals and plans for their client factories:
- Once you have decided to place the order, conduct an initial meeting with suppliers and explain to them about buyer’s requirements and expectations.
- Guide the suppliers on the AQL (Acceptance Quality Level) Standards, Detailed Quality Manual, Tolerances, Technical Specifications, Testing standards, special checkpoints, and other checking parameters of Third-Party Inspection well in advance i.e., while placing the order itself, so that they will take much care right from the raw material stage to till the end of shipment.
- Most of the buyers, will inform the supplier about the third-party inspection right before the shipment or at a very later stage which is not a correct practice. Hence, if buyer plan to hire any third-party companies to check the shipment, inform the same while raising the purchase order as it will create a sense of quality consciousness while producing the goods.
- Discuss the payment terms, acceptable tolerance level on the total shipment, reinspection cost to be paid by supplier etc.
Share your findings and support them to improve their Quality Management System:
- Once the Inspection has been completed by Third Party Inspection Agencies (TPIA), request the TPIA to share the inspection findings/reports with the supplier as well.
- Discuss with your supplier regarding the corrective actions of the current shipment and the preventive actions which they need to take for upcoming shipments as well in detail.
- Prepare an ‘Outgoing Quality Level’ (OQL) Summary among all the suppliers and conduct a periodic review (Quarterly, Half Yearly or Yearly) with the supplier and discuss the previous shipments. Also, guide them on ‘what best they did’ and suggest scope of improvements for them.
Create a Rating/Incentive System to motivate and recognize the suppliers:
- Create your own ‘Key Performance Indicators (KPI) and Key Performance Outcome (KPO)’ for your supply chain partners and analyze their performance based on the same.
- As per the KPI/KPO analysis, provide a recognition along with some incentive to the ‘best supplier’ among your ecosystems which will motivate them.
In short, as a buyer, you need to create a sense of partnership among your suppliers, and you need to support them to maintain the quality right from the initial raw material procurement stage, so that the quality will be inbuilt into the product throughout the production which will create a WIN – WIN situation for all the members in the supply chain ecosystem.
