What is Supplier Quality?

Supplier quality refers to the ability of suppliers to provide goods or services that meet the purchaser’s demands.

Supplier quality varies, and as importers, we always seek out high-quality suppliers, hoping they can produce products that meet our ideal standards. However, even if you’ve found a reputable supplier, you shouldn’t let your guard down and assume there won’t be any issues with the products they produce. Many other factors during the production process can affect your final product, such as communication issues between parties and factory production preferences.

Therefore, after reaching an agreement to cooperate with a supplier, it’s important to stay informed about their production status through proactive communication and specific monitoring methods and procedures. This is known as Supplier Quality Management, abbreviated as SQM. SQM is a process that monitors the quality of suppliers, which is typically an ongoing process. Today I will explain the process of SQM in detail.

Who uses the SQM?

Before we dive into the steps, it’s important to understand that supplier quality management systems are typically implemented by purchasers, with the suppliers being the ones who cooperate.

Large companies usually have multiple suppliers, and they often manage the quality of these suppliers.

For instance, renowned clothing brand Uniqlo has a large team of textile experts who track their products throughout the production process to ensure quality.

It’s generally easier for two parties with a long-term partnership to collaborate on supplier quality management, but it’s possible for new suppliers to reject SQM because it’s usually not mandatory.

However, in many countries and industries with strict quality control regulations, such as pharmaceuticals and food, laws require companies in these sectors to ensure the quality and safety of their supply chains. Therefore, these companies also rigorously implement SQM for their suppliers.

What if there is no SQM?

In short, SQM is the guarantee for purchasers to ensure the quality in the supply chain.

For big companies that care a lot about product quality or industries like healthcare and food, implementing SQM can help them make sure the quality of large batches of products, save money, and have a better handle on their supply chain.

Without SQM, not only are products prone to quality issues, leading to production delays and increased costs for the company, but ultimately, it also harms the company’s reputation.

Of course, not all companies need SQM. For small-scale purchasers or smaller companies, SQM might not be necessary due to cost considerations and complex process. However, this doesn’t mean that small companies don’t need to consider supplier quality, it just means they don’t need to strictly adhere to the SQM process or establish specialized quality inspection teams. They have many simpler and more cost-effective methods.

For instance, let’s consider a toy company with 50 employees that wants to find a factory to produce 3000 plastic toys. Their process for selection, evaluation, and communication would be straightforward. 

Firstly, the scope of supplier selection for small companies is smaller, which significantly reduces the workload. Additionally, their regular audits wouldn’t involve overly complex procedures. They wouldn’t need to submit elaborate analysis reports based on various data metrics; perhaps they’d submit a simple feedback form at most. Communication with suppliers is often direct, with needs expressed clearly and feedback given promptly. 

Although the overall process might be less refined, it still ensures supplier quality while boosting efficiency and saving costs.

What is the basic process of the SQM system?

Whether it’s a large corporation or a small business, selecting the best from multiple suppliers is the first step to ensuring supplier quality. 

First, you need to gather information about the suppliers and evaluate them based on aspects like their quality management system, production capacity, technical capabilities, financial stability, etc. Then, you can choose the suppliers that meet your requirements. This is a tedious process that requires collecting a large amount of information and conducting comparative analysis. 

I suggest you consider supplier consolidation, which means reducing the number of suppliers as much as possible. This simplifies management and boosts production and cooperation efficiency.

During this stage, you also need to communicate with the suppliers and observe whether they are receptive to your reasonable suggestions. If a supplier is difficult to communicate with, it can create significant obstacles for your future cooperation.

Jingsourcing can help you select manufacturers from China.

Once suppliers are selected, it’s time to enter into contracts. Contracts should clearly outline the responsibilities and obligations of both parties, including quality requirements, delivery times, pricing and payment terms, product specifications, testing standards, quality control, etc. Supplier responsibilities and obligations are crucial and must be clearly stated, without overlooking any details.

2. Monitoring and Auditing Suppliers

After selecting suppliers, you can’t just hand over your product to the factory and relax. You need to regularly inspect the supplier’s production processes, work environment, production personnel, raw materials, components, quality of products, etc. 

Apart from physical inspections, you also need to establish your own unique supplier management software, which will track and record key quality indicators of the supplier, such as product rejection rate, on-time delivery rate, quality complaint rate, etc., to evaluate supplier performance and promptly identify potential issues. Based on the evaluation results, appropriate measures can be taken (such as continuing production, returning goods, or reprocessing). This approach enables remote auditing for purchasers. 

Like the supply chain quality management system used by Procter & Gamble (P&G), which can track the entire supply chain process from raw material procurement to final product delivery. This includes supplier management, quality control, order management, logistics management, inventory management, and more. Through this system, P&G can achieve visualizing and real-time monitoring of the supply chain.

Additionally, some small companies often opt for a third-party auditor to conduct supplier audits. This is because small companies usually lack their own dedicated audit teams, and third-party audits can also avoid any conflicts of interest. In our Jingsoucing’s cooperation with international purchasers, we often take on the responsibility of auditing suppliers on behalf of the purchasers. For example, we conduct quality inspections on the supplier’s products and encourage them to improve their products. This helps purchasers avoid a lot of trouble.

3.Continuous Communication with Suppliers

In addition to regular inspections, maintaining communication with suppliers is essential. This allows you to stay updated on the current production situation and address potential issues promptly.

‘Communication’ sounds simple but can be a time-consuming and challenging process. Many times, communication with suppliers can be problematic. 

For example, you might find a supplier with suitable prices and reputation, making you satisfied, but then encounter difficulties reaching agreements with the factory personnel. Many suppliers have their own fixed mindset and production preferences and may not be receptive to your improvement requests. Or, when importing goods from foreign countries, you’ll encounter even more challenges. Not only is language a barrier, but sometimes your ways of thinking may not be on the same page either.

Nevertheless, you must ensure that suppliers clearly understand your product requirements. Any ambiguity in communication can lead to the final product being completely different from what you envisioned. Therefore, despite the difficulties in communication, you must persevere until the project concludes.

4. Problem Solving and Improvement

During the supplier audit process, if any product issues are identified, you need to communicate with the supplier promptly and resolve them. The cooperation of the supplier determines whether the work can be carried out smoothly. This should also be taken into consideration when selecting suppliers in the early stages.

5. Performance Evaluation and Feedback

You need to regularly evaluate various aspects of your suppliers’ performance, such as product quality, timely delivery capabilities, and their willingness to adopt improvement suggestions, and provide them with feedback. Based on the evaluation results, you should consider whether to continue working with the supplier in the future. If you find that the supplier’s performance falls short of requirements during the production process, you can also terminate the cooperation midway to cut losses promptly.

These are the five general steps, but not all companies strictly follow these steps in their supplier quality management. Instead, they may adjust them based on specific products or services. For example, some companies may require factories to undergo supplier quality certification, which is a higher requirement for suppliers.

Supplier quality certification doesn’t certify a specific product of the supplier but rather certifies the supplier’s quality management system. For instance, if an automotive parts factory obtains IATF 16949 certification, it means that it has a qualified quality management system and can consistently provide quality automotive parts. However, this doesn’t guarantee that every product from the factory is of high quality; it’s merely a recognition of the factory’s past quality management.

Supplier quality certification is often requested by purchasers, which helps reduce their risks. Moreover, in industries like food, medical devices, and pharmaceuticals, suppliers are required to pass supplier quality certification.

How to make good use of data for supplier quality management?

We’ve already discussed the general process of supplier quality management, but there’s one crucial point to note – throughout this entire process, data is always the most important tool and is used frequently in almost every step.

It’s essential for companies to quantify and assess their suppliers, and data can always reflect the most accurate situation of various processes in factories. Typically, various indicators are used:

Quality Indicators:

  • Product defect rate
  • Time taken to resolve quality issues
  • Compliance rate with quality standards

Delivery Capability Indicators:

  • On-time delivery rate
  • Delivery completeness rate

Continuous Improvement Indicators:

  • Rate of adoption of improvement proposals
  • Implementation time of improvement projects

Cost-effectiveness Indicators:

  • Cost comparison
  • Quality-related costs

Supplier Performance Evaluation Indicators:

  • Performance rating
  • purchaser satisfaction

These data indicators reflect the factory’s product quality, delivery capability, continuous improvement ability, cost-saving ability, etc., and they are crucial sources for purchasers to assess factory quality.

Further Questions

What's the difference between QMS and SQM?

QMS stands for Quality Management System, and SQM stands for Supplier Quality Management; both focus on quality. However:

The emphasis of a supplier’s QMS is on the quality management system and processes established internally by the supplier, whereas SQM focuses more on the organization’s management and control of suppliers, including selection, monitoring, improvement, etc.

In short, the former is implemented by the suppliers themselves, constituting a set of quality system standards within the supplier company. The latter is implemented by the purchasers collaborating with suppliers, emphasizing the purchaser’s quality monitoring and evaluation of suppliers.

What's the difference between SQA and SQM?

Their concepts are similar, and there may be overlap in practical application, but they also have different focuses. SQA stands for Supplier Quality Assurance, which focuses on specific products or services to ensure they meet quality standards. However, SQM focuses on the entire supplier’s quality management system and processes to ensure they consistently provide high-quality products or services.

The End

We are Jingsourcing, a procurement company from China. We have served numerous buyers worldwide, whose businesses include e-commerce platforms, department stores, government procurement projects, and so on. We can assist you in managing your supply chain and completing various steps in the procurement process, including finding reliable suppliers with competitive prices, product sourcing, custom product development, packaging, warehousing, quality inspection, transportation, and more.

Regarding product quality inspection, our services include AQL2.5 inspection and full inspection. If we find any defective products during the inspection process, we will coordinate with the supplier to repair them or provide free replacements for you. If you discover any product defects and provide evidence within 15 days of receiving the goods, we will either replace them or compensate you.

If you would like to learn more, please feel free to contact us.

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