Posts Tagged ‘supplier audit’
ISO 9001 Helping Select and Manage Your Suppliers?
When you purchase products or services from a supplier, you have two primary considerations:
1. Will the supplier you eventually select provide the best overall value or service which is consistent with your requirements?
2. Does the supplier have the ability to consistently provide the quality desired?
For consideration one – as the customer, you must specify criteria and quality objectives for the product. Through the use of your own quality management systems, you then confirm that delivered product meets your specifications.
For the second consideration – you may want the supplier to have a quality management system of their own to insure consistent controls are in place. How much control? To answer this, you need to consider the following questions:
· What (goods or services) will you be purchasing?
· What significant impact could these products have on the products you make and sell to your customers?
· What are the risks to your business if you experience a major upset as a result of a product non-conformance caused by these products?
· What do you know about the character and past performance of your supplier?
ISO 9001:2008 provides requirements for the purchasing process that your organization can implement, to develop and improve relationships with suppliers. These requirements include:
· Establishment of criteria and quality objectives for products or services you expect to purchase
· And quality management system controls that you require your suppliers to develop to meet your organizational requirements.
Supplier surveillance audits are very advantages when working with a supplier who’s product could have an major impact on your continued success. By periodically auditing these suppliers to your requirements, you will be ensuring that their quality management system continues to meet the needs of your organization. Even with the best of relationships, changes can occur that may cause unforeseen catastrophic results. Keeping your supplier close and monitoring their quality system will strengthen the relationship and reduce the chances of a major upset.
Supplier Quality Management Benefits, Responsibilities
There are benefits to creating strong relationships with suppliers from a customer’s perspective especially if a standalone supplier quality management function exists. Supplier measurement can take place, risk mitigation exercises (both reactive and proactive) can be accomplished and information and improvements can be shared for common gain. A supplier quality management function can create a community for all those involved , Account Managers, Supply chain Consultants, Supplier Performance Managers, in which they can integrate knowledge and deliver profit generating opportunities for both organizations through the exploration of additional, above and beyond current contract business opportunities .
Executive involvement is vital to the success of aligning the relevant strategic players to accomplish objectives and form the basis of building partnerships and ultimately unlocking value for both organizations. The Procurement functions should take the central role in coordinating supplier relationships, at the same time as owning and coordinating the process, authority and technology.
Product Quality Risk And The Supply Chain
Product Quality Risk in a supply chain focuses on the quality problems in the supply chain context, rather in the manufacturing quality context.
Inherent quality problems such as. raw materials, ingredients, production, logistics, and packaging, in any of the supply chain members trigger a domino effect that spread through a multi-tier supply network. For this reason, it is hard for a network member to keep track of who did what, and when, to the final quality of the products. The product that a company sells to the consumer comprises components made by the company and its suppliers. When the product breaks down due to defects in either the company’s component or the supplier’s component, the company will have to bear the consequences.
Thus, Product Quality Risk is part of the supply chain risks. In other words, Product Quality Risk tend to comprise some or all the risk elements, such as operational risk, disruption risk, reputational risk.
For many small business owners this process can be painful and hard to implement. There are many quality management consulting firms available to help ease the pain by providing sound programs that will accomplish your risk management objectives.
Auditing Your Suppliers And Assessing Risk
Supplier audits need to focus on the suppliers and quality management systems that are truly critical to the supply chain, and better utilize available expertise to ensure that performance requirements will be met. Why do we perform supplier audits/? Once we understood that the purpose is to ensure overall success of the supply chain, then an expansion of related audit issues is also required. Supplier quality system audits have contributed to spreading the word about the importance of quality, and the need for a management system that helps keep quality on every business’ agenda. It’s now time to expand the boundaries of our thinking to include other issues, such as risk, that allow a business to grow and prosper or fail.
Companies that do not utilize a strategy for managing supply chain risk may be exposed to potentially negative influences, including impact on procurement, manufacturing and time to market processes in supply chain.
It’s for these reasons that supply chain risk management is now an essential part of a company’s supply chain strategy. It is the only way companies can ensure risks are identified in the entire value chain and mitigated to deliver financial goals.
AS9100 Fast Becoming A Supplier Requirement
The aerospace industry has recognized AS9100 as a means for continually improving quality and on-time delivery within their supply chain. Most of the major aircraft engine manufacturers, such as General Electric’s Aircraft Engine division (GEAE), Boeing, Rolls-Royce Allison and Pratt & Whitney, are requiring their suppliers to be certified to AS9100.
AS9100 certification can be used throughout the entire aerospace supply chain including the design and manufacture of airport and airline operations, replacement parts, supply and maintenance, cargo handling, overhaul and repair depots and flight operations.
The industry is moving towards requiring their suppliers to be AS9100 compliant / certified. By becoming AS9100 compliant / certified, suppliers can gain a competitive advantage and benefit from the process approach and continual improvement that are the foundation of ISO 9001:200* certified QMS.
Currently, the Boeing Company requires all Boeing suppliers to be BQMS (Boeing’s Quality Management System) approved or have a waiver. AS9100 Rev B is a significant part of Boeing’s BQMS requirements.
General Electric Aircraft Engines (GEAE) was one of the first manufacturers to require AS9000 compliance by all of their direct material suppliers. Currently, GEAE is requiring AS9100 certification for all new suppliers, and existing suppliers have a gap audit and a certification audit performed to coincide with their existing surveillance audit schedule.
AS9100 Managing Suppliers
Managing suppliers throughout the aerospace supply chain is a major challenge for the industry. The chain is long, and within the supply base, there are sources that serve many industries. Because the industry is so dependent upon this supply chain, AS9100 includes a number of additional expectations for identifying and maintaining suppliers. Supplier approval is just one step in the process of managing suppliers.
Effectively communicating requirements is very important. The standard lists seven specific areas for consideration. They range from defining engineering requirements to managing test samples and right of access to suppliers’ facilities.
The industry typically relies upon one of three methods for product acceptance. An organization might conduct a receiving inspection, perform the inspection at the supplier’s facility or formally assign product acceptance to the supplier. Procedures for determining the method of supplier control are required, as are the processes used when using these methods.
But no element of supplier control is more important than understanding that a supplier is responsible for managing its suppliers and subtier suppliers. This includes performing special processes that are frequently subcontracted to business consutling firms. The supplier must use customer-approved sources; however, ensuring that the processing is properly performed is the supplier’s responsibility.
A new avenue has opened up in supplier surveillance auditing, which has had the effect of lowering cost and delivering real time results to customers. AS9100 software applications have made it possible to manage the quality requirements for as9100 from your desk top, while lowering the cost of visiting suppliers less frequently. This system is so effective that some registrars are now considering using it for such requirements as document review, corrective and preventive action effectiveness, quality objective review, internal audit effectiveness etc. All of this is done remotely thus lowering travel costs and disruptions to the customer business. Some requirements will always require on site visits, but the amount of time needed to complete a surveillance audit will reduce dramatically.
Auditing The Supplier Selection and Evaluation Process
ISO 9001:2008 says you must select and evaluate your suppliers based on their ability to meet your requirements and evaluate them. There is no set method of doing either of these, but there are a few things that are common. It is important to understand that the size of your organization and the number and type of suppliers drives the form of supplier selection and evaluation. It is the internal auditor’s or external auditor’s responsibility to determine if the method selected is effective and is being followed.
The first step in evaluating the method used to select and evaluate is to determine what the standard actually says. This gives you the requirement by which we, (The auditor’s), will decide on compliance. The standard says that you shall; “evaluate and select suppliers based on their ability to supply products in accordance with the organization’s requirements.” Additionally it states you shall establish; “Criteria for selection, evaluation, and re-evaluation…” And; “Records of the results of evaluations and any necessary actions arising from the evaluation shall be maintained…”
This means that you (the organization) decide on the rules for your suppliers. As auditors we need to look at the criteria given for supplier selection and evaluation. It is important to remember that our job is not necessarily to pass judgment on whether we think the criteria is sufficient. Our job is to determine if those responsible for purchasing are aware of the criteria and are following the plan. We can make recommendations on the intrinsic worth of the criteria, but should limit our conformance decision to whether the standard is adhered to.
The second step is to determine the process used to meet the standard. Supplier selection and evaluation may be part of a single process, or may be two separate processes. The process approach is the best way to accomplish this objective. Meaning you must first determine all of the inputs and outputs of the supplier selection and evaluation processes. This is easily done by looking at how your organization describes their processes in the Quality Manual. Process maps can also provide you with much of the required information.
Quality Management Principle (# 8 Mutually beneficial supplier relationships )
An organization and its suppliers are interdependent and a mutually beneficial relationship enhances the ability of both to create value
Key benefits:
- Increased ability to create value for both parties.
- Flexibility and speed of joint responses to changing market or customer needs and expectations.
- Optimization of costs and resources.
Applying the principles of mutually beneficial supplier relationships typically leads to:
- Establishing relationships that balance short-term gains with long-term considerations.
- Pooling of expertise and resources with partners.
- Identifying and selecting key suppliers.
- Clear and open communication.
- Sharing information and future plans.
- Establishing joint development and improvement activities.
- Inspiring, encouraging and recognizing improvements and achievements by suppliers.
If I New Then What I Know Now
When I first started out some twenty years ago, the communications process for supplier management was somewhat akin to the pony express. You pick up the phone and hope to reach your contact or play phone tag for a few days until you finally made contact. You wrote letters and then waited weeks for a response. You got on a plane and traveled all day to meet for a few hours and travel another day to get back to the office, so you could write more memos to make sure everyone who needed to know the outcome of your trip was informed. Then of course there were the endless meetings which resulted in still more telephone calls, travel, memos, etc..
Supplier quality management was and continues to be a time consuming and costly initiative. Granted the pay back, if done well, far out ways the cost. But what if you could accomplish everything you wanted for half the cost and with half the effort. I personally have been a part of the never ending struggle to rain in my supplier base to keep moving forward to drive cost out and improve the quality of the products and services that I am required to purchase. Unfortunately I found that the programs that we put in place ultimately resulted in increase costs of their own.
Just recently I came across the most wonderful supply chain management software. This software enables you to meet all of your supply chain needs while reducing travel and improving communications real time, both internally and externally. With this software you can conduct quality management audits of your suppliers without leaving your office chair. Corrective and preventive actions are real time with communications to all interested parties at the touch of a computer key board. Evaluating and reevaluating your suppliers becomes an automatic process that lets you stay on top of non-conformances, inspection reports, on time delivery, new product development activities and schedule meeting which included supplier and customer input. What a difference a day makes.
Supplier Quality Management
Due to recent economic, safety and security issues, supplier quality management has emerged as one of the leading business practices in recent years. Today it is imperative for manufacturers to make significant investments in systems and processes to improve supplier quality. For instance, companies in the aerospace, food, and industrial products arena, need to preserve their preferred supplier status to continue to be considered for future business. As a result, they are under pressure to ensure that their products continue to meet or exceed acceptable quality levels and Corrective Action thresholds set by their customers. Therefore, managing their supplier’s quality is mandatory for these companies.
Supplier Auditing is an excellent tool to ensure that suppliers are following the processes and procedures that you agreed to during the selection processes. The supplier audit identifies non-conformances in manufacturing process, shipment process, engineering change process, invoicing process and quality process at the supplier. Once the audit is completed, the supplier and customer jointly identify corrective actions which must be implemented by the supplier within an agreed-upon timeframe. Continued surveillance audits ensure that these corrective actions have been successfully implemented.