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 Tier 2 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. Buyers 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.

Metalcrafts 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 KPIs & 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 doesnt have detailed data -Historical Perspective of problems & problem reported by other plants

Scorecard KPIs & 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 suppliers 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

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

CMMS transfer QR and parts received information to Metalcraft Supplier Scorecard

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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