supplier partnership (lc-06)

8/3/2019 Supplier Partnership (Lc-06)

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TOTAL QUALITY MANAGEMENT

Supplier Partnership

Lecture 6INSTRUCTOR: A NADEEM SHAREEF


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Total Quality Management( HU4006) 2

Learning Objectives

Introduction

Principles of Customer/SupplierRelations

Partnering

Sourcing

Supplier Selection

Supplier Certification

Supplier Rating


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Learning Objectives

Relationship Development.

Inspection

TrainingTeam approach

Recognition

TQM Exemplary Organisation


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Introduction 1/4

An organisation spends a substantial

portion every sales earned on the

purchase of raw materials, components

and services. This is as much as 60%

of the cost of product/service consist of

purchased goods.

Supplier quality can substantially affect

the overall cost of product or service.


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Introduction 3/4

Customers and suppliers should

have the same goal i.e. to satisfy

the need of end user. The betterthe suppliers quality, the better

the suppliers long term position,

because the customer will havebetter quality.


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Introduction 4/4

Since both the customer and the

supplier have limited resources,

they must work together aspartners to maximise their return

on investment.


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Principles of Customer/Supplier

Relations 1/4

Dr. K Ishikawa has suggested ten

principles to ensure quality products

and services and eliminateunsatisfactory conditions between

the customer and the supplier;

1. Both the customer and supplierare fully responsible for the

control of quality.


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Relations 2/4

2. The customer is responsible for

providing the supplier with clear and

sufficient requirements so that the

supplier can know precisely what to

produce.

3. Both the customer and the supplier should

enter into a nonadversarial contract with

respect to quality, quantity, price, delivery

method and terms of payments.


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Relations 3/4

4. Both the customer and the suppliershould decide the method to evaluate

the quality of product or service to the

satisfaction of both parties.

5. Both the customer and the supplier

should establish in a contract the

method by which they can reach anamicable settlement of any disputes

that may arise.


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Partnering 1/5

Partnering is a long term commitmentbetween two or more organisations for

the purposes of achieving specific

business goals and objectives bymaximising the effectiveness of each

participants resources.

This relationship should be based upontrust, dedication to common goals and

objectives.


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Partnering 2/5

Partnering is a multifaceted relationshiprequiring constant nurturing to achieve

continuous improvement and maximum

benefit.

There are three key elements to a

partnering relationship; Long Term Commitment.

Trust

Shared Vision.


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Partnering 3/5

Long Term Commitment. Long term commitment provides the needed

environment for both parties to work toward

continuous improvement. There must be totalorganisational involvement from CEO to the

workers.

Each party contributes its unique strength to

the processes. When these strengths are not

sufficient, investment in new equipment,

system or personnel are required.


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Partnering 4/5

Trust. Mutual trust forms the basis for a strong

working relationship.

It should be viewed as a business paradigmshift and begins with the purchase contractthat is nonadversarial.

Open and frequent communication avoidsmisdirection and disputes whilestrengthening the relationship.

Both parties becomes mutually motivatedwhen WIN-WIN solution are sought.


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Partnering 5/5

Shared Vision:

Each of the partnering organisations mustunderstand the need to satisfy the finalcustomer.

Shared goals and objectives ensure acommon direction and must be aligned witheach partys mission.

Employees of both parties should think and

act for their common good. Each partner must understand the other

partners business so that equitable decisionsare made.


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Sourcing 1/4

Sourcing refers to a number of

procurement practices, aimed at

finding, evaluating and engagingsuppliers of goods and services.


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Sourcing 2/4

There are three types of sourcing;

Asole source of supply implies thatthe organisation in forced to use

only one supplier. This is due tofactors such as patents, technicalspecifications, raw material location,

only one organisation producingitem. Whether the supplier is willingto work to satisfy the end user.


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Sourcing 3/4

Multiple sourcing is the use of

two or more suppliers for one

item. Usually three suppliers areselected and their portion of the

business is a function of their

performance in term of price,quality and delivery.


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Sourcing 4/4

Single sourcing is a planned decisionby the organisation to select onesupplier for an item when several

sources are available. It results inlarge and long term contacts and apartnering relationship, with

guaranteed future volume, thesupplier can direct its resources toimprove processes.


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Supplier Selection 1/3

Choosing the right supplier involvesmuch more than scanning a series ofprice lists. Your choice will depend on

a wide range of factors such as valuefor money, quality, reliability andservice. How you weigh up the

importance of these different factorswill be based on your businesspriorities and strategy.


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Once the decision has been made tooutsource, then the supplier must beselected.

Following are ten conditions for selectionand evaluation of suppliers.

The supplier understands and appreciate themanagement philosophy of the organisation.

The supplier maintains high technicalstandards and has the capacity of dealing withfuture technological innovations.


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The supplier can provide those rawmaterials and parts required by thepurchaser and those supplied meet the

quality specifications.The supplier has the capability to

produce the amount of productionneeded or can attain that capacity.

The supplier has an effective qualitysystem and improvement programmesuch as ISO?QS 9000.


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Supplier Certification 1/3

After supplier selection and approval,

the next step is the certification

process, which starts after the

supplier begins shipment of product.

Criteria;

The organisation and supplier shall have

agreed upon specifications that are

mutually developed, justifiable and not

ambiguous.


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The supplier shall have no productrelated lot rejection for a significantperiod of time, e.g. One year.

The supplier shall have a fullydocumented quality system. ISO 9000is an excellent model to built a system

even if registration is not the goal.The supplier shall have successfully

passed an on-site system evaluation.


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The supplier must conduct inspections

and tests.

Occasionally it may be necessary todecertify a supplier as a result of a

major problem. It is suggested that a

supplier is allowed one failure beforede-certification.


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Supplier Rating 1/3

The Supplier Rating System (SRS) is

a critical component of our overall

Supplier Relationship Management

strategy as more and more

companies rely on their suppliers to

provide an ever-increasing portion of

the value delivered to customers.


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Supplier Rating 3/3

.Supplier Performance

Level

Supplier Rating Level

Exceptional 98% to 100%

Very Good 95% to 97%

Satisfactory 90% to 94%

Marginal 80% to 89%Unsatisfactory


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Total Quality Management

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Relationship Development 1/4

In all the previous slides of

Partnering, Supplier Selection,

Customer/Supplier relationship and

periodic rating contribute to the

establishment of relationship.


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Additional topics of;

Inspection is to eliminate, substantiallyreduce or automate the inspection

activity.Training: in small organisations many

senior managers have no expertise inquality or ability to train the work force,

so must start training process for theenhancement and better understandingof partnership.


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Team Approach:Customer/Supplier teams areestablished in a number of areas,e.g. production design, processdesign and the quality system. It isa good idea to involve suppliers

when the team is first assembledrather than at the end of itsactivities.


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Recognition: creating incentives forsuppliers is a way to ensure that they remain

committed to a quality improvement strategy.

I

ncentives may be in the form of a preferredsupplier category with its rewards;

It is usually as publication of outstanding

contributions in the Organisations

newsletter.A letter of recommendation that can be

posted on the TQM bulletin board, etc.


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TQM Exemplary Organisation (must

be read by all students)

Questions

?

supplier partnership (lc-06)

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