Supplier Selection & Qualification Presented by Betty Rose ASQ-CQE Sr. Supplier Quality Engineer

1. Supplier Selection & Qualification Presented by Betty Rose ASQ-CQE Sr. Supplier Quality Engineer Pacific Scientific OECO Division (a Danaher company) betty.rose@oeco.com

2. What Will Be Covered • New suppliers • First contact • Pre-audit • Making a decision • The audit • Execution • Continuous improvement Southwest Washington Section

3. New Suppliers • Objective : purchased parts consistently meet all requirements (specifications, cost, delivery, etc.) • Why add a new supplier ? • Newly designed part/assembly • New or different technology requirements • Replace current supplier • Outsourcing • Additional capacity • Where do new suppliers come from ? • Commodity Manager/Buyer recommendation • Prior business relationship • Referral • Searches Southwest Washington Section

4. First Contact • Introductory email/letter & inquiry to determine if there is interest in working with your company • Include survey form to be filled out • Technology mix (does it mesh with your business) • Who are current customers • RFQ • For NPI or sensitive parts, use a similar part for quoting • Otherwise, send actual drawing (2-D or model) • Ask for a cost model Southwest Washington Section

5. The Pre-Audit • Form the audit team • Select the leader for the audit • Establish roles & responsibilities • Quality • Financial health • Purchasing systems • Tooling design • Etc. • Discuss & agree on how a decision will be made • Keep the objective in front of the team • Obtain signed NDA Southwest Washington Section

6. Making a Decision • Establish criteria • Decide how the various criteria are to be weighted (basis varies depending on application of purchased material : unique technology vs. common or commodity) Example of a scoring used : 6 categories • General category (maintenance, housekeeping, ethics, environmental policies, openess) 10% • Quality 30% • Cost 20% • Availability (delivery & flexibility, risk management) 20% • Technology (fit has already been ascertained; this category looks at technology management & the design process) 10% • Customer satisfaction (account support & communication) 10% Southwest Washington Section

7. Approved status clears a supplier for business • Conditional status requires follow-up, corrective action and improvement • Not Approved indicates supplier is too risky/costly to fix. Business with this supplier is not recommended. Making a Decision continued • Continuing with above example : • 100 evaluation areas/questions • 1-5 points available for each • 500 point scoring system • Minimum acceptable score of ≥ 60% is required in each of the 6 categories for “Approved” status • Suppliers who do not meet the minimum acceptable evaluation score will either be rejected or put on a corrective action plan to improve performance before business is placed with them Southwest Washington Section

8. Making a Decision continued Example of scorecard, Quality section Southwest Washington Section

9. Making a Decision continued Two additional examples of audit questionnaires downloaded from the ‘net • ABB’s audit workbook • Bosch’s Supplier quality questionnaire Southwest Washington Section

10. The primary purpose of the audit is to determine if the potential supplier’s capabilities match your requirements The Audit • Opening Meeting • Introduce your company • Supplier’s presentation • Set the tone for on-going relationship • Your expectations & purpose of the audit • What the supplier can expect today (audit day) & later • Plant tour • General appearance • Process documentation • Operator demeanor/attitude (ask questions regarding handling of defective material) • WIP • Postings (charts, graphs, reminders) that are on display • Safety Southwest Washington Section

11. The Audit continued • Quality Department • Staff & org chart • What kind of data are collected • Defect prevention • Record retention • Relationship to the Manufacturing Department • SOPs and processes • Supply base management : qualification, incoming material, discrepant material • Metrology : MSV, gage R&R, calibration schedules & certificates, etc • Pareto of yield losses and quality targets • MRB • CLCA process Southwest Washington Section

12. The Audit continued • Customer returns • Pareto of common causes • What processes exist to handle and which departments are involved • CLCA : is there a written process • Are there targets • For current customers, what data currently precedes or accompanies shipments • You want to know if your data requirements are unusual • Format of the data (hard copy, e-copy, graph, etc.) • Do they use • Cost models • Cost reduction goals Southwest Washington Section

13. The Audit continued • Closing meeting • Express appreciation for supplier’s time & efforts • Ask for questions, concerns, feedback • Be specific on any discrepancies • Indicate good points • Time table for any corrective actions • Inform supplier when a decision will be communicated • Team debrief (back at home) • Tabulate results and make a decision • What went well; what worked • How can we improve on future audits Southwest Washington Section

14. The Audit continued How do you perform an Audit when travel is not an option ??? • It will take longer to qualify a potential supplier • The data becomes your eyes • Examples of data they request of their suppliers • Data collected on the factory floor • QA release data • Data sent with a shipment to a customer • Other data relevant to your parts/material • Remember to ask the most important question “how do you know”. The next most important question is “can you demonstrate it” Southwest Washington Section

15. Execution Now that the supplier has been selected, it’s time for the supplier to PERFORM • Production trials : how do you define “production trial”, how many, size, data to be reported • What goes into inventory & what gets scrapped • Perform measurement correlation, MSV, gage R&R, etc • Checklist with sign offs may be necessary to ascertain all steps were taken Southwest Washington Section

16. Monitoring & Improvement Important: For continuous improvement by your supplier, do what you said you would do during the audit & approval process !! • Change control for permanent & temporary changes • How are out of spec parts/material to be handled • Are you getting the VOE you required and are you looking at it • Are you getting CLCA when needed and are you responding • Set up periodical business and technical reviews • Per your company requirements, schedule ongoing audits/surveys • Supplier performance evaluations based on meeting targets such as price, quality, delivery, etc. Southwest Washington Section

17. Thank you for the pleasure of speaking with you Questions ? Comments ? Feedback ? Southwest Washington Section