October 19, 2021
Supplier quality management is critical to an effective and efficient procurement workflow. By acquiring, controlling, and applying supplier data successfully the organization can have increased command of the supply chain with predictable and consistent performance. This speeds up routine tasks and drives down the organization’s cost.
Conversely, unreliable supplier data can lead to an incomplete and inaccurate view of the company’s situation and adds a significant level of risk. It is therefore imperative to understand how to ensure the organization has reliable data from suppliers.
How Does Unreliable Supplier Quality Data Impact the Organization
Data Integrity is a fundamental requirement in the Life Sciences organization’s quality system which needs to ensure that products manufactured are of the desired quality for patients. Regulatory authorities require data to be accurate across the supply chain. If suppliers are not providing accurate data or they are not following agreed upon policies and procedures as well as regulatory guidelines in collection of data, this causes compliance concerns regarding product safety and quality since both are compromised.
Integrity of IT Solutions is Compromised
Many of today’s businesses have an IT environment that consists of disjointed data sources and systems. These organizations typically implemented point solutions to handle specific sets of problems without considering the broader long-term challenges that are created by not having their systems and data seamlessly integrated across the enterprise. Having this disconnected environment across the financial, engineering, quality, and operational systems generates significant challenges for supplier quality management.
Having bad or inaccurate data from suppliers impacts the accuracy of the organizations systems. Since the suppliers are an extension of the organization by providing everything from raw materials and software products, their data rolls up into the overall organizations totals. If the suppliers data is not in compliance with the organizations processes and regulatory guidelines, this causes a major impact to the integrity of the overall enterprise system.
ROI Relies on High Quality Supplier Data
Likewise, if the integrity of the systems are not accurate, the ROI is inaccurate. Bad data in equals bad data out. Metrics developed to assess and calculate the impact of certain processes and policies will be negatively impacted due to incorrect or faulty supplier data.
Speed to Market
Missing or inaccurate supplier data also impacts the speed to market of the organization. It slows the process since the required data is not in the hands of those who need it to make quick decisions. This impacts sales and customer satisfaction.
Supplier data is also important in evaluating the performance of suppliers. Without good data in this area, an organization cannot effectively make decisions on suppliers performance or improvements throughout the value chain.
Ways to Improve Supplier Quality Data
Leverage Integrated Technology Across Supply Chain
One approach to fix the data issue is to invest in integrated solutions that enable communication and collaboration across the organization and the extended value chain. This provides a means for the various departments of the organization and the supplier(s) to accurately share consistent data. From procurement to design, manufacturing, and services, all groups should be working off of the same information.
This requires creating closed-loop quality management by integrating enterprise applications across the value chain. Organizations can leverage a Supplier Quality Management Software solution or extend their existing enterprise technology like EQMS, PLM, MOM, or ERP to suppliers with access to these already integrated IT systems.
Companies who leverage one of these methods are able to pursue further automation of traditionally paper-based and manual processes with their suppliers through a single system rather than numerous disconnected ones. This integration of systems and data sources throughout the enterprise applications provides increased visibility and interaction across functional units and the supplier value chain. This facilitates clean and harmonized data across the organization.
Employ a Standardized Supplier Risk Scorecard Solution Across the Enterprise
The process of evaluating your suppliers so that you can recognize the risks they may pose to your organization and the supply chain itself is known as supplier risk management, or supply chain risk management (SCRM). By proactively incorporating programs that systematically identify, assess, and mitigate threats to the assets and data that might be caused by the supply chain, the organization ensures the supplier risk level is low.
Developing a standardized way to assess and rank suppliers that reaches across the organization is critical. This can be achieved by implementing an enterprise supplier quality solution or an enterprise system. The standardization and centralization of the supplier risk scorecards need to be established and precise in order to both improve the integrity of your organization’s risk portfolio and enable accurate insight for decision-makers across the business units working with suppliers.
Metrics and KPIs to Monitor Supplier Performance
Supplier performance metrics or key performance indicators (KPIs) can assist in grading suppliers’ performance. It is advisable to jointly agree on these metrics with the suppliers so that both organizations have a mutual understanding of how the health of the relationship will be measured.
Monitoring performance through the supplier scorecard permits both parties to understand the current state of the relationship. Although the performance metrics will vary from company to company, the most common gradable metrics include quality, on-time delivery, acknowledgment rate, and responsiveness. Standardizing the metrics and how they are calculated and reported, assists in enabling the identification of areas for improvement and determining which areas require more resources or some type of change. By setting up standards the organization enriches its ability to ensure quality across the supply chain.
Metrics to consider include:
- Success of new product introductions
- Defective parts per million
- Percentage of defective products received
- Percentage of returned products
- Chargebacks for non-conformances
- Complete and on-time delivery
- Percentage of products out of compliance or quality standards
Collaborate with Supplier and Manage Compliance
Compliance requirements can be internal or external specifications, or officially meeting government regulations or industry standards. In the Pharmaceutical and Medical Device industries, that are highly regulated, leveraging supplier portals to communicate requirements and verify that they’re being met are being used.
An organization’s supplier audits can support meeting compliance requirements. It’s important to establish a collaborative relationship in conjunction with formal audit management plan, which outlines the frequency of on-site visits, reporting conditions for suppliers, and the extent into the supply chain to which you’ll go for auditing suppliers.
Transform to Quality 4.0
Quality 4.0 is a term that references the future of quality and organizational excellence within the framework of Industry 4.0. With Quality Management 4.0, organizations aim to deliver quality at a much faster pace based on what the business and the customers want and need. The shift to Quality 4.0 incorporates the nuances of traditional quality coupled with analytics and data governance through the adoption of new technologies.
Quality 4.0 is the digitalization of quality management. The new technologies include sensor data and advanced analytics including artificial Intelligence (AI) and machine learning (ML). These technologies are incorporated into traditional quality methods, teams, and data strategies. Quality 4.0 generates new insights that facilitate organizations to achieve enhanced quality, operational, and financial performance.
For digitalization to be effective, organizations need to be able to define the business benefits. The quality leaders need to sit down with the business stakeholders and have a focused conversation on ensuring that everyone is clear on the desired outcome. Once the quality organization is confident that they understand the business needs, they can setup the right processes for them to get those benefits.
How to Improve Supplier Data Quality
We’ve discussed how bad data from suppliers can impact the organization, however, how can we identify what “good” data quality looks like? The quality of data is impacted by the following factors:
If all systems and data from the supplier are integrated into the organization’s systems and data and they provide only one version of the truth, then you have good data quality.
If the supplier’s data is available in real-time to the organization or as close to real-time as possible then the business can leverage that data to make decisions.
Access and Transparency
If the supplier’s data is accessible and transparent to those in the organization who need to access it, then it empowers the business by getting the data in the hands of those who need it.
Ability to Make Proactive Decisions
If the supplier data is available and real-time, this will be reflected in the organization’s ability to make proactive decisions that impact the business both in the short-term and in the future. Data is power and accurate and real-time data provides better control to the organization.
Supplier quality management is essential to any Life Sciences organization. Having the right experts involved both internally and externally who understand the processes, people, and technology to improve this area is also extremely important.
Good supplier quality management is critical for demonstrating compliance to both corporate policies as well as regulations. It is also imperative for the business to ensure that the internal systems have data integrity for decision making and proper KPIs and metrics to use for ROI calculations. Inaccurate supplier data leads to missing and inaccurate products / recalls/ system failures which can lead to low satisfaction and customers going to competitors. Additionally, the speed by which the organization can get products to market is also impacted significantly as is the ability for the organization to evaluate suppliers.
There are multiple ways to improve supplier data. One key way is to leverage integrated enterprise systems across the supply chain. Another is to employ supplier scorecards to rate the suppliers across the standard criteria leveraging appropriate metrics that reflect their performance. Additionally, collaborating with suppliers to ensure agreement with standards is imperative. And finally, leveraging new technology like sensor data and advanced analytics including AI and ML, to get the organization on the path to Quality 4.0.
There are also a few key areas that provide insight as to whether the organization has achieved exceptional supplier data. These areas reflect how well the organization is controlling their value chain data and should be looked at as a way to ensure the focus of the organization on supplier data quality is working.
Why It Matters to You
Given the importance of supplier data on the overall effectiveness and efficiency of the Life Sciences organization, it is critical to ensure that this area is a major focus of the business. There are significant reasons to read this blog as we discuss:
- How bad supplier data impacts the organization significantly on several fronts.
- What ways an organization can improve their supplier data.
- What good supplier data looks like for the organization.
For over 25 years, Astrix has been a market-leader in dedicated digital transformation & dedicated staffing services for science-based businesses. Through our proven laboratory informatics, digital quality & compliance, and scientific staffing services we deliver the highly specialized people, processes, and technology to fundamentally transform how science-based businesses operate. Astrix was founded by scientists to solve the unique challenges which science-based businesses face in the laboratory and beyond. We’re dedicated to helping our clients speed & improve scientific outcomes to help people everywhere.