Insights Into Automotive Risk Requirements
Terry Onica
QAD
Agenda
• Why is supply chain risk so important now?
• What are the requirements?
• What you need to do to prepare?
• Summary and Conclusions
• Question & Answer (be sure to fill the cards)
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Risk Management Video
Risk Management Video
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In Reality, Plants are Assessing …
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Impact of Japan Earthquake
• Example: Renesas
– Semiconductors
• $615.3 Million
– Repairs
– Inventory
– Fixed assets
– Inability to operate
– Cancelled contracts
Source: Renesas Annual Report 2011
ISO/9001, MMOG/LE & ISO/TS 16949
• ISO/9001 is the international standard for a quality
management system.
• ISO/TS 16949 is an ISO technical specification for quality
management systems in the automotive industry.
• MMOG/LE is for the development of a supply chain
management system that provides for continual
improvement.
MMOG/LE is used for Delivery
ISO/TS 16949 is used for Quality
Risk-Based Thinking & Management
• Materials Management Operations
Guideline/Logistics Evaluation (MMOG/LE) v4
• ISO/9001:2015
• ISO/TS16949 revision, incorporating the risk
based thinking of ISO/9001: 2015, due to be
issued late 2016
What is Risk?
• Risk definition
– Effect of uncertainty on strategic objectives or customer
dissatisfaction
– An effect may be positive, negative or a deviation from the
unexpected
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What is Risk-Based Thinking?
• According to ISO/9001:2015
– Determine factors that could cause processes and quality
management system to deviate from the planned results
– Put in place preventative controls to minimize negative
effects
– Make maximum use of opportunities as they arise
What is Risk?
• Risk responsibility (ISO 9001:2015)
– Top management demonstrates commitment and shall
promote risk-based thinking
– Take actions proportionate to potential impact
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8 References in ISO/9001:2015
1. 4.4.1 Quality management system and its
processes
– Address the risks and opportunities as determined in
accordance with the requirements of 6.1
2. 5.1.1 Leadership and commitment
– Promoting the use of the process approach and risk-
based thinking
3. 5.1.2 Customer Focus
– The risks and opportunities that can affect conformity of
products and services and the ability to enhance customer
satisfaction are determined and addressed
8 References in ISO/9001:2015
4. 6.1.1 Actions to address risks and opportunities
– When planning for the quality management system, the
organization shall consider the issues referred to in 4.1
and the requirements referred to in 4.2 and determine
the risks and opportunities that need to be addressed
5. 6.1.2 Actions to address risks and opportunities
– Actions taken to address risks and opportunities shall be
proportionate to the potential impact on the conformity of
products and services.
8 References in ISO/9001:2015
6. 9.1.3 Analysis and evaluation
– The effectiveness of actions taken to address risks and
opportunities
7. 9.3.2 Management review inputs
– The effectiveness of actions taken to address risks and
opportunities (see 6.1)
8. 10.2.1 Nonconformity and corrective action
– Update risks and opportunities determined during
planning, if necessary
MMOG/LE Requirements 2.5.1-2
• Define
• Prioritize
– High impact and high probability
• Create action/risk/contingency plans
• Train employees
• Review, test, and validate
– Minimum annually
• Lessons Learned
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MMOG/LE Requirements 6.2.1
• Manage sub tier supplier risk
– Organization to its sub suppliers
• Organization communicates specific instructions (e.g.
alternative packaging, transportation) in how to
respond to deviations ([Link])
• Sub tier suppliers has risk assessment process
• Sub tier suppliers to develop contingency plans
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Prioritizing Risk (Example)
Equip. IT Natural
Failures Failures Disasters
Action/Risk Plans
Troubled
New Utility
Suppliers
Business Outages
Labor Transport Skills
Strikes Issues Gaps
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Other Risk Identification Methods
• Brainstorming
• Questionnaires
• Industry benchmarking
• Scenario analysis
• Risk assessment workshops
• Auditing and inspection
• PFMEA
• Turtle diagrams
• Fault tree analysis
• Contingency planning
• Feasibility review
• Customer and sub supplier performance
Addressing Risk
• Options to address risks can include (from
ISO/9001:2015 6.1.2 Note 1)
– Taking risk in order to pursue an opportunity
– Eliminating the risk source
– Changing the likelihood or consequences
– Sharing the risk
– Retaining risk by informed decision
Action/Risk/Contingency Plans
• At a minimum the plan should include:
− Key internal/external contacts
− Containment actions
− Recovery steps to return to normal operations
− Identification of key personal responsible for execution
– Lessons-learned
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Action/Risk/Contingency Plans
• At a minimum the plan should include (continued):
– Escalation process (internal and external)
– Validation of customer
specifications after
production is restarted
– Revision updates
– Authorizations for any
changes to the plan
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Action/Risk/Contingency Plans
• Ensure plans incorporate
– Working on all shifts
– Available in multiple media
(e.g., thumb drive,
computer and paper)
– Authorization to purchase
– Everything in one document
– Assessable on/off site
– Ability to communicate globally
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Managing Sub Supplier Risk
• Tracking Sub Suppliers
− Locations
• Tier 2 with plan for Tier 3
− Financial performance
− Quality performance
− Delivery Performance
− SC intelligence
• Watch for events
• Turn insights into action
Turning Insights into Action
• Leverage your Quality Management System (QMS)
• Quality and delivery information
– Corrective actions
– External, Internal and supplier audits
– Supplier performance
• Risk Assessment
• Action/risk/contingency plans
• Lessons-Learned
• Work flow reminders
• Employee training
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Summary and Conclusions
• Risk management and risk-based thinking requirements are
here (MMOG/LE) or on the horizon (ISO/TS 16949)
• Evidence required to address both are very similar
• Leadership must be involved and taking appropriate actions
• Sub tier supplier risk should be included
• Leveraging your QMS is a good place to start
• Are you ready?
Question & Answer
Terry Onica
Director, Automotive
Email: tjo@[Link]
Thank you!
