Besterfield: Quality Control, 8 th ed..© 2009 Pearson Education, Upper Saddle River, NJ All rights reserved Supplier Partnership By Engr Mian Khurram Mateen

Besterfield: Quality Control, 8 th ed..© 2009 Pearson Education, Upper Saddle River, NJ All rights reserved On average 60% or more of product or service cost is due to procurement. The supplier should be treated as an part of company team. To satisfy the end user – the customer and supplier have the same goals. Because both have minimum resources so they must work together to reduce cost. Before 1980 the procurements decision is on the basis of low price. But now is the era of just in time. This requires:  Long term relationship with supplier(s)  Good supplier management Supplier Partnership

Besterfield: Quality Control, 8 th ed..© 2009 Pearson Education, Upper Saddle River, NJ All rights reserved Principle’s of Customer & Supplier Partnership by Dr Ishikawa 1. Customer & Supplier are fully Responsible for Control of Quality. 2. Customer & Supplier are Independent of each other. 3. Customer’s must be given full Information about the raw material, semi finished products (or) services required. 4. Clear Contract regarding Quality, Quantity, Price, Delivery Modes, Etc. 5. Supplier is responsible for providing quality that will satisfy the customer and also provide necessary data to the customer 6. Evaluation of Same Quality Standards by Both the Customers & Suppliers

Besterfield: Quality Control, 8 th ed..© 2009 Pearson Education, Upper Saddle River, NJ All rights reserved Principle’s of Customer & Supplier Partnership by Dr Kaoru Ishikawa 7. Both decide a contract that will decide and resolve disputes 8. Exchange Information & Feed Back 9. Bother perform business activities such as procurement, production, inventory etc. with each others consent so that a good relationship is establish 10. Both Customer & Supplier do Business transaction w.r.t. END USER.

Besterfield: Quality Control, 8 th ed..© 2009 Pearson Education, Upper Saddle River, NJ All rights reserved PARTNERING It is a long term commitment two or more organization for achievement of common goal by maximizing the effectiveness of each participant resources. This relationship is based on 1. Trust 2. Dedication to a common goal 3. Understanding of each the expectation of each party Benefits of it  Improved quality  Increased efficiency  Lower cost  Increase opportunity of innovation  Continuous improvements

Besterfield: Quality Control, 8 th ed..© 2009 Pearson Education, Upper Saddle River, NJ All rights reserved PARTNERING There are three elements of partnering  Long term commitment Experience showed that the partnering is not achieved Quickly. So it needs a environment for both parties to know each other. Each party contribute with its strengths to the process. If the strengths are not sufficient then there is need of investment in equipments, personnel etc.  Trust It make the resources and knowledge of each party to be combined to eliminate adverse relationship. It will also reduce control and supervision. Both work on win-win strategy  Shared goals It will set a common direction so that efforts are made for one

Besterfield: Quality Control, 8 th ed..© 2009 Pearson Education, Upper Saddle River, NJ All rights reserved Sourcing There are three types of sourcing  Sole Source of the supplier is only one because of following reasons  Patent – copy right and only one source available  Technical specification – no competitor in market  Raw material location is such as that no other party will supply the product  Product produce by the another organization of same group  Multiple Two or more supplier for a item. Usually three supplier are chosen and divide the portion of supply among them. Main reason of multiple sourcing is develop competition for better quality, pricing and services

Besterfield: Quality Control, 8 th ed..© 2009 Pearson Education, Upper Saddle River, NJ All rights reserved Sourcing  Single A planned decision by the organization to select one supplier when other sources are available. It results in a long term relationship. In this the supplier invest on its facility for improvement. Just in time is the example of this strategy.

Besterfield: Quality Control, 8 th ed..© 2009 Pearson Education, Upper Saddle River, NJ All rights reserved SUPPLIER SELECTION The following three questions need to be answered  How critical the item is  Does the organization has the knowledge to develop it internally or acquire its knowledge  Are specialized supplier available? If not, is the organization willing to develop it Theses question must answered in term of cost, quality, delivery, safety and technical knowledge. Once the decision of out sourcing is made then the supplier is selected on the basis of following 10- points 1. Supplier understand the management philosophy of the company 2. Supplier have a stable management system 3. Supplier maintain high technical standard 4. Supplier must meet the quality specification

Besterfield: Quality Control, 8 th ed..© 2009 Pearson Education, Upper Saddle River, NJ All rights reserved SUPPLIER SELECTION The following three questions need to be answered 5. Supplier have the capability to produce certain production level when need or can develop it 6. Supplier kept the organization information in confidential 7. The price is competitive and delivery is on time 8. The supplier is sincere in implementing the contract provision and will not make any amendment with the mutual agreement 9. Supplier have effective quality system like, ISO/QS Supplier have a record of customer satisfaction and credibility

Besterfield: Quality Control, 8 th ed..© 2009 Pearson Education, Upper Saddle River, NJ All rights reserved SUPPLIER Certification This process start after the supplier shipment of product. ASQ has defined 8- certification criteria 1. Supplier and customer agreed upon specification 2. Supplier have no product related rejection for a certain period like on years 3. Supplier have no non-product related rejection for a stated period of time. Such as wrong count or billing error. 4. Supplier have no negative non-product related incident for a stated period of time like, this is not checked through the inspection but supplier communicated to the customer. Change of address or phone numbers 5. Supplier have fully documented quality system ISO/QS supplier successfully passed onsite evaluation 7. Supplier conduct inspection and testing at it own premises 8. Supplier provide time data and information

Besterfield: Quality Control, 8 th ed..© 2009 Pearson Education, Upper Saddle River, NJ All rights reserved Supplier Rating Customer rate the supplier to  Obtain a overall factual rating of performance to enhance the relationship on the basis of following 1. Quality 2. On Time delivery 3. Service 4. Internal Structure 5. Customer Satisfaction 6. Review Reports

Besterfield: Quality Control, 8 th ed..© 2009 Pearson Education, Upper Saddle River, NJ All rights reserved  Inspection – there are four phases of inspection  100 % inspection  Sample based inspection  Audit- own auditing and only check item no. counting  Identity check- both perform identity check  Training  Team approach  Recognition Relationship Development

Besterfield: Quality Control, 8 th ed..© 2009 Pearson Education, Upper Saddle River, NJ All rights reserved Potential Pitfalls of Partnership  Fear of Unknown Concept  Starting Early  Poor Communication  Impatience  Mistrust  Over dependency  Time & Resources

Besterfield: Quality Control, 8 th ed..© 2009 Pearson Education, Upper Saddle River, NJ All rights reserved THANKYOU