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Product and Topic Expert
Product and Topic Expert

The cost of quality refers to the total expense incurred to ensure that a product or service meets customer requirements. It includes both the costs of preventing defects and the costs of dealing with defects that occur. Here are the main components:

  • Prevention Costs: These are expenses incurred to prevent defects from occurring in the first place. They include activities such as quality planning, training, process improvement, supplier evaluation, and quality assurance measures.
  • Appraisal Costs: These are costs associated with evaluating and assessing products or services to ensure they meet quality standards. This includes inspection, testing, audits, and other quality control measures.
  • Internal Failure Costs: These are costs incurred because of defects found before delivery to the customer. They include scrap, rework, repair, and downtime.
  • External Failure Costs: These are costs incurred because of defects found after delivery to the customer. They include warranty claims, product returns, customer complaints, legal costs, and loss of reputation.

SAP Business Network Quality Collaboration can significantly contribute to reducing the cost of quality by streamlining and optimizing various aspects of quality management and collaboration across the supply chain.

  • Provides comprehensive capabilities to support quality collaborations between trading partners (Quality Notifications, Quality Inspections, and Quality Reviews).
  • Request and obtain inspection results from your trading partners, obtain certificates of analysis (COAs), and confirm or make usage decisions and stock postings based on inspection results.
  • Benefit from network intelligence, such as the ability to add business rules disallowing the creation of ship notices for items with unfulfilled inspection or COA requests or with open quality notifications.
  • DocuSign Integration: Suppliers can Digitally sign the inspection result document before submission.
  • Accelerate quality inspections speeding the transfer to unrestricted stock and driving up on-time deliveries to customers.
  • Suppliers can send certificates of Analysis (CoA) on Ship notice as mandated by Buyer.
  • Gain visibility into quality issues and complaints while aligning trading partners to drive quick resolution.
  • Collaborate with trading partners and exchange and review quality documents including unstructured communications, such as batch records, and change requests.
  • Perform deviation and root cause analysis.

Integrated Quality Processes with SAP S4HANA Quality Management and SAP Business Network

The Quality Collaboration process in SAP Business Network involves the coordination and execution of quality inspections between buyers and suppliers to ensure that products meet specified quality standards. Here's an overview of the typical steps involved in this process:

  • Quality Planning: The process begins with quality planning, where the buyer defines the quality requirements and criteria for the products or components to be inspected. This includes specifying inspection characteristics, sampling plans, acceptance criteria, and any other relevant quality parameters in SAP S4HANA Quality Management.kalandinayak_0-1715841668907.png
  • Purchase Order Creation: Once the quality requirements are defined, the buyer creates a purchase order (PO) in SAP S4HANA specifying the quantity, delivery schedule, and quality requirements for the products or components.kalandinayak_1-1715841704118.png
  • Preparation for Inspection: The supplier prepares the products or components for inspection according to the specified quality requirements. This may involve conducting internal inspections, ensuring compliance with quality standards, and providing necessary documentation and certificates.
  • Conducting Inspection: The inspection is conducted either onsite at the supplier's facility or remotely, depending on the nature of the products and the inspection requirements. During the inspection, quality inspectors perform various tests, measurements, and visual inspections to assess product quality and conformance to specifications.
  • Quality Inspection Notification: Upon receipt of the purchase order, the supplier receives a quality inspection notification in SAP Business Network, informing them of the quality requirements and requesting their participation in the inspection process. kalandinayak_2-1715841758577.png
  • Recording Inspection Results: Inspection results are recorded in SAP Business Network, including details of measurements, test results, deviations from specifications, and any non-conformities identified during the inspection.  

  • Quality Evaluation: Based on the inspection results, the buyer evaluates the quality of the products or components and determines whether they meet the specified quality standards and acceptance criteria.



  • Disposition of Non-Conforming Products: If any non-conformities are identified during the inspection, the buyer and supplier collaborate to determine the appropriate disposition of the non-conforming products. This may involve rework, replacement, rejection, or other corrective actions to address the non-conformities and ensure compliance with quality requirements. The Quality Notification is created for the Non-Conformity of the product.



    • Quality Documentation and Reporting: Finally, comprehensive documentation and reports are generated in SAP Business Network to capture the results of the inspection, including inspection reports, certificates of conformity, and any other relevant quality documentation.

There are two variation of Quality Inspection collaboration process with SAP Business Network

  •             Pre-dispatch Quality Inspection process at Sourcekalandinayak_8-1715842335934.png


            Post Material Receipt Quality Inspection process at Buyer premise.kalandinayak_9-1715842355110.png


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