Suppliers play a vital role in new product commercialization, from the product planning stage through to the launch of your product. There are hundreds of thousands of suppliers in the market, but to choose the right one(s) makes all the difference. Many organizations are now becoming more and more strained in supply base building and managing and overseeing the quality, cost, and delivery of raw materials, so we suggest the following five steps to help your organization better identify the right suppliers and build supply bases for your next program.
5 Steps to Improve Supply Base Building & Supplier Quality Management
1. Determine Selection Criteria
Supplier selection is a crucial step, and if not executed properly could have a tremendous impact on your company; selecting a supplier should be the top priority for any Supplier Quality Management activity. Organizations should be able to categorize their supply bases according to their capabilities and needs. Supplier selection criteria must also meet your customer’s quality standard needs, program objectives, and policies. Always check to see if suppliers possess certifications related to the desired product, process, or service they would provide. In a perfect world, your suppliers will deliver quality products and services, in the timeframe requested, and with minimal supervision.
2. Perform Supplier Audits
For most Quality Management Systems (QMS), auditing suppliers is mandatory, but regardless, it’s surefire way to collect accurate information about a supplier and/or its facilities. There are two common methods for conducting supplier audits: onsite and offsite.
When you conduct an onsite audit, the below topics and areas of concern should be addressed:
- The structure of the company’s QMS
- Performance data
- Product and process management
- Results of supplier internal audits and certification audits
- A feeling of how the company operates and the atmosphere within the organization
- Personal interaction with key members of the supplier’s staff and points of contact
Though not as effective as onsite audits for most situations, offsite audits may be conducted by phone, where you’d ask a specific set of questions related to the criteria the supplier needs to meet. On rare occasions you may even get lucky and find the supplier’s website or business directory listing has some or all of the information you require.
With either method of conducting supplier audits, always keep records of each one, specifically noting the date the audit was performed and the team member who performed it. This practice makes it simple for your team to find the information they need on a given supplier, in addition to having multiple audits from a single supplier, over time, from which to compare for tracking quality and improvement.
3. Track & Rate Suppliers
Each company has its own supply bases, which typically expand as new projects begin. It’d be in your organizations best interest to score the performance of every supplier sourced with regard to cost and quality of its final deliverable because this enables your team to track and rate suppliers for the purpose of using them for future projects. Examples of categories to track could be, but aren’t limited to:
- Cost: High, Medium, or Low
- Quality: High, Medium, or Low
- On-Time Delivery: Yes or No (and percentage of on-time deliveries)
Based on the above categories above, you can then filter this information in various ways to see which of your tracked suppliers, for example, are:
- Top-5 highest spend
- Top-10 critical suppliers
- Top-5 low-quality suppliers
- Top-10 excellent performing suppliers
4. Track Supplier Performance
Supplier performance is easily measured if your company has a system that supports making the data readily available, and Key Performance Indicators (KPIs) will prove to be a very helpful tool if used correctly. The following supplier KPIs are good for measuring overall supplier performance:
- Right First Time
- Delivery on Time
- Response Time, Quotes, and Inquiries
5. Supplier Management
Once you’ve identified suppliers and built your supply base, while keeping in mind the previous four steps, engaging and managing your supplier should be much more efficient. You may even get some suppliers to review their internal processes and strategies by mentioning to them that you could source them more business if they improved function X or received certification Y, for instance. Getting to know as much as you can about, and maintaining continuous contact with, your suppliers will drastically improve your relationships with them, and subsequently their transparency, boosting your supply base building and supplier quality management, and the final program product as a result.