Choosing Supplier Evaluation Methods - Determining what a Critical Supplier is

G

Gerry Quinn

#1
Over the many years that I have been in the quality field, I have seen the term "Critical Supplier" used many times. In all of that time I have yet to see a good definition of that term. Most people tell me that "you know one when you see one". Well that hasn't done me any good.

The use of this term has been associated with the level of effort to be expended in evaluating a supplier or a potential supplier. Is the supplier and his product so important that we have to do everything possible to evaluate and document, or can we just check to see if he has a pulse and a telephone.

I work in the medical device industry and attempt to comply with 21CFR820 and ISO 13485:2003.

I have attempted to develop a set of questions (attached) to determine if the supplier needs to be evaluated at all and a matrix of possible evaluations that could be performed.

What I am looking for is a process that is fool proof. Ask the questions, get the answers, go to the matrix and find the acceptable evaluation method.

I'm stuck. Any ideas?

Gerry
 

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Wes Bucey

Prophet of Profit
#2
About a million years ago, someone came up with PERT/CPM (Project Evaluation Review Technique/Critical Path Method)

It helps identify the critical points in a process or project so the project manager can give those points special attention.

When we deal with suppliers, we try to identify those suppliers whose lead times and other characteristics having to do with delivery and conformity of the product or service have a huge impact on the balance of the project.

There is an old poem which begins, "For the want of a nail, the shoe was lost, for the want of the shoe, the horse . . ."

In a sense, all suppliers are critical, but some are so critical to the success of the project that their failure to perform is not easily remedied by finding another supplier because of long lead times or lack of capacity or even capability. When such "critical" suppliers are in a supply chain, managers routinely "hedge their bets" by creating stockpiles of safety stock and/or alternate suppliers in the event disaster should strike the critical supplier.

In the poem, the critical supplier was not the nail manufacturer, but the blacksmith who installed the shoes.
 
Last edited:

Caster

An Early Cover
Trusted Information Resource
#3
Gerry Quinn said:
Over the many years that I have been in the quality field, I have seen the term "Critical Supplier" used many times. In all of that time I have yet to see a good definition of that term. Most people tell me that "you know one when you see one". Well that hasn't done me any good.

What I am looking for is a process that is fool proof. Ask the questions, get the
answers, go to the matrix and find the acceptable evaluation method.

I'm stuck. Any ideas?

Gerry
How about "Would our final customer care/notice if this supplier messed up?"

Spring for heart valve replacement- YES
Design services - YES
Lawn care - NO
ISO registrar - Hmmm?
Training Provider - Hmmmm?

Maybe not so simple as I thought.

Hmmm who is the customer - patient or FDA - or both?

More questions than answers tonight - sorry
 
W

wrodnigg

#4
Hello Gerry!
Gerry Quinn said:
What I am looking for is a process that is fool proof. Ask the questions, get the answers, go to the matrix and find the acceptable evaluation method.
I think you are asking the wrong question:
Don't ask which of your suppliers is a critical one or not. (and besides, there could be quality critical ones, or business (money) critical ones, or... or... or...)
I think you are looking for quality critical ones.

So take a look at your product and determine the critical components. The suppliers who deliver these components are the critical ones.

I would start with a risk assessment of the product (ISO 14971 could help you).
 
A

AllanJ

#5
wrodnigg said:
Hello Gerry! I think you are asking the wrong question:
Don't ask which of your suppliers is a critical one or not. (and besides, there could be quality critical ones, or business (money) critical ones, or... or... or...)
I think you are looking for quality critical ones.

So take a look at your product and determine the critical components. The suppliers who deliver these components are the critical ones.

I would start with a risk assessment of the product (ISO 14971 could help you).
Hello Gerry:

wrodnigg is correct. There are many ways of viewing the word "critica", but, to quote my well repeated slogan, "never lose sight of the product."

You might consider what other industries and the engineering profession would do. Ask your product designers to undertake a "Failure Modes and Effects Critical Analysis" or FMECA. This is shortened in the automotive industry to be "FMEA". The former was being used many decades ago by nuclear engineers working in the western nuclear power industry - to my certain knowledge, as I once worked in that sector.

Perhaps your designers already have done such an exercise. If so, it should reveal a "ranking" for each component, assemble, part, sub assembly etc. This can be used as a guide in deciding which supplier then is "critical" in that if it delivers defective product, you know the risk to health, safety and of litigation.

As an example: I once authorized an audit of a supplier delivering a particular component whose unit cost was less than $100. The audit cost almost $15000. But, since that item was to be welded into a main pipeline in contact with the nuclear reactor pressure vessel, it was certainly "critical". Its failure would cause a major incident.

But, even if your engineers have actually adopted FMECA (or FMEA) or used fault tree analysis (FTA) is is also important that you thoroughly audit their activities. For this you may need to engage the services of a specialist in your particular field, which I understand is the medical industry. That is because you MUST have confidence in their actual process, methods, analysis and so forth.

I hope this helps.
 
M

MikeL

#6
Supplier Evaluation

Caster said:
How about "Would our final customer care/notice if this supplier messed up?"
Definitely the way to view it.

We just use a simple rating system based on quality price and service. If you keep supplier evaluation simple then sorting out the critical from the merely important becomes a moot point.

The guy who services the photocopier can still stuff you up.
 
M

Microbe

#7
I agree with MikeL. This is an area that can get very complicated, very quickly without a significant increase in benefits. Try to keep things simple, review the performance regularly and try to maintain links with your key suppliers

Hope my first post helps!!!! :)
 
G

Gerry Quinn

#8
Thanks for the input. I lost sight of the fact that the engineers and designers play an important part in defining the critical nature of products.

Gerry
 
S

SMSMSM

#9
Hello,

Sorry I jumped in with the problem in discussion.
All my product raw material are purchased by corporate purchase and distributed to subsidiary.
How can I evaluate my Critical Supplier?
What can I do if they fails in price?

:thanx: SM
 
J

Jim Howe

#10
supplier evaluation

Gerry Quinn said:
Over the many years that I have been in the quality field, I have seen the term "Critical Supplier" used many times. In all of that time I have yet to see a good definition of that term. Most people tell me that "you know one when you see one". Well that hasn't done me any good.

The use of this term has been associated with the level of effort to be expended in evaluating a supplier or a potential supplier. Is the supplier and his product so important that we have to do everything possible to evaluate and document, or can we just check to see if he has a pulse and a telephone.

I work in the medical device industry and attempt to comply with 21CFR820 and ISO 13485:2003.

I have attempted to develop a set of questions (attached) to determine if the supplier needs to be evaluated at all and a matrix of possible evaluations that could be performed.

What I am looking for is a process that is fool proof. Ask the questions, get the answers, go to the matrix and find the acceptable evaluation method.

I'm stuck. Any ideas?

Gerry
Gerry, I think your list is on the right track and I believe that the answers posted so far are excellent but let me add the following:

There are a number of catagories that can be given to suppliers based on the product they supply and the impact they may have on your product. Such catagories might resemble the following:

Category A: OEM’s (Originl Equipment Manufacturers) who supply
complete functional products that are integrated into your product. For example; Radar units, Rocket motors, Hydraulic cylinders, etc.

Category B: Raw material suppliers such as steel plate that must be cut
and machined before integration into your product.

Category C: Special processes such as Welding, Plating or Soldering,
etc. that is performed for you.

Category D: Off the shelf parts such as fittings, nuts & bolts.

I am sure that some systems will have even more catagories but do these catagories reflect the criticality of the part? They could, I suppose, but the following criteria would more accurately resemble a better rating system for critical:

1) Safety or critical: Human life at stake
2) Major: injury and/or mission at stake
3) Minor: delays, repairs, inconveniences

To illustrate here are some examples that I have been involved with at some point in my career. Based on the above criteria how would you rate them?

1) Wire harnesses for the installation of x-ray equipment at hospitals.
2) Wire harnesses for PET Scanner sensor rings.
3) Machine-gun SAFETY Switch's for M1A1 Abrams Tanks.
4) Integrated circuits for missile guidance systems.
5) Timer motors for MK-48 torpedo exploders.
6) Wire harnesses for control rods in nuclear reactors.


I offer the above points to illustrate that the term critical supplier could mean just about anything depending on who was giving the definition. You really must decide on the impact to Society as a whole, then to the customer, and then to yourself. Perhaps the above has given some insight as to how to evaluate.
Goodluck!
 
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