Supplier Quality Management: Keeping Product Quality on Track

What is Supplier Quality Management?

Supplier quality management (SQM) is a process used to ensure that suppliers consistently deliver goods and services that meet agreed standards. SQM helps companies improve supply chain quality, reduce costs, and gain a competitive advantage.

A supplier quality management system helps companies maintain high product quality while keeping costs low. From meeting predefined quality standards to complying with regulatory requirements, SQM is key to a well-functioning supply chain. It helps teams identify problems early, monitor progress, and take corrective action when necessary.

The Role of Buyers and Suppliers

SQM works when buyers and suppliers collaborate closely. Buyers must work closely with suppliers to identify and resolve issues quickly. They need to understand why supplier quality matters and take responsibility for consistent, high-quality outputs. They’re also responsible for:

• Supplier monitoring - Regularly track supplier performance to ensure ongoing compliance with quality standards.

• Quality metrics - Measure supplier quality against agreed criteria like defect rates, on-time delivery, and responsiveness.

• Performance insights - Review reports to spot trends and identify improvement opportunities.

• Corrective actions - Work with suppliers to address issues and prevent them from recurring.

• Process improvement - Use quality and audit data to reduce rework and keep processes consistent.

• Clear communication - Set expectations and share specifications openly with suppliers.

• Quality assurance - Maintain the same standards at every production stage, no matter who manages them.

What Is the Supplier Management Process?

The Supplier Management Process (SMP) is a set of steps used that keeps quality in check across the supply chain. It covers everything from tracking suppliers’ performance to meeting regulations and standards. A Materials Requirement Planning (MRP) system can also make this process even smoother.

SMP is a crucial component of any company’s quality management system. Without a well-designed SMP, companies risk losing money and reputation due to poor product quality.

The SMP consists of four main components:

1. Supplier selection - This involves choosing suppliers based on price, lead time, delivery speed, quality, reliability, and availability.

2. Contract negotiation - Companies and suppliers alike must agree on terms that work for both sides.

3. Monitoring and reporting - Companies need to track supplier activities to ensure obligations are met. They should also report these activities to their stakeholders.

4. Compliance - Companies must follow all relevant laws and regulations, including those governing food safety, health, environment, and labor.

Companies often use different methods to implement the SMP. Some companies may review each step manually, while others may automate the process through software.

It’s best to monitor supplier performance regularly, at least once every quarter, to catch issues early. If a supplier falls short, they need to act quickly. Sometimes that means ending the relationship. Other times, it means adjusting requirements and working together on improvements. A clear policy outlining next steps helps prevent bigger problems later on.

How to Choose Suppliers

Supplier selection is one of the most important steps for any manufacturing business. Your product’s quality depends on the parts behind it—that’s why reliable suppliers matter.

When comparing suppliers, keep in mind these three main things:

• Price - Look for a fair deal. Don’t be afraid to ask questions and aim on terms that benefit both sides.

• Quality - Check if the product meets your needs. Does it fit well? Is it durable? Can you return it if it doesn’t meet expectations?

• On-time delivery - Know exactly when you need your product delivered. Will it arrive on time? Will it be damaged during transit? What happens if it doesn't arrive at all?

• Certifications - Check if suppliers meet  relevant standards such as ISO 9001, AS9100, or other industry requirements.

• Evaluation and collaboration - Pick suppliers who act like partners. Review performance, share feedback, and work together to improve.

Once you’ve chosen a supplier, keep communication open and consistent. That way, expectations stay clear and performance easy to track over time.

How Is Supplier Quality Management Measured?

Supplier quality is measured using Quality Management Systems (QMS). These systems help businesses enhance their processes and maintain consistent quality.

There are two main types of QMS: internal and external. An internal QMS tracks the quality of goods made within a company. Meanwhile, an external QMS checks the quality and consistency of supplier-made goods.

Both types of QMS rely on key metrics to assess supplier quality. They show whether a supplier is meeting expectations.

When evaluating supplier performance, focus on the following key metrics:

Supplier Quality Metrics

• Defect rate - The total number or percentage of defective units found, combining defects per million units and defective parts.

• Delivery reliability -  Percentage of orders delivered on or before the agreed date, critical for a reliable supply chain.

• Lead time - Average time from order placement to delivery, crucial for planning and responsiveness.

• Cycle time - Time taken to produce each product, a sign of production efficiency.

• Inspection results - Covers defects found during inspections and any Supplier Corrective Action Requests (SCARs), showing supplier quality and responsiveness.

How Do You Manage Supplier Quality Issues?

If you’ve ever had a poor supplier quality issue, you know how frustrating it can be. Finding out who’s responsible and how to fix the problem can take time and cause tension. When supplier quality issues go unmanaged, you’re leaving money on the table. Customers end up paying more, and you risk losing sales and trust.

Managing supplier quality issues means fixing the problem quickly and efficiently. It also means taking steps to stop the same issues from occurring again.

Start by setting up a supplier quality policy. This policy should outline how your team identifies and resolves quality issues.

Your supplier quality policy should include the following elements:

• Which types of quality issues are covered?

• Who is responsible for resolving them?

• How are supplier complaints handled?

• When and how should quality issues be escalated?

• How often is supplier quality reviewed?

Supplier Quality Management Best Practices

To get high-quality goods from suppliers, put strong supplier quality management practices in place. This helps suppliers meet your expectations and deliver real value to your organization.

Here are some practical ways to manage supplier relationships and maintain high quality across the supply chain:

• Set clear expectations - Establish supplier performance requirements from day one.

• Document standards - Clearly define supplier quality requirements and keep them accessible.

• Qualify suppliers - Vet each supplier thoroughly at the start and review them regularly.

• Address issues Fast - Resolve problems quickly through clear corrective actions steps.

• Prevent repeat issues - Use preventive actions to stop problems before they happen again.

• Review performance - Regularly check regular supplier progress and share feedback openly.

• Control processes - Implement process checks at the supplier level to keep quality consistent.

• Handle nonconformance - Manage nonconforming materials from suppliers to reduce waste delays.