What do Mazda, Ford, Acura, Nissan, and BMW have in common? Besides the fact that they are all well-known, major automotive manufacturers, each has issued recalls within the past several months due to “exploding” frontal airbags. This is no coincidence, as the airbags in question originated from a shared parts supplier, Takata. To date, 14 automakers have recalled vehicles due to Takata’s defective airbags, leading to the National Highway Traffic Safety Administration (NHTSA) calling the situation “the largest and most complex safety recall in U.S. history.”
Enter the new reality of manufacturing. In an effort to cut costs, larger manufacturers, in many cases, rely on a wide range of vendors from across the globe to produce and provide the parts and components needed to create their final product. Whether manufacturing an automobile, an airplane, or a hamburger, big manufacturers are becoming assemblers of other company’s products. Yes, the vehicle may say “Ford” or “Nissan,” but its different parts – from the airbags to the fuel pump –are often not made by the manufacturer, and instead, by suppliers.
Now, the big question is, how do you ensure your product is of the highest quality if you’re not the one making it? In other words, manufacturers trust that their suppliers and vendors have effective quality systems and are doing the right things daily, hourly, and even on a minute-by-minute basis. As recent quality failures have demonstrated, a certificate of analysis (COA) is just not enough to determine whether or not products are suitable for use.
As manufacturing continues to evolve and the supply chain becomes more global and complex, organizations must have greater visibility into quality – not only into their own processes but also into their suppliers’ operations. Without this level of visibility, how can manufacturers ensure that everything from raw materials and components, to assemblies, subassemblies, and finished goods, meet their stringent quality standards? And, if they use multiple suppliers for the same goods, how can manufacturers effectively evaluate which one provides the highest quality products? What can they do to choose the best quality suppliers for long-term business relationships?
Because much of their quality exposure and risk is based upon their suppliers’ processes, manufacturers can no longer afford to base supplier contracts on price alone. Instead, they must use quality information together with pricing to select best-fit suppliers that will help mitigate quality risks and minimize recalls. To do so requires making suppliers an extension of the enterprise and incorporating them into the manufacturer’s quality program. A select number of cloud-based enterprise quality management systems support supplier-to-buyer quality integration and visibility.
With an advanced enterprise quality management system, manufacturers can connect every line, plant, supplier, and partner, as the software collects, standardizes, and “rolls up” quality data in a single, centralized repository. Through this repository, manufacturers can proactively monitor, analyze, and report real-time, aggregated historical data gathered from their own operations, as well their suppliers’ operations. Using this information, it is possible to verify that the components and subassemblies suppliers produce are of the highest quality before they even ship – long before they are assembled into the final product. Manufacturers can even alert suppliers to quality problems, allowing operators to make instantaneous adjustments, thereby preventing quality issues further down the chain while reducing costs. Plus, with cloud technology, onboarding suppliers is as simple as emailing a link to log into the system. From there, suppliers’ required quality checks and data are accessible in real time for additional analysis and action.
By continuously slicing and dicing the data collected across the supply chain, manufacturers can obtain insight and Manufacturing Intelligence that impacts the entire enterprise – helping them make better business decisions and identify areas for improvement. Why are certain plants underperforming? Is there an opportunity to reduce waste, scrap, or rework? Which suppliers are producing the highest-quality components? Should we outsource more work to supplier A instead supplier B? These are just a few examples of the insights an enterprise quality management solution can provide to help manufacturers improve quality, reduce costs, create a competitive advantage, and strengthen relationships with suppliers.
As this new era of manufacturing brings new challenges, it also emphasizes the growing need for supply chain visibility. Plant-wide visibility is no longer sufficient for ensuring product quality. Manufacturers must meet the challenge of improving quality and reducing costs by connecting their value chains with an enterprise quality management system. As a result, high-profile, harmful recalls – like Takata’s – will become news of the past.
Doug Fair is the COO for InfinityQS International, Inc., the global authority on real-time quality and Enterprise Manufacturing Intelligence. Fair oversees the company’s global business operations and helps clients understand statistical methods and implement InfinityQS’ enterprise quality management software. Prior to joining InfinityQS in 1997, Fair began his statistical career on the manufacturing shop floor at Boeing Aerospace and spent several years as a statistical consultant to Fortune 500 companies. A senior member of the American Society for Quality (ASQ) and a Six Sigma Black Belt, Fair possesses a degree in Industrial Statistics from the University of Tennessee, and has coauthored two books on the same topic.