1. IAQG General Assembly San Diego, April 7, 2006
Supply Chain Process Capability & Product Realization Process Strategy Streams
IAQG General Assembly
San Diego, April 7, 2006
Barbara O’Dell
The Boeing Company
IAQG Stream Leader
Supply Chain Process Capability
Bernard Lauras
Airbus
European Sector leader
Product Realisation Process

2. Sub Tier Control as a Source of Risk To Regulators and Customers
No Change
From Montreal
Poor Control of Sub Tiers is viewed as a Risk
Methods used by Suppliers to Control Sub-Tiers are not well understood
Source of Non-Conforming Product
Supplier doesn’t know how to control their (sub-tier) suppliers
Sub Tier system insufficient to detect & prevent non-conformance
Reduced level of interaction with Sub Tiers compared to with suppliers
Part of the reason we perceive risk is that suppliers and subtiers are the source of non-conformance, but in addition, we don’t understand the methods used one or more layers down from us.
One of the reasons this is so is that we lack visibility of the activities deep in the supply chain. If a company, such as Boeing or Airbus, has 100’s of suppliers, and those suppliers have 100’s of suppliers, then the second tier down will have 10,000 to one million suppliers. It’s not possible to have deep visibility of them all
In addition, there is a lack of “transparency” in supplier control methods. In contrast, the international oversight system of other parties has created common terminology and expectations. I know what is happening in Asia because of the common language we use to describe the effort and the means by which the efforts are tracked.
In supplier control, we don’t share such common methods and terminology to describe commonly performed tasks.
As you can see on the right, the existence of common standards could also help benefit some suppliers whose supplier control program is weaker than industry practices
Please note that this work I s a draft document, not yet reviewed by the IAQG team.
Few industry standards and Best Practices published on how to perform excellent supplier control . No common vocabulary or scoring
(Lack of Transparency)
(Lack of Visibility)

3. SCMH provides a framework for organizing and integrating our work
No Change
From Montreal
Stand alone requirements
(9102, 9131, 9103, etc)
9100
Requirements
Supply
Chain
Mgmnt
Handbook
Industry best practices on how to meet requirements
Supplier Mgmnt Life Cycle
Supplier
Selection
Pre Production
Validation
Ongoing
Approval
Change
Mgmnt

4. Supply Chain Process Capability
Name changed from Sub Tier Process Control
No Change
From Montreal
Often, the value stream includes companies operating at many levels, and one standard should be consistently applied
Ideal Stream
Typical Stream
OEM
OEM
First Tier
First Tier
OEM
Sub Tier
Sub Tier
Sub Tier
First Tier

5. & Capability Assessment Verification & Acceptance
SCMH chapters have been renumbered and include Product Realization Activities
3.0 New Product
Introduction
1.0 Supplier Selection
& Capability Assessment
2.0 Requirements
and Flowdown
4.0 Process
Control
5.0 Product
Verification & Acceptance
6.0 Controlling
Non-Conf Product
7.0 Work Transfer
Management
9.0 On going Approval
And Maintenance
8.0 Supply Chain
Mgmnt and
Performance
Measures
10.0 Program
Management
In work by Product Realization Stream
In work by Supply Chain Process Capability Stream

6. For every “chapter” in the Handbook We’ll follow this roadmap
Phase 1: Collect aerospace and other industry best practices, standardize the knowledge & agree on core requirements
Phase 2: Create best practice material first, then mature into a guideline or to an industry standard document (910X standard). Maturity assessment may be developed here. Implementation Process should be defined here (pilot phase as required).
Phase 3: Standardized training provided by industry accepted trainers
Phase 4: Implementation Process. Depending on guideline vs 910X decision, the document may be deployed company by company, or by standardized audit checklist, or by industry certification as part of the ICOP/9104 system. Implementation must include maturity assessment.

7. Supply Chain Process Capability have been tasked Chapters 1 and 2
3.0 New Product
Introduction
1.0 Supplier Selection
& Capability Assessment
2.0 Requirements
and Flowdown
4.0 Process
Control
5.0 Product
Verification & Acceptance
6.0 Controlling
Non-Conf Product
7.0 Work Transfer
Management
9.0 On going Approval
And Maintenance
8.0 Supply Chain
Mgmnt and
Performance
Measures
10.0 Program
Management
In work by Product Realization Stream
In work by Supply Chain Process Capability Stream

8. Chapter 1 - Supplier Selection and Capability Assessment
IAQG SCMH Chapters
Chapter 1 - Supplier Selection and Capability Assessment
Supplier Selection
& Capability assessment
Requirement & Flow down
New Product Introduction
Process Control
Product Verification
and Acceptance
Controlling Non-Conf
product
Work Transfer Management
Supply Chain Mgt and
Performance Measures
On going Approval
& Maintenance
Project Management O
Supplier Selection
& Capability assessment
Requirement & Flow down
New Product Introduction
Process Control
Product Verification
and Acceptance
Controlling Non-Conf
product
Work Transfer Management
Supply Chain Mgt and
Performance Measures
On going Approval
& Maintenance
Project Management O
Supply Chain Processes
Sales Volume & Option Forecasting
Sales Volume & Option Forecasting
Contract requirement flow down
Contract requirement flow down
New product introduction /
New product introduction /LCM
SC design & major Components sourcing
SC design & major Components sourcing
Suppliers sourcing selection & qualification
Suppliers sourcing selection & qualification
Sales & Operation Planning
Sales & Operation Planning
Manage the Supply Chain
Manage the Supply Chain
Master Scheduling & sequencing
Master Scheduling & sequencing
Performance Monitoring and Decision support
Performance Monitoring and Decision support
Planned change management
Planned change management
Supplier Development
Supplier Development
We took the definition of a supply chain:
« That collection of industrial processes which lead to the arrival of the right parts and the right data in the right place at the right time to the right quality standard, through the entire value stream”
We have about 15 processes including the transversal Manage the Supply chain, and we insured all SCMH chapters covers each processes.
Plant, material, skills & capacity planning & Scheduling
Plant, material, skills & capacity planning & Scheduling
Manufacturing
Manufacturing
Post Delivery Support and services
Post Delivery Support
Order Management (internal & external)
Order Management (internal & external)
Inventory planning & optimization
Inventory planning & optimization
Logistic Management
Logistic Management
Non Conformity Management
Non Conformity Management

9. Example Chapter 1 - Supplier Maturity Assessment
per Supply Chain Process
Example
Four levels of maturity (Maturity model CMMI like)
Undefined : No Process, Method, Tools/ No Process, Method, Tools/ and Appropriate Behaviours
Defined
Applied
Optimising: Implemented and optimised, continuous improvement
Four domains assessed:
People & Organisation
Processes
Tools & Data
Performances Metrics
Non Conformity
Non Conformity 1 1 2 2 3 3 4 4
Undefined
Undefined
Defined
Defined
Applied
Applied
Optimizing
Optimizing
Management
Management
People & Organization
People & Organization
No clear Accountability
No clear Accountability
Expert firefighters
Expert firefighters
Clear accountability
Clear accountability
Multifunctional team
Multifunctional team
No Problem solving
No Problem solving
Cross functions
Cross functions
Highly Skilled
Highly Skilled
skills
skills
Highly skilled
Highly skilled
Process
Process
Reactive needs
Reactive needs
Ad hoc firefighting
Ad hoc firefighting
Root cause process in
Root cause process in
Mature process for root
Mature process for root
Customer Stimulus
Customer Stimulus
actions
actions
place
place
cause & preventive
cause & preventive
Process playbooks
Process playbooks
actions
actions
Limited preventive actions
Limited preventive actions
Tools & Data
Tools & Data
Manual : Fax e
Manual : Fax e - -
mail
mail
Multiple Data base
Multiple Data base
Integrated database, clear
Integrated database, clear
Internal & external
Internal & external
Expectation
Supplier
performance
workflows, internal
workflows, internal
collaboration.
collaboration.
Spreadsheet
Spreadsheet
collaboration
collaboration
Real time intelligent
Real time intelligent
workflows
workflows
Performance
Performance
No measurement of
No measurement of
Measuring performance
Measuring performance
Performance drives action
Performance drives action
3+ regular review of
3+ regular review of
Performance
Performance
plans
plans
metrics effectiveness
metrics effectiveness
Metrics
Metrics

10. Supplier Assessment Results
Chapter 1 - Decision making process
Standard Questionnaire and Assessment results independent from the size of company and product/project criticality…
Supplier Assessment Results
Decision to select or not based on risk analysis like 9134 “Supply Chain Risk Management guideline”
(Special action plan if not capable but need to select)
Each Company to apply weighting to each process as appropriate to their Product, Customer, Risks, etc…

11. Deliverables by Seville
Chapter 1 : Supplier Selection & Capability Assessment
Deliverables by Seville
Agree on the definition of the 15 Supply Chain Mgmnt processes
Agree on the maturity matrix concept and finalize its content
Conduct pilot assessments, using the maturity matrix and model, in all sectors
Finalise decision matrix and questionnaire
Actions to be completed later
Validate questionnaire and Maturity Model during on the pilot phase
Publish questionnaire and Maturity Model decision matrices
Issue training package
Identify Requirements,Guideline and Best Practices
Best Practice Sharing:
Deliverables that can be shared across the industry to stimulate voluntary improvements in process performance Common processes, to be widely used at all tier levels
Guideline or Recommended Practice:
This would be a level up from “Best Practice Sharing” and would be more actively promoted to speed up deployment, some companies may insist upon deployment through supply contracts
Standard:
This would be the top level of three and would be reserved for those items that we feel strongly enough about to mandate deployment through Standards

12. Chapter 2: Requirements & Flowdown
Brainstorm of Causes
Affinitize Causes
Customer
Supplier
C & S
Suppliers Produce Non-conforming Product because they do not understand the requirements or do not receive the requirements. WHY?
Customer
Supplier
C & S
Reqts Def
Contr. Rev
Change Mgt

13. 2.0 Requirements and Flowdown
Chapter 2.0 Requirements and Flowdown
2.0 Requirements and Flowdown
2.1 How to clearly identify and communicate requirements throughout the supply chain
2.2 How to generate a shared understanding of the requirements
2.3 How to manage revisions to requirements after initial contract/purchase order release

14. Chapter 2 - Requirements and Flowdown
Deliverables by Seville:
Connect to others doing similar work (Missile Defense Agency, Space Quality Improvement Council) to see if we can combine efforts
Communicate our work to others (AIA, ASQ)
Collect best practices and white papers from aerospace and other industries
Actions to be completed later
Benchmark Medical Device Industry and SEA on Requirements & Flowdown
Publish guidelines/best practices by June 07

16. Product Realization Activities have been tasked Chapters 3, 4 and 7
3.0 New Product
Introduction
1.0 Supplier Selection
& Capability Assessment
2.0 Requirements
and Flowdown
4.0 Process
Control
5.0 Product
Verification & Acceptance
6.0 Controlling
Non-Conf Product
7.0 Work Transfer
Management
9.0 On going Approval
And Maintenance
8.0 Supply Chain
Mgmnt and
Performance
Measures
10.0 Program
Management
In work by Product Realization Stream
In work by Supply Chain Process Capability Stream

17. Chapter 3 – New Product Introduction
No Change
From Montreal
Background:
The Aerospace Industry developed a successful product introduction process based on a 20%-80% outsource ratio and the industry has migrated to a 80%-20% outsource ratio
This change was gradual and a change in the product introduction process was not undertaken
Corrective Action proposed:
Develop a product introduction process that accurately predicts supplier performance at production levels

18. Chapter 3 – New Product Introduction
Status:
Benchmarking performed:
Dell computers
Toyota USA
Knowles (Medical)
Lessons learned and brainstorming have produced Sub-chapters headings
Benchmarking for chapter 7.0 results will be used for chapter 3.0 analysis.

19. Chapter 3 – New product introduction
3.1 Pre-production Process validation (product specific)
3.2 Review of Quality Planning including Key Characteristics
3.3 Product and Process Qualification
3.4 Pre-approval of test methods (where applicable)
3.5 FAI (9102)
3.6 Design Change Requirements
3.7 Product Maturity Assurance

20. Chapter 3 - New product introduction
Deliverables by Seville:
Confirm sub-chapters headings, resolve overlaps with other chapters
Collect best practices from IAQG and other companies
Actions to be completed later
Publish guidelines/best practices by June 07

21. Chapter 4 - Process Control
No Change
From Montreal
9103 (Variation Management of Key Characteristics) not sufficiently and adequately deployed
Value not clearly identified or understood
All functions to be involved, not only Quality
Lack of buy-in
Training required
Need to explain how to apply 9103 based upon supplier & product complexity
Lack of skills

22. Chapter 4 - Process Control
Since Montreal, EAQG has worked on 9103 education package:
Common part (key concepts with IAQG banner) for all companies using the training
Some area to be adapted by each company when training its staff or its suppliers (examples, tools, forms, etc…)
Education package content:
Will focus on value of doing it and risks and/or costs of not doing it
Should take difficulties of doing it into consideration
Work is on going

23. Chapter 4 - Process Control 9103 deployment Constraints
Application of 9103 should be risk oriented (not used if no added value, should focus on the results, not on the tool or the process)
More chance to succeed if convinced of business value than if strict mandate: Improve communication and learn more from supplier experience and constraints
3 ways of flowing 9103 down (deployment drivers) ?
Mandated (high risk product and/or existing key characteristics)
Guideline
Best practices sharing
Mandate from customer
At supplier own initiative or supplier development
Need to create a global culture (prime, suppliers) rather than one way (mandate) => engagement within all levels and functions of the supply chain

24. Chapter 4 - Process Control Further Actions
Measure the effectiveness of 9103 deployment and its benefits on the overall business
Build on lessons learned
See how to define key characteristics
Introduce concept of FAI stage 1 (initial) and stage 2 (confirm capability at ramp up)
Evaluate how to use 9103 results to optimize design for manufacturing

25. Chapter 4 - Process Control Interconnection between several topics
“Global Process Control” brainstorming : We can build from 9103 but shall not limit to it and shall not consider it as the only key factor of success

26. Chapter 4 - Process Control
4.1 Variation management of Key Characteristics (9103)
4.2 Root cause analysis and problem Solving
4.3 Process capability and control
4.4 Design for Manufacturing and Relation with Manufacturing Capability
4.5 Process Change Requirements
4.6 Industrial Capability and Capacity Assessment
4.7 First Article Inspection
4.8 Special Process Control

27. Chapter 4 - Process Control Proposed Short Term Action plan
Deliverables by Seville:
Finalize 9103 education package
Be ready for deployment of the 9103 training
Actions to be completed later
Start to work on Root Cause Analysis and Problem solving
Evaluate the effectiveness of 9103 deployment
Reviewing opportunity for Process Control improvement based on feedback from deployment (industry expectations)
Build on 9103 (evolution of the standard or complementary standards or methodology)

28. Chapter 7 – Work Transfer
Supplier A
Supplier B
Going to talk about whats probably the most visible part of the IAQGs work- its initiatives, particularly the documents it produces
You may be aware of the Standards that the IAQG produces but the IAQG also produces Guidelines
Many of the initiiatives to produce these documents start off as global activities, others start within one of the IAQG sectors and then move to become world wide documents.
Unsuccessful work transfer is a major problem for the industry and we feel it is one of our priorities
We have not standardised process to do it

29. Chapter 7 – Work Transfer
Collected Industry Best Practices (Benchmarking)
Dell computers
Toyota USA
Knowles (Medical)
Standardize Knowledge and Lessons learned
Pre-transition Program Planning
Pre-production meeting(s) – upfront effort
Multidiscipline Team (Agreement: quality, eng., purch.)
Capture Hidden Factory – Last Article audit (product and process)
Receiving Supplier Process Capability & Assessment
Supplier Development – as required
Standardize Knowledge back-up –
Preproduction Meeting
Up front effort w/suppliers, pre-qual, capability
Before suppliers receive work
Multidiscipline Team (qual, eng, purch.)
(Dell) made sure they understood requirements
Work instructions were locked out
Supplier Development
Supplier is accountable for quality and delivery but if they cannot meet expectations then we must assist them before impact. (Dell) development has to happen
Supplier Accountability
Hidden Factory, last article, tooling, equipment,
Technical Data Package Review
Agree on Core Requirements Back-up --
Create chapters as guidelines for Work Transfer Management 7.0 and New Product Link to existing/future standards where possible (i.e. First Article 9102, Process Cert. 9103)
Team presently focusing on defining the “process”.

30. Chapter 7 – Work Transfer
Deliverables in Seville:
Confirm sub-chapters headings
Identify overlaps, existing/needed standards
Collect best practices from IAQG and other companies
Actions to be completed later
Develop a transition process from best practices, ensuring risks are identified and mitigated prior to the work transfer decision and launch
Publish guidelines/best practices by June 07
Agree on Core Requirements Back-up --
Create chapters as guidelines for Work Transfer Management 7.0 and New Product Link to existing/future standards where possible (i.e. First Article 9102, Process Cert. 9103)
Team presently focusing on defining the “process”.

31. Supply Chain Management Handbook Next steps
Finalize Chapter Headings and Sub Chapter titles and content/objectives to eliminate overlaps, improve clarity and integration (June 06)
SAE has provided a “public web space” for our team to communicate with the general public on our progress. We will populate this web space in coordination with the IAQG communications team