Managing a global supplier network can often appear to be a dark tangled web of risk, quality, and logistics management. Studies have shown that although improved collaboration with suppliers is crucial to product success, streamlining collaboration with disparate global suppliers while also reducing costs can still present many challenges. One approach to improved supplier quality management is to incorporate supplier performance scorecards along with enterprise quality management software (EQMS). It’s important to understand how implementing both of these components can be an optimal strategy for accurately segmenting your suppliers, improving communication and logistical inefficiencies, and strengthening supplier relationships.
Creating a Supplier Scorecard
Supplier scorecards are vital data tools that help manage important corporate resources and improve supplier performance. Scorecards should be built around your particular business goals, objectives, and operational processes. As such, your scorecards will likely differ from those of your competitors. You should begin developing supplier scorecards by meeting with internal and external stakeholders for their input in how supplier performance should be measured. Common components of a supplier scorecard include product quality, cost, delivery time, and rejected items vs. accepted items. Keep in mind, your enterprise may need additional scorecard variables. Since supplier scorecards will involve significant input, you will need to implement a collaborative and transparent approach for managing the collection and analysis of this information.
Benefits of Supplier Scorecards
Organizations that take advantage of tools like scorecards can experience a 20 percent increase in accurately measuring supplier performance metrics. Further, companies that leverage data-driven decisions can significantly reduce costs and increase profits. Here are a few more ways supplier scorecards can improve your bottom line:
Suppliers help keep your business humming along–until they don’t. In an economy that can shift in the blink of an eye, late shipments, process delays, chargebacks, and damaged products will promptly derail your competitive strategy. Keeping track of supplier performance and the quality of their deliverables allows you to quickly identify and mitigate problems.
Segmenting suppliers between those that help accelerate innovation (value-driven) and those merely providing a product at the lowest cost and with the highest possible quality (cost-driven) is critical to cultivating the right type of relationships. By monitoring suppliers with a scorecard, you can see which ones are helping you create value. This allows you to build a stronger, more profitable relationship with them, while reducing or removing nonconformance suppliers from your network.
Supply chains are notorious for waste and inefficiencies, largely due to the inability to effectively evaluate suppliers with verifiable data and the challenge of understanding complex patterns within the webs of data. Supplier scorecards provide an effective solution by identifying gaps in supplier performance.
Implementing EQMS in Supply Chain Management
Along with scorecards, businesses are increasingly turning to EQMS solutions like IQS to quickly and efficiently address supplier quality control. EQMS solutions allow businesses to take advantage of current data analysis capabilites, while introducing actionable insights into supply chains. Additionally, an effective EQMS can provide an efficient digital solution, which includes the sharing of scorecard access at multiple plant locations, the ability to share data (and solutions), and the improvement of collaboration across departments, teams, and suppliers. EQMS can not only provide data-driven insights that help you understand what suppliers are bringing to the table but also help reveal gaps in supplier performance. Sharing and analyzing data allows you to uncover inconsistencies and potential opportunities throughout the supply chain. We’ve witnessed a strong uptick in supplier quality and a distinct increase in positive supplier relationships when scorecard data is incorporated into an EQMS.
A Winning Strategy for Global Supplier Management
Effectively managing a global supplier network is challenging, but not impossible with the right tools. The use of scorecards in conjunction with EQMS can provide you with actionable, data-driven insights while improving collaboration with even the most remote supplier. The insights derived from supplier scorecards will allow you to boost efficiency and quality within your global supplier network and quickly remedy any potential problems. Perhaps most importantly, when it comes to resource management, these insights put you, not your suppliers, in the driver’s seat. Contact IQS today to request a demo of our EQMS or learn more about our supplier quality solutions.