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Calin Moldovean

Supply Chain

Supply Chains: Three Levels of Oversight

Managing the weak links for a successful quality system

Published: Wednesday, November 12, 2014 - 16:59


he modern supply chain is becoming more complex, and many different levels of skill and oversight are found among suppliers and purchasing companies. Some suppliers do an excellent job of implementing lessons learned and maintaining a high level of quality, production, and safety. Other suppliers must be guided through all levels of quality, design, production, and safety.

No matter the maturity level of suppliers, most have to be constantly monitored to ensure they haven’t drifted from good practices that are likely to have direct effects on their performance as well as product quality and safety. These factors, along with risk management, compliance, and increased regulations, are driving the need for better supply-chain information management and transparency.

Quality management of a supply chain must consider three discrete levels of oversight: basic, moderate, and thorough. This article explores better ways to support global organizations to minimize risks and knowledge gaps in supplier performance visibility. The phrase “customer” used throughout this article represents the stakeholder receiving products or services from suppliers.

Basic level

At the basic level, the supplier is assumed to have an effective quality management system (QMS) and to be able to deliver lower-risk products or services. The initial supplier selection process is the key component in minimizing risk in the supply chain. It’s useful to design, distribute, and analyze a supplier self-evaluation questionnaire. From the results of this survey, a risk-based analysis can be developed, which may include supplier selection recommendations. The customer can then use this validated information to make informed choices. The survey results can also be used to determine if a basic level of oversight is sufficient, or if a higher level of oversight is needed for some of the surveyed suppliers.

Moderate level

At the moderate level, the supplier usually has a QMS in place, but there may still be delivery delays or high quality costs, which are signs that the QMS is ineffective. The issue may be that the supplier lacks an understanding of key customer or regulatory requirements; this is frequently an issue when working internationally because there may be differences between two cultures regarding what each thinks is acceptable. Finally, the products or services being supplied may be of a relatively high risk, and thus a simple survey may not provide the required level of confidence for the customer.

One solution that can help mitigate these risks is a supplier auditing program. With the help of an independent auditing provider, the customer develops a proprietary audit program that is customized to address the needs of its product and QMS. The provider will then audit the suppliers against those unique criteria and provide a findings report. By leveraging the provider’s established auditor pool, the customer saves money on travel time and expenses, and is assured that the audits are performed by competent local auditors who know the language and culture of the supplier or suppliers.

The supplier audit program can also be supplemented by customer-specific supplier training programs and workshops. Often, challenging issues are rooted in poor communication between the supplier and the customer, and not necessarily in a lack of technical ability on the part of the supplier. If customers can find better ways to communicate their expectations, and if the suppliers have a forum in which to voice their concerns and exchange best practices, then it is a win-win situation for all—particularly in today’s competitive international marketplace.

Finally, at the moderate level, many customers require their suppliers’ QMS to be third-party registered to a standard such as ISO 9001. However, bear in mind that the certificate by itself may not provide the assurance that the customer is looking for.

Thorough level

The quality system's risks at the basic and moderate levels mostly revolve around internal issues such as supplier selection and training. At the heart of the thorough level are methods needed to mitigate the external risks that have the greatest effect on the customer’s brand image and bottom line: field product failures, product recalls, and production delays. At the same time, safety and regulatory compliance risks can’t be overlooked.

One way to mitigate these risks is to design and administer customized supplier development programs that address supplier qualification and selection, supplier audits, performance monitoring, and most important, supply chain improvement. These programs can be designed specifically for the customer’s needs, the industry, and the international marketplace. Often, customers engage with external parties to gain support with rollout and delivery of these initiatives throughout the global supplier base. An example of such a solution is the global supplier management platform (GSM). This platform supports customers by providing access to key information on their suppliers’ capabilities and policies, presented in the form of structured profiles relating to a variety of industry topics such as financial information, company profiles, product quality and safety, and sustainability. A GSM allows companies to evaluate supplier performance in these areas so they can make better-informed supplier decisions.

Supplier process capability studies can also be performed to ensure continued capability and identify areas of improvement.

All of the quality management tools outlined here take a holistic approach to supply chain management. Business partners such as Intertek can manage the process from top to bottom—helping customers strengthen supply chain performance while saving money, staying on schedule, and freeing up resources for higher value-added and end-customer-focused activities.

Calin Moldovean oversees gloabl business assurance activities for Intertek, a Quality Digest content sponsor.


About The Author

Calin Moldovean’s picture

Calin Moldovean

Calin Moldovean, president of Business Assurance at Intertek, is responsible for management systems auditing and certification, training, and supplier management services. He also leads Tradegood, an online marketplace developed by Intertek that connects responsible buyers and trusted suppliers. Moldovean has led laboratories, auditing, and training operations in medical services, and he was a vehicle technology engineer and safety manager, automotive director of operations, and program manager. As a certified lead auditor, Moldovean has audited hundreds of organizations throughout North America, Europe, and Asia. Moldovean holds a master’s degree in mechanical engineering from Transylvania University, Romania, and an executive MBA from Suffolk University, Boston.