Supply Chain Management

Third-party solution providers can help within emerging markets.

It’s hard not to pick up a newspaper or industry magazine or surf the internet without reading that manufacturing industries are relocating their operations to other countries. During the past couple of years, it’s been equally difficult to avoid articles concerning serious quality issues present in consumer and industrial products produced in emerging economies. Even as product lines move to China, India, and Russia, domestic companies are losing significant numbers of experienced employees throughout their organizations due to early retirement or reassignment. Diminished and often lost in this regard is the tribal knowledge of operators who know the pulse of the manufacturing process. This triple whammy of outsourcing, loss of tribal knowledge, and decrease in product quality has emphasized the need for third-party suppliers of supply chain solutions.

Even without the prospect of moving a product line, buyers continue to look offshore for lower-cost suppliers, both for export back to the home market as well as to serve the needs of the growing, emerging markets. However, the launch and start-up of essentially new and unfamiliar product lines in these foreign lands may produce quality levels below expectation. Significant transit time across the ocean eats away any buffer in the production timeline, so cost savings can easily be lost when expedited shipments are required. Quality Management Systems (QMS) don’t mitigate the problem. QMS standards such as ISO 9001 and ISO/TS 16949 for the automotive industry still require product validation and some level of supplier development, regardless of the country of origin of the purchased products.

To address these complexities, it is crucial to have resources on the ground in the developing market. When suppliers are located halfway around the world in a culture that is unlike our own, quality professionals need to be creative in the way that they develop and support the supply base. Manpower reductions and other cost- reduction strategies, as well as increasing travel costs, have organizations leaning toward outsourcing some or all of their supplier-development activities to independent third parties familiar with quality management systems, tools, and techniques.