How to lock out poor quality, unethical components

Moreover, you stand to lose both reputation and money, incur unnecessary costs through product recalls, and waste time, money and labour costs in production. The damage is both extensive and far-reaching.

In an increasingly complex business environment, guaranteeing supplier efficacy and quality is therefore crucial. With further scrutiny of environmental and social issues in the supply chain, the damage caused by substandard materials on the end product is dovetailed by ethical considerations that manifest in the supply chain. 

Unethical practises that exploit workers, violate human rights conventions, and ignore environmental issues are of just as much concern as poor quality materials and products. It is often the case that the two go in hand-in-hand – where one finds unethical practices in a supplier, one also tends to find substandard products. Cutting corners is pervasive in such organisations and low standards are the rule across the board, rather than the exception.

It is therefore incumbent on those operating at the sharp-end of the supply chain to protect their organisation from financial and reputational damage, to expose poor practise and to help to raise standards where it’s possible to do so. This requires transparency, collaboration, a framework or code of conduct to work from and a set of standards to reach. 

Have a supplier management process in place

Validating your suppliers, examining their credentials and checking they’re compliant goes a long way to mitigating the aforementioned risks. It locks out poor quality components from your supply chains and protects against ethical, social and environmental transgressions - safeguarding the long-term efficacy of your supply chain.

Having an efficient and effective supplier management process in place helps you to achieve this. By knowing and understanding your suppliers and developing relationships with them, you’re better able to understand how they operate. You will gain a better understanding of how they handle quality and safety, how, when or if they carry out third party audits and their policies for returning products and materials.

Having that relationship in place also allows you to set production standards that you expect your suppliers to meet. In so doing, you should expect that they demand the same standards of their suppliers too. In order to meet your standards, you either need to develop some internally that you can verify your suppliers against, or alternatively, you can use standards that are set by industry or by the government. The latter will be more stringent and are often legally binding. Failure to reach those standards is a huge red flag.

Carry out regular audits

An audit is an essential part of the supplier management process. Without it you expose your organisation to financial, operational and reputational risk. You should perform these periodically to ensure your supplier is meeting the requires standards you set. 

Through an audit, you’ll be able to establish the means through which your suppliers are monitoring quality control and environmental and ethical standards. Do they carry out inspections? Do they monitor components or raw ingredients for compliance with relevant specifications? Do they have a process and contingency for if or when their suppliers don’t meet standards?

It’s worth remembering that auditing is an ongoing process and not a one-off; it should be carried out yearly. In an increasingly complex environment and with supply chains becoming ever-more diverse that is a cumbersome task – though it can be streamlined and made simpler by working with partners and technology that pre-qualify and verify suppliers for a range of criteria.

The quality of your products is essential to your success as a business. By working alongside suppliers and ensuring their compliance to high standards, you lock out poor quality and protect your organisation in the process – in an increasingly competitive environment, that is essential for success.
To find out how you can identify risk in your supply chain, explore Alcumus’ Supply Chain Compliance solution.