Vision 2020 for Quality in the Extended Value Chain

– 20/20 visual acuity into the supply chain by year 2020

Many manufacturing companies depend heavily on their supply chains to deliver a quality product on-time to the end customer. It is typical to have more than 50% of a product’s components provided by suppliers. Hence, visibility and quality management into the supply chain has become essential to the delivery of a quality product. As a data point, Gartner surveyed supply chain leaders in 2014 and found that improving quality of supplied components was a No. 1 priority [2].

20/20 is a measure of “perfect” visual acuity or clarity of vision. 20/20=1 represents 100% vision. If we were creating a scale of visual acuity into our supply chains what would our current vision be? 20/40=50%, 20/100=20%? Gartner’s survey results show that very few manufacturers would claim visual acuity near 20/20. In fact only 22% reported to have quality management functions integrated into their supply chain management and many of those only have visibility into their first tier of suppliers. It’s no wonder that over half of the high-profile quality failures of the past decade, ranging from flawed product launches, customer and patient safety incidents, and product recalls, are rooted in the extended value chain [2]—failures and recalls with a lingering negative effect on the product brand.

Many companies are focusing their quality efforts internally and are treating the supply chain separately. It is typical to see quality managed for internal operations with a combination of multiple Manufacturing Execution Systems (MES) or Manufacturing Operations Management (MOM) software and silos of quality managed for suppliers via multiple separate quality and ERP software.  However, quality management would be better done in unison with an integrated MOM, EQMS and supply chain management software solution, so accountability and points of verification are optimized throughout the value chain. For future competitiveness, it will not be enough to focus on schedule and cost reduction, it is necessary to increase visual acuity on the quality side. Gartner consultants are recommending that manufacturers set their goals to improve supply chain visual acuity with regards to quality by 2017 [2]. Manufacturing companies can follow Gartner’s advice and set their plans for 2017 or at least shoot for the year 2020. That should be easy to remember: 20/20 Quality by 2020 : )

The last big era of progress in quality management was in the 1980’s with the rise of Total Quality Management, the publishing of the ISO9001:1987 standard for quality management systems, the refinement of the Plan-Do-Check-Act (PDCA) cycle, and the development of the Six Sigma methodology. The current renewed interest in quality management into the supply chain and the publishing of the latest ISO9001:2015 revision could be milestones marking a new renaissance for quality management—an opportunity for big progress. ISO9001:2015 renews emphasis on risk and supply chain management.

What does 20/20 vision include for quality management? The following is a list of visibility requirements for quality in the value chain as it relates to the continuous PDCA cycle which is at the heart of the ISO9001 standard.

PLAN

• Supplier Network Map. Mapping of critical suppliers in the multitier supplier network. Suppliers handling unique IP (intellectual property), trade secret, equipment or tooling critical to production.
• Verification Requirements. Definition of inspection and verification requirements that need to flow down to suppliers. Especially those critical-to-quality characteristics that are tied to design engineering specifications in revision controlled 3D models and PMI (product manufacturing information). Confirmation and verification of qualification of suppliers in lower tiers handling critical-to-quality components.
• Performance Goals. Clear expectation of quality and schedule measures and goals for each program and supplier tier.

DO

• Progress Reports. Visibility of manufacturing progress to scheduled dates on long cycle time made-to-order components. Perhaps even in-process verification of critical-to-quality characteristics as the components are manufactured at the supplier site.
• Performance Measures. Reporting of standard simple metrics that the entire supply chain can use to communicate performance to schedule, quality and collaboration goals.
• Change Control. Management of engineering change notice (ECN) processes to ensure that the respective supplier has received the specification changes and is incorporating the change into the desired effectivity including units in process.

CHECK

• Verification Results. The earlier there is visibility of any issue with components the better. It is desirable to move more inspection and verification to the supplier site whenever possible. Inspection results should be available electronically along with product delivery date updates. Some critical characteristics might even be verified in-process. In-process and delivered product inspection results can be provided by the supplier via supplier portals or transmitted electronically via B2B (business-to-business) interfaces up the supply chain. Inspection results reported by suppliers and gathered through source and receiving inspection allows calculation of the real capabilities of each supplier to hold the required tolerance levels in specifications.
• Nonconformance Documentation. Whether defects are found before the supplier ships a component, at receiving inspection, or at production, it is necessary to have visibility of defects, non-conformances, and the root-causes identified for those issues. Containment and corrective actions can be initiated with specific suppliers to avoid further shipment of units with critical problems until they are resolved.
• Supplier Audits. Suppliers must be reassessed periodically via supplier audits for compliance to regulatory and contractual requirements. Companies need to maintain visibility of supplier audit history and ongoing audit scheduling arrangements.

ACT  

• Corrective Actions. Whether tied to poor performance, specific product defects or audit findings, supplier management must maintain visibility of all corrective actions open with suppliers, their respective root-cause investigation, and resolution implementation plans.

Regulated industries including food, drugs, medical devices, and aerospace have additional accountability interest into their supply chains. These industries have been (a) adding these type of requirements to the industry specific ISO9001 extensions including ISO13485 and AS9100, and (b) participating in the development of standards for communicating quality requirements and results in the supply chain within standards groups like OAGi (Open Applications Group).

Manufacturers like Boeing and Land-O-Lakes, organizations like MESA and NIST, and software vendors like Oracle, e2open and iBASEt, are collaborating within OAGi to (a) develop B2B integration use cases to help manufacturers understand what message standards are available and how to use them to orchestrate a business process with B2B interactions, (b) add message standards to on-board suppliers including sync parties, and (c) add message standards for quality management including inspection requirements, inspection orders, certificate of analysis, and inspection results.

The above efforts by ISO and OAGi, and referenced publications from Gartner are some examples of the renewed interest in quality and the focus on moving quality management processes into the supply chain. There are more examples out there and it is important that organizations are engaged in these types of efforts to improve quality acuity into the supply chain by 2020. Companies should review the assignment of quality functions and governance in their organizational structures, and refresh and integrate the quality management systems across the enterprise to facilitate enhanced quality management processes into the multi-tier supply chain.

The next era of connected quality management into the extended enterprise is coming. Will your organization be ready?

The efforts to extend and adopt standards for the exchange of quality information in the supply chain are far from complete. It is a good time for industry leaders to engage in these activities to ensure their needs are represented and that standards continue to evolve. Contact OAGI.org for more information.

References

[1] “Improve Multitier Supplier Quality by Leveraging Visibility”, Ray Barger, Simon Jacobson, and Christian Titze, Garter, 2015

[2] “Supply Chain is Missing the Mark on Quality”, Jacobson, Suleski, Barger, Chadwick, Stevens and Dorman, Gartner, 2015

[3] “The Evolution of Six Sigma”, Jim Folaron, J.P. Morgan Chase & Co., www.asq.org, 2003

[4] OAGI - Quality Content, B2B Network Collaboration, and Smart Manufacturing Working Groups, http://www.oagi.org/dnn2/OurCommunity/WorkingGroups.aspx

 

Comments

[Martin Buuri Kaburia]

This is very informative

[Leslie Stuart]

Some of the great content on maintaining quality management. I will follow the guidelines for my firm.