:Work Instruction
Description: Supplier Performance
Revision Date:
Date Issued: 08-29-01
WI# 7410-000-002-0 COR
Page 1 of 4
10-18-10
Updated By:
Mike Shipley
Approved By:
Tom Wright
1. PURPOSE / SCOPE
This work instruction details the method used to monitor the performance of suppliers. Areas monitored include
quality, delivery, lead-time, and cost reductions. The primary responsibility for this work instruction is the Purchasing
function. Secondary responsibilities as defined in attached flow chart.
2. DEFINITIONS
Supplier scorecard – Information submitted to suppliers every four weeks detailing quality, delivery, lead time, and
cost reductions performance against pre-established goals
3. FORMS
The scorecard is contained within the MacPac mainframe computer system
4. INPUTS
4.1
4.2
4.3
4.4
Supplier quality level history
Supplier delivery history
Supplier lead-time (weighted average)
Supplier cost reductions (relative to current standards)
5. PROCEDURE (Also see flow chart below)
5.1 Scorecard Criteria
Scorecard Total = 100 points Maximum
The Scorecard monitors multiple areas of Quality:
Period Level and Trend - Combined they equal 25 of total Scorecard points available
Quality Level 20 points maximum
Quality Levels (3-Period DPPM) will be rated using the following criteria
< 501
Excellent
20
501 -2500
Acceptable
15
2501 - 7500
Conditional
7
>7500
Unacceptable 0
Quality Trend 5 points maximum
Positive trend when comparing 6 period average to 13 period average
Positive trend = 5 points,
Negative trend = 0 points
Calculations referenced above are made using the following common DPPM quality performance rating formula:
Number of Defects Delivered
Number of Parts Delivered
x 1,000,000 = DPM
On Time Delivery 25 points maximum
Delivery will be rated on the following % on time based on an allowed 2 days early, 0 days late
98 - 100 %
Excellent
25
92 - 97%
Acceptable
18
83 - 91%
Conditional
10
<83%
Unacceptable 0
Lead Time Days 20 points maximum
Lead-time is measured based on a weighted average of the transactional and full part lead times in days
Transactional Lead-time
0–5
Excellent
6 – 15
Acceptable
16 – 30
Conditional
>30
Unacceptable
14
9
5
0
:Work Instruction
Description: Supplier Performance
Revision Date:
Date Issued: 08-29-01
Full Lead-time
0 – 10
11 – 30
31 – 60
>60
Excellent
Acceptable
Conditional
Unacceptable
WI# 7410-000-002-0 COR
Page 2 of 4
10-18-10
Updated By:
Mike Shipley
Approved By:
Tom Wright
6
4
2
0
Price Variance (Current Period) 8 points maximum
Cost improvements will be rated on the following basis
>4.9%
Excellent
8
2.0 – 4.9%
Acceptable
6
0.0 – 1.9%
Conditional
4
< 0%
Unacceptable 0
Price Variance (6 Period Weighted Avg.) 17 points maximum
Cost improvement ideas will be rated on the following scale based on potential savings
>4.9%
Excellent
17
2.0 – 4.9%
Acceptable
13
0.0 – 1.9%
Conditional
7
< 0%
Unacceptable 0
5.2 Setting up Suppliers to automatically receive the Scorecard every period
5.2.1 The Supplier’s email or fax number is loaded into the Order Processing menu in Mac Pac (58. Customer
Fax# for Doc. Update).
5.3 Viewing an individual supplier’s scorecard
5.3.1 Current supplier scorecards can be accessed in MacPac using the Purchase Order menu item #72
(Supplier Scorecards) and typing in the supplier number (see Example below).
5.4 Reviewing past period scorecard data for all suppliers
5.4.1 Run the query “SCORECARD” on the Allenton file server at the beginning of the following period.
5.4.2 Upload to Excel for review and consolidation
5.5 There will be a periodic review with supply chain leads and the NPI purchasing groups regarding supplier scores
and necessary actions. Suppliers consistently scoring in the Unacceptable range will be targeted for corrective
action and possible replacement (removal from the Approved Vendor List). Suppliers with Excellent scores will be
given first opportunities to quote new business.
5.6 An annual business review will also take place with strategic suppliers selected by the supply chain group where
performance to goals will be discussed and targets for the new year will be communicated.
:Work Instruction
Description: Supplier Performance
Revision Date:
Date Issued: 08-29-01
WI# 7410-000-002-0 COR
Page 3 of 4
10-18-10
Updated By:
Mike Shipley
Approved By:
Purchasing
Supplier
Performance
Receiving
Inspection
Quality
Purchasing
Monitor
performance.
Review alternate
sources
Purchasing
Review
with
Supplier.
No
Acceptable?
-Discrepancy History - DPPM calc
-Delivery Performance - OTD%
-Lead Time
-Price/Cost Reduction
Purchasing
Yes
Purchasing
Request
Corrective
Action.
Purchasing
Annual
Performance
Review.
Compare to other Suppliers of
same commodity
Purchasing/Quality
Supplier
recognition.
Record
Retention
Purchasing
Tom Wright
:Work Instruction
Description: Supplier Performance
Revision Date:
Date Issued: 08-29-01
WI# 7410-000-002-0 COR
Page 4 of 4
10-18-10
Updated By:
Mike Shipley
Approved By:
6. OUTPUTS / RECORDS
6.1 Supplier scorecard in the MacPac mainframe computer system (see example on page 2)
6.2 Meeting notes will be stored on Titan/Operations/Supply Chain/Private in a folder
6.3 Supplier scorecard sent to suppliers (see example below)
Tom Wright