Effective and efficient supplier management is possible, but not when we’re still using old tools and expecting different outcomes.
We sat down with Veeva’s resident supplier quality expert Sophia Finn to learn more about the common but risky supplier quality management (SQM) behaviors she sees in the field, and strategies to overcome them.
Veeva Industries (VI): To set context for this conversation, why are more companies turning their attention to reducing risk and driving efficiency within SQM?
Sophia Finn (SF): I’d say it’s because the business circumstances are demanding it from multiple angles. Regulatory requirements around supplier management have become more stringent, and traceability and transparency across the supply chain are increasingly important. That’s on top of the fact that companies know, often from direct experience, that poor supplier quality management practices can lead to painful audits, warning letters, product recalls and lost revenue.
For example, you likely remember the tens of million vehicles from 11 auto manufacturers that had to be recalled due to faulty Takata airbags in 2017, and then a separate recall in late 2019. While Takata faced significant costs for this quality failure, the auto manufacturers’ brand reputations were also hit hard as their customers were put at risk and had to return recalled vehicles at great personal disruption.
Unfortunately, insufficient supplier transparency and oversight isn’t isolated to certain industries or companies. And using outdated, siloed tools to manage supplier relationships is a major contributor.
VI: Thanks for that background. Let’s turn to the risky behaviors you often see in industry, even highly regulated ones like life sciences, chemicals, cosmetics, and consumer goods. What’s your “top offender”?
SF: It’s got to be using outdated, legacy tools for SQM. And I know it’s tempting, but it’s not necessarily the best way. When I was managing quality at a medical device company and we needed to send a supplier new product specs or a SCAR, we’d email it to them because that was our only way of communicating with them. But it was inefficient and risky.
We all know the email blackhole is a real thing, and busy quality professionals cannot be expected to remember every correspondence they have sent and the responses received. Another highly used tool is an Excel spreadsheet. Because they are so easy to create, they are a favorite for many of us, but in this case, how can you ensure data accuracy and visibility when spreadsheets are stored on someone’s computer or on a shared drive?
We recently released the 2020 Trends in Quality Management study, which found that 65% of quality departments in regulated industries are still managing suppliers with outdated tools such as email, spreadsheets and dated point solutions.
When you think about it, using yesterday’s tools to manage suppliers infuses uncertainty, inefficiency, and a lack of traceability and transparency at every step. “The way it’s always been done” introduces a level of risk entirely unnecessary given the availability of modern, cloud-based supplier quality management solutions.
VI: Thanks for laying that out for us. I’m sure most of our readers can relate to relying on email, spreadsheets, and maybe some outdated software for SQM. What are some of the other risks you’ve identified in this area that we should be aware of?
SF: We recently held a webinar with one of our customers (Sheryl Wreghitt) from Uponor that explored these topics in detail. I encourage you to check out the recording to explore this topic in depth.
But to answer your question, the three risky behaviors we see most often are 1) taking a no-risk approach to managing suppliers, 2) having a nonexistent or undefined approach to supplier training, and 3) continuing to use outdated tools to manage Quality.
In the webinar we go through each of these, as well as strategies to overcome them. I hope you’ll take the time to check it out.
VI: I’m sure people will want to take a look at that webinar, thanks for providing free access to the recording. I want to finish off by returning to the usage of email and spreadsheets for SQM. It’s one thing to identify something is risky, and another to find a better way to do it. So for people who think they might be ready to bring their SQM tools up to 2020 standards, what would you recommend as next steps?
SF: I’d say the most important things are to 1) build your business case and 2) do your research.
Building a business case requires getting a sense of the scale of the current problem and what value your company could gain from solving it. It’s about understanding your processes, challenges impacting your business and your goals for your future state. A few ways to quantify this include 1) totaling the cost of any past supplier quality incidents (both in employee time and other resources), and 2) calculating the number of steps and total time elapsed to complete a common SQM process. This kind of documentation and quantification can help get leadership on board for investing in a new solution for SQM. And if people want to talk through their specific circumstances for how to present a strong business case, I’d be happy to weigh in, just email me.
Once you have the start for your business case, you need to do research on how to buy software and what solutions are out there. Most supplier quality managers have never been a part of the purchase process for software, or if they were, it wasn’t for a cloud-based solution.
Our general manager Frank, who has been in the software business for over 20 years, released a free eBook “An Expert’s Guide to Buying Software” that will give you the lay of the land and maybe make you laugh a few times along the way. And to make sure you’ve got a handle on what’s most important in selecting a software vendor, I suggest taking a look at these 20 Questions You Must Ask Software Vendors. Resources like this will give you the skills to evaluate potential vendors.
VI: Excellent guidance, thank you Sophia for your time and expertise.