The importance of the good relation between Supplier Quality and Purchasing in the organisation.

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Over the years I have been in contact with many companies and I have seen different models from purchasing departments and supplier quality approaches.

Supplier quality is the missing link  between Quality and purchasing. The target is always to apply the best quality standards to the cheapest (or “best cost” concept now) suppliers in order to achieve the best results for the company.

It makes no sense to use the cheapest suppliers and ignoring the quality in decision-making on a supplier selection. It is necessary to involve in an early stage Supplier Quality Management for applying their criteria. Companies nowadays have more and more formularies, initial visits audits and other tools to classify suppliers .  Here the importance is from purchasing to understand the minimum needs from quality to be considered: This means that maybe the second supplier in the cost list can be a long-term better option than the cheapest.  In my opinion, it is clear to understand that the lack of quality has a cost implication in long-term.

On the other hand, we cannot miss the concept that all departments work for the company profit. And therefore, introducing new suppliers in the companies with a good purchasing strategy can end  up in a market lead. Competitors are doing it, always remember.  Never underestimate purchasing departments importance no matter if supplier quality reports for purchasing or not.

Furthermore, here comes the support of Supplier Quality which is key: how to develop a low-cost supplier.  I can tell many success stories, from working closely supplier quality aligned with purchasing. The way to do it bis monitor them carefully, forget about your pride and spend a bit of effort on continuous improvement activities. Supplier Quality must understand the savings impact.

Further more in this global world a small/medium low-cost company can be a perfect partner in global purchasing, all you need is just develop them, give them business step by step and make sure your supplier quality is monitoring them and supporting to improve standards, ending up as a global partner.

23 responses to “The importance of the good relation between Supplier Quality and Purchasing in the organisation.”

  1. Hello
    This is missed in most of all companies and there is also one more important thing and that is the coordination between Sourcing, Engineering department, Local Quality and supplier so Supplier development is to be working as a spider in the network. This is so many things missed when working with suppliers and most of the time the focus is on cost savings

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    • Thanks Donald for the comment, in automotive (my environment ) big companies tend to do it, anyway I agree with you that all departments together in Lean Manufacturing is the key. Thank you also for giving me more ideas for rhe blog !!!

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      • Many suppliers can be either good or bad depending on the level of developed product and defined requirments they are given before they quote. Verifing lessons learned are implemanted into new programs while still meeting the ever challenging and unwavering program timing requirments seems to be an on-going significant aspect for true quality and a good long term supplier relationship.

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  2. hello,
    I agree with you. while, how to develop a small/medium supplie to be a global partner? I think the choosen is very important. the supplier must be of the good future, with the positive culture, good vision, strong desire to become a global company, and most of all, there are enough good associates. Just as a joke in a Chinese comedy, “hat is the most valuable in 21th century? human resources.”

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  3. Miguel,
    There’s a hidden sentence in your article, which is the most difficult part of the job….”give them bussiness step by step”. If this is properly planned and the supplier is willing to improve, all the rest will flue.

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  4. Hello, I totally agree with all your comments…I would add only one important thing, the Supply Chain should be the link to reach Quality and Total Cost of Ownership optimization.

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  5. Hello, I totally agree with your commnet. I would add other viewpoint that RD need provide detail quality standanrd to souring, and souring need provide it to supplier in first. Also souring should support supplier understand the customer product appplication knowledge. That is useful for supplier set critical quality contorl point and get the best cost.

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  6. This is really a good topic, and more and more companies now is approaching lower cost suppier because of more competitors are on the way there and the bad ecnomoical envioroment.
    While, 1)after we spend a lot of time and efforts there, and improved the quality in the supplier, it is also increasing the cost for quality. 2)the quality of their sub-supplier need more efforts to improve. 3)It is more hard to change their mind for the supplier than just adding inspection stations, more involvment in early stage.
    It is still an erea need more study.

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  7. Mr. Brines..

    Your concept is right on cue.. Logistics and Supplier Quality have to work hand in hand together as a team, respect each others role in the Supplier’s responsibility for fulfilling thier obligations and expectations.. The Initial product design team plays a huge role in ensuring the part that is designed into the product meets and/or exceeds the operating expectation of the application.. Once this is accomplished, then the Sourcing Team has the obligation to find the cheapest part thst fits that criteria.. After being in the Automotive business for 40 years. What I see as the biggest downfall is in most automotive businesses. The Sourcing Team is not directly tied to the actual Product Plants business Quality goals.. In my opinion, this is a huge mistake.. Most Sourcing Teams performance success is graded by how much money they can save the company.. Well my friends, you may be saving money on paper buying the cheapest parts you can find but it may be costing you greatly on the Quality end in Production Plant scrap cost and or outgoing Product Quality which results in huge Customer dissatifaction.. And Customer satisfaction rewards you with future business.. In my opinion. Sourcing and logistics has to be tied to Materials Quality and Product Quality and part of their performance success has to be tied to that along with materials scrap cost.. Sourcing has got to work hand in hand with Materials Quality Engineers and Product Quality Engineers when making decisions on which Suppliers to Source.. Sourcing Suppliers based strictly on price savings is a catestrophic mistake and grading your Sourcing success based strictly on how much money is saved is also… If your Sourcing is showing savings and your scrap cost is going down and your product quality is going up. Then you have a recipe for success and Customer satisfaction……

    Rick Nagelmueller

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    • Many thanks Rick. Logistics are totally necessary in the decission pool. One urgent delivery can cost up to 100.000 euros. Good companies involve logistics in the nomination (at least a minimum A/B/C. On the other side I used to be very strong with engineering to get agreements on feasibility of components before nomination. Agree with you in the importance but disagree with you in the reality, good companies work as a team and it is happening!!!

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      • Mr Brines…
        Agree with you totally.. My comments may have been misinterpreted.. Working as a team is imperative.. My intention was to state Sourcing, Logistics and Materials Quality must work as a team.. Sourcing has input to the pricing, Logistics has input to the delivery and returns and Materials Quality has input to the quality and defect corrective action fo the Suppliers. All of this information when put together, gives you a complete picture of the Supplier you are thinking about doing business with and when Sourcing and Logistics and Materials Quality all worked together and are tied to the same accomplishment goals. Your business is leaps and bounds in better condition to make good sound decisions……

        Rick Nagelmueller

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  8. Pingback: L’importance de la bonne relation entre le Département Qualité Fournisseurs et des Achats dans l’Entreprise. | miguelbrines·

  9. I like your topic for discussion and agree when these two groups work hand in hand a lot can get done. My opinion both sides need to be equal in Authority and Responsibility related to each supplier chosen and this is less and less the case in today’s organizations. To keep this short Supplier Quality should have authority to select, disqualify and track product road map to supplier they approve. They must deliver in each commodity a selection of suppliers who are Apple to Apple in regards to capabilities then get out of the way and let purchasing quote the best prices.
    Together they should maintain the overall business spend and if at all possible award by product line so all of the parts (example PCB) are source at the same supplier. Then Scorecards performance to keep each new generation at the same suppliers this will give both sides repeatability. My reason both sides should be aware of the Marketing Target Cost for each product. If cost of materials is typically 50% of the product cost this makes breaking down the total cost by commodity easier and your chosen suppliers must meet the goals you’re working to.

    My Opinion to development of lowest quote suppliers. Why? When this happens the Supplier Quality group will implement all of the controls required of the Top Supplier to make them Apples to Apples and suppliers will use this to increase pricing anyway. Yes somewhere in your parts list we usually have room of the cheapest quote just so long as both side segregate those parts so they can manage them.

    I suggest two reasons suppliers are developed.
    1. Just to move parts to another low cost labor region. This is a business decision and typically Purchasing and Supplier Quality have to execute it.
    2. Design Technology. This is the reason Supplier Quality should always be looking at the next manufacturing technologies so operations has a plan for executing. When they don’t the designers will find someone and design them into the technology before they’re ready.

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    • Chris. Many thanks for your comments. Very possitive all of them, showing expertose in the field. The only comment I mean is be part of the decsion making as SQA!

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  10. Thanks a lot for sharing your opinions. Our company is exactly the negative example. We focused on the lowest cost when developing suppliers and the quality failure cost turned out to be high.

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