2. OWNER BY MFG OUTPUTS Incoming Supplier Quality Audits ( Supplier feedback System) Continuous Improvement plans Yields Cycle Time Problems solving as needed Customer Satisfaction Surveys and feedback (Project Manager) Review of field reliability and service activity Ongoing SPC Change Management process (with engineering involvement)

3. Not Certified –  The quality process is not implemented yet  Communication with suppliers is open Qualifying –  There is a formal commitment to quality,  but the process is not yet implemented. Certified –  Most of the agreed-upon requirements are met,  but the quality process is only partially implemented.  The supplier is working toward and committed to achieving a preferred rating. Preferred –  The quality process is fully implemented.  All key requirements are being met. Award –  A key supplier is eligible for Award. USE A FORMAL RATING SYSTEM FOR OUR SUPPLIERS SUPPLIER FEEDBACK

4.  MEASURING &TRACKING COST OF POOR SUPPLIER QUALITY  COST OF POOR SUPPLIER QUALITY (COPQ) ATTRIBUTED TO THEIR SUPPLIERS. SUCH COPQ MAY ADD UP TO OVER 10% OF THE ORGANIZATION’S REVENUE.  THE FOLLOWING SHOULD BE TAKEN INTO ACCOUNT TO CALCULATE THE ACTUAL COPQ.  SCRAP, REWORK, SORTING AND PROCESSING COSTS DUE TO POOR QUALITY  MRB INVENTORY AND PROCESSING COSTS DUE TO INSPECTION FAILURE  LINE SHUTDOWN ATTRIBUTED TO POOR QUALITY  USING EQUIPMENT THAT IS CAPACITY CONSTRAINED FOR REWORK DUE TO POOR QUALITY, REDUCING THE OVERALL UTILIZATION OF THE PRODUCTION LINE  FREIGHT COSTS DUE TO EXPEDITED SHIPMENT TO CUSTOMERS/DOWNSTREAM PLANTS  WARRANTY EXPENSES DUE TO POOR QUALITY  RECALL EXPENSES DUE TO POOR QUALITY OF PRODUCTS SHIPPED TO CUSTOMERS

5.  Cost recovery  TOTAL COPQ IS EQUAL TO THE COPQ OF OEM PLUS INHERITED COPQ OF SUPPLIERS.  PROACTIVELY WORK WITH SUPPLIERS TO IMPROVE QUALITY  REDUCE COPQ. HENCE A COST-RECOVERY SYSTEM  SUPPLIERS ARE CHARGED BACK FOR PROVIDING POOR QUALITY OF COMPONENTS  INTRODUCE BUSINESS DISCIPLINE AND ACCOUNTABILITY INTO THE SUPPLY CHAIN.  INSTITUTES A QUALITY MANAGEMENT SYSTEM TO AGGREGATE SUCH COSTS AND USE IT FOR CHARGE-BACKS  RECOVER THE COSTS OF POOR QUALITY FROM SUPPLIERS,  INSTITUTE A DISCIPLINE THAT FORCES THE SUPPLIERS TO QUICKLY IMPROVE QUALITY OF PRODUCTS SHIPPED

6.  SUPPLIER AUDIT  ENSURE THAT SUPPLIER IS FOLLOWING THE PROCESSES AND PROCEDURES THAT WAS AGREED TO DURING THE SELECTION PROCESSES  SUPPLIER AUDIT IDENTIFIES NON-CONFORMANCES IN MANUFACTURING PROCESS, SHIPMENT PROCESS, ENGINEERING CHANGE PROCESS, INVOICING PROCESS AND QUALITY PROCESS AT THE SUPPLIER.  AFTER THE AUDIT, THE SUPPLIER AND MANUFACTURER TOGETHER IDENTIFY CORRECTIVE ACTIONS WHICH MUST BE IMPLEMENTED BY THE SUPPLIER WITHIN AN AGREED-UPON TIMEFRAME.  A FUTURE AUDIT ENSURES THAT THESE CORRECTIVE ACTIONS HAVE BEEN SUCCESSFULLY IMPLEMENTED.  OUR MANUFACTURE ORGANIZATION ENSURE THAT THE AUDIT PROCESS IS EFFECTIVE AND EFFICIENT AND ALLOWS THEM TO AUDIT THEIR ENTIRE SUPPLIER  SCHEDULE AT LEAST ONCE A YEAR WHILE MAINTAINING A LEAN STAFF OF AUDITORS.  THE FOLLOWING PICTURE SHOWS THE BEST PRACTICES PROCESS FOR INTERNAL AUDITING

7.  SUPPLIER SCORECARD  Use of scorecard technique to rank the supplier’s performance based on:  IMPROVEMENTS  QUALITY Key operational metrics that lead our organization track the supplier scorecard:  # OF CORRECTIVE ACTIONS LAST QUARTER  AVERAGE RESPONSE AND RESOLUTION TIME FOR CORRECTIVE ACTIONS  # RMAS PROCESSED PER MONTH  MRB INVENTORY LEVELS  # OF REWORK HOURS DUE TO SUPPLIER COMPONENTS  # OF CUSTOMER COMPLAINTS ON PRODUCT QUALITY  WARRANTY RESERVES  RELATIVE RANKING OF SUPPLIER  PERFORMANCE AGAINST BENCHMARK

8.  CLOSED LOOP CORRECTIVE ACTION  Implementing a Quality Management System (QMS) that provides a closed loop corrective action process to fix problems  Identification of quality problem.  Initiate an investigation and identify the root cause of the problem  Create corrective actions to be approved  Implement appropriate action which represent procedures, training or recalibrating the equipment  Use the entire information to initial a cost recovery with the supplier  Deploy a closed-loop, integrated quality management system.  Audits become a core driver into the corrective action process and become a key tool for continuous improvement

9.  ENGAGING SUPPLIERS IN QUALITY SISTEMS  Engage suppliers in all aspects of their quality management system, so that the supply-base is fully integrated into the QMS being rolled out. Key requirements include:  Supplier should be able to provide quality-related data to our company  Feeding information from supplier’s quality system into manufacturer’s quality system  Getting the supplier to use a manufacturer’s web-based quality management system  Provide the right information to a key customer without having to deploy software in-house

10. KEEP CUSTOMER HAPPY BY RESPONDING THEIR NEEDS  PROVIDE COMPREHENSIVE MANAGEMENT OF CUSTOMER SUPPORT  GENERAL CUSTOMER’S NEEDS  APPOINMENTS  AVAILABILITY TO THEIR PRODUCT  STATUS OF THEIR PRODUCT AT ANY TIME  OFFER CUSTOMER SELF-SERVICE OPTION Create websites services creating secure access to network for the customer and his needs  KEEP CUSTOMER DATA SAFE AND ACCESSIBLE Have accurate and complete information of the customer Customer responsiveness rather than say I will call again  HELPING CUSTOMER TO CONTACT THE RIGHT PERSON Customer may want to make phone calls Contact customer directly with the right person who has experience and background and answer their specific needs  MEASURING CUSTOMER LOYALTY EFFORTS › Use of networking for measuring the responsiveness to the customer › Listening the customer’s voice

11.  Customer Satisfaction Survey and feedback The best way to find out whether your customers are satisfied is to ask them. What, How, when Ways to ask customer satisfaction or not  Face-to-face  Call them on the phone  Mail them a questionnaire  Email them a customer satisfaction survey  Email them an invitation to take a customer satisfaction survey  SCHEDULE TO CONDUCT A CUSTOMER SATISFACTION The organization will conduct a survey after the customer have received the product

12.  Owned by Marketing planning Outputs Schedule for obsolescence (Marketing) Service part planning (Service) Inventory of finish goods projections (Finance) Final project profit/ Loss summary End of tool monitoring, incoming part inventory (Mfg)