There are two guiding principles of quality practices for high-technology supply chains: (1) do not generate any defects within your span of control, and (2) do not pass on any defects to the next link in the chain. Quality is controlled by the use of adequate tests at different stages throughout the supply chain. In addition, it is generally assumed in the electronics and high-technology industries that the lowest total cost of quality is afforded by testing at the lowest level of assembly possible. Defects are more expensive to find and remove at higher levels of product assembly，so they should be found and removed at the lowest level. Unfortunately, that level has the lowest competency of the chain.
The supply chain management system is critical to overseeing and controlling the competency and operational data for the chain. The ability to handle and distribute technical as well as operational data instantly throughout the chain is very critical. When that communication is not properly enabled，or it breaks down，results could be very catastrophic in terms of unusable product.
In one particular case that the author is familiar with, a supply chain with four companies contributing to the build-up of the final electronic product was faced with a serious manufacturing quality problem. The four links represented the manufacturing and testing of printed circuit board lamination, fabrication, assembly, and final product assembly. The bottom link of the chain, the laminator, subcontracted some of the work to another company, which did not perform to specifications. Due to the lack of instant engineering communications between the links, this nonconformance problem was not detected until the product was in the customer's hands. This rendered the total inventory in the supply chain defective. In addition, communication problems made the eventual discovery of the cause more difficult, and hence valuable sales and recovery time were lost. The position of millions of dollars of unused product had to be determined through legal deliberations.
The supplier management program is a cornerstone of quality assurance in a supply chain. It consists of many steps including:
1. Qualification. The qualification process begins with a list of potential suppliers, which are then audited either by reviewing their documentation (both financial, manufacturing, and quality procedures) or visiting their manufacturing facilities. During the visit, the team can review the supplier procedures and conformity to international standards of manufacturing and quality, such as six sigma, ISO 9000, good manufacturing practices (GMP), and the various IPC standards.
2. Ratings. After the initial approval, the supplier is usually placed in an approved status, and purchase orders can be placed and goods received with good incoming inspection and testing procedures.
3. After a period of time, and with increased communication and confidence that the supplier has demonstrated their capabilities and quality in a consistent and continuous manner, a supplier might be placed in a preferred status. The company would be motivated to place orders with this supplier，knowing that less testing and inspection of incoming: products would be required.
4. The next step in supplier status is full partnership or sometimes a preferred ranking such as “A” preferred. In this case, there might be close ties with the supplier/partner; purchase orders might be placed without bids and supplier parts might go directly into the company’s stock as “ship to stock” or “ship to dock.”
5. Audits. In the process of qualifying or rating suppliers, quality audits are performed to ensure conformance with industry and company standards- The quality audits could take the form of visits, actual or through the Internet, to the suppliers to check on performance，material testing，and inspection above and beyond normal test and inspection procedures. Dimensional data can be directly transferred from the company’s CAD system to the inspection equipment.
The level of incoming inspection is dependent on the status of the suppliers. For a nonqualified or new supplier, there should be an extended incoming inspection and testing program. On the other hand, a preferred supplier should be in a position to ship to stock (if agreed), where their materials are received directly into the stockroom with no incoming tests or inspections. In addition, a supplier whose materials are to be altered, such as fabricated PCBs, should have a greater level section and testing, whereas a supplier of materials that will stay intact in the product，such as PCB assemblies，might be subject reduced incoming inspection program. Another method of substituting for the incoming inspection function is to ask the supplier to certificates of compliance and/or testing to specifications. The requirements or test certificates should be mutually agreed upon to include the specifications that are relevant to the product being manufactured.