Building a Quality Focused Supplier Process (QFSP) in Your Organization John C. Chang, PE, Senior Supplier Support Engineer Delphi Corporation 248/813-4354; E-mail, [email protected] Ms. Jill Rodeghier, Supplier Support Engineering Manager Delphi Corporation 765/730-5292, E-mail, jill.rodeghier @delphi.com Robert A. Kemp, Ph.D., C.P.M. Kemp Enterprises 515/221-2503, [email protected] 91st Annual International Supply Management Conference, May 2006 Abstract. Today’s customers expect zero defects with JIT delivery from their suppliers of the specified quantities as a matter of standard practice. More importantly, customers expect us to help them know what they need in terms of quantities and quality now and for the future. No other change process adds long-term value as quickly as zero defects. Companies failing to embrace this quality culture face difficult challenges. To achieve this level of performance requires tremen-dous focus in your organization and throughout its supply base. The fourbroad processes and eight steps discussed here will help an organization create a quality culture of zero defects. Introduction. The Global Supply Management team at Delphi is undergoing a lean transformation to further enhance competitiveness and to improve supplier relationships. Continuous improvement of supplier quality is a key element in lean transformation. Delphi quality control has identified poor supplier quality as a major potential systemic problem. A lean transformation will fail without continued requisite quality from suppliers. In 2002, the Delphi Supplier Quality team developed the Quality Focus Supplier Process (QFSP) to continuously improve its suppliers’ quality performance. Delphi implemented the QFSP with 300 suppliers globally in 2003. This presentation will provide participants with specific knowledge and supply management tools to build a QFSP to help improve supplier performance. Our discussions will include problem identification, solution techniques, step-by-step procedures, and early results from QFSP. Our goal is to show you how to create an organizational cultural change and commitment to zero defects and total quality performance. Quality Focused Supplier Process System. The QFSP is designed around the four processes of the Plan-Do-Check-Act (PDCA) mentality. Plan: Understand the problem and create the plan. Do: Execute the plan.

Check: Act:

Verify the plan is effective. Standardize lessons learned.

Delphi believes that most suppliers have the desire to perform well and that they are engaged in many great improvement activities. But there are three potential breakdowns in the PDCA cycle that can keep suppliers and most organizations from achieving the desired quality performance to ensure customer satisfaction. First is the lack of proper planning. Quality improvement is often attempted in the “Do” stage of PDCA; however, without identifying and then specifically correcting the most important or critical problems, we cannot achieve our goals. Planning is a big part of QFSP and properly implementing Steps 1 through 3 of the QFSP will help ensure that suppliers and employees understand the concept that “a problem well defined is a problem half solved.” The second potential breakdown might occur in the “Check” process. The Check process helps ensure that the tasks were actually completed and that the corrective actions completed actually solved the problem. If the “Plan” stage was completed incorrectly, the check process will show that the supplier worked on the wrong problem and the Plan stage must be repeated. Our metrics must measure results of actions that drive continuous improvement. The third potential breakdown typically occurs during the “Act” stage. After successfully completing a corrective action in one area or operation, many organizations fail to standardize the lessons learned across all other processes, products and plants. This error of neglect opens doors for possible repeated quality problems across that organization. Zero defects will never be achieved until an organization has embraced systematic learning to prevent potential repeated quality problems. QFSP is not a punitive process nor is it a means to force suppliers to do non-value added work. Emphatically, it is not Delphi’s “program of the year.” Rather it is a Delphi initiative being deployed in Delphi’s own plants worldwide and with selected suppliers, as appropriate. Indeed, the QFSP is a new way of thinking and eliminating the systemic issues potentially threatening Delphi’s efforts to achieve zero defect performance for its customers. It is about understanding, prioritizing, and eliminating the top systemic issues within the entire value chain by building and inculcating a true problem solving culture. QFSP focuses on accomplishing four important goals. 1. The QFSP team helps identify and analyze any systemic issues threatening quality. 2. The QFSP team helps suppliers develop quality plans to achieve zero defects. 3. The QFSP team works with suppliers at the supplier’s location to help ensure that the quality plan works and desired quality levels are actually achieved. 4. The QFSP team works with the supplier in an eight-step process to repeatedly lower quality problems by 50 percent or more with each repetition. The steps are as follows. Step 1: Identify potential suppliers. This step analyzes quality performance data from the past 6-12 months to identify suppliers that have most detrimental quality impact on Delphi. The data analyzed include PPM, the number of problem cases, disruptions, repeated issues,

and customer impacts. A weighted scale is used to ensure that high impact suppliers are identified for analysis. Step 2: Investigate selected high impact suppliers. This step extends the analysis of those suppliers selected in Step 1, with the goal of detecting a quality trend. Trends are plotted and charted. These data display the impact per Delphi plant, supplier plant, product line, part number, and nonconformance type. With these data collected and summarized, we are ready to start the QFSP planning process. QFSP plans vary by supplier, but the process is similar. Step 3: Develop a one-page proposal. This proposal serves as a communication tool between Delphi and a supplier as well as among concerned Delphi functional groups. This proposal is developed and owned by the Delphi Supplier Quality Engineer (DSQE). The content of the proposal includes the supplier background and problems, current status (obtained from Steps 1 and 2), objectives, and the step-by-step improvement action plan. The DSQE team ensures that the action plan actually focuses directly on the supplier’s problems. Delphi uses its standard A-3 format for this planning process. Step 4: Communicate the plan to Delphi and the supplier’s leadership. Communication of the plan to all stakeholders helps to ensure a good understanding of the plan. The key is communicating the plan of action to all stakeholders at Delphi and the supplier. Step 5: Hold a supplier commitment meeting to kick-off the QFSP. It is extremely important to obtain strong commitment and engagement from the supplier’s leadership before launching the QFSP. Delphi clearly establishes three objectives to be completed within six months, 1) a 50% reduction in identified nonconformance (PPM), 2) a 50% reduction in the number of problem cases, and 3) establishment of a first time quality (FTQ) system. The other key task is to identify a single-point project owner within the supplier organization. It is critical that this person controls the resources needed to execute necessary changes and to drive results. Success of the QFSP depends on the DSQE working directly with the supplier project owner to ensure that project plans are executed successfully at the supplier’s organization. Step 6: Implementing QFS on site is the “meat” of the process. This step follows the philosophy of “going to Gemba” (the actual place of the problem) and understanding the opportunities for improvement. Problems cannot be solved from behind desks or computers. It is critical that all levels of management at the supplier’s manufacturing site understand why their facility was selected and how the QFSP will be deployed. Delphi’s standard implementation process includes: developing a value stream map, reviewing the 5 Whys to identify systemic issues, identifying kaizen actions to eliminate systemic quality issues, and deploying metrics to track progress and effectiveness. As in Step 2, this information becomes the basis for measuring progress and defining effectiveness of plan execution. If the process to reduce problems by 50 percent is successful, these data reflect that and become input for subsequent repetitions of the QFSP to reach zero defects. Step 7: Conduct management review. This essential step keeps the leadership of both organizations informed of the progress and identifies any roadblocks over the six-month QFSP cycle. Steps 6 and 7 will be repeated each month during the QFSP until all quality systemic

problems are addressed. Leaders from both organizations attend these progress review meetings. It is imperative that the DSQE and supplier project owner make these presentations and agree on any new courses of action and timing for improvement. Step 8: Exit QFSP. This is the final step of the QFSP. The supplier should complete the QFSP within a six-month period, but it may take longer in some situations. This determination is based strictly on performance against the previously described quality metrics. Typically after six months the supplier has met the objectives. The Delphi SQE discontinues on site visits, but continues to monitor the supplier’s performance for an additional three months. If the supplier’s performance is acceptable and they achieve the 50 percent reduction in problems, the supplier will graduate from QFSP. Subsequently Delphi urges the supplier to continue using the QFSP to strive for a zero defect culture. The zero defect culture is the goal. If a supplier’s improvement performance has not been acceptable, the DSQE leads discussions to determine the next course of action, which may include not awarding more new business to that supplier. Delphi’s goal is that all selected suppliers will be successful and become zero defect suppliers. Examples of Supplier Systemic Issues. Supplier A is a large component parts company with resources to provide focus on various quality activities. During the first visit, supplier A briefed the SQE team on its quality problems and the programs used to address and correct its quality problems. The programs included six-sigma and lean transformation activities. After an onthe-spot (going to Gemba) review, Delphi found the supplier’s current activities were not aligned with the problems directly causing Delphi quality issues. Indeed, 60 percent of the issues identified in Delphi’s analysis were caused by poor performance from supplier A’s supply base. Furthermore, the SQE team found that supplier A didn’t have a supplier quality organization or anyone working with its suppliers on a daily basis. In its planning cycle, supplier A had jumped to the Do stage before managers fully understood the problems. This example illustrates two important lessons; 1) the Plan phase must identify and address the systemic problems before moving to the Do phase and problem solution process, and 2) Quality improvement is a supply chain problem that must be addressed across the supply chain. Supplier B is a small but important producer of plastic parts for Delphi. Delphi’s concern with this supplier was its number of problem cases per month that were jeopardizing Delphi’s quality performance. Supplier B came to Delphi to discuss plans to reverse this trend, but its summary of activities was not focused on the true systemic issues. A QFSP was kicked-off with a value stream mapping workshop, immediately followed by a meticulous review of the 5 Whys that addressed all formal customer complaints. From this assessment, a Pareto analysis of its past improvement plans revealed that its plans always focused on putting out small fires instead of its critical issues. The supplier’s management team became fully engaged and began using the QFSP approach for all quality issues, internal and external. Moreover, it began teaching QFSP to its suppliers. In a six-month period, it reduced Delphi complaints by nearly 70 percent and it was well on its way to be an effective quality focused supplier. Most Frequent Systemic Problems. Most systemic issues in suppliers’ operations are, in fact, common across many organizations. These systemic issues occur in the daily operations and the key to eliminating them is proper identification and planning. The most frequent

systemic problems are identified in Table 1. Even though each issue is unique to an individual supplier, standard quality tools exist and can be used to correct the problems. Some of the tools used by Delphi are listed in Table 2. These tools and many others are readily available in the training and professional development market, or the literature. Your people and personnel from your supplier’s operations should be trained to use these quality tools effecttively and efficiently on a cooperative and ongoing basis. Table 1. Most Frequent Systemic Quality Issues Category of Systemic Quality Issue

Occurrence

Standardization (i.e. work instructions, quality reaction plan, look across, process and quality control plan, etc.)

29 percent

APQP (i.e. misunderstanding customer needs, quality pass through, incomplete APQP, etc.) Hidden Factory (i.e. defining rework, incorporation into the standard work plan, etc.) FMEA (i.e. incompletion, not transferring work to work standard and practice; incorrect risk taking, etc.) Tiered supplier management (i.e. APQP, supplier quality, etc.)

25 percent 14 percent 13 percent 11 percent

Operator training (i.e. insufficient regular training, certified worker, etc.)

8 percent

Maintenance programs (i.e. lack of proactive maintenance, delayed reactive maintenance)

5 percent

Table 2. Most Frequent Systemic Quality Problems and Standard Tools Suggested Tool Selection Systemic Category

5-Why

Line Side Layered First Time Review Audit Quality

X

X

X

X

X

X

X

X

Value Total LookCustomer Plant Stream Pareto Productive Across Visit Visit Mapping Maint. X

X

X

X X

X

X X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X X

X X

X

X

Leadership. The commitment and engagement of top leadership in the supplier organization is crucial. Without top leadership support, the activity will not succeed. Of the suppliers

engaged in QFSP that did not make satisfactory performance, the cause of failure was always the lack of commitment or engagement by the supplier’s top leadership. But leadership commitment is not enough. Leaders must also instill a problem solving culture. It is important for leaders to: Know your performance to your CUSTOMER, daily. Have a clear OWNER of problem solving. Know WHEN to react. Know HOW to reach the improvement target. Verify the EFFECTIVENESS and STANDARDIZE lessons learned. It is the suppliers’ leadership’s responsibility to follow specific actions to ensure that the problem solving process is getting to the true systemic issue and that it is eliminated. Many times getting to the systemic issue is difficult because the people involved attribute the problem to management or someone else. But without identifying and addressing the systemic root cause, the problem can never completely be eliminated—only the symptoms. Once the effectiveness of the correction actions is proven, the lessons learned must be standardized across processes and products to completely eliminate the problem. Conclusions and Recommendations. World-class companies in all industries do not have fewer problems than other companies. They are world-class because they know when and how to react to and solve problems more effectively than others. Some the key points to consider in determining when and how to react to problems include: 1. Understanding the impact to the customer and communicating that impact to all employees, especially the operators on the floor running the processes daily, 2. Knowing the reaction plan when products deviate from requirement, 3. Assuring that standard work exists, people are trained, and it’s being followed, 4. Going to Gemba (actual place of the problem) instead of solving problems from behind your desk, 5. Assuring problems are addressed by cross-functional teams…not just the quality engineer. It is important to remember, QFSP is not a “program of the year.” It is a way of thinking, and if deployed properly, it will make a tremendous difference in your company’s performance and potentially make your company, your customer’s best supplier! To achieve this status your company must embrace the zero defect culture. REFERENCES “Learning to See,” by Mike Rother and John Shook, version 1.2, June 1999. “How Delphi Went Lean,” R. David Nelson, Supply Chain Management Review, November/December 2004 p. 32-37. “How Delphi Helps Suppliers Develop a Quality Focused Culture,” Bill Clark, John Chang, and Dr. Marcus Chao, Supply Chain Management Review, January/February, 2006.