6 Steps to How Should Companies Manage Supplier Quality Development?

Introduction

A supplier is often referred to as an organization that provides goods to a specific company. Of course, this organization may be a manufacturer, a trader, or just a small workshop. It is particularly important to investigate the basic information of the supplier and its production capacity in advance.

For buyers, a supplier who can continue to develop in long-term cooperation is undoubtedly the best choice. Choosing a reliable supplier with excellent product quality and affordable prices is essential too. So, how and why should we select and manage the suppliers?

Why Do You Need Supplier Quality Development?

Third Party Inspection for Supplier Quality Development
Pre-shipment Inspection

In the supply chain structure system, the general supplier acts as the supplier or provider of goods. They are responsible to produce quality goods for consumers and buyers.

The final consumer satisfaction in international trade transactions depends on several factors. For instance, the product’s quality, convenience, and after-sales service. However, customers might not always be able to check the product quality in international trade. It might be due to force majeure or other factors.

In these cases, a third-party inspection company like AQI Service can help handle the issues. We embody our role, acting as a supervisor to inspect and ensure the quality of the goods for you.

Buyers need a suitable management system to rate the suppliers based on several factors. Through the screening process, you’ll be able to get excellent and reliable suppliers. It allows you to purchase more quality items, whether materials, semi-finished or finished products.

This supplier scoring criteria form also provides more flexibility to your supply chain selection. As a result, your can improve your end consumers’ satisfaction.

In this post, we’ll share what to cover in creating such a form and how you should score it. Let’s get started!

How Should Companies Manage Supplier Quality Development?

Supplier development is critical in determining how a potential supplier cooperates with you. Let’s look at how you can identify a supplier’s capabilities.

1.   Ranking Supplier Performances

Companies use KPIs to make sure suppliers follow the specifications in an agreement. They help you understand suppliers’ performance and measure their output. Besides, the KPIs also determine the aspects that need further improvement.

Here are some of the things that you should be measuring for supplier development:

Defect Rates

You should record the number of damaged products delivered by a supplier. The defect rate is often measured as defects per million. Thus, it provides a clear sign of their reliability and trustworthiness.

Contract Compliance Rate

Through a contract compliance KPI, the supplier must follow the pricing agreements. The supplier must also stick to the delivery times. It helps to confirm that your supplier is delivering what they promised.

Transparency and Risk

This KPI requires suppliers to prove that they are compliant and stable. It is also critical to demand that suppliers install safety measures within their facilities. It is to protect your company’s brand reputation.

PO Accuracy

This KPI requires suppliers to prove that they are compliant and stable. It is also critical to demand that suppliers install safety measures within their facilities. It is to protect your company’s brand reputation.

2.   Listing Out Approved Suppliers

Consolidating the number of suppliers you have to manage is always a great idea now and then. Every importer should have an approved list of suppliers. It would be more efficient to categorize your suppliers based on different categories.

With this information, importers can filter down suppliers. Below are the criteria for listing approved suppliers:

Type of Supplier

You should always categorize your list of suppliers into different categories. It will make it easier for you to identify which best suits your needs. Here are four main types of suppliers:

  • Services – It includes suppliers of electricity, water, telephone services, etc.
  • Manufacturers – It is the earliest point of the supply chain and the least expensive option.
  • Distributors – They buy large quantities from manufacturers. They then supply smaller orders to companies that the manufacturers may refuse.
  • Importers – They act as domestic distributors, but the items they buy are from overseas.

Expenditure

You can categorize a supplier’s spending, whether high, average, or low. Suppliers should make the most out of the resources given. Proper supplier development includes producing a large number of goods at a low cost.

3.   Choice of Suppliers

The selection of suppliers is an essential aspect of a business. There would usually be a lineup of the same type of suppliers to select from. Thus, evaluating each supplier is crucial for supplier quality development. The ones with the best performance will manage the majority of the resources.

If suppliers are efficient, there will be less need for monitoring. Companies would often refer to the following supplier selection criteria:

Ability to Meet Production Capacity Requirements

You should identify the greatest output that a supplier can manufacture. Suppliers that can exceed the requirements will manage to fulfill company demands. Your company can prioritize them over other suppliers.

Supplier Quality Certifications

Common and advanced certificates emphasize supplier quality in their bodies of knowledge. Yet, it is best to verify such certificates through on-site audits to ensure they are legit. Examples of these certifications include:

  • ISO 9001
  • ISO 14001
  • Supplier Quality Professional (CSQP)
  • Quality Improvement Associate (CQIA)
  • Manager of Quality/Organizational Excellence (CMQ/OE)

Previous Performances

Performance history has a significant impact on supplier development. Previous track records and scorecards can help determine a supplier’s capability. Companies should think before working with suppliers who fail to meet their KPIs.

Terms for Payments

As an importer, it is best to assess your supplier’s payment terms beforehand. Both parties must have a mutual agreement before working together. It can avoid disputes between both sides.

4.   Managing Suppliers

You should track supplier performances to help you understand each supplier’s needs. You may also decide whether the suppliers need any corrective actions. Writing reports updating on supplier development can help importers identify problems. In fact, transparency between both parties can lead to better management.

When managing supplier development, there are a few things that you must take notice of:

Delivery Times

Delivery times could change due to disruptions such as a pandemic. Keeping track of on-time deliveries can help avoid future disruptions. Things that companies should consider when reviewing delivery times include:

  • The number of units ordered
  • Request date
  • Promise date
  • Date of delivery
  • Date of shipping

Shipping Methods

Changes in seasons could result in different shipping options being chosen. A company must review the necessity to switch to a different shipping method. That way, the suppliers can deliver the products on time.

5.   Supplier Auditing

Supplier audits function to collect a lot of data from suppliers. Because of that, it is a crucial way of determining the supplier’s quality. With the current trend, there are two primary types of audits:

Questionnaire-Type Supplier Audits

Questionnaires help gather basic information about a supplier. Yet, its drawback is that the data could be unreliable for supplier development. The main questions it would answer include:

  • “Do you have an organizational chart?”
  • “Are personnel performing and verifying special processes certified?”
  • “Is the Quality Manual reviewed and updated?”
  • “Has any recognized organization audited your system within the past 2 years?”

On-Site Supplier Audits

The best way to get more reliable information is to conduct an on-site supplier audit. It provides much more realistic data about the supplier. When visiting the facility, the questions it would answer include:

  • “Are the storage conditions ideal for our products?”
  • “Are all the staff members working together?”
  • “Does the manufacturing process follow our company’s specifications and requests?
  • “Do all the employees follow the safety guidelines?”

6.   Monitoring the Development of Suppliers

Companies should develop a schedule before visiting their supplier’s facility. It is crucial to set aside time to visit suppliers to review their processes. You should state your company’s requirements and expectations. Instead of dealing with problems in the future, it is best to work on an agreement first.

Below are some aspects that you can discuss during the visit:

Packaging

The material of the packaging must be consistent. The boxes or containers should be compatible with the product manufactured. It can help reduce costs and prevent wasting raw materials.

Design

The process of designing the exterior look of the product can attract consumers. You should request a prototype of the product for checking. It will be a sample for the mass production of the product.

Conclusion

Organizations must understand the importance of sourcing the right suppliers. Investing time to enhance supplier quality development is the key to generating revenue. It helps improves communication, information sharing, and relationships. That way, it can help supply chain management processes become more efficient.

I hope you found this article helpful in learning about supplier development. Feel free to contact us if you have any inquiries about supplier development.

Keyword: supplier development

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Author: AQI Service as a professional quality control service company in China specialized in providing a complete range of quality inspection and testing certification services in China & Asia for global importers, buyers, retailers, and sellers.