I’ve been managing supplier relationships for almost my entire career, including hardware component suppliers, contract manufacturers, technology alliance partners, and engineering service providers.

Over that time I’ve worked with a number of people at all levels who seem to believe that their one-up position as the customer entitles them to demand more from suppliers while paying less.

The attitude seems to be: “Do as I say or we’ll take our business elsewhere.” [Read more…]

I’ve managed suppliers at multinational, US-based firms, and I’ve worked for a large electronics manufacturing services company, and those experiences have given me the opportunity to think a lot about the power dynamics on both sides of the table.

I know it seems obvious, but it’s important to remember that at the core it’s a business relationship based on a payment for a product or service, or an expectation of an ongoing revenue stream.

Suppliers are in business just like you are, and their decisions are based on the same concerns about profit and growth and predictability.

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There are three things that can happen when a non-conforming part appears on the production line.

(1) The part is immediately rejected and never makes it into an assembly.

That’s good, but the additional handling of the part is a waste of time and resources.

(2) The part is added to an assembly, but the assembly fails an inspection or tests further down the line. This adds more cost for rework and re-testing.

(3) The part is added to the assembly, isn’t caught by downstream testing and the product ships to a customer. Now it’s a bigger problem, depending on what characteristic of the part doesn’t meet requirements.

This could be a latent problem that will eventually cause the product to fail, leading to a return and an unhappy customer.

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Subcontracting Quality

It’s hard enough to get people to focus on quality when their company’s name is on the product.

It’s even more challenging when the design and/or manufacturing of the product is outsourced. How do you effectively manage product quality indirectly through suppliers and subcontractors?

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When I joined Hewlett-Packard in 1988, I was assigned to a team that was working on a design for manufacturability manual for printed circuit board designers.

Our primary objective was to provide performance and cost information that could be used to guide decisions about different design options.

My favorite project during that time was a predictive model to estimate the manufacturing yield of a PCB design based on a composite “complexity” metric.

Because we were an internal supplier, I was able to look at the actual lot yields for hundreds of active part numbers with known design parameters, so it seemed like a fairly straightforward exercise to experiment with different regression models to find an optimum fit between complexity and yield.

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In a recent post, I wrote about suppliers who claim to be committed to quality but may not actually behave that way.

Before getting too carried away with improving quality in the supply chain, it’s probably a good idea to understand your own company’s commitment to quality, although I see nothing wrong with holding your suppliers to a higher standard.

It may seem impressive when businesses highlight quality as a core value, something that’s published on their website and displayed on their walls, but is that just for show?

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Suppliers always declare their commitment to the highest standards of quality as a core value, but many have trouble living up to that promise.

I can’t tell you how many times I’ve visited suppliers who proudly display their framed ISO certificates in the lobby yet suffer from persistent quality problems that lead to higher cost and schedule delays.

Here’s how you can tell if they’re really serious:

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