The True Cost of Supply Chain Quality
By Hannah Kain, ALOM President and CEO
A Q&A with Kaveh Moraghebi, Sr. Director Quality & Sustainability of ALOM
Kaveh Moraghebi
Kaveh Moraghebi is a Quality Assurance expert with over 25 years of experience in Quality Management Systems and process improvement. Moraghebi is Certified Six Sigma Black Belt with specialized knowledge in Kaizen and Lean Manufacturing. He is an IRCA Lead Auditor and has conducted more than 300 audits for well-known registrars in ISO 9001, ISO 13485 and ISO 14000 disciplines. This Q&A, excerpted from the Smart Supply Chain podcast episode of the same name, presents Moraghebi’s insider perspective on one of the industry’s most debated topics – the true cost of quality in the supply chain from product design to the end user.
Q: How would you define quality in the context of supply chain management?
Moraghebi: Quality in supply chain is first about understanding the customer’s needs. Who is their end-user? How will the product be used, how is it packaged, where is it being shipped, and what is its purpose? Quality goes beyond the ISO 9000 standard definition. It involves maintaining a competitive advantage, reducing costs, ensuring safety, complying with regulations, and striving for continuous improvement.
Q: How do you measure the cost of quality?
Moraghebi: We monitor the cost of quality daily primarily by avoiding the high costs associated with poor quality and staying focused on training, technology, process and material improvements that enhance service delivery levels.
Q: Can you provide a recent example where quality control measures averted a potential issue?
Moraghebi: We identified a mixed product item number anomaly on a supplier work order. This early detection saved us significant costs and maintained our credibility with the customer. Our recommended approach is to focus on embedding quality into processes rather than inspecting quality into them after the fact.
Q: How does technology and data analytics play a role in managing and improving quality in the supply chain?
Moraghebi: We use technology to prevent errors such as ensuring serialized products are correctly matched with orders in our system, enhancing traceability and compliance. Technology is crucial for ensuring visibility across a wide range of quality checkpoints at extremely high order production and fulfillment volume. This allows us to proactively manage quality by capturing data on various parameters throughout the supply chain.
Q: Is ISO and Six Sigma a priority in supply chain quality management?
Moraghebi: Yes, because the two standards work together and complement each other. ISO keeps an organization honest by providing an internationally recognized, externally verified standard and audit process that ensures transparency and follow through on quality commitments. Having systems in place to validate and report an organization’s quality metrics meet Six Sigma standards demonstrates overall quality management effectiveness. Achieving Six Sigma quality is an incredibly high standard that in the long run saves customers money and increases end user satisfaction because it is a proactive investment rather than a reactive added cost.
Q: Is quality synonymous with higher costs?
Moraghebi: Not at all. Quality is the only way to be profitable. Not doing quality is what’s truly expensive due to the potential for recalls, reputational risk, and compliance issues. Building in quality up front saves on maintenance and other costs over time. An organization could think they are managing quality costs by addressing issues as they are reported. This reactionary approach takes people away from their regular job to address a problem that could have been avoided. That is a double hit to productivity. Then if you add up the hours and costs to resolve an issue, not to mention reputational damage with the customer or end-user for addressing and smoothing things over, I think the business case for embedding quality up front becomes much more compelling.
Q: What role does continuous improvement and innovation play in quality?
Moraghebi: Continuous improvement and innovation drive efficiency, cost reduction, and customer satisfaction, enhancing competitive advantage. It’s about getting better every day and understanding that improvement is necessary across the board – from individual roles to the entire supply chain ecosystem.
Q: Where is the future of quality in supply chain management heading?
Moraghebi: The future lies in digital transformation, with technologies like AI and IoT enhancing quality control through real-time monitoring and data analytics. I see the broader quality scope expanding to include compliance management, risk management, and a stronger focus on sustainability and the circular economy.
This Q&A was excerpted from a transcript of an episode of “Smart Supply Chain”. You can listen to the podcast episode here.