Essay on Supplier Quality Management: Enhancing Organizational Performance

Introduction

Supplier quality management can be defined as a set of activities introduced by the management to improve the overall organizational performance (Jagtap, Teli, Raikar & Deshmukh, 2017). These activities involve measuring and assessing the cost of supplier quality, using performance-based scorecards to assess supplier performance, conduct supplier audits, and design effective communication models with suppliers with the aim of achieving customer satisfaction (Jagtap et al., 2017). Forker (1997) asserted that the effect of supplier quality on an organization's performance is broad and direct, and the overall understanding is that the firm's quality performance (output) should be as effective as the quality performance of its suppliers (input) (Jagtap et al., 2017). The paper will, therefore, examine why supplier quality is important, the supplier quality system, the requirements of the quality management system, and measuring and monitoring the performance of suppliers.

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Why Supplier Quality is Essential

In America, many firms are outsourcing their manufacturing process to strategic partners around the world (Teli, Majali, Raikar & Deshpande, 2012). Many consumer goods are currently manufactured in Mexico or countries in the Far East and then shipped to Northern American markets using multiple logistics streams, such as air, trucks, and oceans (Teli et al., 2012). It might take several weeks for a finished product to reach the U.S. from a supplier in the Far East. Therefore, there is a need for manufacturing firms to streamline their supply chain and implement lean inventory techniques to ensure they address the problem of stock-outs within the shortest period of time (Teli et al., 2012). Firms need to actively solve their supplier quality issues before completely damaging their business operations, and even incur financial losses (Teli et al., 2012). As the recession begins to set in, there is no room left for supply chain disruptions, and any difference in supplier quality can greatly reduce the firm's revenue, affect the market share, augment production cost, and even threaten brand image and reputation (Teli et al., 2012). In a nutshell, firms can achieve systematic reductions in the cost of poor quality by implementing a quality management system as it will help them to generate more revenue and increase their overall market share (Teli et al., 2012).

Supplier Quality System

The automobile sector has developed a chain of about 25 core suppliers and sourced 90% of its raw materials from them (Teli et al., 2012). Automobile firms need to start identifying opportunities for enhancing supplier quality by assessing the product and delivery quality processes emanating from their major supplier (Teli et al., 2012). A number of issues were mentioned as key reasons warranting automobile firms to develop an effective supplier quality system. First, different stakeholders were able to detect supplier quality issues, and non-conformances in several spreadsheets (Teli et al., 2012). As an outcome, it was very hard for the manufacturer to obtain an accurate perspective of all open and recurring issues with a supplier. Second, the corrective action process was managed manually by the manufacturer (Teli et al., 2012). It resulted in the creation of fewer corrective action requests in recurring supplier quality issues. Thirdly, supplier performance scorecard analytics, such as PPM were calculated manually from different spreadsheets (Teli et al., 2012). Therefore, supplier scorecards did not provide the manufacturer with enough leverage in working with their suppliers to address quality-related problems.

The Need of Quality Management System on Process Management in Automobile Industries

There is a need for automobile industries based in the U.S. to develop an appropriate quality management system to improve their process management on their manufacturing wing, which they have been outsourcing (Teli et al., 2012). After an initial analysis, the manufacturer recognized the following prerequisites for the quality management system (Teli et al., 2012). The QM system should be able to track quality issues across all sites with all suppliers and develop closed-loop corrective action processes (Teli et al., 2012). The QM system should have a scoreboard mechanism to assess and report on quality metrics with suppliers, and apply it as a basis to enhance progressive improvement in supplier quality (Teli et al., 2012). Finally, it should allow the firm to execute an end-to-end cost recovery process that entails three big scopes; Recognizing supplier quality issues that need cost recovery, offering a basis for chargeback communication, and dispute resolution with key vendors, and ensuring raw material, and non-material costs and supporting documents are included in the cost recovery records (Teli et al., 2012).

Measuring and Monitoring the Performance of the Supplier

Scrutinizing supplier performance is a critical process of changing managerial behavior, and aligning the relationship with the strategic and operational goals of the purchasing firm (Jagtap et al., 2017). Performance analytics provide the necessary information for decision-makers to design, control, and direct crucial activities of an organization (Jagtap et al., 2017). They also permit managers to measure performance, to signal, and train suppliers on the crucial dimensions of performance, and finally to enhance improvement activities by identifying deviations from standards (Jagtap et al., 2017). Price has often been regarded as an essential factor in assessing and monitoring suppliers. Consequentially, to effectively maintain partnerships, the purchasing firm must progressively monitor supplier performance across multiple sections and offer feedback for improvement (Jagtap et al., 2017). These dimensions can be both tangible (operational performance) or intangible (relationship status) (Jagtap et al., 2017).

Supplier Audits on Supplier Activities

Supplier audits are generally time-consuming activities, but it essential since it adds value to a business. In contemporary organizations, the function of a quality auditor is that of an adviser who identifies areas of improvement fir mutual course (Jagtap et al., 2017). Many automobile firms are also adopting the nonconformance audit, where the auditor is expected to list all the cases he or she observed where things were not done in accordance with the supply chain procedures (Jagtap et al., 2017). Supplier development entails all the activities implemented to enhance supply quality with assistance to operations improvement on the supplier's end. Purchasing firms may use a flurry of activities to develop the supplier's performance or capabilities (Jagtap et al., 2017). Companies normally participate in supplier development as a reaction to competitive markets. Finally, the chance to enhance the product design performance by enhancing suppliers in the product development process to understand better the basic structure of buyer-supplier relationships (Jagtap et al., 2017).

Conclusion

In conclusion, the paper has addressed different scopes that would enhance the overall process management and supplier quality of an organization. Automobile firms need to streamline their supply chain, and implement lean inventory techniques, if they are to increase their revenues, market share, and reduce production cost through outsourcing. The installed QM system should be able to track quality issues across all sites with all supplier and develop closed-loop corrective action processes. Finally, the system should have a scoreboard mechanism to assess and report on quality metrics with suppliers and apply it as a basis to enhance progressive improvement in supplier quality.

Reference

Forker, L. B. (1997). Factors affecting supplier quality performance. Journal of Operations Management, 15(4), 243-269.

Jagtap, M. M., Teli, S. N., Raikar, V. A., & Deshmukh, P. M. Effect of Supplier Quality Management (SQM) (2017). on performance measures of manufacturing organization. Retrieved from: file:///C:/Users/User/Downloads/Paper-A015.pdf

Teli, S. N., Majali, V. S., Bhushi, U. M., & Deshpande, A. S. (2012). Knowledge-based Supplier Quality Management System for Automobile Industry. Int. J. of Engg. Innovation and Research, 1(4), 327-321. Retrieved from: file:///C:/Users/User/Downloads/KnowledgebasedSupplierQualityManagementSystem.pdf