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Maximizing Use of Your
Supplier Scorecard
How they help your company win!Eduard Toerek, President - QUARA Innovations
etoerek@quarainnovations.com
Reinhold Toerek, Vice-President - QUARA Innovations
rtoerek@quarainnovations.com
www.quarainnovations.com
OMTEC 2018
© 2018 Quara Innovations LLC . For use permission, contact info@quarainnovations.com

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QUARA Innovations
- Quality and Regulatory Solutions
- FDA Compliance
- Quality System Management & Readiness
- Supplier Quality Management
- Metrics & Data
www.quarainnovations.com

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Scorecards
• Why do you want a scorecard?
– You think it’s a requirement
– Everyone else has them
– Keep track of our suppliers
– Keep track of quality
– Help improve our product
– Help improve our suppliers
– Help improve our own processes
– Develop a real ”partnership” with our suppliers
– Tool to ”weed out” the bad suppliers
– Use in Management Review
A tool to help you and your suppliers get better

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Once upon a time…

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Inputs and Elements to Supplier Ratings
Quality Delivery
Sourcing/
Purchasing
R&D Receiving
Supplier
Process

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Definitions and Targets - On Time Delivery
• On Time Delivery
– Define what “On Time” Means. Why? How important is this?
• Parts shipped by due date?
• Parts arrive on due date?
• Is it on time if the supplier requests a later date and is granted?
• Is there a grace period?
• What about part shipped early? Penalty for this?
– Establish OTD targets
• What are consequences of missed targets?
– e.g. Supplier must meet 90% OTD 2 of every 3 months or SCAR is issued.
Definitions and Targets…Keys to effective implementation

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Definitions and Targets - Quality Metrics
• Quality
– How is quality measured?
• First time yield?, Lot acceptance?, DPM?
• Is sampling plan adequate?
• Where is it measured? …
– At supplier
– At your facility (receiving inspection)
– Are deviations considered in this metric?
– What about USE AS IS dispositions on Non Conforming Material Reports?
– Establish Quality Targets
• e.g. Supplier must meet 90% quality level 2 of 3 months or SCAR is issued
• What are the appropriate quality levels for your company?
– Are Field Actions and Recalls included in the Quality scorecard?
– Are NCEs included in the quality scorecard?
• Typical measures include # of Open NCE. Should we measure time to Close?, Adequacy of Response?
• Consider how your supplier manages the non-conformity process.
– Are SCARs included in the quality scorecard?
• Typical measures include # of Open SCARs and Time to Close. What about adequacy of Response? What should we measure?
• Consider how your supplier manages the processes.
Definitions and Targets…Keys to effective implementation

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Simple Scorecard Example with Quality & Delivery Elements only
• Supplier Specific Quality & Delivery per month
• Overall year over year and Current YTD Quality Information
• Overall year over year and Current YTD OTD Information
• Overall monthly supplier performance Information
• Data provides ability to track what you need

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Scorecard Inputs
• Scorecard Inputs
– Process Capability
• %age processes that meet minimum process requirements
– Part quality
• Number of Lots accepted, Number of receipts accepted, PPM, First Time Yield, Total Yield, etc.
– On Time Delivery
• Percentage OTD per month
• Cautions:
– Need to define what On Time Delivery means. (Is it date product left the supplier, date product enters your building, date it was received?)
– If expected delivery dates are extended and approved, then need to ensure those extended dates are updated for OTD data to be accurate
– Service Characteristics
• Perhaps a service scorecards or data sheet is needed
– Supplier response time
– How easy/difficult is the supplier to work with?
– Is supplier pro-active when issues arise?
– Overall satisfaction with supplier
– Cost vs. Value
– Supplier Audit Results
– SCARs
– Deviations
– NCEs
There is more than Quality & Delivery
Measures of Process Management

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Scorecards Scoring
• What do you do?
– Establish elements for the scorecard
– Establish weighting factors for each element
– Establish targets for all elements of the scorecard
– Establish scoring criteria and methodology
– Establish triggers/thresholds for when reaction is needed
– Provide scorecards to your suppliers on a regular basis
– Talk to your suppliers about the scorecards, make sure everything is clear, and you reach
consensus on the scoring
If you don’t do it right, it will be ineffective

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Scorecard Gotchas
• Are you measuring the right things?
• Are you measuring the right things the right way?
• Are you measuring the same way your supplier is measuring?
• Are proper systems in place to capture all the data?
• Is your data reliable?
• Is your data timely?
• Are you driving appropriate actions based on scorecard performance?
• Are you sharing the scorecard with your suppliers?
Fundamentals of data gathering, reporting, and usage

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Supplier Quality Process

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Metrics and Scorecards

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Drill Down
Corporate Heat Map
Drill-Down of Heat Map Metrics
2017 2018

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Action Planning
Detailed Performance and Action Plans

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Drill Down to Actionable Level
0
20
40
60
80
100
120
NCE
0
5
10
15
20
25
30
35
Wrong
Revision
Cosmetic Labeling
Controls
Packaging Expired Out of Spec Incomplete
Supplier
Category
Details
0
5
10
15
20
25
30
35
Wrong
Revision
Cosmetic Labeling
Controls
Packaging Expired Out of Spec Incomplete
Supplier
0
5
10
15
20
25
30
35
Wrong
Revision
Cosmetic Labeling
Controls
Packaging Expired Out of Spec Incomplete
Supplier
TrendoverTime
Each element
must be
“breakdownable”
to demand
appropriate action
when necessary

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What are we really trying to accomplish?
• Supplier Evaluation
– Scorecard
– Quality
– Delivery
– Cost
– Logistics
– Performance
• Evaluation should drive appropriate actions
– Don’t drive undesired actions
• What actions do your scores drive?
– Remove from ASL, disqualify
• Drivers for:
• Audits
• Business Review
• ASL Action
• Input to Management Review – what to include
The key to finding what
you want, is knowing
what you want.
• Other contributing factors
– Supplier Audit results
– Criticality of Supplier
– Criticality of parts provided by supplier
– Risk
– Is supplier Dock-To-Stock?
– Certifications/Registrations

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Supplier Evaluation Report

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SECTION 2 Supplier Evaluation Scoring
Measuring and reporting data is
not enough…You have to
DO something with it!

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SECTION 2 Supplier Evaluation Scoring
Weighting factors incorporated into calculated scores
• Classification of product or services
• Significant Subcontractor
• Elapsed time since last audit

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Weighting factors incorporated into calculated scores
• Classification of product or services
• Significant Subcontractor
• Elapsed time since last audit
SECTION 2 Supplier Evaluation Scoring

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OTD
NCE
SCAR
AUDIT
RELATIONSHIP
Supplier
Scorecard
ACCEPTANCE
Supplier RATING
acceptable?
Any RED or
YELLOW Supplier
Metrics?
Record
action in
Supplier
Control log
Generate
reports and
provide to
supplier
Supplier
Evaluation
Report
ASL Action
Business
Review
Audit
Annual Audit
Schedule
Monthly
2 – 4 Years
YES YES
NO NO
Business
Production
/Process
Logistics
Organization
Finance
Performance
Quality
Subsystem:
- NCE
- SCAR
- Audit
- etc.
Determine
Appropriate
Action
Connecting All the Pieces
Scorecards – Not just data anymore

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Scorecard Heatmap
Instant, current look at
elements of each
supplier score

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Trend Charts
Choose what to see
and how much detail

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Traditional Selection Methodology
• Rating based on Quality & Deliver?
• Utilize all available tools
• Measure what is important to YOU
How well does your supplier
Manage the Process?

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Supplier Ratings/Scores/Grades
• More than just the number of occurrences
• How well are the PROCESSES managed (SCAR, CAPA, Audit…)
– Item definitions
– Escalation methodology
– Reliability
• Effectiveness
• Relationship – subjective
– Responsiveness
– Easy to work with
– Reliable
– Trustworthy
Proper definitions lead to “breakdownable” metrics

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Process Rating or “Grades”: example SCAR rating options
• SCAR Index
– Qty (issued, open, aged)
– Response Time, action plan (weighting factor x1)
– On-time closure (weighting factor x2)
– Effectiveness (weighting factor x5)
– Risk Mitigation
W1
W2
W3
Wi
.
.
.
Wn
Rating =
X1: Quantity
X2: Open
X3: Aging
Xi
.
.
.
Xn: Risk
Rating = W1X1 + W2X2 + … + WnXn

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Clearly Defined, Accurate Metrics & Responsibility
• On-time delivery
– Ordered within leadtime
– Committed delivery date
– Requested delivery date
– Changed delivery commitment
– Early delivery
– Change order, increased quantity
• Revision level of items received
• Made to Print
• Acceptance Rate – based on reject/receipts at inspection,
or production cycle
• Relationship – Good Partners

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Triggered Actions
• Scorecard Actions
– Assess
– SCAR/CAPA
– Update Supplier Evaluation Report
– NCE
– Audit
• Supplier Evaluation Report Actions
– Audit (self, desktop, onsite)
– ASL Action (Probation, remove, retain)
– Business Review (monthly, quarterly,
annual)
Evaluate Data …Take Action

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How a supplier scorecard helps you win!
• What is needed to make sure you have an effective scorecard that is beneficial
to both you and your supplier?
– Communication
• Perhaps one of the largest factors in misunderstandings
• Develop a GREAT relationship with your suppliers
• Develop trust with your suppliers
– They need to trust you as much as you need to trust them
– You are a large factor in your suppliers’ scores
– Your supplier scorecards will reveal much about your own organization
– Be willing to receive input (complaints, criticisms, suggestions, praise) from your suppliers
– Be quick to react to input provided by your suppliers
– Be quick to engage with your supplier to help them if/when scores dip
• Too often new suppliers are sought when issues arise. However, many
of the issues are self-inflicted.
• Much time and money is invested in onboarding a supplier; let’s develop them.
Their success is your success.
You Win, Your Suppliers Win, Your Customers Win…What a Wonderful World!

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Takeaways
• Select appropriate metrics
• Ensure reliable data sources
• Drive appropriate actions
• Communicate with your suppliers
For a Supplier Scorecard Checklist, send email
with subject “Scorecard Checklist” to:
info@quarainnovations.com
Please include your name, title, and company name

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Discussion?
For a Supplier Scorecard Checklist, send email with
subject “Scorecard Checklist” to:
info@quarainnovations.com
Please include your name, title, and company name

33.
Thank You!!!Eduard Toerek, President - QUARA
Innovations
etoerek@quarainnovations.com
Reinhold Toerek, Vice-President - QUARA
Innovations
rtoerek@quarainnovations.com
www.quarainnovations.com © 2018 Quara Innovations LLC . For use permission, contact info@quarainnovations.com