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Case study on

Metalcraft Supplier Scorecard

Background Company and Industry

Established in 1967 with branches in 27 countries Supplies Automotive parts to Largest Vehicle manufacturers

80% of the sales were recorded in North America territory

Tier 2 suppliers source subcomponents from Tier 3 suppliers, convert into raw materials

Total Manufacturers in industry accounted to around

5000

Large number of firms approx. 5000 in number, but only 100 large scale manufacturers.

The basic supplier chain consisted of 4 levels: the automakers and 3 tiers suppliers.

Metalcraft and Delphi are Tier 1 suppliers.

Biggest problem faced by industry was cost incurred on defectives parts.

Automakers pushed the cost of quality defect down the Supply Chain to various suppliers.

Structure of the Automotive Supply

Chain

OEM Tier1
OEM
Tier1

Tier 2

Structure of the Automotive Supply Chain OEM Tier1 Tier 2 Tier 3

Tier 3

Key Challenges

  • Achieving Zero Defects considering their existence at 84 locations and

volume 1.0 million incoming components per plant per day

  • Managing the cost with their suppliers

  • Evaluating Potential Suppliers on many areas

  • Ranking System Green, Yellow and Red

  • To have a system by which existing infrastructure and facilities

are fully utilized

  • Automakers pushed down the costs of quality defects to suppliers

  • To Evaluate and monitor Suppliers constantly, to improve

quality and on-time delivery in supply chain, developed strict sourcing process and Supplier Scorecard

Sourcing Process

Product Design Engineer has to develop a design and engineering drawing based on the inputs received internally by keeping in control the cost, weight , performance targets etc and approving the sample with

supplier.

-Setting the physical and performance characteristics -Evaluation of above characteristics and the frequency of checking -Checking the incoming parts as per above, on arrival -Periodic checking, whether above is followed

Above details sent to buyer, in order to get it sourced from suppliers.

Buyer’s checking parameters : Landed cost, currency exchange, productivity history, capacity requirement, technical capability, delivery

performance, internal discussion with product engineers.

Control Plan

  • Product Design Engineer was responsible for both Physical and Performance characteristic of the part.

  • The Product Design Engineer and Plant Manufcaturing Engineer determined the process to check and evaluate the parts received.

  • The control plan was prepared and approved before start of

production.

  • Once the production was started the QC dept. implemented the quality check as per Control plan and recorded the results

  • Depending on value of the product the QC was prepared.

Metalcraft’s Supplier Scorecard

Main focus on Quality, Timing and Delivery

CMMS (Corporate Materials Management System

Suppliers rating above 70% are Green, between 50 and 69% were yellow and Below 50% are red.

Quality focused on three key areas Overall quality - Aspects of quality and performance Launch quality rejects Vehicles were tested in the initial stages Defect rates Total scrap, defect parts replaced , to avoid repeat of issues

Timing Suppliers committed delivery dates Certification process PPAP & PSW

Delivery

To avoid penalty clause with buyers

Work overtime if required Impact adding incremental costs

Scorecard KPI’s & Bottlenecks

Buyers

-A Multi-functional program management team comprising purchasing, engineering, quality and planning

Bottlenecks

-Buyer and Supplier staff rotation/changing jobs -Multiple production facilities -Difference in infrastructure setup -Scorecard parameters and current performance of the product vary.

Plant Quality Engineers

-To ensure that parts received into plants are high quality and defect free -1.0 million parts received daily approximately from 200 suppliers

Bottlenecks

- Most of quality problems were discovered on arrival

-Suppliers production process and transit to plant

-Overall comment that scorecard doesn’t have detailed data -Historical Perspective of problems & problem reported by other plants

Scorecard KPI’s & Bottlenecks

Supplier Development (SD) Engineers

Most frequent users of the scorecard

Suppliers

Ensure that their scores remained high and that the scores in system

accurately reflected their performance. Some suppliers believe that the purchasing departments selected the

Vendor that they wanted in the end, regardless the supplier’s score.

Other Users

Some did used but some of them use on causal basis.

Operation of Metalcraft Supplier Scorecard

Inputs :

Electronic orders from EDI Contact Information Quality System

Process :

Calculates PPM & Tradeline

Calculates Suppliers Quality Rating Calculates PSW Slippage

Outputs :

Consolidated Contact Information Quality and Delivery Results by Individual plants Sourcing Recommendation / Green

Quality Reject Process Flowchart

Problem Identified with Supplier Part

Quality Reject Process Flowchart Problem Identified with Supplier Part Plant Quality Engineer Sends QR Notification to

Plant Quality Engineer Sends QR Notification to Supplier via phone/VAX and enters into CMMS

Quality Reject Process Flowchart Problem Identified with Supplier Part Plant Quality Engineer Sends QR Notification to

CMMS transfer QR and parts received information to Metalcraft Supplier Scorecard

Quality Reject Process Flowchart Problem Identified with Supplier Part Plant Quality Engineer Sends QR Notification to

Metalcraft Supplier scorecard calculates PPM, Timing, Delivery and Supplier

Rating.

Management Team

Mark Muller Commodity Purchasing Agent Ellie Smith Quality Supervisor Darrel Bond Product Engineer Mark Lechter Corporate Supplier Development Manager

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