Supply chain management requires continuous improvement and monitoring of the quality of resources and operations within production. However, failures or miscommunication between a supplier and a client occur sometimes and cause an interruption in processes. A crisis simulation case shows the situation with a company that sells building materials to building contractors that came across a supplier who fails to provide roofing nails for a company. The issue is managed by a Supply Chain Manager who needs to handle the situation with the supplier and establish a system that will ensure a supplier’s compliance as the roofing season is coming soon. This essay will propose a supplier performance improvement plan considering the steps that should be taken and the effectiveness of the corrective actions.
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The building company should assure that materials for selling will be delivered timely and with high quality. A supplier’s compliance and communication during the execution of corrective actions are crucial. Next, there are mentioned activities that will be included in the supplier performance improvement plan. First, there should be found the root cause of the problem with the delivery of damaged boxes and missing items. Second, managers from both sides should find a solution to the current issue by either fixing it together or terminating the contract. Correction of the problem may include establishing a specific quality control strategy, managing clients’ complaints by switching to other roofing materials, helping the supplier with the delivery, depending on the reason for failures in the supplier’s operations. Third, quality assurance control should be established with specifications and guidelines for the supplier to have clear key performance indicators. Moreover, fines and punishment for violation of standards must be discussed with both parties and included in the quality control rules.
After identifying the cause of the issue with boxes and establishing quality assurance principles, it is essential to improve processes within supplier-client activities. Lean Six Sigma methodology implies that after failures, it is crucial to implement an enhancement strategy (“What is Six Sigma?”). Therefore, to address the issue with roofing nails from the supplier, the company’s managers can introduce frequent inspections of boxes with materials. Furthermore, they can aid the supplier in checking the production and delivery services to find out where the issue occurs and establish strict control over the problematic area. If a problem repeats despite control measures, it is possible to communicate with the supplier about clients’ complaints and dissatisfaction and switch to another supplier if needed. Finally, the monitoring and control of supplier’s compliance must be profound, including standardization and documentation observance check and continuous performance plan adherence. The building company’s managers can introduce prevention costs in the future as well as look for other suppliers and establish relationships with them to avoid losses of clients.
Roofing nails may be substituted for other roofing nails if they can be delivered to customers while the company is waiting for the supplier performance plan to be executed. It is also possible to rework nails and impose the cost of alteration on the supplier. Another way to fix the issue can be by sending a representative of the supplier’s organization to the building company to check materials and negotiate forms of improvement and costs and damage compensation. The supplier improvement plan execution will act as a building company’s tool to deal with possible damaged or missing items or delays in the implementation of the contract by the contractor.
To fulfill a performance improvement plan, managers should identify the root cause of the problem with a supplier. It is stated that the Lean Six Sigma methodology can help in addressing the issue because it is based on interrelated elements: process management, improving existing processes, designing new processes (“What is Six Sigma?”). The first step is to define the main problem in the process. A team of a supply chain manager, a representative of a supplier, and an independent person from the same sphere can be invited to research the issue. The team will get a responsibility to identify the cause of the supplier’s failure to deliver roofing nails.
The development of evaluation criteria requires highly qualified specialists and time to prepare procurement documentation. Possible crucial quantified performance indicators are lost customers, customer satisfaction ratings, service turnaround times, or future revenue losses. The second step is to measure information collected and deliver preliminary assumptions about the root cause of the issue. It is essential to ensure that the building company and the supplier established required quality specifications and check found data against established standards. The third step is to analyze all assumptions and discover the valid reason for deviation based on profound data research.
The potential containment that has to be introduced should be based on quality and process control. The total quality management (TQM) system suggests monitoring operations prevent defects and establish high compliance with the supplier. Quality control charts can be created by a team as well as inspection of the boxes with a quantified amount of roofing nails to ensure that the items delivered comply with the specification. It is also possible to execute random sampling among all boxes that arrive at the company to identify the approximate percent of defective shipments. It is suggested to use continuous inspection upon receipt to assure that the supplier has delivered necessary products, and both quality and quantity are consistent (Barone). If the supplier provides roofing nails of high quality for an extended period, the times of inspection can be decreased.
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The corrective plan will be successful if both parties will discuss and agree on the terms of compliance and contract specifications and standards. It is vital to communicate thoroughly on all matters of damages, costs, delivery, and rules. The supplier performance improvement plan is based on methodologies that proved to be effective across various companies. The consistent execution of the high-quality procurement strategy by the contractor simultaneously increases the efficiency of the entire product supply chain (“Contract Management”). Compliance will affect the cost of purchases positively; delivery and inspection costs may also be reduced. The involvement of experienced specialists in the development of technical specifications for purchased goods to prevent damages will ensure high standards and integrity from the contractor. However, the success of the performance improvement strategy is substantially dependent on the commitment of partners.
To make a conclusion, one might say that the effectiveness of purchases is based on mutual agreement and continuous compliance, and improvement of services and procurement. It is essential to establish specific standards, the number of costs for goods or services under the contract, and the results of contract execution and clearly explain all processes and controversial issues. High-quality contract and control measures may lead to a decrease in the cost of the contract while achieving the desired result of its execution. Therefore, step-by-step implementation of contractual obligations, monitoring and acceptance of results, and responsibility of a supplier and a buyer to fulfill activities according to a schedule will motivate both parties to avoid damage costs and complaints from clients.
“What is Six Sigma?” ASQ.org, Web.
Barone, Adam. “Total Quality Management (TQM).” Investopedia.com. 2020, Web.
“Contract Management.” Worldbank.org. 2018, Web.