Vendor quality Management system-Vendor development

2. Welcome to the program
Optimize product performance thru’
VMD
Vendor Management Development
by
H K Varma Varmahk@Gmail.com
98202 62986
22 426 62986

3. Managing supplier quality
• Managing supplier quality is a challenge for most
organizations, even the ones that do it well.
• In a space where precision is key, slight variations in
 processes
 equipment used, or
 materials sourced by suppliers
• can quickly result in rejects and dissolved relationships.
• These variations really highlight the need for a seamless
Vendor quality management system , VMD

4. Role of Vendor in a seamless SC
• For most organizations, the processes associated with the
acquisition of materials and services represent the “front
door” of their Supply Chain.
• On average, companies spend more than 60% of total sales
on the acquisition and administration of materials and
services, +
an additional 10% for logistics and order fulfillment.
• A good Supply Chain helps to reduce
– lengthy cycle times
– Inventory
– ensure the smooth receipt and delivery of material or
services to point of use. &
– Reduce acquisition costs

5. SBU EVA Tree
Mfg Cost Var Output at TP Stores cr. 4000
305 3972 +/- in WIP 178
PBIT Misc Output -206
1255 Input Cost
3667 Dir Malt 2940
NOPAT Dir Lab 31
874 Mktg PBIT Sales/Serv 6000 Malt OH 47
929 Cost of Sales 3972 Shop OH 261
ED on Sales 794 PGOH 36
TAX OD Adj Pers Rel Exp 89 Comm Exp 163
EVA 381 -65 T&C 54 Alloc Exp 189
425 Sales Pr Exp 8
Corp alloc NDC 19
86 ODE 63
WACC Estb 31
12% Other Exp 41
Cap Chg MMI 950
409 Cap Emp WIP 250
3406 Net F Assets FG 53
560 Curr Assets Cust OS 3073
4393 Oth contl A 67
Net WC
2846
Curr Liabilities Vendor Cr 1360
1547 Cust Adv 33
OCL 154
18%
Hence it is important
that we develop our
suppliers to be more
Cost competitive ,
thru improvement in
Quality,
Processes ,
Six Sigma ,
SPC at their end

6. Cost of Quality
Cost of
Quality
Cost of good
quality
Cost of poor
quality
=
+
Quality
Assurance
thru’
CA PA

7. Cost of Quality Management vs Cost of servicing defects
Low Quality High
LowCostHigh
Total
cost of
Quality
Minimum
cost of
Quality
Total
cost of
Quality
Cost of
Service
defects
Optimum
level of
Service
uality
Where
you want
to be
Cost of
Quality
Manageme
nt
96% 97% 98% 99.99%

8. The Lean-Six Sigma philosophy
Cost of Quality Management vs Cost of servicing defectsLowCostHigh
Prevention
and
Appraisal
cost
Failure
costs
𝟒𝝈
𝟓𝝈
𝟔𝝈
96% 97% 98% 99.99%

9. Build an Integrated IT Architecture That Extends
Deep Into Your Supply Chain
• Disconnected IT – data sources and systems – is one of the
biggest roadblocks to performance improvements.
• Develop supplier metrics / dashboards to have more control
over supplier-related activities, some of which are highlighted
below:
– E-Billing , Bill Parking
– Sharing of OEE data
– Sharing of Stock levels
– On-line SPC data thru Web portal
– Production status
• Automate the collection of metrics data where possible

10. Supplier Quality - Visibility
• Supplier Quality Management largely depends on the efficient
production of materials while minimizing adverse events.
• A supplier that performs well,
– quickly communicates non-conformances or deviations,
– responds to audit or report requests,
– relays process/equipment changes and, among many other
areas,
• meets delivery requirements.
• Not dealing with adverse events and non-conformance related
to performance directly translates to supplier risk.
• This is an ideal method of obtaining a real-time performance
assessment and greater visibility

11. Vendor assessment
• Traditionally, quality managers send representatives for on-site
audits to view actual production lines.
– This, of course, becomes costly with globalization, unless
suppliers have been chosen within close proximity.
• The following elements are key for improving your enterprise risk
portfolio for decision-makers working with suppliers
– Compliance Management
– Supplier Quality Management
– Environment, Health, and Safety (EH&S)
– Calibration Management
– Employee Training

12. Supplier Assessment Scorecard
• With suppliers comes risk, and supplier assessment scorecards
are critical to managing, understanding, and mitigating that
risk
• Supplier Assessment Scorecards: Scorecards enhance
the operational risk management aspects of SQM (Supplier Quality
Management)
• By quantifying supplier performance , we can effectively
prioritize issues that require the most attention
• Research has shown that the earlier a defect or
nonconformance is caught the less expensive it will be in the
long-run
• Companies that rely on many suppliers are developing supplier
risk scorecards and processes to evaluate and rank suppliers
based on historical and current performance

13. Vendor Assessment II ( Criticality * Rating )
1 = Not
Important
4 = Critical
1 = Poor
4 = High
Vendor
rating
Criteri
a No.
Criteria Importance
(A)
Rating(B) A*B
1 2 3 4
1 Work stn condition 3
2 Maintenance of m/cs 3
3 Productivity 4
4 Safety Initiatives 4
..
20 Quality Systems 4
Vendor ::
Min Score = 20 Max Score = 320Evaluation CFT ……..
Score < 100 Rejected

14. Max
Score
Weighted
score
1. GENERAL ORGANIZATION: 4 2.9
2. SAFETY 4 2.3
3. INSPECTION 4 3.4
4. DRAWING & REVISION CONTROL 4 2.8
5. PROCUREMENT: INCOMING R M CONTROL 4 2.4
6. MANUFACTURING PROCESSES 4 2.1
7. TOOLINGS & MEASURING INSTRUMENTS 4 3.7
8. QUALITY : QUALITY INDICATORS 4 2.6
9. M/C & TOOLING MAINTENANCE SYSTEM 4 2.5
10. ENVIRONMENT 4 3.2
40 27.9
Supplier Assessment (Summary)

15. Gr 3
1. GENERAL ORGANIZATION: Weightage
Rating at the time of Visit Weighted
ScoreCapability Score 1-4
1.1 - Work Station Condition 40% Medium
1.2 - Customer Documentation 60% Low
2. SAFETY
2.1 -Availability of safety equipment: 30% Medium
2.2 - Workmen wearing safety shoes , gloves etc: 70% Low
3. INSPECTION
3.1 -First Piece & In-Process Inspection: 60% Medium
3.2 - End Product Inspection: 40% High
4. DRAWING & REVISION CONTROL
4.1 - Availability of Drawing & Inspection Checklist 40% High
4.2 - Ability to Understand Part Drawings: 60% Low
5. PROCUREMENT: INCOMING RAW MATERIAL CONTROL
5.1 - Material Procurement: 40% Low
5.2 - Component & Raw Material Storage: 60% Medium
6. MANUFACTURING PROCESSES
6.1 - Competence over Manufacturing Processes: 40% Medium
6.2 - Work Instructions: 60% Low
7. TOOLINGS & MEASURING INSTRUMENTS
7.1 - Measurement Calibration System: 70% High
7.2 - Tooling Storage & Protection: 30% Medium
8. QUALITY : QUALITY INDICATORS
8.1 - Quality Management System 40% Medium
8.2 - Supplier Quality & Delivery Indicators: 60% Medium
9. M/C & TOOLING MAINTENANCE SYSTEM
9.1 - Machine maintenance system: 50% Low
9.1 - Tool maintenance system: 50% Medium
10. ENVIRONMENT
10.1 - Energy conservation : 40% Low
10.2 - Re-cycling of process wastes : 60% High

16. Supplier Assessment score
Overall
Score
Acceptable > 30 Green
Conditional 20 - 30 Orange
Poor
Performer
12 - 20 Yellow
Rejected < 12 Red
Vendors with low
scores are asked
to overcome the
shortcomings
with focus on
time-bound
improvements

17. Establish Processes for Managing Supplier
Compliance and Audits
• Supplier audits can support meeting compliance requirements,
but not every organization has the resources required or the
processes in place to conduct them.
• It’s crucial to establish a collaborative relationship in
conjunction with formal audit management plan, which
outlines
– the frequency of on-site visits,
– reporting requirements for suppliers, and
– the depth into the supply chain to which you’ll go for
auditing suppliers.

18. • Supplier Audits – A team from Focal Organization visits the
Vendor and allocates points against a number of queries in a
questionnaire.
• Important factors to be used as criteria for vendor evaluation are
determined. These are usually variables that add value to the
process through increased service or decreased cost.
• Actual working of the various departments is audited by examining
records, analysis of the system and talking to people on the spot.
• Need to be repeated at regular intervals to monitor improvements.
• After determining which factors are critical, a method is devised
that allows the vendor to be judged or rated on each individual
factor.
• Rating should be converted to numeric values to assess the Risk
and rank the vendors in descending order.

19. Zero
Rejection
Guide in Investing in
latest technology
Develop new
products fast
Small
lots
ISO9000/
TS16949/
ISO14001-E
/18001-HS
Impln.of
Lean &
six sigma
initiatives
Reduce
costs thru’
VELoaning of
tools, gauges ,
testing equip etc
Vendor
Training
Negotiation
with
supplier’s
supplier
Support in
crucial areas
to enhance
Quality and
Service
On-time
Delivery

20. Environmental and Health & safety measures
Benefits
• ISO 14001 - International Organization for Standardization
– By reducing waste and using fewer raw materials, costs are
reduced.
– Fewer costs give companies a competitive advantage.
– By managing environmental issues before a problem arises,
companies benefit from reduced liability.
• OHSAS 18001 - Occupational Health & Safety Advisory Services
– Identifies health hazards and evaluates risks
– Provides a safer, healthier work environment. This should help
reduce lost time due to illness and injury.
– Fewer accidents and injuries lead to reductions in liability
claims and lower insurance premiums.

21. Training subcontractors
• Training constitutes one of the most important stages in
supplier development.
• Its purpose is to overcome deficiencies in different areas of
operation , quality etc
• It can be arranged on a group basis or on an individual basis.
• The vendor’s staff chosen for the training then cascades down
to the remainder of the workforce.
• The training may be organized by the main contractor :—
– from among its own personnel, experts or
– from among bodies such as a chamber of commerce and industry,
professional association, university etc.

22. ISO 9000 / TS 16949 certification ----
• ISO 9000 certification stresses the importance of compliance
on technical specifications and the quality requirements .
• In fact , some procuring enterprises agree to work with
suppliers only if they are ISO 9000 certified.
• To help subcontractors acquire such certification, main
contractor should assist them with regard to system &
procedures to be adopted for
• documentation control
• product purchasing
………………..

23. Organization of work within the enterprise
• Internal functioning of an enterprise is important from a quality
viewpoint.
• Thus to gain a better appreciation of overall coordination the
organization would need:
– No barriers between different departments / Sections
(Homogeneity between departments)
– Encourage teamwork
– Organize discussions on working practices and investigate
solutions to problems

24. Improving Quality by improving Processes
1. KPIs should help in identifying areas for improvement and
determining which areas require more resources or some
type of change.
2. Ensure higher OTD while maintaining Cost and Quality
(Higher Sigma levels) .
3. Approach
– Make Vendor’s existing processes better
– Focus on training and developing skills of Vendor workforce
4. Monitor Cp , Cpk (Higher Cp , Cpk :: less scrap / wastes)
5. Accordingly Vendors are rated on their performance ( Called
External factors) ie , Quality , OTD , Service , Flexibility to
develop and retain a healthy vendor base
6. Review KPIs monthly , quarterly , yearly

25. Vend
or
Total
recei
pts
%
Acce
pted
Quali
ty
Ratin
g
%*35
Actu
al
price
Std
Cost
Std/
Actu
al
price
Price
Ratin
g
Ratio
* 30
As
per
Sche
dule
Deliv
ery
Ratin
g %
* 20
Servi
ce
No.
of
Sugg
estio
ns…
%
of
total
sugg
estio
ns…..
Servi
ce
Ratin
g
% *
15
A 100 90 31.5 40 40 1.0 80 16 2 33 5
B 60 80 28 50 48 0.96 55 18.3 1 17 2.4
C 50 70 24.5 60 53 0.9 45 18 3 50 7.5
Total Vendor Composite Rating III
( with weight ages for Quality , Price , Delivery & Service)

26. Hold Suppliers More Accountable For the Quality of
their Products
Drive performance improvement thru’ CFTs to manage
quality across entire spectrum of suppliers
⁻ Non-Conformances / Corrective and Preventive
Action (NC/CAPA)
⁻ Complaint Handling
⁻ Statistical Process Control (SPC) – to get Real-time
visibility of supplier quality metrics through web-
based portal
• It also eliminates surprises on the receiving
nonconforming materials.

27. Receipt data
a. Vendor ‘A’ receipts Dec’13 80
b. FTR (First time right) 72
c. FPY 90.00%
d. Accepted with TCN 1
e. Accepted after Sorting/Re-work 6
f. Rejection returned back 1
g. Ultimate Yield (80-1)/80 98.75%
h. Hidden Factory 8.75%
Role of SPC is to monitor process on regular basis there by
eliminate / minimize the Hidden factory

28. Group 1 2 3 4
Lots In (Nos) 120 120 120 120
Accepted after change note 13 9 6 1
Reworked 12 7 4 1
Scrapped 5 2 1 -
Calculate Hidden factory
First Time Yield (%) 75% 85% 91% 98%
Ultimate yield (%) 96% 98% 99% 100%
Hidden factory (%) 21% 13% 8% 2%
Exercise
Hidden Factory - Answers
Focus should be at improving
the FTY & reducing the
Hidden factory
}

29. Why Six Sigma Quality
1. The sigma scale is a universal
measure of how well a critical
characteristic performs
2. The higher the sigma score, the
more capable the process.
3. Products with more
characteristics (CTQs),need Six
sigma quality standards to ensure
final product performance
4. Even if the milestone of Six
Sigma may take time to reach,
the act of working toward that
goal drives breakthrough
changes.
Sig
ma
Percent
defective
Defects
per
million
1 69% 691,462
2 31% 308,538
3 6.7% 66,807
4 0.62% 6,210
5 0.023% 233
6 0.00034% 3.4
7 0.0000019% 0.019
Note the difference
1. Conventional quality 3 % d ,
2. Under Six Sigma it is 3 out of a
million
Conventional quality 3 % d
3.4 3.0% d 30,000
Higher Sigma >>> Lower defects

30. Six Sigma
• Every mistake an organization or person makes ultimately has
a cost,
– the need to do a certain task over again,
– the part that has to be replaced,
– time or material wasted
• Six Sigma is a scientific problem solving tool for
– meeting your customer's needs (Time , speed , Quality )
– minimizing wasted resources (Errors , rework , Hidden
factory , variations +/-)
– maximizing profit in the process ,thru’ disciplined data
collection and analysis to determine best solutions

31. Mean = 12gm
USL=12.2
LSL=11.8
Filling of an oil bottle ( 𝟏𝟐𝐠𝐦
+𝟎.𝟐
−𝟎.𝟐 )
VOC
VOC
𝜎 = 0.17
Rejections = 1.8𝜎
Rejections = 1.8𝜎
VOP
VOP
12
+
−
1𝝈 = 12
+𝟎.𝟏𝟕
−𝟎.𝟏𝟕
=
𝟏𝟐.𝟏𝟕
𝟏𝟏.𝟖𝟑
VOP = 12
+
−
3𝝈 = 12
+0.51
−0.51
=
12.51
11.49
2.4
Process Sigma
2 .4
VOP = 6
For a process to be under 6 𝐒𝐢𝐠𝐦𝐚 , value of std.dev should be
minimum
𝟏
𝟔
(USL-LSL) , ie 6 𝝈 should fit the Spec. width (VOC).
What is ideal Std dev. (𝝈) ………
How do we
ensure a
6𝝈
performance

32. 𝐗 Chart
For variables like Dimensions , weight , Temperature , hardness , viscosity etc
9
9.2
9.4
9.6
9.8
10
10.2
10.4
10.6
10.8
11
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
𝑋 chart also shows all values within UCL &
LCL , which indicates process is in control
𝐔𝐂𝐋 = 𝐗 + 𝐀 𝟐 𝐑 = 10.61
𝐋𝐂𝐋 = 𝐗 − 𝐀 𝟐 𝐑 = 9.33
𝐗 = 9.97

33. Control Charts
Background
• Dr Shewhart in1920 observed that every process exhibits
some degree of variation
• Since no two things can be produced exactly alike ,
variation is natural and should be expected
• He defined that if a measurement falls within plus or
minus three standard deviations of its average, it is
considered “expected” behavior for the process.
• This is known as common cause variation
• He observed two types of variations in any process

34. Control Charts
Chance cause variation
• Inherent (Common cause) in the process . It is random &
cannot be controlled ...............
• Hence a process which operates with only chance
variation is within statistical control .
– Limits are generally +/-3σ ( Value of σ may vary from
case to case)
– (99.7% within and 0.3% above UCL or below LCL)
• Once the process is within control , adjustments can be
made to minimize random variations to further improve
the process

35. Variable Control Charts
• Variable Control charts are used to monitor measurable
quality characteristics of a process eg Temperature ,
dimension , weight , viscosity etc
• Variable charts can monitor only one quality characteristic at
a time .
• Variable Control charts help to monitor both process mean X
and process variability R or σ
• Hence it becomes necessary to use minimum 2 control charts
to study the process. Ie
– Range or Std Deviation
– Process mean , with UCL & LCL

36. R Chart out of limits
0.00
0.50
1.00
1.50
2.00
2.50
3.00
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
A process is not in statistical control
if any point falls outside the control limits.
First , control the process before going for X or S chart

37. S Chart
Sample Sample observations 𝐗 Std Dev
1 9.26 10.44 10.39 9.87 10.26 10.04 0.49
2 10.92 10.08 9.97 10.16 9.30 10.09 0.58
3 10.10 10.61 8.62 10.24 10.17 9.95 0.77
4 10.17 9.24 10.60 10.08 10.51 10.12 0.54
5 10.29 10.36 10.39 10.58 9.96 10.32 0.23
6 9.84 9.52 10.11 9.65 10.18 9.86 0.29
7 9.84 9.77 10.47 10.25 10.28 10.12 0.30
…25
B4 and B3 from
Control limit chart
To ascertains deviation between the sample
For sample size > 10
𝐒 = 0.45
UCL = 𝐁 𝟒 ∗ 𝐒 = 2.089*0.45 = 0.94
LCL = 𝐁 𝟑 ∗ 𝐒 = 0 * 0.45 = 0

38. Control Limit factors
dev. by Statistical Quality Control and Management Institute
Samp
Size
Factors for 𝐗
charts Factors for R Charts Factors for S charts Samp
size
n A A2 A3 D1 D2 D3 D4 d3 B3 B4 B5 B6 n
2 2.121 1.880 2.659 0.000 3.686 0.000 3.267 0.853 0.000 3.267 0.000 2.606 2
3 1.732 1.023 1.954 0.000 4.358 0.000 2.574 0.880 0.000 2.568 0.000 2.276 3
4 1.500 0.729 1.628 0.000 4.698 0.000 2.282 0.880 0.000 2.266 0.000 2.088 4
5 1.342 0.577 1.427 0.000 4.918 0.000 2.114 0.864 0.00 2.089 0.000 1.964 5
6 1.225 0.483 1.287 0.000 5.078 0.000 2.004 0.848 0.030 1.970 0.029 1.874 6
7 1.134 0.419 1.182 0.204 5.204 0.076 1.924 0.833 0.118 1.882 0.113 1.806 7

39. Observations
VOC = 10” +/- 0.60
Cp = VOC/VOP
=
(10.6−9.4)
6∗0.45
𝐶 𝑝 = 0.44
USL = 10.60
LSL = 9.40
Conclusion
Though the process is under control (All points within UCL & LCL),
the process capability Cp = 0.44
If , however the σ is reduced to ∶ 0.20 , 𝐂 𝐩 = 𝟏. 𝟎𝟎 and
If , the σ is further improved to ∶ 0.15 , 𝐂 𝐩 = 𝟏. 𝟑𝟑
Hence it important that SPC is under control and 𝐶 𝑝 𝑖𝑠 > 1
VOP
= 6𝝈

40. Variable ( Continuous) data Control chart Summary
Control Chart Sub-group
size (n)
Control limits
Average and Standard
deviation X , R
2-10 UCL = X + A2 R
LCL = X - A2 R
Range R 2-10 UCL = D4 * R
LCL = D3 * R
Average and Standard
deviation X , S
>10 UCL = B4 S
LCL = B3 S
Individuals and moving
range MR
- Range
- X
1 UCL = D4 ∗ MR
LCL = D3 ∗ MR
UCL = X + 3
MR
d2
LCL = X − 3
MR
d2

41. MR Chart
Tensile Strength of Bridge bolt (Ksi)
0
5
10
15
20
25
30
35
40
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
As there are no out-of-control conditions , the process
is operating in-control. Moving range within normal
UCL = 𝐃 𝟒 ∗ 𝐌𝐑 = 3.267*11.47 = 37.47
LCL = 𝐃 𝟑 ∗ 𝐌𝐑 = 0*11.47 = 0
𝐌𝐑 = 11.47

42. 100%
Within
+/- 3 std Dev
95%
Within
+/- 2 std Dev
Apprx. 69%
Within
+/- 1 std Dev
Interpreting Control Charts
:: Test Zones :: Each control limit represents
1 std deviation
UCL
LCL
Centerline
Rarely a point
would fall
outside the
control limits

43. Control Charts for Attributes
• Whenever it is difficult to take numerical
measurement the quality is judged either conforming
/ non-conforming - Defectives based on attributes(
Np and p charts) :
– Leaks / does not leak , No. of counts scratches ,
holes , dents etc .
• Attribute data can have two values , such as pass/fail
present/absent etc ie data which can be counted.
• The inspection doesn’t require spl trained people as
no measurements are involved .

44. F-Flexibility measures
• Volume flexibility (Fv ) : measures the proportion of
demand that can be met profitably by the supply chain
system
• Delivery flexibility (Fd ) :
– The ability to move planned delivery dates forward .
– Delivery flexibility is expressed as the percentage of
slack time by which the delivery time can be reduced
• Mix flexibility (Fm ) : the response time between product
mix changes.
• New product flexibility (Fn): is defined as the ease with
which new products are introduced , the time or cost
required to add new products to existing production
operations

45. Delivery flexibility (Fd)
• Delivery dates change regularly and costs are associated
with not meeting the delivery dates
• The ability to move planned delivery dates forward may be
important in supply chain management.
• This ability allows the supply chain to accommodate
rush orders and special orders, and is described as delivery
flexibility.
• Delivery flexibility is expressed as the percentage of slack
time by which the delivery time can be reduced/advanced

46. Vendor Performance dashboard
• Real-time information is put on supplier dashboard giving
internal and external supplier metrics and Key Performance
Indicators
• The Vendors are judged on their performance the way we
judge the performance of our employees.
• The goal is to develop a world-class supplier quality system
• Steps to build a world class Vendor base
– Standardized Vendor audit process
– Building Vendor risk management scorecard
• It helps to actually know which suppliers are more risk-prone
and therefore require more attention v/s auditing suppliers
arbitrarily or because a certain amount of time has passed.

47. Vendor Performance dashboard
• Some vendors need to be audited in 6 months , some in 12
months.
• Helps in strategic use of resources
• One of the most notable advantages is of connecting what
were traditionally individual silos, now putting all of that
information in a central location
• Focused approach on the suppliers who might need the most
help in improving processes
• Efforts are put where they matter most.

48. VQMS dashboard – (Each Vendor)
Vendor : Ms Everest Enterprise – EV078
3. KPI- System output (Higher the
better)
Flexibility – Volume (Scale 0
to 1.50)
1.3
Flexibility – Timeline (Scale 0
to 40)
32
4. KPI-Estimated
Service ( Bill Parking , Test
Certificate , VE , Innovative ,
SPC & data :: scale 1 to 40)
26 Supports Six
Sigma , VE , Lean
, IT networking
JIT Implementation (doc
reduction 10% - 40% wrt
previous year)
20
%
YOY reduction in
Lot qty (80/20
principle)
2. KPI- System output - Quality and OTD (Higher
the better)
Quality Rating (Scale 1 to 100) 89
OTD - Time (scale 1 – 100) 93
OTD - Qty (scale 1 – 100) 89
Vendor Assessment Score
(CFT : JHK , RTD , VSH , ARD)
Score :: 29
( 0 - 40 )
…. and many more

49. Dash Board – Entire Vendor base (141)
Assessment Score
(0 – 40)
> 30 20-30 12-20 < 12
66 32 26 17
Quality and OTD
Performance
60-70 70-80 80-90 > 90
Quality 29 41 34 37
OTD - Qty 18 32 45 46
OTD - Time 14 36 49 42

50. Dash Board – Vendors ( 141 vendors)
Improvement Initiatives penetration
YOY Performance
(Vendors covered)
2010 2011 2012 2013
IT Integrated 14 56 89 117
Vendors under Six
Sigma (SPC accompanies
deliveries)
27 43 59 88
Vendors trained in
Lean Six Sigma
45 87 112 141
Vendors under ISO 59 73 94 136
Lean/JIT
Implementation
35 49 78 132
Plant Inventory
(Rs-Lacs)
Sep’13 Oct’13 Nov’13 Dec’13
646.0 624.0 589.0 563.0

51. Supplier reward program
• There are two sides of performance improvement
motivation:
– Rewarding the suppliers who perform well so they
will aspire to continue performing well , and
– Correcting Poor Performance : taking corrective
action with those suppliers whose performance
does not meet our expectations.
• It would never be safe to assume that switching
supplier eliminates problems

52. Establish (KPIs) of all related processes and
actions to Accelerate Operational Excellence
• It's crucial to identify a specific set of KPIs that will
help you measure progress and identify areas for
adjustment.
• Equally important to having these measures, however,
is a related system of communication procedures,
processes around the KPIs to ensure that they are
being accurately measured, interpreted,
communicated, and acted upon.

53. Advice
• Last but not least :
• You’ve got to make sure your suppliers understand how you
define a quality part.
– Avoiding this step appears negatively in your cost of poor
quality metric, and second
The success mantra for getting quality products and maximizing
cost reductions is by working harmoniously with suppliers as if
they’re a trusted partner
They were in business before your relationship and will most likely
be in business after your relationship. That means they do something
well and you’ve got to respect that.

54. Our other Training Programs
In-company as well as Open prog.
• Enhance Productivity & Inventory turns thru Principles and
Applications of Lean Manufacturing – 2days
• Vendor Quality Management Systems - 2days
• Operational Excellence - 1day
• Lean Six Sigma - 2 days
• SCM – 1day
• 5S & Visual Control Management - 1day
• Lean and Value Stream Mapping – 2days
• Materials – A profit centre - 2days

55. Thank
you
H K Varma
9820262986
Varmahk@Gmail.com