Quality initiatives keep check on company efficiency. (Investments & Finance).

THE mere mention or a "quality initiative" is enough to strike fear into the heart of any manufacturer.

A sweeping, amorphous term, it conjures images of long and expensive programs and armies of consultants picking through the fabric of your organization and processes. Not that there's anything wrong with that -- there are lots of companies that could benefit from a major quality "shake-up."

But what about the rest of us? There are steps any company could and should take on a regular basis to ensure it is getting better quality from its operation and its suppliers -- and ultimately, better quality in its products.

This is especially the case as more manufacturers farm out different aspects of their production. Quite often, the fact that a manufacturer has shown that it will be reviewing these areas will encourage internal improvement, or prompt a supplier to "lift their game."

Another by-product of the exercise is an understanding of the risk that manufacturers face from their supplier base.

Unfortunately, manufacturers are at the mercy of their weakest supplier. It is important to know where that exposure exists and take appropriate action. The following five tips will help manufacturers gain a clear understanding of where they could focus their limited resources to maximum effect.

* Check your quality "backbone." A key indicator of quality capability is the existence of a mechanism or framework -- the backbone on which the quality function rests. This may be in the form of a structured "quality system" that satisfies a recognized standard, or it may be more informal. Why is a quality framework important? This is a good indicator of a company's maturity, stability and ability to withstand change.

With the right framework in place, a company will be able to consistently repeat what it does, change what it does in a controlled fashion, spot problems (or potential problems), fix them and prevent them from reoccurring and make adjustments for optimum performance.

If a quality system is in place at your suppliers, you can proceed to look at other parts of their operation. If not, then perhaps you can proceed to look for another supplier.

* Look at how things go in and out. Understanding where you are within the supply chain, from raw materials to the final customer, allows you to evaluate your effectiveness as part of that chain.

A quick review of your purchasing process can tell you how responsive you are as an organization. How do you order material? Is it a case of going out for bid every time, using an advanced material ordering system, or somewhere in-between? This has a direct impact on how quickly you are able to turn around quotes to your customers. It will also be an indicator of your ability to deliver on time.

* Look at how you interact with your customers. With the increasing sophistication in customer management systems, managing a customer base is likely to be as complex as managing a supplier base. Despite their complexity, these systems ultimately exist to optimize communication between you and your customer -- so you may feed information, anticipate needs, promote feedback, and generally work more closely with your customer.

Fast, effective communication with your customer can result in more involvement in their planning process -- making for a longer, more committed relationship.

* Give your supply chain a health check. Your supply chain is an extension of your organization. Depending on how critical their product is to you, and your alternative sources of product, your supply chain can expose you to unnecessarily high levels of risk. A periodic health check is a simple, low-cost way to detect areas where your company is exposed.

Look at the distribution of your supplier base. Are they local, interstate or overseas? If you have no overseas suppliers you are definitely in the minority. Have you physically met all of your critical suppliers or visited their facilities? How do you qualify them? And how do you validate their production? How do you accept supplier product? By asking these questions you may identify some areas where a little operational improvement can deliver a lot of protection from sub-standard suppliers.

Evaluate your internal role in the supply chain. For example, how many dedicated purchasing employees (non-administrative) per $1 million in purchases does your company have? -- and how does this compare with your peers?

* Find out how much you know about yourself Measuring your company's performance is critical in knowing where it is headed. Your current performance measures may be more than adequate in knowing where you are. But discovering what you don't know can be equally enlightening.

You can't improve what you don't measure. General business measures can be helpful in gauging your operation (in addition to their accounting applications). What is your annual inventory turnover ratio? What is the capacity utilization of your manufacturing resources?

Do you employ technology in your manufacturing process? If you do, are you making the most of it?

Having the right measures in place will help you keep your finger on the pulse of your operation -- and highlight areas where you need to improve. You should know straight away if you are in trouble if you can't find a pulse.

Gerard Pearce is vice president and J. Michael McKay is president and chief executive of SQA Services Inc. They can be reached respectively at [e-mail] and [e-mail]