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QUALITY AUDIT

PURCHASE PROCESS OF A PUBLIC DEPARTMENT

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F-09-149 AFTAB

SP-09-140 EJAZ

OUR KOALITY TEAM

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Defining Quality Perfection

Consistency

Eliminating Waste

Speed Of Delivery

Compliance With Policies And Procedure

Providing A Good, Usable Product

Doing It Right The First Time

Delighting Or Pleasing Costumers

Total Customer Service And Satisfaction

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Large and Equipment Intensive Organization

Huge Variety of Non Standardized Equipment

High Stake Logistic Support Operations

Annual Budget Worth Billions Rs

Newly Implemented Procurement Management System

(IESS)

Shortfalls Against Basic Quality Dimensions

Introduction

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To carry out Quality Audit of the Purchasing Process of ABC

Public Dept and suggest key improvements for quality

purchase of spares at affordable prices reducing the

administrative & logistic delays and focus on soft issues

after analysis of various shortfalls

Project Statement

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The scope of this case study will be limited to procurement of

vehicle spares within country (local level) by a regional

component of the National Level Organization

Project Scope

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Process Flow

Sources of Procurement

Problems Being Faced

Methodology

Quality Audit and Analysis

Voice of the Stake Holders

Performance Statistics

Input by Various Professionals

Identification of Problem Areas

Core Issues

Recommendations & Conclusion

How to Proceed

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YesStart Demand

on Store

Aval

EndItems Issued

NA Certificate

Demand on Bulk Depot

Purchase Process

Delivery By Vendor & Inspection

AvalItems Issued

Yes

No (Not Aval)

No (Not Aval)

Process Flow

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Sources Of Procurement

Govt Industries

Indigenous Manufacturers

OEM / OPM

Importers

Local Whole Sellers

Shopkeepers

Gen Order Suppliers (90 %)

…….isn’t this alarming ????.isn’t this alarming ????

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Grey Areas

Diversified Equipment Type

Different Suppliers

Variation - Fatal for Quality

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Comprehensiveness of Documentation System

Good Ethical Practices

Flexible System

Fair Play & Justice

Ability to Reach Out Source

Simplicity in System

Effective Vendor Evaluation System

Vendor Pre Qualification

Supplier Relationship

Supplier Satisfaction

Speed of Delivery System

JIT

Price for Money

Quality Indicators

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Quality Consciousness of Vendors Maintainability of Logistic Stock Storage Life Inspection Methods Training of HR Assessment of Life Cycle Guarantee / Warrantee Supply Chain Mgmt Payment Schedule SOPs Availability Empowerment Ease of Demand Process Vendor Data Base Performance Based Vendor

Assessment Vendor Appraisals

Quality Indicators

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Methodology, Quality Audit And Voice Of Stake Holders

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Methodology

Benchmarking (Organization following Best Practices)

Questionnaire

Interviews

Quality Audit

Average of 3 x Comparable Outfits

Comparison With KSB

Identification of Vital Issues

Analysis of Vital Issues; Input of Stakeholders, Professionals

Key Suggestions for Optimum Performance

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Quality Audit

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Quality Audit & Comparison

Ser Category

PUBLIC SECTOR KSB PUMPS

Marks obtained

Quality %Marks

obtainedQuality %

1Documentation and Transparency

17 68% 20 80%

2Practicality, Speed, Effectiveness

9 23% 34 85%

3 Supply Chain Mgmt 7 28% 22 88%

4 Vendor Mgmt 7 16% 29 64%

5 Quality 8 32% 21 84%

6 Cost Effectiveness 4 27% 13 87%

7 Training 5 33% 13 87%

8 Customer Focus 6 30% 17 85%

9 Soft Issues 4 10% 31 78%

    67 27% 200 80%

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Comparison

0102030405060708090

Document Speed Supply Vendor Quality Cost Trg Customer Soft

Public Private

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Voice Of The Stakeholders

• SUPPLIERS

• CUSTOMERS

• EMPLOYEES

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Voice Of The Suppliers

Environment not conducive (Soft Issues)

Uneven allotment of business

Lack of respect in dealings, sitting place,

refreshments

Wastage of time, summon for meager issues

Bureaucratic Culture

Lack of info / specs on Tenders

No proprietary / long term relation

Delayed & unclean payments

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Voice Of Customer

Reactive, Rather Than

Proactive

Waiting Room

Delays

Quality Of Spares / Qos

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Need Adequate Training

Processing Delays

Motivation

Voice Of Employees

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Performance Statistics And Input By Professionals

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Rejection Rate

Month Rejection % of Sample 1

Rejection % of Sample 2

Rejection % of Sample 3 Average %

Sep-07 33 23 19 25Oct-07 23 33 24 27Nov-07 19 32 27 26Dec-07 25 28 29 27Jan-08 25 29 30 28Feb-08 23 28 36 29Mar-08 32 22 31 28Apr-08 26 36 26 29May-08 15 37 29 27Jun-08 33 37 22 31Total 254 305 273 277

Average 25 31 27 28

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Rejection Rates

0

5

10

15

20

25

30

35

Sep-07

Oct-07

Nov-07

Dec-07

Jan-08

Feb-08

Mar-08

Apr-08

May-08

Jun-08

Average %

Average %

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Process DelaysDemand

Serial Prep Time (Days) Time Taken to get NA (Days) Purchase Process Delivery /

Inspection Total Process Time

1 6 47 12 12 77

2 7 51 13 9 80

3 5 49 19 13 86

4 6 41 12 14 73

5 3 43 11 18 75

6 8 5 2 2 17

7 6 6 3 2 17

8 9 49 12 18 88

9 5 32 19 13 69

10 7 47 15 16 85

11 3 49 14 12 78

12 4 41 17 19 81

13 5 43 13 28 89

14 6 44 19 12 81

15 8 25 21 15 69

Total Days 1065

Average Days 71

Average Months 2.4

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Total Process Time

0

20

40

60

80

100

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Total Process Time

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Performance Statistics

• Rejection Rate - 28% (< 15%)

• Timely Delivery - 50% (>85%)

• Accuracy Of Order - 80% (>99%)

• Delays In Processing - 2-3 Months (1

Wk)

• Availability In Depots - 10% (>70%)

• Customer Satisfaction - 50% (>80%)

• Supplier Satisfaction - 50% (>70%)

• Cost Effectiveness - 40% > Than Mkt Price

• Durability/ Quality - 40% (90%)

• Waste/ Dead Inventory - 40% (<15%)

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Input By Professionals• Various Interactive Sessions During QITC Course

• Mr Kamran Moosa, CEO PIQC

• Mr Shafqat Iqbal, Former Dir PNAC

• Brig Iftikhar

• Gen (R) Mian Salimuddin, CASE Faculty

• HoDs Proc & QM KSB

• Dir QM, NESCOM

• Dir QA, AWC

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Identification Of Problem Areas And Core Issues

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Identified Problem Areas

Process Inefficiency

Soft & Ethical Aspects

Bad Vendor Management

Technical & Training Issues

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Process Inefficiency

Dependence On Non Availability Voucher From Depot

Lack Of IT Culture

Untrained Employees

Denial Of Repeat Orders / Proprietary

System Overload (Bulk Depot Non Functional)

Bulk Purchase Of Un Required Items At The End Of Fin Yr (Bar Chart)

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Utilization Trend Of Annual Budget

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5

10

15

20

25

30

35

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Soft / Ethical Aspects Less Accountability (Bad Inventory Management/JIT)

Process Violation; Compromised Price/Quality

No Respect For Suppliers

Non Conducive Environment, Intricate Documentation & Payment Procedures

Diminishing Mutually Beneficial Relationship

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Bad Vendor Management Variance In Price & Quality

Inefficient Tendering Process Without Mention Of Specs

Suppliers Pre-qualification

Old Suppliers Base; General Order Suppliers

No Effort To Reach Out Close To Actual Source

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Technical / Training

Old Vintage, Non Commercial Equipment

Less quality awareness of all stakeholders

Priority to economics only / lowest price

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Key Recommendations

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Recommendations Selection Of Quality Vendors: OEM/OPM/Sole Distributors

Process Simplification & Speed: Remove False Customers,

Inventory Mgmt Through IT

Training: Employees And Vendors

Quality Of Supplier: Less Inspection, Quality Contracts

Purchase Criteria: Quality Instead Of Lowest Price

Reduction Of Waste/ Dead Inventory

Forecasting

No Mandatory Consumption Of Budget

Accountability For Surplus/Dead Inventory

Reward System For On Performance

Customer Focus

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Vendor Management Factors

Selection Of Quality Conscious Vendors

Concept Of Partnership And Trust

Performance Rating And Rewards

Respect For Vendors

Mutually Beneficial Relation

Vendor Relationship Model (Vrm)

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VRMVRM

SPEEDY CLEAN SPEEDY CLEAN PAYMENTSPAYMENTS

SUPPLIER FOCUS

BUSINESS SECURITY

CoQ

TRAINING

INFO & TEAM WORK

RECOGNITION

WIN WIN RELATIO

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Vendor Relationship Model Vendor Relationship Model Vendor Relationship Model Vendor Relationship Model

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CONCLUSION

A reduced variation, simplified processes and creation of an environment of trust and respect between all stakeholders can lead to a long-term and mutually beneficial relation; thereby exponentially improving the quality & speed .

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4343

If You Have Your Sight, You Are Blessed.

If You Have Insight, You Are A Thousand Times

Blessed

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