Supplier Performance Measurement PPM (parts per million)?

[petem]

I am looking for a method to determine accurate PPM levels to measure our suppliers against in a manufacturing enviornment. what are you exeperiences and do you use PPM or another benchmark?

[Phil Fields]

Originally Posted by petem

I am looking for a method to determine accurate PPM levels to measure our suppliers against in a manufacturing enviornment. what are you exeperiences and do you use PPM or another benchmark?

What type of data do you collect now?
What do you want to do with the PPM data once calculated?

Phil

[Jennifer Kirley]

PPM is of no value unless you know parts-per-million-of-what.

Supplier ratings can include more than defects. It could include the business's health. Imagine if the company was going bankrupt because of their zero-defect policy. That wouldn't benefit you because they'd be bankrupt with a warehouse full of beautiful parts.

Meausre the things that are important to you. They could be things like:

Defect rate
Their SPC data
Delivery on-time rates
Cycle times for production and processing orders
Responsiveness when you call for C of Cs.
Business health
Safety record
Environmental compliance

[petem]

hello Phil

i am collecting reject quantities (and cause) and receipt quantities

[Phil Fields]

Originally Posted by petem

hello Phil

i am collecting reject quantities (and cause) and receipt quantities

That is similar to the data I collect on a monthly basis. Every month I collect in an EXCEL file the # of parts received from each supplier, and the # of parts rejected (at receiving and production floor). I then calculate individual supplier PPM and an overall PPM. I also trend 3, 6 and 12 month averages for selected suppliers and the combined supplier base.

This data is reviewed at a monthly meeting with Management. Corrective actions that need to be taken could be reviewed/discussed at this meeting.

Supplier metrics was a new item to be formalized PPM. Management selected PPM as a staring point to evaluate supplier performance.

[petem]

thx for the input!

[vallesj]

I think we have to be careful on selecting just PPM as the overall metric for the factory. If you want to see the real situation with the suppliers affecting your factory. PPM from Suppliers where you expend more money probably affects you more, also if you handle different units with suppliers, for example Lb, and you want them to mix with pcs or Oz that will give a weight not recommended, for example you can receive so many Oz of something, and never have an issue, so your ppm's will be low no matter that you have 3 pcs that affected most the product. Also you have to consider how many pcs or LB coming from one supplier are used on and indivicual unit you are making at your factory. It is not as easy at it sound.

If any of you guys here already have something that is considering the factors I am mentioning, that will be of a good help. I have already some ideas of how to handle this, but I prefer to use something already established somewhere, and that is working well.

[Roadruner]

I was wondering if you could give me some input on best practice for measuring PPM in a supply chain. We have few intricacies that are involved but not really too different than other similar industries.

· We have two types of suppliers
o Suppliers who supply product as ordered and have a final inspection opportunity to review product quality and replace non-conforming product with conforming product prior to shipment. In those cases 100% quality is a basic expectation
§ Raw Material Suppliers
§ Turn key detail suppliers
§ Hardware suppliers
o Suppliers who process product that we provide a fixed qty of parts and therefore any defect (whether caught prior to shipment or not) ends up as a recordable defect on their PPM. 100% is still the expectation but a harder one to achieve with only one opportunity to get it right.
§ Heat Treat processors
§ Anodize & Paint processor

My questions are:
1. Is there a best practice for measuring these two types of suppliers?
2. Is it best practice to measure them with the same formula or a different formulas?
3. What is the best or “correct” formula

Here are the two formulas we are debating
1. # of non-conforming parts from supplier / total parts ordered – This is counting each ordered unit as 1ea on the right side of the equation
2. # of non-conforming parts from supplier / total parts closed to stock - This counts each part closed to stock as 1ea on the right side of the equation. The big difference here is that a specific part make go to the processor multiple times for different steps but they only get credit for 1 part on the right side. In the first formula they would get credit each time it’s processed.

Thanks for your thoughts!