and product quality are the key to maintaining a competitive
edge in the market. How can a company successfully achieve
those objectives while also outsourcing its manufacturing?
outsourcing manufacturing to lower-cost countries, many
companies find new demands imposed on their quality management
processes. And for many, their existing quality management
systems prove to be no longer effective, especially if
they are either a spreadsheet-based manual system or a
PC-based point solution.
how exactly can a company that outsources its manufacturing
still maintain clear visibility into its outsourcer''s
process capability, as well as its overall product quality?
This article explains how.
As companies shift their manufacturing and assembly operations
offshore to low-cost countries, shipments to distribution
sites within the United States can take weeks to be delivered.
Therefore it is very important for such companies to gain
visibility into process capability and quality issues
within their outsourcer''s manufacturing sites so that
they can prevent any unacceptable quality products from
entering the supply chain.
unacceptable quality products do happen to enter the supply
chain, the company often has to scrap a part of the shipment
at the point of destination, weeks after it was shipped
from the outsourcer''s manufacturing site. And if a company
is forced to scrap products due to quality issues as late
as that in the delivery chain, it may encounter shortages
if the inventory in the distribution system is already
too lean. The company may also see disruption in fulfillment
of orders to their customers.
high inventory at distribution centers is one way some
companies try to insure against disruption from quality
issues, but it is an expensive alternative, especially
in an industry such as high-technology or consumer electronics
with short product lifecycles.
additional transportation and handling incurred due to
poor quality products being rejected at the point of destination,
instead of the point of manufacture, also leads to increased
cost of inventory write-offs. As a result, it is critical
that the company''s quality management systems provide
timely and clear visibility into quality requirements
at their outsourcer''s manufacturing site.
take the example of what happened to a large golf club
manufacturer that decided to outsource manufacturing of
its components to China. After manufacture, the components
were sent to the company''s plant in the United States
where final assembly took place. The outsourcing vendor
sent process quality information to the company once a
week over spreadsheets. However, by the time the golf
club manufacturer was able to aggregate all the data,
create trend charts and have its quality engineers analyse
the charts, some of the information was over 10 days old.
its quality engineers had visibility into any product
or process quality issues in the recent batch of components,
it was actually too late to do anything about the batch,
which was already on its way to the United States. The
quality engineers, therefore, sought a way to get clear
and timely visibility into process capability and quality
data so they could proactively minimise quality issues
at the supplier''s plants.
quality management system solution
Manufacturers who outsource manufacturing need to deploy
a web-based quality management system in their own environment.
The web-based quality system provides all the capabilities
expected of a quality management system, such as inspections,
audits, CAPA, document control, supplier dashboards and
scorecards, and cost recovery.
addition, a supplier can access relevant screens of the
manufacturer''s quality system over the Web and enter relevant
data from its own assembly line in real-time and provide
the manufacturer instant visibility to process data. As
a result, such a quality management system, while owned
by the manufacturer, can span company boundaries
a critical requirement in an outsourced manufacturing
a system enables manufacturer''s quality engineers to:
inspection points in the supplier''s manufacturing line
and define quality attributes to be collected at those
inspection points, so that the supplier can collect
data using the Web-based quality system at those inspection
points. The system then automatically calculates process
capability and makes it available to manufacturer''s
quality managers - all within hours. As a result, a
manufacturer''s quality managers have real-time visibility
into process capability issues at their supplier.
all collected data, identify issues and create corrective
actions to be implemented at supplier''s plants. A
web-based system ensures that a supplier has instant
visibility into corrective actions created by the manufacturer.
The supplier''s engineers work on the corrective actions
to identify root cause and resolution. A web-based system
also enables the manufacturer''s quality managers to
track the progress of corrective action by the supplier''s
quality engineers and ensure that they have been successfully
the supplier''s processes on a frequent basis and
easily correlate the detailed audit data and results
against previously identified corrective actions to
ensure the corrective actions were successfully implemented.
these capabilities, the manufacturer''s quality managers
not only can prevent a poor quality shipment from entering
the supply chain in a timely manner, but they can also
identify quality issues, create appropriate corrective
actions for the supplier and systematically prevent such
problems from occurring again.
the example above, the golf club manufacturer''s quality
engineers ended up implementing just such a quality system
with data entry capability at its outsourcing partner''s
plants. Since then, the manufacturing process capability
of the outsourcing partner has increased, and quality
issues can now be identified in real-time and proactively
addressed. A traditional PC-based quality management solution could
not have met these requirements, and it could have increased
the manufacturer''s risk of high reject costs and disruption
of supply from its outsourced suppliers.
author is a research advisor to industry analyst firm
Ventana Research, and vice president, marketing, MetricStream,
a Vinod Khosla-funded enterprise compliance and quality