How to Determine Critical Supplier/Vendor

[Steve McQuality]

I may have missed an answer to this question during a search of the forum, but here goes anyway...

Does anyone have any advice on how to determine a Critical Supplier? Here are some excerpts from our procedures and how we've defined "Critical" Suppliers and "Critical" Components...

• Critical Component: Any component, having (our company) Part Number, affecting the quality and/or safety of a finished, packaged, or labeled device.
• Critical Supplier list (CSL): A subset of the ASL, determined by Purchasing and/or Quality Assurance, containing single source suppliers or suppliers providing critical components or services to (our company). These suppliers may be based on importance of product, dollar value and/or volume. For service providers, the criteria will be the criticality of the service provided. These CSL suppliers will be part of the periodic supplier performance reviews.

...and what do we define as "periodic supplier performance reviews"?

• (Our company's) goal is to monitor CSL suppliers quarterly and formally review CSL suppliers annually.
• reviews may occur more frequently and may be prompted by internal complaints or objective evidence or a poor rating
• Table 3 lists the categories by which a supplier is evaluated

"Table 3" above refers to the following criteria; 1) Quality - based on incoming inspection and production rejects for "dock to stock" material, 2) Delivery - On Time Delivery adjusted for required or requested changes and 3) Additional Supplier Rating - subject rating of "intangibles" such as customer service, response to non-conformances, etc.

When I reviewed our receipts over the past year, we have approximately 79 suppliers that fit the category of "supplying assigned P/N's" - which if I rated all of these, that's all I'd get done!!

Have we backed ourselves into a corner with these definitions? Some of our P/N'd parts include "off the shelf" inductors, packaging materials, etc. We used to classify suppliers by only dollar amount - but our registrars didn't like that method and in retrospect, it's not really the right way to go about it.

We'd like to pare down this list of 79, but I was looking for some thoughtful advice on a legitimate way to do that without merely putting blinders on and hoping for the best. Any advice would be greatly appreciated.

I've been revamping our Supplier Qualification program, and have found a Great Tool that I downloaded from the Cove - and it works very well for our current list of 18 "critical" suppliers. However we wanted to review and revise that list. Any thoughts???

-Steve

 

[Frank T.]

At my company we evaluate all suppliers using a similar spreadsheet to the one I have attached. The status of the supplier changes as their percentage changes, which is evaluated by late shipment, rejects and accepted shipments. The status changes colors for quick reference to how suppliers are performing.

Hope this helps.........

 

[Steve McQuality]

At my company we evaluate all suppliers using a similar spreadsheet to the one I have attached. The status of the supplier changes as their percentage changes, which is evaluated by late shipment, rejects and accepted shipments. The status changes colors for quick reference to how suppliers are performing.

Hope this helps.........

Hi Frank:

Excellent SS!! Where were you when I was searching for an easy way to rate suppliers! The SS I "plagerized" from the Cove earlier works fairly easy as well - but I have a question for you; How do you manage to rate some 242 Suppliers quarterly! :mg: Do you do anything else with your time?

Seriously, I like the fact that you have a quick look at your entire supplier list but how do you get the data for each of these suppliers? Do you have an automated query through your MRP system or something similar?

-Steve

 

[Frank T.]

Document Control personnel enters data upon receipt of paperwork from receiving inspection, just before filing it. It seems complex entering data manually but, we determined it averages at the most 30 minutes a day. Which isn't that bad in my opinion, considering the info. you get in return. Also, the one I use at work charts this data. As for rating and sending 242 performance reports, it takes approx. 2 to 3 hours once every 3 months, which again is that bad considering.

Just for kicks....
30 min. day = 2.5 hrs a week = 130 hrs a year
2.5 hrs quarterly = 10 hrs a year
Overall 140 hrs a year = approx. 5.83 days to maintain this list.

 

[Steve McQuality]

Thank you Frank. If manual works, there's no need to make it more complex than it needs to be. Obviously, our list of 79 is a little smaller than your list. I appreciate your info.

I'm curious to see if anyone else weighs in - but it's Friday afternoon!

Thanks!

 

[Frank T.]

No problem.

 

[Jim Wynne]

The fact that you feel the need to describe some suppliers as "critical" seems to indicate that some form of CA is needed. You need to ask yourself what it is you're afraid of. Do you think that a given supplier might screw up something important? If so, why don't you do something about it, such as changing suppliers? Are you reacting to the fact that some feature on a drawing has been identified as critical? If so, and you have a reasonable level of confidence in the supplier, what are you worried about?

I just think that the whole idea of pigeonholing some suppliers as "critical" misses an important point, which is that if you're worried about your suppliers, you need to do something about it other than making a spreadsheet and having their names in bold red type.

 

[Steve McQuality]

Hi Jim:

Thank you for your insightful and thought provoking questions! I guess sometimes you "inherit" a system and don't step back and ask these types of questions. It's one of those "can't see the forest for the trees" type of things...

The fact that you feel the need to describe some suppliers as "critical" seems to indicate that some form of CA is needed. You need to ask yourself what it is you're afraid of. Do you think that a given supplier might screw up something important? If so, why don't you do something about it, such as changing suppliers?

We have a very good non-conforming system in place that would catch anything that would fall into this category. In a recent case, we did search out and found a replacement supplier. ...so that can't be the reason...

Are you reacting to the fact that some feature on a drawing has been identified as critical? If so, and you have a reasonable level of confidence in the supplier, what are you worried about?

Good point. See above... So that can't be it either...

I just think that the whole idea of pigeonholing some suppliers as "critical" misses an important point, which is that if you're worried about your suppliers, you need to do something about it other than making a spreadsheet and having their names in bold red type.

Well said! After discussing your feedback amongst ourselves this morning, it becomes clear that by "critical" I think we're looking more at "business critical" (or should be) more than "product critical". We have systems in place to find product critical defects - but we don't always do a good job monitoring "business critical" suppliers.

We're in a unique situation where some of our purchase product is unique and not easily "re-sorced" (pun intended). Having said that, there are still some things we can do other than just generate reports!

Thanks again! ~Steve

 

[Thurai]

Other then quality and delivery don't you think price is one of the criteria to evaluate critical suppliers?

Thank you.

 

[Steve McQuality]

Other then quality and delivery don't you think price is one of the criteria to evaluate critical suppliers?

Thank you.

For our situation, we don't have a lot of control on price. We are unique in that, for most of our critical materials, we're pretty much locked in to one supplier due to the special nature of the products we buy. In many cases, we'd spend more developing a new supplier (if we could even find one with the capability) than we would sticking with the current supplier. Also, we're not big enough to carry the necessary clout to affect price. In some cases, we're not "big enough" to affect quality either! I just look at this as "job security" for me and the rest of the QA Dept.

There is still a "pain threshold" to price, but ours is pretty high - so for now we don't include that aspect in our "official" supplier monitoring.