Control Inventory Costs with a Quality Management System

Abby Jenkins, Product Marketing Manager

September 20, 2021

Between delays, material scarcity, increased prices and labor shortages, supply chain challenges continue to flummox businesses, and those confronting limited stock must prioritize minimizing waste.

One of the most effective ways to minimize waste is through a quality management program. And, while relying on an ad hoc approach to quality management might may have been adequate during good times, because materials are scarce and profit margins tighter, businesses must adopt a more comprehensive and systematic approach.

Businesses conducting quality inspections at random, or not at all, may be jeopardizing profitability and customer satisfaction. Businesses that are not taking a systematic approach to quality face some of the following challenges:

  • High Cost of Goods. If businesses don’t catch errors in the manufacturing process, items will be subject to reworks and scrap, both of which can impact the cost of goods.
  • Product Defects and Reworks. If raw materials and components are not inspected at receipt, damaged items may be added to inventory and used in future builds. Furthermore, if they’re not identified at receipt, suppliers may not be able to exchange faulty products that they send out, increasing costs.
  • Unhappy Customers and Returns. Defects not detected before customer orders are filled are subject to costly returns and unhappy customers.
  • Inconsistent Quality. Inconsistency due to fluctuations in production processes negatively impact your brand’s identity and customer satisfaction.

Quality management software helps companies proactively address inefficiency in the manufacturing process before the goods are complete. Identifying defective componentry, raw materials and flawed processes as they materialize allows production to proactively make changes and ultimately increases customer satisfaction and operational efficiency.

NetSuite’s Quality Management solution(opens in new tab) formalizes and automates policies, standards and practices to ensure the highest quality products, with minimal overhead. With NetSuite, you can quickly and easily define the tests you want to perform, set parameters to evaluate the results and apply those to the relevant items and operations for receiving and in-process testing. NetSuite will automatically tell you what to test, collect the results and use workflows for dispositioning.

A formalized approach to quality ensures products are reviewed as they enter, move throughout and exit the warehouse. This helps businesses meet regulatory and internal quality expectations and provides templates and tools to help maintain and associate quality data to other business records and workflows.

NetSuite Quality Management helps manufacturers to:

  • Define inspections and pass/fail criteria. The first step of a quality management process is to define the type of inspection to be performed, the type/category/method of inspection, pass/fail criteria and the acceptable variance limits. Pre-defined inspection criteria ensures consistent inspections are conducted using the same constant, and it directs inspectors how to capture relevant measurements and compare them to pass/fail limits.
  • Executing quality assurance for inbound receiving. Inbound quality processes ensure raw materials and components arrive from suppliers undamaged and as ordered so that they can be used to produce finished goods. Pre-defining inbound inspection criteria for items as they enter the warehouse ensures products arrive according to the specifications agreed upon with the supplier. Inspection criteria will include what items to inspect, and at what frequency; not all parts that arrive will be subject to inspection, low-cost supplies or items that arrive with frequency or from trusted suppliers may not require each item to be inspected. The type of inspection that’s required will also vary by item and needs to be defined. Some items may require only a visual inspection, while others will require testing. Finally, procedures for what to do when items do not pass inspection need to be defined.
  • Executing manufacturing floor quality control processes. Once production begins, quality management processes must be in place to ensure the BOMs are being executed correctly, machinery is running according to specifications and finished goods are produced as expected. The goal is to ensure defects are identified and corrected before they leave the manufacturing floor.
  • Executing quality assurance for outbound fulfillment. During the fulfillment process, quality management processes serve as a double check to ensure no damaged products have been entered into inventory. Sending a faulty product to a customer costs the business more money, because they will likely need to pay to return the product and ship out a replacement. Product defects also negatively impact customer satisfaction. 
  • Mobile data collection. NetSuite’s tablet interface provides a convenient way to capture and process test results directly from the shop floor or receiving dock. The mobile collection interface is designed to deliver all of the relevant information a quality engineer needs to efficiently and accurately gather inspection data without having to return to a computer throughout the process. The quality tablet interface enables quality engineers to perform inspections, review standards, record data and submit data for analysis directly from the inspection area. This data is then shared in real-time across the organization so that it can be used to improve future processes and supplier relationships.

NetSuite has packaged the experience gained from tens of thousands of worldwide deployments over two decades into a set of leading practices that pave a clear path to success and are proven to deliver rapid business value. With NetSuite, you go live in a predictable timeframe — smart, stepped implementations begin with sales and span the entire customer lifecycle, so there's continuity from sales to services to support.