A Culture of Quality Through Supplier Quality Management

Jan. 3, 2017
The relationship between quality management and other functions is one of the most mutually beneficial relationships in business. Supplier quality management can improve operational and financial metrics.

Honey is an amazing creation. For those of us with a sweet tooth, it’s wonderful to watch a swarm of honeybees at work. Of course, the bees are doing much more than making honey—they pollinate roughly 90 percent of flowering plants, making this one of the most important symbiotic relationships in nature. Pollination happens in other ways as well, but honeybees make it much better.

Just like the relationship between honeybees and flowers, the relationship between quality management and other functions is one of the most mutually beneficial relationships in business. And that’s a great message to rally behind when creating a culture of quality.

Symbiosis and the culture of quality

It’s easy for those quality leaders building a culture of quality to focus on the benefits to quality management, in part because quality performs much of the firefighting caused by the lack of a culture of quality. Cultures of quality are relatively rare—LNS statistics show that only 23 percent of the market has a culture of quality. At the other end of the spectrum, 34 percent of the market considers quality a department and not a cross-functional responsibility.

However, engaged quality management is just as important to other functions. For instance, quality does not own product management, but when engaged effectively during new product introduction (NPI), it drives improved NPI success and financial performance, our research shows. Quality does not own manufacturing, but when engaged effectively in production planning and execution, the result is improved overall equipment effectiveness (OEE) and on-time delivery (OTD). Likewise, quality does not own the supplier relationship, but when engaged effectively through leading supplier quality management (SQM) practices, it improves the performance of the supply chain. Given the importance of the supply chain in today’s products, this creates benefits not just in supplier quality but across product management, manufacturing and service as well. SQM is symbiotic, and improvements to SQM measurably benefit all parties.

For the five years that LNS has tracked quality people, process and technology practices and reported quality and business performance metrics, the research has consistently proven the value of this mutually beneficial symbiosis. The research examines the impact of adopting individual best practices as well as the impact of improving quality maturity, with one result being hard evidence of the value of cross-functional quality practices. For instance, companies that have adopted cross-functional processes that embed quality across design, manufacturing and suppliers see benefits for quality, engineering, manufacturing and service (see chart, above).

Why supplier quality management?

To gain the cross-functional and executive engagement needed to instill a culture of quality, leaders must create an initiative that will deliver substantial results for the company and other functions. SQM fits the bill. It is both high-impact and low-maturity; it’s a situation that not only is calling out for help, but will also result in substantial benefits when addressed.

Just how important is SQM? It’s a top concern across industries: Collaboration with suppliers is the highest or second highest ranked concern in the industries LNS surveys. It’s also considered to be the most critical quality process for corporate success by 50 percent of the market.

Perhaps surprisingly, though, 41 percent of companies consider SQM one of their least mature processes. An optimist would consider this a great place to make a meaningful impact. However, it should also be noted that this is a risky condition given the importance of SQM, complexity of the supply chain, varying roles of suppliers, and globalization. Also, only 21 percent of the market has automated SQM with software. SQM data includes information that is competitively sensitive both to a company and its suppliers, and exchanging and managing this data without the benefit of enterprise security exposes a company to significant cybersecurity risks.

Start here, go where?

Build an effective SQM initiative by understanding where you stand, benchmarking that against SQM leaders, and quantifying the benefits of improved SQM. LNS recommends that organizations leverage an operational excellence maturity model that captures the spectrum from SQM laggards to leaders. Quality leaders can use this maturity model to understand their as-is state and determine steps necessary to achieve a leadership position. Maturity models are effective communication tools as well because they provide a simple view of a complex environment.

For a maturity model to be useful in benchmarking activities, it must be correlated with the current maturity of the market. Correlations with the market help identify SQM capabilities for laggards, leaders and the majority. LNS has performed this research and has identified that much of the market is still defining core processes and performance while leaders are adopting risk-based perspectives to SQM, closed-loop SQM and advanced technologies.

Finally, the maturity model should provide a perspective on metric performance achieved by companies along the maturity spectrum. This is a vital aid in the discussion with other business leaders and top executives, who are being asked to change and need to understand the incentive for change.

SQM has benefits for all

SQM is a high-impact and low-maturity quality process, which improves operational and financial metrics. Quality leaders should consider SQM initiatives from multiple perspectives. While SQM maturity is beneficial to quality management, quality leaders must emphasize its mutual benefit to business partners to foster a culture of quality.

>>Dan Jacob is a research analyst with LNS Research. He primarily focuses on enterprise quality management systems with collaborative coverage across automotive, aerospace and defense, high-tech and electronics, and medical devices.

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