Any chain, including a supply chain, is only as good as its weakest link. If we

Question

Any chain, including a supply chain, is only as good as its weakest link. If we receive superior raw materials in the door, we have a better chance of producing a superior product. Research the topic of vendor relationships and methods used to assure high quality raw materials from your supply chain. How would you specify quality materials and subassemblies, how would you monitor vendor performance, and how would you check that the product you receive on your dock meets your requirements? How would you deal with substandard product? What does the ISO 9000 Standard require? Use citations other than the textbook.

Write three well though-out paragraphs that address the topic question with laser focus and show the references and websites you used for your citations.

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Explanation / Answer

Vendor relationship management is a discipline behind the process to build a relationship with suppliers to ensure controlled costs, best quality and minimising risks. It requires working with vendors to ensure that both the businesses benefit from the agreement.

Vendor management needs to focus on “Value”, that is quality for the money paid. To assure high quality raw materials from your supplier, you should be willing to pay the justified amount which may sometimes be higher than the average market price. Lowest price usually means lowest quality too. If you are paying a higher price for higher quality, it would also be wise to include quality details in the contract. Vendor performance is usually monitored by a series of agreed and contractual Key Performance Indicators (KPI’s). Vendor performance management has been made considerably easier with the implementation of VPM software and the collaboration of both vendors and purchasers. Both purchasers and vendors see the benefit of vendor performance management to such an extent that it is almost the normal practice in large companies.

Quality checks need to be done to ensure the quality of raw materials and parts that enter the factory. It is the responsibility of the purchasing department to ensure that the materials that arrive are of the correct quality specification. Quality can be measured on various aspects relevant to the raw material such as - Physical description, Dimensional measurements, Chemical composition, Performance specifications, Industrial standards, Brand name etc. Any substandard product needs to be reported to the vendor and returned if need be. This will ensure that this is not repeated in future. It is essential that the vendor be made aware of the importance of quality of raw material to ensure high quality finished goods.

ISO 9000 is a set of international standards on quality management and quality assurance developed to help companies effectively document the quality system elements to be implemented to maintain an efficient quality system. They are not specific to any one industry and can be applied to organizations of any size. The ISO 9001 requirements are broadly separated into eight sections (called ISO 9001 clauses), five of which contain mandatory requirements for a QMS: general Quality Management System requirements (clause 4), Management Responsibility (clause 5), Resource Management (clause 6), Product Realization (clause 7), and Measurement, Analysis and Improvement (clause 8). All elements of these five clauses are mandatory with the exception of the Product Realization section, which allows for a company to exclude portions that are not applicable. Clauses 1 through 3 include no requirements, but instead deal with the scope of the standard, references to understand the standard better, and terms and definitions.

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