ASQ Fox Valley Section April 4, 2017 Meeting...1-10 High Supplier B 1-10 High Suppler C 1-10 High Supplier D 1-10 High Technical Competence 15% 5 x 0.15 0.75 8 x 0.15 1.20 9 x 0.15

ASQ FOX VALLEY SECTION

APRIL 4, 2017 MEETING

SPEAKER: CHUCK GATES

Pre-dinner Meeting

Supply Chain Management Overview

• Supply Chain Management Principles

• Supply Chain Strategy

• Customer Relationship Management

• Supplier Relationship Management

• ISO 9001:2015 QMS Requirements for External

Providers

1

2

SUPPLIER QUALITY

CALL FOR ACTION

Takata Air Bag

Defects

Major Recall and

Penalty

Best Buy Pays $3.8M

Lawsuit for Selling

Recalled Products

March 2017

Reported

Over 15,000

Consumer Product

Recalls in February

Keurig Pays $5.8M

Lawsuit for Selling

Defective Products

FDA Reported a

Large Number of

Recalls

U.S. Employment

• Healthcare

• Airlines

• Retail

• Food & Drug

• Telecommunications

• Education

• Financial

• Insurance

• Hotel & Entertainment

• Utilities

Services 80%

Manufacturing 8.2%

Agriculture 7.1%

Construction 4.1%

Mining 0.6%

Non-Service Sector

3

U.S. Gross Domestic Product (GDP) Wealth

Services 81.7%

Manufacturing 11.7%

Agriculture 1.0%

Construction 3.8%

Mining 1.8%

• Healthcare

• Airlines

• Retail

• Food & Drug

• Telecommunications

• Education

• Financial

• Insurance

• Hotel & Entertainment

• Utilities 4

5

Company Breakdown by Industry

Non-Service Industries Small Medium Large

Manufacturing, Construction, Mining & Agriculture x x x

Service Industries Small Medium Large

Healthcare x x x

Airlines x x x

Retail x x x

Food & Drug x x x

Telecommunications x x x

Education x x x

Financial Services x x x

Insurance x x x

Hotel & Entertainment x x x

Utilities x x x

Other x x x

Every Company

is Part of a

Supply Chain

SUPPLY CHAIN ELEMENTS & ENTITIES

QUALITY ~ DELIVERY ~ PRICE ~ SERVICE ~ SUPPORT

6

Raw

Material

Suppliers

Fabrication

Suppliers

Component

Suppliers

Service

Suppliers

In B

ou

nd

Lo

gis

tics

Pro

vid

ers

Manufacturers

and

Service

Providers

Distribution

Network

Dealers

Retailers

Distributors

En

d U

se

rs

Information CashMaterial

Ou

t B

ou

nd

Lo

gis

tics

Pro

vid

ers

Upstream Downstream

Tie

r 2

Tie

r 1

Independent Legal

EntitiesThree Primary Flows Many Connected Processes

BASIC SUPPLY CHAIN PROCESSES

7

SUPPLIERS

INBOUND

LOGISTICS

PROVIDERS

MANUFACTURERS

and

SERVICE

PROVIDERS

DISTRIBUTION

NETWORKEND

USERS

• FORECASTING

• ORDERS MGMT

• PLANNING

• SCHEDULING

• TIER 2 SOURCING

• SUPPLIER MGMT

• QUALITY MGMT

• PRODUCTION

• INVENTORY MGMT

• RISK MGMT

• PACKAGING

• SHIPPING/DELIVERY

• COMPLIANCE

> STANDARDS

> REGULATIONS

• FORECASTING

• FREIGHT ROUTING

• PLANNING

• SCHEDULING

• QUALITY MGMT

• TRANSPORTAION

• INVENTORY INTRANSIT

• RISK MGMT

• STORAGE

• PICK UP/DELIVERY

• COMPLIANCE

> STANDARDS

> REGULATIONS

• FORECASTING

• ORDERS MGMT

• PLANNING

• SCHEDULING

• SOURCING

• SUPPLIER MGMT

• QUALITY MGMT

• OPERATIONS

• INVENTORY MGMT

• RISK MGMT

• PACKAGING


• COMPLIANCE

> STANDARDS

> REGULATIONS

• FORECASTING

• ORDERS MGMT

• PLANNING

• SCHEDULING

• SUPPLIER MGMT

• QUALITY MGMT

• WAREHOUSING

• INVENTORY MGMT

• RISK MGMT

• SUPPORT


• CUSTOMER SUPPORT

• COMPLIANCE

> STANDARDS

> REGULATIONS

DEALERS

DISTRIBUTORS

WHOLESELLERS

RETAILERS

AGENTS

• RESEARH

• PURCHASE

• ORDER

• FEEDBACK

8

SUPPLY CHAIN STRATEGY

Drafting and deploying an appropriate supply chain

strategy yields many benefits such as:

Exceptional Quality (Minimal Failures and Recalls)

Cost Reduction

Lead Time Reduction

Increased Productivity and Efficiencies

Risk Elimination or Reduction

Focused Supplier Involvement

Partnerships and Alliances

LEVELS OF SUPPLIER PLANNING

9

Strategic

Tactical

Operational

The Certified Manager of Quality/Organizational Excellence Handbook, 3rd Edition

Overall Future Direction

Vision

Mission

Supply Chain Strategic Plan

How the Strategic Plan will

be Accomplished

Functional Plans (Financial,

Marketing, Sales, Operations,

Logistics, and Procurement)

Day-to-Day Plans

Quality Objectives & Metrics

Scheduling and Execution

Throughput Performance

Ongoing Audits

SUPPLY CHAIN VISION, MISSION, GOALS, & OBJECTIVES

10


Tier 2

Suppliers

Tier 1

Suppliers

In Bound

Logistics

Providers

Manufacturer*

Out Bound

Logistics

ProvidersDistributors*

End

Users

Strategies

Vision

Mission

Goals

Objectives

Strategies

Vision

Mission

Goals

Objectives

S1 …..

S2 …..

S3 …..

S4 …..

Etc …..

Strategies

Vision

Mission

Goals

Objectives

IP1 …..

IP2 …..

IP3 …..

Etc …..

Strategies

Vision

Mission

Goals

Objectives

M1 …..

M2 …..

M3 …..

Etc …..

Strategies

Vision

Mission

Goals

Objectives

OP1 …..

OP2 …..

OP3 …..

Etc …..

Strategies

Vision

Mission

Goals

Objectives

D1 …..

D2 …..

D3 …..

Etc …..

Supply Chain Strategy, Vision, Mission, Goals & Objectives

*Core or Prime Entity

Develops the Supply Chain Strategy,

Vision, Mission, Goals, & Objectives

SUSTAINED COMPETITIVE ADVANTAGE

Collaboration ~ Integration ~ Seamless Processes

11

Customer Relationship Management (CRM)

Customer Relationship Management: A Strategic Imperative in the World of e-Business, Stanley A. Brown, Wiley, 2000.

One-to-One Relationship

Marketing

Four Types of Customer Relationship Management

Three Stages of Customer

Loyalty

Twelve Steps to Customer Relationship

Success

Stage 1 – Customer Acquisition

Stage 2 – Customer Retention

Identify Specific Needs,

Requirements, and Values

Stage 3 – Intimate, Strategic

Customer Care

• Lifetime Customers

• Loyal Customers

• Prospective Customers

• Past Customers

• Smaller Customer Segments

• Customized Marketing to Each Segment

• Product/Service Differentiation

1. Align the management

team and mobilize it for

action.

2. Assess the readiness for

change.

3. Address each customer

segment.

4. Identify the best

customers.

5. Listen closely to the

customers.

6. Analyze the gaps.

7. Mobilize strategic account

teams.

8. Develop the strategic

action plan.

9. Validate the action plan.

10.Train the customer care

team.

11.Implement the strategies.

12.Track results and adjust if

needed.

12

Customer Segment Map

Segment 3

Low Profit

High Sales

Segment 1

High Profit

High Sales

Segment 4

Low Profit

Low Sales

Segment 2

High Profit

Low Sales

ProfitLow High

Sale

s

High

Low

13

Quality Function Deployment (QFD)

Quality 1

Delivery 2

Responsiveness 3

Lead Time 4

Price 5

Customer

Requirement Priority Top

Notc

h

Ingre

die

nts

Slo

w M

ix

Tim

e

Fin

ish

ed

Inven

tory

24

/7 C

all

Syst

em

Sta

nd

ard

Pro

du

cts

Strong Relationship

Moderate Relationship

Weak Relationship

+ Strong Positive Correlation

- Negative Correlation+

-

Customer Rating of

Competitors

Low High

Competitor A

Competitor B

$6-$

8 P

er

Pou

nd

2 H

ou

rs

Min

imu

m

45

Da

ys

of

Inven

tory

All

Ca

lls

An

swere

d

On

ly 1

0%

Non

sta

nd

ard

Performance Targets

+

14

Supplier Relationship Management (SRM)

Customer Relationship Management: A Strategic Imperative in the World of e-Business, Stanley A. Brown, Wiley, 2000.

One-to-One Relationship

Four Types of Supplier

Relationship Management

Three Stages of Supplier

Loyalty

Twelve Steps to Supplier

Relationship Success

Stage 1 – Supplier Selection

Stage 2 – Supplier Retention

with Partnerships

and Alliances

Stage 3 – Intimate, Strategic

Supplier Care

• Lifetime Suppliers

• Loyal Suppliers

• Prospective Suppliers

• Past Suppliers

• Smaller Supplier Segments

• Customized Strategy for Each Segment

• Consolidation

1. Align the management

team and mobilize it for

action.

2. Assess the readiness for

change.

3. Address each supplier

segment.

4. Identify the best suppliers.

5. Listen closely to the

suppliers.

6. Analyze the gaps.

7. Mobilize strategic audit

teams.

8. Develop the strategic

action plan.

9. Validate the action plan.

10. Train the supplier care

team.

11.Implement the strategies.

12.Track results and adjust if

needed.

15

Supplier Segment Map

Segment 3

Low Results

High Spending

Segment 1

High Spending

High Results

Segment 4

Low Results

Low Spending

Segment 2

High Results

Low Spending

ResultsLow High

Sp

en

din

g

High

Low

Supplier Spend

Quality

Deliver

Price

Rating

A $0.2M Low

B $4.8M Low

C $0.7M High

D $5.3M High

16

SUPPLY CHAIN MANAGEMENT

Suppliers Manufacturers Distributors End

Users

Share Information across the supply chain

Point of sale data

Sales forecast

Increase the speed

Faster order to delivery time

Quicker responses

Reduce variation in the processes

Control, audit, and eliminate failures

Use six sigma for continuous improvement

Flexible to volume changes

Develop agile processes

Respond to customer demand

Be able to respond to changing product mix

Be sensitive to TRUE end user demands

Reduce costs in the face of changing needs

World-class Quality Expectations

Application of Technology

Shorter Development Cycle (Time to Market)

Continuous Process Improvement

Inventory Reduction

Reduced Variation

Ongoing Implementation of Statistical Process Control

The Five Vs

Visibility

Velocity

Variability

Volume Flexibility

Variety Adaptability

17

DEPLOYMENT OF STRATEGY AND EXPECTATIONS

SUPPLIER STRATEGY ELEMENTS

The Supplier Management Handbook, 6th Edition

Speed and

Accuracy

ISO 9001:2015 Clause 4 Context of the Organization

4.2 Understanding the needs and expectations of interested parties

ISO 9001:2015 Explained, 4th Edition, Cianfrani and West, ASQ, 2015

ASQ/ANSI/ISO 9001:2015 QMS Requirements, American National Standard, ASQ, 2015

Quality Management System

Customer

The OrganizationSubcontractors

Regulators

Suppliers

Internal

Divisions

Design

Consultants

External

Process

Process Process

Process

Process

Process

Process

Interested

Parties

Entire

Supply

Chain

18

19

ISO 9001:2015 QMS

Changes Related to Purchasing & Suppliers

ISO 9001:2008 ISO 9001:2015

Purchased Product Externally provided products & services

Supplier External provider

Clauses

8.4 Control of externally provided processes, products and services

8.4.1 General

The organization shall ensure that externally provided processes,

products and services conform to requirements.

8.4.2 Type and extent of control

The organization shall ensure that externally provided processes,

products and services do not adversely affect the organization’s ability to

consistently deliver conforming products and services to customers.

8.4.3 Information for external providers

The organization shall ensure the adequacy of requirements prior to their

communication to external provider.


APRIL 4, 2017 MEETING

SPEAKER: CHUCK GATES

Post-dinner Meeting

Supplier Quality Management Best Practices

• Supplier Selection

• Supplier Contracts

• Supplier Requirements

• Supplier Partnerships and Alliances

• Supplier Performance Monitoring

• Supplier Certification

• Continuous Improvement Tools

• Risk Management

20

SUPPLIER SELECTION: STRATEGIC SOURCING


21

The process of reducing the total cost of purchased materials,

goods, and services, while improving levels of operating

efficiencies, quality, technical innovation, customer service,

and system safety.

Traditional purchasing Strategic sourcing

Focus Purchase price or

landed cost

Total cost of ownership

Transactional Collaborative

Business

boundaries

Never crosses Opportunities for realigned

and collaborative processes,

data flow, and workflow

Technology Benefits from technology Applies to higher degree

Visibility Internal Entire supply chain

Certified Supply Chain Professional, 2016

GENERIC SUPPLIER SELECTION PROCESS

22

Internal

Alignment for

Supplier

Selection

Determine

Suppler

Selection

Criteria

Select

Suppliers to

Evaluate

Evaluate

Suppliers

Select

Suppliers

Form Supplier

Selection Team

Train the

Selection Team

Create a Culture

For Supplier

Selection

Objectivity

List the Potential

Supplier Selection

Criteria

Finalize the

Supplier

Selection Criteria

Determine the

Decision Making

Process

Use Strategic

Sourcing to

Select Potential

Suppliers

Involve the

Supplier

Selection Team

Talk with

Potential

Suppliers

For Open

Communications

Use the Decision

Making Tools to

Evaluate Suppliers

Exercise Care

In Selecting

Suppliers

Long-term

Relationships

SUPPLIER CONTINGENCY SOURCING STRATEGY

23

Sole

Single

Multiple

Only One Supplier is Capable

Several Qualified Suppliers

Strategic Alliance with One Supplier

Several Qualified Suppliers

More than One Supplier is Selected

High Risk to Exit

Moderate Risk to Exit

Lower Risk to Exit

SUPPLIER SELECTION: CRITERIA

Technical competence

Process capability

Quality conformance

Delivery performance

Financial control (debt, net income, cost reduction, etc.)

Past experience and performance

Risk management and corrective action process

Management involvement and commitment

Employee profile (skills, experience, training, etc.)

Tier 2 supplier relationships

Balanced Score Card Customer Focus Objectives

Process Improvement Objectives

Learning and Growth

Financial Perspective

24


Supplier selection criteria should be defined by a cross-functional

team consisting of members from quality, purchasing, engineering,

production, and materials management.

SUPPLIER SELECTION: DECISION TOOLS

RATING MATRIX

Criteria Supplier A

1-10 High

Supplier B

1-10 High

Suppler C

1-10 High

Supplier D

1-10 High

Technical Competence

15%

5 x 0.15

0.75

8 x 0.15

1.20

9 x 0.15

1.35

7 x 0.15

1.05

Process Capability

10%

8 x 0.10

0.80

8 x 0.10

0.80

7 x 0.10

0.70

7 x 0.10

0.70

Quality Conformance

20%

8 x 0.20

1.60

9 x 0.20

1.80

8 x 0.20

1.60

7 x 0.20

1.40

Delivery Performance

10%

6 x 0.10

0.60

6 x 0.10

0.60

7 x 0.10

0.70

7 x 0.10

0.70

Financial Control

15%

7 x 0.15

1.05

8 x 0.15

1.20

9 x 0.15

1.35

7 x 0.15

1.05

Risk Management

10%

4 x 0.10

0.40

5 x 0.10

0.50

3 x 0.10

0.30

7 x 0.10

0.70

Management

Commitment 10%

6 x 0.10

0.60

7 x 0.10

0.70

8 x 0.10

0.80

7 x 0.10

0.70

Balanced Score Card 10% 6 x 0.10

0.60

7 x 0.10

0.70

6 x 0.10

0.60

7 x 0.10

0.70

Total 6.40 7.50 7.40 7.0025


26


SUPPLIER REQUIREMENTS

Customer Needs & Wants (Voice of the Customer)

Demand Forecast (Products and Services)

Customer Orders

Product Functional Requirements

Quality Management System & Quality Requirements

Delivery Requirements

Pricing and other Contractual Obligations

Supply Chain Strategies, Vision, Mission, Goals & Objectives

Corrective & Preventive Action Reporting

Product Traceability

Safety and Safeguards Needed

Environmental Standards and Regulations

Corporate Social Responsibilities

Continuous Improvement Initiatives

Integration of Customer & Supplier Relationship Management

Legal, Operational, and Financial Aspects

Statement of Work (SOW)

Part, Commodity, or Service Definitions/Scope/Specifications

Deliverables

Performance Evaluation Metrics

Bonus and Penalty Clauses

Price and Payment

Warranties

Contract Changes

Confidentiality

Software and Patents

Binding Arbitration

Termination Clauses

SUPPLIER AGREEMENTS/CONTRACTS

ELEMENTS

27


28

STEPS TO ENSURE A FAIR SUPPLIER SELECTION PROCESS


1. Learn as much as possible about the

potential suppliers or sub-contractors

1. Use site inspections

1. Develop a process that ensures an objective

suppler evaluation system

1. Make the selection based on all of the

quantitative and qualitative factors – not

just price

Quality Control

Product/Service Requirements and Specifications

Quality Management System

Quality Manual

Quality Policy & Procedures

Quality Objective & Metrics

Work Instructions

Process Specifications

Inspection Methods

Quality System Audits

Skills Compliance

Machine and Equipment Calibration

Nonconforming Material Separation

Traceability29

ENSURING QUALITY CONDITIONS ARE MET


Co

nti

nu

ou

s I

mp

ro

vem

en

t

SUPPLIER EXIT STRATEGY

Step 1:

Negotiate a fair contractual agreement with a clause to agree to

arbitration if any disputes arise that cannot be resolved by both parties. Consider multiple suppliers to reduce risk of exiting.

Step 2:

If expectations are not met, work together to resolve any differences.

Step 3:

If there is no improvement, engage an independent arbitrator selected jointly by both parties.

Step 4 (Last Resort):

Be prepared to exit the contractual agreement and engage with

a backup supplier. 30

TYPES OF CUSTOMER-SUPPLIER RELATIONSHIPS

31

Relation-

ship

Characteristics

Proximity VisibilityCompetitor

InteractionCommunication Culture

Buy on the

market

Arm’s

length

Purchase

requirementsSignificant Computerized

Not an

issue

Ongoing

relationship

Medium

termSome sharing Some

Designated

contact pointsAware

PartnershipLonger

termFull sharing Limited

Department

interaction

Aware +

adaptive

Collaboration/

strategic

alliance

Long-term

relationship

Sharing + partners’

plans as own

Limited or

none

Extensive, high

trust, licensingMerging

Mergers/

acquisitionsOwnership

Internal, commonly

held informationNone Varies

One

culture

SUPPLIER CERTIFICATION

32

Develop Certification

Criteria

Identify Qualified Suppliers

Evaluate Qualified Suppliers

Award

Certification Status

Ongoing Monitoring

for Compliance


Step 1

Step 2

Step 3Step 4

Step 5

KEY SUPPLIER PERFORMANCE & MONITORING METRICS

Quality

Delivery

Responsiveness Reliability

Cost

Continuous Improvement

33

34

Quality

It is expected that the suppliers have a documented quality

management system and some have adopted the ISO 9001 QMS

format. It is also expected that the contract or purchase order

clearly details the quality standards and expectations with

quantifiable metrics.

Potential Quality Metrics:

Parts per million (ppm) defects

Percent nonconforming at the supplier’s location

Document accuracy (control chart data, invoices, files received, etc.

Nonconforming products received by the customer

Cpk ≥ 1.33

35

Delivery

Potential Delivery Metrics:

Early deliveries

On time deliveries

Late deliveries

Percent of incorrect quantities delivered

It is expected that the contract or purchase order clearly

details the delivery expectations with quantifiable metrics.

36

Cost


details the price/cost expectations with quantifiable metrics.

Potential Price/Cost Metrics:

Percentage of prices higher than agreed to

Dollar value of nonconforming product received (scrap, rework,

returns)

Cost reduction achieved as specified

Warranty costs associated with supplier’s nonconformance

37

Responsiveness


details the responsiveness expectations with quantifiable

metrics.

Potential Responsiveness Metrics:

Timeliness in responding to any and all customer requests,

inquiries, questions, deadlines, telephone calls, e-mails, etc.

Corrective action responsiveness (timely and complete)

Agility, flexibility, and quick response to changes

38

Reliability


details the reliability expectations with quantifiable metrics.

Potential Reliability Metrics:

Percentage of warranty expense that exceeds the goals

Mean time between failure (MTBF) that exceeds the goals

Failure rates that exceed calculated values

BALANCED SCORE CARD (BSC) METRICS

39


Customer

Card

Quality

Delivery

Price

Service

Financial Card

Process

Card

Continuous

Process

Improvement

Learning Card: Innovation & Development

BSC OBJECTIVES EXAMPLES

Customer• Market Share

• Customer Retention

• Customer Service and Satisfaction

• Warranty & Product Returns

• Field Service Performance

• Quality, Delivery, Price

Business Processes• Cost of Quality

• Productivity

• Cost Reduction

• Cycle Time Reduction

• Innovation

• Supplier Performance

• Continuous Improvement40


Learning and Growth

• Employee Retention

• Competency Level

• Employee Training

• Knowledge Management

Financial

• Return on Assets

• Return on Investment

• Profitability

• Cash Flow

41

SUPPLIER PERFORMANCE DATA: DASHBOARD

Delivery

QualityCost

Continuous

ImprovementReliability

Responsiveness

EXAMPLE SUPPLIER PERFORMANCE REPORT

42


RISK MANAGEMENT STRATEGY

Risk-based approach to manage the supply base

Contingency planning

Risk mitigation plan

Minimize, monitor, and control risks

Identify and evaluate strategies and techniques

Techniques

Supply chain mapping

Avoidance

Detection

Mitigation

Prevention

Risks

Counterfeit parts, materials, and services43

44

REASONS FOR THE EMPHASIS ON RISK MANAGEMENT

The ASQ Auditing Handbook, 4th Edition

A more unstable world situation

Increased reliance on computer systems and electronic

records storage

Increased concerns about international and domestic

uncertainty

The globalization of markets and competition

A more complex regulatory environment affecting many

aspects of the organization, its operations, and its

administration

The litigious nature of our society

A heightened awareness and appreciation of

uncertainties and tenuousness of our business and

personal lives

TYPES OF RISK

Catastrophic Events

Fires, hurricanes, tornados, floods, earthquakes,

blizzards, and other natural disasters.

Quality Failures and Major Product Recalls

Safety Violations and Major Accidents

Noncompliance with Standards and Regulations

Bankruptcy

Hostile Takeover

Illegal Actions

Design Errors

Material Nonconformance

Terrorist Attack

Vandalism, Theft or Sabotage45

POTENTIAL LOSSES DUE TO RISKS

Revenue (Decreased Sales)

Lower Profit or Huge Dollar Losses

Decrease in Market Share

Falling Stock Price

Replacement Cost for Damaged Facilities and Equipment

Possible Increased Borrowing (Higher Debt)

Damaged Image or Reputation

Overall Recovery Cost Could be Significant

Recovery Period May be Very Long (Several Months or Even Years)

46

BUSINESS CONTINUITY

Business continuity encompasses planning and preparation to

ensure that an organization can continue to operate in case of

serious incidents or disasters and is able to recover to an

operational state within a reasonably short period of time.

1. Resilience

~ Unaffected critical business functions

~ Redundant systems

~ Spare capacity

2. Recovery

~ Plan in place to recover or restore critical business

functions

~ Short-term and long-term

3. Contingency

~ Capability and readiness to cope with major disruptions

~ Documented risk management plan and responses47

PDCA FOR RISK MANAGEMENT

PLAN

DO

CHECK

ACT

Identify and define potential

exposures to loss.

Quantify the financial and

nonfinancial risks.

Select the best risk

management techniques.

Implement and

test the risk

management

techniques.

Assess the effectiveness

of the risk management

techniques and make the

necessary adjustments.

Implement the full

process for risk

management.

Monitor risk

mitigation

effectiveness.

48

49

SUPPLIER RISK PLAN STATUS

Supplier

Documented

Risk Plan

Mitigation

Plan

Monitoring

Plan Control Plan Status

001 Yes Yes Yes Yes Complete,

Solid Plan In

Place

002 No No No No

Risk Plan Not

Required;

Commodity

Supplier;

Excess

Capacity

Available

003 Yes Yes No No

Monitor &

Control Plan

Due in 3

Months

004 Yes Yes Yes Yes Plan in Place,

but it is Weak

005 No No No No

Risk Plan

Past Due;

Need to

Negotiate for

Compliance

50

RISK RANKING AND FILTERING (RISK MAPPING)

Severity or Impact

Pro

ba

bil

ity

1 2 3 4 5

1

2

3

4

5

High Risk

Medium Risk

Low Risk

1-1 1-2 1-3 1-4 1-5

5-1 5-2 5-3 5-4 5-5

4-1 4-2 4-3 4-4 4-5

3-1 3-2 3-3 3-4 3-5

2-1 2-2 2-3 2-4 2-5

51

RISK TREATMENT (RESPONSES) STEPS

Step 2

Avoid Risk with

Prevention Tactics

Step 1

Prioritize the Risks

Probability & Severity

Step 3

Reduce Risk Losses

Step 4

Share the Risk

Multiple Sources

or Insurance

Step 5

Accept Risk Losses

• Prevent the Risk

• Eliminate the Root Cause

• Proactive Action

• Calculate the Probability

• Determine the Severity

• Risk Ratio =

Probability x Severity

• Minimize the Likelihood

• Minimize the Losses

• Contingency Planning

• Transfer Risk to Suppliers

• Purchase Insurance for

Financial Losses

• Multiple Sources for

Products and Services

• Accept Risk Losses that

are Less than the Prevention

or Reduction Costs

• Up to the Level of the Company’s

Risk Tolerance or Threshold

52

SUPPLIER AUDITS

53

CORRECTIVE/PREVENTIVE ACTION (CAPA)P

rob

lem

Id

en

tifi

ca

tio

n CARs: Corrective Action Requests

Complete Problem Identification

Quantitative Problem Data

Identify Process & People Involved

Fa

ilu

re A

na

lys

is FMEA

FTA

Cause and Effect Diagram

Potential Failure Causes

Ro

ot

Cau

se

A

na

lys

isVerify Root Cause(s)

Quantify the Root Cause(s)

Evaluate the Effectiveness of the RCA Process

Assure Robustness in the RCA Results

Co

rre

cti

ve

Ac

tio

n Document Who, What, When, and How to Correct Each Problem

Implement Corrective Action

Pre

ve

nti

ve

Ac

tio

n Document Who, What, When, and How to Prevent a Reoccurrence of the Problem

Implement Preventive Action

Co

ntr

ol P

lan Document the

Control Plan

Implement the Control Plan

54

Continuous Improvement


details the continuous improvement expectations with

quantifiable metrics.

Potential Continuous Improvement Metrics:

Reduction in quality defects

Reduction in costs

Faster delivery times; reduced cycle times

Elimination of waste or non-value added activities (lean)

Reduced process variation (six sigma)

SUPPLIER CONTINUOUS IMPROVEMENT

55


Sustained

Competitive

Advantage

Product

Improvements

Process

ImprovementsQuality

Improvements

Value Added

Reduce Waste

Cost Reduction

Competitive

Pricing

56

Potential Supplier Improvement Projects

Goals

Market Demands

Legal Requirements

and Voluntary Standards

Technology Advances

Major Improvement

Initiatives

Customer Needs

• Strategic

• Tactical

• Operational

• New Products/Services

• Increased Competition

• Changing Economic Conditions• Changing Requirements

• More Customization

• Increased Demand

• Reduced Lead Times

• New IT Systems

• Increased Security

• Unique Platforms

• Statutory

• Regulatory

• Standards

56

Session 1-57 © APICS CONFIDENTIAL AND PROPRIETARY

Listing of Continuous Improvement Methods

Seven Planning Tools:

• Affinity Diagrams

• Tree Diagrams

• Process Decision Program

Charts

• Matrix Diagrams

• Interrelationship Diagrams

• Prioritization Matrices

• Activity Network Diagrams

Seven Quality Tools:

• Control Charts

• Histograms

• Pareto Charts

• Scatter Diagrams

• Check Sheets

• Cause & Effect Diagrams

• Flow Charts

Continuous Improvement Techniques:

• Total Quality Management (TQM)

• Plan – Do – Check – Act (PDCA)

• Quality Function Deployment (QFD)

Malcom Baldrige National Quality Award

International Standards:

ISO 9001 Quality Management System

ISO 14000 Environmental Management System

ISO 26000 Social Responsibility System

ISO 31000 Risk Management System

Six Sigma:

DMAIC (Define ~ Measure ~ Analyze ~ Improve ~ Control)

SIPOC (Supplier ~ Inputs ~ Process ~ Output ~ Customer)

Root Cause Analysis

Defects Per Million Opportunities (DPMO)

± 6 Sigma with a 1½ Sigma Shift from the Mean

Lean:

• 5S (Sort Set Shine Standardize Sustain)

• Kaizen Events or Kaizen Blitz

• Standard Work

• Visual Management

• Value Stream Mapping (VSM)

• Takt Time versus Cycle Time

• Total Productive Maintenance (TPM)

• Overall Equipment Effectiveness (OEE)

• Quick Changeover

• Lean Accounting

Continuous Improvement Enablers:

• Project Management

• Data Management

• Knowledge Network

• Information Technology

• Internal and External Auditing

• Education and Training

• Resource Allocation

• Leadership and Direction

• Collaboration and Transparency

• Alliances and Partnerships

Many

Others

Statutory and Regulatory Industry

Standards

Theory of

Constraints

TOC

CAGates 201657


Education and/or Experience

You must have eight years of on-the-job experience in one or more of the

areas of the Certified Supplier Quality Professional Body of Knowledge. A

minimum of three years of this experience must be in a decision-making

position. “Decision-making” is defined as the authority to define, execute,

or control projects/processes and to be responsible for the outcome. This

may or may not include management or supervisory positions.

If you were ever certified by ASQ as a Quality Auditor (CQA), Reliability

Engineer (CRE), Software Quality Engineer (CSQE), or Manager of

Quality/Organizational Excellence (CMQ/OE), experience used to qualify for

certification in these fields applies to certification as a Supplier Quality

Professional.

If you have completed a degree from a college, university, or technical

school

with accreditation accepted by ASQ, part of the eight-year experience

requirement will be waived, as follows (only one of these waivers may be

claimed):

• Diploma from a technical or trade school — one year will be waived.

• Associate degree — two years waived.

• Bachelor’s degree — four years waived.

• Master’s or doctorate — five years waived.

58


ASQ CSQP

Body of Knowledge Area

Number of

Questions

I. Supplier Strategy 22

II. Risk Management 14

III. Supplier Selection & Part Qualification 30

IV. Suppler Performance Monitoring & Improvement 30

V. Supplier Quality Management 30

VI. Relationship Management 14

VII. Business Governance, Ethics, & Compliance 10

Total Multiple-Choice Questions 150

59



WEB INTERACTIVE COURSES

Next CSQP Web Interactive Course Starts May 10, 2017

6 Wednesdays, 6:00 p.m. to 9:00 p.m. Course Fee: $1,200 members

5/10, 5/17, 5/24, 5/31, 6/7, 6/17

Another CSQP Web Interactive Course will begin in July to prepare

for the September Exam Dates

Visit www.asq-foxvalley.org to register 60

http://www.asq-foxvalley.org/

61

Thank You

Documents

ASQ Fox Valley Section April 4, 2017 Meeting...1-10 High Supplier B 1-10 High Suppler C 1-10 High Supplier D 1-10 High Technical Competence 15% 5 x 0.15 0.75 8 x 0.15 1.20 9 x 0.15