September 2, 2019
By Dan Creinin, Product Manager, Elemica Quality, Elemica
The supply chain has undergone a complete transformation over the past 10 – 15 years. Two of the forces driving this change include the geographic expansion and increased regulatory activity based on market events. Geographic expansion has driven down costs, but, has also exposed manufacturers to financial and brand risk caused by inconsistent quality.
Product quality directly impacts the profitability of a company. A critical cost of poor quality elements includes supplier material quality. Manufacturers must give the proper attention and resources optimizing their upstream partnerships. As regulations increase and consumers demand more transparency, manufacturers require more complete knowledge of their extended supply chains to be able to address brand risk.
To gain insights into the extended supply chain, companies continue to invest in a digital transformation journey. Using a Digital Supply Network to automate business processes and provides constant flow of information between suppliers, buyers, shippers, and logistics service providers. The information is collected, rationalized, and correlated across business processes and then extended to all trading partners. Streamlining communication among suppliers, customers, and manufacturing sites creates an inter-enterprise quality and compliance solution that minimizes costly product quality and delivery issues. Extending supply chain data gives manufacturers and participants the upstream visibility and control they need to provide improved downstream customer service.
E-COAs Improve Supply Chain Quality
One way to improve supply chain visibility, traceability, and transparency is to take advantage of the Electronic Certificate of Analysis. Today, manufacturers do not take advantage of the business value locked in consistently analyzing their supplier’s COAs. They do not see the wide quality variation their suppliers produce from lot to lot. This variation causes excessive investments in process and inventory to manage this variation.
Electronic Certificates of Analysis (COA) provides a lens into your supply chain quality. By electronically gathering inbound COAs, you can reduce material costs and variability. Out of specification supplier shipments are dramatically reduced, streamlining qualification processes and reducing pre-production inventory. Supplier’s COA data is compared to a company’s specifications, preventing out of spec lots from entering your factory and eliminating production disruptions. Not only are time and money saved on the inbound process, but a review of this data will improve product yield/quality to the customer.
A proactive analysis prevents having to scrap products and minimizes costly returns.
Visibility – Direct Material Inbound Quality Drives Operational Efficiency
Supplier quality data drives operational efficiency. By ensuring that every inbound shipment from every supplier shipping location to each production facility meets your specification, a manufacturer can realize many financial benefits including;
- Reduced pre-production inventory– No longer does a manufacturer have to put inbound materials or ingredients on a quality hold if they know that every inbound lot meets their specification.
- Meet demand variability – With the ability to efficiently schedule inbound materials, a manufacturer can better schedule its production activities based on variation in demand.
- Reduced rework / improved efficiency – Knowing that your supplier’s ingredients or materials meets your specification before it enters your inventory results in higher quality and less rework.
Traceability – Inbound Material Accountability Drives Regulatory Compliance
Regulatory compliance continues to change based on the markets you serve. Food, chemical, pharmaceutical, CPG and other industries have regulations specific to each market. Many industries have different requirements for traceability and has some kind of initiative in place to provide complete end-to-end traceability.
These regulations require extensive supplier documentation across corporate, production facility, and material quality metrics for both process and finished good quality. Manufacturers that openly share information with their supply chain partners improve their position with their suppliers and customers. An Electronic COA provides documentation that keeps a business in compliance with industry regulations.
Electronic COAs from suppliers must contain lot traceability and quality information to help a business comply with its regulations. Additional detail on shipments, purchase orders, shipments, product specs, and more need to be shared to provide a complete picture so that a quicker, better diagnosis to any potential quality problem can be addressed.
Transparency – Supply Chain Mapping Engenders Consumer Trust
Buyers continue to demand more and more transparency information about their purchases. Whether it is driven from a greater social consciousness, buyers want to know that all the ingredients or materials used for the goods they purchase are in compliance and of the highest quality. This market-driven transparency requires systems to track this information.
Once the information is gathered and tracked across the supply chain, it can be communicated among trading partners, to proactively address issues before challenges permeate through the supply chain.
Open and honest dialog among trading partners improves transparency, which in turn increases collaboration, leading to a competitive edge in the market. By demonstrating that you systemically know your extended supply chain partners, you can demonstrate to your customers that you understand their concerns and are addressing them.
Reducing Risk with COAs
The combination of visibility, traceability, and transparency into supply chain processes means you gain molecular insights into what is happening within your supply chain, from raw materials to end customers. This includes all documentation, transaction, data exchange, messaging, etc. all shared on a networked platform so that all trading partners have accountability and understand escalation paths if needed.
The deep knowledge and insights gained from information within the supply chain, along with quality information shared on COAs, means that risk can be minimized, saving costs and improving customer satisfaction.