webinar sqm best practices and insights
TRANSCRIPT
Supplier Quality ManagementBest Practices and Practical Insights for 2015
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The impact of poor quality
product recall increase 1999-20111+135%
1 Recall Execution Effectiveness Report. Deloitte, GMA, FMI and GS1. May 20102 raps.org, A. Gaffney, “Number of Drug Recalls Surges at FDA, Led by Mid-Level Concerns”, August 2014
6x FDA drug recall increase 2004-20132
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The impact of poor quality
$90M
A product recall can cost an organization between1
$10M
1 Recall Execution Effectiveness Report. Deloitte, GMA, FMI and GS1. May 2010
52%recalls due to supplier/vendor issues1
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Let’s do the math
Drug recalls in 20131 1225
1 raps.org, A. Gaffney, “Number of Drug Recalls Surges at FDA, Led by Mid-Level Concerns”, August 2014
Cost per recall $10M to $90M
Cost of drug recalls in 2013 $12B to $110B
X
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Let’s do the math
Cost of drug recalls in 2013 $12B to $110B
52% of recalls due to
suppliers/vendors$6B to $55B
1%
$60M to $550MWhat if improving supplier visibility & quality reduced
recalls by…5%
$300M to $2.75B
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Industry challenge: Identifying Quality Issues Early
1X 10X 100X 1000X…Issue
Resolution Cost
Supplier Network
Corporate Planning & Design
ManufacturingFacilities
Distribution Centers
Consumers
Only 22% of companies see quality as an integrated function of their supply chains1.
1 Gartner, S Jacobson, “Quality: The Missing Link in Your Supply Chain Strategy”, January 2015
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Industry challenge: Supply chain complexity
1 The Supplier Performance Measurement Benchmarking Report, Aberdeen Group, 2002
50-80%of the total product costs are spent on raw materials & parts procured from multiple suppliers across different parts of the globe1
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Industry challenge: Supplier visibility
1KPMG Global Manufacturing Outlook report, 2014
Complete visibility Tier 1, 2 and
beyond suppliers visibility
Limited visibility
Limited Tier 1 supplier visibility, but not Tier 2 &
beyond
Some visibility
Tier 1 supplier visibility & some Tier 2 supplier
visibility
22%
38% 40%
Only 22% of today’s manufacturers have complete visibility into their supply chain1
Supplier Quality Maturity FrameworkMastery of each step leads to improved visibility and quality across the supplier network
Level 1 Level 2 Level 3 Level 4 Level 5
Ad-hoc
Email communication
Faxcommunication
Manual data capture Supplier
Scorecard
Repeatable
Supplier Agreements
Electronic data capture & spreadsheets
Approved Supplier List
Collaborative
Quality Network Integration
QualityNetworkCollaboration
QualityNetworkVisibility
Historical Performance / Automated Scorecard
Automated
System Driven
Centralized Supplier Management
Metrics and KPIs
Tier 1SupplierCollaboration
PredictiveInsights & Triggered Events
Optimized
Tier 1SupplierVisibility
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Best Practices for Managing Quality Inthe Supply Chain
Broaden supplier assessmentsEnable broader visibility into the supplier network
45% of executives agreethe leading challenges to
supply chain efficiencyinclude supplier
performance and qualitymanagement
- KPMG Global Manufacturing Outlook report 2013
1
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Establish clear measurement programsLeverage automation tools to support measurement & monitoring of supplier quality
Best Practices for Managing Quality Inthe Supply Chain
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Dynamic Supplier Scorecard
Real-Time
Consistent
Accurate
PrioritizeScheduleManage
InformedSystematicEfficient
Execute Consistent
Remediate Integrated
Measure Accurate Decisions
Complete
Measure and Inform
Audit Management
Audit Execution
Audit Planning
Supplier Audit Checklist
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Best Practices for Managing Quality Inthe Supply Chain
Invest in infrastructureEnable quality across the supply chain through effective communication of quality events
Cloud Computing will play the most
important role in IT enabling quality between
now & 2017- Gartner, S Jacobson, “Quality: The Missing
Link in Your Supply Chain Strategy”, January 2015
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Supplier 1
Supplier 2
Supplier 3
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Best Practices for Managing Quality Inthe Supply Chain
Close the quality loop with suppliersLeverage technology to connect & integrate
suppliers into quality management processes
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Quarantine
Quality Processes
Product Nonconformance Notification Received Supplier Identification Root Cause CAPA Plan Effectiveness Check
Issue Identified Notification to Supplier SCAR Reviewed CAPA Approved Action Item Reminders
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Extend quality management practices into the supply chain
Visibility - Identify issues early before they become costly quality incidents
Traceability - Understand the root cause and source of quality issues in your supply chain
Accountability - Ensure supply chain partners understand issues and resolution requirements in a timely manner
Profitability - Mitigate quality related financial risk and improve supply chain efficiency
For more information, visit:www.spartasystems.com