Purchasing: Quality Clauses vs. Supplier Quality Requirements Manual

When developing your purchasing system, one question is whether to invoke specific “Quality Clauses” or to reference an all-inclusive “Supplier Quality Requirments Manual” (SQRM). What are the pros & cons of each?

Quality Clauses / Codes

“Quality Clauses” (or “Codes”) are a “menu” of various quality requirements that the Buyer can select to be referenced on each purchase order (PO). Alternatively, many purchasing systems allow for the more knowledgeable Supplier Quality team to pre-select specific “Quality Clauses” for each product, service, or supplier.

PROS

  • Flexibility - Each PO can be uniquely tailored to invoke specific quality requirements.
  • Simplicity for Supplier - Each PO contains only those specific quality requirements applicable to the product or supplier… making them easier to understand AND identify applicable flow-down requirements (due to the omission of superfluous inapplicable requirements).

CONS

  • Inconsistency - Since each PO will have different quality requirements, different Buyers or Supplier Quality Teams, may be inconsistent in which “Quality Clauses” they select (invoke) for similar products, services, or suppliers.
  • Omissions - In some instances, “Quality Clauses” that should be invoked are not, due to differing opinions held by various Buyers or Supplier Quality Team members.
  • Inefficient - Each product, service, and/or supplier must be individually evaluated to determine the appropriate applicable “Quality Clauses”.
  • Time-Consuming for Supplier - Since each PO has different quality requirements, the Supplier “should” review each PO in detail to ensure that each “Quality Clause” can be met… even where the same product is ordered on a repetitive basis.
When using this approach, it is a “Best Practice” to have technically knowledgeable Supplier Quality personnel, rather than Buyers, assessing and determining which “Quality Clauses” are applicable to each product, service, and/or supplier.

“Quality Clauses” (or Codes) are used by organizations such as:

“Supplier Quality Requirments Manual” (SQRM)

A “Supplier Quality Requirments Manual” (SQRM) is a comprehensive collection of ALL of a company's quality requirements. These SQRMs usually contain “qualifiers” as to when each requirement is applicable to an order.

PROS

  • Consistency - Each PO references a single SQRM and its revision level.
  • Flexibility - The applicable quality requirements are identified based upon the criteria contained in the SQRM.
  • Simplicity for Supplier - The supplier only needs to understand and learn one set of requirements for the same or similar products or services.
  • Efficient - There is no need for the Buyer or a Supplier Quality Team to evaluate and determine which quality requirements must be invoked for each product, service, or supplier.

CONS

  • Comprehensive - The supplier will need to read the entire SQRM to determine the applicability of the quality requirements AND flow-down requirements.
The above “CON” may be considered a “PRO” considering that the rock group “Van Halen” actually embedded nonsensical requirements in their standard contract to provide a quick visual indicator of whether the contract had been read by the Promoter (Visual Management... the Van Halen way).
  • Interpretation - While both “Quality Clauses” and SQRMs require a degree of “interpretation”, this issue tends to be more prevalent in SQRMs. For example, some SQRMs fail to clearly address when requirements must be “flowed down” (e.g., do flow down requirements apply to suppliers of COTS (Commercial-Off-The-Shelf) items?).
The above “CON” is easily addressed by having the SQRM undergo a comprehensive review by technically competent Supply Chain quality personnel.
  • Document Distribution - An SQRM must be maintained under document control. And Suppliers often fail to verify that the version of the SQRM they're following is the current version (whether it is distributed in hardcopy, electronic, or made available via a web site).
The above “CON” may be turned into an opportunity by e-mailing a short quarterly, biannual/semi-annual, or annual newsletter to suppliers containing relevant information. For example:
  • Notification of revisions/updates to the SQRM
  • Details of changes to SQRM
  • Interpretive clarifications of SQRM requirements or FAQs
  • Notification of changes in Procurement and/or Supplier Quality personnel along with updated contact information
  • Requests for information (RFI) to identify potential new product/service sources from existing suppliers

The “SQRM” approach is used by companies such as: