Knowing your suppliers is as important as knowing the resources themselves. If you have a product defect, it doesn’t matter if it was a supplier’s fault or your own – the only thing the public will see and react to is your product and brand. Ouch. It pays to keep a tight control on supplier management.
The first step in understanding suppliers is through an evaluation and acceptance process. What are their business systems? Are they financially stable? What does Dunn & Bradstreet have to say about them? What percent of their sales is the product or resource you need? If it’s not substantial, will that affect the quality?
What is the capacity of the supplier’s operations?
What technology do they use? Do they have a good reputation in the industry? Are their product costs and distribution costs in line with competition and your budget? Physically, where are they located, and who are your points of contact?
Suppliers come in many flavors, such as:
- OEM (original equipment manufacturer) – design control
- Contract manufacturer –process control
- Critical service provider –data control
- Critical material supplier –material control
- Catalog/off the shelf material supplier
- Routine or low-risk service provider
- Sister plant –depends on patient safety impact of service or material
You need to ask yourself a set of questions to determine your risk with this supplier, and assign a value to your response such as “adequate, deficient, unsatisfactory,” or a numerical value that can be calculated to equal a total score. Include questions about the market and classification of the device. Consider regulatory requirements and any past or risk of exposure due to product recalls. As far as the manufacturing capability and supply chain, consider how many suppliers, the number of sources, and supplier manufacturing location. What is their technical capability and how does that match with yours? Finally, for quality purposes, are they certified to ISO 19001, ISO13485, etc?
Assigning a risk criticality level to your suppliers will help determine how to control and monitor the supplier relationship: high risk or level 3, medium risk or level 2, or low risk, level 1. Based on this ranking, you can then determine the frequency and type of supplier audits commensurate with risk (bi-annual, annual, third party, etc.). You can determine the frequency and type of inspections, from dock to stock, sampling, first article to 100% inspection. You can determine the quality metrics (SCAR response time, thresholds, PPM’s, etc.).
As for performance monitoring, there are many factors you can look at, such as:
- Parts Per Million (PPM’s)
- Nonconformance’s (NC’s) – “trend”
- Supplier Corrective actions (SCAR’s)
- Key Performance Indicators (KPI’s):
- On-time, Inventory Turns, COPQ, Rejections, etc
- Scorecards: quality, cost, service, delivery, compliance
- Technical data trends
Find the metrics that are right for your product or process and supplier relationship, from scorecards and global supplier ratings to approved supplier list (ASL) and SCARS-Feedback and more. Update your supplier risk profile and analyze it to monitor the “health” of the supplier in real time. Monitoring the performance of your suppliers throughout the product life cycle can help you identify problems and rectify them before they become a potential brand disaster.