Feature Article : Reducing Risk in Supply Chain Management: A Textile Case Analysis
Our team in India recently presented with the Indo French Chamber of Commerce and discussed a few applicable case studies related to “Reducing Risk in Supply Chain Management.” Daniel Ben-Ezra, Pro QC’s Country Manager in India, provided the following summary highlighting one of the cases presented.
European company that has been in business for +200 years, serving top end clients with their carpets globally. Production of all carpets was being done in India and Nepal.
A long term (+32 years) relationship had been there with one of their main vendors in India. This relationship had originally been rather informal in nature, with owners of both companies frequently visiting each other and developing a good understanding. In the past years, the relationship had become more formal in nature as new management succeeded the original owners of both firms. In this case, the client identified Pro QC as a quality solutions provider online, and requested a meeting at our office in India during one of their upcoming visits. We were aware of the client meeting competitors at the same time, allowing them to compare profiles & rates before making a final decision on their quality control partner.
The buyer was facing several quality problems with the carpets and negative feedback in the market from their clients. Despite years of efforts to correct these problems, the Indian vendor continued to be unable to deliver the required quality. Lead-time was an additional issue, promises were not being kept and delays led to further customer complaints.
Because of the persistent quality issues, the client for many years inspected the carpets at their own warehouse in Europe prior to shipment to their clients worldwide. In case carpets were rejected, they could not be sent back to India as costs would be prohibitive, hence many items were scrapped. Further, as one can imagine, the overheads involved in performing their own inspections in Europe and additional shipping costs were putting pressure on margins.
Unfortunately, due to continuous complaints by the buyer for an extended period of time regarding quality & lead-time, the supplier had become agitated and was seriously contemplating parting ways with the client. The buyer represented a relatively small % of business for this particular vendor, and the headache that resulted from servicing this buyer was become more and more of an issue for the vendor. They were close to severing ties, which would have been a big problem to the buyer as they were very dependent on this particular vendor. It would be lengthy and costly process to sample and produce the same types of products with another vendor.
The buyer had hired a reputed creative director to steer the company in a different direction. This led to new and more demanding designs, putting additional pressure on an already strained relationship. Because of persistent quality and lead-time issues, many different people from the buyer’s organization started communicating with the vendor – designers, buyers, quality control staff, marketing, logistics and sales people. The vendor was struggling maintaining all these stakeholders. Another issue was presented by the weavers and other subcontractors of this particular vendor. They had their own aspirations if becoming an exporting company, and also flat out refused to carry out certain processes as they were deemed to costly and/or complicated.
Pro QC established the following goals:
* Re-establish trust between the buyer and the vendor. * Improve processes so that client production requirements could be met. * Reduce costs. Through enhanced quality, the client could do away with their internal QC process in Europe and experience a lower number of rejects. * Get to zero customer complains in terms of quality and lead-time.
1) Supplier audits and corrective action plans were generated and executed.
The first step involved auditing this particular vendor and developing a corrective action plan for improved quality and lead-times. Various processes at the vendor’s facility were identified that were leading to structural issues. Through corrective actions after the audit had been completed, we worked diligently together with the vendor on fixing these.
2) Alignment of quality expectations between Pro QC and the client’s QC team.
In order to better understand the exact quality issues being identified by the client’s QC team in Europe, for a period of time quality inspections were carried out both in India and afterwards in Europe for the same pieces. By comparing findings, we calibrated our own quality engineers in terms of the client requirements. After several of such inspection rounds, we were confident that were looking at the products in the exact same way as the client, allowing for direct shipment of the carpets to end user clients across the globe. This lead to substantial cost savings and lead-time improvements.
3) Monthly calls for follow-up.
Through Pro QC, the client finally had continuous eyes and ears in the factory allowing them to have a finger on the pulse on all developments at the vendor’s location. By discussing corrective actions and inspection results on a monthly basis through conference calls, all stakeholders were starting to feel more confident about the vendor and as a result, the relationship between the two parties improved substantially.
4) Employ weekly inspections on-site.
By consistently performing inspections in India at the factory, the vendor’s staff started understanding the client’s requirements and quality standards. As a result, quality steadily improved. Important to note is that originally the vendor was hesitant on working with a 3rd party inspection company. They felt that they were capable of dealing with the situation themselves and had all knowledge in-house. This turned out to be incorrect – the vendor is now very pleased with our presence. Through improvement of their processes, the vendor has been able to tap new markets and clients as well.
5) Conduct meetings with subcontractors & weavers.
Critical to the success of the relationship between buyer and vendor was involvement of the various sub suppliers of the vendor. The vendor actually only provided finishing activities at their own site, and were outsourcing the majority of production processes to other sub suppliers. As one can imagine, at first the vendor was very hesitant about allowing the client and Pro QC access to their sub suppliers, but once assurances were given we managed to start building a relationship with these people as well. Through training and the occasional sweepstake, sub suppliers became more involved and motivated to work for the client, resulting in a reduced number of defects and a willingness to work on more complicated designs which were critical to the client’s business.
In this case and many others, Pro QC substantially improved the relationship between the buyer and the vendor. The following milestones were reached:
1) Zero customer complaints for quality.
Since Pro QC started performing inspections at site, product quality improved substantially. Important to note is that through identification of defects in India itself as opposed to the European warehouse, allowed more effective rework and shipment of rugs that were of higher quality.
2) Large cost savings.
Being able to ship the rugs directly from India to clients as opposed to sending them to Europe first for a quality check, allowed the client to enjoy substantial savings with regards to overheads and transportation.
3) Successful launch of new designs with enhanced complexity.
Getting all sub suppliers on-board was critical in the introduction of new and more complex rug designs. We helped address concerns and provided training that allowed staff to comply with more the client’s more demanding requirements.
4) Successful exhibitions and new business for the client.
Receiving samples in time and at the right quality is absolutely critical to the client as a big source for them of new business is trade shows. Prior to Pro QC’s involvement, it was not uncommon for the client to not have required samples with them doing such shows, or when they were there the quality could be problematic. By focusing our efforts on quality and lead-time of the various samples that were required prior to such shows, Pro QC helped the client secure new business and present themselves better.