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Transcript of Chapter9:Supplier Partnership
for the Environment (SP) is an innovative partnership between automobile original equipment manufacturers and their suppliers and the Environmental Protection Agency (EPA). SP addresses the goals of the membership by creating new and innovative business-centered approaches to environmental protection that improve the environment while providing value throughout the automobile supply chain. SP provides a forum for small, mid-sized and large automotive and vehicle suppliers to work together, learn from each other and share environmental best practices.
Dream of it
What is Total Quality Management?
Total Quality Management or TQM
for short is a way of planning, organizing and understanding each activity, and of removing all the wasted effort and energy that is routinely spent in organizations, thus improving the competitiveness, effectiveness and flexibility of an organization for the beneﬁt of all stakeholders. It ensures that leaders adopt a strategic overview of quality and focus on prevention not detection of problems.
presented by the students of
IT & M Department
is the discipline of strategically planning for, and managing, all interactions with third party organizations that supply good and/or services to your organization, in order to maximize the value of those interactions. In practice, supplier partnership entails creating closer, more collaborative relationships with key suppliers in order to uncover and realize new value, and reduce risk.
Importance of Suppliers
are a key component to a business. To sustain the business operations of a company or an organization, suppliers are needed to provide the necessary goods and services.
Selection of right suppliers
is the most important activity with regard to supplier partnership.The organization has to depute a team of executives to assess the quality of proposed suppliers. The supplier should be selected based on their technological capabilities and their ability to deliver as per schedule.
Every organization should stipulate standards to be met by its suppliers.
Flexibility in production and delivery
Low prices through low cost
Unceasing Effort on behalf of cost savings
Value-ad and sophistication
Dramatic cost reduction
Long Term Contracts
are therefore important both to the vendor and to the vendee. It is important to the vendor because he can invest in tooling, process machinery, and inspection equipment and even in new plants. He can spend time and money in hiring and training employees and establishing quality system. The Long-term contract is also important to the company, because it reduces expenditure on account of selection of new vendor every time. Once the company realizes that the vendor is a partner due to the Long-term contract, the vendor can be associated even in design review meetings of company.
Involvement of Supplier
in new product development can be beneficial with regard to the costs and time associated with their development. This involvement may range from giving minor design suggestions to being responsible for the complete development, design and engineering of a specific part.
The quality system of the vendor should be aligned with that of the company. Now that the ISO 9000 standards have been accepted worldwide. it would be better to help the vendor to establish the quality system meeting ISO 9000 standards. Otherwise, the company should train the vendors to establish a system for managing quality.
Alignment of Quality System
At period intervals, the company should carry out formal second party quality audit to check the effectiveness of the vendor's quality system. The quality audit will be carried out as per agreement with the regard to the elements of quality system covered by the contract. The scope of the audit should be documented.
A thorough evaluation of vendor's products at periodic intervals is required to assess the quality of their design and manufacturing. For this purpose, the company should pick up samples at random from the vendor's premises and get them evaluated in an independent test laboratory or in their own test laboratory. The vendor should inform the company whenever design changes are made so as to carry out another evaluation, if needed.
Appraisal or incoming inspection of materials on sampling basis may be required although the supplier would have already inspected the items before shipment. The company should gradually make the supplier to take the full responsibility for the quality of the supplies. The result of inspection should be communicated to the vendors, immediately without loss of time, so that it will alert them for improving quality.
The vendors are to be continuously assessed/ rated, based upon the performance of the supplies with respect to some or all of the following parameters:
Although the intensions are good, the relationship between the vendor and the vendee may deteriorate due to inadequate or improper communications. The company should formulate a clear specifications for each raw material that is bought. The specifications for the raw materials should be a controlled copy, with the vendor being given a controlled copy of the specifications. Whenever changes are made to the controlled documents, copies of the amendments should be automatically given to the holders of the controlled documents.
The purchase order should contain the requirements in clear terms. The quantity required, the style or applicable specifications, inspections requirements, delivery instructions, etc. should all be communicated clearly .The supplier's seminars, the visit of executives from the company to the vendor and vice versa should be utilized to improve the communications and gaps, if any.
At regular intervals, the executives of the company should visit the vendors. During the visit, they should also conduct seminar for the employees of the vendors. During the seminar, they should educate them about the latest trends in manufacturing, quality assurance and other related matters.
Support for Improving Infrastructure
The company can help the vendors improving their infrastructure.
They could give short-term loans to help them
They could also allow them to use some of the spare facilities available in the company
They can educate the executives of the suppliers
They could permit their vendors refer to the standards available in the company.
Bonus and Penalties
The vendors should be treated carefully and tactfully. They should be motivated to perform better. The measures of motivation can be as simple as timely payment or early payment or even advance payment depending upon the quality of the product supplied.
Vendor development is of strategic importance because expenditure saved by improving the efficiency and productivity of vendors improves the competitiveness if the company. The vendors should be treated as an extended arm of every organization. They should be involved in development of new products so as to save cost and time. A healthy relationship should be established between the company and its vendors. It will be wise to select the right vendors at the first instance. For this purpose, the quality system of the vendors and the quality of their products have to be thoroughly assessed. Vendor rating is quite useful in evaluating objectively the quality, price and delivery of the vendors in an ongoing manner. The company should be make the vendor take the responsibility for the quality of the supplies. However, incoming inspection may be required to assess the continued quality of the raw materials and supplies, which will also give data for vendor rating. In the context of virtual corporation, vendor development and supplier's quality are very crucial. Therefore, one of the important requirements for TQM is the supplier's quality, which requires constant monitoring, systematic and sustained efforts by every organization.