Supplier Selection - Auditing

Auditing is an effective way of gathering data. You have the ability to to build an audit plan, visit the location and ask as many questions as you would like.
Audits can also be long, boring and a huge waste of time, for both you and the auditee. Everyone has sat through one of these and tried to duck out as fast as possible, only to be dragged back for the complimentary luncheon and then the dreaded closing meeting. For me, auditing has to be more of a value added (sorry for the cliche) process. If I'm going to spend time and resource on travel and using up valuable time at someone's facility, I have to walk away with something tangible - the results must justify my work.
The most effective method I have used is a total business model approach. I do not put much faith in audits to "the standard" as that only captures a portion of what I'm interested in. If the plan is to pour money (thousands or millions annually) into an organization, I want to know a lot more about them than if they have rework instructions or if their calipers are "in calibration". This type of Q&A is a total waste of time. If an organization doesn't have the basics covered, there isn't much hope of them being and organized body all moving in the same direction.
On to the audit planning.
I find the most effective way of evaluating a location or organization is by keeping the overall scope simple. I loosely follow the Ishakawa diagram 6 Ms (Machine, Method, Materials, Maintenance, Man and Mother Nature (Environment)) and then focus on each of the major departments (Sales, Engineering, Quality, Purchasing, Manufacturing, Customer Service, IT and Support)

The plan I developed and follow looks at each department individually and asks only relevant questions, as what I categorize as relevant :). Also, the questioning method is simply what is the Condition Expected and your findings are the Conditions Realized, this removes any vagueness as you clearly state what you are looking for and report what you found.
First I look at the personnel, do they they have enough people to do the work? If I put more work into this area, can they handle it? Do they have a training program to get the group up to speed and keep them current? More importantly - Do they even know if they have the right amount of people and what their knowledge levels are? That is the hardest question to ask and have answered - basically are you self aware?
I move on to the easy stuff after that - what do you do, how do you do it, how do you track it and are you getting better? This is the list of usual suspects and going through the motions for each step of their process. The only thing here is asking these questions in the NON-Manufacturing departments. Again, are these companies self aware of the entire process or do they just focus on the manufacturing. I find this is where organizations fall down. They do not have process in place for support departments and they do not have the means to measure the effectivity and efficiency of their people.
The final round of questions is about the environment - is it comfortable, do people like it there, what type of work environment are people subject to, etc. I try not to score these with much weight, i.e. lesser number of questions, but it is important none the less. Companies that realize that the most important resource is the people working for them (again, cliche but true) are usually the highest performers.

Scoring
Again the goal is to keep it as simple as possible, 1-2-3. 1 = you are not achieving any of the expected conditions, 2 = partial achievement and 3 = fully achieving the expected requirement. When you try to expand beyond 3 different states you introduce opinion and conjecture. This taints your audit results and opens the floor up to lobbying for leniency. I look at it as either you aren't doing anything, OR what you are doing is something but not enough, OR you are in full compliance of the expectation. There is no way for someone to dispute these states.

Closing the Loop
If you can put together an audit that captures the true business from start to finish, not just the making of the parts, and can rate people accordingly, I feel that you have a worthwhile audit. These results should give you a good indication of how this organization will perform when the rubber meets the road.
If you have solid audit reporting you can now use that with the other data you plan on evaluating during the Supplier Selection process.

Supplier Selection Process

So you have a design that you think is ready for manufacturing, both at the supplier and in your own system. Now you have to go out and find the right supplier to do the job. What criteria are you going to use? Geographic location? Past performance? Lowest price?
We all know which one gets used, past performance - NOT. The powers to be usually go with the lowest price regardless of everything else. In the end, the old adage of you get what you pay for rings true. The guy that can make it as cheap as possible usually delivers late, has high scrap rates internally and a high PPM rate within your facility. And to add to that, who knows where this company is that can provide you with a low piece price, usually not right next door. The approach I prefer is a combination of as many attributes that I can gather. I do this by combining an on-site audit with any historical data available. For new suppliers making a bid, the audit is the only thing you have, unless you have a common denominator - like a business associate who deals with them or you have access to their customer list and ratings. Either way, the unknown is always an adventure. At least looking to your current list of suppliers, you know what you are getting.

Best Practices – A Closer Look at Supplier Scorecards

The Supplier Scorecard assesses suppliers based on major performance benchmarks in several key areas such as Manufacturing Critical-path Time (MCT), On-time Delivery, Quality Parts per Million, Cost of Poor Quality, Inventory Turns and Productivity Gains.
Supplier Scorecards are one of the best techniques in using facts to rank the supplier’s relative performance within the supply base and tracking improvement in supplier’s quality over time. Scorecards also provide a data point into any future business negotiations. Following are the key operational metrics that leading manufacturers track in their supplier scorecard:
PPM of Supplier Components
# of Corrective Actions Last Quarter
Average Response and Resolution time for Corrective actions
# RMAs Processed per month
MRB Inventory Levels
# of Rework Hours due to Supplier Components
% of Actual COPQ Recovered from Suppliers
# of Customer Complaints on Product Quality
Warranty Reserves
Relative ranking of supplier
Performance against benchmark

Jade Innovations Supplier Management Solutions

Jade Innovations offers a comprehensive, Supplier Relationship Management Software solution to manage the ever-critical supplier base. The Jade difference is simple – 1000s of hours of user-feedback combined with easy-to-use interfaces leading to an advanced software solution to manage your supplier base. At Jade Innovations the software is designed and created by Quality Experts with real-life experience and knowledge in the quality field – thereby ensuring the Supplier Relationship Management software meets the requirements of both the user and the supplier-base, whether performing Supplier Corrective Action or reporting via Supplier Scorecards. Try out the free demo today at www.jadeinnovations.com.

Design Concepts or Change - Designing for Manufacturing

This stage is not only the first, but it is the most important part of the process by a long shot. If your design looks great, has all the features your Customer wants and your 3D modeling shows that it fits into your widget properly, that is great for you. This does not mean that it will be as open and shut for your manufacturing environment, nor does this ensure that your suppliers will have the ability to meet these requirements.

Once the concept is there, and you have determined that fit, form and function exist that meets Customer needs, now the real work begins - designing for manufacturability. The best case scenario is an open forum with a combination of your design team, actual assembly or manufacturing associates and key suppliers with expertise in making your concept a reality.
Your design team has done the up front leg work and you have a working model. 3D modeling software or better yet, samples, of the actual part is what is needed for your manufacturing group to determine how this will work in the 'real world'. Spending the needed time listening and adapting your plan to ensure that the actual users can handle the part with relative ease is the ideal design. Once this group has poked and prodded over you latest creation and you have run the modeling tests and hopefully new samples can be made, it is time for the experts to come in.

Once you realize how great a resource your suppliers are in all aspects of your production environment, the sooner you can start reaping the benefits of their expertise. Usually their help comes to you pro bono, as the upfront care you take now is a great benefit to everyone in the long run - especially if everyone feels they are a part of the process.
The key elements of getting supplier input during design are highlighted with:

• fresh eyes approach to the project
• comparing what you feel is 'manufacturable' to what the supplier feels is achievable
  
• getting realistic expectations of what the supplied product will be based on your demands
• the exercise is not to bow to the supplier's will, however they will present data (hopefully) to support their input. With this input you can determine/calculate what the results will be once production starts.
• create an element of predictability for all groups and from this have pre-determined plans of action when nonconformance rears its ugly head
  
• creating a sense of Community across the plains of the manufacturing environments

The best preparation for this stage is a series of checklists, a strong DFMEA process, an open relationship with your manufacturing team and a mutual respect and open relationship with the suppliers.
I realize this is painting with a broad stroke, but in all reality every widget is the same aerospace to clothing apparel. These steps will help get you to your destination faster and cheaper, and in the end that is what everyone wants and needs.

Best of luck and take care,
jay

Supplier Monitoring & Management - Getting Started

Welcome to the first in a series on how to effectively manage suppliers through data collection and analysis. We must always be looking for ways to keep one step ahead of the suppliers and be able to anticipate coming events and more importantly the reaction to those events. Looking at the life cycle of a product and defining where suppliers fit and how, we can start to establish a baseline for data collection and analysis.

JADE's Supply Chain Circle of Life:

1. Design Concept or Change
2. Pre-Vendor Selection
3. Vendor Audits
4. Request for Quote
5. Vendor Selection
6. Design Review
7. Design Freeze
8. Prototypes
9. Pre-Production Approval
10. Ramp up to Launch
11. Start of Production
12. Continuous Improvement

With a baseline to start from, we can look at how to gather data on Suppliers and how to put together meaningful Supplier Scorecards, look at the best approaches to Supplier Audits and follow up with Supplier Corrective Actions and Continuous Improvement methodology.

Understanding Supplier Relationship Management

DEFINITION- Supplier relationship management is a comprehensive approach to managing an enterprise's interactions with the organizations that supply the goods and services it uses. The goal of supplier relationship management (SRM) is to streamline and make more effective the processes between an enterprise and its suppliers just as customer relationship management (CRM) is intended to streamline and make more effective the processes between an enterprise and its customers.
SRM includes both business practices and Supplier relationship management software and is part of the information flow component of supply chain management (SCM). SRM practices create a common frame of reference to enable effective communication between an enterprise and suppliers who may use quite different business practices and terminology. As a result, SRM increases the efficiency of processes associated with acquiring goods and services, managing inventory, and processing materials.
According to proponents, the use of SRM software can lead to lower production costs and a higher quality, but lower priced end product. SRM products are available from a number of vendors, including Jade Innovations.

Root Cause Engineering Change Notice

The supply relationship management function of an organization is responsible for various aspects of acquiring goods and services for the organization. In many organizations, acquisition or buying of services is called contracting, while that of goods is called purchasing or procurement. The critical supplier information is stored in the dbase. Contact information is logged and used for automatic notification that actions must be taken. The system is persistent in its "attack" as it will not stop calling until the supplier logs into the system and reacts. So you require countermeasures and preventive actions, internal corrective action, supplier scorecards etc.

Supplier Relationship Management

Worried about e-business tools that focus on suppy-chain management! JADE Innovations is there to provide e-business tools that focus on suppy-chain management and development - both internal and external. Whether you require solutions for corrective action software, supplier scorecards or overall supplier relationship management JADE Innovations focused, proven approach ensures that your supply management requirements are met.