By Daniel Borges Madureira
The global supply chain is experiencing unprecedented disruption. After the past 18 month’s sudden and prolonged cool down, the world economy is picking up at a pace faster than anyone could have predicted. Shortage of goods is becoming a major obstacle for key industries such as automotive, electronics or consumer products to satisfy market demand.
If your organization is currently looking for ways to optimize your existing stocks and your installed capacity, you’re in good company. The dominant philosophy across industries today is to do more with what is available, which in practice means reducing waste and minimizing risk.
As business leaders turn their attention to supply chains, industrial and quality managers are being asked questions like:
- How much of our material is blocked due to quality issues and how much of it can be recovered?
- Which of our suppliers represent a higher risk to our operation?
- How many complaints did we receive from our key accounts due to late or missed deliveries?
The answer to these questions requires information from different parts of the organization, which all are (or should be) connected to a unified Quality Management System.
The four quality management processes listed below are being modernized in many of your peer companies today, with immediate and long lasting effects on efficiency by anticipating and highlighting the greatest operational issues and risks. Read on to see how you might do the same in your organization.
1 – Non-Conformance Management
Metrics like %OOS (Out Of Specification rate) or %OEE (Overall Equipment Effectiveness rate) translate the capability of a company to transform their resources into goods and services that comply with the requirements of their customers. Detecting, correcting and preventing non-conformances is a fundamental part of a quality management system designed to reduce waste.
During an exchange with the Head of Quality Management of the specialty materials division of a major chemical company, they highlighted the challenges related to tracking and reducing the volume of OOS material in their multiple warehouses around the world. Thanks to the creation of a shared process between Financial, Industrial and Quality, that division was able to accurately track and evaluate the stock labeled “out of specification” in their ERP.
Despite representing around 5% of the total working capital, because there had been no root-cause investigation of the original non-conformance, the division has no way at the moment to guarantee a reduction of this blocked stock in the future.
Complementing a well designed process with a suitable technical solution would allow the organization to close the loop and recover value from otherwise wasted stock.
2 – Complaint Management
When a non-conformance is not contained by the supplier, it will most likely be detected by the customer and result in the issuing of a complaint. Besides the financial burden in the form of replacement, restitution and compensation, a customer complaint also represents a reputational loss.
Reducing cost and lead time while increasing customer satisfaction are the ultimate indicators of the effectiveness of a company’s quality management system. The process for handling complaints can be a strong contributor to these indicators by allowing an organization to proactively identify trends and patterns that lead to preventing recurrence of motives and root-causes.
3 – Audit Management
There are several types of audits used for the timely identification, assessment and correction of potential problems in business operations and processes. System, process and product audits are used across industries to constantly improve performance and prevent supply chain disruption.
Managing a comprehensive audit program includes monitoring the findings, root-causes and actions associated with customer, internal, supplier and certification audits. The amount of information generated by audits, combined with the particularly sensitive and urgent nature of audits, make the usage of digital tools for audit management a must-have for any organization engaging with multiple stakeholders on a global scale.
4 – Risk Management
Since the latest revision of the ISO9001 standard, risk management is front and center in the strategy of most companies, regardless of their activity or market. Identification, evaluation and mitigation of risks are cyclical activities that require a multidisciplinary approach and the sponsorship of top management.
Some of the most relevant sources of risk that need to be considered when creating a Business Continuity Plan (BCP) include natural disasters, raw material shortages or labor disputes. Monitoring and mitigating the risk of supply chain disruption due to these and other events is made easier by using a cloud-based risk management solution.
How to Use this Supply Chain Disruption to Increase Organizational Agility
There are many lessons to be taken from the ongoing issues affecting the global supply chain. One of those lessons is built on the principle that making sources of internal inefficiency more visible and assessing risks throughout the supply chain are two crucial steps to increase the resilience of any company.
Investing in digital tools that ensure a standard, harmonized and integrated process-based approach to non-conformances, complaints, risks and supplier quality management is unarguably the best recipe to put those lessons into practice. Business partners and consultants can help navigate this disruption to emerge more resilient and agile.