5 Ways A Supplier’s Quality Standards Create High Cost for Manufacturers

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Many people do not think about how much parts and materials’ quality affect their end product. Uncontrolled quality standards for a supplier impact the entire manufacturing process and often drive up costs for manufacturers.

Supplier’s Quality Standards

The supplier’s quality standards impact both parts and raw materials purchased for manufacturing. Every time an item is sent back to a supplier, that drives up costs. Every time you have to rework an item because of poor quality in the parts or materials, it drives up costs.

Reworks

Perhaps the most obvious symptom that your suppliers do not have a good quality management system in place, a rework because of your supplier’s mistakes is costly. Any item that you cannot ship or sell passes on its entire Cost of Goods Sold (COGS) to other items in your supply line. If your manufacturing processes have a high 6% rework rate, the COGS from reworking poor materials might be eating your entire profit margin for the year.

If you have a high number of reworks, it is important that you discover why the reworks are happening. They are most likely because of 1 of 2 possibilities. Either your manufacturing process has poor quality management, or your suppliers’ processes do.

If it is your own manufacturing quality control, take the time to fix it. If it is from the parts or materials you use in the manufacturing process, you will need to discover where the discrepancy is and either work with your supplier to fix it or find a new supplier with a higher quality control process.

Poor Quality End Products

Even if you do not see a high number of reworks in your manufacturing process, the opportunity costs of creating low-quality end products may be hurting your business. If customers see a shorter lifespan for your materials or a high probability that the materials will break soon, then you are likely losing out on both the number of customers you could reach and the prices you can charge the customers you do reach.

Customer follow-up is key to understanding when and how your product quality can be improved. If your customers complain about one specific item that always breaks and that item is purchased from a 3rd party supplier, you know that your suppliers’ manufacturing quality is affecting your end product quality.

Workforce Confusion

Do not make your manufacturing employees responsible for controlling the quality of your parts and materials. If employees are constantly having to remove items from the manufacturing line, they will be less focused on making sure they do the job right. Develop quality control systems with your suppliers before the supplies make it to the manufacturing floor to reduce workforce confusion from poor quality materials.

Reducing Trust in Your Brand

If your suppliers’ poor quality standards affects either your workforce, your product quality, or your bottom line through reworks, these distribution chain problems will be felt by your customers. When customers feel like a business’s quality processes are not adequate for the job at hand, they lose trust in your company as a brand.

This leads to the final two ways poor supplier quality standards impact your costs.

Increased Development Time

Mary Walton, in Deming Management at Work, tells of how Florida Power and Light engineers were dumbfounded when they went to a Japanese utility company and discovered that the Japanese kept a fraction of the replacement transformers that Florida Power and Light required to have on hand at any given time. Because of a quality management issue in the installation of the transformers, the American company had to devote nearly ten times as much resources to having replacement parts on standby for when they failed.

This meant that any new transformer technology would have to replace all the transformers currently on the field, and all the replacement transformers. Rather than a quick turnaround, the replacement of stockpiles slowed development.

Whatever your parts, high quality supplies is essential to low cost manufacturing. For more information about quality plastics manufacturing, please contact us today.

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