Explanation of Getting Quality Goods From Your Suppliers by Ron Kurtus - Improve Your Business with Total Quality Management (TQM). Key words: Total Quality Management, quality control, supplier partnerships, ASQ, Ron Kurtus, School for Champions. Copyright © Restrictions
Getting Quality Goods from Your Suppliers
by Ron Kurtus (revised 4 January 1997)
(Note: This is a paper I gave at an American Society for Quality Control (ASQC) symposium in Charlotte, NC in 1992. Although the material is several years old, the principles still apply.)
ABSTRACT: The way to assure your supplier will provide you with quality goods and services is to form a customer-supplier partnership with him. You do that by working together, sharing motivation for quality goods, and helping each other to do a good job.
In any business or job situation, your prime goals to satisfy your customer with quality goods and services. But in order to effectively satisfy your customer, it is essential that your suppliers also provide you with quality parts and services. This includes both your internal and external suppliers.
1.1 A Need for Quality Goods
This need is for quality supplies is obvious. If you get shoddy goods, items out of spec, unreliable parts, and/or late delivery, it is very difficult for you to deliver quality products yourself. Likewise, if your workers are inefficient, if the repair service is unreliable, or if you are getting low quality performance from those who provide you service, you are hindered from successfully satisfying your customer.
1.2 How Do You Get Quality?
Now, the question is: "How can you make sure that you will get the quality performance you need from your suppliers?"
1.2.1 Old method was to play tough
A method that has been used for years by many American companies is what they call "playing hard ball" with their suppliers. This includes using threats to influence their vendors, micro-managing the contract, or playing one supplier against the other.
These companies have also dealt the same way with their workers. Threats of layoffs would often keep workers in line. Brow-beating was often effective in the short run. An environment of distrust was always there in the workplace.
Other companies have simply accepted poor quality, getting what they wanted through re-work. They felt they were lucky to get anything close to specification from the supplier.
Surprisingly, a large number of organizations still use these outdated methods.
1.2.2 New method uses TQM
With the advent of the Total Quality Management (TQM) philosophy of doing business, there are much better ways to assure quality performance from your suppliers. The new way of thinking is to establish an atmosphere of trust, teamwork, and cooperation.
In other words, you must establish a partnership with your suppliers, such that it is in the best interest of both of you that the other succeeds. Working together as partners is the way to assure you will get the quality products and extra service you want and need in your business.
1.3 Steps to Achieve Goal
From studying and observing what is working in various companies and organizations that have established forms of partnerships with their external suppliers, as well as their employees, I have synthesized those examples into a strategy or continuous process consisting of three steps:
- Work Together to Focus Understanding,
- Share Motivation for Quality Goods, and
- Help Each Other to Do a Good Job.
The following explains how applying these steps in a continuous process will help establish a customer-supplier partnership that will assure that you get the high quality products you need.
2.0 Forming a Partnership with Your Supplier
Surveys have shown that many American suppliers would rather deal with Japanese firms than American companies. The reason for this is because the Japanese companies usually emphasize commitment and trust in their relationship with suppliers. Of course, the fact the Japanese have long term relationships and partnerships with suppliers is also a major reason it is so difficult for American companies to penetrate their market.
It is also important for you to establish partnerships with your suppliers. That includes forming partnerships with workers too. A partnership can be defined as a business relationship that is built on trust and open communication , and which enhances the mutual benefit of all parties involved.
2.1 Strategies of Establishing Partnerships
But that doesn't happen over night. You must follow some sort of strategy consisting of a procedure, process, or number of steps to establish an effective customer-supplier partnership.
2.1.1 Problem with Vital Supplier
For example, consider the situation where you are dependent on a certain supplier of parts that are important to the manufacturing of your product. This vendor has been sometimes erratic in its delivery of those parts, as well as their quality. You need the parts on time, within specification, at a reasonable cost, and with some follow-up service for any needed adjustments.
Although you had tried begging, pleading, and threatening, you haven't seen that much of an improvement in the company's output. Unfortunately, they're the only supplier available at a reasonable price. So now, you try something new. You try to form some sort of a partnership with this supplier, using TQM methods to encourage them to provide you with the parts you want and need.
2.1.2 Nurture a Relationship
But what do you do? You don't just go up to them and say, "Hey! Let's be partners!"
Instead, you must nurture a relationship with them. Just as the new mode of supervision is to be more of a coach than a dictator-boss, you must guide and encourage them to become the quality supplier you need.
This can be easily done by first making sure they understand what you want from them. Then you give them some reasons to provide quality products and services. Finally, you offer to help them and work together in order to get that product done correctly and on time.
2.1.3 Have Attitude of Trust
But you must also understand their capabilities, be motivated to work together with them, and be willing to get help and advice from your supplier. This is an attitude of trust and working together.
2.2 Work Together to Focus Understanding
In order for your supplier to provide you with the product or service that you want, that supplier must know exactly what you want. Too often orders are given carelessly, with the assumption that "they'll figure it out."
It is certainly true that if your worker or external supplier does not understand what you want, then it may be very difficult for that supplier to provide such an item. The supplier gets the impression that you really don't care about the outcome of this assignment and about the quality of the product. Careless instructions often implies that the item isn't all that important. It is similar to the old computer adage of "Garbage In -- Garbage Out."
2.2.1 Make sure they understand
If you want something done correctly, you must make sure the supplier completely understands what it is you want.
For example, in dealing with fellow workers or internal suppliers, Hughes Aircraft Company insists that people use what they call AVO forms, which stands for "Avoid Verbal Orders." Hughes management realized that verbal instructions often can be misinterpreted, misunderstood, or even forgotten. By having an order or instruction written, the chances of misinterpretation are reduced.
But you have to go beyond simply giving clear directions. It is quite possible that what you want is not completely feasible or that you have some misconceptions about the product or capabilities of your supplier. The best solution is to work together with your supplier to make sure that both of you understand what is wanted and what is possible.
Working together on defining and/or clarifying the requirements brings the supplier in on your "team" and is the start of a partnership.
2.2.2 Use Quality Function Deployment When Stating Requirements
One of the best ways to assure the supplier understands your requirements, as well as to initiate working together on clarifying those requirements, is to use some form of what is called Quality Function Deployment (QFD). In simple terms, you meet with key supplier personnel from the various disciplines to define, discuss, and clarify your requirements.
a. Work Together on Specification
You first list what features and specifications you want in the product or service you are purchasing. You also prioritize those features in order of importance to you. The contractor or supplier personnel then translate those features into functions that will fit their design and manufacturing methods. Any weaknesses in their capabilities can be addressed, tradeoffs can be discussed, and the design can be initiated.
b. Iron Out Misunderstandings
This type of discussion will iron out any misunderstandings about what is wanted, capabilities, and requirements. It also initiates working together with the supplier as a team. They are getting involved in your problem, and you are showing interest in working with them on getting this job done. It is the beginning of a partnership.
c. Encourage Method Down the Line
Another thing this does is to encourage the supplier to use similar methods in dealing with their own internal and external suppliers, enhancing the quality process.
QFD-type techniques can also work in giving workers assignments. The whole idea is to work together to make sure the assignment is completely understood.
2.2.3 Use MBWA and Other Forms of Two Way Communication
Once the requirements have been clarified using QFD, then it is good to maintain an open two-way communication with your suppliers. Management-By-Walking-Around (MBWA) is an effective way to find out what is really going on with your workers and internal suppliers. It is not meddling or micro-management, rather it is simply getting to know any problems or obstacles and fixing them, if necessary.
a. Shows Interest
Another advantage of MBWA is that is shows the workers that you are interested in them and their problems. They, in turn, feel they are more a part of the team or partners in the program. It is a two-way communication, where you tell what is going on, and they tell what is happening.
b. Skip-Level Meetings
Other forms of two-way communication are skip level meetings, and brown bag meetings with management. Managers at Lockheed Aircraft Corp. emphasize these methods to enhance good communication with their employees.
c. Similar Method Works With Suppliers
Working together to focus communication with your external suppliers is essential in forming a partnership with them. A form of MBWA is possible with your external suppliers. Meeting with them on a regular basis and perhaps touring the plant in a non-threatening manner can encourage good communication. Inviting suppliers to your facility and allowing them to ask questions of those using their products is very effective in improving their ability to do a good job.
d. Eliminate Distrust
Unfortunately, due to the years of distrust between customer and supplier, there is still discomfort in being able to do this type of thing. But that just emphasizes the need to form a partnership to eliminate distrust and get down to the serious business of producing quality items.
2.3 Share Motivation for Quality Goods
You normally have a strong motivation to receive quality goods and services. You want to get your money's worth and obtain those quality items that are necessary for you to be able to deliver quality goods to your customers.
On the other hand, your supplier may not be as motivated to provide you with the quality products and services you want to use or need to pass on to your customers. His first motivation is usually to make money, and that money is already established in your contract.
2.3.1 Sometimes a Bonus Works
Sometimes bonuses are handed out for excellent work, delivery ahead of schedule, and such. The Department of Defense uses what they call Award Fees in many contracts, giving bonuses to their contractors for doing excellent work. Giving a bonus is one form of motivating for quality, but it may have only short term effectiveness.
2.3.2 Giving Recognition
Another strategy that is often used is to give recognition and/or praise for a job well done. Recognition programs for employees and even for suppliers is advocated in most quality programs. It is a criteria for the Baldridge Award. Companies such as Delco Electronics Division of General Motors emphasize giving recognition to their suppliers.
But you must go beyond giving something to the supplier as a carrot of motivation. Rather, you must share your desire for quality goods with the supplier. As partners, it must be in both of your best interest that you receive quality products and services from your suppliers.
2.3.3 Promise Continued Business
The second major motivation of the supplier is to get repeat business. But sometimes the relationship between delivering quality products on time and the potential of getting repeat business may not be established. In some situations, a customer may have no other choice but to continue with a certain vendor -- quality delivery or not.
a. Some May Not Need It
Although some vendors may be in the enviable position of not really needing your business, they still will react to the promise of continued business with you in most cases. Even the most busy plumber will not scoff at, "If you do a good job, I'll throw more business your way."
b. Long Term Promise
The promise of continued business must be given in the long term. That defines a commitment and a relationship between you. By getting the suppliers to work with you as partners, they can see that if you do good they will be getting future business. That prospect is appealing to many companies, as well as workers.
c. Share the Burden
Likewise, workers like to know there is a true partnership relationship and that they have job security. Nucoa Steel has a motto of "Share the pain; share the gain" with their employees. In other words, if business requires cutbacks, everyone including top-management will share in the burden, as opposed to laying off any individuals.
2.3.4 Work Together to Make an Impact
A surprising hidden motivation that many people have concerning their work is to be able to feel important or to make an impact in their job. People want to contribute. People have ideas -- many of them valuable -- that can help the operation of an organization.
a. Don't Stifle Cooperation
Unfortunately, many supervisors hold the attitude of, "That's not my idea," to stifle contributions from their workers. What a way to hold down quality! Likewise, many companies do not accept suggestions from their vendors.
b. Work Together for Results
Another way to assure quality from your suppliers, to help to form a partnership with them, and to share your desire for a quality product is to work together to make an impact. Although you may have great ideas, you must allow your suppliers to express their ideas also. Then use the best of them. It isn't who's ideas is best, rather it is what idea is best.
Sharing impact starts in the QFD process. It can continue in status meetings, through suggestion programs, and such. Remember that you are both working together as a team to achieve your goal.
c. Results in Success
By allowing the suppliers to make input and give recommendations, you are allowing them to be important to the success of the operation. This not only make the suppliers feel good (an excellent reward), but it also gives them a vested interest in your success.
2.4 Help Each Other to Do a Good Job
If you want to make sure you get a quality product, it is sometimes necessary to help your suppliers continuously improve.
2.4.1 Helped a small vendor
For example, Kaman Sciences of Colorado Springs helped a small vendor set up a Quality Assurance program. It paid off in Kaman getting quality parts from this vendor. They formed a Customer-Supplier Partnership
2.4.2 Help train supplier's employees
It is also not uncommon for companies to send their employees to training sessions to make sure their work force is up to date on the latest techniques. Likewise, you can also help your external suppliers by inviting them to join in critical training sessions. In the sprit of working together, there is no reason that suppliers cannot also invite their customers to join in their training.
As part of establishing a working partnership on the Strategic Defense Initiative (SDI) program, defense contractors TRW and Rockwell International invited Air Force personnel to audit special training sessions they were having in TQM techniques. The Air Force then reciprocated for their training sessions.
In this way, both the customer and suppliers where speaking the same language, as well as encouraging the spirit of cooperation between them.
2.4.3 Ask supplier for help
You should not only help your supplier, but you must also ask them for help. Ask them to help to improve your system by pointing out obstacles you may be putting up. Ask them for suggestions on how you can improve.
This cycles back to Step 1 on working together to focus understanding, with effective two-way communication. This is done during the QFD process when you work together on the requirements.
Also, allowing them to provide an input gives them motivation and involvement in your project. This is part of sharing motivation. The whole thing is a continuous process. It also establishes an atmosphere of trust and cooperation.
In conclusion, the way to assure your supplier will provide you with quality goods and services is to form a partnership with that supplier. Three steps help you form that customer-supplier partnership:
- Work Together to Focus Understanding
- Share Motivation for Quality Goods
- Help Each Other to Do a Good Job
These steps will be the foundation for forming a customer-supplier partnership. It is a continuous process of improvement of your relationship and of the products and services delivered.
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