[This post is a continuation of Selecting the Most Capable Supplier: Part 1]
In the second part of this post, we will discuss 3 specific processes that you should review to control for manufacturing supplier quality management before starting to do business with them. As a customer, you need to know that every aspect of your order is managed with the utmost care in a process that is repeatable and accountable.
Too many small companies (and many larger ones for that matter), rely on brute force or a "who screams the loudest strategy" to manage their business. In order to sleep better at night, you need to know that your suppliers have a defined, repeatable, and measured process to manage every aspect of their business. The three most important questions to ask are:
1. How is WIP or Order Fulfillment Managed?
Whether or not you're working directly with a manufacturer or with a distributor, understanding this process and how a supplier manages it is key to making sure that your deliveries are on time. This process should include, at a minimum, written process for order entry/acceptance, production management, and shipping notification.
Why are these important? Because everyone has been in that situation where you are expecting delivery of a product to start production only to find out at the last minute that the order will be late. Now you have a production line that is idle or that needs to be torn down and set up for something else, which costs time and money. In 95% of cases like this, the supplier could have let the customer know well in advance about the delivery delay if a proper WIP/Order Fulfillment process had been in place.
Having a reliable WIP/Order Fulfillment process in place is critical for a supplier. It allows them to manage their on-time delivery better since it is a leading indicator of what products have fallen behind in the process. This gives a supplier the opportunity to develop recovery plans should production fall behind and, at the very least, the opportunity to communicate with the customer about a delay should a delay become unavoidable.
Automatic shipping notifications are also a must in today's business environment so that your procurement teams can know exactly what to expect and be proactive in managing.
2. What is the Process for Handling a Quality Issue?
We have all heard a prospective supplier tell us that they never have any quality issues, and we know that is not true. It's not a matter of "if" there will be a problem, it is "when." Understanding how the supplier manages these challenges is key to knowing how quickly you can expect a resolution.
Some specific questions to ask are:
- Who do I contact when there is a problem - my customer service rep, quality manager, or operations manager?
- What do we need to do to communicate the problem, send pictures, return parts, etc.?
- What are the plans for recovery should there be a problem? How is rework handled? What is the expectation for remakes, etc.?
Epec’s Investment in the Quality Management System
Though going through quality issues is not always pleasant, it is essential that you know what to expect with a supplier in case they have an issue to deal with. The only way to do that is to review the documented process. (Note: It's always good to get an overview of the a vendor's quality organization so that you can get an understanding of the resources available to manage issues when they occur. Be wary of vendors with small quality departments - they don't mean that there are no quality issues; rather, they often indicate that the supplier doesn't want to pay for that level of service for their customers).
3. How are Engineering Change Orders or ECO's Handled?
In this digital age, too many companies rely on email as the mechanism for managing communication throughout their organization. The problem with this strategy is that too often, it is the only place a record of changes is kept. Problems inevitably arise when someone leaves, a company closes down or a computer network crashes.
Every well-run organization needs to have a documented ECO management process that includes a central place to keep all data so that everyone can access the proper updated information. Too often, this level of investment is not made by companies because it requires significant capital and discipline to assure that the procedure is followed. The term "tribal knowledge" is nothing more than a polite way of saying that there is no documented procedure to manage changes in a way that is in the customer's best long term interest.
Over the last 10 years, many entrepreneurs have taken the plunge to start companies in mature industries where larger competitors haven't addressed customer needs. The biggest challenge for you as a customer is figuring out whether the companies you may work with have invested in their infrastructure sufficiently enough to keep up with their rising sales as the company grows.
I hope that you enjoyed these 2 posts and I look forward to sharing more insights soon.
