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3. 3
© 2015 CEB. All rights reserved. QUAL2565215SYN
ROADMAP FOR THE PRESENTATION
Measure Supplier
Performance
Introduction Improve Suppliers Next Steps and Q&A
4. 4
© 2015 CEB. All rights reserved. QUAL2565215SYN
Revenue Expectations Cost Pressure
0%
50%
100%
2%6%
10%
15%
41%
19%
7%
1%
4%
8%
20%
43%
18%
6%
INTENSE PRESSURES DESPITE SUPPLY RISKS
Business Executive Expectations of Revenue Growth and Cost Pressure in Next 12 Months
Q4 2014 Business Barometer Survey
Business Executive Expectations of Supply Chain Disruptions in Next 12 Months
Q4 2014 Business Barometer Survey
Much Higher
Higher
Somewhat Higher
No Change
Somewhat Lower
Lower
Much Lower
Decreased
Same
Increased
Supply Chain Disruption
0%
50%
100%
35%
56%
9%
n = 332.
Source: CEB 2014 Business Barometer Survey.
n = 1,938.
Source: CEB 2014 Business Barometer Survey.
Companies expect to fuel
growth through increased
efficiencies as cost
pressures remain.
■■ However, few expect supply
chain risks to change over the
next 12 months.
■■ This pressure to perform, while
containing costs, can lead to an
unintentional oversight of key
risk assessment and reduction
strategies.
5. 5
© 2015 CEB. All rights reserved. QUAL2565215SYN
INSUFFICIENT SUPPLIER OVERSIGHT INCREASES COSTS
Estimated Costs Incurred by Accelerator Pedal and Floor Mat Recalls
Toyota Motor Corporation, in Billions of US Dollars
Product recall and
repair costs
Estimated lost sales.
The recall is estimated
to have dented demand
by 10,000 vehicles.
National Highway Traffic
Safety Administration
fines for not notifying
the agency in a timely
manner of problems.
Settlement costs
related to complaints of
unintended acceleration.
$1.1 $0.8 $0.08 $1.10
Source: Tomoko A. Hosaka, “Toyota Recalls May Cost Automaker $5.5 Billion.” NBCNews.com, 10 March 2013, www.nbcnews.com/id/35893905/ns/business-
autos/t/toyota-recalls-may-cost-automaker-billion; Mike Ramsey, “Toyota in $5.5 Billion Gas Pedal Settlement,” The Wallstreet Journal, 27 December
2013, https://online.wsj.com/article/SB10001424127887324669104578203440990704994.html.
Insufficient supplier
oversight has overt costs
that impact profitability.
■■ Toyota’s 2009 recalls for
accelerator pedals and floor
mats cost the company an
estimated $3 billion.
6. 6
© 2015 CEB. All rights reserved. QUAL2565215SYN
BUILD SUPPLIER QUALITY MANAGEMENT CAPABILITIES
Supplier Quality Management Maturity Curve
■■ Led by
Procurement
■■ Ad hoc program
■■ Led by Quality
■■ Introduces
supplier self-
assessments
■■ Uses on-
site audits
occasionally
■■ Limits supplier
development
■■ Uses standard
qualification and
auditing process
■■ Establishes
standard
criteria to
identify supplier
performance
issues
■■ Prioritizes
supplier
development
activities
■■ Measures
supplier
performance
■■ Uses supplier risk
profiles
■■ Audits for
strategic
management
criteria
■■ Develops
suppliers
on strategic
activities
■■ Establishes
a shared risk
prioritization
framework with
procurement
■■ Integrates
activities into
corporate
risk and audit
programs
■■ Assesses and
audits for culture
and corporate
management
practices
■■ Uses supplier
performance to
inform business
continuity
planning and
customer
experience risk
assessments
Basic Emerging Intermediate Advanced World-Class
Source: CEB analysis.
Quality organizations
move through five levels of
maturity as they strive for
world-class supplier quality
management.
■■ Supplier quality management
often begins as a procurement-
led activity, but at world-
class companies it eventually
integrates with other
assurance activities related
to corporate risk.
7. 7
© 2015 CEB. All rights reserved. QUAL2565215SYN
Measure Supplier
Performance
Introduction Improve Suppliers Next Steps and Q&A
ROADMAP FOR THE PRESENTATION
8. 8
© 2015 CEB. All rights reserved. QUAL2565215SYN
THE CURRENT STATE OF SUPPLIER PERFORMANCE
MEASUREMENT
“Measure Supplier Performance” Importance Versus Maturity Score
Average Score
Quality executives recognize
the importance of measuring
supplier performance, but
maturity lags.
■■ Measure Supplier Performance:
Approaches used to measure
the performance of existing
suppliers.
Level 1 Level 2 Level 3 Level 4 Level 5
Quality measures
supplier performance
locally according to
incoming inspections
and quality issues.
Quality measures
supplier
performance locally
according to their
ability to consistently
deliver products
that meet product
specifications.
Quality uses a
single consistent
framework for
measuring supplier
performance to
assess a supplier’s
ability to meet
several operational
expectations.
Quality provides
supplier
performance inputs
to an integrated
supplier scorecard
that is used globally
to track and
compare supplier
performance across
all elements of the
relationship.
Supplier performance
reports are integrated
into corporate risk
reports and inform
business continuity
planning and
customer loyalty risk
assessments.
n = 24.
Source: CEB Quality 2014 Functional Maturity Diagnostic.
Importance Maturity
3.38
2.55
Very Important
5.0
4.0
3.0
2.0
1.0
0.0
9. 9
© 2015 CEB. All rights reserved. QUAL2565215SYN
INTEGRATED SCORECARD DEVELOPMENT BEST
PRACTICES
Principles Benefits
Involve internal business partners before
developing scorecard.
Demonstrates how scorecard focuses on elements
business partners care about (i.e., metrics beyond
quality).
Create category-based scorecards.
Enables analysis of similar suppliers in an apples-
to-apples fashion.
Focus on the “critical few” KPIs (approximately
three to five per metric).
Maintains focus on the most important drivers
of supplier performance.
Select KPIs that are within the organization’s
control.
Measures outcomes that can be influenced by
the organization and the supplier.
Use a mix of both quantitative and qualitative KPIs.
Contributes to a fact-based scorecard while
allowing for day-to-day user perception.
Incorporate existing KPIs and/or SLAs where
appropriate.
Encourages adherence to existing contract terms
and conditions.
Automate data collection, aggregation, and
reporting.
Creates a scalable performance management
process.
Source: CEB analysis.
Use a standardized supplier
scorecard effectively
manage suppliers.
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© 2015 CEB. All rights reserved. QUAL2565215SYN
DEVELOP SCORECARD WITH BUSINESS PARTNER INPUT
Participants
■■ Share opinions
■■ Help determine criteria for
supplier key performance
indicators
Administrator
Organizes the meetings
Takes notes and distributes
to all participants
Facilitator
Creates meeting agenda
Keeps participants focused on
meeting goals
Drives decision making process
Sponsor
Ensures proper people
attend the workshop
Ensures performance
criteria meet overarching
business objectives
Source: CEB analysis.
Source: CEB analysis.
Ask probing questions to surface business partners’ performance expectations for a category of suppliers, such as:
■■ What equates to satisfactory performance for suppliers in this category?
■■ If we hired a new supplier today, how could they make an immediate positive impact? What defines a negative
impact?
■■ Are there any existing measurements you are tracking that define supplier success in this category (i.e., SLAs, other
pre-defined expectations)?
■■ What causes you heartache with suppliers in this category?
■■ What aspects of your supplier interactions should be measured in a scorecard?
■■ What do high performing suppliers in this category do that lower performing suppliers don’t?
■■ When you come across situations where a supplier can improve, what typically causes you to think that?
Use a workshop to get
business partner input to
scorecard development.
■■ Include both Quality staff
and business partners with
knowledge of the supplier
relationships.
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© 2015 CEB. All rights reserved. QUAL2565215SYN
SCORECARD STRUCTURE: METRICSQuality provides inputs
to a standard, integrated
supplier scorecard.
■■ The sample scorecard uses six
standard metrics designed to
answer the following questions.
■■ Cost: Is the expected value
being received?
■■ Delivery and Support: How
reliable is the supplier? Do they
meet established time frames?
■■ Flexibility and Ease of Doing
Business: How “well run” is the
supplier? Is billing accurate?
■■ Quality: Does product and
service meet expectations?
■■ Partnership: Is the supplier
proactive? Do they provide
strategic guidance?
■■ Risk and Compliance: Does
the supplier mitigate risk? Do
they comply with company
standards?
Metric
Metric Weight
Percentage
KPI KPI Measurement
Cost 30%
Price Competitiveness Ranking compared to competitors
Discounts and Value-Add
Supplier proactively identifies volume discounts and other
price-reducing options
Transparency in Negotiations Provides transparency into its cost breakdowns
Delivery
and
Support
25%
Problem Resolution
Supplier is willing to take ownership of day-to-day issues
and problems
On-Time Delivery Degree to which hardware orders are delivered on time
Service Dependability Degree to which hardware service calls are completed on time
Order Accuracy Degree to which supplier fills orders accurately
Flexibility
and Ease
of Doing
Business
10%
Invoice Accuracy Degree to which supplier provides error-free invoices
Invoice Timeliness Invoices are provided in a timely manner
Account Management
Responsiveness
Supplier’s account management team quickly responds to requests
Usefulness of Reporting
Reports contain clear, concise, and actionable information including
performance, financial performance data, or trend information as
appropriate
Order Modifications
Supplier is able to accommodate order changes without significant
impact from delays
Quality 20%
Quality of Product Quality of product against requirements
Mean Time to Repair (MTTR) MTTR statistics against requirements
Reliability Mean time between failures against expectations
Warranty/Maintenance Number of warranty claims and defects
Resource Quality
Ability of resources to install and/or repair hardware based
on contractual obligations
Partnership 10%
Provision of Innovative Solutions Proactive provision of valuable and innovative solutions
Business Alignment
Supplier’s recommendations reflect their understanding of our
business objectives
Technology Supplier uses leading-edge technology in its products
Risk and
Compliance
5%
Product Safety Products function in accordance with industry safety standards
Business Alignment Supplier supports our diversity goals
Source: CEB analysis.
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© 2015 CEB. All rights reserved. QUAL2565215SYN
Metric
Metric Weight
Percentage
KPI KPI Measurement
Quality 20%
Quality of Product Quality of product against requirements
Mean Time to Repair (MTTR) MTTR statistics against requirements
Reliability
Mean time between failures against
expectations
Warranty/Maintenance Number of warranty claims/defects
Resource Quality
Ability of resources to install and/or repair
hardware based on contractual obligations
SCORECARD STRUCTURE: KEY PERFORMANCE
INDICATORS (KPIs)
KPI Evaluation Criteria
If a KPI is effective, you should be able to answer “yes”
to many of the following questions:
■■ Does it align with business objectives?
■■ Is it actionable?
■■ Is it quantitative and objective?
■■ Is it contractual?
■■ Is it well defined, including rating system?
■■ Is it controllable?
■■ Will it drive desired behavior?
■■ Is reliable data reasonably efficient to obtain?
Source: CEB analysis.
Identify three to five critical
few KPIs per metric.
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© 2015 CEB. All rights reserved. QUAL2565215SYN
Metric
Metric Weight
Percentage
KPI KPI Measurement
Quality 20%
Quality of Product Quality of product against requirements
Mean Time to Repair (MTTR) MTTR statistics against requirements
Reliability
Mean time between failures against
expectations
Warranty/Maintenance Number of warranty claims/defects
Resource Quality
Ability of resources to install and/or repair
hardware based on contractual obligations
SCORECARD STRUCTURE: KPI MEASUREMENTS
KPI Measurement Considerations
Consider the following questions when selecting
KPI measurements:
■■ What am I trying to measure?
■■ Who can provide this data?
■■ How often does the data change?
■■ Who or what is the data source?
Source: CEB analysis.
Define standard KPI
measurement criteria
for clarity across the
organization.
14. 14
© 2015 CEB. All rights reserved. QUAL2565215SYN
PANELIST
Simone Silva
Director of Quality North America
Whirlpool Corporation
Simone Silva is currently the Director of Quality for Whirlpool in North
America. Simone is responsible for the definition of the strategy for
supplier development in North America and its execution, leading a team
of approximately 60 people working with 1400 suppliers and supporting
the 12 plants of Whirlpool in the US and in Mexico.
Simone has over 18 years of experience in Quality and Service, 11 years in
Automotive and 7 years at Whirlpool Corporation, having had important
international assignments in China, Germany and Mexico.
15. 15
© 2015 CEB. All rights reserved. QUAL2565215SYN
SUPPLIER QUALITY RISK RATING DEFINITION AND APPLICATION
Before
■■ No standardized quality metric across different regions
■■ All available metrics were single focused, PPM, A-Defect, field,
warranty cost
■■ Multiple KPIs used by different stakeholders to assess supplier
quality
■■ No assessment of supplier competencies to support quality
■■ As a result quality not consistently considered as a factor in business
decisions
After
■■ Balanced criteria for supplier quality assessment composed by
performance and competence metrics
■■ Stakeholder alignment on single criteria
■■ Standardized criteria used to assess global suppliers in different
marketing regions
■■ Supplier risk rating used to prioritize training and supplier
development initiatives
■■ Supplier risk rating used as the single source of quality input for
supplier selection
February March April May June July August
Supplier Risk Rating—Definition/Alignment
Execution—Use of Risk Rating (New Launches and Existing Products)
SDE PDPs SDE On-Boarding Supplier Training
Whirlpool Quality Vision
Undisputed Quality Leader: Recognizably the Best, and Differentiated
Versus Competition
Global Strategic Sourcing Mission
Quality Parts and Services, Sourced and Delivered on Time, from the
Right Supplier, at the Right Cost
Source: Whirlpool Corporation.
16. 16
© 2015 CEB. All rights reserved. QUAL2565215SYN
THE TOOL—SUPPLIER QUALITY RISK RATING
■■ Assessment performed by the SDE responsible for the Commodity on the corresponding market region
■■ Criteria for scoring defined for each individual metric
■■ Hard metrics from the corporate data systems, SAP, ONTRAC
■■ Cross-functional collaboration encouraged for the competence assessment
■■ Risk rating available to all functions interacting with suppliers on a web-based system
Source: Whirlpool Corporation.
Scoring for Associated Risk
Risk Scoring Range
Low Risk
Total score between 80 to 100
points is considered Low Risk
Medium Risk
Total score between 60 to 79 points
is considered Medium Risk
High Risk
Total score below 60 points is
considered High Risk
70 points of scoring for
associated Risk
30 points of scoring for
associated Risk
SUPPLIER PERFORMANCE SUPPLIER CAPABILITY
QUALITY RISK
ASSESSMENT
Contribution to
Total Regional
PPM
Total
Regional CAL
Occurrence
Sir/Field
Failures Last 12
Months
PPM Trend CAL Trend 8D
W-PPAP
FPY
Process
FMEA
FSA
Risk
Value
Risk
9 0.03% 7 3 12 N 0 11,299 6 5 9 3 4 2 52
High
Risk
17. 17
© 2015 CEB. All rights reserved. QUAL2565215SYN
QUALITY RISK SCORING
Supplier Performance
Risk
Contribution to TOT
Regional PPM
TOT Regional CAL
Occurrences
SIR/Field Failures
Last 12 Months
PPM Trend CAL Trend
Contribution to PPM <.1%
and PPM <150:
PPM 0 = 10 pts
PPM <.05% = 9 pts
PPM .05–.1% = 8 pts
CAL<1 Occurrences
CAL 0 = 10 pts
CAL 1 = 8 pts
No (FF) Field Failures in the last 12 month:
0 Field Failures and 0 CAL = 14 pts
0 Field Failures and CAL>0 = 12 pts
Supplier PPM <150
Trends down on 6 and 3 months
rolling PPM with >40% imp = 18 pts
Trends down on 6 and 3 months
rolling PPM with >30% imp = 16 pts
Trends down on 6 and 3 months
rolling PPM with >20% imp = 14 pts
Suppliers under 50 PPM
automatically get full 18 points
Trends down on 6 and 3 months
rolling with >40% imp = 18 pts
Trends down on 6 and 3 months
rolling with >30% imp = 16 pts
Trends down on 6 and 3 months
rolling with >20% imp = 14 pts
Suppliers with 1 or less CAL
automatically get full 18 points
Contribution to PPM <..4%
and PPM <500:
PPM .11–.2% = 7 pts
PPM .21–.4% = 6 pts
CAL <6 Occurrences
CAL 2–3 = 7 pts
CAL 4–6 = 6 pts
Field failures (FF) in last 12 month with minimal effect to
customer due to timely and robust countermeasures
(10 pts)
Supplier PPM <500
Trends down on 6 and 3 months
rolling PPM with >10% imp = 12 pts
Trends down on 6 and 3 months
rolling PPM with <10% imp = 11 pts
PPM with 0 imp = 10 pts
Suppliers 150–200 PPM
Automatically get full 12 Points
Trends down on 6 and 3 months
rolling CAL with >10% imp =
12 pts
Trends down on 6 and 3 months
rolling CAL with <10% imp =
11 pts
CAL with 0 imp = 10 pts
Suppliers with 2–3 CAL
automatically get full 12 Points
Contribution to PPM >.4%
and PPM >500:
PPM .41–.5 = 5 pts
PPM .51–.6% = 4 pts
PPM .61–.8% = 3 pts
PPM .81–1% = 2 pts
PPM 1.01–1.5% = 1 pts
PPM>1.5% = 0 pts
Contribution to CAL >6
Occurrences
CAL 7 = 5 pts
CAL 8–10 = 4 pts
CAL 11–12 = 3 pts
CAL 13 = 2 pts
CAL 14–15 = 1 pts
CAL> 15 = 0 pts
Field Failures (FF) in the last 12 month with significant
customer impact:
Field Failures with medium customer impact and support
cooperation = 8 pts
Field Failures with high customer impact and support
cooperation = 6 pts
Multiple part families with Field Failures from supplier = 4 pts
Fail Failures with medium customer impact and poor support
cooperation = 2 pts
Field Failures with high impact on customer and poor
support cooperation = 0 pts
Supplier PPM >500
PPM Increasing <5% = 8 pts
PPM Increasing <10% = 6 pts
PPM Increasing <15% = 4 pts
PPM Increasing <20% = 2 pts
PPM Increasing >20% = 0 pts
PPM >1000 is automatically 0 pts
Supplier CAL >6 CAL
CAL Increasing <5% = 8 pts
CAL Increasing <10% = 6 pts
CAL Increasing <15% = 4 pts
CAL Increasing <20% = 2 pts
CAL Increasing >20% = 0 pts
CAL>15 is automatically 0 pts
Contrib 10 pts 10 pts 14 pts 18 pts 18 pts
70 points of scoring for associated
risk based on performance.
Source: Whirlpool Corporation.
Note: These are guidelines—SDEs still need to use critical thought.
18. 18
© 2015 CEB. All rights reserved. QUAL2565215SYN
QUALITY RISK SCORING
Supplier Capabilities
Risk
Problem Solving
(8D)
Perfect Launch
(PPAP/FPY)
Process Control
(Process FMEA)
Continuous Improvement
(Focus Supplier)
Use of proper tools with all issue closure less
than 30 days and no repeat issues
(9–12 Points)
Above 90% FPY on PPAP submissions and no
issues in first 90 days
(5–6 Points)
Process FMEA present with active RPN
reduction activities and robust control plans
(5–6 Points)
Not on focus supplier with good quality
performance
(5–6 Points)
Use of proper tools with average closure less
than 30 days with minimal repeat issues
(7–8 Points)
70–89% FPY on PPAP submissions with minor
issues in first 90 days and prompt reaction
(4 Points)
Process FMEA present with active RPN
reduction activities and robust control plans
(5–6 Points)
Quality trends indicate lack of continuous
improvement
(3–4 Points)
Lack of use of proper tools with average
closure greater than 30 days and numerous
repeats
(0–6 Points)
Below 70% FPY on PPAP submissions with
poor reaction
(0–3 Points)
No FMEA or failure mitigation methods and/or
poor process control
(0–3 Points)
On the focus supplier program due to
performance or deteriorating quality levels
(0–2 Points)
Contrib 12 pts 6 pts 6 pts 6 pts
30 points of scoring for associated
risk based on capability.
Source: Whirlpool Corporation.
19. 19
© 2015 CEB. All rights reserved. QUAL2565215SYN
PROCESS GOVERNANCE
Process Update
■■ All Supplier Risk Rating to be updated every six months
(Mid-Year [June–July]–End Year [December–January])
■■ If it is deemed appropriate, a supplier review board
should be scheduled for a rating review out of the
scheduled update windows:
–– Commodity manager should attend
–– Quality representative for the supplier and requesting
region should attend and present data justifying the
change
–– Regional Quality leader can attend as optional
■■ SDEs should always practice judgment while applying
the criteria
■■ SDEs should collaborate with process partners to assess
supplier competence
■■ SDEs are responsible to define quality roadmaps by
commodity based on the Risk Rating
■■ Before asking for an unplanned update, the regional SDE
should evaluate the following:
–– Are we reacting to a special cause event (single data
point)?
–– Is the change in risk based sustainable improvement
or confirmed performance degradation (3+ months)?
SDEs Responsibility
Source: Whirlpool Corporation.
20. 20
© 2015 CEB. All rights reserved. QUAL2565215SYN
Measure Supplier
Performance
Introduction Improve Suppliers Next Steps and Q&A
ROADMAP FOR THE PRESENTATION
21. 21
© 2015 CEB. All rights reserved. QUAL2565215SYN
THE CURRENT STATE OF SUPPLIER PERFORMANCE
IMPROVEMENT
“Improve Suppliers” Importance Versus Maturity Score
Average Score
Quality executives
recognize the importance of
supplier improvement, but
maturity lags.
■■ Improve Suppliers: Practices
used to ensure the suppliers
improve their capabilities and
performance over time.
Level 1 Level 2 Level 3 Level 4 Level 5
Quality reacts to
supplier issues that
disrupt operational
processes with
limited and targeted
support to fix the
immediate issue.
Quality offers
unmetered support
to critical suppliers
with chronic poor
performance.
Quality uses
established
relationship and
performance
criteria to identify
suppliers who
need improvement
and helps them
improve systems and
processes.
Quality uses
an established
risk framework
to prioritize
suppliers requiring
improvement on
both operational and
strategic activities.
Quality identifies
select Tier 1 suppliers
to collaboratively
improve culture
of quality and the
quality of corporate
management
practices.
n = 24.
Source: CEB Quality 2014 Functional Maturity Diagnostic.
Importance Maturity
5.0
4.0
3.0
2.0
1.0
0.0
3.35
2.31
Very Important
22. © 2015 CEB. All rights reserved. QUAL2565215SYN
22
OVERVIEW
Rolls-Royce plc operates in four global markets: civil aerospace, defense aerospace, marine, and energy. It is investing
in technology and capability that can be exploited in each of these sectors to create a competitive range of products.
The success of these products is demonstrated by the company’s rapid and substantial gains in market share during
recent years. As a result, engine deliveries have grown and the company now has a total of 54,000 gas turbines in
service worldwide. The investments in product, capability, and infrastructure to gain this market position create high
barriers to entry.
GUIDING PRINCIPLES
■■ To ensure supplier performance and improvement, the company must establish structure for performance measures,
reporting, analysis, and issue resolution.
■■ Standardizing language, information, processes, and roles is as important among internal parties as with suppliers.
COMPANY SNAPSHOT
Rolls-Royce plc
Industry: Aerospace, Power
Systems, and Defense
Rolls-Royce has a broad customer base comprising more than 500 airlines,
4,000 corporate and utility aircraft and helicopter operators, 160 armed
forces, and more than 2,000 marine customers, including 50 navies. The
company has energy customers in nearly 120 countries. Rolls-Royce employs
40,000 people in more than 50 countries.
2011 Sales: £11 Billion
Employees: 40,000
Headquarters: London
SYSTEMATIC SUPPLIER PERFORMANCE MANAGEMENT
23. 23
© 2015 CEB. All rights reserved. QUAL2565215SYN
SYSTEMATIC SUPPLIER PERFORMANCE
MANAGEMENT
Practice Components
Rolls-Royce creates global
standards for consistent
assessment, management,
and communication of
supplier performance.
Potential
Continuous
Improvement
Roadblocks
Practice
Components
Inconsistent/
Unreliable Data
Standards
Performance
Issues Not
Addressed
Adequately
Uncoordinated
or Inefficient
Measurement
Activity
Suppliers Lack
Awareness of
Performance
Standards
Component 1:
Comprehensive
Metric Dictionary
Easy-to-use
metrics dictionary
standardizes
all aspects of
performance
assessment.
Component 3:
“Three-in-One”
Escalation Process
Systematic
underperformance
resolution
process with
escalation triggers
involves/assigns
appropriate skills
and activities.
Component 2:
Supplier
Measurement
Road Map
Process map sets
out discrete tasks,
owners, and data
requirements.
Component 4:
Supplier Training
and Tools
Training sessions
and online tools
for suppliers
foster awareness
of performance
requirements.
“We have developed
cross-checks and
methods to ensure that
our data is world class, enabling
us to use this information to make
important business decisions.”
Rick Wells
Supplier Support Leader
Rolls-Royce
Source: Rolls-Royce Holdings; CEB analysis.
24. 24
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RIGOROUS PERFORMANCE IMPROVEMENTA systematic process
formalizes issue resolution
actions and triggers for
escalating to higher levels
as new capabilities are
required.
Level 3:
Fundamental Redesign
Level 2:
Improve Overall
Performance
Level 1:
Make Immediate
Improvements
Level 0:
Restore the
Status Quo
■■ Purpose: Verify adherence
to established process and
product specifications.
■■ Owner: Local Area
Manager
■■ Duration: Two weeks
■■ Purpose: Analyze process,
product, or system to
identify root cause.
■■ Owner: Specialist
■■ Duration: Three weeks
■■ Purpose: Deploy cross-
functional team to address
complex/broad problem.
■■ Owner: Local Area
Manager Plus Specialist
■■ Duration: Five weeks
■■ Purpose: Involve
senior management
to determine redesign
or supplier change.
■■ Owner: BU Director,
Specialist, and Local
Area Manager
■■ Duration: Indefinite
Trigger: Fundamental
redesign may be required
to resolve issue.
Trigger: Cross-functional
team is needed to
resolve root cause.
Trigger: Problem is still
evident after status quo
restored.
3
2
1
Source: Rolls-Royce Holdings; CEB analysis.
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© 2015 CEB. All rights reserved. QUAL2565215SYN
ACTIONABLE CONTINUOUS IMPROVEMENT PLAN
Escalation Gantt Chart
Illustrative
“Time-boxed” process steps
promote thoroughness
while maintaining progress.
Tasks and Milestones Owner Mandatory Support Status February March April May
3 10 17 24 3 10 17 24 1 7 14 21 28 3
Level 0: Restore the Status Quo
Verify adherence to established process and product specifications.
Problem Definition Rolls-Royce Supplier Completed
Containment Action Supplier Completed
Customer Protection Supplier Local Area Manager Completed
Process Adherence Review Supplier Local Area Manager Completed
Specification Conformity
Review
Supplier Completed
Adherence/Conformity
Results Analysis
Supplier Completed
Resolution Plan Definition/
Development
Supplier Completed
Level 1: Make Immediate Improvements
Analyze process, product, or system to identify root cause.
Root-Cause Analysis Supplier Specialist Completed
Customer Protection
Review
Supplier Rolls-Royce Completed
Improvement Plan
Implementation
Supplier Local Area Manager Completed
Progress Monitoring Supplier Completed
Level 2: Improve Overall Performance
Deploy cross-functional team to address complex/broad problem.
Integrated Team
Resources Identification
and Formation
Supplier Specialist, Local Area
Manager
Completed
Additional Root-Cause
Analysis
Supplier Specialist Completed
Customer Protection
Review
Supplier Specialist Completed
Process Improvement
Plan Definition and
Implementation
Supplier Specialist, Local Area
Manager
Completed
Progress Monitoring Supplier Local Area Manager Completed
Level 3: Fundamental Redesign
Involve senior management to determine redesign or supplier change.
Level 2 Business Care
Consideration
Supplier Three-in-One
Receiver, Specialist,
Local Area Manager,
BU Director
In Progress
Redesign Decision-Making
Process
Supplier,
Specialist, Local
Area Manager,
BU Director,
three-in-one
Receiver
Not
Started
Hard timescales
maintain process
discipline and
discourage
premature closure.
Source: Rolls-Royce Holdings; CEB analysis.
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© 2015 CEB. All rights reserved. QUAL2565215SYN
CONTINUOUS IMPROVEMENT PLAN SAMPLE TEMPLATE GUIDE
Supplier: __________________
Date: __________________
Purpose: __________________
Priority Metric KPIs
Targeted
Current
Score
Target
Score
Improvement
Initiatives
Action
Step(s)
Owner Target
Date
Date
Completed
Status/Notes
1
2
3
4
5
Source: CEB analysis.
27. 27
© 2015 CEB. All rights reserved. QUAL2565215SYN
Measure Supplier
Performance
Introduction Improve Suppliers Next Steps and Q&A
ROADMAP FOR THE PRESENTATION
28. 28
© 2015 CEB. All rights reserved. QUAL2565215SYN
SESSION TAKEAWAYS
CEB Resources and Recommended Next Steps
Assess Your Supplier Quality Management Maturity
■■ Option 1: Functional Maturity Diagnostic (Full-Functional Assessment)
■■ Option 2: Supplier Quality Management Maturity Model (Quick Self-Check)
Build a Standard Supplier Scorecard
Scorecard Builder (Library of Best-in-Class KPIs)
Create a Consistent Continuous Improvement Plan
Continuous Improvement Plan Template
Participate in the Supplier Quality Management Benchmarking Effort in the Early Fall
1. Align scorecard metrics with elements business partners care about
(i.e., metrics beyond quality).
2. Create standard global scorecards to assess supplier performance across all
elements of the relationship.
3. Use scorecard results to construct actionable continuous improvement plans
that establish joint accountability.
29. 29
© 2015 CEB. All rights reserved. QUAL2565215SYN
QUESTION AND ANSWER SESSION
Logistics
■■ Press “*1” on your phone to ask a question.
■■ Written questions can be submitted directly into the web platform.
For more information and to access additional resources please visit
www.ceb.quality.executiveboard.com or contact lzheng@executiveboard.com.