6 Ways Quality Can Strengthen Supply Chain Profitability

To thrive in today’s competitive global business environment, manufacturers must have a top-to-bottom quality-oriented approach that infuses innovative thinking into every part of the supply chain in order to deliver world-class performance through products, processes and people.

Some promising news, according to a recently published report by Forbes Insights and ASQ, is that senior executives and quality professionals see a direct connection between the success of their continuous improvement initiatives and the success of their organizations as a whole.

The Forbes Insights/ASQ research surveyed 1,869 executives and quality professionals from around the world and focused on the links between quality efforts and corporate performance, as well as the evolving business value of quality and its relationship to the supply chain. Thirty-six percent of enterprises surveyed said that they regard themselves as an established quality organization, while 39% reported that they are still developing their quality programs and 25% said they are struggling to implement quality in their companies.

For those organizations that do have established quality programs, more than half say their initiatives already encompass a range of key corporate functions, including operations and supply chain management.

This focus on quality for the supply chain is especially crucial when one recognizes that supply chain management is often motivated to achieve the least cost when identifying and qualifying new suppliers. Supply chain leaders are often rewarded for these cost-savings. But then extra costs are incurred once the final product is manufactured and delivered and it is discovered that reworks are required due to the focus on price and not quality.

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A Portrait of the Supply Chain Manager

It’s been written that a career in supply chain management can be like climbing a mountain.

While there is often a map for the path forward in professions like accounting, medicine and the law, in supply chain management – as with mountaineering – there are any number of paths that can reach the summit.

Those were among the findings from a research series conducted for the Council of Supply Chain Management Professionals (CSCMP) and published in the July/August 2015 issue of Supply Chain Management Review, and reinforced by research conducted by McKinsey & Company and Kuhne Logistics University.

The latter, for instance, found that while many supply chain management executives had experience in logistics, procurement and sales/marketing, “… a surprising number of supply chain executives are appointed without any previous exposure to SCM…in our sample, supply chain executives spent 88% of their previous career span outside the SCM function.”

Are those findings consistent with readers of Supply Chain Management Review and members of APICS Supply Chain Council? And, if so, who is today’s supply chain manager? And, how did he – or she – navigate to their position on the mountain?

Did they start out in the supply chain going back to their college days, or, as in the McKinsey study, did they come into the profession from other parts of the organization?

Moreover, what are their duties today and how do they see the job changing?

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The Future Of Performance Management Is Not One-Size-Fits-All

In 2013, CEB research found that 86% of organizations had recently made significant changes to their performance management system, or were planning to. In 2014, a Deloitte survey found that 58% percent of companies surveyed did not think performance management was an effective use of time, and many media outlets jumped on the opportunity to air their grievances.

Finally, the rising wave of discontent seemed to crash in 2015, as a slew of large organizations like GE, Accenture, Netflix, and Adobe all scrapped their age-old annual performance management processes in favor of more continuous feedback systems. And many others followed suit.

But, was it the right move for everyone?

Last summer, I wrote an article on this topic myself, urging business leaders to really consider the implications of following these organizations. The issue, in my opinion, is not that these organizations did something wrong. Rather, the risk is that many leaders misinterpreted these stories to mean that they should abandon performance management altogether.

One thing is clear: the future of performance management in the American workplace is still very much in question.

For more insight into this important topic, I recently sat down with a handful of thought leaders in the performance management space, including Rob Ollander-Krane, Senior Director of Organizational Performance Effectiveness at Gap, Inc., Nigel Adams, Global Chief Talent Officer at Razorfish Global, and Amy Herrbold, Senior Director of Organizational Development at Kellogg. Together, we discussed the future of performance management to understand, from their perspective, why changes to this process are long overdue.

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Two thirds of buyers not managing supply chain risk effectively

Almost two thirds of buyers think their organisations are not managing their supply chain risk effectively.

Responding to a mini-poll held during a webinar organised by Supply Management in association with business information publisher Bureau van Dijk, 63 per cent of listeners said they didn’t believe their organisations managed threats in the best way.

Ted Datta, BvD’s strategic account director – London, said a majority of negative response underlined the increasing awareness among companies and buyers of the key importance of good supplier risk management. This was increasingly important because legislation was covering new and wider areas, said Datta.

“Know your suppliers, business partners and third parties,” he said, emphasising buyers needed to be up-to-date with new risks as situations changed every month. Datta said as there was so much information to monitor, companies could segment their supply base to identify key strategic suppliers and monitor those suppliers ‘in real time’ or as frequently as possible depending on their resources. Others could be reviewed in a more structured way, he said.

David Lyon, head of procurement at Cancer Research UK, told the webinar, Enhanced supplier due diligence: the implications for supplier risk management, reputation was vital for a charity and it had to ensure suppliers were aligned with its core purpose. “As an organisation that spends 80 per cent of every pound donated on our core mission of research, we must work hand in hand with all our suppliers,” he said.

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