THE ROLE OF SUPPLIER PARTNERSHIP AS A QUALITY IMPROVEMENT STRATEGY

KISII UNIVERSITY COLLEGE

(A CONSTITUENT COLLEGE OF EGERTON UNIVERSITY)

FACULTY            : COMMERCE

DEPARTMENT    : ACCOUNTING AND FINANCE

UNIT                     : TOTAL QUALITY MANAGEMENT

UNIT CODE          : BCOM/BBAM 472

TASK                     : THE ROLE OF SUPPLIER PARTNERSHIP AS A QUALITY

                                   IMPROVEMENT STRATEGY

GROUP 3

1.      DAVID H. SHIKUMO                       C12/60312/08

2.      HARON MUTULA                            C11/60228/08

3.      MOSES SAIDI                                   C12/60310/08

4.      THOMAS YERI                                C12/60289/08

5.      MAUREEN WAWIRA                      C11/60233/08

6.      MOHAMED FARAH ADAN             C12/60321/08

7.      JAMES KING’ORI                            C11/60176/08

8.      JAMES MUTETI                               C12/60305/08

9.      PATRICK OGENO                            C12/60865/07

10.  HARRISON EGESAH                        C11/60190/08

INSTRUCTOR     : MRS E. A. ODERO

SUBMITTED        : 22^ND FEBRUARY, 2012

QUESTION

Discuss the role of Supplier Partnership as a quality improvement strategy

 INTRODUCTION

TQM is a way of planning, organizing and understanding each activity, and of removing all the wasted effort and energy that is routinely spent in organizations, thus improving the competitiveness, effectiveness and flexibility of an organization for the benefit of all stakeholders. It ensures that leaders adopt a strategic overview of quality and focus on prevention not detection of problems.

Suppliers are firms and individuals that provide the resources needed by the company to produce its goods and services. This includes materials and parts, capital items, supplies and service.

 Partnering is a long term commitment between two or more organization for the purpose of achieving specific business goals and objectives by maximizing the effectiveness of each participant’s resources. The relationship is based upon trust, dedication to common goals and objectives, and understanding of each participant’s expectations and values. Benefits includes improved quality, increased efficiency, lower cost, increased opportunity for innovation, continuous improvement of products and services.

Organizations spend on the purchase of raw materials, components and services. Therefore, suppliers’ quality can substantially affect the overall cost of a product or service. One of the keys to obtaining high-quality products and services is for the customer to work with suppliers in a partnering atmosphere to achieve the same quality level as attained within the organization.

Customers and suppliers have the same goal of satisfying the end user. The better the supplier quality, the better the supplier’s long-term position, because the customer will have better quality. This is because both the customer and supplier have limited resources; they must work together as partners to maximize their returns on investment.

 Deming stated that customers must stop awarding business based on the low bidder because prices have no basis without quality. He advocated single suppliers for each item to help develop a long-term relationship of loyalty and trust. Joint efforts improve quality, reduces costs, and increase market share for both parties.

Supplier partnership is the discipline of strategically planning for, and managing, all interactions with third party organizations that supply good and/or services to your organization, in order to maximize the value of those interactions. In practice, supplier partnership entails creating closer, more collaborative relationships with key suppliers in order to uncover and realize new value, and reduce risk.

MANDATORY REQUIREMENTS OF SUPPLIER PARTNERSHIP

Successful supplier partnerships require commitment and continual nurturing. The following points as mandatory requirements of supplier partnerships;

Ø  Supplier personnel should meet with buyer personnel beyond those in the purchasing office. It is particularly important for them to meet with personnel who actually use their products so that needed improvements can be identified and made.

Ø  The price-only approach to buyer –supplier negotiations should be eliminated. Product features, quality, and delivery concerns should also be part of the negotiations. The goal of the negotiations should be to achieve the optimum deal when price, feature, quality, and delivery issues are all factored in.

Ø  The quality of supplier products should be guaranteed by the supplier’s quality processes. The buyer should have no need to inspect the supplier’s products.

Ø  Both partners should be capable of sharing information electronically so that the relationship is not inhibited by paperwork. Electronic data exchange is particularly important for successful Just in Time (JIT).

Ø  The supplier should fully understand and be able to practice just-in time (JIT). Buyers should not need to maintain inventories.

ROLE OF SUPPLIER PARTNERSHIP

1. Timeliness

The suppliers should ensured that they deliver the required inputs on time while in return the customer (organization) should pay for the supplied inputs on time hence saving time and creating a good relationship.

2. Information

The customer (organization) is responsible for providing the supplier with clear and sufficient information of requirements so that the supplier can know precisely what to produce. Both the customer and the supplier should continually exchange information, sometimes using multifunctional teams, in order to improve the product and service quality.  

3. Product evaluation

Both the customer (organization) and the supplier should decide the method to evaluate the quality of the products or services to the satisfaction of both parties. This will enhance their relationship which may lead to better provision of services to organization’s customers.

4. Monitor customer complaints

When dealing with business transactions, both the customer and the supplier should always have the best interest of the end user in mind.  Having a complaints handling system in place will help you pick up on any adverse incidents and trends relating to your products. For example, the Australian Standard AS/ISO 10002:2006 Customer Satisfaction—Guidelines for complaints handling in organizations provides advice on the complaints handling process, including planning, design, operation, maintenance and improvement.  

5. Awareness of product liability laws

Both customer and supplier should ensure that their products comply with the safety standards. If end user suffer serious injury or death from problems with your products, you and your business could be liable under the product liability provisions of the Consumer Law or at common law. 

6. Ensure necessary tests are done

Many products need testing to ensure they are safe and free of faults and consistently meet any mandatory standards that apply. If you are supplying products covered by mandatory standards or bans, every item must comply. If you claim that all your goods comply, you must be able to support this with evidence. Having an effective compliance program helps you to gather this evidence.

 7. Provide dependable products

In supplier partnership it’s the role of the supplier to ensure the quality and reliability of the products they supply. The supplier must be reliable at all time. The quality of the products should not be compromised hence quality improvement.

8. Anticipate changing needs and acting on them

The customer (Organization) should be aware of changing needs of the end user and therefore adjust accordingly. On the other hand, the supplier should adjust according the needs of the consumer.

9. Commitment

Long-term commitment to the partnership provides the needed environment for both parties to work towards continuous satisfaction of end users needs. Each party contributes its unique strengths to the process hence product quality improvement.

10.  Compliance with mandatory standards

Any products subject to mandatory product safety regulations must comply before you can sell them. Mandatory standards and bans are law. For instance, In Kenya the products should bear the Diamond Standardization mark of Quality from Kenya Bureau of Standards (KEBS).

11.  Communication

Any arising needs in product by the management should be communicated to the supplier on time. This will ensure that no delays are experienced on both parties which could lead to inefficiencies and delays in production therefore compromising quality. Suppliers that do not maintain a policy of open communication- or even worse, actively practice deception- should be avoided at all costs.

12.  Plan ahead for recalls

A company that has a set of recall roles and procedures in place will save time and money, and will help protect their reputation, in the event that a recall is necessary. It is in everybody’s interests to act quickly and surely to remove unsafe products as soon as they have been found. 

Impacts of quality improvement

1.      Customer and society

Customers and society get benefited by quality of organization products by enhancing customer satisfaction and delight. The higher the quality, the better the civilization. The improved quality products and organized services make the society and customers more dependent on them. Quality requirements keep on increasing towards perfection. Failure of quality has a catastrophic consequence for the organizations products. Improved quality increases employment and prosperity in the society.

2.      Companies’ performance

Through quality improvement there will be spectacular growth in the net profits of the organization. Quality facilitates the reduction of waste which results in increased quality output and reduced use of inventory.

3.      Nation’s economy

The national economy becomes stronger and stronger as a result of exports and earning foreign exchange brought by quality. Quality helps in raising the living standards of all the people in the country and helps in improving science and technology.

CONCLUSION

Relationships between an organization and its suppliers have traditionally been characterized by adversarial activities such as the low-bid process, in which at least one and often both parties lose. Rather than working together to find ways for both to win, buyers use their leverage to force suppliers to absorb costs to win the low bid, and suppliers look for ways to minimize their losses by barely meeting the buyer’s specifications. Such relationships will not help either party succeed in the long run in a competitive market place.

To understand the rational for partnering with suppliers, one must understand the goal. The goal is to create and maintain a loyal, trusting, reliable relationship that will allow both partners to win, while promoting the continuous improvement of quality, productivity, and competitiveness.

REFERENCES

1.      Dale H. Besterfield, et al (2003): Total Quality Management, 3^rd Ed, Pearson Education International, New Jersey.

2.      John S. Oakland (2008): Total Quality Management, 3^rd Ed, Elsevier ltd, Oxford UK.

3.      Frank M. Gryna (1998): Quality Planning and Analysis, 4^th Ed, Prentice –Hall, London.

4.      Mc Ivor, Ronan, Paul Humphreys, and Eddie McAleer (1997): Implication of Partnership Sourcing on Buyer-Supplier Relations, Journal of General Management.