Quality Cost in Supply Chain

  

Lets understand cost aspect in supply chain between supplier vs OEM.
   
Supplier are  charged for the additional cost incurred by the OEM due to non-conforming components and materials and late deliveries from suppliers.

 A charge-back system is an effective way to introduce business discipline and accountability into the supply chain. 

OEMs use it as a "stick" for their suppliers to drive them to collaboratively identify the root cause of quality problems and to implement corrective actions. 

The supplier can provide relevant quality information about the shipment to the OEM even before it ships from the supplier's dock. If there are quality issues with any supplier component, manufacturers can take appropriate preventive action even before it arrives or take it out of the supply chain to reduce their own COPQ. QMS systems that do not support web architecture make it difficult for an OEM, participating in a supply chain, to reduce its effective COPQ.

Challenge faced

OEM has to rely on process and product quality information from the supplier's quality system. Suppliers cannot be forced to install different systems for different OEMs at the same plant to support their respective quality needs.

QMS systems if not on web based , real time , than gaps during  shipment and data available  for processing is in question, As information usually does not integrate well with the OEM's own systems and is frequently not available in a timely manner.

Term :  OEM* mean Original Equipment Manufacturer

VIDYUT CHANDRA PATANGE -
MTech (Industrial Engg and Management), Supply Chain Management Certified ( S.Korea )
CEO & Founder 
SRH Management Consultants and Trainers 
www.srhmc.wordpress.com
9490118367


Comments

Post a Comment

Popular posts from this blog

LETS LOOK AT COST OF QUALITY

Image
            Cost of Poor Quality A   manufacturing company   had annual sales of Rs.2500 Crores . Its quality department calculated the total cost of repair, rework, scrap, service calls, warranty claims and write-offs from obsolete finished goods. This aggregated cost, called Cost of Poor Quality (COPQ), amounted to 20% of their annual sales. A 20% COPQ implied that during one day of each five-day workweek, the entire company spent its ti me and effort making scrap, which represented a loss of approximately Rs 10,00,000 per day. Experts have estimated that Cost of Poor Quality typically amounts to 5-30% of gross sales for manufacturing and service companies. Independent studies reveal that COPQ is costing companies Millions of Rupees  each year and its reduction can transform marginally successful companies into profitable ones. Yet most executives believe that their company's COPQ is less than 5%, or just do not know what it is. All levels ...
Read more