How quality can improve supply chain business performance

With so many organisations currently being affected by global stock and product delays, the need to apply risk-based thinking must be revisited urgently. Increased lead times have generated disruption that affects operational management in a range of industry sectors. This is not only because of the pandemic – global conflict, terrorism, natural disasters, Brexit and legislative and regulatory changes are also either already contributing to the crisis, or will be soon. 

Organisations we work with are reporting numerous difficulties. Examples include the construction industry struggling to obtain cement and wood, and the manufacturing industry failing to source steel, plastics and other materials. That’s without mentioning the logistics industry which, arguably, is having the toughest time of all. 

Right now, the supply chain is as fragile as an eggshell – it’s okay until you tap it, but then it will surely crack. 

Creating fresh opportunities 

The strategy behind supply chain management needs some detailed review – and a rethink so we can create new opportunities to find a way through the high-risk situation we are currently facing. It’s been said before, but we need to think outside the box. So how can we create those opportunities? 

We need to maximise the knowledge and intellectual property within our organisations or the ones we work with, and practise more collaboration by interacting effectively with others within our industries. We should work more closely with suppliers and other external providers, because they will have the best insights into where the best supply availability might be. To benefit from partnerships like these, we should not just work with the top people in the supplier organisations but also with people throughout their businesses because they might be more familiar with where the opportunities are. 

Long-term relationships 

One of Deming’s 14 points essentially warned businesses not to buy from the cheapest. Never has this advice been more relevant and apt, even though it might be challenging, because it’s essential to build a long-term relationship with a supplier. 

Many companies have an ‘approved suppliers register’ for material suppliers and outsourced processes. Alongside this, risk is often linked to a red, amber, green (RAG) approach, with clearly defined criteria. However, with the current challenges linked to the supply chain, there is often no review or update process – and certainly no opportunity for re-evaluation. My concern is that, when carrying out supplier audits at the moment, we are failing to focus on how supplier quality can improve business performance. 

Building resilience 

When choosing suppliers, the starting point is to look at their quality performance. However, we also need to focus on where they obtain their goods. This is crucial if we are to improve our overall levels of resilience and ensure we have strong disaster planning and business continuity processes in place. 

Sometimes external providers of outsourced processes are seen as a significant opportunity. We often subcontract specialist work activities but we need to be aware that, with ever-growing technological complexity, this can mean we are outsourcing some core activities that, in turn, lead to disruption and risk. 

Right now, the supply chain is as fragile as an eggshell – it’s okay until you tap it, but then it will surely crack.

Bob Hughes CQP FCQI

When considering external suppliers, another really important factor to take into account is to ensure they are ISO 9001 certified through third party audits linked to an accredited certification body.  

In my experience, this doesn’t happen often. Instead, approval is given to suppliers via a partially completed tick box supplier questionnaire. Where second party audits have taken place there is, in some cases, little or no evidence to be found in responses to the causes of non-conformity findings, nor is there any suggestion that there has been a review of whether actions taken were effective. 

Many organisations could benefit from working with their suppliers to develop improved risk registers and better analysis of the way both parties approach any lessons learned. Both parties could also benefit from improved ways of sharing and recording information, and building awareness of new and changing trends. These consistently impact on everyone’s ability to supply and deliver products and services at the right quality and the right cost – which, in turn, affects profitability for all in the supply chain. 

To summarise, we all need to focus on building partnerships with our suppliers – never more so than during the current supply chain crisis. We need to work with our suppliers to create a network of knowledge and have effective processes to monitor the quality of support they offer us. 

Five key questions about your supplier 

I will leave you with five key questions that I believe anyone involved in working with suppliers should be asking themselves: 

1. Are the suppliers’ products and services delivered with a right-first-time approach? 
2. Are they offering me great service and demonstrating accountability? 
3. Do their products and services enhance my organisation’s reputation, including in the context of environmental, social and governance (ESG) considerations? 
4. Do they offer my organisation a competitive edge? 
5. Am I consistently reviewing my suppliers’ capabilities, capacities, competence and commitment to sustainability?