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Maximizing Use of Your Supplier Scorecard - OMTEC 2018

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Supplier scorecards provide a comparative look at suppliers and a heightened understanding of internal challenges within your organizations. Orthopaedic device companies rely on scorecards to monitor the performance of suppliers that are an extension of their own operations. The right elements in the scorecard (e.g. weighted factors of quality, delivery, cost, responsiveness, SCAR, CAPA, etc.) will strengthen your confidence, control and relationship with your suppliers while simultaneously providing essential indicators to drive positive change.

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Maximizing Use of Your Supplier Scorecard - OMTEC 2018

  1. 1. 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
  2. 2. 2 QUARA Innovations - Quality and Regulatory Solutions - FDA Compliance - Quality System Management & Readiness - Supplier Quality Management - Metrics & Data www.quarainnovations.com
  3. 3. 3 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
  4. 4. 4 Once upon a time…
  5. 5. 5 Inputs and Elements to Supplier Ratings Quality Delivery Sourcing/ Purchasing R&D Receiving Supplier Process
  6. 6. 6 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
  7. 7. 7 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
  8. 8. 8 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
  9. 9. 9 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
  10. 10. 10 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
  11. 11. 11 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
  12. 12. 12 Supplier Quality Process
  13. 13. 13 Metrics and Scorecards
  14. 14. 14 Drill Down Corporate Heat Map Drill-Down of Heat Map Metrics 2017 2018
  15. 15. 15 Action Planning Detailed Performance and Action Plans
  16. 16. 16 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
  17. 17. 17 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
  18. 18. 18 Supplier Evaluation Report
  19. 19. 19 SECTION 2 Supplier Evaluation Scoring Measuring and reporting data is not enough…You have to DO something with it!
  20. 20. 20 SECTION 2 Supplier Evaluation Scoring Weighting factors incorporated into calculated scores • Classification of product or services • Significant Subcontractor • Elapsed time since last audit
  21. 21. 21 Weighting factors incorporated into calculated scores • Classification of product or services • Significant Subcontractor • Elapsed time since last audit SECTION 2 Supplier Evaluation Scoring
  22. 22. 22 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
  23. 23. 23 Scorecard Heatmap Instant, current look at elements of each supplier score
  24. 24. 24 Trend Charts Choose what to see and how much detail
  25. 25. 25 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?
  26. 26. 26 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
  27. 27. 27 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
  28. 28. 28 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
  29. 29. 29 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
  30. 30. 30 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!
  31. 31. 31 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
  32. 32. 32 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. 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

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