Roxane Napoli, Senior Marketing Manager, Pilgrim Quality Solutions
Recently, Pilgrim co-sponsored a webinar with LNS Research titled “Supercharge Supplier Quality Management for Competitive Advantage.” During the webinar, Dan Jacobs, LNS Research Analyst, provided many insightful data points from his recent research and made the case for focusing on and advancing supplier quality maturity.
The data is clear…and compelling. Almost every organization can achieve significant gains by improving supplier quality management processes and maturity. If you haven’t watched the webinar, you can access it here and see the data for yourself.
On time, on quality, on volume. A path to industry leadership.
According to LNS Research, 50% of organizations feel that supplier quality management is a process critical to success. Unfortunately, 41% of those same organizations feel that supplier quality is one of their least mature processes.
What does that mean for you? It means that more than other quality processes, optimizing supplier quality processes gives you room to differentiate from competitors and get ahead of the industry. Consider examples provided in the webinar such as Amazon.com and Wal-Mart. These are two businesses that grew to industry dominance by optimizing their supply chains not only for low prices but also for high volumes of quality products. Increasing supplier quality maturity can enable your business to provide higher volumes of quality products and deliver them to your customers at just the right time.
Supplier Metrics Make a Difference
LNS Research has identified a number of supplier quality management best practices and measured their impact. In the table below, note 12 best practices in supplier quality management and the reduction in supplier defect rate when each practice is adopted. The number one item on the list, establishing supplier scorecards, corresponds to a 50% reduction in median Supplier Defect Rate (SDR). Reducing SDR will reduce Cost of Poor Quality (COPQ), which goes directly to the bottom line.
Source: LNS Research
Supplier Quality Maturity Depends on Technology
It’s critical to understand supplier performance, but if your supplier quality processes have yet to mature, you’re likely using data from numerous spreadsheets and siloed systems. Do you trust that the data you’re using is accurate and timely?
The topic of data raises a key challenge in supplier quality maturity. Very few organizations have invested in the technology needed to automate supplier quality processes. Only 21% of the organizations surveyed automate their supplier quality processes with software, which makes it difficult to generate accurate metrics and scorecards.
For many organizations, technology will play a key role in advancing maturity. It will enable standardized data capture, secure supplier communications, and consistent reporting of supplier performance metrics. And LNS predicts that leading organizations will continue to embrace and integrate technologies including mobile, big data, smart connected devices, and more.
Getting Started on the Maturity Journey
Improving supplier quality processes requires an investment in effort and in time. Luckily, it isn’t difficult to demonstrate that improving supplier quality has benefits throughout the business. Improvement in metrics such as Overall Equipment Effectiveness (OEE), On Time Delivery (OTD), and Cost of Quality (COQ) will ensure that personnel outside of the Quality team feel the impact of suppler-related process improvements.
The first step on the journey is to assess your organization’s “as-is” maturity state and then determine where you’d like it to be. If you’re unsure of your current state, click the Take Assessment button below to discover your existing maturity level and also estimate your overall Cost of Quality.
Supercharge Supplier Quality Management for Competitive Advantage
Pilgrim SmartSolve® Supplier Quality Management Overview Video
What is Your Quality Maturity?
Learn how higher maturity reduces the overall cost of quality.