Let’s look at how a supplier’s quality can be evaluated and validated so you know that they will supply you with parts and products that meet your expectations.
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Evaluating and validating supplier’s quality is a concern for any business selling products, regardless of whether you buy off the shelf, get your own custom products manufactured, or manufacture products for someone else. You will always be worrying about the material and component suppliers in your supply chain, or even the assembly supplier if you don’t assemble the products yourself.
Why is supplier quality important?
“If you have bad suppliers, your products will tend to be bad, too.”
This simple statement sums up the effect of poor-quality suppliers on your products.
Supplier quality can be broken down into two key aspects:
- How they behave, operate, and support their customers (us)
- If they can provide the best possible quality services, materials, components, and/or products for the needs of the buyer’s project
Poor quality goods from suppliers can kill any type of deal, from the simplest of single-use promotional giveaway products to a Rolls Royce automobile. If the quality you receive does not reach your expectations, as the buyer you will probably be reluctant to pay the supplier.
Dimensions of quality may be the color, material, dimensions, reliability, durability, etc, as long as you have specified what is specifically important to your needs. (01:31)
When should you start being concerned with supplier’s quality and what should you do to mitigate risks of poor quality?
Let’s say you’re developing your own new product, perhaps one with a unique function such as a toaster that has an arm that grabs the bread and moves it so it’s toasted evenly, when would the quality members of the team in your business or of the manufacturer start getting involved?
You want to select good-quality parts from the very start. Some design engineers don’t think about quality or even cost, as their focus is on finding parts that will work, so they push the work of finding quality parts at the right price to the purchasing team.
The design, purchasing, quality, and reliability teams may get together for a meeting at an early stage to go over the product’s requirements and goals, and most new products will have a PRD (product requirement document) which outlines the features, aesthetics, functions, its quality, reliability, warranty period, etc, and they’ll discuss this and assign tasks, such as checking different potential suppliers’ quality. The goal will be to come up with one primary source of parts that achieve all of the requirements, and one or two secondary-source suppliers to use as backups who can also supply suitable parts which are perhaps at a slightly lower level of quality than the primary source. Unfortunately, sourcing second-source suppliers sometimes gets forgotten about in busy projects, but they do provide an important safety net that can reduce the risks of you losing supply if there’s a disruption with your primary source supplier.
Focusing on the quality of critical parts like expensive ones or custom-made ones (like camera modules, PCBAs, batteries, displays, custom enclosures, etc) is particularly important and good suppliers who know what they’re doing must be found for those. Even though it can be busy, you want to avoid having to source new parts when you have already started product development, as this will be time-consuming and costly. (05:56)
Why the quality team must help to include your quality standards in the PRD (product requirement document).
When developing their product requirements one thing that we see businesses skip from including in their PRD are the quality standards that the product and supplier need to abide by. For example, you can’t just state that you want the product to be ‘the same quality as Apple products.’ Since you do not have Apple’s quality standard to share with your supplier, how can they actually achieve this?
You need to do the work to devise your quality standard so they can follow it and produce goods that reach your expectations, otherwise, you’re opening yourself up to a lot of gray areas where the manufacturer might tell you that they have produced the products as instructed even though you disagree. Without a quality standard in black and white to refer to, who is incorrect here? So reducing the risks of misunderstandings would be, for example, very clearly stating how thick the walls of the enclosure should be, how it curves in certain ways, etc. Points like this should be very clear in your PRD and this will require the input of quality engineers at this point. This is especially critical for custom parts that the supplier has never made before. (15:33)
Why small businesses may benefit from working with a supplier who has in-house engineering resources.
Some small businesses who don’t have, say, their own quality engineer on staff, may benefit from working with a supplier who has the in-house know-how to help them develop their quality standard, for example. This may come at an extra cost, but if you have gaps in your team’s experience it’s a good way to make progress. Paying extra to be sure that critical parts reach your expectations, for instance, may well be worthwhile. (22:05)
Doing due diligence to qualify that a supplier’s quality is good.
Initial due diligence
Start by checking their website and Alibaba page, it should be clear if they are not very capable of fulfilling your needs.
Source suppliers based on your criteria which might include that they need to be mid or low-tier, their capacity, quality development, reliability testing, technical expertise, and costs. You can run checks, including a credit report check for financial information, to check that the supplier is a legitimate manufacturer, is financially sound, has experience with your product category, and owns their trademarks and patents which shows that you do have in-house development capabilities, etc.
More advanced due diligence
You need to go on-site and audit critical or custom component suppliers’ factories particularly as early as possible in order to avoid wasting time building your product around their parts if they turn out to be unsuitable.
There are 2 focuses when on-site:
- Assessing what they can do – can they help design and develop the product or just one part, can they give good engineering advice or will they have to spoonfed, can they make the volumes we need, can they test with their own equipment, can they expand production if needed, etc.
- Assessing the risks – what’s the risk of them totally screwing up production, do they have the quality staff needed to follow our quality standard, etc. (23:32)
Checking the supplier’s QMS.
A supplier with a sound quality management system in place is of benefit to you. A lot of Chinese suppliers have ISO 9001, 1345, 16949 certificates, etc, but they’re from local certifying bodies and are not really legitimate, plus the supplier likes to state the qualification but doesn’t actually use the QMS, so you need to check the veracity of such certifications and see if they’re put into practice by the supplier. (33:16)
Audits can also uncover helpful information about suppliers.
There are many useful pieces of information about your supplier and their ability to hit your quality expectations still to be found. For example during a process audit on-site you can also look at:
- Component qualification tests for each part will show their testing capabilities and how many samples they tested.
- Inspections while on site will help you assess how they are operating their production lines, if they have QC staff checking during production, etc.
- Looking at their organisation from the top down and seeing how management works with staff, who can speak English and really understand what you’re talking about, etc. (35:07)
Formalize approved suppliers.
Formalizing approved suppliers provides you with a guardrail against using unqualified suppliers. A list of URLs from Taobao is not going to cut it when you need to go out and source parts as it opens you up to too much risk. You need to have pre-qualified suppliers who you know are capable of delivering parts at the quality you require and expect (maybe scoring them based on your criteria of quality, risks, delivery, etc, into tiers) and you will create that approved supplier list by doing the due diligence outlined here.
You might even have a quarterly supplier meeting for those on your list where you assess them on key metrics and adjust their rankings accordingly (especially if you have larger projects). (37:35)
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