The beauty of cloud-based solutions is that manufacturers do not need to make significant IT investments to build a quality network. Such a solution has value beyond product quality. Brand owners need second and third sources in case a key component supplier goes down. You can quickly bring alternate manufacturers online and monitor their product quality, ensuring the results you need and minimizing the impact to delivery schedules. A cloud-based solution can support a highly complex supply chain, including, for example, disparate locations in China and India, with a single solution.
Brand owners and suppliers have related but different concerns regarding supply chain issues. Brand owners consider time to market, cost, and quality. Time to market pressure is huge, based on the sheer pace of innovation (changes to new phones or computer tablets), or based on specific market windows, such as holidays. Costs are affected by supplier costs, yields, rework and inventory levels, and are affected by efficiencies and product quality. Quality translates into brand protection on a high level, and warranty costs on a hard level. In 2010, the warranty accruals reported by all U.S.-based warranty providers grew to $22.7 billion, while the claims paid was $23.4 billion.
Suppliers may be concerned about participating in a supply quality network for several reasons. The first is the fear that the brand owner could use supplier data as pricing leverage. The supplier is already working on a very thin margin, and will not participate under threat of penalty. Secondly, test processes and product performance are highly proprietary. The supplier needs assurance that the competition does not have access to how his device is being tested, how fast it runs, and how long it takes to boot, etc.
The way to overcome these concerns is to see quality as a holistic issue. It’s not just “my” quality versus “your” quality. If supplier quality improves and the brand owner increases market share, then the brand owner will use the quality supplier as a preferred vendor and buy more units.
The brand owner also can show how high quality will help the supplier reduce scrap, reduce rework, and so reduce costs. A tool like this helps the supplier to be more efficient, and that translates into cost savings and higher output using the same resources.
For brand owners, the benefits of employing a cloud-based supplier quality network are significant:
- Driving down costs. Actively manage manufacturing operations and quickly respond to out-of-compliance manufacturing process shifts and other events exposed through dashboard and alerts.
- Increasing yields, minimizing rework and returns. Proactively leverage manufacturing and test data via a Web browser from anywhere in the world. Detect product problems at the source, prior to shipment, to prevent quality escapes. This is “pushing quality back to the source.”
- Proactively managing product quality. Automatically collect data from the test floor and redirect engineering from time-consuming data-gathering tasks to high-value problem solving.
- Accelerating continuous improvement initiatives and new product introductions. Roll up and analyze granular parametric and attribute test data associated with each serial number and subassembly, and correlate it with return and warranty analysis.
- Reducing audits and incoming inspections. Replace contract manufacturer audits with real-time monitoring and replace incoming quality inspections with dock-to-stock deliveries.
- Fortifying supplier relationships. Foster collaborative communication, planning, and problem resolution between suppliers, contract manufacturers, and your quality personnel. This leads to a significant reduction in defects and related costs.
For suppliers, the benefits of participating in a supplier quality network include:
- Meeting customer requirements for Certificates of Compliance (CoC) —electronically and instantly
- Increasing factory productivity and output while improving quality
- Seeing and correcting embarrassing issues before shipment and customer complaints
- Reducing disruptive on-site customer audits
- Eliminating paperwork
- Gaining preferred supplier status and higher ratings
- Lowering cost of quality with visibility into production trends
A holistic view of quality benefits all: supplier, manufacturer, and customer. Applying that perspective through cloud-based tools such as supplier quality networks is providing renewed control in these challenging times.
About the Author: Nader Fathi is General Manager, Supply Chain Quality, at Camstar Systems, Inc.