Contents

 Introduction
 Quality Management Principles
 Importance of Supply Chain
 Supplier Evaluation and Selection Process
 Methods of Supplier Part Approval Process
 QMS Development for Supplier
 Supplier Performance Monitoring Process
 Case Study
 Open Session-Discussions with the
participants on Supplier QMS Development

SCM
 Introduction
Definitions: Quality is...
 Quality is fitness for use (J. Juran)
 Quality is the most profitable product line we have

(H. Geneen)
 Quality is free (P. Crosby)
 Quality is compliance to a standard (W.E. Perry)

 Quality is a degree of excellence (R. Glass)

 Degree to which a set of inherent characteristics fulfils requirements

( ISO 9000:2005)
Quality is not just product quality. Quality is everything a
SCM customer expects from an organization
 Introduction
Features of Quality
• Defined by customers.

• A measure of achievement of customer satisfaction.

• Fulfilling the customer’s Needs / Requirements.

• Ensuring no Defects.

• Ensuring Fitness for use.

• A precise & Measurable Variable.

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 Quality Management Principles

• Customer Focus
• Leadership
• Involvement of People
• Process Approach
• System Approach to Management
• Continual Improvement
• Factual Approach to Decision Making
• Mutually Beneficial Supplier Relationships
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 Quality Management Principles
Mutually Beneficial Supplier Relationships
Applying the principle of Mutually Beneficial
Supplier Relationships leads to :
• Identifying and selecting key suppliers.
• Clear and open communication
• Sharing information and future plans
• Establish joint development and improvement activities.
• Establish relationship that balance short term gains with long
term considerations.

SCM
 Supply Chain Management in its ‘broadest’ context deals
with the flow of material and information from the
natural resource stage all the way through to the ultimate
CUSTOMER

• MATERIAL FLOWS

• INFORMATION
FLOWS

• FINANCIAL FLOWS
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 Importance of Supply Chain
Customer
Organization or a person that receives a product

Organization

Group of people and facilities with an arrangement

of responsibilities, authorities and relationships

Supplier

Organization or a person that provides a product /

service
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 Importance of Supply Chain
 Consequently, supply chains cover several enterprises such as raw material
suppliers, companies who transform the materials by adding value, finished
goods suppliers, distributors and retailers.

 In order to optimize business processes, it is important that all the resources

within the supply chain share the gained benefits equitably

 This means that a manufacturer will include both its suppliers and
customers in the supply chain with the intent of minimizing constrains and
addressing all major business objectives.

 These objectives include, but not limited to, issues such as:
◦ Inventory reductions,
◦ Reductions in lead times and cycle time,
◦ Development of Internet communications,
◦ Improvement in the order fulfillment process
◦ Improved customer satisfaction.
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 Importance of Supply Chain

• Value Chain
• Supply side- raw materials, inbound logistics and
production processes

• Demand side- outbound logistics, marketing and

sales.

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 Importance of Supply Chain
In recent past, there has been accelerated effort to move product
manufacturing to the lowest-cost location, which often (in case of
complex products & supply chains) lead to sub-optimization of
supply chain system.

A system approach to analyzing an entire supply chain

to determine non-value added activity can help to
optimize and rationalize a supply chain and result in
cost savings and efficiency improvements

SCM
 Importance of Supply Chain

Consumers in the global market place

move fast

• Manufacturers should move fast

• Suppliers should move fast

Processes
Mechanisms
Achieve rapid delivery
Using and tools
Speed to market
that optimize
SCM supply chain performance
 Importance of Supply Chain

OBJECTIVE of Supply Chain Management

To synchronize the requirements of the customer with the flow

of materials from suppliers in order to affect a balance
between what are often seen as conflicting goals of high
customer service, low inventory management and low unit
cost – Stevens

The success of a supply chain is measured in terms of the

overall profitability rather than profits at individual stage

SCM
 Importance of Supply Chain

• Proliferation in product lines

• Shorter product life cycles
• Higher level of outsourcing
• Globalization of manufacturing
• Shift in power structure in the chain - entities closer to the

SCM customer are becoming more powerful

 Importance of Supply Chain
CHARECTERISTICS of Supply Chain Performance – “8 RIGHT”s

Product

Place
Quantity

Condition
RIGHT

Time
Source
Service

Price

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 Importance of Supply Chain
TOOLS
The most common tool used to address the supplier performance is
plan for every part. Also the supply chain wastes collectively cause for
poor supplier performance , leading to a weak supply chain
management

Supply Chain Wastes

System complexity
Lead time
Transport
Space
Inventory
Human effort
Packaging

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 Importance of Supply Chain

VSM –Value Stream Mapping

A visual map that shows the path and flow of

physical products and electronic information
from raw material through delivery to the
customer.
VSM is used to evaluate the entire supply chain
for opportunities to eliminate waste and cost
and to mitigate risk.

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 Importance of Supply Chain

SUPPLIER FACTORY DC RDC RETAILER

Raw Materials
Finished Goods

Information Flow

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 Importance of Supply Chain

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 Importance of Supply Chain

HISTORY

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 Importance of Supply Chain

Organizations must
 focus on key indicators and optimize
performance levels
 must define quality as it relates to
customers
 modify quality to achieve and sustain
quality levels that maximizes supply chain
performance and quality management

SCM
 Importance of Supply Chain
This can be achieved by:
• Sound processes and systems – Quality in product production
obtained by having flexible system to create, organize, release and
document manufacturing details, processes and work instructions.
• Speed – Rapid response to attaining and retaining customers by
proper planning and employees’ utilizing tools which assist in making
quick decisions.
• Maximized internal productivity – TPM combined with Lean
processes and techniques
• Error-free shipping - trained employees, clear instructions on
packaging
• Right product at right time with right documentation – accuracy of
product & information
• Establishing and maintaining collaboration – Establish team of
internal and external experts to help improve products, refine
processes and cut costs
• Alignment with customer requirements
SCM • Regulatory compliance
 Importance of Supply Chain
Supply Chain Elements
• Supply Chain Design
Strategic • Resource Acquisition
• Long Term Planning (1 Year ++)

• Production/ Distribution Planning

Tactical • Resource Allocation
• Medium Term Planning (Qtrly,Monthly)

• Shipment Scheduling
Operational • Resource Scheduling
• Short Term Planning (Weekly,Daily)

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 Importance of Supply Chain
• Supply Chain Goals

Efficient supply chain management must result in

tangible business improvements. It is characterized by
a sharp focus on
Revenue growth

Better asset utilization

Cost reduction.

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 Importance of Supply Chain

Changing Paradigm
 Functional v/s Process
 Products v/s Customers
 Revenues v/s Performance
 Inventory v/s Information
 Transactions v/s Relationships

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 Importance of Supply Chain
Critical Success Factors Today
 Cross functional management and planning skills

 Ability to define, measure and manage service

requirements by market segment

 Information systems

 Relationship management
 and
 win win orientation

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 Importance of Supply Chain
Implementation: Points to keep in mind

• Recognize the difficulty of change.

• Prepare a blueprint for change that maps

linkages among initiatives.

• Assess the entire supply chain from supplier

relationships to internal operations to the
market place, including customers, competitors
and industry as a whole.

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 Importance of Supply Chain

The New Model of Relationships

Hard bargaining v/s shared destiny
Exit v/s Voice
Arms length relations v/s Involving dealers and
suppliers in product development
Piling up v/s Replenishing dealer inventory more
frequently
In short working together as partners to cut costs, boost
efficiencies, innovate and share value

SCM
 Importance of Supply Chain
The New Model of Relationships
• Adversarial vs partnerships
• Short term vs long term contracts
• Large vs small order quantity
• Full truck load vs small parcels
• Inspection vs no inspection
• Written order v/s understanding
• Many v/s few suppliers
• Design and then invite quote from supplier v/s
involving supplier in development
• Bargaining, holding cards close to chest v/s Shared
destiny, transparency
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 Importance of Supply Chain

Summary
 Segmentation of customers based on service needs
 Customization of logistics network
 Listen to signals of market demand and plan accordingly.
 Differentiate product close to the customer
 Source strategically
 Develop a supply chain wide technology strategy
 Accept channel spanning performance measures

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 Uncertainty exists in a normal manufacturing set-up
like late deliveries, machine break-downs, order
cancellations, etc.

Inventory exists more or less as an insurance to

uncertainties.

In single factory the uncertainties can be overcome by

properly planning the inventory at the raw-material,
WIP and Finished goods by applying statistical control
and agreement with the customer..

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 An ERP system that encompasses not only the company's internal
operations, but the operations of supply chain business partners and
suppliers in the production of goods from raw materials, inventory and
supplies gives companies much-needed visibility into their
manufacturing processes.

ERP distribution and warehousing systems employ automation that

enables the company's customer-facing sales force to link customer
quotes and orders directly into back-office inventory management,
fulfillment and accounting systems.

An inventory management system optimizes inventory stocking and

consumption and provides for both manual and automatic inventory
forecasting. Companies can set order policies for individual parts and
assemblies. The software also issues reports on inventory exception and
potential oversupply conditions, and has the ability to track inventory
across multiple locations.
SCM
 Supplier Evaluation and Selection Process
ISO 9001:2008-QMS Requirements
7.4 Purchasing
7.4.1 Purchasing process
The organization shall ensure that purchased product conforms to
specified purchase requirements. The type and extent of control
applied to the supplier and the purchased product shall be dependent
upon the effect of
the purchased product on subsequent product realization or the final
product.

The organization shall evaluate and select suppliers based on their

ability to supply product in accordance with the organization's
requirements. Criteria for selection, evaluation and re-evaluation
shall be established.

Records of the results of evaluations and any necessary actions

arising from the evaluation shall be maintained(see 4.2.4).
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 Supplier Evaluation and Selection Process
Develop
potential list of
Suppliers

Conduct initial
Reduced
assessment /
Supplier List
Risk assessment

Test RFQ &

RFQ review

Conduct detailed
Audit

Develop final Final

list of Suppliers Supplier List
Supplier
Development
Regular Audits
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 Supplier Evaluation and Selection Process
This involves the following:
Supplier Identification
Inputs
Referral
Customer Approved Sources
Internet /Business Directory

Supplier Evaluation and Selection

Inputs
Supplier Audit/Assessment Check-list

Supplier Product Approval Process and Supplier

Approval
Inputs
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 Supplier Evaluation and Selection Process
Evaluation and Selection Criteria:

• Registration as per company’s act.

• License as per Factory’s act.

• Clearance from the Pollution control board

• Details on Infrastructure

• Capacity Plan

• Client List

SCM • QMS and EMS Certification

 Supplier Evaluation and Selection Process
Objective:
To ensure that the selected supplier can meet the requirement of
the customer in a Consistent basis for long term

Method:
Evaluation of Documents submitted

On-site Visit
System Audit - Follow ISO 9001:2008 / ISO /TS 16949:2009
requirements

Process Audit / Product Audit – Check-list Specific to the

Process/Product Requirements
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 Methods of Supplier Part Approval Process
Purpose

 To ensure that all customer Engg. Requirements are

understood, and to demonstrate the capability of supplier
to meet the requirements, initially & during actual
production run at quoted production rate.

 To validate that the products made from production tools

and processes meet the Engg. Requirements

SCM
 Methods of Supplier Part Approval Process

ISO/TS 16949:2009-QMS Requirements

[Link] Product approval process

The organization shall conform to a product and
manufacturing process approval procedure recognized by the
customer .

NOTE Product approval should be subsequent to the

verification of the manufacturing process.

This product and manufacturing process approval procedure

shall also be applied to suppliers.

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 Methods of Supplier Part48Approval Process
CUSTOMER CUSTOMER
PPAP Process Flowchart Example
Customer P.O./ Record of
Customer – Approved PSW
Spec.
Requirements
ORGANISATION

Customer Part Project Owner Completion of Submission (or

Design & Team PPAP Required Resubmission)
Receipt and
Requirements. Items of PPAP
Approval of
Warrant
Submitted
PSW
Customer
Process design Gather Completion of
Requirements Information PSW Validated
Process
Supplier (PSO/Run at
Customer Initiated rate)
Specifications Changes
PPAP Table Approved PSW
4.1 Records
Customer
Initiated
Customer Changes to
Logistics Part, Speci.,
Requirements Notes: 1. Activities shown will not always be present. etc.
2. Records shown may be in various media and in storage locations

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 Methods of Supplier Part Approval Process
Comparison of PPAP with Traditional approach

Traditional sample submission PPAP

Sample Taken from a small lot Sample taken from a significant

production run
Additional processes other than in No process other than PFD is
PFD followed. allowed without informing to
customer or notified after production.

Non productionised tooling are used. Notified to customer.

Submission of - Submission of –
-Samples, dimensional report, 18 documents /items along with
material test report, any qualification samples as applicable, which
record (spl. Processes). provides the evidence of controls
exercised on production/process
environment.
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 Methods of Supplier Part Approval Process

Comparison of PPAP with Traditional approach

Traditional sample submission PPAP

Customer approval for bulk production Customer approval based on sample &
based on evaluation of sample & evaluation of documents & items which
documents submitted. provides confidence to customer that
supplier has understood his
requirements & demonstrated his
capability to meet the same in bulk
production.

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 Methods of Supplier Part Approval Process

REQUIREMENTS FOR PART APPROVAL

1. Design Records of Saleable Product

- for proprietary components / details
- for all other components / details
2. Engineering Change Documents, if any
3. Customer Engineering Approval, if required
4. Design FMEA
5. Process Flow Diagrams
6. Process FMEA
7. Control Plan
8. Measurement System Analysis Studies
9. Dimensional Results
continued…….
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 Methods of Supplier Part Approval Process

REQUIREMENTS FOR PART APPROVAL

10. Records of Material / Performance Test results

11. Initial Process Studies
12. Qualified Laboratory Documentation
13. Appearance Approval Report (AAR)
14. Sample Production Parts
15. Master Sample
16. Checking Aids
17. Customer-Specific Requirements
18. Part Submission Warrant (PSW)

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 Methods of Supplier Part Approval Process

Part Submission Warrant

Separate PSW for each part no.

 Identify Mould / cavity / line no. in PSW
 Part weight shall be rounded off to four decimals derived out
of 10 randomly selected
parts
 10 parts represent all moulds, cavities, lines as appropriate
 Appendix A – PPAP Manual

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 Methods of Supplier Part Approval Process

Situations where Submission to Customer is Required

# Requirements
01 A new part or product (Ex: a specific part, material, or colour not
previously supplied to Customer)
02 Correction of a discrepancy on a previously submitted part

03 Engg. Change to design records, specifications, or materials

production product / part numbers(s)
04 For bulk materials, Process technology new to the supplier, not
previously used for this product

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 Methods of Supplier Part Approval Process
Situations where Notification to Customer and Submission is Required
(Unless waived by the Customer)

# Requirements
01 Use of construction or material other than what was used in the
previously approved part or product (e.g. under deviation permit
cases)
02 Production from new or modified tools , dies, moulds patterns,etc.

03 Production following upgrade or rearrangement of existing tooling

or equipment
04 Production from Tooling and Equipment transferred to a different
plant site or from an additional plant site
05 Change of Supplier for parts, non-equivalent materials, or services
(Ex: Heat Treatment, Plating)
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 Methods of Supplier Part Approval Process

Situations where Notification to Customer and Submission is Required

(Unless waived by the Customer

# Requirements
06 Product produced after the tooling has been inactive for volume
production for 12 months or more
07 Product and Process related changes to components of the
production product manufactured internally or by Suppliers

08 Change in test / inspection method – new technique (no effect on

acceptance criteria)
09 For bulk materials, new source of raw material from new or
existing supplier
10 Change in Product appearance attributes
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 Methods of Supplier Part Approval Process
Situations when PPAP Validation , Customer Notification and
Submission is Required
 The Organization shall submit for PPAP approval prior to the first
production shipment in the following situations unless the Customer
has waived this requirement.

 The Organization shall review and update, as necessary, all applicable

items in the PPAP file to reflect the Production, regardless of whether or not
the Customer requests a formal submission. The PPAP file shall contain the
name of the authorized Customer representative granting the waiver and the
date.

 Specimen Format for Product / Process Change Notification that has to

submitted to Customer for approval is specified in PPAP manual.

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 Methods of Supplier Part Approval Process

Submission to Customer – Levels of Evidence

Level 1 Warrant only (and for designated appearance items, an

AAR) submitted to the customer.
Level 2 Warrant with product samples and limited supporting data
submitted to the customer.
Level 3 Warrant with product samples and complete supporting
data submitted to the customer
Level 4 Warrant and other requirements as defined by the
customer.
Level 5 Warrant with product samples and complete supporting
data reviewed at the organization’s manufacturing location.

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 Methods of Supplier Part Approval Process

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 Methods of Supplier Part Approval Process

PPAP Submission Levels

Notations:
 S – The supplier shall submit to designated customer product approval activity
and retain a copy of records or documentation items at appropriate locations,
including manufacturing

 R – The supplier shall retain at appropriate locations, including manufacturing,

and make readily available to the customer representative upon request

 * - The supplier shall retain at appropriate locations, and submit to customer

upon request

 Level 3 as default level

 For Bulk materials, Level 1 as default level

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 QMS Development for Suppliers
ISO/TS 16949:2009-QMS Requirements
[Link] Supplier quality management system development
The organization shall perform supplier quality management
system development with the goal of supplier conformity
with this Technical Specification. Conformity with ISO
9001:2008 is the first step in achieving this goal.

NOTE The prioritization of suppliers for development

depends upon, for example, the supplier's quality
performance and the
importance of the product supplied.

Unless otherwise specified by the customer, suppliers to the

organization shall be third party registered to ISO 9001:2008
SCM by an accredited third-party certification body.
 QMS Development for Suppliers

 After the PPAP Approval and Part Submission Warrant (PSW)

Sign-off , release of Production Order,
 Prepare Supplier Improvement Program during the Regular
Production Phase
 Training Suppliers on Disciplined Problem Solving Methods (8D
Approach) and developing Problem Solving Format
 Analysis of Customer Complaints-Gate-Line-Field Rejections
with Suppliers and initiation of Problem Solving through Cross
Functional Team
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 QMS Development for Suppliers
 Approach to achieve the set PPM targets
 Inculcate Defect Prevention Process rather than Defect
Detection at Supplier
 Establish Visual Controls at Suppliers Site for Customer
Feedback / Concerns
 Co-ordinate for Periodic review and updation of
Manufacturing Process Documents-PFD/PFMEA/Control
Plan
etc based on the Corrective actions/ Improvement

SCM
 QMS Development for Suppliers

 Periodic Reviews with Suppliers for monitoring the

effectiveness of the actions taken
 Periodic Supplier Audits based on SQA Manual/Check-list of
and co-ordinate for Corrective Actions by Suppliers
 Promote Supplier Self-Certification/Green Channel/Direct on
Line based on the Quality Levels

SCM
 Suppliers Performance Monitoring Process

Objective:
To ensure that the selected vendor performs and identify the area for
improvement
Methods: As per Performance Monitoring Indicators

[Link] Supplier monitoring

Supplier performance shall be monitored through the following
indicators:
- delivered product quality;
- customer disruptions including field returns;
- delivery schedule performance (including incidents of premium
freight);
- special status customer notifications related to quality or delivery
issues.
The organization shall promote supplier monitoring of the
performance of their manufacturing processes
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 Suppliers Performance Monitoring Process

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 Suppliers Performance Monitoring Process

Supplier Classification
Classification of Vendor based on performance rating

Class A – Most Preferred Supplier

Class B – Second Source Supplier

Class C – Under probation

Objective:

75% of all the suppliers to be classified as Class A

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