Imagine someone coming back from a long business trip and turning in an expense report consisting of one piece of paper with a dollar amount on it. Imagine also that the accuracy of the number was important enough to decide whether you and other executives go to prison.
This may seem extreme, but this analogy can easily apply to managing supply quality in today’s world, in which both executives and quality personnel are receiving prison sentences and hefty fines for failure to manage their supply chains. Relying on Certificates of Compliance (the expense report) without also demanding Certificates of Analysis (receipts) may be creating unnecessary risks at an unprecedented level.
The COC (Certificate of Compliance)
A COC (Certificate of Compliance or Conformance) is the document your supplier sends you in which he assures you that the shipment and its lot contents conform to standards you’ve agreed to or are mandated in some other way*. It’s simply a signed statement, like the expense report, of how much was spent in aggregate and on what. It is an assurance that what is being promised is true, although no evidence for that is presented.
Because it is a formal document and is named “Certificate,” it is easy to make the unfounded leap into considering it to be the equivalent of evidence (or, with an expense report, the receipts). In reality, the gap between the declaration and an assertion backed by evidence is filled in with hopes, and the expectation that because things have gone pretty well so far, this shipment will be alright yet again.
Is this approach worth the risk to you and to your company?
Multiply, Don’t Average
Consider the modern supply chain. Today, the supply chain can be so multi-tiered that the origins can easily be lost “in the mists of time” as well as “in the mists of space.”
When the primary instrument of managing supply quality is a COC, each link relies on the signature of the previous link. Meanwhile, your end customer is relying on your word. After all, your customers have a right to expect that you stand behind the promises made by each link and that you guarantee the safety and quality of what they buy.
One of the most common mistakes made in this calculation is to add up the reliability of each link and average the sum. For example:
In fact, probability is calculated by multiplying the percentages.
If only one link is added to this chain, the result is still 87.333% reliability, not 95.73%.
Now imagine the modern supply chain, multi-tiered and spread around the globe. Will a Certificate of Compliance or Conformance (COC) from each of those links, with no documentation showing laboratory analysis of the material in question, give you the level of risk you can live with?
Like an expense report with receipts attached, COCs should be backed up by COAs (Certificates of Analysis). These are the test results associated with each lot. In electronic form, they can be set up to sound the alarm if the statistical tools detect anomalies, as well as attempts to falsify results.
The New Risks
Last year, the head of the Peanut Corporation of America (now defunct) was sentenced to 28 years in prison, his brother and food broker Michael Parnell, to 20-years, and the plant’s quality assurance manager, Mary Wilkerson, was given five years.
Kevin Pollack, whose company Stericycle ExpertSOLUTIONS helps handle brand recalls, said various foods are recalled every year because of bacterial contaminations, which can lead to illness. The PCA case, he said, is historic in that a corporate executive was held accountable with a prison term for knowingly distributing tainted food. **
The destruction of lives is the most important element of this story, but it’s also hard to calculate the damage done to the reputations and brands of all who were involved.
Greater Complexity Requires Cost-Effective Efficiency and Modern Tools
With the dispersal of production into multi-tiered supply networks, management faces the challenge of overseeing this complex flow in a cost-effective but much more efficient way.
Without new tools, transparency is lost, and the windows of time available to intervene can shut down with alarming speed. Traditional tools are simply overwhelmed.
When considering what type of reporting approach to use, consider the methods as well as the tool. The most efficient and responsive method is to manage the documents in electronic form.
This requires implementing a system that is easy for suppliers, no matter how far away, to use, by requiring only access to a laptop and connection. Instead of flowing from link to link, the data shows up in your organization as crunchable data.
With the simplified, no-frills interface provided by GSQA®, the information is instantly available.
You can identify trends, and Statistical Process Controls (SPC) let you identify attempts at falsification early enough to intervene before your name ends up on a front page, and not in a good way.
Companies understand that they are, at any given moment, only as good as the promises they make about what they are delivering. Using the most efficient method demonstrates a commitment to meeting or exceeding standards.
COC’s Must Be Backed Up By COAs In Electronic Form
The question you must ask yourself is “how critical is it for us to quickly stop sub-par material from entering the supply chain?” If your answer is that it is very critical, then the only alternative is to use electronic Certificates of Analysis (COA), with appropriate fields that contain any necessary Certificates of Conformance or Compliance (COC) included within them.
EMNS, Inc., a leader in supply chain QA performance management, offers state-of-the-art tools that restore the ability of your company to manage the flow of material and finished or semi-finished production throughout your supply chain. When used to its fullest capability, the impact of the GSQA® approach reaches beyond operations management, directly into the strategic domain, and to the fundamental relationship, your company has built with your customers.