OE21 Guideline: 6.1c 

Supplier and Supply-Chain Management

Strategic Objective:

Manage suppliers and supply chain results to maximize value to customers

Strategic Objective:

Select and optimize key suppliers and supply chain to meet requirements

Quality Objective:

Responsibility:

Lead: Operations Focus Team (OFT)  Support: Other focus teams

Strategic Objective:

Approved by: (Name) Chair, Leadership Focus Team (LFT)

Approved: MM-DDD-YY

VALUE ADDED

 

  1. Selects the best key suppliers and supply chains 

  2. Allocates or awards purchase orders/contracts to key suppliers

  3. Measures and manages performance of key suppliers and supply chains

  4. Implements improvement plans for key suppliers and supply chains

 

POLICY          6.0 COMMENTARY

The organization has adopted the Baldrige Framework Item 6.1c Supplier and Supply Chain Management, and 7.1c Supply-Chain Management Results as the internal policy, including the following sub-items:

 

6.1c Supply-Chain Management - The organization manages its suppliers and supply-chain, including: 

 

  • Selecting qualified suppliers to meet operation needs, enhance performance and ensure customer satisfaction;

  • Measuring and evaluation of suppliers performance;

  • Providing feedback to suppliers to help them improve; and

  • Dealing with poorly performing suppliers

 

 

7.1c Supply-Chain Management Results - The organization measures, tracks and improves trends in key measures and indicators (results) of the performance of suppliers and the supply-chain, including contribution to enhancing the organization's performance. Results are compared with competitors and other organizations with similar offerings, customer groups, and market segments.

PROCESS

6.1c Flow Diagram (Figure 6.1c-1 Supplier and Supply-Chain Management)

6.1c Process Chart (Figure 6.1c-2 Supplier and Supply-Chain Management)

Inputs to 6.1c Supplier and Supply-Chain Management

 

 

  • List of key suppliers, what is provided, and contact information

  • List of key partners, what is provided, and contact information

  • Description of current Supplier and Supply-Chain Management systems (if used)

Measurement and Analysis Tools and Techniques

  • Procedures and tools for current Supplier and Supply-Chain Management systems (if used)

Outputs from 6.1c Supplier and Supply-Chain Management

  • Note: The above OE21 Inputs and Output tools are also used for Partner selection and management

  • Outputs from current Supplier and Supply-Chain Management systems (if used)

Case Study

  • Read the 6.1c Case Study

Implementation Instructions

Task 6.1c-1 Review Organization Results Assessment (Supplier/Supply Chain Performance Results) - After conducting the Organization Assessment (OE21 Standard 4.1.), the OFT opens the assessment and reviews results presented in the tab labeled RG07. The scores and comments are used to understand key supplier performance. From these, the OFT creates a task list for the Operations Excellence Action Plan.

Task 6.1c-2 Conduct the Key Supplier Selection Survey - The OFT opens the Key Supplier Selection Survey from the survey program (www.surveymethods.com). The OFT inputs ratings (1-5) and comments into the survey for up to ten key suppliers. The Key Supplier Selection Survey includes ratings and comments for the following:

 

  • Technical Capability: The extent that supplier outputs (products and services) are in alignment with organizational needs, and requirements;

 

  • Strategic Fit: The extent that the supplier is in alignment with the organization's mission, strategic goals, and strategy action plans;

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  • Recommendations and References: The extent that the supplier has been vetted, using recommendations/references from reputable organizations or key personnel;

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  • Quality: The extent that the supplier meets the organization's quality requirements.

  • Price: The extent that supplier prices are stable, competitive and in alignment with the organization's budgeted cost requirements;

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  • Delivery or Availability: The extent that supplier delivery or availability of products or services meet the organization's schedule or turnaround requirements; and

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  • Risk: The extent that supplier management and financial performance are low risks, reliable and sustainable over the long term.

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  • OFT 6.1c Key Partner Selection Assessment (survey)

 

Task 6.1c-3 Input data and analyze Key Supplier Selection Matrix. From the shared CI-Toolkit folder, open the Key Supplier Selection Matrix. The OFT exports the Key Supplier Selection survey data and imports it into the Key Supplier Selection Matrix spreadsheet. As soon as the survey data are imported, the Key Supplier Selection Matrix calculates the data used for the selection of the key suppliers. Figure 6.1c-3 is an example of a Key Supplier Selection Matrix with data inputs.

 

  • OFT_6.1c_Key_Supplier_Selection_Matrix (.xlsx)

 

Figure 6.1c-3 Key Supplier Selection Matrix (example)

DECISION: The OFT uses the Key Supplier Selection Matrix as a guideline for selecting the top key suppliers and evaluating the remaining suppliers. The OFT and LFT may then decide to eliminate the suppliers that are at or near the bottom of the Score in the Selection Matrix.

  • PROGRESS: You have reached Milestone 1 (good work). Input the status [6%] on the organization's OE21 Intranet Main page alongside the title of this standard.

Task 6.1c-4 Conduct the Key Supplier Performance Survey - The OFT opens the Key Supplier Performance Survey from the survey program (www.surveymethods.com). The OFT inputs ratings (1-5) and comments into the survey for up to ten key suppliers. The Key Supplier Performance Survey includes ratings and comments for the following:

 

  • Availability: To what extent is the partner or supplier available, when requested and needed by our organization?

 

  • Budgeted Cost: To what extent are the partner or supplier costs incurred within, or supportive of our budgets allocated for their program outputs or work performed?

 

  • Cycle Time or Schedule: To what extent the partner or supplier program or work performance contributions completed as scheduled?

 

  • Satisfaction: To what extent is the partner or supplier program or work outputs and communications satisfactory to those within our organization and by our customers who may benefit from these programs or work outputs?

 

  • Quality: To what extent is the partner or supplier program or work outputs deemed as free of defects, rework, waste or other quality problems?

 

  • Workload: To what extent is the partner or supplier Program or work outputs in full support of our organization program workload, or output/production plans?

 

  • Innovation: To what extent are the partner or supplier contributions or suggested ideas submitted and aimed at improving program outputs, outcomes, and customer satisfaction?

 

  • OFT 6.1c Key Supplier Performance Assessment (survey)

 

Task 6.1c-5 Input data and analyze Key Supplier Performance Matrix - From the shared CI-Toolkit folder, open the Key Supplier Performance Matrix. The OFT exports the Key Supplier Performance survey data and imports it into the Key Supplier Performance Matrix spreadsheet. As soon as the survey data are imported, the Key Supplier Performance Matrix calculates the data used for the selection of the key suppliers. Figure 6.1c-4 is an example of Key Supplier Performance Matrix with data inputs.

 

  • OFT_6.1c_Key_Supplier_Performance_Matrix (.xlsx)

 

Figure 6.1c-4 Key Supplier Performance Matrix (example)

Note 1: The example Key Supplier Performance Matrix displays the following:

  • Requirements for Performance

  • Adjustable weights assigned to each question

  • Titles of suppliers

  • Ratings (1-5) imported from surveymethods.com

  • Individual supplier scores

  • The Average of all total ratings

  • A Score in percent calculated as (Average Rating/Max Rating)

 

Note 2: The longer-term trend of Scores in % vs. a goal % (e.g., 95%) are useful metrics to track in a Performance Measurement System (Task 7.4-4).

DECISION: The OFT uses the Key Supplier Performance Matrix as a guideline for evaluating the key suppliers. The OFT and LFT may then decide to eliminate the suppliers that are at or near the bottom of the Score in the Selection Matrix. The matrix scores may also be used as an indicator for supplier recognition, awards or award-fee contracts.

Task 6.1c-6 Design and Document the Supply Chain System (if applicable). The OFT uses the ACI-Process Designer tool to help design a supply chain system (where applicable) and to determine the types and candidates for the key suppliers in the supply chain.

 

  • OFT_6.1a_Process_Designer (.xlsx)

 

Where appropriate, the Supply Chain System is documented using the CFT 3.2 Product Service Requirements Specifications as a general format.

 

NOTE: The requirements for a typical Supply Chain commonly include:

 

  1. Capabilities versus key supplier requirements specifications

  2. Price versus competitive prices and requirements (short, long-term, life-cycle cost projections)

  3. Product quality versus key supplier product specifications

  4. Service quality versus key supplier service specifications

  5. Support capabilities versus product/service support requirements

  6. Delivery performance versus delivery requirements (current and projected)

  7. Rapid response capability to create, adapt or improve anticipated products or services

  8. Core competencies that keep supplier competitive, sustained and of high value

  9. Communications and Transaction Interactions – that build strong organizational relationships

10. Supply Chain Performance – ability to manage and improve inputs and outputs in the supply chain, using excellent processes and practices, including inventory, order-handling, delivery, process improvement, end-user relationships and satisfaction, and cost reduction practices

 

  • PROGRESS: You have reached Milestone 2 (good work). Input the status [53%] on the organization's OE21 Intranet Main page alongside the title of this standard.

​​​Task 6.1c-7 Document the Supply Chain Management System - The OFT follows instructions 1 through 12 to document and implement the Supply Chain Management system. The Inputs, Outputs, and Guidelines for Supply Chain Management normally include:

 

  1. Input: Customer and Market requirements for SCM

  2. Input: Supply Chain Management software system

  3. Input: Inventory requirements

  4. Input: Production and Inventory Facilities requirements

  5. Input: Transportation requirements

  6. Input: Customer satisfaction with products and services delivered

  7. Output: Customer and Market requirements

  8. Output: Inventory requirements

  9. Output: Production requirements

  10. Output: Transportation requirements

  11. Output: Customer Satisfaction Assessment results and action plans

  12. Output: Customer view of the value of delivered products and services

 

  • Guideline 1: If the organization is or will be the top tier "owner" of the supply chain, then the implementation of an off-the-shelf SCM System is highly recommended

 

  • Guideline 2: If the organization is or will be a supplier in a larger SCM system, then the suppliers in the chain may have to meet the SCM owner's supply chain requirements for production, inventory, distribution, and information.

  • PROGRESS: You have reached Milestone 3 (good work). Input the status [96%] on the organization's OE21 Intranet Main page alongside the title of this standard.

Task 6.1c-8 Update Operations Excellence Action Plan - The Operations Excellence Action Plan includes tasks aimed at improving a supplier and supply-chain performance and results. The Operations Focus Team (OFT) adds tasks, responsibilities and other information necessary to implement new initiatives as a result of this Supplier and Supply-Chain Standard.

 

  • OFT_6.1a_Operations_Excellence_Action_Plan (.xlsx) 

 

Task 6.1c-9 Input Supplier and Supply-Chain Metrics into PMS - Unless the organization has its Performance Management System, the OFT uses the following tool:

 

  • OFT_7.1_PMS_Operations_Excellence_Metrics (.xlsx) 

 

As a minimum, the OFT selects, inputs and tracks the composite Assessment scores for key suppliers, as appropriate, including:

 

  • Key Suppliers Performance Score. The key supplier's performance score is the total score for 1 to 10 suppliers; computed on the Key Suppliers Performance Matrix spreadsheet. 

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  • Organization satisfaction with supplier outputs (1-5 rating)

 

  • Percent (%) of supplier rework or defect-correcting hours

 

Normally these measures are updated quarterly, or when changes require updates.

 

Task 6.1c-10 Use PMS to Review Suppliers and Supply Chain Management - On a quarterly basis, the OFT with support from all focus teams uses the Performance Measurement System to monitor trends of process management initiatives versus goals. Usually, these are updated quarterly, or when changes in conditions require updates. The OFT appropriate action to drive measures towards their goals. When goals are met, the OFT may raise the goals higher, as appropriate. The OFT takes timely and appropriate action to drive measures towards the goals. When performance goals are met, the OFT may raise the goals (targets) higher. See OE21 4.1 Task 4.1.5 for guidance.

 

Figure 6.1c-5 is an example Trend Chart for Standard 6.1c Supplier Results.

PROGRESS: The status (Milestone 4 = 100%) is input on the organization's OE21 Intranet Main page alongside the title of this standard.

  • PROGRESS: You have reached Milestone 4 (congratulations). Input the status [100%] on the organization's OE21 Intranet Main page alongside the title of this standard.

 

 

Figure 6.1c-5 Example Trend Chart for Standard 6.1c Supplier Results