SUPPLY CHAIN RISK MANAGEMENT BLOG

Integrate QM and Minimize Risks - Quality Assurance in Supplier Relationship Management

Nov 28, 2014    Rösch Georg

 


riskmethods welcomes a guest post from Georg Rösch, Head of Product Management at POOL4TOOL.

Supplier Relationship Management (SRM) is a classic purchasing issue, even though it is connected with other business processes. If, for example, one were to examine the classical procurement process, it in fact begins with the consumer in the form of a request, and ends with the bill in the finance department. The decision to universally integrate different stakeholders into the SRM process and to place value on a comprehensive information database is therefore logical and correct. All-in-one software tools can make this much easier to achieve because they cover all purchasing processes, include Supply Chain Risk Management, and can be implemented across departmental and geographical boundaries. 

Integrate QM and Minimize Risk
The master data for the suppliers and materials of a company create the foundation for all following processes in SRM. A “clean” database is therefore not only necessary for efficient processes in Purchasing, but also serves as a significant source of information that spans all locations and systems. In addition to this, there must be a guarantee that all risk-related information about suppliers, locations, and supply chains are included so that detailed risk profiles can be put together. Appropriate strategic suppliers can only be selected successfully by looking at the big picture. In this way, award decisions can be made on the basis of risk profiles that include financial and quality key figures, compliance and sustainability factors, as well as possible risks related to the geopolitical climate.

An important step to minimize risk from the beginning is to integrate the QM department into the entire SRM process, and to focus on Supply Chain Risk Management early on.

The perspective offered by QM can provide valuable insight during each stage of a control loop in SRM—from supplier qualification to action management. It is critical not to lose sight of any risk-related information throughout the entire process.

1)     Supplier Qualification
The successful implementation of a purchasing strategy depends upon the quality of the supply base data. The better and more complete they are, the easier it becomes to assign suppliers according to their strategic significance. Supplier Qualification builds upon the data gathered during the supplier registration process. By using a software tool, all participating parties can be drawn in right away, and the registration and release process for each category can be directed more easily. Even at this stage, information about possible risks related to the suppliers, locations, and supply chains should be taken into account, ideally without leaving the system.

2)     Audit Management
A Software tool supports the planning, execution, and analysis of audits. All planned and past audits, such as initial assessments of serial suppliers, (first) visit reports, QM system audits, etc. can be entered into the online portal and systematically evaluated. The central management of all audit data is particularly advantageous, as are the complete documentation and archiving.

3)     Complaints
Complaints can be processed in a structured and standardized way by using a software tool. This results in a higher level of transparency and process security for all involved parties. With the help of proven quality management methods, such as 8D reports or PDCA, the causes of each complaint, as well as necessary measures that must be taken, can be systematically processed without any risk of repetition errors.

The Quality Manager can implement measures for specific suppliers together with Purchasing. Complaint data, meeting logs, sketches, action plans and much more, can be entered and saved for each supplier in order to make quality-related information readily available to the purchasing department and any other involved employees.

4)     Supplier Performance Rating
Supplier performance is an important factor in SRM and must be monitored constantly. A comprehensive supplier evaluation takes both hard facts (such as a supplier’s reliability), and soft facts (such as their level of innovation) into account. Supply Chain Risk Management is particularly important here because a comprehensive supplier evaluation must also include risk information in order to create a realistic supplier profile.  If the same software tool is being used for both Quality Management and Supplier Relationship Management, the information from each module can be incorporated into all processes that are being implemented. This produces valuable synergy. 

5)     Action Management
Action Management, which has been integrated into the supplier evaluation process, serves to facilitate supplier development. in order to continuously improve each supplier’s potential. By using predefined methods, a supplier’s potential can be improved and, if necessary, they can be re-qualified.

The implementation of an “All-in-One Supply Collaboration” solution makes it easier to include QM managers and to integrate Supply Chain Risks Management into the entire SRM process. The expansion of the 360° supplier cockpit to include risk-related information about the suppliers, locations, and supply chains allows the buyers as well as the QM Manager to recognize potential dangers early on, to react more effectively in the case of risk events, and to improve the quality of SRM as a whole.


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