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Examples of How Supplier Quality Management System Implementations Pay Off

supplier quality management system

We conclude our series on supplier quality management (SQM) today with a look at some case studies and examples of benefits derived from the application of a supplier quality management system. The first post in this series broke down what is supplier quality management and the steps to evaluate suppliers and the second post gave you insight into the metrics to look out for by six major industries.  We now have an entire category of blog posts dedicated to better working with suppliers, analyzing them, and what to look out for to get the most value in working with suppliers. As the world is more distributed and players within the supply chain in transportation, manufacturing, and distribution are varied, applying a supplier quality management system in your business may allow you to stay more strategic and collaborative. In short, this allows the bottom line to stay healthy as you are working with suppliers who share your goals and are vested in a positive outcome for all. We deal with our suppliers of transportation on a daily basis: our select carrier partners. Without great relationships with those carriers, we would be unable to serve our shipper customers in the best way possible.

Examples and Case Studies from the Implementation of a Supplier Quality Management System

Company:

Cequent Transportation Accessories, a manufacturer of a range of accessories for light trucks, SUVs, recreational vehicles, passenger cars and trailers, has long used enterprise quality management. Three years ago, however, overseas supplier rejected parts per million (PPM) were at a high-unacceptable by Cequent standards.

Cequent Transportation Accessories (Plymouth, MI) designs and manufactures a range of accessories for light trucks, SUVs, recreational vehicles, passenger cars and trailers.

The Problem:

Cequent has long used enterprise quality management. Three years ago, however, overseas supplier rejected parts per million (PPM) were at a high-unacceptable by Cequent standards and in direct conflict with the requirements expected of its domestic suppliers. Also, as the importer of record when leveraging overseas suppliers, manufacturers have a responsibility to protect against the risk of defective parts entering the market. To mitigate risk and improve quality from its Chinese suppliers, Cequent used IQS’ (Cleveland) global infrastructure to implement a domestic quality and compliance program in China on Unchecked Suppliers

Left unchecked, Chinese suppliers-like domestic suppliers-may ignore quality. Unlike domestic suppliers, they will respond to quality benchmarks by throwing labor-end-state inspection and rework-at the problem. The Chinese manufacturing business does not have a history of quality management and quality processes, so simply dictating an end-state is not the answer. Providing a step-by-step process all the way down to part characteristics can remove cultural and traditional process barriers.

Although a solid process is a foundation, an importer’s responsibility does not stop there. Other factors-such as poor tooling and equipment as well as basic communication challenges-can contribute to poor quality. To complete the quality program, the importing organization needs to provide monitoring and in-process checks to ensure that all aspects of the production process meet quality standards. Importing organizations serious about quality also should provide a monitoring and compliance mechanism that checks quality throughout the process and not just at end-state.

Getting Serious About a Supplier Quality Management System

The good news is that a rigorous process for identifying, managing and monitoring quality already exists. Automotive calls it Advanced Product Quality Planning (APQP), with Failure Mode and Effect Analysis (FMEA)-essentially a risk profile and its operational counterpart, a control plan. These standards are now regularly being used in aerospace and defense, and have recently been extended into the medical device market to stem a growing tide of quality issues there. As Cequent’s enterprise quality management software, IQS not only provides a framework for FMEAs and the associated control and inspection plans but it integrates them with each other and the rest of the quality management system.

Before launching a supplier quality management system with its Chinese suppliers, Cequent first ensures that they can build or prototype a product in its U.S. labs. After the appropriate risk profiles, control plans, work instructions, and inspection plans are in place, Cequent establishes the supplier as an entity within its IQS global infrastructure and deploys the supplier using its quality framework in IQS. This provides the supplier with a step-by-step, detailed process for executing quality properly while giving Cequent complete visibility into a supplier’s real-time inspection and compliance data as well as the ability to make characteristic-level changes to the documentation when needed.

The final step for Cequent was to develop a plan within the supplier quality management system whereby quality experts would spend physical time at the plant helping suppliers learn and apply the inspection process. Not only has this increased the speed of supplier adoption, but it also has improved the overall flow of data and communication. “With a supplier quality management system in place, we can quickly break down cultural barriers, set performance expectations and forge a path to success with our suppliers,” says Kreg Kukor, Cequent director of global quality systems.

A sound supplier, quality management system, enabled Cequent to successfully deploy a quality program to its first Chinese supplier in less than 24 hours. Through this quality transformation, Cequent has assurance-before product arrives in the United States-that supplier-exported parts have passed required quality thresholds, reducing future warranty costs or recall issues. Today, 97.5% of product moves through plants without rework.

“Typically, an overseas supplier can copy a great design, but risk rapidly escalates when the design has a defect, or the characteristic details are not coordinated and shared through the enterprise from engineering to post production,” says Kukor. “By teaching suppliers to use FMEAs and control plans as living documents, we proactively reduce PPM, warranty, and risk, while improving our suppliers’ capabilities. The reality is that their success is in our hands.”

Tracking Supplier Quality Management System Performance

The newly implemented supplier quality management system enables Sequent to track supplier performance, create supplier scorecards, implement a dock-to-stock program and have up-to-the-second information available on nonconformances. This creates a no-excuses environment with accountability standards. “We’ve found that our suppliers greatly appreciate the effort we have put into our supplier quality management program because it has proven to help improve their company’s performance and to build a long-term business relationship with us,” says Kukor.

“The implementation of the supplier quality management system made it possible to develop a robust quality management process for suppliers that we could quickly and seamlessly replicate across our entire global supply chain,” adds Kukor. “We plan to continue developing FMEA-based quality inspection programs to reduce our PPM across our entire global supply base.”

Supplier Quality Management System Benefits

In three years’ time:

  • Lowered overall supplier PPM from 33,555 to a monthly average below 300
  • Lowered internal PPM from 1,102 to 172
  • Reduced supplier nonconformance from 176 to 30

In two years’ time:

  • Increased supplier container shipments from 1 per month to 8 per month
  • Doubled supplier spend as a result of improved supplier quality
  • Enabled Cequent to successfully deploy a quality program to its first Chinese supplier in less than 24 hours.

Personal Supplier Quality Management System Case Study

A unique way I used to improve Supplier Quality Management (SQM) is by The Supplier Day Conference. All key Suppliers are called into your operation. The theme is Improved Quality Management. Each Supplier talks about their current supplier quality management system. If you have visited these Suppliers and reviewed their quality systems, you can talk about Continuous Improvement to improve quality. You then take a plant tour of your operation so your suppliers can see your quality systems in action. They can talk to your Quality team. Your production operators should be versed in quality at the production site as well. If there are any Return to Vendor (RTV) rejected components, you can talk about the reject and how it can be avoided with the next shipment. The next step may be Six Sigma quality (For a company to achieve Six Sigma, it cannot produce more than 3.4 defects per million opportunities, where an opportunity is defined as a chance for nonconformance. This is very close to perfection or zero defects and is difficult to attain. It takes much discipline and focus.

Always work toward quality perfection (even though perfection does not exist) with all of your suppliers.

New Product case study: If a Supplier is producing a new component for you before they ship the new product, always ask for a pre-shipment sample. Have your Quality people inspect the new product sample and approve it before the Supplier ships the new product to you, so you do NOT receive the entire shipment and reject it because it does not meet your specifications.

How have you improved supplier quality? Have you implemented a supplier quality system in your operations? Let me know how it went below in the comments section.

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Chuck Intrieri
Mr. Chuck Intrieri is a highly experienced and credentialed Supply Chain Management professional and is a recognized thought leader and innovator, primarily in the areas of Supply Chain Optimization, LEAN initiatives, Operations, Manufacturing, Third Party Logistics (3PL) International Purchasing/Importing, Inventory Management and Logistics, Strategic Sourcing, and Procurement Operations.
Chuck Intrieri
Chuck Intrieri
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