In this issue an interesting case on the importance of good and reliable suppliers to achieve a good product.
This case tells the story of a large and well-known company that was releasing a new and strategically important product to the market. For a reliable operation of the new product a special piece of equipment was needed which was not readily available on the market. So they requested one of their available suppliers to develop and produce the equipment. The supplier selected is a small and innovative supplier with whom they have a long-lasting relationship with a good experience. Up till then this suppliers had supplied custom-made parts and sub-assemblies and now they were requested to develop and produce the complete device. This new development, however, was hampered by major start-up problems, especially in the quality of the product, resulting in additional cost and delay.
At that moment two questions arose: What to do now and could this have been prevented?
After containment actions were taken to safeguard the quality of the product supplied an analysis of the QLTC profile of the supplier provided an answer to the first question, what to do?. The QLTC profile consists of a set of specific questions that have to be answered by the supplier and customer and that provide objective, data-driven insight in the performance and capabilities of the supplier on four important aspects of a fruitful customer – supplier relationship:
- Quality [Q]: What quality level is required for this product and what level is achieved in reality? If problems arise are they resolved quickly and don’t they reoccur? Which certifications are required for this product and does the supplier comply?
- Logistics [L]: What logistic performance is required for this product and is this performance achieved? Will the supplier be able to ramp up production in case demand for the product increases significantly? How long does it take to confirm an order and is that fast enough? Is the supplier capable to supply variations to the product in time when necessary?
- Technology [T]: Is production executed with the craftsmanship required and are employees sufficiently trained and experienced? Does the supplier deploy up-to-date technology and does he invest enough to maintain the knowledge level? Is the supplier capable to timely design products that meet customer requirements and is he able to quickly and efficiently start production?
- Total Cost [C]: Are prices charged market-conform and how do we know? Is it sufficiently clear where prices are based on? How much waste is there in the process?
The answers to the questions above provide direct insight in the strengths and weaknesses of the supplier in relation to the customer requirements and thereby where improvements are needed.
In the case described above the QLTC analysis, combined with a round of dedicated interviews with managers of the supplier, resulted in three clear improvement projects, targeted at operational control, managing resources and a structured approach of new product development and production start-up.
Remains the second question: could this situation have been prevented?
Specifically at the prevention of supplier disturbances as sketched above lies the power of timely and regularly making a QLTC profile. Defining requirements and reviewing performance regularly using the QLTC profile enable customer and supplier to timely define required performance and implement improvements proactively. In this way a relatively small investment in the supplier relation yields a major return in the prevention of disturbances.