Commentary: Manufacturing quality reimagined: The hidden power of your data
Manufacturers that only use quality data in a reactive manner at the local plant level are missing out on opportunities to generate large-scale, enterprisewide savings.
For many manufacturers, quality management means using data to help them respond to on-site alarms after a process or machine fails or when quality checks indicate products are outside of specification limits. This data may include part or component measurements, process parameters, and traceability fields such as lot codes, shifts, and work orders. But, manufacturers that only use their data in a reactive manner at the local level are missing out on realizing the full power of their quality data. This data also has the potential to provide strategic insights that can be used to proactively prevent problems from occurring and quickly uncover opportunities to make significant enterprisewide improvements.
These improvements can be attained by aggregating data from all of an organization's plants and suppliers to provide visibility into the performance of the entire organization, rather than just one plant or production line. When data is aggregated and delivered to the corporate level for analysis using statistical charts and visualizations, it can generate actionable insights that can be used to streamline global operations, improve overall product quality, and save companies millions of dollars.
Enterprisewide visibility
However, despite advancements in data collection and storage technology, many manufacturers still manually collect quality data and store it in discrete databases or keep paper records in filing cabinets at the local plant level. A recent InfinityQS survey of 260 manufacturers found that 75 percent of respondents still manually collect their data-with 47 percent of those relying on pencil and paper. Such an approach creates data silos and inconsistencies, which prevent executives and decision makers from seeing what's happening across multiple sites and extending improvements beyond a single plant.
A better approach is to unify quality data from all sources, including global suppliers, incoming inspection, shop floor operators, the quality lab, and packaging. With such enterprisewide visibility, manufacturing companies can discover insights that were previously hidden by data silos or locked away in filing cabinets. This unification of data can best be achieved by first centralizing manufacturing data from across the enterprise in a single repository. Then a statistical process control (SPC) engine can be used to analyze the data and compare operations from line to line, product to product, and site to site. For many companies, a cloud-based, software-as-a-service (SaaS) quality intelligence system is an appropriate way to achieve that.
For instance, a bottled water company previously employed a paper-based system for collecting and analyzing its quality data. When plant-floor issues arose, its quality engineers had to retrieve all of the necessary data, and then stop operations to sort and decipher hand-written notes before they could fix the problems. By automating data collection and moving to a cloud-based quality intelligence solution, the company now has real-time visibility over its processes-both within each individual site and from the corporate level across more than 25 facilities. The company can now track trends in its quality data, at both the corporate level and within individual plants, to make intelligent, timely decisions. For instance, at regular intervals, operators can pull products off the production line and gather data on key performance indicators (KPIs), such as height, diameter, and thickness. By reviewing and analyzing the collected data, the company is able to ensure consistency in the shapes and sizes of its water bottles, and highlight the greatest opportunities for improvement in the blow molding process. This approach enables it to catch issues early in the process and reduce, if not eliminate scrap, recalls, and potential delays in production.
Notably, a quality intelligence solution enables quality and process improvement teams and plant floor operators to identify issues in real time and catch problems before they occur. Manufacturers can then shift from reacting to quality issues to actually preventing them.
For example, one global tire manufacturer wanted to better leverage its production data for proactive process improvement. By utilizing a quality intelligence solution, the company can keep an eye on its processes at all times, including recordkeeping for ISO 9001 compliance and overall product quality. The quality intelligence solution issues automated alerts that notify key personnel when manufacturing processes begin to drift, ensuring that each tire is consistently produced to the highest quality standards. With this approach, the company was able to drive operational process improvements that resulted in significant cost savings and increased productivity. In one plant, it realized US$400,000 in annual savings on a single belt line. It did this by analyzing dimensional data and uncovering previously unknown quality information that revealed opportunities for reducing waste and raw material usage. Similar savings were realized on other production lines and throughout other facilities.
Providing operational insights
Once a company has consolidated the quality data from all its sites, that data can then be analyzed by quality professionals, vice presidents, operations managers, or C-level executives. Aggregated data can be sorted and viewed in different ways to compare plant-to-plant, product-to-product, and line-to-line performance, enabling quality personnel to proactively pinpoint opportunities for improvement that can significantly increase output and efficiency across the enterprise.
Such comparative analyses can show which sites need help and where the biggest gains and cost savings opportunities are located. With these operational insights, quality professionals transform from reactive "firefighters" into quality and process improvement strategists. They can use these operational insights to streamline, optimize, and transform processes and operations across the enterprise, thereby elevating product quality, improving efficiency, and creating significant cost savings.
Global transformation
Quality professionals and executives at the corporate level can also identify which lines and plants are their top-performing ones. They can take those best practices and standardize them to all facilities to achieve substantially improved results. Organizations can then begin to see real, measurable impacts to their bottom lines.
In some cases, those impacts can be substantial. One North American consumer packaged goods company uses the data in its secure, centralized repository to perform predictive analyses and respond quickly to variances across plants. Because the data are centralized in the cloud, the company can monitor if different facilities are producing above target and quickly make adjustments to prevent waste, reduce excess product or "giveaway," promote standardization, and minimize plant-to-plant variations. Furthermore, the manufacturer is able to analyze the aggregated data to identify areas for continuous improvement. The company has reported a staggering US$2.1 million in savings due to waste reduction alone.
Many organizations are exhausted from reacting to crises on the plant floor and constantly looking for opportunities to squeeze more profitability from the production line. Reimagining how they manage quality can help break that cycle. When the same data that alert manufacturers to plant-floor issues also provide critical insight into how to optimize global operations, quality becomes a competitive advantage. With the proper technology in place-automated data collection, cloud computing, a centralized data repository, and quality intelligence-manufacturers can unveil the hidden power within their quality data.
The concept of using a neutral third party to resolve conflicts between suppliers and customers is not new. Mediation and arbitration have long been considered as more efficient and less costly ways to resolve contractual disputes than litigation. In fact, 2025 marks the 100th anniversary of the Federal Arbitration Act, which allows for contract disputes to be resolved through a private resolution process instead of going to court.
Over the years, the concept of using a neutral has expanded to include more preventive techniques for keeping business relationships healthy and addressing potential contractual misalignments earlier. For example, the construction industry has been utilizing the concept of a dispute review board (DRB) since 1975 to solve issues that arise during major projects, such as cost overruns, schedule delays, and disputes over payment or the quality of workmanship. The DRB is typically a panel of three independent expert advisors who are immediately available to help resolve disputes that arise during the contractual relationship.1 The panel is formed at the beginning of the construction project with the goal of resolving any issues or differences before they become formal claims.
Recently the concept has evolved further into what is now known as a “standing neutral” and has been adopted by companies in many industries outside of construction. A standing neutral is a highly qualified and respected expert, selected by both parties in a business relationship to help them resolve issues and maintain a healthy relationship. This can best be described as a proactive approach where the neutral provides quick, informal, flexible, adaptable, and nonadversarial ways for preventing disputes.
The role of the standing neutral
Unlike a neutral third party used on an ad-hoc basis for dispute resolution in mediation or arbitration, a standing neutral is a readily available “fast response” technique. It is designed to prevent any issues from escalating into adversarial disputes that might otherwise go to mediation, arbitration, or litigation. A key feature is that the neutral is “standing,” meaning it is integrated into the parties' continuing governance structure. Another key concept is that the standing neutral supports the relationship itself and both parties equally; the goal is to ensure the success of the relationship.
Embedding a standing neutral into a contracting party's governance structure can have a powerful impact on the success of the business relationship. The standing neutral provides a helpful "dose of reality" to the parties and encourages them to be more objective in their dealings with each other. When differences of opinion arise, the parties can quickly use the standing neutral as an objective sounding board, obtaining a recommended course of action that is minimally disruptive to the business relationship.
While the classic role of a standing neutral is to serve as a “real-time” issue-resolver throughout a relationship, companies have begun to expand how they have used a standing neutral. The University of Tennessee’s research—which is detailed in the white paper “Unpacking the Standing Neutral”—reveals the creative ways that companies are using a standing neutral.2 For example, some companies are increasing the role of their standing neutral to support annual relationship health checks and even using neutrals as “deal facilitators” to help craft highly complex or strategic outsourcing agreements.
Today, there are many different variations of a standing neutral. Figure 1 shows some of the most common options companies can consider when designing the role and scope of their standing neutral. In the figure, these options are organized across nine design principles or considerations. For an example of how a standing neutral can operate in a real-world setting see the sidebar “Idea in action: EY case study."
Getting ramped up
If you think using a standing neutral would benefit one of your relationships, we suggest going through the following simple stages. It’s important to note that the cost and expenses of the standing neutral are absorbed equally by both parties.
1. Selection: At the outset of their relationship, parties select one person (or three) with whom they trust and have confidence to serve as standing neutral throughout their relationship. A single standing neutral should always be entirely independent. In most cases where there is a panel of neutrals, each party nominates one member, and the two nominated neutrals will select a third member; in such cases, it is typically required that every panel member be acceptable to both parties and that all panel members be independent and impartial, with no special allegiance to the nominating party.
As part of the selection process, the parties formalize an agreement with the standing neutral, which includes determining the standing neutral's responsibilities and authority. The nine design principles in Figure 1 can be used to accomplish this.
2. Briefing: The parties brief the standing neutral regarding the nature, scope, and purpose of the relationship or venture. As part of the briefing, the standing neutral is usually equipped with a basic set of contract materials and supporting documents.
3. Continuing involvement: A key part of designing a standing neutral program is embedding your standing neutral as part of your ongoing governance. For example, we recommend at a minimum that the parties have their standing neutral attend the parties’ quarterly business reviews and lead an annual relationship health check. This enables the standing neutral to meet regularly with the parties to review the progress of the relationship, even if there are no issues.
Alternatively, it is possible to have a
standby neutral (versus a standing neutral). In the case of a standby neutral, the neutral is merely available on an ad-hoc basis to be called on whenever necessary to give an advisory opinion.
Why standing neutrals work so well
Standing neutrals have had a remarkable record—especially for resolving issues before they become disputes. A study of the use of standing neutrals in the construction industry found that, in the vast majority of cases, the parties never look to the standing neutral to make any dispute resolution recommendations or decisions. (And in the small minority of cases where the standing neutral actually makes a recommendation, 95% of the recommendations are accepted by the parties without resorting to mediation, arbitration or litigation.
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It may seem counterintuitive that having a standing neutral reduces the likelihood of needing a third party to resolve disputes. But research has found that the presence of others causes people to behave more honestly and reign in unethical behavior such as cheating. These effects are amplified when the third-party observer is knowledgeable in the subject matter of the agreement and in the nature of the agreement.
The establishment of a standing neutral—which appears at first to be merely an efficient technique for quickly resolving disputes—creates a dynamic situation in which the participants change their relationship and their attitudes toward each other. The changes usually are an evolution, rather than a conscious effort. For example, at first it is common for contracting parties to feel they are simply choosing a neutral expert for resolving conflicts between them promptly. However, as the standing neutral interacts with the parties during ongoing governance forums, the parties develop a greater sense of confidence in the standing neutral's ability to quickly alleviate friction in the relationship. When this happens, the parties shift their view of the standing neutral from “dispute-resolver” to one of “sensible sounding board.”
The presence of a standing neutral also encourages teamwork and improved performance by all parties. The contracting parties become incentivized to concentrate on “fixing the problem” rather than “fixing the blame,” and use their mutual knowledge to solve the problem rather than relinquishing control to the neutral. A side benefit is when the parties construct their own solutions to problems, they often increase their trust and confidence in each other's abilities, which ultimately strengthens the relationship. For these reasons, the standing neutral serves as not only a standby dispute resolution process, but also as a remarkably successful dispute prevention process.
Notes:
1 For more information see A. A. Mathews, Robert J. Smith, Paul E. Sperry, and Robert M. Matyas, Construction Dispute Review Board Manual, (New York: McGraw-Hill, 1996): p. 10
The global consulting firm EY was looking to outsource the food services, cleaning services, and maintenance at its facilities to the provider Integrated Service Solutions (ISS). But the company wanted to do so in a way that was completely different from how it had approached outsourcing workplace services in the past. EY and ISS wanted to create an outsourcing agreement that was highly collaborative and beneficial for both parties.
To do so, they incorporated a standing neutral in the contracting process from the outset. Together the parties selected one standing neutral—Erik Linnarsson, a lawyer from Cirio Law Firm—as a deal facilitator. Linnarsson was trained as a certified deal architect (CDA) to craft complex outsourcing agreements.
Post contract signing, the parties continued to use a standing neutral, embedding Linnarsson into the outsourcing relationship’s ongoing governance. Linnarsson supported both mid- and higher-level governance forums. He also acted as both an expert coach and evaluator for issue resolution, providing advice as problems arose. If needed, Linnarsson had the authority to make formal, nonbinding recommendations. When Linnarsson decided to retire, EY, ISS, and Linnarsson ramped up one of Linnarsson’s colleagues, who now serves the role of standing neutral.
The parties also have tapped into their standing neutral for additional post-support services that are preventive in nature. These include ongoing performance management alignment and performance relationship health monitoring. For example, one role of the standing neutral is conducting an annual relationship health check, which includes measuring the level of trust and compatibility between the two partners.
The standing neutral also supports strategic reviews, including reviewing the contract for any misalignments. For example, when the parties initially created the agreement, they had decided to use a specific sustainability metric. However, since signing the contract, regulatory requirements around sustainability have become stricter. In addition, EY wanted to be a global leader in sustainability. As part of the proactive review, and with the help of the standing neutral, the parties worked together to revamp the metric.
Magnus Kuchler, EY’s markets leader and country managing partner for EY Sweden, believes that using a standing neutral has had a positive impact on the outsourcing relationship. “Simply having a trusting and credible standing neutral post-contract signing gives team members a sounding board that helps people make better decisions,” he said. “Using a standing neutral is truly a powerful tool to help contracting parties maintain a healthy relationship—which ultimately prevents costly disputes.”
Global trade will see a moderate rebound in 2025, likely growing by 3.6% in volume terms, helped by companies restocking and households renewing purchases of durable goods while reducing spending on services, according to a forecast from trade credit insurer Allianz Trade.
The end of the year for 2024 will also likely be supported by companies rushing to ship goods in anticipation of the higher tariffs likely to be imposed by the coming Trump administration, and other potential disruptions in the coming quarters, the report said.
However, that tailwind for global trade will likely shift to a headwind once the effects of a renewed but contained trade war are felt from the second half of 2025 and in full in 2026. As a result, Allianz Trade has throttled back its predictions, saying that global trade in volume will grow by 2.8% in 2025 (reduced by 0.2 percentage points vs. its previous forecast) and 2.3% in 2026 (reduced by 0.5 percentage points).
The same logic applies to Allianz Trade’s forecast for export prices in U.S. dollars, which the firm has now revised downward to predict growth reaching 2.3% in 2025 (reduced by 1.7 percentage points) and 4.1% in 2026 (reduced by 0.8 percentage points).
In the meantime, the rush to frontload imports into the U.S. is giving freight carriers an early Christmas present. According to Allianz Trade, data released last week showed Chinese exports rising by a robust 6.7% y/y in November. And imports of some consumer goods that have been threatened with a likely 25% tariff under the new Trump administration have outperformed even more, growing by nearly 20% y/y on average between July and September.
As another potential strike looms at East and Gulf coast ports, nervous retailers are calling on dockworkers union the International Longshoremen's Association (ILA) to reach an agreement with port management group the United States Maritime Alliance (USMX) before their current labor contract expires on January 15.
The latest call for a quick solution came from the American Apparel & Footwear Association (AAFA), which cheered President-elect Donald Trump for his published comments yesterday indicating that he supports the 45,000 dockworkers’ opposition to increased automation for handling shipping containers.
In response, AAFA’s president and CEO, Steve Lamar, issued a statement urging both sides to avoid the major disruption to the American economy that could be caused by a protracted strike. "We urge the ILA to formally return to the negotiating table to finalize a contract with USMX that builds on the well-deserved tentative agreement of a 61.5 percent salary increase. Like our messages to President Biden, we urge President-elect Trump to continue his work to strengthen U.S. docks — by meeting with USMX and continuing work with the ILA — to secure a deal before the January 15 deadline with resolution on the issue of automation,” Lamar said.
While the East and Gulf ports are currently seeing a normal December calm post retail peak and prior to the Lunar New Year, the U.S. West Coast ports are still experiencing significant import volumes, the ITS report said. That high volume may be the result of inventory being pulled forward due to market apprehension about potential tariffs that could come with the beginning of the Trump administration, as well as retailers already compensating for the potential port strike.
“The volumes coming from Asia on the trans-Pacific trade routes are not overwhelming the supply of capacity as spot rates at origin are not being pushed higher,” Paul Brashier, Vice President of Global Supply Chain for ITS Logistics, said in a release. “For the time being, everything seems balanced. That said, if the US West Coast continues to be a release valve for a potential ILA strike supply chain disruption, there is a high risk that both West Coast Port and Rail operations could become overwhelmed.”
Hackers are beginning to extend their computer attacks to ever-larger organizations in their hunt for greater criminal profits, which could drive an anticipated increase in credit risk and push insurers to charge more for their policies, according to the “2025 Cyber Outlook” from Moody’s Ratings.
In Moody’s forecast, cyber risk will intensify in 2025 as attackers switch tactics in response to better corporate cyber defenses and as advances in artificial intelligence increase the volume and sophistication of their strikes. Meanwhile, the incoming Trump administration will likely scale back cyber defense regulations in the US, while a new UN treaty on cyber crime will strengthen the global fight against this threat, the report said.
“Ransomware perpetrators are now targeting larger organizations in search of higher ransom demands, leading to greater credit impact. This shift is likely to increase the cyber risk for entities rated by Moody's and could lead to increased loss ratios for cyber insurers, impacting premium rates in the U.S.," Leroy Terrelonge, Moody’s Ratings Vice President and author of the Outlook report, said in a statement.
The warning comes just weeks after global supply chain software vendor Blue Yonder was hit by a ransomware attack that snarled many of its customers’ retail, labor, and transportation platforms in the midst of the winter holiday shopping surge.
That successful attack shows that while larger businesses tend to have more advanced cybersecurity defenses, their risk is not necessarily diminished. According to Moody’s, their networks are generally more complex, making it easier to overlook vulnerabilities, and when they have grown in size over time, they are more likely to have older systems that are more difficult to secure.
Another factor fueling the problem is Generative AI, which will will enable attackers to craft personalized, compelling messages that mimic legitimate communications from trusted entities, thus turbocharging the phishing attacks which aim to entice a user into clicking a malicious link.
Complex supply chains further compound the problem, since cybercriminals often find the easiest attack path is through third-party software suppliers that are typically not as well protected as large companies. And by compromising one supplier, they can attack a wide swath of that supplier's customers.
In the face of that rising threat, a new Republican administration will likely soften U.S. cyber regulations, Moody’s said. The administration will likely roll back cybersecurity mandates and potentially curtail the activities of the US Cybersecurity and Infrastructure Security Agency (CISA), thus heightening the risk of cyberattack.