Mhlnews 8367 Quality Supply Chain 1

6 Ways Quality Can Strengthen Supply Chain Profitability

Oct. 12, 2017
A spirit of collaboration and open communication is more essential to quality success than other initiatives.

To thrive in today’s competitive global business environment, manufacturers must have a top-to-bottom quality-oriented approach that infuses innovative thinking into every part of the supply chain in order to deliver world-class performance through products, processes and people.

Some promising news, according to a recently published report by Forbes Insights and ASQ, is that senior executives and quality professionals see a direct connection between the success of their continuous improvement initiatives and the success of their organizations as a whole.

The Forbes Insights/ASQ research surveyed 1,869 executives and quality professionals from around the world and focused on the links between quality efforts and corporate performance, as well as the evolving business value of quality and its relationship to the supply chain. Thirty-six percent of enterprises surveyed said that they regard themselves as an established quality organization, while 39% reported that they are still developing their quality programs and 25% said they are struggling to implement quality in their companies.

For those organizations that do have established quality programs, more than half say their initiatives already encompass a range of key corporate functions, including operations and supply chain management.

This focus on quality for the supply chain is especially crucial when one recognizes that supply chain management is often motivated to achieve the least cost when identifying and qualifying new suppliers. Supply chain leaders are often rewarded for these cost-savings. But then extra costs are incurred once the final product is manufactured and delivered and it is discovered that reworks are required due to the focus on price and not quality.

According to the report, cost and quality are not mutually exclusive. Close to half of senior executives and quality professionals surveyed say their quality efforts have increased profitability. Forty-seven percent attribute profitability growth to their continuous improvement efforts. One in five credit significant growth, exceeding 5% in the most recent year.

One of the biggest quality challenges supply chain leaders face, which is reinforced via this report, is the need for more training skills and awareness to prepare the workforce to be able to see continuous improvement initiatives through. Fifty-four percent cite future employee competence as their most vexing, yet-to-be resolved problem. That’s aligned with the growing skills mismatch in the supply chain industry. Businesses must accept that they’ll be hiring people with basic, functional skills who must be trained up to the specific supply chain skills needed. Workers will have to be willing to learn new skills that are in demand.

But hiring and training the right people aren’t enough. Both senior executives and quality professionals voiced a concern in the report that a spirit of collaboration and open communication is more essential to quality success than other initiatives.

How to Achieve Supply Chain Quality

So what action steps can supply chain leaders take to manage and succeed with quality in the coming months?

1. Incorporate performance excellence into business cases. Promoting investment into quality initiatives may pay dividends many times over but executives are short on time and resistant to commit resources unless they can clearly see resulting value. Be sure to link your potential project to the overall organizational strategy. Depending on the project, you will want to connect to a business unit’s strategy, as well as the supply chain functional area strategies.

2. Remember that corporate culture matters. According to Bill McMahon, COO of Nautilus Inc., a manufacturer of home fitness equipment who is quoted in the report, “Ultimately, it’s about effort and effectiveness and it is people who deliver that. Everybody needs to take a piece of quality and own it. And it’s much easier to rally people around a goal such as, ‘Let’s make the best product we can.’ That’s an easier cry than, ‘Hey, our Pareto charts show that the following 10 things are wrong.’”

3. Ultimately, it’s the customer. Regardless of the positive importance of continuous improvement, improving the customer experience is essential. The shift today is from internal focus on operation to customer focus. From a supply chain perspective, that’s certainly true. In the automotive and aerospace industries, for example, the importance of suppliers to the customer is very high as the supply is dependable on their performance. However, as the Forbes Insights/ASQ report shows, the supplier must also satisfy his direct customer and for that matter the entire supply chain. The famous proverb, “The chain is only as strong as its weakest link,” is so true here.

4. Measure everything. This has always been the case but in this digital era we have the ability to analyze far more data, which will lead to better decisions and greater efficiencies. At my company, for instance, each month our quality team reviews all customer websites for Cabiran’s rating. The quality Parts-Per-Million (PPM) performance, the On-Time-Delivery (OTD) and the On-Time-To-Request (OTTR) results are recorded in a report for the top management. Trends are then analyzed, and based on the results actions are taken to improve performance. Monthly results are uploaded on tables and graphs and can easily identify if the action taken has improved performance.

5. Run an open, no fault environment. The report identified how much collaboration is critical to quality delivery. That means employees should feel free to communicate on issues and suggest new ways of working. My company holds a meeting of all employees to expose them to our performance in the supply chain of each product. The forum also discusses complaints and improvements to the system. The rationale behind this is that our performance is a team effort and every link in the chain should be tied to the goals, the performance and the improvement to satisfy our customers and fulfill our role in the supply chain.

6. Prepare for digital disruption to conventional quality wisdom. Quality must address the impact of the digital advance. For instance, the rise of digital products that can be shipped instantly requires a different approach to assure its higher quality. This is another factor that can improve performance in the supply chain.

The era of design in hardcopy format such as drawings is gradually fading out and everything is now digital. A supplier who would like to be a part of the supply chain must have the ability to work with several digital formats. The issue is that the customers are not necessarily using the same formats, and you find yourself having several formats. Furthermore, the issue of adhering to various international regulations also needs to be monitored. Quality engineering that is involved in the design and first articles should be capable of facing these new demands.

Ultimately, any company that would like to be a key supplier in a supply chain must incorporate an enterprise-wide, quality-oriented approach to reach its aspiration to be a top quality organization. Prime organizations such as the big automotive and aerospace manufacturers are aiming to reduce their supply bases. One needs to be an established organization to retain a top position in the supply chain. 

Gideon Roth is the vice president of quality & regulatory at Cabiran (1991) Ltd., a manufacturer of aluminum castings for the aerospace industry. He is also deputy chairman of the Israel Society for Quality (ISQ), an American Society for Quality (ASQ) fellow, and the co-chairman of the ASQ Global Advisory Committee and the International Liaison of the ASQ Aviation, Space & Defense Division.

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