The document discusses strategies for supplier quality improvement, including: 1) Selecting suppliers through evaluations of their capabilities and quality systems, using surveys and on-site audits. 2) Qualifying new suppliers and parts through a defined process including quotes, testing, approvals, and production trials. 3) Managing existing suppliers by categorizing them in a cost-impact matrix to focus quality assurance activities based on business importance.

1. Supplier Quality improvementJerry StevickSelecting and Qualifying New SuppliersPre-Selection Steps for Potential New Suppliers<br />The best and most cost-effective Supplier Quality Assurance (SQA) technique is to select strong suppliers that are committed to compatible long-term support, improvement, and relationship goals with the customer. Before a company selects a new supplier, the supplier should be evaluated across a range of topics including their technical capabilities, technical support, manufacturing capabilities, capacity, quality systems, administrative support, proven quality performance, commitment to continuous improvement, financial strength, and cost performance.<br />These assessments are typically made from an on-site “facilities review” which follows a structured format. Some aspects of the assessment may be supported by pre-visit questionnaires or subsequent submission of data by the supplier. The quality portion is often covered by a formal Supplier Quality (SQA) Survey that addresses quality performance and a range of quality system attributes. SQA Surveys typically result in a score or rating and are used to document the supplier’s quality systems and identify needed improvements.<br />At these early stages these techniques are most effective for screening suppliers out rather than approving suppliers. In all cases, a supplier audit represents a snapshot of one point in time at one location. A supplier audit at one location does not “approve” a supplier for multiple locations or for a given time period. SQA Surveys can be out-sourced to third parties if the standards and scoring rationale are clear. <br />Qualification Steps for New Suppliers and New Parts<br />Leading-edge companies follow a defined qualification process. Typical steps include formal quotes, engineering samples, qualification testing, produceability or specification review, supplier audit, part qualification (Production Part Approval Process or similar system), pilot run, field test if needed, and first production approval. The primary benefit of a formal qualification process is cross-functional attention to details to insure that gaps in the preparation of new suppliers do not interrupt production. The purpose of a PPAP is to submit data that substantiates longer term capabilities. Full formal approval should be delayed until all engineering and production requirements have been properly completed and documented.<br />Managing Existing Suppliers for Supplier Performance<br />Supplier Quality Cost versus Impact Matrix<br />The Supplier Quality Cost / Impact Matrix categorizes component suppliers based on the dollar spend and the perceived impact or risk associated with the technical complexity, impact on production, or the product in use. This technique helps to focus resources and provides a capability of targeting SQA activities based on the business impact of a particular commodity.<br /> Sample Cost versus Impact Matrix RISK / IMPACT High Low C O S T High Copeland White Rodgers GE Morrison Ryerson Honeywell Fasco Emerson Parker-Hannifin AK Steel Invensys UTEC St. Gobain Wilspec Norandel Outokumpu Premier Coils Plus Scott Mfg Metals USA Webco ILS DuPont Metals One Low Techniplas T-O-D Kalona Deltrol BSI Revcor Vantec Morton Lau Chatleff Suburban Basler ITW Timco Valspar Ken-Mac Metals Dixie Wire Custom Aluminum Midwest Metal Kaufman Eng’g Tube Forming Tyco Avery Dennison Lund Mid-Iowa Electron Kobe Wieland High Complexity / High Cost / High Warranty Commodities 1 2 3 4 <br />Quadrant 1 - High Cost / High Impact Suppliers<br />This quadrant identifies the suppliers or component commodities with the greatest dollar spend and impact on the business or product performance. This group of suppliers merits the full attention of the SQA activities. There is also a special subgroup of suppliers identified in this quadrant because these suppliers supply those commodities that routinely show up on the high warranty cost or high warranty occurrence reports over time.<br />SQA activities that are appropriate for Quad 1 suppliers include:<br />Formal, complete SQA Audit at least once every two years.<br />Full part qualification package (PPAP) on new parts, modified parts, or when a change in the supplier’s process occurs.<br />Produceability Review / Specification Review for new suppliers, new parts, or new commodities at an existing supplier.<br />Quarterly Review Meetings (selected suppliers)<br />High warranty suppliers should have four formal visits per year.<br />Visit supplier site 2X per year, monitor compliance to submitted PPAP<br />Supplier visit to customer site 2X per year<br />Other Quad 1 suppliers should have two formal visits per year.<br />Establish joint improvement targets for reject rate performance <br />At supplier’s production site(s)<br />At customer’s point-of-use<br />In use in the field (warranty, sales allowances, etc.)<br />Monitor progress against joint improvement targets <br />Review Corrective Actions at supplier’s site<br />Review action plans in support of reject rate improvement targets<br />Process capability program for critical / significant attributes<br />Identify critical/significant attributes for key suppliers and develop supplier scorecard<br />Suppliers submit data quarterly for supplier quality engineer (SQE) review<br />Conduct joint product teardowns of rejected materials<br />Issue monthly report on supplier performance<br />Quadrant 2 – Low Cost / High Impact Suppliers<br />This quadrant identifies the suppliers with a lower dollar spend but still having a significant impact on the business because of the technology, the specific nature of the component, or the application. This group of suppliers merits many of the same SQA activities as Quadrant 1 except the rigor can be modified based on the supplier’s good track record or the nature of the product or process. The part qualification process (PPAP) is the primary tool in this category. Formal SQA Audits should be targeted for every three years. Visits between audits should review reject rate performance and monitor the supplier’s performance versus their PPAP submission. <br />At least one review meeting per year should focus on a review of reject rates, any field issues, and quality improvement actions. At least one visit per year should be targeted to stay abreast of any changes and to monitor the supplier’s conformance to their submitted PPAP.<br />Quadrant 3 / 4 and Other – Low Impact and Low Cost Suppliers<br />The suppliers on the right side of the matrix have a lesser risk associated with their component usage because of lower technology content, a low-risk application, the component is a commodity, or very low usage volumes. These suppliers submit a streamlined version of the PPAP such as initial samples, part layout, lab testing, and warrant to verify or demonstrate that the supplier understands and can meet the intent of the customer’s requirements. These suppliers are typically handled on an “as needed” basis in production.<br />Establish ground rules for non-drawing requirements<br />Customers should require each new supplier to meet with the using manufacturing facility to clarify drawing and specification interpretations, and document support requirements. This review focuses on a common understanding of specifications as well as identifying expectations for ongoing support of production. Production support issues include:<br />• delivery patterns• lot sizes / lot control• packaging issues<br />• part presentation• bar code / labels• first in - first out flow<br />• safety / ergonomics issues• visits expected• contingency plans<br />• local warehousing • safety stock• problem support<br />• improvement expectations• data requirements• points of contact<br />These issues become more critical as the distance to supplier locations increases<br />Establish a web-based site for suppliers<br />Establish a web-based site for suppliers to access all quality and delivery requirements as well as their SQA performance metrics and forms for submitting corrective actions, deviation requests, process changes, engineering specifications, etc.<br />Resources<br />Resources required to support this SQA approach can vary considerably depending on how many suppliers are included and what breadth of techniques might be utilized. Companies rarely staff for full coverage under all circumstances. Experience demonstrates that a skilled SQE could manage 5 – 7 key suppliers assuming that two or three would represent a high maintenance workload and the rest represent a medium or low maintenance workload. These SQEs would also pick up the “as needed” work required by the lower impact suppliers. Should the emphasis on overseas sourcing escalate significantly, additional SQE might be needed. In this approach the SQE would manage his assigned key suppliers from product inception through production to warranty. He would coordinate data collection and follow-up activities with other support functions in engineering, customer service, warranty, reliability, and corporate sourcing or materials. <br />This program should be initiated and administered through a purchasing function although many SQE and warranty activities can take place independently once the pattern is established. The SQE support could technically report to any organization and provide the coordination role and some legwork for the multiple organizational functions involved in managing supplier relationships that merit periodic review. Some SQA functions, such as corrective action and problem solving, are best performed close to the usage point while others could be effectively centralized or even out-sourced.<br />In addition, customers should consider adding regional resources in geographic regions with a significant number of new suppliers or supplier changes. This presence can be achieved through a regional office or through third-party contractors. The primary function of this resource is to monitor overseas suppliers on a short-term basis when issues arise and to react quickly when production issues arise. Given the long distances, long replenishment times, and cultural and language barriers associated with Far East sourcing, customers need quick response when issues that potentially disrupt production occur. These unpredictable situations cannot be effectively managed from the US.<br />