Supplier Auditing Using Six Sigma

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    Hey guys would like to get some ideas here. I am going to be running a project to implement six sigma tools into our current supplier audit. We are using a system at present that is very subjective in nature and can easily allow poor performing suppliers an opporunity to do business with our organization based on their ability to “snow” the auditor. I think that some basic six sigma tools could really help us out here.
    Onsite MSA: A quick Gage R&R can tell us if the supplier’s inspection equipment is accurate enough to accept or reject parts based on the product tolerances. If the supplier does not have this ability an immediate yellow flag.
    Capability Analysis: suppose we randomly sample 30 parts from their existing production process that most closly resembles the parts we will potentially be purchsing and perform a capability analysis on the critical dimensions. From this we can see the process variation, Cpk, Z score, etc. I think the most noted thing about a capability anlysis is the ability to predict an expected ppm level which can be very beneficial in selecting suppliers.
    What other tools could be used during an initial supplier evaluation that would make sense to perform in a day or two to give us a good idea of whether or not we should purchase from this vendor.


    Mr IAM

    I would suggest adding a statistical process control chart to your capability analysis.  Being able to view the proecss behavior over time is very helpful.  I was thrilled as a customer when my suppliers could send me an up-to-date control chart of the process.  This means more to me then a quick snap-shot capability index value.  This shows they are paying attention to the process – not just flying product out the door.
    Good luck! M



    I agree completely. Thanks.
    Anything else guys?



    Ask for their sigma level.



    Check DOE report if the result are in actual production use. Correlation of same measuring equipment. Attribute MSA for Inspector if any.
    You might want to consider the following though it is not SS tool:
    1.0 Data Gathering Methods. Including its control, feed-back system, improvement tracking system, reporting, checking and corrective action tracking. Randomly verify also the SPC since they might try to make it look good only in time of your audit. 
    2.0 Personel’s training and Trainers Training Records. Pick actual people away from the audit point and look for his/her training record.
    My one cent comment



    Dear Gump,
    The ideal situation is to have the same quality initiatives at vendor as you are having; however you are following six-sigma, it will take considerable time for the vendor to learn six-sigma.I suggest the following steps,
    1.Help vendor to make a correct flow diagram as well as correct quality & control plan.
    2.Ask him to make a rejection trend chart to be displayed at a prominent place in his works.
    3.Go for Gauge control.
    4.Teach him simple techniques of finding the root-cause for defect generation.( Shainin techniques such as multi -vari, concentration diagram, component search etc. )
    5.Study the rejection you are facing in your incoming inspection.
    6. Introduce poka-yokes at the critical operations.
    7. Go for SPC after you have achieved something, so that the vendor is motivated to take extra initiative.
    8.Ultimately start six-sigma at his place. Avoid statistical jargons at his place to a minimum extent.
    I hope this helps you.
    With best wishes,
    P.S. – The book ‘ The World Class Quality ‘ by Mr. Keki R. Bhote publishers American Management Association will be very useful guide.



    Evaluating POTENTIAL suppliers is not the same as monitoring existing suppliers, so using “6-sigma tools” has limited opportunity, but you can still use this approach.  For example, potential suppliers don’t have data relative to product they’ve made for you, so they typically present best case examples.  Since they’re not doing business with you yet, most companies are reluctant to let you dig into their process to confirm the data.  PPM, DPMO, scrap rates, sigma levels, etc, are all important if you’re a customer, but what’s presented during an initial assessment may have no bearing on work they’ll do for you down the road.  Take everything at this stage with a grain of salt.
    My recommendation is to follow the DMAIC process.  First, Define what your goals are, and establish the metrics you’ll need to determine effectiveness of your process.  A project charter is a good idea.  It lays out the plan, and gets everyone on the same page.  Decisions should always be based on data, so get some. Develop a scorecard or assessment form with meaningful critera, segmented by areas of need or concern for your company.  A 1-5 Likert scale may work fine, and while you can’t eliminate subjectivity, you can minimize it greatly, while gathering useful data.  If you have multiple auditors, you may want to do some sort of GR&R to validate that your people evaluate suppliers somewhat consistently.  But go back to your needs.  Consider developing a QFD to define what’s important to you and where you need to focus.
    There are numerous ways to assess a supplier further, but always require evidence, and quantify it using your assessment scale.  This is essentially your Measure phase.  For example, rather than relying on sugar-coated control charts the supplier may show you, ask for examples of out-of-control or out-of-spec situations, and how they managed this through their CAPA process.  How and when did they notify the customer?  What problem-solving techniques are used?  What examples of mistake-proofing are used?  Using your assessment scale, you’ll assign values for all these elements, and come up with a score.  You could even go as far as establishing a rough capability.  Depending on your needs, you can look at numerous aspects of the supplier’s business, but stay focused on objective evidence, and quantifying that evidence with a score.  Once you’ve assessed the designated suppliers, consider a prioritization matrix to compare suppliers’ performance, or use some other decision analysis method. 
    Working through DMAIC, you’ll then need to Analyze the supplier’s strengths & weaknesses, and determine the risks of doing business if they fall below an established threshold.  Even if they score well, there are always improvements to be made, so lay out a plan to work with them on this.  Finally, you need to establish some controls around all this.  Supplier scorecards are very helpful when data-driven and contractually enforced.  Even a basic control plan can provide value.
    Good luck!

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