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Major Flaw in Quality Standards

Caster

An Early Cover
#21
Re: If I have to explain, you wouldn't understand.

TedCambron said:
Some people need to experience manufacturing within an "automotive enviorment" to understand. .....My only concern is how many people in the cove actually deal with the automotive industry and have a solid understanding of the reality of doing business in that manner. .....
Ted

In my view, "the" automotive industry is not monolithic.

There is a big difference between the "not so" big 3 and Toyota.

Toyota has lots of single source suppliers (we're one) and a key pillar of their system is supplier integration.

They have no need of ISO and TS. And they could buy GM with their spare cash and shut them down just for fun.
 
T

TedCambron

#22
Re: If I have to explain, you wouldn't understand.

Caster said:
Ted

In my view, "the" automotive industry is not monolithic.

There is a big difference between the "not so" big 3 and Toyota.

Toyota has lots of single source suppliers (we're one) and a key pillar of their system is supplier integration.

They have no need of ISO and TS. And they could buy GM with their spare cash and shut them down just for fun.
I agree with you 200%
Toyota is the exception (Honda too). They do not operate in the "normal" fasion that I've grown accustom to. They do not need ISO and TS. They are operating on a much higher level.

The technical standard is faulty only for the organizations that need it. Meaning anyone who has bought into it. Not just the three blind mice. All the tier one and in most cases tier two suppliers.

Bottom line: All organizations that do not follow the "exceptions", when it comes to supplier management, will have to include secondary suppliers or fail.
 
V

vanputten

#23
Hello Ted:

Why would a company want to second source anything? To have the suppliers compete against each other on price?

Why do business on price? We should be doing business on overall cost.

There is a tremendous increase in complexity and variables to be monitored and controlled when you start to add suppliers. If you add a second supplier, then you have to define requirements twice, monitor twice, split purchasing volume (or do you just keep one supplier on the side - don't give them business, but require that they know your requirements and implement them if you ever issue a PO?), build multiple relationships, everything to create a mutually beneficial supplier customer relationship must be done twice. The customer is spliting the limited resources bewteen suppliers. This make it more difficult to build mature, beneficial relationships.

Some orgnazitions that say second sources are required, do this to mask or work around mutually beneficial relationships. If an organzation truly works with a supplier and builds a muture business and supply relationship, the need for a second source can be eliminated.

Competition between suppliers hurts the suppliers and the customer. And if you want to talk about knowledge of the auto industry related to the number of suppliers, all auto companies have been trying to reduce the number of suppliers since the mid 90's. They have finally recognized that mulitple suppliers means excessive varibility and multiplicity. Also, cusotmers want systems andnot components. They don't want just the exteriror mirror, the want the mirror and the door. Fewer components and fewer suppliers is easier to understand, manage and montior.

Standards need to apply to many different types and sizes of suppliers. To say that ALL organizations should be required to second source is myopic. Think about very small auto suppliers. They may have only a few suppliers in total. Why second source?

Your comment about 10 lines or fewer really confuses me. One can get a degree in supply chain management. If it can be done in 10 lines or fewer, why are there degrees in this subject. Saying that a complex issue can be explained and justified in 10 lines or fewer is just amazing to me.

Please tell me everything about the benefits and impacts of second sourcing in 10 lines or less. Wow! A don't forget to include how the increase or decrease in variables of the supplier relationship is effected, include a complete explination of doing business on price Vs. cost, and include a description on the impacts of causing suppliers to compete with each other instread on one supplier collaborating with the customer.

I have been in the audo industry since 1991 and the quality industry since 1997. Your generalism about the Cove and the level of competency of the members is offensive to me. But I will get over it.

Regards,

Dirk
 
V

vanputten

#24
"Quality Systems have made it nearly impossible to use more than one supplier for any given item. "

By the way, quality standards may have made it nearly impossible to use more than one supplier, but not quality systems.

And the PPAP stuff you complain about, I agree. PPAP's are often of little value. Advanced quality planning is very beneficial. And don't forget that the PPAP origin is the Big 3 in the US, not a standard.

Softness is only a sign of weakness in a competitive, non-mutual environment. Softness can be a sign of incredible strength, intellect, and understanding.

Regards,

Dirk
 
#25
vanputten said:
Hello Ted:

Why would a company want to second source anything? To have the suppliers compete against each other on price?

Why do business on price? We should be doing business on overall cost.

There is a tremendous increase in complexity and variables to be monitored and controlled when you start to add suppliers. If you add a second supplier, then you have to define requirements twice, monitor twice, split purchasing volume (or do you just keep one supplier on the side - don't give them business, but require that they know your requirements and implement them if you ever issue a PO?), build multiple relationships, everything to create a mutually beneficial supplier customer relationship must be done twice. The customer is spliting the limited resources bewteen suppliers. This make it more difficult to build mature, beneficial relationships.

Some orgnazitions that say second sources are required, do this to mask or work around mutually beneficial relationships. If an organzation truly works with a supplier and builds a muture business and supply relationship, the need for a second source can be eliminated.

Competition between suppliers hurts the suppliers and the customer. And if you want to talk about knowledge of the auto industry related to the number of suppliers, all auto companies have been trying to reduce the number of suppliers since the mid 90's. They have finally recognized that mulitple suppliers means excessive varibility and multiplicity. Also, cusotmers want systems andnot components. They don't want just the exteriror mirror, the want the mirror and the door. Fewer components and fewer suppliers is easier to understand, manage and montior.

Standards need to apply to many different types and sizes of suppliers. To say that ALL organizations should be required to second source is myopic. Think about very small auto suppliers. They may have only a few suppliers in total. Why second source?

Your comment about 10 lines or fewer really confuses me. One can get a degree in supply chain management. If it can be done in 10 lines or fewer, why are there degrees in this subject. Saying that a complex issue can be explained and justified in 10 lines or fewer is just amazing to me.

Please tell me everything about the benefits and impacts of second sourcing in 10 lines or less. Wow! A don't forget to include how the increase or decrease in variables of the supplier relationship is effected, include a complete explination of doing business on price Vs. cost, and include a description on the impacts of causing suppliers to compete with each other instread on one supplier collaborating with the customer.

I have been in the audo industry since 1991 and the quality industry since 1997. Your generalism about the Cove and the level of competency of the members is offensive to me. But I will get over it.

Regards,

Dirk
I'm pretty difficult to offend - my ego allows me to discount most sniping.

Thus said - let me tackle the question of "Please tell me everything about the benefits and impacts of second sourcing in 10 lines or less." in as few lines as I can - who knows how many until we count them?

  1. I think "pre-set" second sourcing should be reserved only for custom-made products, NOT off-the-shelf items.
  2. Second sourcing is essentially "risk management" in the event some "event" blocks shipment from prime source for critical time-sensitive products.
  3. If the order would take up too much capacity of any single source, then second sourcing may be a necessity.
  4. Both prime and secondary MUST be aware of each other and willing to cooperate on keeping customer supplied with no "line down" situations.
  5. Cooperate means EVERYBODY is in the loop for changes, raw material supplies, tooling, inspection instruments & techniques.
  6. Raw materials suppliers must be willing to divert shipments from primary supplier to the secondary supplier if catastrophe or disaster hits primary (Conflagration, inundation, labor strike, etc.) to maintain orderly flow of finished product to customer.
  7. Secondary supplier should get fee to stay on standby.
My own experience:
As a primary supplier, I brokered a deal for a customer who absolutely, positively needed a constant source of supply of a special component.

Our reputation gave us the nod for the sole source contract, but I knew we couldn't build up a sufficient amount of "safety stock" held in a third party off-site warehouse to cover our customer if we experienced the unthinkable and got shut down for more than one or two weeks.

One of my friendly competitors in another city had exactly the same machines we did and I had a lot of respect for his ability. I set up a conference call with the customer, who agreed to put up a "standby fee" to my competitor to come to my rescue if we flopped.

I kept a small stock of raw material in quarantine at my competitor along with a sufficient supply of expendable tool bits to sustain production until our national supplier could deliver more to him. We coordinated inspection instrumentation and my competitor also turned out a "First Article" to show his capability, using a duplicate of our computer programming. The unit pricing would be the same for each of us.

We kept my competitor in the loop throughout a three year contract and on two occasions, we had him fire up to meet expanded demand and to produce safety stock to meet future contingency.

I suppose I could have arranged something similar "under the table" without telling the customer, but I was, and remain, a great believer in "NO SECRETS!"

:topic: As a supplier of custom products, I NEVER agreed to participate in an "auction" for a customer's business. One of the first questions we asked was, "Who else are you getting quotes from?"

If the guy said, "None of your business."

We replied, "You make it easy. No quote! Bye. Take care."

If he mentioned two or three others, we always replied, "We don't participate in auctions. We make custom products to your design. We will willingly negotiate a price, but not to beat a competitor. You can always find someone desperate enough to give a low quote. Do you really want to deal with a desperate supplier?"

The answer we really wanted to hear was, "We came to you first because you have a good reputation."

Surprisingly, we had a lot of guys come back and play our way who had initially told us, "None of your business!"

Space here is much too short to give a course in how to run a custom manufacturing business without being bullied by your customers and still be "customer-centric."
 
T

tomvehoski

#26
If I read the OP correctly, he is looking for TS 16949 to say something along the lines of: "The customer shall require (allow? encourage?) multiple sources for tier two products". Some random thoughts on this...

TS does not make any requirements on the customer, nor can it. Requirements are placed only on the supplier implementing it.

Should the standard also say:
- The customer shall be on time for all meetings
- The customer shall pay in 10 days or less
- Customers attending run at rates shall leave home two days early to allow for possible travel delays
- Customers shall not run with scissors (sarcasm off)

Do you want your business cut in half because all Tier 1s should be dual sourced too?

Sourcing is a business strategy and decision that cannot be dictated by any standard. Standards are meant to be guidelines - not a replacement for intellegent and creative thought. Yes, the Big 3 can be messed up. So can non-automotive companies. Don't blame an inanimate object because something in your business crashed and burned.
 

Coury Ferguson

Moderator here to help
Staff member
Super Moderator
#27
Wes Bucey said:
"You can always find someone desperate enough to give a low quote. Do you really want to deal with a desperate supplier?"
I have had first hand experience in this respect. My previous company always were the low bidder and 75-80% of the time lost money. Certain contracts were bid on and being the lowest bidder, obviously they got the contract, not fully understanding the extensive processes that were involved including heat treating, cad plating, mechanical properties, etc. They still haven't made an acceptable part for the Government and is seriously delinquent on delivery (The contract due date was 12/04). Even the "original" supplier of this product said "good luck."

The second experience (with another company) I had with this similar but not exactly the same was we were competing with another supplier on some fasteners with GM. We had GM and our competitor over and met. The other supplier asked GM for a "sidebar" and GM met with them and then came back and said "I am sorry but we have decided to go with company X." After talking with the SQE that was responsible for us on another contract. She stated that "they underbid you by $0.000001 that is why they got the contract." This was my first experience with one of the Big 3.

Wes Bucey said:
"I'm pretty difficult to offend - my ego allows me to discount most sniping."
That is a true statement and I know that this is from experience.

Wes Bucey said:
"Thus said - let me tackle the question of "Please tell me everything about the benefits and impacts of second sourcing in 10 lines or less." in as few lines as I can - who knows how many until we count them?

1. I think "pre-set" second sourcing should be reserved only for custom-made products, NOT off-the-shelf items.

2. Second sourcing is essentially "risk management" in the event some "event" blocks shipment from prime source for critical time-sensitive products.

3. If the order would take up too much capacity of any single source, then second sourcing may be a necessity.

4. Both prime and secondary MUST be aware of each other and willing to cooperate on keeping customer supplied with no "line down" situations.

5. Cooperate means EVERYBODY is in the loop for changes, raw material supplies, tooling, inspection instruments & techniques.

6. Raw materials suppliers must be willing to divert shipments from primary supplier to the secondary supplier if catastrophe or disaster hits primary (Conflagration, inundation, labor strike, etc.) to maintain orderly flow of finished product to customer.

7. Secondary supplier should get fee to stay on standby."
I count 7 lines here. Wes congratulations you now have received your Degree in Supplier Management, from the Coury Ferguson University. The Degree is in the mail.
 
Last edited:
E

Ederie - 2007

#28
Off OP question / Nice comments Wes.
A custom machine shop I worked at a few years back had some jobs they had been doing for along time.
The jobs went on the auction block to the lowest bidder.
The owner bid his current price and lost the jobs.
He had personally tweaked these jobs for 15 years, made them very efficient to the point where we could get 100 assemblies out per week without very much stress on our system.
His comments were "keep making them , they'll be back, nobody can possibility meet our quality and price"
Six months later the phone rang.... said he would have to put everybody on overtime to catch up, so its gonna cost you more..... :lmao:
 

Helmut Jilling

Auditor / Consultant
#30
Re: If I have to explain, you wouldn't understand.

Oh, c'mon. What kind of mish-mash is this?
TedCambron said:
I agree with you 200%
Toyota is the exception (Honda too). They do not operate in the "normal" fasion that I've grown accustom to. They do not need ISO and TS. They are operating on a much higher level.
I like Toyota, but let's not make them gods. They do not operate on "a much higher level." Their system already does the common sense stuff ISO and TS requires, so there is no reason to "adopt it." They already do it! They just don't certify to it. Remember, JAMA (the Japanese Auto Assoc.) particpated in the writing of TS 2002...

The technical standard is faulty only for the organizations that need it. Meaning anyone who has bought into it. Not just the three blind mice. All the tier one and in most cases tier two suppliers.

There is nothing wrong with the standards themselves, but they are not a magic bullet. They are just common sense stuff written down into a code. But, as with anything, there are some companies that do it well, and a lot of companies that don't! That is not the fault f the standards. It is the fault of the executives who run those companies.

I have some very good exercise gear sitting in my home office. The fact that I am out of shape is not the fault of the equipment. It is my fault because I don't use it diligently. Same difference.... Put the blame where it is due. Fat, arrogant, egotistical, self-centered executives who lack any interest or understanding of leadership. And Leadership is the one thing the Japanese have in abundance. The arrogant Big 3 just like to bark orders...

And, lack of leadership has a proce. The Japanese have stuck to their knitting for decades, even when they weren't very good. The Big 3 got fat and lost Leadership. Now they are paying the price. It is an inevitable law of economics. Even the Big 3, (or Big 2) cannot escape it.
 

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