What to do when customer requirements are too much?

[Amy1Amy]

I’m looking for some advice. I am the QA Manager for a very small powder coating facility (less than 25 employees). We have one very big customer (not automotive) that provides us with almost 100% of our business. We perform NO design, the customer sends us their parts, we spray them with powder, and we ship the parts back to the customer, the end. For the most part, things run very smoothly and the customer is very happy with the quality of the product we send to them.
That being said, the customer has a supplier quality management program which, I believe, is way overkill for what we actually do (they hold all their suppliers to the same standards, regardless of size and scope, no matter how simple). If this supplier quality management system were based on ISO 9001:2008 alone, we would pass with flying colors, no question. Their expectations are built off of ISO, but then they take it to a whole other level requiring things such as:
· Capability studies / layout measurements run after each preventive maintenance activity
· Cpk of critical characteristics
· Reliability tests for production
· Gauge R&R or MSE studies from each measuring and test equipment system used (including preciseness, repeatability, user influence etc.)
· Process parameter control plans (e.g. temperatures, times, speed, etc.)
· PFMEA procedure and PFMEA for all products
· Process capability studies
· Use of 6 Sigma techniques, including:
o 6 Sigma road map
o Green Belts and Black Belts
o Statistical SW (Minitab, JMP, QSTAT, etc.)
o Design of Experiments (DOE)
· Use of Lean Manufacturing tecdhniques, including:
o Balanced scorecard
o Establishing a Lean site steering committee
o Value Stream Mapping
o Lean TPM (Total Productive Maintenance)
o Visual metrics / visual management system
o Kanban system
o SMED (Single-digit-Minute Exchange of Die)
o Lean training program
We have an effective quality program which includes all of the necessary elements of a good quality management system and yet we have failed (and will continue to fail) all of our customer’s audits due to the extent of these requirements. We have even tried performing some of the techniques listed above (ie – MSE studies) but found them of absolutely no value except to satisfy the customer’s requirements. We were doing it for the sake of doing it, no value added , which seems completely counterproductive to the culture I think our customer is trying to promote.
Really I’m just looking for some feedback from anyone who has experienced a similar problem and what they did about it (if anything).
Thanks,
Amy

 

[Sidney Vianna]

Re: What to do when customer requirements are too much

Welcome to The Cove.

Assuming your customer is willing to dialogue, you can try to use your historical performance to demonstrate your reliability as a supplier, what is the end goal. All the techniques you listed are meant to either improve yields or reduce costs. If you "are already there" what more can your customer ask for?

Make them also realize that some of their expectations would lead to increased costs. Engage the customer buyer as you allie. They don't want price increases.

The level of sophistication of a QMS must be commensurate with the product/service criticality and complexity. One size does not fit all. Hopefully your customer's SQA will realize that.

 

[Jen Kirley]

Re: What to do when customer requirements are too much

Welcome to the Cove, Amy!

Supplier approval programs are set by procedure and are generally not customized, especially in producers that sell to customers who, in turn have all these requirements you list. There is, however this thing called a waiver request that my people do for specific customer requirements that we can't, or won't meet.

In our drawing review process, if we don't meet certain customer requirements we use a form in which we request a waiver: we state the requirement, and we state the basis of our not meeting it (such as continued registration to TS 16949). Because there is trouble getting replies, we add a clause saying to effect "If we don't get a response from you within 90 days and you continue to buy from us, your approval is assumed."

In the end the customer has the prerogative to continue to buy from you, or try to find a powder coating facility that does the 6S Road Map, etc.

 

[michellemmm]

Re: What to do when customer requirements are too much

Welcome to The Cove.

Make them also realize that some of their expectations would lead to increased costs. Engage the customer buyer as you allie. They don't want price increases.

You nailed it, Sidney. Cost increase will wake the customer up and help them transform from "Imagineering" to "Engineering". The customer will have to justify their requirements (to their management) and perform cost per function analysis. I have faced this problem so many times and every time the customer finds out about cost increase in piece part or NRE (non-recurring expenses), they change spec.

 

[Claes Gefvenberg]

Re: What to do when customer requirements are too much

Welcome to the Cove, Amy, and what a well written first post. I do hope you will continue posting here.

We have one very big customer (not automotive) that provides us with almost 100% of our business.

So you are in their very firm grip. 'Resistance is futile' and so on. Yet big players need products from small suppliers too, which is probably why they allow you to stay on in spite of consistently failing their audits.

That being said, the customer has a supplier quality management program which, I believe, is way overkill for what we actually do (they hold all their suppliers to the same standards, regardless of size and scope, no matter how simple).

I have been subjected to similar treatment at times. As a wise person here in the Cove said: One size does not fit all, and as you indicate some of those programs are just about lethal to small suppliers.

We were doing it for the sake of doing it, no value added , which seems completely counterproductive to the culture I think our customer is trying to promote.

It probably is. It certainly is not the route to a lean system, is it?

Really I’m just looking for some feedback from anyone who has experienced a similar problem and what they did about it (if anything).

I feel your pain, but there is really but one option left to you: To reason with the customer, complicating the discussion by bringing facts into the equation and hope for their benevolence. I would be interested to learn however, what your contracts / agreements have to say on the matter. Have you at any point accepted the program?

/Claes

 

[Wes Bucey]

If repetition has any value, I repeat what the foregoing have said:
This is your biggest (some might say ONLY) customer, he needs to be satisfied in some way.

I'm pretty sure reasoning with the SQA is next to worthless, he only follows his script and rarely has leeway to grant wholesale waivers (what your company needs.)

Your top bosses need to negotiate as far up the line at your customer as possible to get the waivers for most requirements (getting waivers for ALL requirements is unrealistic.) The bosses need to be prepared with facts and flexibility in negotiating, not anecdotal conversation, as to why current procedures and processes at your plant are adequate for the relatively straightforward and simple task you perform.

A good analogy for them to use is that you are more like an off-the-shelf supplier than a custom supplier in that you have one process with a few variables (the type of powder and coating thickness) versus the myriad variables in machining complex shapes.

My guess is the customer should be willing to grant the waivers and modify your contracts in the future to eliminate the "overkill" requirements. If not, your bosses should not give up, but should at least try to renegotiate, using the point that complying with these requirements will mean much higher costs which will have to be passed on to the customer.

I am curious whether the fees your company charges for powder coating are "competitive" or if they are much lower than your competitors who may be in a position to comply with all the requirements set forth by the customer. This may be a potent bargaining chip in the negotiation.

If your bosses don't feel comfortable making the negotiations by themselves, they should consider hiring a professional negotiator familiar with industry requirements to help them with the negotiation.

 

[JRKH]

If repetition has any value, I repeat what the foregoing have said:
This is your biggest (some might say ONLY) customer, he needs to be satisfied in some way.

I'm pretty sure reasoning with the SQA is next to worthless, he only follows his script and rarely has leeway to grant wholesale waivers (what your company needs.)

Your top bosses need to negotiate as far up the line at your customer as possible to get the waivers for most requirements (getting waivers for ALL requirements is unrealistic.) The bosses need to be prepared with facts and flexibility in negotiating, not anecdotal conversation, as to why current procedures and processes at your plant are adequate for the relatively straightforward and simple task you perform.

A good analogy for them to use is that you are more like an off-the-shelf supplier than a custom supplier in that you have one process with a few variables (the type of powder and coating thickness) versus the myriad variables in machining complex shapes.

My guess is the customer should be willing to grant the waivers and modify your contracts in the future to eliminate the "overkill" requirements.

(Snip)

Well said Wes...

In this there is going to be more than just the quality depts involved. Your customer's purchasing dept will be involved as well as ANYONE in either company that is interested in the associated costs involved.
In short, your managment doesn't want to lose the business, and their management does not want to have the cost driven up by unnecessary requirements.

The OP needs to get their mangement involved so that they and their customer can come to a mutually beneficial arrangement.

Peace
James

 

[howste]

I'd be interested to know what your contract/PO with the customer includes. If it includes all of these requirements, then your company has already agreed to do them. These issues should have been resolved before the company started doing work for the customer. If you've already agreed to something you're unwilling to continue, then you need to renegotiate for future work.

If they aren't included in the contract/PO, then the customer has no right to ask for them until they add them to the contract or PO. At that point you have the ability to negotiate what you'll agree to, and what costs may be involved.

 

[Wes Bucey]

I'd be interested to know what your contract/PO with the customer includes. If it includes all of these requirements, then your company has already agreed to do them. These issues should have been resolved before the company started doing work for the customer. If you've already agreed to something you're unwilling to continue, then you need to renegotiate for future work.

If they aren't included in the contract/PO, then the customer has no right to ask for them until they add them to the contract or PO. At that point you have the ability to negotiate what you'll agree to, and what costs may be involved.

Yeah, that's all well and good, Steve, but ask folks in automotive - some customers have a penchant for playing "my way or the highway!" long after supplier-favorable contracts are written.

In the case of a supplier not really playing attention to the fine print on requirements during whatever Contract Review they do, that's just par for the course with most small operations. They don't start paying attention until they get burned. For some, that's too late. In any regard, there can be dozens of scenarios for these requirements suddenly becoming an issue - some realistic and valid and some just the case of "mission creep" so many of us have experienced in our careers. It's also too late to scold the supplier management for not getting it right in the original contract, nor for not playing tough if the contract didn't contain these requirements. The fact is, this customer is the only thing that keeps the supplier's doors open. Few contracts force the customer to keep sending material for outsourced processes - if the customer goes to a different supplier, there isn't a whole lot of recourse open to this supplier.

 

[JRKH]

I'd be interested to know what your contract/PO with the customer includes. If it includes all of these requirements, then your company has already agreed to do them. These issues should have been resolved before the company started doing work for the customer. If you've already agreed to something you're unwilling to continue, then you need to renegotiate for future work.

If they aren't included in the contract/PO, then the customer has no right to ask for them until they add them to the contract or PO. At that point you have the ability to negotiate what you'll agree to, and what costs may be involved.

I would be very surprised if any of this stuff has been included in the P.O.
From my exprerience with small shops it's generally a question of calling or going to the chop and saying "We need these parts powder coated" and "OK we can do that"...and that's pretty much the deal, except for a quick PO that contains the part number, quantity due date and price....

To be honest the OP's situation sounds like something that their customer had dumped on them and they are just rolling it through...

Peace
Jame