Supplier Quality Management

Supplier Quality Management - Compliance versus Competence. It is a matter of measurement.?

I recently returned from an international trip to a key supplier to investigate some issues. There are always issues with suppliers somewhere. In this article the supplier scenario has been fictionalized.

My approach was not to assess their compliance to any Quality Management System such as ISO9000 or AS9000, but instead to understand how they perform. Having been in that role in the past, I find audits for compliance to a system of Quality a necessary function but on the same token I find it hard to value them. Of course, we want suppliers that demonstrate that they have a sound Quality Management System, but what does that mean? Is "compliance" to a system a good measure of a supplier’s ability or a good measure of performance? Many would argue compliance to a standard is the only way we have to evaluate a supplier’s ability. Well, I am not advocating we dismiss that approach, but as I see it, that is not the only way. We far too often see well qualified supplier struggle, yet they would be considered compliant, perhaps even superb in their adherence to the industry accepted standards for a Quality Management System.?

Consider the fact that an Auditor spends only a few days, at best, pouring through the records that often the company themselves selected to determine if their system of Quality complies. Let us face it, there may be some records that would tell a troubling story but often the supplier’s team is focused on not getting caught with mistakes, or at best tailoring records and activities to tout themselves in the best light. Factor in the fact that the audit is scheduled well enough in advance that the folks being audited can prepare their story and records and the sampling will be small as compared to actual daily levels and there is no wonder, we often find "certified or registered" suppliers having problems that can rise to the level of complete supply chain disruption.?

If then or biggest concern with the supply chain is continued flow with minimal disruption and of quality levels that achieve our economic goals, then what can be done to ensure these goals? Well, some of the most common avenues are picking better auditors, asking for more frequent audits and of deeper more thorough samples. Or even sending your own companies Quality professionals to do your own assessments rather than an outside auditor, which may even include more stringent Quality requirements. However, these are still Quality looking at "compliance" as the key measure. All good, right? Not necessarily.?

As a rare Quality professional, I quit the Quality industry years back and went off and owned and operated my own small contract manufacturing company for over 10 years, successfully registered to ISO 9000 and happily, with Cage code in hand won several DOD contracts. What did I learn from this journey? I am in business to make money and I work each day to maximize that. Now I fully agree that having standards, especially ones that force myself and my management team to behave in a better way and to assess themselves more critically is spot on to support a lasting profit model. But (here it comes) the moment as the business leader I suspect working to "comply" to any standard is wasting me money I am going to shut that effort down or look for a way around it. It is the nature of the beast. To the point, suppliers even share some of these work arounds and ways to cheat the system. I know because I have consulted for and with them in the past. We (suppliers) even go so far as to put feelers out to our friends in the industry to get a read on the auditors to see which ones are easier to appease and how to appease them. Or, another business leader option is to delegate the task of Quality Management to a team of people dedicated to appeasing auditors, while I require others to focus on making continuous economic improvements. And that is when it goes from being a methodology that can help companies gain improvements in Quality to “sunk” cost and all I want from it is the marketing aspect of having the registration. Sound Familiar??

So, what can be done to strengthen your organizations supply chain beyond the standard measures of after the fact accept & reject of inspections or compliance or non-compliance to a standard.?

As with any undesirable situation the good first step is to create a well-defined problem statement. In this case, I think we can agree that a supply chain is a bit more complex than a simple problem statement. However, we can summarize a few key challenges to considered, such as:

? We cannot accurately predict when and where a supply chain disruption could occur.

? We cannot accurately predict a supplier that has a disruption can adequately respond to that disruption.

? Technical challenges in Engineering and Manufacturing drive supply chain disruptions.

So, the problem all of us face is how better to view a supplier with an eye towards prediction of disruptions. Easier said than done. Well, the first step would not be to abandon any auditing or measure of compliance to a Quality Management System. Knowing the problem of disruption, although we can’t predict why a supplier has a disruption, we could possibly assume a set of reasons most do have significant disruptions. Lets’ face it, we have all seen it before and there are no original mistakes that happen, just new ways in which problems manifest and at times in greater magnitude.

I would then start by calling in my Lean Six Sigma experts (insert cringe here) and ask them for some help. But let’s be specific. If we use the 6M’s Fishbone, Man, Machine…etc., we could start to brainstorm the types of reasons our suppliers have disruptions. Basically, we would be compiling a list of business practices and operations of what could go wrong. With that list in hand, we could then look to each operation within the company to see how we could measure their strengths and weakness to the potential of a disruption. We could assign levels of assessment to each item, like a maturity number and determine what potential level of disruption risk of an operation could be.

For example, Let us take a PWB Manufacturer, hypothetical of course, and try a scenario. Let us say this make believe PWB manufacturer, Bill’s Boards, has been in operation for the past 30 years. Impressive, correct? Maybe not. As my team assess the supplier, they comeback with a measure of Machine/Equipment and tell me they don’t like what they scored. The team lead explains to me the overall score was lower than they would like because even though the equipment is well maintained, has measurable capability and capacity, it is of much older vintage and not easily adaptable to newer emerging technology. This an unbelievably valuable information however on a risk of disruption scale it is low because the equipment can still be maintained and if necessary, upgraded or replaced.?

So, what would my Lean Six Sigma Master’s say I am missing? The Man element in this operation. What if the people that program this equipment and maintain this operation are aging out of the work force, or their knowledge base is limited to only this equipment and no other? One loss of a significant player could send them into a spiral if anything goes wrong and things will go wrong.

ISO and AS standards address this as “Resources” and state that Management “shall establish and provide the resources to… “Maintain”. And there in lies the rub. The standards are not best practice, they are standards to “maintain” a Quality Management system, in hopes it will help manage continuous improvement but if it does not that’s Ok because it will maintain some level of Quality Management. The basics levels only. Well, that’s not helpful in trying to focus on which suppliers may or may not have a serious disruption in the supply chain and how to prevent it. IF I am managing a large supply of critical suppliers, I want more insight and I want to be able to communicate to my suppliers what I believe are shortcomings so I can determine if their reactions are appropriate.?

There are of course the deliverables of a PPAP (Production Part Approval Process) which is a great way to see a snapshot of production of a part along with key measures of performance. These work very well especially when the production is high volume, has little interruption and for less complex and challenging designs. But then of course, even in these situations we see disruptions. Again, I am nor recommending abandonment of standards and activities such as ISO,AS and PPAP. But there are other aspects to consider that could be measured.?

So, let’s get back to my field trip with my example of an international supplier. What did I find? Would you be surprised to know, the supplier, who is ISO 9000 registered and approved for Automotive production, could not perform a proper Gage R&R? It turned out they were using an outdated spreadsheet that gave a false representation that had good repeatability/ But when I analyzed the data independently it showed they had an operator to part interaction and could not maintain good measurements.

Would you be surprised to learn that the supplier’s PFD (Process Flow Diagrams) although previously submitted, were not followed and the process mapped as “walked” reflected excessive rework, that when assessed had a direct correlation to the root cause of field failures we were experiencing?

You probably wouldn’t be surprised then to find that the PFMEA (Process Failure Modes and Effects Analysis) that was also submitted along with the PFD did not take into account a multitude of “potential” failure modes. This was attributed to the fact that few people involved in the process had proper training of performing PFMEA and there was no formal control plan.

So, what to do? Consider this. What is the measure of “goodness” of a control plan, a process map or an FMEA?

If we start looking at any process with a Lean Six Sigma eye it starts with a problem statement (which we have as no visibility to what can cause supply chain disruptions) and then the task of measuring the process for its “Goodness”, data collection.?In the end, if we make a conscious effort to left shift from compliance to competence, we can augment our current audit work with “competence” measures and from that we have a better measure of prediction. I won’t tell you there is a standard method to do this, yet, but I believe in a short time the industry will move in this direction, or when I write my book on Supplier Quality Management. Whichever comes first. In the meantime, I’ll keep asking the question of the QA auditors I work with, “what is the measure of goodness” for that audit element or PPAP deliverable. I know, as we discovered with MSA (Gage R&R) with this one supplier, there are measures of goodness and just submission of the PPAP deliverable is not the one I am interested in.