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ORGANIZATIONAL SUPPLIER MANAGEMENT ORGANIZATIONAL SUPPLIER MANAGEMENT

ORGANIZATIONAL SUPPLIER MANAGEMENT - PowerPoint Presentation

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ORGANIZATIONAL SUPPLIER MANAGEMENT - PPT Presentation

Cameron Gray Quality Continuous Improvement Specialist Valiant TMS Agenda The Importance of Developing a Supplier Management System Supplier Selection Supplier Qualification Supplier Evaluation ID: 636572

quality supplier management qualification supplier quality qualification management evaluation delivery improvement suppliers story material system supply development selection cont

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Slide1

ORGANIZATIONAL SUPPLIER MANAGEMENT

Cameron Gray

Quality Continuous Improvement Specialist

Valiant TMSSlide2

Agenda

The Importance of Developing a Supplier Management

System

Supplier Selection

Supplier Qualification

Supplier Evaluation

Supplier Classification

Supplier Development

Supplier RemovalSlide3

Auto Industry Average Spend

Automobile Engineering Partners,

April 2015Slide4

The Importance of Developing a Supplier Management System

Procurement costs often highest in company

Delivery of supplier material directly impact delivery of final product

Supplier material often integrated into final product

Therefore, quality, delivery, and price of incoming material directly impact relationship with customerSlide5

Supplier Selection at TGI Friday’sSlide6

The Supplier Lifecycle

Supplier Selection

Supplier Removal

Supplier ManagementSlide7

Supplier Selection

Determine Strategy

Single Source or Multi Source

Short Term vs Long Term Agreements

Local or Foreign

Determine key purchase criteria

Quality?

Delivery?

Price?

Very often, an improvement in quality and delivery can drive an increase in price

Purchasing and Supply Chain Management

, 3e

Monczka

/Trent/Handfield 2005Slide8

Supplier Selection: Case Study 1

Technetium-99 is an isotope used in healthcare as a radiotracer

Widely used in healthcare worldwide since the 1960s

66 hour half life prohibits stockpiling

At peak production, isotope was multi-sourced

Today, Chalk River production facility is the only North American supplier and is being shut down

Multiple new facilities are being brought online in 2018

Current global shortage due to poor sourcing strategy

Physics World

, H. Johnston 2016Slide9

Things Change in 60 yearsSlide10

Story Time!Slide11

Supplier Qualification

Supplier Quality to verify the supplier’s ability to meet company and customer requirements

Calibre of their

quality

management system

Certified to required standard? (ISO9001

,

TS16949, ISO14001)

Ability to meet customer requirements

Sophistication

of continuous improvement program

Ability

to address

non-conformances in a timely mannerWillingness to collaborate in the supplier development programSlide12

Supplier Qualification (Cont’d)

Procurement responsible for ensuring:

Capacity to meet requirements on schedule

Alignment with strategic business goals

Total cost of dealing with the supplier

Material cost

Communications methods

Inventory requirements

Incoming verification requirements

Accounting responsible for ensuring:

Financial

stabilitySlide13

Supplier Qualification (Cont’d)

Supplier Quality validate capabilities

Visit/Audit Supplier

Confirm status of Quality Management System

Confirm status of certification to required standards

Discuss supplier performance with other customers (when appropriate)

Review of supplier through industry source databases

Evaluate through prototyping/sampling (when appropriate)

Provider feedback to supplier on opportunities for improvementSlide14

Supplier Qualification (Cont’d)

Procurement

Forward all relevant documentation to Supplier Quality

Submit

Request for Quote

Ensure promised capacity exists and is available (via SQ audit as necessary)

Upon successful qualification, add

s

upplier to Approved Supplier List (if new supplier)

Accounting

Obtain financial report or credit check

Upon successful qualification, add supplier to material management systemSlide15

Ex. Supplier Selection and Qualification Process

Supplier identified to fill need

Eliminate supplier from candidacy

Select Supplier

Meet sourcing strategy?

New Supplier?

Review Past Supplier Evaluations

Good Delivery and Price?

Issue Request for Quote

Initiate Supplier Qualification Process

Meet Quality and Spec

Req’s

?

Yes

Yes

Yes

Yes

No

No

No

NoSlide16

Supplier Qualification: Case Study 2

In 2010 SEC

mandated all companies

using

tantalum, tin, tungsten, and gold must report on

conflict mineral usage

Apple Computers now requires all suppliers be 100% conflict mineral free

Apple’s

supply

base

now

100% conflict mineral free

Apple

conducting qualifying audits to ensure compliance4 suppliers removed since 2014Slide17

Story Time 2.0! The Story Strikes BackSlide18

Supplier Evaluation

Gives purchasing ability to make informed decision

Before creating an evaluation:

Determine Evaluation Frequency

Determine Evaluation Criteria

Quality

Delivery

Cost

Supplier Relationship (subjective)Slide19

Supplier Evaluation (Cont’d)

Effective Evaluation Systems often exhibit the following characteristics:

They allow for flexibility in rating

Internal customers evaluate supplier performance

Evaluations are acknowledged by supplier

Evaluations are based on measurable criteria

Best suppliers are highly rated

Evaluations provide early performance warnings

Evaluations benchmarked against best practice suppliers

Supply

Chain

Management Review

, Robert J. Trent

2010Slide20

Supplier Evaluation (Cont’d)Slide21

Supplier Evaluation: Case Study 3

AMD Inc. implemented a comprehensive scorecard system

Included objective and subjective metrics

Importantly included rates of organizational learning by providing supplier targets

Intended to determine best

practices and

identify optimal strategic

partners

F

ound

to be

most

effective at driving process development

Allows AMD to drive internal and external changeSlide22

Story Time 3! Return of the StorySlide23

Supplier Categorization

Categorizing supplier’s into different classifications or types is helpful when comparing them

If all supplier’s are evaluated against the same criteria, it is difficult to get a clear picture of how they actually performed

Common categories include

Custom material

Commodity items

Resources and ServicesSlide24

Supplier Development and Continuous Improvement

Supplier Qualification and Evaluation should provide insight into areas of improvement for many suppliers

By categorizing issues, high level problems can be reduced

High frequency non-conformance issues

Non-conformances with large impact on deadlines

High cost non-conformances

Late deliverySlide25

Supplier Development and Continuous Improvement (Cont’d)

Define

area for improvement

5W2H

Measure

benchmark current performance and

test the existing process

Analyze

root

cause

Improve

by

implementing solutions

Control by maintaining gains or re-initiating cycle

DMAICSlide26

Supplier Development: Case Study 4

In 2014, Tesla Motors published all of its patents

Suppliers, Customers, Competitors have access

Threats

Reduced Brand Differentiation

Increased Competition

Reduced Margins

Opportunities

Positive PR

More widespread availability of charge stations

Supplier knowledge spurs innovation

Drives Down Cost

Improved reliability of supply

Wharton University of Pennsylvania Magazine ,

June 2014Slide27

Story Time 4! The Story AwakensSlide28

Supplier Removal

Supply bases grow large over time

Supply base management costs resources

Eliminate suppliers to maintain manageability

Elimination Techniques

Arbitrary Reduction

80/20 Reduction

Best in Class

Quality and Delivery Threshold Elimination

Inactive ReductionSlide29

Questions?