Even the simplest product often contains a myriad of interrelated parts, and the failure of any one of those parts could have major consequences. Companies that manufacture finished goods for the general public put the reputations of their firms on the line every day.
Every time a consumer buys a product, whether that product is an inkjet printer, a laptop computer or a brand new car, the quality of the components will play a huge role in their satisfaction and even their safety.
Students pursuing a business curriculum need to master a vast array of knowledge, from basic concepts like supply and demand to more advanced notions like marketing and consumer behavior. Supply chain management is another important concept that business students need to master, and it is becoming more important every day.
While supply chain management is an integral part of modern business theory, companies did not always pay so much attention to the various components that made up their products. In decades past, an automotive manufacturer or computer company paid close attention to everything that was manufactured within their four walls, but they were often less concerned with components made by subcontractors.
That is changing, thanks in part to the distributed nature of the modern manufacturing process. In the past, companies were less concerned with subcontractor-manufactured products, but they also outsourced less of their manufacturing. With cost cutting an important component of the modern business world, outsourcing has increased, and with it the risk that something will go wrong.
The risk of substandard components does not mean companies need to bring all their manufacturing home and build new fabrication plants. What it does mean is that vigilance is more important than ever before.
Companies have responded to the risks inherent in outsourced manufacturing in a number of different ways. Firms with an extensive network of overseas manufacturing plants may place supervisors and managers in those plants to review quality standard and train foreign workforces. Other firms may beef up their in-house quality control efforts, focusing on foreign-made components and testing a greater percentage.
No matter how they do it, modern manufacturers need to keep a close eye on every part of the supply chain, no matter how small or seemingly insignificant. As the manufacturer of a product, the company is responsible for the quality of every component, from the smallest screw to the largest steel frame. The failure of any one of those components could have catastrophic consequences, from car accidents caused by the breaking of a single bolt to costly recalls due to a substandard part.
It should be noted that supply chain management includes both in-house and outsourced manufactured parts. Components manufactured within the four walls of the factory can fail too, and company managers should not lose sight of that fact. As companies have rushed to implement supply chain management programs, some have placed too much focus on outsourced components and not enough on native ones. A good supply chain management program looks at the finished product holistically while maintaining the quality of every component that comprises it.