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supplier quality

5 Reasons Why Companies Need Supplier Quality Management

In today’s complex and fast-paced business environment, establishing a robust supplier quality management system is not only desirable but critical for sustaining compliance and achieving process excellence. Companies must cultivate cordial relationships with global suppliers and build a supplier quality management procedure with well-defined metrics around quality and compliance. However, firms are mostly dealing with increasing regulatory oversight, intense competition, and market fluctuations. Managing supplier quality, therefore, takes a secondary position among organizations. They find it time-consuming and complicated to analyze data, uncover supplier insights, and gain a clear understanding of supplier capabilities. This results in data inconsistencies and deterioration of supplier performances.

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Benefits of Supplier Quality Management 

Minimizes risks 

Extended supply chains, outsourcing, and globalization accompany a significant amount of risk. These risks are usually related to quality, safety, business continuity, cost volatility, supply disruption, non-compliance, and many more. Having an effective supplier quality management process allows companies to effectively audit the supply chain and identify each specific risk. This helps businesses to reduce risks and avoid potential costly fallout.

Improves contract management and supplier relationships

For businesses to gain ground, it is crucial for companies to reduce costs, streamline contract management, protect brand reputation, and achieve long term profitability. The process becomes much easier when tasks such as supplier prequalification, supplier audits, vendor management, insurance monitoring, and analytics are taken care of. With a robust supplier management process, companies can easily maintain good relationships with suppliers while carrying supplier quality audits regularly. They can easily improve and grow a cross-beneficial business relationship.

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Enhances procurement decisions 

Most procurement decisions are under immense pressure to find, qualify, monitor, and manage suppliers while lowering the costs of doing so. With supplier quality management, CPOs can make informed procurement decisions by mitigating supplier risk through communication, evaluation, selection, and monitoring services. They can gain unprecedented visibility into safety statistics risk profiles and historical data. Moreover, improving supplier quality management can enhance the procurement process and reduce the lead time apart from maximizing data quality on the entire supply chain.

Inability to analyze suppliers can impact the efficiency and procurement process of organizations. Stay a step ahead by requesting free platform access to improve the supplier quality management process and gain specific insights. 

Meets compliance requirements 

Businesses usually have to maintain compliance with, country-specific regulations, industry standards and regulations, corporate policies and standards. Working with a huge number of suppliers makes it difficult for companies to align with compliance standards. However, potential costs, disruptions, and damages can be avoided when a company is proactive in its approach to supplier compliance and supplier quality management.

Fosters sustainable performance 

While most companies have strategies in place to manage health, safety, behaviors within the organization, they fail to ensure the same with suppliers, contractors, and vendors. Supplier quality management actively fosters an aligned culture of health and safety through contractor prequalification, document management, auditing, employee-level qualification and training, business intelligence, and insurance verification.

To know in detail about supplier quality management benefits and strategies to reap them, request for more information from our analysts.

4 Effective Strategies to Make Strides in Supplier Relationship Management

Supplier relationship management (SRM) is an integrated approach that addresses and provides benefits for both the buyer and seller sides. It should be noted that not all suppliers are the same, so not all customer-supplier relationships should be dealt with through a single strategy. The typical goal of supplier relationship management is to streamline and improve processes between a buyer and its suppliers. It is all about developing a mutually beneficially relationship with suppliers, especially those deemed as most strategic to the brand, to promote quality, efficiency, and innovation among several other benefits. As with many procurement activities, at the most basic level, supplier relationship management can be used to reduce both prices paid and costs to the organization. Developing appropriate styles of interaction can also make it is possible to save money. The key to developing an effective supplier relationship management approach is a well-understood supply base.

Strategies for better supplier relationship management

Leverage technology

Investing in a good supplier management software helps companies keep track of information about their suppliers in one place. Companies can also take one step further and install an advanced purchase order management software which is useful in creating, processing, and tracking purchase orders with the suppliers.

Ensure timely payments

Fulfillment of payments on time is a vital element of an effective supplier relationship management. This is also a critical step in ensuring that the company’s valuable suppliers are not lost. Timely payments also facilitate companies to establish their credibility and reliability as a customer to their suppliers. Just like companies like to receive prompt delivery of goods and services from the suppliers, the suppliers expect prompt payments. In case companies are unable to make payment on the date agreed, then they must inform the supplier as soon as possible with the date on which they can expect the payment.

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Make detailed agreements

Supplier relationship management is a non-negotiable in the case of companies that buy from a vendor on a regular basis. Begin by listing out what both parties expect from the partnership such as item or service description, price, delivery terms, payment terms, and communications. Then have both parties sign it. The complexity of this document depends on the business requirements. A well-documented supplier relationship agreement reduces the possibility of confusion or disputes and paving way for better supplier relationship management.

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Best Practices to Ensure Top Notch Supplier Quality

Manufacturing a product isn’t the same as it was about ten years ago, and it will continue to evolve. Today’s fast-paced business world is advancing to such an extent that business leaders must choose to consistently adjust to new emerging strategies to be at the top of the competition. Consumer packaged goods (CPG) manufacturers are under intense pressure to deliver quality products while keeping costs down. The push to globalize to meet customer demand, coupled with increasing mergers and acquisitions, makes it almost impossible for CPG companies to cost-effectively manage the quality of ingredients and materials across the supply chain. Supplier quality management (SQM) is a critical activity that relies on suppliers in the provision of the goods or services. It involves managing, monitoring, and responding to the changes in the supplier’s ability to fulfill customer’s needs on time and to meet the agreed quality specifications. Here are some best practices that will help CPG companies to streamlinSE_Demo2e their supply quality management better:

#Supplier quality check 1: Measure and track cost

If a product quality issue arises, it is often the parent company who bears the cost of poor quality, even though the fault may lie with a supplier. These costs can consume a significant portion of revenue, yet many companies fail to measure and track them in a consistent manner. This results in companies shelling out a bomb on poor quality every year, without knowing where or how to recover these costs. Companies must find out how much it costs to manufacture a good quality product. An appropriate ‘cost of poor quality’ metrics can also help to calculate supplier charge-backs accurately, and recover expenses faster.

#Supplier quality check 2: Set up a  cost recovery system

Agreeing on a cost recovery process with the suppliers can boost accountability throughout the supply chain. It may allow CPG companies to recover the cost of poor quality from a supplier with much more ease, and encourage them to look at and address issues that are causing poor quality quickly and efficiently.

#Supplier quality check 3: Supplier audit

Supplier audit is one of the key factors that will aid in ensuring supplier quality of CPG companies. Businesses can come to a consensus with suppliers on a procedure for a quality check against non-conformances in manufacturing, quality, service provision, compliance, etc. Audits will help companies identify areas for improvement and help ontake corrective actions, response and resolution processes, and targets. It will ensure that the supplier quality meets the desired standards.

#Supplier quality check 4: Build supplier relationships

Tracking supplier quality is not just about avoiding costly recalls, penalties, and lawsuits. It also aims at generating significant value for the business by strengthening overall product quality, enhancing the company’s reputation and credibility, lowering costs, and driving superior business performance. Companies must treat the suppliers as an extension of their enterprise and not a separate entity. Quality standards, audits, and other processes must be enforced with the same rigor and commitment in the supply chain as in the rest of the organization.

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