What is supplier quality management?

What does supplier quality management mean?

Supplier quality management is the work a buyer does to make sure its suppliers deliver goods and services that meet the agreed requirements. It sets the quality terms in the contract, checks the supplier before it supplies, approves the first parts, checks deliveries and runs a fixed process when a delivery is defective.

Take a common case. A maker of garden machines buys a steel bracket from a small metal shop. For two years the brackets are fine. Then the shop buys its steel from a cheaper mill and says nothing. Three months later, brackets crack on machines already sold. Supplier quality management is the set of rules that would have stopped this: a clause that obliges the supplier to announce any change of material, a new approval of the part after the change, and a check of the first deliveries made with the new steel.

The work is most formal in manufacturing, medical devices, food and aerospace, where a bad part can hurt people. It also applies to services, as the FAQ below shows.

How is it different from supplier performance, risk and lifecycle management?

Supplier quality management answers one question: does what the supplier delivers meet the specification? The neighbouring disciplines use its results but answer other questions, and each has its own guide.

Supplier performance management

Measures everything the supplier delivers against the contract: quality, but also delivery, cost, service and responsiveness, in a scorecard reviewed with the supplier. Defect rates from supplier quality feed its quality line. See supplier performance management.

Vendor risk management

Looks at what could go wrong in the future: insolvency, sanctions, cyber attacks, a single source. A rising defect rate can be an early sign of a supplier in trouble. See vendor risk management.

Supplier lifecycle management

Controls the supplier record over time: its status, what it may do, and the checks between stages. A failed quality audit is one of the events that can restrict a supplier. See supplier lifecycle management.

Supplier onboarding

Collects and checks the supplier’s legal, tax and bank data before the first order. Quality certificates are often collected at the same time, but judging them is quality work. See supplier onboarding.

The whole set, and who owns each part, is described in the supplier management guide.

What are the steps of supplier quality management?

The supplier quality management process follows the life of a part or a service, from the first drawing to years of repeat deliveries. Most organisations use these steps, with more or less effort depending on how critical the part is.

1. Write the requirements down. The drawing or specification, the tests, the packaging and the documents that must come with each delivery, such as a certificate of conformity. What is not written cannot be checked.
2. Agree the quality terms. A supplier quality agreement, signed next to the purchase contract, sets what the supplier must do and what the buyer will check (see the next section).
3. Qualify the supplier for quality. Check its certificates, such as ISO 9001, and for important parts audit its factory or site. This is the quality side of the supplier qualification described in supplier lifecycle management.
4. Approve the first parts. Before series supply starts, the supplier makes parts with its real tools and process, and the buyer measures them against the drawing. In the car industry this is the production part approval process (PPAP).
5. Check deliveries. Incoming inspection at the buyer’s site, the supplier’s own test reports, or both. Many buyers reduce checks for suppliers with a long clean record and increase them after a problem.
6. Handle defects. Stop bad parts reaching the customer, ask the supplier for a corrective action, and check that the fix works.
7. Control changes. The supplier must ask before it changes a material, a site, a process or a sub-supplier, and the buyer decides whether the part must be approved again.
8. Measure and develop. Count defects, follow open actions, audit again on a schedule, and help weak suppliers improve when changing supplier is not an option.

Several people share this work. A supplier quality engineer usually owns the technical side: approvals, audits and defect analysis. Procurement owns the contract and the commercial follow-up, such as charging the cost of a defect. The receiving team or the laboratory runs the incoming checks.

What goes in a supplier quality agreement?

A supplier quality agreement is the contract document that turns quality expectations into duties. It sits next to the purchase contract or the framework agreement and applies to every order placed under it. ISO 9001 asks the buyer to tell external providers its requirements, including how the buyer will control and monitor their performance and which checks it or its customer will perform, at the supplier’s site if needed.

Some buyers publish their quality agreements on their supplier pages. A German industrial manufacturer, for example, publishes a quality agreement that rates suppliers A, B or C on customer-driven quality, supplier quality, on-time delivery, response to complaints and premium freight caused by the supplier. B and C suppliers must present measures to reach A. The same document asks for immediate measures after a defect, ideally in an 8D report, and says costs are documented, agreed with the supplier and charged.

How is a new supplier part approved?

A new part is approved when the supplier shows, with parts made on its real production tools and process, that it meets every requirement of the drawing. Approving a hand-made sample is not enough, because the series process can behave differently. The approval is repeated when the part or the process changes.

The car industry has the most formal version: the production part approval process (PPAP), published by the Automotive Industry Action Group (AIAG), whose current manual is the fourth edition, published in 2006. The supplier submits a package of up to 18 elements, from design records and process failure analysis to measurement results, sample parts and a Part Submission Warrant, the summary the supplier signs. Five submission levels set how much of the package the customer receives, from the warrant alone (level 1) to samples and the complete data kept available for review at the supplier’s site (level 5). Car makers add their own requirements on top.

Other sectors use lighter forms: a first article inspection report that measures every feature of the first parts, a pilot batch tested in the buyer’s laboratory, or a trial period for a service. The principle is the same. A supplier does not start series supply until the buyer has seen evidence from the real process.

What happens when a supplier delivers a defective part?

When a defect is found, the buyer first protects its own production and its customers, then asks the supplier to find and remove the cause. The order matters: sorting the stock comes before the analysis, because bad parts may already be on the line or in the warehouse.

1. Record the defect. Batch, quantity, what is wrong, where it was found, with photos. Block the stock concerned.
2. Contain. Sort the parts in stock and in transit, at the buyer or at the supplier, and replace the bad ones so production can continue.
3. Send a corrective action request. Often called a SCAR (supplier corrective action request), it asks the supplier to answer in a set format and by set dates.
4. Find the root cause. The supplier explains why the defect happened and why its own checks did not catch it. The 8D method, made popular by Ford in the late 1980s, gives the structure: team, problem description, containment, root cause, corrective action, validation, prevention, closure.
5. Check the fix. The buyer checks the next deliveries more closely, and closes the request only when the defect has not come back.
6. Recover the costs. Sorting, rework, extra freight and line stops are charged as the quality agreement allows.

A repeat defect, or a corrective action that misses its dates, is no longer only a quality problem. It goes into the supplier’s scorecard and review, and may change the supplier’s status, for example no new parts until the problem is closed.

How do you measure supplier quality?

The most common measure of supplier quality is defective parts per million (PPM): the number of defective parts divided by the number of parts delivered, multiplied by one million. It lets a buyer compare suppliers that deliver very different volumes. Other measures count rejected lots, complaints and how fast the supplier responds.

A worked example. In one quarter a supplier delivers 120,000 brackets. Incoming checks and the assembly line find 36 defective ones. Its PPM is 36 ÷ 120,000 × 1,000,000 = 300. A second supplier delivers 4,000 castings and 6 are defective: 6 ÷ 4,000 × 1,000,000 = 1,500 PPM. The second supplier had fewer defects but a defect rate five times higher. There is no universal good PPM: the target depends on the part, the sector and the process, and belongs in the quality agreement.

These figures become the quality line of the supplier scorecard. How to weigh them against delivery, cost and service, and how to run the review with the supplier, is explained in supplier performance management.

What do quality standards require from buyers?

Quality management standards make supplier quality a duty of the buyer, not an option. They do not say how to do it, but they require criteria, controls and records, which auditors check.

Sector rules add their own layer: aerospace, automotive, food and pharmaceutical buyers have their own standards and audit schemes. Check what your own customers and regulators require before designing the supplier quality process.

What does supplier quality management software do?

Supplier quality management software records the quality side of each supplier in one place: certificates and their expiry dates, audits and findings, first-part approvals, incoming inspection results, complaints, corrective action requests and their deadlines, and the PPM and other measures. Its main value is the trail: who approved what, when, on which evidence, which auditors ask for.

• Quality management system (QMS) software with a supplier module. Common in medical devices and pharmaceuticals, where documents, training, audits and corrective actions must be controlled together.
• The quality module of an ERP. Inspection plans on goods receipt, blocked stock and quality notifications tied to the purchase order and the supplier.
• Supplier management or source-to-pay suites. Strong on supplier data, questionnaires, certificates and scorecards; often lighter on inspection and engineering detail.
• Supplier portals and collaboration tools. Let the supplier upload certificates, answer complaints and submit approval packages instead of exchanging emails.

Choose from your own cases, not from feature lists. Ask each tool to show, with your data, a certificate expiring next month, a complaint that goes from containment to a closed 8D, a change request from a supplier that triggers a new part approval, and a quarter’s PPM per supplier. Then check how the result reaches the systems that order and pay: a supplier blocked for quality must be blocked where orders are placed. The wider choice of supplier tools is covered in supplier management software.