To consider how best to answer this question, it might be useful to begin by establishing some definitions to better distinguish Supply Chain Management (SCM), and Supply Chain Quality Assurance (SCQA).
Supply Chain Management (SCM)
Let’s begin by defining SCM (Supply Chain Management) as the management of the flow of goods and services. This includes the movement and storage of raw materials, work-in-process inventory, and finished goods from point-of-origin to point-of-consumption.
The emphasis in this process is on ensuring a predictable and reliable flow of material through the various links, from suppliers (and sometimes sub-suppliers) to enterprise facilities and on to markets. One of the main concerns of managers overseeing this process centers on preventing bottlenecks. Excellence in managing the supply chain translates into excellence in balancing the inventory, i.e., maximum responsiveness to the fluctuations of market demands. Achieving this requires using a sophisticated and complex algorithm, one capable of providing guidance to the entire complex supply structure. This process encompasses everything from the “exploded” bills of material of each input to the finished product. The processing cycle, with the demand for dynamic responsiveness, must of course be enabled by a sophisticated, robust and capable computer system.
One of the key assumptions behind a focus on SCM is that, with a sophisticated enough system, and a sufficiently detailed bill of material, the information flow to and from members of the supply chain (resellers, retail, distribution, factories, suppliers, distributors, 2nd-tier suppliers, etc.) can calibrate inventory amounts, shipping and storage requirements, etc. and thereby keep costs down and customer service high. The expectation is that, as a whole, the system’s use will result in delivery of all materials in a just-in-time mode.
Assumptions from Another Era
Yet, is this enough for customer satisfaction and safety? One of the assumptions of a narrow focus on SCM is an expectation that quality is a non-issue. Is it possible that this assumption harkens back to an era when products were manufactured within the company’s plant, and subjected to detailed product approvals under its close control?
In-plant quality systems are essential to manage in-line quality control, to oversee routine test analysis, monitor asset maintenance, employee training, in-scope compliance activities, and many more functions, depending on the maturity of the product. The functional coverage of quality systems in enterprises has, of necessity, constantly grown to augment ERP.
Today’s challenge is bringing visibility to the myriads of supply chain profiles, which can be multi-tiered, and can include contract manufacturers on a global scale. The need for supply chain/material visibility has far outstripped existing capacity inherent in the SQM inventory control model, as well as the quality control capacity of even ‘in-plant’ manufacturing. In the face of a quality breakdown somewhere in the supply chain, the best that SCM can do is to deal with aftermath: it can recommend higher inventory levels at problem facilities. The best an in-plant quality system can do is initiate quarantines, issue nonconformance messages, and perhaps mobilize special testing efforts to deal with this situation: all of these happen after the supply chain has been contaminated.
However, when the SCM and Quality managers are engaged in this kind of response to out-of-spec, contaminated or counterfeit/adulterated materials, they are really functioning outside their core focus, which is managing the balanced flow of inventory and product quality.
Supply Chain Quality Assurance (SCQA)
Unfortunately, most companies committed to tracking the quality of their supply chain materials can only do so by testing what arrives at their loading dock, at some significant cost to their bottom line.
They are not only missing a number of key supply chain QA components in their array of technological tools, they are cultivating a different mind-set, perhaps even a different “culture” in the same sense that managers who supervise the digging of the path for a new oil pipeline (location, permits, obstructions) have a different culture from those who then lay and connect the pipe (delivery, fit, integrity). The two cultures have different concerns, different vocabularies, and different ways of being.
One of the key components necessary for managing supply chain quality is the capacity to “see” (have full visibility of) all significant supply chain members, their material from-to transactions, by lot, with quality assurance testing results, offering complete transparency and traceability, plus the ability to prevent problems before, rather than after, they flow through the entire chain and land at the B2B customer’s loading dock or at a B2C customer’s home.
Another challenge relates to a sensitivity to, and understanding of, the unavoidable variability of materials in every product, whether it be raw, finished, or in-between. This requires competence in Statistical Process Control (SPC) and the on-line tools to produce data that is actionable before problems arise.
Variability is not a new concept. It’s been addressed in a number of these GSQA® Journal articles and is firmly ensconced in management literature since the days of W. Edwards Deming and his heirs, the practitioners of the Six Sigma Quality System.
However, awareness of material variability’s consequences appears to still be a blind spot, or perhaps just out of sight, when a company’s supply chain management practices are rooted in SCM and in-plant quality management rather than SCQA. In many supply chains, no checks are performed to ensure that material characteristics are appropriate before they leave the suppliers. Neither are they checked upon receipt.
The list of consequences for neglecting this important function is long. Mistakes in quality control have caused deaths from out-of-spec, contaminated, adulterated and counterfeit materials, be they out-of-specification titanium or steel, or pathogen-laden foods. In fact, these problems have been traced straight back to management neglect and malfeasance, resulting in jail terms, such as what happened with the now-defunct Peanut Corporation of America, whose CEO and quality manager went to prison.
Other, less lethal to life and limb, but just as threatening to the health of a company, are the effects on customer loyalty, as well as brand reputation. On another front, neglect can lead to a lack of compliance with risk mitigation demanded by government regulations, and a loss of ISO and FSMA certifications.
In conclusion, a careful study and adoption of industry best practices–which invariably include implementation of Supply Chain Quality Assurance, not just Supply Chain Management–has the capacity to save significant money, reduce risk and make companies more competitive, earning a right to be placed in the middle of the Profit Center column.
Are your systems staged to accept these new responsibilities for QA documentation and analysis? How will you satisfy supply chain visibility concerns from regulators, from customers, from stakeholders? And if you find yourself in a market crisis mode, how will you allay fears if there is little supply chain transparency, and little capacity to implement recalls or inform the public in a timely way?
If not well equipped, consider assistance from EMNS. We’ve made it our goal to help companies achieve Supply Chain Quality Assurance.