Preventing Damage in Long Supply Chains

Damage caused to goods and other assets in the supply chain is ubiquitous. The fact that it has always been a major problem and the sheer scale of the problem seems to have a curious affect on us. We treat it rather like a mile-high mountain that should be circumnavigated rather than climbed. We conjure up procedures and financial devices that effectively write off the problem – and the vast cost. This is understandable where solutions are either non-existent or insufficient. Why climb the mountain when the cost is greater than going around it?

Precious Assets

With many governments putting inflation control measures to one side in order to get cash flowing again, we all know what is coming over the next couple of years: money will lose some of its value and physical assets will become relatively more precious to us. It surely is time to look again at how we can better look after these precious assets.

This is a relatively simple thing to achieve in a stand alone business that is not part of a long supply chain (I said simple, not easy!). For those in long supply chains, things are more complicated. Asset flowing through the chain are controlled by a handover from one chain member to the next. Systems are in place to track those assets and ensure that the right party is billed. Then there is the damaged box that spikes the system.

Quality Control

How do long supply chains deal with damaged goods at the moment? That, of course, depends on the type of chain, type of goods and, most importantly, the dominant partner in the chain (there usually is one) which tends to gain the most – and potentially lose the most – from the activities within the chain. The dominant partner will tend to call the shots when it comes to dealing with damage. You may think that the best policy is to have a strict quality control function that checks goods coming in to each chain partner. Thus, when a damaged box is received the assumption is made that the previous chain partner caused it (if they let it come in to them from the previous chain partner, the culpability amounts to the same thing – they are responsible). So, job done: attention to goods inwards quality control will result in all parties taking a proportionate share of responsibility for damage. Not so fast. This is only one of many models that long supply chains will use to regulate damage. Too much reliance on quality control in a long supply chain may be wasteful as it would involve hoards of quality controllers pulling loads apart (you usually can’t see what is in the middle of a pallet of goods) in order to seek out damaged products, resulting in a duplication of effort.

Quality Assurance

In another model there may be a “get it right first time” philosophy where the emphasis would be on quality assurance rather than quality control. This would involve all parties having demonstrable systems in place that will bring the likelihood of failure down to a minuscule percentage. This can work well when the systems being policed are predictable and regular. For example, if automated loading/unloading systems are being used, then quality assurance procedures can be employed to mitigate the possibility of damage as the system is programmable and each physical movement can be predicted. However, much damage is caused by that most random element – the human being. Quality assurance systems will respond to this through training, disciplinary measures and incentives. All good stuff, except that humans will still be humans. Certainly training, discipline and incentives go a long way. However, as stated, humans will be humans. In any case, prevention can also be wasteful as it inevitably involves spending money on members of the team that were perfectly OK in the first place. A good analogy can be found with health: isn’t preventing sickness preferable to treating it? Possibly it is, but it involves checking up or educating perfectly healthy people. This supply chain model may simply swap wasteful preventative measures for wasteful quality control measures without any guarantee for success.


In yet another model, the dominant chain partner will simply allocate cost for damages to whichever partner or partners in the chain they hold responsible. Sometimes known as a charge-back, this often involves the party near the end of the chain – and often the end user – flagging up the damage problem and then an automatic financial penalty allocated to those that are deemed to be at fault. This system may not require much quality control nor much quality assurance. However, it does rely on bolting the stable door after the horse has bolted and it often results in the end user – the ultimate customer – carrying out the quality control function which will surely have unhealthy consequences for the whole supply chain over time.

So what is the best model to use in a long supply chain? The answer is, all of them! Or, to be more accurate, a mixture of them. No one system is a cure-all. Beware of anybody who claims to have the panacea to damages.


The starting point is culture. That is, a culture where members of the team, at all levels, understand how precious assets are, whether the belong to their own company or to a third party. How this is instilled is a horses-for-courses matter. In some companies, financial incentives directly linked to damage may be possible and appropriate. In others, a wider sweep may be required. It may be a matter of having a decent share ownership scheme where the team have a general interest in looking after assets. This works less well the larger the company is and the more diluted the shares are. This does not work at all where a large proportion of staff are from external agencies. Whatever the hurdles, the culture must be got right first.

QC Versus QA

When it comes to quality control (QC) versus quality assurance (QA), a balance must be struck between the two. For too long, businesses have lurched from QC to QA and back again when the answer has always been in between the two of them. I remember a company that was suffering from severe damage problems. When the head of the QA function was invited to inspect the damage he replied that he didn’t need to because the QA systems reported no problems. There were no gaps in the system. Failure was not possible. Unfortunately has was stuck in the bureaucracy of his QA systems and forgot about the real world.

In truth, a good, even limited QC function, will feed the QA function so that systems can be developed and mitigation can be improved. In theory, improved QA will lead to less reliance on QC. However, there can never be NO QC. This function may diminish with success (NB always promote good QC people to QA), but it will never diminish to zero. This is especially true of long supply chains where it is important to allocate blame (and therefore costs) to the member of the chain that caused the problem. It may be reasonable to allocate the lions share of responsibility for damage to the supply chain partner with inadequate QA systems but once those QA systems are up to an acceptable standard and the playing field has been levelled, the QC function will then be needed to allocate blame and costs.

Real Time Common Sense

The final ingredient is what I will call real time common sense. Once you have a healthy culture and you have a state-of-the-art quality system in place, encompassing the best QC and QA procedures, you will need to regularly review things. It is very easy for any supply chain to get itself caught up in the red tape of its own procedures. Occasionally you may need to shake things up. There will need to be occasionally rebalancing of the QC versus QA resource, as discussed above but more than that, take a look at what is actually going on. Take a walk through a few production sites, distribution centres or retailers. See for yourself what is happening. You may find that you have created a lot of worthy pen-pushers and box checkers that are all working to a tight system when you see damage happening right in front of you that nobody has spotted. That’s the thing about quality. QC deals with the problem after is has happened. QA deals with it before it has happened. What about the middle bit? Who is there when it actually does happen? When we are dealing with the massive costs involved with product damage, it is a real eye opener that more resource isn’t put into the actual point of impact. Whatever bureaucracy you put around the problem, don’t forget to pay full regard to the incidents of damage as they occur.

Here is an example: let’s say that as a result of a QA analysis of QC data, a distribution centre decides to slightly widen all its aisles. This is because the QC data shows an unacceptable level of damage caused by lift trucks backing into pallets of products and into racking. This is a big decision as it requires the loss of one aisle in order to make space. Over time, damages are reduced as a result of the change. Problem solved. Not quite. The data shows good results, but what the data does not show is that some of the fork truck drivers have not changed their ways. Would you believe it, it appears that one or two of them got a kick out of backing into the soda pop bottles and seeing the stuff fizz and spill. Also, one or two others are still working as if the aisles were still the same size as before. They were the ones who backed into the adjacent aisle on purpose as a way of knowing when to stop. So there was a greater saving to be made than the one that was realized. It is only by witnessing the actual operation in real time that such a situation can be ascertained and further savings can be made as a results of (in this case) some stern words delivered to a few fork truck drivers.

Another example of the application of real time common sense is this scenario: the QA department determine that mis-location of fork tines to pallets is causing a great deal of damage to products as the forks slice through the boxes instead of through the pallet window. It is deemed that poor lighting is the main reason as the grey forks are merging with the grey warehouse floor leaving the time-pressured operator to literally take a stab at the correct location. Much expense later and damage through mislocation of forks is reduced. Everyone is happy. Once again, though, this only partially solves the problem. Some real time checking by a supervisor reveals that many trucks are still piercing boxes of goods. After quizzing the operators and through the common sense approach of getting on a truck and trying it for himself, it is obvious that, although much improved, the grey-on-grey problem is still not fully dealt with by the improved lighting. The operator still needs to do a double-take to ensure he is correctly locating the forks. The answer was to use the Sumo Glove, a bright yellow pad that is fitted to the ends of the forks, available exclusively in the UK from By the way, I didn’t make up these scenarios both actually happened quite recently.

Product damage and damage to other assets can no longer be factored into budgets and forgotten. Many companies are beginning to realise this. With long supply chains, the problem is complicated and requires a multi-disciplined approach. Four vital elements are required: (i) healthy culture, (ii) quality control, (ii) quality assurance, (iv) real time common sense. None of these four elements can be missed out. The art of managing and reducing damage is getting the balance between these elements right. Perhaps it is time to scale that mile-high mountain. Looking after assets is never an optional extra. It is a must-do for all of us. However, in the new financial climate, the winners will surely be those businesses that go the extra mile to protect their assets.