1. Managing Supplier Quality
Chapter 9
Managing Supplier Quality
in the Supply Chain

2. Supplier management Chapter 9
The value chain (Tools for focusing core business reducing costs and identify competitive sources)
Supplier partnering (to improve )
Applying the contingency perspective to supplier partnering
A supplier development program
Acceptance sampling and statistical sampling techniques

3. There are many suppliers. How we manage them

4. What is VALUE?
Something benefit to someone.

5. Supplier management The Value Chain
The value chain consists of a network of value chains
Value chain activities … are the tasks that add value for the customers
Non-Value chain activities typically have costs but no effect on customers
Value added- something that giving value to customers
Porter (1995) has identified value and non-value activities.
Value (Core activities): Operation, Logistics, marketing, services
Non-value: no effect on the customers such as firm infrastructure, Human resource management, Procurement

6. Supplier management The Value Chain
The chain of customers
When you view the step in the chain after you as your own customer.
If you work at workstation 4 in a process … you will make sure that the work you do is impeccable (free from mistake) before you release it to … workstation 5

7. Supplier management The Value Chain
Managing the supply chain
… The linkage between a series of suppliers and customers.

8. Supplier management Supplier Development Approaches = Supplier partnering
There is a trend towards developing closer relationships with fewer suppliers
Developing and assisting suppliers
Inspired by JIT supplier-partner relationships have emerged
1) Single sourcing (Reduce vendor-easy to implement quality improvement program)

9. Supplier management Supplier Partnering
2) Dual sourcing (Reduce to few supplies)
3) Supplier evaluation is a tool to differentiate and discriminate between suppliers (Potential supplies will evaluated and recorded on report card based on quality, technical capability and delivery)
4) Sole-source filters -Comes from the external validation of quality program. The company must be accredited.
Baldridge
ISO 9001:2008

10. 5) Supplier certification/ qualification programs (Long term visits and focus on evaluation)
6) Supplier development – Focus on helping customers. Improve supplier by training over long periods of time through supplier development program
7) Supplier audit - Visit suppliers and provide result to customers. Not have developmental components.

11. Supplier management Supplier Partnering
Electronic Data Interchange (EDI)
Communication system between supplier and customers for linking information system.
Schedules are communicated through an electronic data interchange link on a real time basis. Example of information: Balance production system, order
Vendor Managed Inventory (VMI)- Supplier needs to responsible their inventories and keeping at lost cost.

12. Supplier development
Supplier development is activities under a buyer to improve the performance of its suppliers.
The activities include supplier evaluation, supplier training, consultation, sharing data and sharing processes.
7 steps for supplier development.

13. Supplier management Supplier Partnering
7 steps for Supplier Development
Identify critical products (high cost and high volume) and services
Identify critical suppliers (Not meet reliability and delivery)
Form cross-function teams (Buyer forms)
Meet with supplier top-management (Discuss the strategies, performance target, measurement and process for improvement)

14. Supplier management Supplier Partnering
Supplier Development
5. Identify key projects (Improvement content and where)
6. Define details of agreement (Cost, resources, improvement)
7. Monitor status and modify strategies
9- 14 14

15. Supplier management Supplier Partnering
Supplier Relationship Management Systems (SRMS) focus on upstream activities
Spend analytics
Sourcing execution
Procurement execution
Payment
Supplier score-carding
Performance monitoring
Much like CRMS

16. Supplier management Applying the Contingency Perspective to Supplier Partnering
One variable which affects what customers want from their suppliers is … position in the supply chain
Suppliers are only marginally more interested in relationships than customers

17. Supplier management A Supplier Development Program: ISO/TS 16949
The ISO/TS standard applies only to automotive companies
Provide high quality to customer
Developed by the International Automotive Task Force (IAFT). Members include:
Ford GM
Daimler Chrysler

18. The ISO/TS 16949

20. Supplier management A Supplier Development Program: ISO/TS 16949
ISO/TS elements Includes:
Quality management system
Management responsibility
Resource management
Product realization
Measurement, analysis and improvement

21. Quality management system
Must recognize key process and document for the process
Establish sequences and linkage for the process.
Determine how effective their operation are; make resources and information available.
QMS- how you manage quality in the organisation
You must identify

22. Management responsibility
The extent to which management is committed to the development and implementation of QM and continuous improvement.
Management is responsible to developing policy, communication with organisation, quality objectives, management review and providing resources.

23. Resource Management Management must provide resources
Training and development
Infrastructure; equipment, machine, tools
Work environment; Safe, clean and adequate

24. Product Realization Product and process should be adequately planned.
Customer related process should be designed
Should consider all aspects of products and process design

25. Measurement, Analysis and Improvement
Company need to provide documentation than can demonstrate product conformity, quality management system conformity and continual improvement.

26. Supplier management Acceptance Sampling and Statistical Sampling Techniques
Acceptance sampling is controversial.

27. Supplier management Acceptance Sampling and Statistical Sampling Techniques
Acceptance sampling might be needed when:
Dealing with unproven suppliers
During start-ups and when building new products
When products can be damaged during shipment
When problems with a certain supplier have been noticed

34. Producer Risk (Consumer reject)
Consumer Risk
(Consumer accept)

35. Sampling Plan

36. Sampling size

37. Supplier management Acceptance Sampling and Statistical Sampling Techniques
Operating characteristic (OC) Curves
Assessment of the probabilities of acceptance given the existing quality of the shipment
Identifies the consumers risk (Product is defective but consumer accept the products)
Producer risk (Product is good but consumer rejects the product)

38. Supplier management Acceptance Sampling and Statistical Sampling Techniques
More complex sampling plans:
Double standard plans
Multiple sampling plans
Acceptance sampling in continuous production

39. Supplier management Summary
If you purchase components or supplies from another firm, to insure high quality, you need a process for making sure that that you can believe in the products and services you are receiving.

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Printed in the United States of America.