IT Briefcase Exclusive Interview: Safeguarding Quality and Compliance Processes Across Supply Chains

In this discussion with Sebastien Breteau, founder and CEO of supply chain compliance solutions provider, QIMA, we learn about the growing role of digital transformation in safeguarding quality and compliance processes across brands’ supply chains. The company recently launched QIMAone, a data-driven quality and compliance platform that better connects brands with their suppliers and partners.

• Q. What’s happening in the business landscape now that’s forcing enterprises to think differently about quality and compliance in their supply chain?

A. If the US-China trade war didn’t already upend an enterprise’s supply chain, they have likely faced inescapable difficulties amid the factory shutdowns, quarantines, and travel restrictions due to the current COVID-19 pandemic. It’s important to note, however, that these landmark events haven’t reversed trends or upended supply chain management strategies. Rather, they have accelerated already existing trends toward diversification, which were happening in recent years thanks to rising labor costs in low-cost manufacturing countries, the trade war and now the COVID-19 pandemic.

Starting with cost-effectiveness, supplier diversification has naturally emerged as a top priority. But, of course, switching suppliers isn’t a simple flip of a switch, especially in a landscape rife with rising compliance hurdles and increased quality scrutiny.

With volatile consumer demand patterns and the threat of global economic recession looming, much of the initial supply chain management discussion has been focused on cash flow and cost-cutting. But if cash is king, as the old adage goes, then many enterprises will soon understand that quality is the king’s closest companion. Consistently high measures of quality will ensure the bottom line. Conversely, as too many enterprises have discovered firsthand, poor quality will quickly kill cash flow and lead to expensive overcharges and eventually insurmountable brand damage. In today’s challenging environment, businesses simply cannot afford to ignore quality and compliance in their supply chain.

Throughout 2020, as travel restrictions increased and lockdowns were intermittently disrupting production and transportation, the already existing trend to empower suppliers and build a more collaborative relationship with became even more relevant than before.

The convergence of these trends has underscored the importance of having full visibility into the supply chain and stronger collaboration between brands and their supply network.

• Q. So far, how successful have brands been at mapping their supply chains?

A. In an increasingly volatile global trade landscape, enterprises must prioritize risk management. But the majority of companies are struggling to measure risks beyond their directly contracted, tier-one suppliers. A recent MIT Pulse Survey found that 38% of respondents had failed to map their supply chains. Even more alarming, a significant 65% had not mapped their supplier’s suppliers. Why not? The answer is simple: they lack the tools to adequately do so. However, in a Q3 QIMA survey of over 200 global enterprises, two-thirds of respondents report that the pandemic has accelerated their company’s resolve to digitize their supply chain.

Traditionally, supply chain mapping can be a long and arduous process. For example, following the earthquake and tsunami in 2011 in Japan, it took one Japanese semiconductor manufacturer a team of 100 people more than a year to map the company’s supply network past tier one and tier two suppliers. Time and resources companies simply do not have in this current landscape.

To date, the supply chain technology platforms these companies have been relying on to close these loops have been slow to respond. Luckily, the future of supply chain mapping is more promising, thanks to new digital tools. These tools can help automate and digitize the process of mapping by onboarding all suppliers into one end-to-end quality and compliance platform. Therefore, this level of visibility and collaboration ensures a holistic view of the company’s supply chain and the data and insights needed to minimize disruption and drive continuous improvement.

• Q. What role do data analytics play in supply chain management?

A. Simply put, being data-savvy is now the difference between supply chain triumph and supply chain disaster. Of the many merits of a digitized supply chain, digital solutions in inspection and auditing provide a single consolidated portal for data collection by inspectors. This provides enterprises with usable analytics which can be turned into predictive insights to make proactive decisions based on real-time data and events rather than speculation. When data sets are automated and centralized, workflows can also be streamlined. Subsequently, this can save hours of effort and reduce the long- and short-term impact of human error.

Notably, digital inspection and audit processes also help businesses better communicate applicable data to stakeholders and work directly with factories and suppliers, identifying underlying issues at all phases of the supply chain, including accessing unique insights and tracking quality metrics along the product journey. By identifying quality issues as they happen, live on the factory floor, and streamlining the communications process, data analytics can identify problems with suppliers before products are shipped or, in many cases, even produced. This eliminates costly chargebacks and waste.

• Q. What are the benefits of digitizing quality and compliance processes in supply chain management?

A. Apart from improving data analytics and communication, there are a host of other benefits to digitizing quality and compliance processes in supply chain management. Amplifying the speed to market is an important one because, thanks to smart technologies and mobile devices, today’s consumers have become increasingly impatient. In today’s fast-paced environment, enterprises that are too slow to deliver will concede market share to swifter competitors.

A digital supply chain gives brands real-time visibility into products’ journey across their supply networks, tracking everything from product conception, to inspection, to transportation and arrival at destination. Switching from pen and paper to digital means higher efficiency for everyone, from the inspector down the floor to the report reviewer in the office. For example, we have measured up to 30% gains in efficiency for inspectors when our clients implement QIMAone.

Moreover, a digitized supply chain enables enterprises to agilely respond to current trends in global trade. Measuring the effects of the US-China Trade War prior to the pandemic, a Q1 2020 QIMA Barometer Report found that inspection demand among US-buyers in China had plunged 14% YoY in 2019. In contrast, demand skyrocketed in neighboring markets in Southeast Asia (up 9.7% YoY) and South Asia (up 37% YoY). However, ethical measures, including labor compliance and sustainability, were more likely to slump in regions that experienced a flood of new buyers. The report tracked a 4.3% YoY decline in ethical scores in factories in Southeast Asia and a significant 7.1% YoY drop in Bangladesh.

Through a digitized supply chain, it’s easier to remain agile in the face of these challenges, making them malleable in sourcing in new geographies that balance cost and value. The real-time visibility and supplier-relations capabilities of a digital supply chain empower this nomadic sourcing model without sacrificing ethical compliance and product quality. A critical benefit, particularly during a time when consumer demand for greater traceability is at an all-time high.

• Q. What features are built into digital supply chain platforms that assist with supply chain mapping, diversification, and vendor relations?

A. Digital solutions help alleviate the pain points of diversification by increasing the pace, accuracy, and ease of the inspections and audit process. For example, using the QIMAone Quality Platform, configurable workflows allow brands to customize instructions at each unique location, giving inspectors the checklists they need to confidently go on-site using just a transported tablet or other mobile device, and upload data directly into a cloud-based system. Users can also easily take, annotate and share pictures of defects and work either online or offline, eliminating concerns over unstable internet or wireless connections. Equally importantly, it uses the power of automation to eliminate all tasks that were previously handled via pen and paper, often resulting in error-prone documentation and information processing of 2-3 days.

Digital solutions also help overcome some of the common challenges enterprises regularly encounter when they contract with suppliers in new geographies. For example, some digital platforms support a multilingual interface, allowing inspectors to work in their native language. This is helpful for hiring locally and removing miscommunications that may stem from language barriers. Quality and compliance platforms can facilitate compliance with local regulations and quality standards, storing the parameters directly within the platform. Furthermore, collaboration is a central feature of a digital platform like QIMAone, where action planning management is simplified through integrated chat rooms that centralize communications to one location rather than having it scattered throughout emails, calls and pings.

Perhaps the most promising feature of digital supply chain platforms is that they fundamentally transform the relationships enterprises have across their entire network of suppliers. Thanks to the real-time visibility and data analytics, each relationship is no longer based on a standard client-vendor contract. Instead, the relationship becomes a mutually beneficial one that is rooted in partnership, collaboration and teamwork. Digital platforms help brands reimagine a supplier-relations framework built on trust, transparency, and collaboration, connecting them with suppliers that they can grow with now and well into the future.

Sébastien Breteau is the founder and CEO of QIMA, a quality control and compliance service provider that partners with brands, retailers and importers to secure and manage their global supply chain. He has more than 20 years of experience in supply chain management, founding his first sourcing company in 1997.