Supplier Scorecard Metrics - Supplier PPM Quality Defects

P

pammesue

Im looking over our Supplier Scorecard Metrics and think they may not be up to par.
This procedure hasnt been rolled in awhile and I would like to have your input on the Quality Defect Level PPM. Do you think they are fair or are they unreaslistic?
Score on the left is 1-10 related to the QUALITY DEFECT LEVEL PPM we find per quarter.

Score / PPM
10 30 or better
9 100
8 250
7 500
6 1000
5 2500
4 5000
3 10,000
2 15,000
1 30,000

Im fairly new to statistics, so be very gentle with your responses.
thanks,
Pammy
 

Jim Wynne

Leader
Admin
Re: Supplier PPM Quality Defects

Im looking over our Supplier Scorecard Metrics and think they may not be up to par.
This procedure hasnt been rolled in awhile and I would like to have your input on the Quality Defect Level PPM. Do you think they are fair or are they unreaslistic?
Score on the left is 1-10 related to the QUALITY DEFECT LEVEL PPM we find per quarter.

Score / PPM
10 30 or better
9 100
8 250
7 500
6 1000
5 2500
4 5000
3 10,000
2 15,000
1 30,000

Im fairly new to statistics, so be very gentle with your responses.
thanks,
Pammy

It seems to be an arbitrary scale, and whether it's useful or not depends on what you do with it, and whether what you do with it results in improvement.
 
P

pammesue

Re: Supplier PPM Quality Defects

It has inspired 1 supplier to try harder, but more often than not, we get no response in return from our lower end suppliers.

So in a sense it is effective somewhat. We do follow up with corrective actions, but we are between a rock and a hard place with 2 of our suppliers. They are critical to our operation and they are the only ones we have.

Thanks for your reply Jim
 

CarolX

Trusted Information Resource
Re: Supplier PPM Quality Defects

Hi Pam,

I agree with Jim.

Do you know your suppliers' capabilites. Can they really score a "10"?

I have one customer that understands our business and has set a requirement of 5000PPM with a goal to improve to 2500PPM. I have another customer that runs a "scoring" system like yours - and we will NEVER score a 10, unless we get them to a) change their drawing to resonable tolerancing and b) pay for us to go fully robotic.
 

CarolX

Trusted Information Resource
Re: Supplier PPM Quality Defects

It has inspired 1 supplier to try harder, but more often than not, we get no response in return from our lower end suppliers.

So in a sense it is effective somewhat. We do follow up with corrective actions, but we are between a rock and a hard place with 2 of our suppliers. They are critical to our operation and they are the only ones we have.

Thanks for your reply Jim

Are you asking for something that can not be accomplished at the price targets you have for the product?
 
P

pammesue

Re: Supplier PPM Quality Defects

Carol,

Many of our suppliers will Never reach a 10. So do you think we should base each supplier on its own scale?
That sounds like its more fair.

thanks
 
J

John Nabors - 2009

Re: Supplier PPM Quality Defects

Pammesue-

I going to make a wild guess on the basis of your OP and also your location that you are in automotive (as I was many years ago and thankfully am no longer). If I am wrong, cheerfully ignore the rest of this post. :bigwave:

I was in auto back in the QS-9000 days. We had a supplier rating system similar to yours, I honestly can't recall whether it was a QS-9000 requirement or just a requirement of our own procedures. I can tell you that my subjective take on our suppliers' performance often didn't jibe with the scoring that our rating system produced. Just as a hypothetical example:

Us: "We need 5000 of these tomorrow"
Supplier: "We can give 'em to you in two weeks"
Us: "No, we need them tomorrow"
Supplier: "We'll get 'em to you tomorrow"

We get them tomorrow, and there is a non-conformity.

Us: "We found this problem"
Supplier: "We will come and pick them up, fix them, and have them back to you by the end of the day."
Us: "Great!! Thanks!!!"

They do as promised. Phone call later:

Supplier: "Everything fine now?"
Us: "Yup, great job, just one thing - you delivered 5000 bad parts and 5000 good parts, so your PPM is now 500,000. I have to take you off the approved supplier list."

You see where I'm going with this? In my opinion, there are sometimes aspects of a relationship with a business partner that cannot be objectively quantified. That's why I always say don't use metrics to beat people up, use the metrics as appropriate to help them improve in a spirit of partnership.

:topic:
I once dealt with a supplier who demanded metrics on a monthly basis (disclaimer: the owner of the company became and still is a great friend of mine). The reason she wanted them wasn't for any sort of criticism as none was warranted; the company was a fantastic supplier. The reason she wanted them was so she could post them on the status board and have a perfectly good excuse to buy her employees a nice lunch. :agree1:
 

Jim Wynne

Leader
Admin
Re: Supplier PPM Quality Defects

Carol,

Many of our suppliers will Never reach a 10. So do you think we should base each supplier on its own scale?
That sounds like its more fair.

thanks


Unless you're forced to do so, or your suppliers are actually making millions of things, there's no good reason to use PPM at all. When something bad happens, your suppliers need to know (A) how it affects your business, (B) that you expect measures to be take to prevent it from happening again (if possible) and (C) continual poor performance won't be tolerated.

If you know that some suppliers are necessary evils--and it does happen--beating your head against the wall won't be helpful either.

You need to try to determine the best economically feasible quality level you can expect from each supplier, and then hold them to it. What you expect of supplier "A" might be different for other suppliers, so arbitrary rating scales and inane PPM targets won't be helpful.
 

CarolX

Trusted Information Resource
Re: Supplier PPM Quality Defects

Carol,

Many of our suppliers will Never reach a 10. So do you think we should base each supplier on its own scale?
That sounds like its more fair.

thanks

That sounds a little more realistic.
 
P

prototyper

I would consider each supplier on their own merits.
What is the impact of their product on your business?
How do they perform compared with other suppliers of similar commodity?
Set them individual targets which are challenging but realistic.
If certain suppliers continue to underperform, ensure they understand the implications to your business, ask them for an improvement plan and if that fails resource elsewhere.
 
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