Lack of visibility of quality into the supply-chain can often have an adverse effect on the business, leading to poor quality of product, lost inventory due to quality issues, or even stock-outs of particular product lines. How can companies streamline their their supplier quality management to increase visibility into the supply-chain, and incorporate their quality standards and practices down the supply-chain?

Cost of Poor Supplier Quality When a product fails to meet quality standards, it is often the parent company (or brand owner) that must incur the liability for such events. Companies will track the cost of poor quality(COPQ) within their organization, but often fail to track the full cost of poor supplier quality (COPSQ). While many companies will track material costs as they relate to suppliers, the nonmaterial costs such as quality department overhead, inspection overhead, supplier communication, and administrative costs are often overlooked. As a result, the overall COPQ becomes inaccurate due to supplier quality issues above and beyond materials costs. Companies often attribute this to cost of doing business, leading to higher unit costs. Making suppliers liable for both material and non-material costs can help to recover costs due to poor quality.