Managing relationships with various suppliers for Apparel and Footwear can be strenuous at best, but excelling in this area can have a significant impact on your business’s operations and bottom line.
The first step in managing these relationships is to understand the difference between Quality Assurance and Supplier Compliance and how to manage both of these successfully.
What is Quality Assurance?
Quality Assurance is your confidence in a supplier’s ability to deliver apparel and/or footwear products or materials that meet or exceed your needs. An interactive relationship between your company and its suppliers will help to ensure your end product meets your customers’ needs without any inspection or adjustments necessary on your part.
According to Joseph Juran (U.S. Quality guru), you can divide the quality assurance process into 9 steps:
- Define your product’s quality requirements
- Evaluate applicable suppliers
- Choose the most qualified supplier
- Plan for quality jointly with your supplier
- Collaborate and cooperate during the relationship
- Validate supplier’s conformance to your quality requirements
- Certify qualified suppliers
- Create quality improvement plans
- Design and use supplier ratings
What is Supplier Compliance?
Your company needs a common set of rules that govern how suppliers of apparel and footwear products must conduct business with you. There are general and standard guidelines for these rules (e.g., EDI standards, national or international laws, etc.), and your company includes your own unique set of compliance rules covering environmental and social issues. You need to know how a company performs as a steward of the natural environment and how a company manages relationships with employees, suppliers, customers, and the communities in which they operate.
In order to comply with your rules, suppliers must make adjustments to their own operations. They must devise a plan using operational procedures and computer systems to satisfy your rules while providing a high-quality apparel or footwear product or service.
What’s the Difference Between Quality Assurance and Supplier Compliance?
Compliance is simply putting forth the necessary effort to meet your company’s social and environmental requirements and those of any applicable laws. Quality, however, is a product of a systematic improvement process that uses resources and products and measures them so that continuous improvement and compliance are both inevitable outcomes.
In other words, you can’t achieve both Quality Assurance and Supplier Compliance with a compliance-only approach.
When you concentrate on continuous improvement in all key areas, including social and environmental compliance, you improve productivity, which, of course, results in increased profitability.
But how do you properly evaluate an apparel and footwear supplier with both of these areas in mind?
Key Steps to Evaluate Suppliers for Both Compliance and Quality Assurance
Measure the cost incurred to manufacture a quality product.
- Determine overall equipment effectiveness (OEE) which can be calculated as OEE = Availability (how often an asset is available) x Efficiency (how close the asset is to maximum production) x Quality (the percentage produced within your quality specifications).
- Calculate the percentage of footwear and apparel products in compliance with government regulations and your company’s social and environmental rules.
- Measure on-time and complete shipments.
- Track lead-time variability and fill rates. These are the primary reasons for carrying excess stock, which is a poor use of your working capital.
- Ask for contingency plans from your suppliers.
- Establish non-compliance penalties.
- Ensure suppliers understand expected deliveries and outline your carrier selection process.
- Set up a process for identifying compliance and quality issues and producing resolutions.
- Have the apparel and footwear supplier sign a formal contract that clearly outlines services or products to be supplied, as well as cost, pricing structure, terms and conditions, regulatory requirements, and legal provisions. Be clear about your expectations concerning social and environmental compliance.
Continually measure your apparel and footwear suppliers on both quality and compliance and insist on transparency in your supply chain.