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How Closed-Loop Quality Capabilities Help Suppliers Increase Customer Demands

June 13, 2014
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Though the Aerospace & Defense (A&D) industries have always had a high premium on quality, recent economic and government drivers have raised the bar even higher. The combination of budget cuts—which totaled more than $40 billion in 2013—and additional track and trace compliance requirements included in 2011’s National Defense Authorization Act (NDAA) are requiring all industry players to elevate their quality management systems and processes to meet the new realities of the day.


A prominent effect of this belt tightening and stringency is being squeezed upstream from OEMs to suppliers. Overall, supplier networks are being consolidated, with increased demands on product compliance and timely deliveries on the part of OEMs. The message is clear: A&D suppliers need to improve their quality management capabilities, or risk losing contracts to competitors who do.


Leading suppliers are facing this challenge by improving quality management through architecting closed-loop quality process capabilities that are driving the types of improvements in product compliance and on-time deliveries that are winning deals with suppliers. In this article we’ll show how closed-loop quality management capabilities are helping A&D suppliers face internal challenges, and how these performance improvements are helping to win deals.


Moving Beyond Quality Management Silos


Separate and independently operating quality groups and functionalities, what we refer to as “silos,” were a long-ago standard that doesn’t cut it in today’s A&D industry. Particularly with the unrivaled product complexity and quality standards, leading A&D suppliers understand the importance of breaking down these quality management silos and establishing two-way quality management information flow across functional departments.


One of the key ways this is being achieved is through emerging software categories like Enterprise Quality Management Software (EQMS). Through preconfigured workflows and functionality, EQMS is allowing A&D suppliers to integrate quality, product, and process data across the entire value chain. This is a crucial capability in meeting both compliance requirements and responding to customer demands, as it enables companies to identify quality issues much closer to their source, greatly speeding the time to response, helping to eliminate non-conformances, and lowering the overall Cost of Quality.


Improvements in KPIs


In a theoretical sense it’s not difficult to see how creating closed-loop quality architecture can have a positive effect on all aspects of a supplier’s quality management efforts, but what does the data show?


Well, A&D survey respondents with closed-loop quality capabilities in place reported a median 99% rate in Products in Compliance (PiC)—the proportion of product deliveries made without any delays—as compared to 95% for respondents without the capability. This is a substantial operational improvement, particularly in the A&D industries, where variances are already miniscule over other industries.


In addition, closed-loop quality management capabilities have also been shown to move the needle on getting products to customers faster. The percentage of on-time deliveries (OTD) is another metric that gives a good indication of upstream quality, as supply chain issues can materialize in the design and manufacturing process. Looking at the data, A&D respondents that reported having closed-loop quality processes experienced a 2.5% higher median OTD than all other respondents.

In an environment of increased pressure and expectation among customers, this level of performance improvement is precisely the type of enhanced quality management capabilities that can allow an A&D supplier to win a new contract, or hold on to an existing one.

Leveraging EQMS for Quality Processes


Research has shown that emerging EQMS software is instrumental in easing and lowering the cost of closed-loop architecture by breaking down informational silos and integrating and managing quality and compliance processes across the full value chain. For this reason, it’s quickly becoming an indispensable tool for A&D suppliers in keeping up with the dynamics of the A&D industries.


As an industry with strong ties to government spending levels and particularly subject to regulations, it’s a virtual guarantee that the need for enhanced quality management in A&D will continue to grow with time. This means suppliers can be expected to face tighter and tighter demands and standards from customers. Those suppliers capturing the early EQMS adopter advantage and closed-loop quality management architecture across operations will be far better positioned to meet these demands and remain competitive than those that don’t.
 

For more on successful strategies for A&D suppliers, attend this upcoming Webinar: https://vts.inxpo.com/Launch/QReg.htm?ShowKey=20268&AffiliateData=article.
 

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