Doubling Down on Quality

How digital supply chains offer a competitive advantage

Published: Monday, November 30, 2020 - 13:03

As commercialization strategies evolve amid Covid-19, and supply chains continue to trend toward diversification, the only way for businesses to control their destiny is to double down on quality standards. If cash is king, then quality is the king’s closest confidant since high quality protects and guides the bottom line.

To gain a competitive edge, many businesses are planning to digitize their supply chains so they can use real-time data to infuse quality safeguards into all the materials and products they buy, move, and sell through their entire supply chain. In a July 2020 survey of more than 200 companies conducted by QIMA, two-thirds of respondents reported that the pandemic has accelerated their company’s path toward digitizing their supply chain, including the use of new digital inspection and audit solutions.

Here are some of the ways digital transformation can help businesses enhance quality throughout their supply chain networks.

Identify quality challenges faster and reduce charge-backs

Consistently poor quality leads to exponential costs for a business, both internally and externally, and eventually hampers brand image, market share, and long-term growth if not properly addressed.

Digitizing the quality control process provides businesses with a speedy and centralized portal for data and communication, which standardizes processes. By arming companies sooner with data, audits, and reports, a digitized system fosters proactive rather than reactive decision-making.

Digital quality processes also allow businesses to better communicate and work directly with factories and suppliers, identifying and resolving looming quality issues during all phases of the supply chain. Quality issues are identified as they happen on the factory floor, and problems are addressed before products are shipped and arrive at the buyer. This avoids costly chargebacks and lost sales.

Assists with agility and sourcing diversification

If a business wasn’t already derailed by the intensifying tariffs of the U.S.-China trade war that began in 2018, it’s likely impacted by the uncertainty surrounding the Covid-19 pandemic. In these choppy waters, supply chain diversification is a lifeboat that can help businesses stay afloat. But shifting sourcing geographies isn’t a simple flip of a switch; the landscape marked by mounting compliance hurdles and grave risks for quality.

Digital supply chain platforms can help businesses become more agile. Using a digital quality solution, users can increase the pace and accuracy of inspections by using a tablet or other mobile device that uploads collected data directly into a cloud-based system. Most advanced software tools allow users to easily take, annotate, and share pictures of defects and work online or offline, which eliminates concerns over unstable internet or wireless connections.

Digital solutions also help with some of the common challenges businesses encounter when they enter into relationships with suppliers in new geographies. For example, some digital platforms support a multilingual interface, allowing users to work in their native language. Quality and compliance platforms can also make it easier to comply with local regulations and quality standards, storing the parameters directly within the system.

Reduce human error

There are hundreds and sometimes thousands of people across a supply chain network, ranging from suppliers, factory owners, factory workers, transport partners, inspectors, and others. Although legacy technology has supported traditional supply chain management processes, many businesses still collect and analyze data manually rather than automatically.

Manual data entry means that a player must input data to process inspections. Not only does this take up time, it is also subject to inconsistencies and errors. By automating data collection and inspection processes with tools like machine learning and enhanced analytics, businesses can avoid human errors and achieve consistency to ensure quality standards are met.

Map and anticipate risks across the supply chain ecosystem

In an increasingly volatile landscape, businesses must put risk management on the top of the agenda. But most companies struggle to gauge risk beyond the primary suppliers they directly contract with. A recent MIT Pulse survey found that 38 percent of respondents had not mapped their supply chains. But even more concerning, 65 percent had not mapped their supplier’s suppliers. Why not? Simply put, they lacked the tools to do so.

This unsettling trend suggests that a substantial segment of brands are operating in the dark when it comes to on-the-ground supplier relations, lacking actionable data or real-time visibility into what’s happening in their supply chains. Without an eye on the supply chain, potential risks are endless. Unbeknownst to the business, a provider of a key component to its product could be bought out by a foreign company, or another provider could change up procedures in a way that impacts quality. And when something changes or goes wrong, the buyer won’t know about it until it’s already happening.

One of the greatest triumphs for digitalization in supply chains is the ability to implement a risk-based approach to operations. A fundamental shift happens when the usual linear approach to supply chain management transforms into an interconnected model, enhancing collaboration, malleability, and optimization. With these enhancements, a true risk culture is created, and companies are able to anticipate disruptions and reposition themselves appropriately to circumvent or mitigate impact.

End-to-end transparency and quality

A digitized supply chain creates a closed loop of communication by enhancing human-to-human interactions through data, drawing from a single platform that’s always on and always connected. Drawing from contextually relevant data, functional silos become transparent and offer real-time visibility into what’s happening on the ground during all phases of the end-to-end supply chain. This empowers holistic decision making, which can serve the entire network.

As companies integrate and digitize more of their supply chain networks, traditional barriers of time and space shrink. This is key during the Covid-19 pandemic, when more businesses need to diversify, but travel provisions and quarantines are in place that restrict this ability.

Essentially, by digitizing their supply chains and quality management, businesses move from being reactive to proactive, acting based on real-time events rather than supposition. At the heart of this transformation is a strengthened relationship between quality and cash. By raising quality standards and reducing costs and time associated with poor quality, businesses can achieve new performance levels, improve operational efficiency, and focus on creating new revenue opportunities.

About The Author

Sébastien Breteau

Sébastien Breteau is the founder and CEO of QIMA. The company employs more than 4,000 employees, including expert inspectors, auditors, and laboratory engineers, and provides product inspections, supplier audits, laboratory tests, and certification services in more than 85 countries.

Breteau also established his own charity foundation, the Breteau Foundation, which aims to promote education in developing countries by providing digital education tools to underprivileged children worldwide.