The world of quality management is incredibly complex. Though technology makes our jobs easier and faster to do, there are limitations to the impact that even the best technology has. One of the most common limitations of EDI and B2B Collaboration technology is that it’s just not accessible to your entire supply chain. In most cases, only one-third of the supply chain is electronically enabled. That means that two-thirds of suppliers are left to send critical B2B data and information via email. We’ve put together a list, albeit non-comprehensive, of six different supplier quality issues directly tied to this kind of manual trading.
You sent a purchase order to your supplier for a batch of digital instrument display screens. The supplier acknowledges the purchase order and sends an ASN. When the shipment arrives, you do a preliminary inspection on the batch, only to discover that every last one of those screens is cracked, and you cannot use them in your product.
Damaged parts happen. Sometimes, they’re the supplier’s fault, and sometimes they’re the shipper’s fault. In either case, you shouldn’t have to pay for unusable parts. Though it may be unethical, your supplier may not always want to participate in the corrective action process. By not being an electronic trading partner, they have the opportunity to “misplace” emails that contain important documents like Reject Notices to try to get out of it.
In a similar scenario, let’s say that you need to send a purchase order for a mounting bracket. Since the last time you ordered this mounting bracket from this supplier, the bolt pattern has changed, so your design specifications have changed. Although you attach the new bolt pattern specification in the email and the purchase order, your supplier doesn’t see the design specification update. They ship an order of mounting brackets according to the outdated specifications.
Of course, you wouldn’t find out about the mistake until the batch arrives at your dock. If there are no other quality defects, there is a high probability that you wouldn’t discover that the bolt pattern on the mounting bracket is out of specification until it’s on the assembly line.
Now you are rapidly approaching your deadline, and you have to stop production because you don’t have mounting brackets with up-to-date specifications. Stopping production and waiting for a new batch of mounting brackets is a big deal, and these delays can be easily avoided by making this supplier an electronic trading partner. Consequently, you can also prevent the angry customers and managers that come with missed deadlines.
Let’s say that nothing comes in damaged. Your screens have no cracks, and your mounting brackets have the correct bolt pattern. The problem here is that they’re simply late.
You emailed the purchase order to Bob because he is your contact at Acme Supply. Bob, however, is taking a week off and enjoying time with his family. Bob also did not assign a backup to cover incoming purchase orders while away, and he forgot to set his automated email response. It looks like Bob received your purchase order, but you really can’t tell for sure.
A week later, you noticed that acme company still has not responded to your email containing the purchase order, nor have they issued an ASN, and you need those parts tomorrow. So, you call Bob, and since he doesn’t answer, you leave a voicemail explaining that you sent a purchase order a week ago and that you’re concerned that acme company might have overlooked it.
The first thing the following day, you get a phone call, and Bob explained that he was out of the office and didn’t see the purchase order until this morning. Your parts will be on their way as soon as possible, but not in time to meet your deadline.
This whole scenario would be easily avoidable if only acme company were an electronic trading partner instead of having to use email to send a purchase order.
Sometimes quality issues don’t come to light until after the device has left your facility and has been in operation somewhere in the field for a few months or even longer. What happens when a pattern emerges that your product has a quality defect? You begin an investigation. What happens when the analysis reveals that the quality issue is on your supplier’s part and not your product? You take up the matter with your supplier and settle on corrective action.
If you approach your supplier months or years after shipping your product to resolve a quality issue they need to own, you will need documentation. This documentation isn’t always accessible by simply searching your email inbox.
When you are doing business with your suppliers manually, that is, via email, you have no way to track and trace serial numbers and supplier parts reliably. You might be able to enter these things manually into your database, but manual entry produces errors. Sometimes characters are switched or omitted. Other times, critical data entry might not happen because everyone is rushing to meet a deadline.
Without enabling your manual suppliers to become compliant electronic trading partners, you have no mechanism to reliably trace supplier quality issues when dealing with a serious quality issue in your products in the field.
Everything happens at warp speed these days. That includes business. Perhaps you received a larger order for your product after sending the purchase order to your supplier. Maybe the cost of materials fluctuates, and you need to decrease the order quantity before your supplier issues the invoice to stay on budget. Perhaps your supplier can’t fulfill the entire order on time, so you must split the order between multiple suppliers. Whatever the case, you have to have the flexibility to change a purchase order and know that your supplier receives those changes.
In EDI, an 860 purchase order change request covers these scenarios and allows you to automate the updates between you and your supplier. However, if your supplier is a manual trading partner instead of an electronic trading partner, they can’t leverage this EDI document. That means they’re missing out on benefits like improving order fulfillment accuracy and efficiency, more accurate invoicing, reducing inventory, and reducing the overhead cost of processing these transactions.
What happens when the supplier quality issue is actually with your supplier’s supplier? Things quickly become much more complex. What happens when your supplier quality issues belong to the manual supplier of your manual supplier? Life becomes difficult for everyone involved.
Let’s say that you have discovered an in-field quality issue that you have traced back to an electronic control assembly from a particular supplier. When you approach the supplier about performing a corrective action, they discover that the root of the problem is faulty wiring in the wiring harness that came from their supplier. After a few months of usage, the wires overheat and burn the insulation off, causing a short.
Naturally, your supplier wants to do everything they can to pass the cost of resolving this issue off to their supplier, who appears to be responsible for causing the problem in the first place. Now, you have to deal with that other supplier to resolve this quality issue.
Do you deal with them directly or through your supplier? Who do you send the bad parts back to for rework, or do you commission a batch of new replacement parts? At whose expense? If your suppliers are manual or paper-based, you lack the necessary tools to trace the quality issue quickly, and you have to communicate with both of those suppliers using email and phone calls to resolve the problem. These methods of communication slow down the process, and there is no guarantee that the supplier of your supplier will receive your communication at all.
Modern business requires modern tools. By using email to send mission-critical B2B documents and information instead of technology designed for integrating and automating B2B interaction, you’re fostering an environment prone to these six quality issues.
Are you tired of dealing with these known quality problems? We designed ChainLink SRM to solve them. Be sure to check out our downloadable resource Solving Six Supplier Quality Issues with ChainLink SRM to learn how ChainLinkSRM resolves these supplier quality issues.
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Are you interested in learning more about converting your manual suppliers to fully compliant electronic trading partners? Check out this article, Supply Chain Management and B2B Collaboration.
Want to talk about how your company could leverage ChainLink SRM? Contact us. We would be more than happy to chat with you about your pain points.
David is the Chief Operations Officer and Director of Business Development at TTP Solutions LLC. Since 2019, David has been the driving force behind sales, marketing, and organizational development. David holds a B.B.A. in Entrepreneurship and a B.A. in Spanish from Middle Tennessee State University. He has a passion for helping others to solve problems creatively. Husband to KerrieAnn, David loves photography, hiking, traveling, and reading.