Manufacturing Needs better QC, Risk, and Compliance Systems

  • November 03, 2011
  • ARC Advisory Group
  • News

November 3, 2011 - Consumers and retailers continue to expect faster and better service and higher and more consistent product quality at increasingly lower cost. Current global manufacturing business trends are making this increasingly difficult to achieve. Governments continue to enact new regulations to protect public health and safety. In 2010, the US alone issued more than 43 major new regulations. This is forcing companies to place renewed emphasis on designing and deploying more effective enterprise-wide closed loop product quality, risk, and compliance (QRC) management systems that integrate all supplier, producer, and retailer operations and supply chains according to a new ARC Advisory Group study. “Every senior executive knows that the bar for product safety due diligence continues to rise with the increasing business risk that poor quality, contaminated or defective product, or non-compliance with government regulations can have on a company. Traditional paper records and disparate electronic records system and the lack of immediate visibility into the performance of production and business operations lack the functionality required by manufacturing enterprises today. This has given rise to modern QRC management systems. However, designing and deploying such a system is not so simple in that it also requires redesign of traditional business processes,” according to Principal Analyst John Blanchard, the principal author of “Quality, Risk, and Compliance Management Systems Worldwide Outlook.” Technology Explosion Causing Changes in Manufacturing Enterprises The capability and ease of use of new technology continues to improve at the same time its cost continues to decline. This allows manufacturers to deploy new technologies to meet business needs. Effective closed-loop enterprise quality management systems are now becoming a reality due to new technology based on common IT and automation standards. These include modern workflow engines, powerful and easy to use data analysis tools, massive data centers, and reliable cloud computing. Government Regulations and Customer Requirements Also Drive Need for QRC Government regulations and recordkeeping requirements continue to grow unabated across manufacturing and non-manufacturing industries. The cost to comply with such regulations has become significant for both large and small companies. Many people only think of environmental regulations in terms of reducing the impact of manufacturing operations on air, water, and soils. However, they also apply to product specifications, water withdrawal permitting, and costs associated with disposal of products that contain hazardous material. Companies like Walmart, Target, and Costco in the US and Carrefour and Tesco in Europe continue to grow and increase their percentage of sales of their supplier companies. In some categories, this amounts to almost 50 percent of total category sales. On-line shopping sites like Amazon and now most retailers are also a major influence. Such sites include customer reviews of each product, dramatically increasing product quality visibility to the consumer. Product quality now has more impact on sales than most marketing efforts. About ARC: Founded in 1986, ARC Advisory Group is the leading research and advisory firm for industry. Our coverage of technology from business systems to product and asset lifecycle management, supply chain management, operations management, and automation systems makes us the go-to firm for business and IT executives around the world. For the complex business issues facing organizations today, our analysts have the industry knowledge and first-hand experience to help our clients find the best answers.  

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