When you boil it all down, companies exist to provide solutions to problems. Supplier quality measures a supplier’s ability to deliver high-quality products that meet customer expectations. If your company’s solutions aren’t meeting customer expectations, they’re not solving the problem.
With good supplier quality management (SQM) processes, you can ensure you’re continuously adding value to your customers’ lives and exceeding their expectations.
Monitoring a supplier’s performance requires the near-constant assessment of product quality, cost, compliance, etc. To do this the right way, companies need a good system. In this post, we cover the benefits of SQM and exactly how to develop a supplier management process that saves businesses time, money, and headaches.
Supplier quality management (SQM) is the process of monitoring a supplier’s ability to meet the customer’s needs. SQM measures supply chain performance using a proactive and collaborative approach.
To master supplier quality management, companies have to hit a few targets. First, you need to foster positive relationships with suppliers throughout your whole supply chain. Next, you need to develop an organized supplier quality management procedure with easy-to-track metrics for success regarding quality and compliance. Once you’ve nailed your metrics and procedure, it’s time to start tracking the data to dig up supplier insights. The trends you find in these insights will help you understand how well suppliers are meeting the needs of your customers across your whole supply chain.
Relationships with suppliers play a bigger role in supplier quality management than you might think. To establish an effective supplier management process, you need strong trust, as well as the ability to exchange expertise and resources across expansive supply chains. Working together also requires both parties understand their role in the process.
It’s easy to assume supplier quality management only affects the quality of the final product. That’s not the case. Yes, how you perform supplier quality management can make or break the quality of your product, but this ultimately affects your brand’s perception, value, profitability, and overall success. Here are some of the biggest benefits of implementing a supplier quality management strategy:
Extending your supply chains is not a risk-free endeavor. It’s always possible that you’ll encounter issues with quality, safety, compliance, etc. Effective supplier quality management mitigates some of the risks by giving you complete visibility over your supply chain. This allows you to spot each risk before a costly problem arises.
To get a business off the ground, you have to put your nose to the grindstone. Supplier quality management can help you through all the hurdles standing in the way of long-term profitability, whether you’re trying to reduce costs, streamline contract management, or safeguard your brand’s reputation.
This is because supplier quality management simplifies pesky tasks like supplier prequalification, audits, vendor management, insurance monitoring, and analytics.
Supplier quality management takes the pressure off your chief procurement officers and expedites procurement decisions through effective communication, evaluation, selection, and monitoring. More data = better quality procurement decisions and less lead time.
Working with many suppliers complicates compliance. The more proactive you are when it comes to monitoring potential upsets, the easier it is to remain compliant.
The health and safety of your organization are probably on your radar, but have you considered the health and safety of your suppliers? Supplier quality management measures health and safety standards throughout every step of the supply chain, from contractor prequalification, document management, and employee qualification and training all the way to insurance verification.
The last thing your brand needs is to have recalls and lawsuits plastering news headlines. With good supplier quality management, you can build a reputation of quality across your supply chains and a brand customers will trust. This can ultimately improve shareholder value and overall profitability. In fact, a 5% improvement in reputation strength has been shown to yield a market capitalization growth of 2.5% of the average S&P 500 company and measures 2.2% in the FTSE100.
SQM helps companies deliver better quality goods or services to customers. It can even get goods and services to customers faster. When customers experience quality, they’ll come back for more. 55.3% of consumers stay loyal to a brand because they love the product. By improving quality with supplier quality management processes, you can ultimately increase customer loyalty and customer lifetime value.
The supplier management process isn’t a one-step deal. It’s a multistep system that requires collaboration, communication, and software tools to get the job done right. We’re providing a basic framework you can follow, but you can tweak this process based on your company’s workflows. The process follows 5 steps.
To measure supplier quality management, organizations need a standardized set of metrics to evaluate their supplier performance. Businesses can use these metrics to record data on a supplier scorecard. The company will then use that scorecard to evaluate a supplier’s reliability.
The best scorecards utilize software so that they’re readily available to both the company and the supplier at all times. Remaining transparent while measuring supplier performance is an important part of maintaining a healthy relationship. Using software to store a dynamic scorecard on the cloud keeps the scorecard available and updated at all times.
There are a number of metrics you might use on your supplier scorecard, but common ones include:
If you choose the right suppliers from the get-go, supplier quality management will be a breeze. Set yourself and your company up for success by taking these 6 factors into consideration next time you choose suppliers.
There are several behaviors to adopt in order to ultimately craft and maintain a best-in-class SQM program. These few actions guarantee you will improve your sourcing processes and get the most out of your suppliers.
When it comes down to it, you’re responsible for the quality control of your goods and services. That’s why it’s so important that you monitor the quality of your suppliers and materials regularly. If you can catch and correct issues before they’re repeated on a larger scale, you can prevent accidents from becoming expensive mistakes.
Measuring the cost of poor supplier quality is the process of counting up expenses related to errors, delays, and the like. Taking a good look at your cost of poor quality allows you to adjust supplier relationships to control future risk.
If you’re juggling a big number of vendors, it can be difficult to audit them all regularly. Combat this hurdle by cross-examining your supplier risk management with quality audits to identify your most high-risk suppliers. Prioritize auditing these more frequently.
The best way to optimize product quality control is by checking in with your suppliers frequently. The more data you have, the better equipped you are when it comes time to eliminate risky (or just unnecessary) suppliers.
A set of key performance indicators will help you accurately and consistently measure supplier performance. Keeping track of performance using the same key performance indicators is vital to measure the improvement or decline of supplier performance, and the metrics can even help suppliers course correct.
When it comes to correcting compliance issues, actions must be taken quickly and efficiently. The best way to effectively correct compliance issues is to make a supplier corrective action request (SCAR) procedure. When you have a corrective procedure in place, you can take swift action and provide suppliers with the guidance they need to correct the issue as quickly as possible. The less time you spend scrambling to make an action plan, the better the outcome.
When you’re responsible for an organization’s entire supply chain, managing the quality of production can be tough. A system like supplier quality management helps you maintain visibility of the whole supply chain. The structure of SQM provides the collaborative opportunities and support necessary for businesses to minimize risk and create high-quality products.
With support from the right software, businesses can even exaggerate the benefits of SQM. Our software streamlines production by automating workflows, uniting data, and giving you end-to-end visibility into your supplier management.
Supplier quality management (SQM) is the process of monitoring a supplier’s ability to produce quality goods and services that meet the expectations of both companies and customers.
It’s extremely important for brands to practice supplier quality management to ensure the success of their businesses. Supplier quality directly impacts customer loyalty, brand reputation, sales, and market value. Quantifying supplier quality with key performance indicators and relevant metrics helps ensure your companies continue satisfying their customers’ wants and needs.
The best way to ensure the quality of your suppliers is through quality management. Suppliers appreciate open communication and collaboration throughout the SQM process. Checking in with your suppliers and performing regular audits with a standardized set of metrics is key. Higher-risk suppliers should have their own set of metrics and should be audited more often.