Tag: audit

Best Practices For Minimizing Global Supplier Risk

We were just reading through an article posted by Supply Chain Management Review that discusses Four Best Practices for Minimizing Global Supplier Risk.  As a third-party quality engineering and consulting firm, we get questions about this often and have written a handful of articles related to the topic.

We like the SCMR’s four best practices, but did want to add some additional comments.

1) Make routine site visits.

It can be quite costly to manage routine site visits, whether your supplier is domestic or abroad.  All of the benefits discussed in the article can be achieved by partnering with a third-party to represent your interests on-site.  From facility audits to product inspections, a third-party has more local knowledge and specific experience in supplier development.

“Site visits allow procurement officers to ensure that workplace practices and product quality are consistent with their expectations, as well as to increase the likelihood of early discovery of major problems—from supply chain hiccups to unsafe working conditions.”

2) Invest in local advisors.

Local advisors can be the third-party QC organization or agent if one is being used, but a solid relationship with suppliers isn’t an impossible achievement either.  Open communication goes a long way here.  Third-party quality providers (3PQs) are unbiased and can offer extensive local expertise. Many third-parties are actually perceived as extensions of an organization’s own in-house quality representatives.

“Investing in consultants or other advisors on the ground in the countries where your risk is greatest, who understand the dynamics relevant to your business and can flag problems early, is critical to maintaining a smooth foreign procurement experience.

3) Reward supplier performance.

Supplier development is more than a reward system for supplier performance.  When organizations work with suppliers to develop partnerships, evaluation and corrective action is seen as more of a continuous improvement effort rather than a grading and/or carrot-stick system.  When weighing risk vs. reward, many suppliers that feel they are in a partnership are thinking long-term.

Rewarding supplier performance is good though.

“Getting out in front of potential disasters with a program that benefits suppliers for avoiding or mitigating risk is one of the best investments a procurement department can make in protecting the procurement function and the company.”

4) Build internal support.

Pick up any quality book, and it’s going to mention the necessity of top-down support.  Communications become especially relevant here. Make sure you’re capturing the right data and using it to communicate effectively to whoever your audience is.

Getting buy-in from the top corporate brass, as well as from senior executive peers in other departments, can be critical to securing the resources necessary for a robust and effective risk-management program. 

Also check out our recent post on 3 Ways to Improve Supplier Communications.  Pro QC’s VP/Americas also contributed a newsletter article regarding Reducing Outsourcing Risks and Cost.  Read this one to learn more about the third-party quality provider (3PQ) value.

An introduction to ISO 9001:2008

This video series is an excellent introduction to ISO 9001:2008 produced by QualityGurus.  The two-part series answers many of the questions we receive from clients.

ISO 9001:2008 sets out the criteria for a quality management system and is the only standard in the family that can be certified to (although this is not a requirement). It can be used by any organization, large or small, regardless of its field of activity. In fact ISO 9001:2008 is implemented by over one million companies and organizations in over 170 countries.

Part 1 of 2

Part 2 of 2

For additional information, visit the ISO website, or contact Pro QC directly.  We are happy to answer questions and organize audits.

Preparing for an audit

checkmark_blueA previous Quality Q & A newsletter article featured tips for audit preparation.   In the reprinted content below, Pro QC’s Supplier Development Manager discusses how each party can expedite the process.

 

Preparation for a factory audit can be broken down by responsibilities of the client, supplier (factory) and third party (Pro QC). Communication and documentation are key actions that increase the likelihood objectives are met.

The Client:  

  • Inform the supplier to let them know an audit will be scheduled and provide additional contact details as available. Consider the length of time requested by the supplier, in addition to any initial hesitations noted.
  • Evaluate the expectations of the audit and relevant necessary components that should be incorporated into an on-site checklist or other evaluation tool.
  • It is not considered appropriate to surprise a supplier with a visit to perform an audit.

The Supplier:

  • Inform related internal people about the scope, agenda and contents of the upcoming audit.
  • Complete and submit the Supplier Profile and Booking form that will be supplied to you by the Pro QC Project Coordinator.

Pro QC International (3PQ):  

  • We work with the client to understand their expectations and the product and specific standard(s) involved.
  • We select a suitable audit checklist or develop a customized one if necessary.
  • We select the auditor best suited to the requirements noted and provide him/her with necessary training and recommendations to follow.
  • We provide an audit notification letter along with an agenda of the audit, the booking form fro scheduling and the Supplier Profile form to the supplier to inform them of the audit activities so that they can inform and prepare their internal attendees.

Top 3 – Key factory audit components

Performing factory audits to assist in supplier selection or throughout the production cycle is a primary contributor to a reduction in both sourcing risks and cost.  While specific standards often apply, such as the ISO series, factory audits do have several key components in common.

1) Management 

Who is the management and what management style is generally supported within the corporate culture?  Through observation and interviews, an audit reveals attitudes and general values that serve as indicators of the overall organization’s realized performance.

“One of the greatest lessons I’ve learned over the past couple of decades, from a management perspective, is that really when you come down to it, it really is all about people and all about leadership.” ~Steve Case

2) Metrics –

Show the data.  Suppliers should be able to back-up any claims with supporting data that can be reviewed and verified.  The specific metrics vary depending on a number of factors, but identifying those factors and making sure suppliers are following through with documentation and review is critical to any industry.

“90% of making the correct decision is gathering information.”

3) Corrective Action

No one is perfect.  But, the difference lies within how an organization handles nonconformaties, or any service affecting issues that may occur.  Having paperwork on-hand is an excellent start, but suppliers should demonstrate through training and observation that staff consistently follows through with procedures.  Also, how is the supplier tracking trends and making necessary process improvements?

“For every failure, there is an alternative course of action. You just have to find it. When you come to a roadblock, take a detour.” ~Mary Kay Ash