I interviewed Romeo Elias who discussed Quality Control and Management of Suppliers.
Today we're speaking with Romeo Elias, the founder and CEO of Intellect. Today's topic is going to be related to business process management and how it can help ensure that your suppliers meet your standards. And my question, Romeo, is can you describe the concept of supplier management and what does it mean in this context.
Thank you, Dustin. It's good talking to you again. I appreciate the opportunity to speak more with you about this topic. Definitely, I mean, supplier management is a very critical area of expertise for a lot of companies in different sectors, like specifically manufacturing, in pharma, even in environmental companies and food production, because today we live in a global world and everything is really interconnected. If you look at your typical product today, it's made up of hundreds, if not thousands of supplier. And there's a whole field of focus here. How do you ensure that as you [inaudible 00:01:07] product and as you maintain that and you go to market, how do you ensure that your supplier are meeting the standards that you need to meet for your clients. Ultimately, at the end of the day, if something was to happen to your product, if you were to have a safety with your drug or your medical device or with your — whatever it is — your phone, and it's caused by a supplier, ultimately, you're accountable, not your supplier. So a lot of companies spend a lot of money, a lot of time, a lot of effort into understanding, into tracking and managing the processes around how they select, how they qualify, and how they continue to monitor and manage their relationships with their suppliers. Does that help?
Can you talk about some of the challenges that you face when making sure your suppliers are meeting standards?
So essentially, it starts with understanding, first of all, the selection process. How do you select your supplier? And what kind of products are they going to be providing or service they'll be providing for you? And then you go into the next level of how do you ensure between the various companies that you find, how do you qualify them? How do you ensure that you pick this vendor versus another? And at every step in the process, you need to have quality processes and procedures in place to meet. And by the way, this is not simply for your own purposes internally to ensure that you maintain a quality product, but also it oftentimes is to ensure that you meet your certification and your standards like ISO or FDA or USDA. There are countless standards out there that you have to abide by.
And so you have to have those processes in place. You have to document them. You have to enforce them. You have to ensure that you're maintaining that internal process internally as you select these suppliers and you continue to monitor on a regular basis that they are following those procedures.
So it's a very broad area. For example, if you look at it from the perspective of the sticky case of quality management... So, for example, we have a whole suite of software that we've created specifically around the quality management area.And when you look at that, there is a specific module all around supplier management. In that module, what you're doing is you are doing regular audits with your suppliers. The [00:03:30] are there to identify are they meeting the various standards that you've put in place. Are they maintaining their own certification? They have to show you that they have completed. And are you identifying any incidents or nonconformance, and if so, then how do you track those? How do you make sure that the supplier corrects those? Sometimes you may find that a particular supplier is underperforming, so you need to be able to have data, information that will let you determine that so you can replace a supplier or really make sure that they change their process internally.
So the challenges are across the board. And they can be anywhere from the most micro-level in terms of how you manage from day to day to even the highest level in terms of how you select and your overall process that you have in place with the managing and getting your suppliers.
What do you do when a company, a supplier is not meeting the standards?
Well, there's many process, obviously, many ways you can analyze it. Obviously, as a company, you have to choose,first of all, is this a recurring issue? Is this something that can be resolved quickly? Is it a major issue? So this is the whole process of what they call nonconformance and how you manage that, and then you have to have internal process to determine, based on the nonconformance identified, how do you deal with it. Is it something a one-off thing that happens every so often and it can be managed and the risk is manageable?Or is it really a severe situation? And then you have to determine is the supplier somebody that you continue to work with, or do you need to replace? Because it really depends on a case-by-case situation.
I think the key, really, is that you as an organization, as a company, you have to have that discipline. You have to have this awareness that your suppliers are part of your ecosystem, and you need to treat them as almost an extension to your employee workforce. But obviously, they are external to you, so there are some parameters, and there's contracts in place, and you have to be able to take all that into consideration.
Now from a perspective of when you look at business process management and quality management systems, what they try to do is bring actual process and standardization to this relationship with your suppliers. So now it's no longer just simply conversations and discussion. It's really systematized. So your suppliers have to fill out information on a regular basis and to specific forms and documents that you request of them. They have to show you traceability and accountability to any issues that you've identified. You have transparency and reporting. They have that same information available to them, so they can be aware of it. They can correct these things themselves, so it's no longer... It's not a reactive thing. It's a proactive process.
In addition, there are situations where you need to be able to source out where their suppliers are coming from, because if you're taking a situation where it's a food product, they may be giving you a portion for that food, but may need to know also where they got their ingredients from. So really, there are so many areas here that it could be evolved in. So having systems in place will help you determine and put in place where your processes that you're tracking as an organization begin and end. It ensures that you're enforcing that process with all your suppliers. It gives you visibility, again, accountability to them and to your own team that they are following those processes and they're ensuring and enforcing them and there is a full trail of decisions made, audit histories of what happened, when, why it was made, and ultimately, all this helps mitigate and manage your risk. And the more, obviously, you document, the more you automate, the better you're able to ensure the standard is high for your suppliers. If anything, once you have any kind of transparency into any process, the quality and the standards of the [inaudible 00:07:33] improve across the board. And that's really ultimately what you're doing here, is you're bringing focus and attention to an area of your supply chain that's very critical. It's the relationship with the suppliers and understanding how that affects your product line.
Is there any more you could share about the good results you'll get by following business process management?
Essentially, then you look at... Business process management in general applies to any discipline in your organization. Supply chain and supplier management is, obviously, a very critical one. In this particular case, really it applies to quality. And I think there are so many cases out there of where... I think specifically, most recently, if we look at Samsung phone and the problems they had with the actual battery, it boiled down to a supplier issue. So that's an example where not having good quality systems in place and procedures in how you deal with your suppliers, how they maintain their processes and certification, where you can cause huge damage to your reputation, to your revenues. I mean, it can be massive to your organization.
So really, BPM helps really mitigate all that and quality management as a specific set of processes that could be running on BPM will help you also ensure that you're not only managing your risk, you're managing your nonconformance. You're managing your corrective actions. You're managing your audits. And all this data is transparent. If you have to make changes, all of these processes are tracked and managed in the system, and you will be able to tailor them to your exact business process needs.
Thank you, Romeo, for sharing today.
Absolutely, Dustin.My pleasure. Look forward to talking again. Hopefully this was helpful to your audience.
About Romeo Elias
Quality Control and Management of Suppliers