Supply Chains: Who’s to blame when it all goes wrong?
17th September 2007 by Gail Van Den Bos1 Comment
Recently there have been news of problems with toys produced in China. There have also been other stories in the media concerning food safety issues there. And the finger is pointing at complex, global supply chains and inferred lack of controls in manufacturers in China.
China’s manufacturing sites come in for a lot of bad press… maybe deservedly, but they are part of a chain of responsibility that starts with the customer at one end of the chain: the originator of the contract for the products to be made and supplied to markets in the EU, in America etc.
But quite a few questions need to be asked before identifying culprits who contribute to product failures.
Was a risk assessment carried out across the supply chain, to identify where the greatest potential for things to go wrong was?
What checks were made that the manufacturers and their raw material suppliers could make the products? Was any sub-contracting allowed and if so, who to?
Were the specifications and contracts for the products clear enough? Were these communicated to those who needed to know? Including raw materials suppliers? Did everyone understand what was required? And understand the implications of getting it wrong or substituting something else?
What checks were made in production or on final products before shipping? And on receipt of products into warehouses at their destination?
So who’s to blame when something has been supplied that doesn’t meet the purchasers’ requirements?
Who did a risk assessment (if any) and identified where the product was coming from and who was involved with it? Who checked the main supplier and all their suppliers (to extent necessary)? Who tested the products and raw materials?
If there was independent certification in place against any number of standards, who did the certification? And what was the unit certified for?
Who wrote the contracts and product specifications? Who agreed to them?
Who passed on the requirements in the contract and specifications down the supply chain? And made sure the information reached sub-contractors where used?
Who inspected the factories and raw materials suppliers during production? Who signed off any final inspections pre-shipment? Who accepted the goods into the purchaser’s distribution system?
Who released the goods for supply to the consumer?
A product quality or safety problem points to a breakdown, or series of breakdowns, in the systems within a supply chain. And each stage in the chain has a responsibility that their product (or service) meets the needs and requirements of other unrelated organisations in that chain. If something gets through to the consumer that’s unsafe or not fit for purpose, it’s because it’s got past the various gatekeepers that need to be in place to protect their interests. So maybe it’s not just the manufacturers in China that should take all the blame…
Gail Van Den Bos is Product Manager for customised supply chain services across LRQA,and works to ensure the technical integrity of these services worldwide.
15th January 2008 at 11:30 am
Gail,
You have said a mouth full with this statement:
“A product quality or safety problem points to a breakdown, or series of breakdowns, in the systems within a supply chain.”
I would have to think it’s more of a series of breakdowns as opposed to just one. It’s been my experience companies are given business for the wrong reason and typically when that happens there is always the question “How inexpensive can you make it?” I use the word “inexpensive” interchangeably with “cheap” because at most companies the purchasing agent is driving the selection of suppliers and a not cross functional team that may include a Quality Engineer, Design Engineer, Manufacturing Engineering, Quality Assurance, Legal, etc. Therefore, the “less money” that is spent upfront means the more money the purchasing agent saved the company and that means his/her pay check goes up. The purchasing agent could care less how much rework and cost is spent downstream because that is manufacturing’s problem! I am not saying all of them are this extreme, but most of the ones I have met are.
Once I recommended to a purchasing agent that we should have suppliers build test parts to see which supplier can meet our specifications I was told it’s not my place to recommended or decide what suppliers are chosen. Needless to say two years later the supplier is still struggling to make the part. I have since left that company, but continue to ask my old colleagues about the progress. By the way I was the Product Assurance Manger so I felt obligated to ensure we had suppliers capable of manufacturing products to our specifications. Guess I was mistaken.
When purchasing agents are rewarded (bonus for doing their jobs) for saving companies money up front (all purchased items used for resale) and not the total cost, we will continue to have a series of breakdowns in the supply chain.
Table 21.1 of Juran’s Quality Handbook Fifth Edition displays the steps of Traditional Versus Strategic View of the Purchasing Process. The Traditional view sees the supplier/buyer relationship as Adversarial, competitive, distrusting while the Strategic view sees the supplier as Cooperative, partnership, based on trust. The table also shows the different approach to cost. In the Traditional View it’s about how much each piece costs as opposed to the total cost of ownership in the Strategic view.
One thing I always try to do is builder a relationship with the people I interact with. I am not saying I am always successful, but more times than not I am. It’s been my experience that when you have developed a relationship that is not just purely based on business, each of you are willing to got he extra mile to ensue each party involved has a clear understanding of the expectations. Clear specs, meeting the specs, etc.
One thing I like about the industry I am in (consultant for medical device manufactures with a focus on supplier development) with regards to the manufacture/supplier relationship is the US Food and Drug Administration (FDA) looks to the manufacture of the medical device as solely responsible for purchasing controls. The FDA wants to know what your company is doing for the Evaluation of suppliers, contractors, and consultants (21 CFR Part 820.50 (a)). For the full regulation on purchasing controls follow this link. http://www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfcfr/CFRSearch.cfm
In closing I fully believe this is a true statement:
“So maybe it’s not just the manufacturers in China that should take all the blame…”
I do recall my third grade teacher saying, “When you point at someone you have three fingers pointing back.”!!! So when companies point to manufacturers in China, they should remember they are as just at fault, perhaps three fold.