BUSINESS PLANNING & TECHNOLOGY DEVELOPMENT 3534

Originally Published MX January/February 2004

BUSINESS PLANNING & TECHNOLOGY DEVELOPMENT

Challenge: A manufacturer with a long-standing outsourcing partner decides to intensify its audits of all such outside firms after undergoing a product recall because of problems at another supplier. How should the manufacturer approach such a change with the outsourcing partner, and how should the outsourcing firm respond?

By itself, intensifying supplier audits is not sufficient to ensure that outsourcing partners will not contribute to future recalls. The manufacturer must have a comprehensive supplier quality system in place to ensure that its partners are capable of meeting expectations. Such a system should be designed to be preemptive and preventive, and it must be capable of measuring and trending supplier capabilities and performance. In addition, an effective system for corrective and preventive actions based on risk management must be an integral part of doing business.