The document summarizes key aspects of supply chain management for the automotive industry based on ISO/TS 16949 standards. It discusses purchasing processes, supplier assessment and development, risk management, and material and logistics control. Key points include qualifying suppliers, evaluating risks, conducting audits, ensuring measurement systems are capable, managing changes, and implementing corrective actions. Suppliers must meet industry requirements for quality systems, core tools, and certifications. Customers should prioritize and develop suppliers to improve performance and ensure supply chain integrity.

1. 1
TS16949: Automotive Supply
Chain Management
23rd Annual ISO 9000 Conference
R. Dan Reid, ASQ Fellow, ASQ CQE
Session ISO-062
March 9, 2015
WWW.OMNEX.COM
• Purchasing Processes
• Supplier Assessment and Development
• ISO/TS 16949:2009 Key Related Clauses
• Material, Production Control & Logistics
Session Agenda
2Copyright 2015 Omnex. All Rights Reserved.

2. 2
WWW.OMNEX.COM
PURCHASING PROCESSES
Supply Chain Risk
3Copyright 2015 Omnex. All Rights Reserved.
WWW.OMNEX.COM
• Supplier Qualification
• Supplier Selection
• Supplier Monitoring
• Supplier Development
Typical Purchasing Processes
4Copyright 2015 Omnex. All Rights Reserved.

3. 3
WWW.OMNEX.COM
Supplier Risk Assessment Considerations
• Engineering, e. g. validation, technical
• Financial
• Quality, e. g. process capability/control, APQP/PPAP*
• Data/IP Security
• Single Sourcing
• Dependency/Leverage
• Geo‐political, e. g. geographical, political
• Sustainability, e. g. human rights, environmental, safety
• Material Compliance, e.g. Conflict Minerals
• Regulatory, e.g. export control, Customs‐Trade Partnership
Against Terrorism (C‐TPAT)
5Copyright 2015 Omnex. All Rights Reserved.
* Advanced Product Quality Planning
Production Part Approval Process
WWW.OMNEX.COM
Supply Chain Risk Management
1. “Map” the supply chain for all direct product
Suppliers and Sub‐Tier suppliers
– Map should include supplier names, locations plus
other information as needed
2. Identify any risks
– Risks should be qualitative, e. g. Red‐Yellow‐Green and
quantitative, e. g. Failure Mode and Effects Analysis
(FMEA)
3. Develop a mitigation plan
– Design to eliminate
– Dual sourcing,
– Extra inventory, e.g. buffer stock
– Dual tooling
6
Copyright 2015 Omnex. All Rights Reserved. 6

4. 4
WWW.OMNEX.COM
SUPPLIER ASSESSMENT
AND DEVELOPMENT
7Copyright 2015 Omnex. All Rights Reserved.
WWW.OMNEX.COM
AIAG* Sub‐tier Supplier Requirements
• ISO 9001 compliance (Certification preferred)
• AIAG Core Tools Implemented:
– Statistical Process Control (SPC)
– Failure Mode and Effects Analysis (FMEA)
– Measurement Systems Analysis (MSA)
– Advanced Product Quality Planning (APQP)
– Production Part Approval Process (PPAP)
• Determination / Documentation of Special and Pass Through
Characteristics
• The Quality Department/Function is an integral part of the
Supplier Selection process
Copyright 2015 Omnex. All Rights Reserved. 8
* Automotive Industry Action Group

5. 5
WWW.OMNEX.COM
AIAG Sub‐Tier Supplier Requirements
• Supplier financial stability is reviewed before supplier
selection
– e.g. Dun and Bradstreet (D&B) risk analysis
• ISO 17025 (or equivalent) accreditation is required for any
commercial laboratories used
– Must be by a recognized body, e.g. A2LA, NAVLAP, L‐A‐B
• Supplier capacity and operating plan are verified before full
production approval
– For example, Run at Rate
• Supplier metrics include delivery and PPM, or an index that
includes rejected and/or returned material
• AIAG certification as applicable, e.g. heat treat (CQI‐9)
AIAG CQI‐19
Appendix BCopyright 2015 Omnex. All Rights Reserved. 9
WWW.OMNEX.COM
Main Audit Types
• System Audit
– Has the management documented and implemented a QMS
conforming to the standard and is the system capable of giving
assurance to the quality of product or service?
• Process Audit
– Concentrate on the key processes as documented in procedures and
work instructions
• Product Audit
– An independent examination of the product determines whether or
not it meets the requirements of the established product specification
10Copyright 2015 Omnex. All Rights Reserved.
The audit program manager should have an audit
program showing audit plans over time

6. 6
WWW.OMNEX.COM
Supplier Operational Assessment
11Copyright 2015 Omnex. All Rights Reserved.
WWW.OMNEX.COM
Supplier Development
• Customer organizations should prioritize suppliers for
development based on supplier risk and supplier performance
– Also considering the importance of the purchased product to the
organization’s product(s)
• Top management is responsible provide sufficient resources
for supplier management activity including supplier
development (ISO 9001:2008, clause 5.1)
• Actions taken will result in either supplier performance
improvement or “escalation”
Copyright 2015 Omnex. All Rights Reserved. 12

7. 7
WWW.OMNEX.COM
Supplier Development
• Examples of typical areas for supplier development
– Quick Set Up
– Lean Manufacturing
– Error proofing / Mistake proofing
– Process Controls
– Measurement System Capability
– Product Identification & Traceability
– Document / Records control
– Bottle neck / Constraint management
– Packaging / Labeling
Copyright 2015 Omnex. All Rights Reserved. 13
WWW.OMNEX.COM
ISO/TS 16949:2009
KEY RELATED CLAUSES
Key Supplier Chain Issues
14Copyright 2015 Omnex. All Rights Reserved.

8. 8
WWW.OMNEX.COM
ISO/TS 16949:2009
15
Automotive Industry Agreed
Requirements
ISO9001 Customer‐Specific
Requirements
TS 16949 includes all ISO 9001 and applicable
customer‐specific requirements
Customer‐Specific
Requirements
Customer‐Specific
Requirements
Customer‐Specific
Requirements
Customer‐Specific
Requirements
Copyright 2015 Omnex. All Rights Reserved.
WWW.OMNEX.COM
ISO/TS 16949:2009
Supplier Quality Management System
Development (clause 7.4.1.2)
• The organization must perform supplier quality management
system development with the goal of supplier conformity
with this Technical Specification – conformity with ISO
9001:2008 is the first step in achieving this goal
– NOTE: The prioritization of suppliers for development depends upon, for
example, the supplier’s quality performance and the importance of the
product supplied
• Unless otherwise specified by the customer, suppliers to the
organization must be third party registered to ISO 9001:2008
by an accredited third party certification body
16
Copyright 2015 Omnex. All Rights Reserved. 16

9. 9
WWW.OMNEX.COM
• The organization must determine and provide the
resources needed:
– To implement and maintain the quality
management system and continually
improve its effectiveness
– To enhance customer satisfaction by
meeting customer requirements
Clause 6.1 Provision of Resources
Copyright 2015 Omnex. All Rights Reserved. 17
WWW.OMNEX.COM
• Clause 5.4.2 Quality management system planning
– Top management shall ensure that… the integrity of the quality
management system is maintained when changes to the quality
management system are planned and implemented…
• Clause 7.1.4 Change control
– The organization shall have a process to control and react to changes that
impact product realization…
– Any product realization change affecting customer requirements requires
notification to, and agreement from, the customer…
• Clause 7.3.7 Control of design and development changes
– Design and development changes shall be identified and records
maintained. The changes shall be reviewed, verified and validated, as
appropriate, and approved before implementation…
Change Management Clauses
18Copyright 2015 Omnex. All Rights Reserved.
Change management must extend to the supply chain!

10. 10
WWW.OMNEX.COM
• Clause 8.2.2 Internal Audit
– The management responsible for the area being audited shall ensure
that any necessary corrections and corrective actions are taken without
undue delay…
• Clause 8.2.3 Monitoring and measurement of processes
– When planned results are not achieved, correction and corrective action
shall be taken, as appropriate…
• 8.2.3.1 Monitoring and measurement of manufacturing
processes
– A corrective action plan shall then be completed by the organization,
indicating specific timing and assigned responsibilities to assure that the
process becomes stable and capable…
• 8.5.2 Corrective action
– The organization shall take action to eliminate the causes of
nonconformities in order to prevent recurrence…(problem solving!)
Corrective Action Clauses
19Copyright 2015 Omnex. All Rights Reserved.
WWW.OMNEX.COM
• Clause 7.6.1 Measurement System Analysis
– Statistical studies shall be conducted to analyze the variation present
in the results of each type of measuring and test equipment system…
– This requirement shall apply to measurement systems referenced in
the control plan…
– The analytical methods and acceptance criteria used shall conform to
those in customer reference manuals on measurement systems
analysis…
Measurement Systems Analysis
20
Measurement is a process!
Copyright 2015 Omnex. All Rights Reserved.

11. 11
WWW.OMNEX.COM
7.5.1.1 Control Plan
7.5.1.2 Work Instructions
7.5.1.3 Verification of Job Set‐Ups
7.5.1.4 Preventive and Predictive
Maintenance
7.5.1.5 Management of Production Tooling
Process Control Clauses
21Copyright 2015 Omnex. All Rights Reserved.
WWW.OMNEX.COM
• The organization must establish and maintain
documented procedures for identifying training
needs to achieve competence of all personnel
performing activities affecting product quality…
• Personnel performing specific assigned tasks must be
qualified, as required, with particular attention to the
satisfaction of customer requirements…
Clause 6.2.2.2 Training
An example of a Customer-Specific Requirement is the
application of digitized mathematically-based data
Copyright 2015 Omnex. All Rights Reserved. 22

12. 12
WWW.OMNEX.COM
MATERIAL, PRODUCTION CONTROL
AND LOGISTICS
23Copyright 2015 Omnex. All Rights Reserved.
WWW.OMNEX.COM
Automotive Industry Action Group (AIAG)
and Odette International “Best Practices”
24Copyright 2015 Omnex. All Rights Reserved.

13. 13
WWW.OMNEX.COM
• Supplier Management prioritization should be based
on risk (supplier, product, process)
– Qualitative, e. g. red‐yellow‐green ratings
– Quantitative, e. g. FMEA
• Organizations need effective supplier management
processes
– Supplier Qualification, Selection, Monitoring and
Improvement
• Automotive industry has specified requirements for
suppliers and sub‐tier suppliers
Session Summary
25Copyright 2014 Omnex. All Rights Reserved.
WWW.OMNEX.COM
734.761.4940
Questions?
Thank You!
Dan Reid
dreid@omnex.com

14. 14
WWW.OMNEX.COM
R. Dan Reid
• Company Experience
– Omnex, Director of Consulting
– AIAG, Program Development Manager, Quality
– Baxter Healthcare, BioScience Division, Director of Supplier Quality
– General Motors, Various Materials Management, Purchasing and Supplier Quality positions
• Accomplishments
– ASQ Fellow and ASQ Certified Quality Engineer (CQE)
– Member of U.S. Technical Advisory Groups for Quality, Environmental and OH&S Management Systems
– The first Delegation Leader of the International Automotive Task Force (IATF)
– Author of QS‐9000, ISO Technical Specification (TS) 16949, ISO 9001:2000, ISO International Workshop
Agreement (IWA 1), AIAG Business Operating Systems for Healthcare Organizations (HF‐2); author with
McGraw Hill, ASQ Press and others; ASQ Quality Progress Administrative Committee/Reviewer
– Worked on the Chrysler, Ford and GM Potential Failure Mode and Effects Analysis, Production Part
Approval Process and Advanced Product Quality Planning projects and IAQG APQP/PPAP Project
– Led AIAG Projects for Effective Problem Solving, Cost of Poor Quality, Supplier Management and others
– Registered VDA 6.3 Auditor Trainer; ISO 9000, ISO 14000, AS 9100 Trainer
– A2LA Board of Directors
• Awards include
– 2010 Quality Coaching Excellence for Primary Care Practices, Michigan Primary Care Consortium
– 2006 Automotive Industry Action Group (AIAG) Healthcare Focus Group Chairs’ Award
– 2007, 2005, 2004, 1993 Cecil C. Craig Awards, ASQ Automotive Division
– 2004 ASQ Automotive Division Quality Leader of the Year
– 2003 Leadership Award from the ISO9000 International Conference
– 2002 AIAG Outstanding Achievement Award