The Supplier Quality Management System

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. 

1. Approval – The first step of a solid supplier quality management system is to establish steps for achieving supplier approval. These steps will vary in intensity depending on potential risk. Make a master list detailing all the steps necessary for supplier approval. The list should include information about all the roles and responsibilities involved– this will make the processes simpler in cases where multiple departments are involved. You’ll also need a checklist that assesses the safety and quality systems of each vendor.
2. Audits – Performing regular audits helps you stay on top of supplier quality control. Auditing suppliers regularly ensures that your supplier’s practices continue to align with the requirements of the purchasing company. While enterprise-level companies can perform second-party audits, smaller companies usually opt for third-party audits. The difference? A second-party audit is when a customer or contracted organization performs an external audit on a supplier. Third-party audits are performed by audit organizations, and thereby avoid any conflict of interest. 
3. Incoming inspections – The next step in the supplier quality management process is to perform incoming inspections. Inspections are another method for evaluating supplier quality. In this step, the supply chain’s raw materials, ingredients, and products are assessed for compliance using a set of specifications.
4. Ongoing communication – Communication is a huge part of maintaining positive supplier relationships. Prioritize checking in with your supply chain. By keeping the lines of communication open, you’ll probably end up heading off a significant portion of potential issues at the pass. Make sure you’re clearly communicating your expectations, keeping suppliers up-to-date on requirements, and staying abreast of any potential road bumps.
5. Non-conformance & CAPAs – This is the final step, and hopefully one you won’t encounter that often. When you find raw materials that don’t meet product quality standards, you’ll need to file the appropriate non-conforming materials reports and complete corrective and preventative actions to ensure the issue doesn’t reoccur.

How is Supplier Quality Management Measured?

To measure supplier quality management, organisations need a standardised 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 utilise 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. 

There are a number of metrics you might use on your supplier scorecard, but common ones include:

• Quality
• On-time delivery rate
• Acknowledgment rate
• Responsiveness

How to Choose Suppliers

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.

1. Cost of quality – Cost is obviously one of the first factors you’ll consider in your search, but the cost of quality digs a bit deeper. Cost of quality basically measures how much it costs to produce a good. Within this section, you have the cost of poor quality and the cost of good quality. The cost of poor quality includes resources leftover from production, while the cost of good quality refers to preventative measures.
2. Overall equipment effectiveness – A supplier’s overall equipment effectiveness gauges their overall performance by measuring their availability, efficiency, and quality. This metric shows you when the assets you need will be available, how often they’ll be available, and how often they’ll meet your quality expectations.
3. Products in compliance percentage – Your potential supplier’s compliance percentage shows their ability to make products that adhere to applicable laws and regulations. The better this number, the lower risk the supplier will attract.
4. On-time shipments – Quality isn’t limited to the physical product– when customer’s judge quality, they’re looking at the whole buying experience. If your goods and services are always out of stock, your customers may get frustrated and look for alternatives. When products are out of stock, customer's loyalty to brands and retailers decreases, even causing customers to abandon brands altogether. Consistent, on-time shipments foster customer satisfaction and loyalty, so this should definitely be a requirement for your next supplier.
5. New product introduction – New product introduction is the percentage of new products that successfully meet volume, quality, and timeline requirements. Time is money. If you want to make sales, you have to stay relevant. To do so with effectiveness, you need a supplier who can adapt to your individual new product introduction and materials needs.
6. Supplier diversity – A focus on diversity and responsibility among your supply base is an effective risk mitigation practice and is a great indicator of satisfaction with suppliers. Tracking supplier diversity and responsible sourcing factors like human rights, environmental issues, and health and safety practices protects against supply base risks associated with them and broadens the pool of suppliers in your base.