Cultivating Contractor Relationships: Driving Value through Supplier Excellence
At Wyeth Consumer Healthcare, supply-chain excellence is not just about metrics, but also about people and relationships.
By Ron Perry, Wyeth Consumer Healthcare
A few years ago, Wyeth Consumer Healthcare had a number of supplier quality issues that impacted key business metrics and compromised our customer service. Inconsistency and unreliability of supply cost us money, caused us downtime, and affected our ability to meet customer demands.
These issues were varied and for the most part unpredictable. They ranged from discolored or contaminated materials to malfunctioning components. What’s most important is that the potential for mis-orders was lowering our customer feedback ratings, and we were concerned about the impact this might have upon brand reputation as well as organizational credibility.
Our senior management said something needed to be done. So we established an effort to address these needs and prevent future supply quality concerns—the Supplier Quality Excellence (SQE) program. (Editor’s note: This article is derived from Ron Perry’s presentation from our recent webcast, “Operational Excellence for Building Better Partnerships”)
Foundation for Success
Our program success factors include an executive-endorsed vision, a very organized program, processes and approaches that are standardized, and metrics with meaning. We accentuate the right people, and we partner with the right providers (Figure 1).
Figure 1: SQE Program Success Factors
The Supplier Quality Excellence program works to improve suppliers who may be delivering poor and inconsistent quality. It works to increase existing supplier performance, whether it is poor, at par, or above par. And ultimately it works to try to drive greater overall value.
We’ve established partnerships with suppliers at each and every one of our manufacturing sites. We have carefully defined projects per each supplier and we try to employ standardized Lean, Six Sigma, and even Total Production System approaches to ultimately be the best. We aspire that one day people will point to Wyeth the way they do Toyota and say, “That’s the Wyeth Way.”
We have top-down executive management endorsement, and we believe it has been critical to our success. This program is a key strategic initiative within Wyeth Consumer Healthcare. It’s governed by a senior-level steering team which importantly includes representation from all our manufacturing sites. This is not just a corporate-run initiative. The engine of this program is embedded in each and every one of our sites that interact with suppliers and materials on a daily basis.
Our strategic initiative is defined beyond its vision. It has a specific mission: Reduce the risk of product supply interruptions due to raw material and packaging component issues. Develop a mutually beneficial relationship with key, selected suppliers to proactively prevent these occurrences.
And we have established goals, priorities, and key metrics. Our top-line metrics are very simple. They are about expanding our program and having a greater impact on our suppliers. It’s about reducing the potential for unwanted events and controlling a lower level of events. And it’s also about reducing the potential for a supplier event to occur. We expect the metrics of our program over the next few years to include more measures on total value, and more clear connections to budget reduction and operational efficiency, and whether we’re using our resources the best way we can.
The program started about two years ago with concepts. We had many non-standardized approaches, but we had people working within our North American and European sites that had great ideas, and they were trying things on. Our team members frequently shared their approaches and best practices. They decided to replicate what they felt worked best. And they ended up putting together standard practices that we use today and try to improve upon.
I’d like to note, citing author Jeffrey Liker, that standard doesn’t mean permanent or unchangeable. It does mean consistent and improvable.
Figure 2: Example of SQE Progress Monitoring
Critical to our process is making sure that each and every team that is working with a supplier on a particular project has focus. We have focus by using project charter documents to know what it is that we’re aiming for—the clear endpoints and success measures (Figure 2). We have the ability to monitor progress on our agreed-upon targets, and when they’re achieved. And we capture that history and manage that knowledge.
Our experienced green and black belts quickly apply the DMAIC approach (Figure 3). This is a standardized process we use in every single one of our programs. We have quality training, development, and experience, all of which has proven essential to the success of each SQE initiative.
Within the programs, we employ failure mode and effects analysis (FMEA), and this has become a tool which each supplier uses outside the program, even with their own supply chains and with other customers. This has been an excellent and comprehensive measure for assessing where the potential or likelihood of risk may occur. It’s fostering a Mutual Quality System and helps us to estimate the probability of issues.
Additionally, there is a softer side to the program. Stealing from the Toyota way, Genchi genbutsu, or “Go and see for yourself,” includes our engagement with all levels of suppliers—even shop-floor level. It’s personal. It’s high touch-point. You can apply it anywhere. The value here comes from observation and from learning about how each company can improve, recommend changes to one another, and improve the overall value chain.