As global markets evolve, supply chain managers are faced with many new challenges, as traditional approaches to managing supply chains prove increasingly ineffective. The integration of quality management principles offers potential for broadening the perspective of supply chain management from its traditional narrow focus on costs and competitive relationships to a focus on cooperative relationships between members of the supply chain and the strategic importance of supply chain management to the achievement of cumulative competitive capabilities.
While product quality is a primary focus among Best-in-Class manufacturers, supply chain quality is a close second. Increasing suppliers’ performance, reducing part costs, and increasing visibility into suppliers all play a significant role in manufacturer quality management.
Supply chain management directly impacts overall quality and the profitability of any company. It is increasingly important to take advantage of manufacturing and supply chain synergies to improve customer satisfaction, deepen employee engagement, and promote organizational performance.
Top-performing manufacturers have internalized the importance of supply chain synergies. Compared to All Others, the Best-in-Class are:
9x more likely to implement supply chain management as a technology that supports quality management.
6x more likely to track suppliers with a traceability system.
23% more likely to standardize quality business processes to improve supplier collaboration in new products, parts selection, warranty planning, and product obsolescence.
10% more likely to feel operational pressure to manage supply chain risk.
8% more likely to focus on the supply chain to increase performance, reduce part cost, and increase visibility into quality.
The Numbers: Manufacturer Buyer Intent in Supply Chain Management
Aberdeen in there survey captured 36 million buyer intent signals in its sub-sample of manufacturing categories over the past year. We identified the number of unique devices researching each week across 124,000 manufacturing firms globally (Figure 1).
Figure 1: Supply Chain Management Buyer Intent in Manufacturing
In aggregate, this Manufacturing index shows a sustained buyer intent signal in supply chain and steady interest in supply chain management (SCM): Manufacturing providers are looking to bring new and sophisticated analyses to the abundant data they maintain. A major push in manufacturing is the strong desire to convert better SCM into focused improvements in quality. The results show that SCM investments are a means to accomplish that goal.
Aberdeen’s intent data provides a macro-level view of how manufacturing and large groups of companies are consuming content, and where their interests lie. However, this data also provides a more granular, company-level view, down to the device ID. This yields unprecedented clarity into how specific organizations are consuming content, and where they might be making near-term investments.
A number of guidelines arise from this research. First, do not be swayed by fear of getting ‘stuck in the middle’. Managers should note that strength on several capabilities at the same time is a powerful competitive weapon. Organizations that relentlessly pursue a single capability will fall behind in the global marketplace.
Second, continuing quality management efforts leads to two benefits. In addition to leading to improvements in product quality, quality management practices are associated with supply chain performance improvements, through their impact on variance reduction. These include minimization of cycle time and improvement of on-time delivery rates. These are improvements that drive cumulative capabilities.
Third, work to establish a strong partnership with a few suppliers, based on trust and sharing of information. The approach known as comaker-ship will lead to benefits in both quality and supply chain management, including reduced cycle time, increase inventory turnover ratio and higher on-time delivery rates. Again, these drive cumulative capabilities.
Finally, managers should follow a sequential process that starts with the basics when implementing co-makership. Begin by working to reduce the number of suppliers. From there, move to leveraging their quality performance to where their process can be trusted to provide materials without inspection. Finally, a true partnership can be established, where buyers and suppliers are intimately involved in helping each other product quality products and improving their supply chain performance.
Today's business environment, assisted by the predominance of quality management practices, favours the development of cumulative capabilities, rather than tradeoffs. As a result, successful managers incorporate a horizontal perspective in their supply chains, capitalizing on the dependence between buyer and suppliers. A strong, committed supplier can be a real asset to an organization. When key suppliers get involved in product and process development at the buyer's organization, they are better able to serve the buyer. Its processes can be designed with in-depth knowledge of the characteristics of the materials that will be purchased from the supplier in mind. Suppliers may be able to provide useful inputs into the design of products, before production even begins. An additional benefit associated with the development of a small cadre of trusted suppliers is development of the ability to accept incoming materials without inspection. Thus, quality improvement can lead to cost reduction.
The good news is that many organizations are already well positioned to undertake efforts to change relationships with suppliers. An existing foundation in quality management can be leveraged into the development of close and cooperative relationships with suppliers. Conversely, effective supply chain management will reap benefits in terms of quality improvement. Quality management and supply chain management go hand in hand—it's as simple as that.
Developing a cumulative capability in quality management is an effective competitive weapon. It positions an organization to compete on two fronts simultaneously, as well as leading to improved performance on both quality and supply chain metrics.