Supplier Quality Management

Learn about supplier quality management and how to ensure supplier compliance.

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What is Supplier Quality Management?

Supplier quality management (SQM) is a process used to ensure that suppliers consistently deliver goods and services that meet agreed standards. SQM helps companies improve the quality of their supply chain, reduce costs, and gain a competitive advantage.

The supplier quality management system aims to help companies achieve a high level of product quality at the lowest possible cost. The process involves identifying problems early, monitoring progress, and taking corrective action when necessary.

To be successful, SQM requires close collaboration between buyers and suppliers. Buyers must work closely with suppliers to identify and resolve issues quickly. It means that buyers need to understand the importance of supplier quality and take responsibility for ensuring that suppliers deliver high-quality products and services.

Buyers should also monitor supplier performance regularly, including measuring supplier quality against agreed standards. It’s also essential for them to look at supplier performance reports and use them to look for areas where they can make continuous improvements.

Finally, buyers should communicate clearly with suppliers about expectations and requirements. It ensures that suppliers deliver consistent quality, regardless of who is responsible for each stage of the production process.

What Is the Supplier Management Process?

The Supplier Management Process (SMP) is the series of steps used to ensure quality control over the entire supply chain. The SMP includes everything from managing suppliers’ performance to ensuring compliance with regulations and standards. Additionally, having a Materials Requirement Planning (MRP) system in place can also help with this. 

The SMP is a critical component of any company’s overall quality management system. Without a well-designed SMP, companies risk losing money and reputation due to poor product quality. 

The SMP consists of four main components:

  1. Supplier selection – This involves selecting the right suppliers based on criteria such as price, delivery speed, quality, reliability, and availability.
  2. Contract negotiation – Companies must negotiate contracts with their suppliers to ensure that the agreement meets their needs.
  3. Monitoring and reporting – Companies need to monitor their suppliers’ activities to meet their contractual obligations. They should also report these activities to their stakeholders.
  4. Compliance – Companies must comply with applicable laws and regulations, including those governing food safety, health, environment, and labor.

Companies often use different methods to implement the SMP. Some companies may use a manual approach, where managers review each step in the SMP. Others may automate the process through software.

Regardless of the method used, companies must be vigilant in monitoring their suppliers. It means reviewing their performance at least once per quarter.

If a supplier doesn’t do what they agreed to do, companies need to act quickly. In some cases, this might mean terminating the relationship. However, if a supplier is not performing according to expectations, companies can still work with them by adjusting their requirements.

Companies should develop a formal policy outlining what actions they’ll take when a supplier fails to meet their contractual obligations to avoid problems down the road.

How to Choose Suppliers

Choosing suppliers is a critical step in any business. Your product or service’s quality is determined by its components. So how do you choose suppliers?

When shopping for a supplier, there are three main things to keep in mind:

  1. Price – Make sure you’re getting a fair deal. Don’t be afraid to ask questions and work out a deal.
  2. Quality – Ask yourself whether the product meets your needs. Does it fit well? Is it durable? Can you return it if it doesn’t meet expectations?
  3. On-time delivery – Know exactly when you need your product delivered. Will it arrive on time? Will it be damaged during transit? What happens if it does not arrive at all?

Once you’ve chosen a supplier, you should establish a relationship with them. It means communicating regularly, making sure they’re meeting your expectations, and keeping tabs on their performance.

How Is Supplier Quality Management Measured?

Supplier quality is measured using Quality Management Systems (QMS). They’re made to help businesses enhance their processes and procedures to produce consistent products.

There are two main types of QMS: internal and external. 

Internal QMS measures the quality of goods produced within a company. External QMS measures the quality and consistency of goods produced by suppliers.

Both types of QMS use metrics to measure supplier quality. Metrics include defect rates, lead times, cycle times, and inspection results. These metrics are used to determine whether a supplier is meeting expectations.

When evaluating supplier performance metrics, you should consider the following factors:

  • The number of defects per million units – This metric shows how many defects there were during the last 12 months.
  • The percentage of defective parts – This metric shows the percentage of defective parts found during inspections.
  • Lead times – This metric shows the average amount of time between order placement and shipment.
  • Cycle times – This metric measures the amount of time it takes to produce each product.
  • Inspection results – This metric shows the number of defects detected during inspections.

How Do You Manage Supplier Quality Issues?

If you’ve ever had a poor supplier quality issue, you know how frustrating it can be. It’s hard to find out who’s at fault, and it’s hard to fix the problem. If you’re not managing supplier quality issues, you’re leaving money on the table. Your customers will pay more than necessary, and you’ll lose out on sales.

Managing supplier quality issues means resolving the problem quickly and efficiently. It includes taking steps to prevent future issues from occurring.

To help prevent supplier quality issues, you should establish a supplier quality policy. The policy should outline the procedures you use to identify and resolve quality issues.

Your quality policy should include the following elements:

  • What types of quality issues are covered?
  • Who is responsible for resolving them?
  • How to handle supplier complaints?
  • How to escalate quality issues?
  • How often to review supplier quality?

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Supplier Quality Certifications

Quality certifications are necessary because they help ensure that suppliers meet specific standards. They’re also helpful when negotiating contracts with suppliers since they show you’ve done your homework and are willing to pay extra for quality.

Below are the most popular quality certification programs:

  • ISO 9001 is an internationally-recognized standard for quality management systems. Many companies use it to ensure that their suppliers meet specific standards.
  • SGS is one of many global companies that provide inspection services for products and materials. Their inspectors certify products and materials against international safety standards.
  • TÜV is another global company that inspects products and materials to ensure compliance with safety standards.
  • National Sanitation Foundation (NSF) is a third-party organization that tests products to ensure they comply with food safety regulations.
  • Underwriters’ Laboratories (UL) is a third-party testing organization that ensures electrical equipment meets safety requirements.

Supplier Quality Management Best Practices

To ensure that your supplier delivers high-quality goods and services, you must implement effective supplier quality management practices. It will ensure that your supplier meets your expectations and provides value to your organization.

Here is a list of some of the best practices to help you manage your supplier relationships and ensure that you get the highest quality products and services possible.

  • Establish supplier performance requirements
  • Define and document supplier quality requirements
  • Perform initial and ongoing supplier qualification
  • Implement and manage corrective actions processes
  • Implement and manage preventive actions processes
  • Conduct regular supplier performance reviews
  • Implement process controls at suppliers
  • Manage non-conforming material from suppliers
Rob Paredes
Article by
Rob Paredes
Rob Paredes is a content contributor for SafetyCulture. He is a content writer who also does copy for websites, sales pages, and landing pages. Rob worked as a financial advisor, a freelance copywriter, and a Network Engineer for more than a decade before joining SafetyCulture. He got interested in writing because of the influence of his friends; aside from writing, he has an interest in personal finance, dogs, and collecting Allen Iverson cards.