Study the top-performing companies across all manufacturing industries and a plain and simple truth emerges: the ability to produce consistently high-quality products, regardless of the forces impacting demand, suppliers, pricing, or channels, is the key to accomplishing revenue and profit goals.Manufacturing companies dominating their chosen markets have as their core strength the ability to deliver exceptionally high levels of quality in their products on a consistent basis. Compliance is the competitive strategy of making sure every product produced every day will exceed customer expectations and, as a result, drive up sales and profits.
Reason 1: Improve Product Conformance at the Process Level
Let’s face it, when products aren’t regularly conforming to quality assurance or customer standards, it costs the entire company lost time in firefighting toward a workaround solution and possibly reduced customer satisfaction.
Instead of resorting to the quick fix that can drain revenue, manufacturers that have turned compliance into a competitive weapon take these steps:
- First, they evaluate and in many cases re-define the supply chains, production processes, and quality-assurance standards to alleviate bottlenecks in the production areas.
- Second, entirely new approaches to measuring quality and compliance are often initiated to augment procedures already utilized. Parameters are rigorously scrutinized. These steps give the manufacturing teams’ insight into which processes are underperforming and the circumstances responsible for these defective processes.
- Third, enterprise compliance and quality management software is used to selectively automate those areas where manufacturers can get the best return from this IT investment.
- Fourth, benchmarking and performance analysis is completed. Corrective and preventative action at this point is no longer a firefighting exercise but one that can be handled through exception reporting and fine-tuning the process itself. The result is that when non-conformance is reduced, customer satisfaction increases and service costs drop.
Reason 2: Create a Culture of Quality in Your Supply Chains
Many manufacturers marvel at the Toyota Production System (TPS), and envision it as insular, contained within the Toyota manufacturing plants with Six-Sigma measures of production quality and efficiency. The foundation of this world-class production system is actually based on a very high level of supply-chain quality standards that Toyota suppliers need to consistently meet in order to continue shipping products to the auto manufacturer. Suppliers have said that participating in the TPS forces a culture change first in their companies, then a re-alignment of processes to better share knowledge in the Toyota Supplier Network.
When manufacturers rely only upon manual processes to complete inspections and audits, it is rare that these results are correlated back to supplier rating results.
Maintaining the information in a centralized database, minimizing the possibility of error and automating calculations could in fact signal exceptional gains in the performance of suppliers to quality standards. The opportunity for a manufacturer to further increase the performance of suppliers to quality, delivery, and performance standards is lost because the supplier rating information is not adequately calculated and communicated to the supplier.
For manufacturers that choose to automate their manufacturing compliance strategies using an Enterprise Compliance and Quality Management (ECQM) approach, the potential exists for motivating each supplier to continually higher quality levels with a correspondingly higher level of goals set for follow-on supplier ratings.
The bottom line is that through first defining the processes that interlink inspection and audit to supplier ratings, manufacturers can encourage each supplier to implement specific improvement strategies and rapidly see the results in new shipments.
Reason 4: Develop a Comprehensive Corrective and Preventative Action Strategy
Error detection and prevention is a hot-button issue today, and compiling accurate records of corrective actions is crucial for maintaining a good quality system and preventing the reoccurrence of defects. It is important to have a closed-loop mechanism for initiating, implementing, and verifying the effectiveness of changes resulting from the non-conformance process.
Some problems may only need simple resolution, which may be closed in an exception or non-conformance record, whereas other types of problems may require the exception to be attached to an issue or action plan to complete the investigation. This is why it is important to have a system that is customizable for your specific needs and for the requirements of your industry.
Reason 5: Create and Post Audit Benchmarks on Supplier Portals
One of the best strategies for creating and sustaining competitiveness between suppliers regarding quality is to post their relative performance on portals and internal websites where all suppliers can see who is excelling, who is staying at a constant quality level, and who is falling in terms of quality. Manufacturers that do this actively include Dell, General Electric, Hewlett-Packard, Toyota, and many others. Microsoft does this on its supplier portal called Microsoft Market, and internally this visibility into supplier performance is called “rank and spank” strategy for ensuring high levels of supplier quality.