On the sixth (work) day of Christmas my supplier said to me ‘Do you really think we need an RMA? You don’t really want to return it, do you?’
As I wrote yesterday, each defect, regardless of size or significance, impacts the overall success of the product it fits into. The buyer takes parts from a bunch of different suppliers and assembles them into their final product, which may go on to another buyer, or may enter the distribution chain from this point.
Cosmetic issues may force the supplier to sell at a discount rate. Since your hourly employees are paid the same regardless that’s really not good for your profit margins.
Functional issues may force the supplier to substitute other parts to keep production running or to issue a recall if it has already shipped to a customer. That means rework and lost productivity time, which also are not good for your profit margins.
All of this is expensive. Who is going to pay for the rework and additional parts? Who eats the cost of the discount or the recall? Each supplier contract probably contains some guiding information, but the best thing is to avoid these costs altogether.
Each supplier has to understand how their work can impact the bottom line of a producer. It is crucial to onboard your suppliers with your quality initiatives. Before you tell me that’s a much too heavy-handed approach, consider this: there is no rework that is less expensive than doing it right the first time.
Consistently issuing RMAs when necessary and taking active steps to reduce them by resolving quality issues amongst your suppliers before batches ship will yield long term benefits. Embracing quality programs like Lean, Six Sigma, ISO 9000, and others increase your profitability over time.
Remember, sometimes an RMA is necessary, but an RMA is always a loss. Start by working through your supplier communication processes, then work your quality initiatives down into your supply chain. You might just be able to reduce the number of RMAs you have to process in the long run.
How do you manage quality down into your supply chain?