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Sébastien Breteau

Management

Visibility and Data: A Solid Combination for More Resilient Supply Chains

How visible is your supplier quality?

Published: Thursday, August 12, 2021 - 11:03

Major global events of the past five years have sparked seismic shock waves in global supply chains, relocating where businesses manufacture and source their products. Whether facing rising labor costs in China, new tariffs in the U.S.-China trade war, or cataclysmic shutdowns amid the Covid-19 pandemic, most businesses have had no choice but to expand their supplier networks into new geographies.

A recent survey of businesses with global supply chains conducted by QIMAone found that two-thirds of buyers plan to further diversify their sourcing in 2021 and engage suppliers in new regions.

Although the driving goal of supply chain diversification is to help businesses circumvent operational disruptions and achieve cost-savings, therein lies a troubling paradox. Because when businesses shift to new sourcing geographies, they actually subject themselves to new operational complexities and risks that could cost them in the long-term—particularly around supply-chain visibility and quality. According to QIMAone’s annual survey, supplier communication and quality were cited as serious issues by 59 percent and 41 percent of respondents, respectively.

Supply chain digitization, which has accelerated due to the pandemic, could help businesses overcome the paradox posed by diversification. Compared to their counterparts, businesses with highly digitized supply chains cut concerns of supplier communications and quality in half.

By focusing on the following areas, businesses can safeguard and enhance their supply chain processes and assert a malleable, nomadic sourcing model that empowers them to reap all of the benefits of diversification—without sacrificing visibility.

Bolster data collection to gain real-time visibility

According to Shopify, 10 percent of products bought online are returned by consumers for preventable reasons, including poor quality and damage. Not only are returns costly in the short term, they also threaten brand reputation over time. So how can businesses avoid the detriments associated with poor quality? The answer lies in data. By illuminating real-time visibility from factory to shelf, data serve as a key energy source for today’s modern business.

An effective digital supply-chain framework will automate the data entry needed across business operations, collecting and updating data points in real time from all the employees and suppliers within the ecosystem. Furthermore, these data points must be accessible within a single system, rather than having them fragmented across multiple systems that don’t sync up and communicate with each other. Successful application of data could mean automating risk-based, in-line inspections at any factories found to be at risk or automatically approving reports to ensure fast-paced shipments.

When data collection is digitized and centralized, workflows are streamlined, and hours of manpower are cut. Time, energy, and resources can then be transferred to other, more valuable efforts. Essentially, automation of quality assurance allows managers to dedicate more time to other activities that help grow the business, such as negotiating better vendor prices, building new supplier relationships, and digitizing other processes that proliferate innovation and efficiency.

Avoid human error in manual processing

Supply-chain networks are complex operations that involve hundreds and sometimes even thousands of parties, ranging from vendors to factory owners, laborers, and inspectors. Although recent technological advancements have supplemented traditional processes of supply-chain management, many businesses still manually input and process the data that inform decisions. For example, manual inspections usually use paper sheets for measurements. Hand-written reports are submitted to the quality control manager, who then must review disparate reports coming from a multitude of sources.

When this repetitive, tedious routine is expended across multiple transactions, it means that the employee is spending a great amount of time on data input. As the old adage goes, “Time is money.” With analog processes, businesses dedicate exorbitant amounts of time and money inspecting each product or component that travels through the supply chain—and rampant human errors still compromise quality and performance measures. But, for example, a digital inspection app equipped with voice recognition can save brands up to 50 percent in inspection time and reduce human error, according to QIMAone field data.

Raise capacity and increase speed with supply-chain mapping

Today’s marketplace is dominated by one-click service, with the modern consumer expecting immediate gratification. After the pandemic caused rampant supplier shutdowns and shipment delays, many businesses learned the hard way that capacity and market speed are dependent on suppliers. When push comes to shove, a business is only as strong as the weakest link in its supply chain.

To untangle complexities and avoid kinks in the chain, businesses must conduct end-to-end mapping of their supply network. Digitization is revolutionary because it uses comprehensive GPS coordinates to gain visibility into the product journey along the entire supply network, closely monitoring the product in its conception, inspection, transit, and arrival at final destination.

The benefits of end-to-end mapping are numerous, starting with the ability to identify unauthorized manufacturing and prevent the additional costs associated with poor quality. With risks identified beforehand, businesses can adapt their quality control programs to add more controls or shift production to another supplier with a stronger track record. Moreover, decisions about from where to source product and how to transport it are streamlined and based on external events in real time. For example, if a new wave of the Covid-19 virus unfolds where some of a suppliers’ factories are located, remedial actions can be taken, such as shifting production to other factories in safe locations.

Infuse supplier relations with trust, transparency, and teamwork

The pandemic has been full of teaching moments, and it’s evident that a business cannot safeguard its supply chain alone. This is especially true in today’s landscape, where volatile demand, disruptions, and uncertainty mean that supplier diversification will become increasingly critical.

In keeping pace with the paradoxical pressures and risks that arise when working with new suppliers and diversifying into new geographies, close supplier relationships are the critical differentiator that will determine success or failure. Only by knowing what is happening on the factory floor with a supplier can a business make informed decisions about its own operations. For example, the application of a digital inspection platform informs key metrics and cuts to the core of operations, including identifying failure rates of individual factories and inspectors, defect rates of specific products, and country-by-country performance.

Notably, digitization is ushering in a new framework for supplier relations. Thanks to real-time visibility into what’s happening at all stages of the product journey, the relationship a business has with a supplier is no longer dictated solely by a standard client-vendor contract. Rather, it becomes a truly mutually beneficial relationship that is anchored by the three Ts: trust, transparency, and teamwork. By reimagining the supplier-relations framework with these tenants, digitization better connects businesses with quality cross-border partners they can grow with—now and for years to come.

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About The Author

Sébastien Breteau’s picture

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.