5 Key Practices to Adopt for Supplier Management to Assure Quality Output

The key to maintaining the quality of end products or services of a business is supplier management. This article explains some of the best practices that an organization can adopt to manage its suppliers.

The approach of quality management in a business must include supplier management. In fact, the international ISO 9001 certification for quality management includes ‘Evaluation of supplier performance’ as an integral requirement for businesses. However, the standard does not mention any particular methods or processes for the evaluations. It explicitly means that materials or products provided by other external parties that are used in the production need to be managed, evaluated, and supervised so that they enhance the quality of output. Hence, supplier management must be an integrated part of the QMS (Quality Management System) and must promote best management practices across the supply chain. The following section talks about some of the key practices that emphasize monitoring and managing the supplies and their providers. Take a look.

5 Major Practices to Apply for Supplier Management for Quality Assurance of Your Output

Assess the KPIs

The first step is to access the KPIs or Key Performance Indicators of your supply chain to understand how your suppliers are performing. Deciding the KPIs and interpreting them might be quite difficult. Therefore, consider the metrics for which data is easily available such as inventory carrying costs, delivery time of inputs, or costs of inputs. Calculating the costs of poor quality (COPQ) supplies also gives you an idea of your supplier performance. The lower the costs, the better the supplier performance. You need to aggregate the data collected for various KPIs, analyze the trends, and conclude whether the performance has improved/deteriorated according to different metrics. Accordingly, you can change a required supplier, implement new controls or regulations for some supplier, modify any procurement process, and so on.

Check Your Suppliers Frequently

You are also required to evaluate the suppliers and not just their products. You should regularly check their procedures and materials (they use in manufacturing your inputs) to ensure that they conform to your established regulations and instructions. Regularly reviewing each of the suppliers provides you with information that helps in assessing their efficiency. Also, your suppliers need to comply with the requirements of the ISO 9001 standard, so you need to keep an eye on them to ensure that your suppliers are working in compliance with the requirements.

Find Opportunities to Recover Costs

A useful practice that helps you in recovering the costs for poor supplies is charging the suppliers who are responsible for them. For that, you need to evaluate the root causes that resulted in poor suppliers or the requirements that the supplier failed to meet. You can hence charge the particular supplier/suppliers by assessing the costs of those poor materials. Such a cost-recovery practice eventually helps in finding a lot of issues or non-material costs such as mishandling, or lack of inspections by the suppliers.

Continuous Improvement through Corrective Actions

To reduce poor quality supplies or prevent nonconformities, you should adopt the practice of continual improvement through corrective actions. The implementation of a QMS supports the process of continual improvement and so you need to ensure that the process includes supplier improvement too. Your organization’s quality management team should evaluate your processes periodically, including the supplier processes, to find any loopholes or nonconformities. Subsequently, you can implement corrective actions to prevent any such slip-ups in your supplier processes.

Having a Proper Supplier Scorecard

Many businesses neglect this practice, but to ensure accurate supplier management, you need to create and maintain a scorecard of your suppliers. Based on the KPIs and operational metrics, you should evaluate the performance of your suppliers over time to help decide on the negotiations in the long run. Maintaining a scorecard hence helps in keeping track of the performance of your suppliers and ensuring that they are in line with your quality goals.

These are the key practices a business can deploy to assure supplier management and fulfill the criteria of ‘supplier performance evaluation’ for ISO 9001 certification. Having the right supplier management is necessary to mend the gaps or flaws in your supply chain and prevent risks. This helps to maintain consistency in the quality of your output. Besides, it is also required to find opportunities for enhancing any supplier processes, lowering the purchase costs, and increasing savings.