manage supplier risk - drive superior supplier quality outcomes (ceb webinar)
TRANSCRIPT
CEB Quality Leadership Council
Drive Superior Supplier Quality Outcomes
19 May 2015
A Framework for Member Conversations
The mission of The Corporate Executive Board Company (CEB) and its affiliates is to unlock the potential of organizations and leaders by advancing the science and practice of management. When we bring leaders together, it is crucial that our discussions neither restrict competition nor improperly share inside information. All other conversations are welcomed and encouraged.
Confidentiality and Intellectual Property
These materials have been prepared by CEB for the exclusive and individual use of our member companies. These materials contain valuable confidential and proprietary information belonging to CEB, and they may not be shared with any third party (including independent contractors and consultants) without the prior approval of CEB. CEB retains any and all intellectual property rights in these materials and requires retention of the copyright mark on all pages reproduced.
Legal Caveat
CEB is not able to guarantee the accuracy of the information or analysis contained in these materials. Furthermore, CEB is not engaged in rendering legal, accounting, or any other professional services. CEB specifically disclaims liability for any damages, claims, or losses that may arise from a) any errors or omissions in these materials, whether caused by CEB or its sources, or b) reliance upon any recommendation made by CEB.
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ROADMAP FOR THE PRESENTATION
Measure Supplier PerformanceIntroduction Improve Suppliers Next Steps and Q&A
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Revenue Expectations Cost Pressure0%
50%
100%
2%6%10%
15%
41%
19%
7%
1%4%8%
20%
43%
18%
6%
DERF 13-4684
Catalog # FLC6674813SYN
Title BRF: Bus Barometer Q3 Ex Summary
INTENSE PRESSURES DESPITE SUPPLY RISKS
Business Executive Expectations of Revenue Growth and Cost Pressure in Next 12 MonthsQ4 2014 Business Barometer Survey
Business Executive Expectations of Supply Chain Disruptions in Next 12 MonthsQ4 2014 Business Barometer Survey
Much Higher
Higher
Somewhat Higher
No Change
Somewhat Lower
Lower
Much Lower
Decreased
Same
Increased
Supply Chain Disruption0%
50%
100%
35%
56%
9%
n = 332.Source: CEB 2014 Business Barometer Survey.
n = 1,938.Source: CEB 2014 Business Barometer Survey.
Companies expect to fuel growth through increased efficiencies as cost pressures remain.
■ However, few expect supply chain risks to change over the next 12 months.
■ This pressure to perform, while containing costs, can lead to an unintentional oversight of key risk assessment and reduction strategies.
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DERF 13-5292
Catalog # QUAL7015613SYN
Title HO: Santa Clara 10 02 Sr Advise
INSUFFICIENT SUPPLIER OVERSIGHT INCREASES COSTS
Estimated Costs Incurred by Accelerator Pedal and Floor Mat RecallsToyota Motor Corporation, in Billions of US Dollars
Product recall and repair costs
Estimated lost sales. The recall is estimated to have dented demand by 10,000 vehicles.
National Highway Traffic Safety Administration fines for not notifying the agency in a timely manner of problems.
Settlement costs related to complaints of unintended acceleration.
$1.1 $0.8 $0.08 $1.10
Source: Tomoko A. Hosaka, “Toyota Recalls May Cost Automaker $5.5 Billion.” NBCNews.com, 10 March 2013, www.nbcnews.com/id/35893905/ns/business-autos/t/toyota-recalls-may-cost-automaker-billion; Mike Ramsey, “Toyota in $5.5 Billion Gas Pedal Settlement,” The Wallstreet Journal, 27 December 2013, https://online.wsj.com/article/SB10001424127887324669104578203440990704994.html.
Insufficient supplier oversight has overt costs that impact profitability.
■ Toyota’s 2009 recalls for accelerator pedals and floor mats cost the company an estimated $3 billion.
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BUILD SUPPLIER QUALITY MANAGEMENT CAPABILITIES
Supplier Quality Management Maturity Curve
■ Led by Procurement
■ Ad hoc program
■ Led by Quality ■ Introduces supplier self-assessments
■ Uses on-site audits occasionally
■ Limits supplier development
■ Uses standard qualification and auditing process
■ Establishes standard criteria to identify supplier performance issues
■ Prioritizes supplier development activities
■ Measures supplier performance
■ Uses supplier risk profiles
■ Audits for strategic management criteria
■ Develops suppliers on strategic activities
■ Establishes a shared risk prioritization framework with procurement
■ Integrates activities into corporate risk and audit programs
■ Assesses and audits for culture and corporate management practices
■ Uses supplier performance to inform business continuity planning and customer experience risk assessments
Basic Emerging Intermediate Advanced World-Class
Source: CEB analysis.
DERF 13-5878
Catalog # QUAL7384013SYN
Title ST: AandE Supplier Risk
Quality organizations move through five levels of maturity as they strive for world-class supplier quality management.
■ Supplier quality management often begins as a procurement-led activity, but at world-class companies it eventually integrates with other assurance activities related to corporate risk.
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Measure Supplier PerformanceIntroduction Improve Suppliers Next Steps and Q&A
ROADMAP FOR THE PRESENTATION
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THE CURRENT STATE OF SUPPLIER PERFORMANCE MEASUREMENT
“Measure Supplier Performance” Importance Versus Maturity ScoreAverage Score
Quality executives recognize the importance of measuring supplier performance, but maturity lags.
■ Measure Supplier Performance: Approaches used to measure the performance of existing suppliers.
Level 1 Level 2 Level 3 Level 4 Level 5
Quality measures supplier performance locally according to incoming inspections and quality issues.
Quality measures supplier performance locally according to their ability to consistently deliver products that meet product specifications.
Quality uses a single consistent framework for measuring supplier performance to assess a supplier’s ability to meet several operational expectations.
Quality provides supplier performance inputs to an integrated supplier scorecard that is used globally to track and compare supplier performance across all elements of the relationship.
Supplier performance reports are integrated into corporate risk reports and inform business continuity planning and customer loyalty risk assessments.
n = 24.Source: CEB Quality 2014 Functional Maturity Diagnostic.
Importance Maturity
3.38
2.55
Very Important
Project # xxxxxx
Catalog # PSC8151514SYN
5.0
4.0
3.0
2.0
1.0
0.0
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INTEGRATED SCORECARD DEVELOPMENT BEST PRACTICES
Principles Benefits
Involve internal business partners before developing scorecard.
Demonstrates how scorecard focuses on elements business partners care about (i.e., metrics beyond quality).
Create category-based scorecards.Enables analysis of similar suppliers in an apples-to-apples fashion.
Focus on the “critical few” KPIs (approximately three to five per metric).
Maintains focus on the most important drivers of supplier performance.
Select KPIs that are within the organization’s control.
Measures outcomes that can be influenced by the organization and the supplier.
Use a mix of both quantitative and qualitative KPIs.Contributes to a fact-based scorecard while allowing for day-to-day user perception.
Incorporate existing KPIs and/or SLAs where appropriate.
Encourages adherence to existing contract terms and conditions.
Automate data collection, aggregation, and reporting.
Creates a scalable performance management process.
Source: CEB analysis.
Project # xxxxxx
Catalog # PSC8151514SYN
Use a standardized supplier scorecard effectively manage suppliers.
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DEVELOP SCORECARD WITH BUSINESS PARTNER INPUT
Participants
■ Share opinions
■ Help determine criteria for supplier key performance indicators
Administrator
Organizes the meetings
Takes notes and distributes to all participants
Facilitator
Creates meeting agenda
Keeps participants focused on meeting goals
Drives decision making process
Sponsor
Ensures proper people attend the workshop
Ensures performance criteria meet overarching business objectives
Source: CEB analysis.
Source: CEB analysis.
Project # xxxxxx
Catalog # PSC8151514SYN
Ask probing questions to surface business partners’ performance expectations for a category of suppliers, such as:
■ What equates to satisfactory performance for suppliers in this category? ■ If we hired a new supplier today, how could they make an immediate positive impact? What defines a negative impact?
■ Are there any existing measurements you are tracking that define supplier success in this category (i.e., SLAs, other pre-defined expectations)?
■ What causes you heartache with suppliers in this category? ■ What aspects of your supplier interactions should be measured in a scorecard? ■ What do high performing suppliers in this category do that lower performing suppliers don’t? ■ When you come across situations where a supplier can improve, what typically causes you to think that?
Use a workshop to get business partner input to scorecard development.
■ Include both Quality staff and business partners with knowledge of the supplier relationships.
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SCORECARD STRUCTURE: METRICSQuality provides inputs to a standard, integrated supplier scorecard.
■ The sample scorecard uses six standard metrics designed to answer the following questions.
■ Cost: Is the expected value being received?
■ Delivery and Support: How reliable is the supplier? Do they meet established time frames?
■ Flexibility and Ease of Doing Business: How “well run” is the supplier? Is billing accurate?
■ Quality: Does product and service meet expectations?
■ Partnership: Is the supplier proactive? Do they provide strategic guidance?
■ Risk and Compliance: Does the supplier mitigate risk? Do they comply with company standards?
Metric Metric Weight Percentage KPI KPI Measurement
Cost 30%
Price Competitiveness Ranking compared to competitors
Discounts and Value-AddSupplier proactively identifies volume discounts and other price-reducing options
Transparency in Negotiations Provides transparency into its cost breakdowns
Delivery and
Support25%
Problem ResolutionSupplier is willing to take ownership of day-to-day issues and problems
On-Time Delivery Degree to which hardware orders are delivered on time
Service Dependability Degree to which hardware service calls are completed on time
Order Accuracy Degree to which supplier fills orders accurately
Flexibility and Ease of Doing Business
10%
Invoice Accuracy Degree to which supplier provides error-free invoices
Invoice Timeliness Invoices are provided in a timely manner
Account Management Responsiveness
Supplier’s account management team quickly responds to requests
Usefulness of ReportingReports contain clear, concise, and actionable information including performance, financial performance data, or trend information as appropriate
Order ModificationsSupplier is able to accommodate order changes without significant impact from delays
Quality 20%
Quality of Product Quality of product against requirements
Mean Time to Repair (MTTR) MTTR statistics against requirements
Reliability Mean time between failures against expectations
Warranty/Maintenance Number of warranty claims and defects
Resource Quality Ability of resources to install and/or repair hardware based on contractual obligations
Partnership 10%
Provision of Innovative Solutions Proactive provision of valuable and innovative solutions
Business AlignmentSupplier’s recommendations reflect their understanding of our business objectives
Technology Supplier uses leading-edge technology in its products
Risk and Compliance
5%Product Safety Products function in accordance with industry safety standards
Business Alignment Supplier supports our diversity goals
Source: CEB analysis.
Project # xxxxxx
Catalog # PSC8151514SYN
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MetricMetric Weight
PercentageKPI KPI Measurement
Quality 20%
Quality of Product Quality of product against requirements
Mean Time to Repair (MTTR) MTTR statistics against requirements
ReliabilityMean time between failures against expectations
Warranty/Maintenance Number of warranty claims/defects
Resource QualityAbility of resources to install and/or repair hardware based on contractual obligations
SCORECARD STRUCTURE: KEY PERFORMANCE INDICATORS (KPIs)
KPI Evaluation Criteria
If a KPI is effective, you should be able to answer “yes” to many of the following questions:
■ Does it align with business objectives?
■ Is it actionable?
■ Is it quantitative and objective?
■ Is it contractual?
■ Is it well defined, including rating system?
■ Is it controllable?
■ Will it drive desired behavior?
■ Is reliable data reasonably efficient to obtain?
Source: CEB analysis.
Project # xxxxxx
Catalog # PSC8151514SYN
Identify three to five critical few KPIs per metric.
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MetricMetric Weight
PercentageKPI KPI Measurement
Quality 20%
Quality of Product Quality of product against requirements
Mean Time to Repair (MTTR) MTTR statistics against requirements
ReliabilityMean time between failures against expectations
Warranty/Maintenance Number of warranty claims/defects
Resource QualityAbility of resources to install and/or repair hardware based on contractual obligations
SCORECARD STRUCTURE: KPI MEASUREMENTS
KPI Measurement Considerations
Consider the following questions when selecting KPI measurements:
■ What am I trying to measure?
■ Who can provide this data?
■ How often does the data change?
■ Who or what is the data source?
Source: CEB analysis.
Project # xxxxxx
Catalog # PSC8151514SYN
Define standard KPI measurement criteria for clarity across the organization.
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PANELIST
Simone SilvaDirector of Quality North AmericaWhirlpool Corporation
Simone Silva is currently the Director of Quality for Whirlpool in North America. Simone is responsible for the definition of the strategy for supplier development in North America and its execution, leading a team of approximately 60 people working with 1400 suppliers and supporting the 12 plants of Whirlpool in the US and in Mexico.
Simone has over 18 years of experience in Quality and Service, 11 years in Automotive and 7 years at Whirlpool Corporation, having had important international assignments in China, Germany and Mexico.
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SUPPLIER QUALITY RISK RATING DEFINITION AND APPLICATION
Before
■ No standardized quality metric across different regions
■ All available metrics were single focused, PPM, A-Defect, field, warranty cost
■ Multiple KPIs used by different stakeholders to assess supplier quality
■ No assessment of supplier competencies to support quality
■ As a result quality not consistently considered as a factor in business decisions
After
■ Balanced criteria for supplier quality assessment composed by performance and competence metrics
■ Stakeholder alignment on single criteria
■ Standardized criteria used to assess global suppliers in different marketing regions
■ Supplier risk rating used to prioritize training and supplier development initiatives
■ Supplier risk rating used as the single source of quality input for supplier selection
February March April May June July August
Supplier Risk Rating—Definition/Alignment
Execution—Use of Risk Rating (New Launches and Existing Products)
SDE PDPs SDE On-Boarding Supplier Training
Whirlpool Quality VisionUndisputed Quality Leader: Recognizably the Best, and Differentiated Versus Competition
Global Strategic Sourcing MissionQuality Parts and Services, Sourced and Delivered on Time, from theRight Supplier, at the Right Cost
Source: Whirlpool Corporation.
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THE TOOL—SUPPLIER QUALITY RISK RATING
■ Assessment performed by the SDE responsible for the Commodity on the corresponding market region
■ Criteria for scoring defined for each individual metric
■ Hard metrics from the corporate data systems, SAP, ONTRAC
■ Cross-functional collaboration encouraged for the competence assessment
■ Risk rating available to all functions interacting with suppliers on a web-based system
Source: Whirlpool Corporation.
Scoring for Associated Risk
Risk Scoring Range
Low RiskTotal score between 80 to 100 points is considered Low Risk
Medium RiskTotal score between 60 to 79 points
is considered Medium Risk
High RiskTotal score below 60 points is
considered High Risk
70 points of scoring for associated Risk
30 points of scoring for associated Risk
SUPPLIER PERFORMANCE SUPPLIER CAPABILITYQUALITY RISK ASSESSMENT
Contribution to Total Regional
PPM
Total Regional CAL Occurrence
Sir/Field Failures Last 12
MonthsPPM Trend CAL Trend 8D
W-PPAP FPY
Process FMEA
FSARisk
ValueRisk
9 0.03% 7 3 12 N 0 11,299 6 5 9 3 4 2 52High Risk
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QUALITY RISK SCORING
Supplier Performance
RiskContribution to TOT
Regional PPMTOT Regional CAL
OccurrencesSIR/Field Failures
Last 12 MonthsPPM Trend CAL Trend
Contribution to PPM <.1% and PPM <150:
PPM 0 = 10 pts
PPM <.05% = 9 pts
PPM .05–.1% = 8 pts
CAL<1 Occurrences
CAL 0 = 10 pts
CAL 1 = 8 pts
No (FF) Field Failures in the last 12 month:
0 Field Failures and 0 CAL = 14 pts
0 Field Failures and CAL>0 = 12 pts
Supplier PPM <150
Trends down on 6 and 3 months rolling PPM with >40% imp = 18 pts
Trends down on 6 and 3 months rolling PPM with >30% imp = 16 pts
Trends down on 6 and 3 months rolling PPM with >20% imp = 14 pts
Suppliers under 50 PPM automatically get full 18 points
Trends down on 6 and 3 months rolling with >40% imp = 18 pts
Trends down on 6 and 3 months rolling with >30% imp = 16 pts
Trends down on 6 and 3 months rolling with >20% imp = 14 pts
Suppliers with 1 or less CAL automatically get full 18 points
Contribution to PPM <..4% and PPM <500:
PPM .11–.2% = 7 pts
PPM .21–.4% = 6 pts
CAL <6 Occurrences
CAL 2–3 = 7 pts
CAL 4–6 = 6 pts
Field failures (FF) in last 12 month with minimal effect to customer due to timely and robust countermeasures
(10 pts)
Supplier PPM <500
Trends down on 6 and 3 months rolling PPM with >10% imp = 12 pts
Trends down on 6 and 3 months rolling PPM with <10% imp = 11 pts
PPM with 0 imp = 10 pts
Suppliers 150–200 PPM Automatically get full 12 Points
Trends down on 6 and 3 months rolling CAL with >10% imp =
12 pts
Trends down on 6 and 3 months rolling CAL with <10% imp =
11 pts
CAL with 0 imp = 10 pts
Suppliers with 2–3 CAL automatically get full 12 Points
Contribution to PPM >.4% and PPM >500:
PPM .41–.5 = 5 pts
PPM .51–.6% = 4 pts
PPM .61–.8% = 3 pts
PPM .81–1% = 2 pts
PPM 1.01–1.5% = 1 pts
PPM>1.5% = 0 pts
Contribution to CAL >6 Occurrences
CAL 7 = 5 pts
CAL 8–10 = 4 pts
CAL 11–12 = 3 pts
CAL 13 = 2 pts
CAL 14–15 = 1 pts
CAL> 15 = 0 pts
Field Failures (FF) in the last 12 month with significant customer impact:
Field Failures with medium customer impact and support cooperation = 8 pts
Field Failures with high customer impact and support cooperation = 6 pts
Multiple part families with Field Failures from supplier = 4 pts
Fail Failures with medium customer impact and poor support cooperation = 2 pts
Field Failures with high impact on customer and poor support cooperation = 0 pts
Supplier PPM >500
PPM Increasing <5% = 8 pts
PPM Increasing <10% = 6 pts
PPM Increasing <15% = 4 pts
PPM Increasing <20% = 2 pts
PPM Increasing >20% = 0 pts
PPM >1000 is automatically 0 pts
Supplier CAL >6 CAL
CAL Increasing <5% = 8 pts
CAL Increasing <10% = 6 pts
CAL Increasing <15% = 4 pts
CAL Increasing <20% = 2 pts
CAL Increasing >20% = 0 pts
CAL>15 is automatically 0 pts
Contrib 10 pts 10 pts 14 pts 18 pts 18 pts
70 points of scoring for associated risk based on performance.
Source: Whirlpool Corporation.
Note: These are guidelines—SDEs still need to use critical thought.
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QUALITY RISK SCORING
Supplier Capabilities
RiskProblem Solving
(8D)Perfect Launch
(PPAP/FPY)Process Control(Process FMEA)
Continuous Improvement(Focus Supplier)
Use of proper tools with all issue closure less than 30 days and no repeat issues
(9–12 Points)
Above 90% FPY on PPAP submissions and no issues in first 90 days
(5–6 Points)
Process FMEA present with active RPN reduction activities and robust control plans
(5–6 Points)
Not on focus supplier with good quality performance
(5–6 Points)
Use of proper tools with average closure less than 30 days with minimal repeat issues
(7–8 Points)
70–89% FPY on PPAP submissions with minor issues in first 90 days and prompt reaction
(4 Points)
Process FMEA present with active RPN reduction activities and robust control plans
(5–6 Points)
Quality trends indicate lack of continuous improvement
(3–4 Points)
Lack of use of proper tools with average closure greater than 30 days and numerous
repeats
(0–6 Points)
Below 70% FPY on PPAP submissions with poor reaction
(0–3 Points)
No FMEA or failure mitigation methods and/or poor process control
(0–3 Points)
On the focus supplier program due to performance or deteriorating quality levels
(0–2 Points)
Contrib 12 pts 6 pts 6 pts 6 pts
30 points of scoring for associated risk based on capability.
Source: Whirlpool Corporation.
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PROCESS GOVERNANCE
Process Update
■ All Supplier Risk Rating to be updated every six months (Mid-Year [June–July]–End Year [December–January])
■ If it is deemed appropriate, a supplier review board should be scheduled for a rating review out of the scheduled update windows:
– Commodity manager should attend
– Quality representative for the supplier and requesting region should attend and present data justifying the change
– Regional Quality leader can attend as optional
■ SDEs should always practice judgment while applying the criteria
■ SDEs should collaborate with process partners to assess supplier competence
■ SDEs are responsible to define quality roadmaps by commodity based on the Risk Rating
■ Before asking for an unplanned update, the regional SDE should evaluate the following:
– Are we reacting to a special cause event (single data point)?
– Is the change in risk based sustainable improvement or confirmed performance degradation (3+ months)?
SDEs Responsibility
Source: Whirlpool Corporation.
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Measure Supplier PerformanceIntroduction Improve Suppliers Next Steps and Q&A
ROADMAP FOR THE PRESENTATION
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THE CURRENT STATE OF SUPPLIER PERFORMANCE IMPROVEMENT
“Improve Suppliers” Importance Versus Maturity ScoreAverage Score
Quality executives recognize the importance of supplier improvement, but maturity lags.
■ Improve Suppliers: Practices used to ensure the suppliers improve their capabilities and performance over time.
Level 1 Level 2 Level 3 Level 4 Level 5
Quality reacts to supplier issues that disrupt operational processes with limited and targeted support to fix the immediate issue.
Quality offers unmetered support to critical suppliers with chronic poor performance.
Quality uses established relationship and performance criteria to identify suppliers who need improvement and helps them improve systems and processes.
Quality uses an established risk framework to prioritize suppliers requiring improvement on both operational and strategic activities.
Quality identifies select Tier 1 suppliers to collaboratively improve culture of quality and the quality of corporate management practices.
n = 24.Source: CEB Quality 2014 Functional Maturity Diagnostic.
Importance Maturity
5.0
4.0
3.0
2.0
1.0
0.0
3.35
2.31
Very Important
Project # xxxxxx
Catalog # PSC8151514SYN
© 2015 CEB. All rights reserved. QUAL2565215SYN
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OVERVIEW
Rolls-Royce plc operates in four global markets: civil aerospace, defense aerospace, marine, and energy. It is investing in technology and capability that can be exploited in each of these sectors to create a competitive range of products.The success of these products is demonstrated by the company’s rapid and substantial gains in market share during recent years. As a result, engine deliveries have grown and the company now has a total of 54,000 gas turbines in service worldwide. The investments in product, capability, and infrastructure to gain this market position create high barriers to entry.
GUIDING PRINCIPLES
■ To ensure supplier performance and improvement, the company must establish structure for performance measures, reporting, analysis, and issue resolution.
■ Standardizing language, information, processes, and roles is as important among internal parties as with suppliers.
COMPANY SNAPSHOT
Rolls-Royce plc
Industry: Aerospace, Power Systems, and Defense
Rolls-Royce has a broad customer base comprising more than 500 airlines, 4,000 corporate and utility aircraft and helicopter operators, 160 armed forces, and more than 2,000 marine customers, including 50 navies. The company has energy customers in nearly 120 countries. Rolls-Royce employs 40,000 people in more than 50 countries.
2011 Sales: £11 Billion
Employees: 40,000
Headquarters: London
SYSTEMATIC SUPPLIER PERFORMANCE MANAGEMENT
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SYSTEMATIC SUPPLIER PERFORMANCE MANAGEMENT
Practice Components
Rolls-Royce creates global standards for consistent assessment, management, and communication of supplier performance.
Potential Continuous
Improvement Roadblocks
Practice Components
Inconsistent/Unreliable Data
Standards
Performance Issues Not Addressed Adequately
Uncoordinated or Inefficient Measurement
Activity
Suppliers Lack Awareness of Performance
Standards
Component 1: Comprehensive Metric Dictionary
Easy-to-use metrics dictionary standardizes all aspects of performance assessment.
Component 3: “Three-in-One” Escalation Process
Systematic underperformance resolution process with escalation triggers involves/assigns appropriate skills and activities.
Component 2: Supplier Measurement Road Map
Process map sets out discrete tasks, owners, and data requirements.
Component 4: Supplier Training and Tools
Training sessions and online tools for suppliers foster awareness of performance requirements.
“We have developed cross-checks and methods to ensure that
our data is world class, enabling us to use this information to make important business decisions.”
Rick Wells Supplier Support Leader Rolls-Royce
Source: Rolls-Royce Holdings; CEB analysis.
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RIGOROUS PERFORMANCE IMPROVEMENTA systematic process formalizes issue resolution actions and triggers for escalating to higher levels as new capabilities are required.
Level 3:Fundamental Redesign
Level 2:Improve Overall
Performance
Level 1:Make Immediate Improvements
Level 0:Restore the Status Quo
■ Purpose: Verify adherence to established process and product specifications.
■ Owner: Local Area Manager
■ Duration: Two weeks
■ Purpose: Analyze process, product, or system to identify root cause.
■ Owner: Specialist
■ Duration: Three weeks
■ Purpose: Deploy cross-functional team to address complex/broad problem.
■ Owner: Local Area Manager Plus Specialist
■ Duration: Five weeks
■ Purpose: Involve senior management to determine redesign or supplier change.
■ Owner: BU Director, Specialist, and Local Area Manager
■ Duration: Indefinite
Trigger: Fundamental redesign may be required to resolve issue.
Trigger: Cross-functional team is needed to resolve root cause.
Trigger: Problem is still evident after status quo restored.
3
2
1
Source: Rolls-Royce Holdings; CEB analysis.
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ACTIONABLE CONTINUOUS IMPROVEMENT PLAN
Escalation Gantt ChartIllustrative
“Time-boxed” process steps promote thoroughness while maintaining progress.
Tasks and Milestones Owner Mandatory Support Status February March April May
3 10 17 24 3 10 17 24 1 7 14 21 28 3
Level 0: Restore the Status QuoVerify adherence to established process and product specifications.
Problem Definition Rolls-Royce Supplier Completed
Containment Action Supplier Completed
Customer Protection Supplier Local Area Manager Completed
Process Adherence Review Supplier Local Area Manager Completed
Specification Conformity Review
Supplier Completed
Adherence/Conformity Results Analysis
Supplier Completed
Resolution Plan Definition/Development
Supplier Completed
Level 1: Make Immediate ImprovementsAnalyze process, product, or system to identify root cause.
Root-Cause Analysis Supplier Specialist Completed
Customer Protection Review
Supplier Rolls-Royce Completed
Improvement Plan Implementation
Supplier Local Area Manager Completed
Progress Monitoring Supplier Completed
Level 2: Improve Overall PerformanceDeploy cross-functional team to address complex/broad problem.
Integrated Team Resources Identification and Formation
Supplier Specialist, Local Area Manager
Completed
Additional Root-Cause Analysis
Supplier Specialist Completed
Customer Protection Review
Supplier Specialist Completed
Process Improvement Plan Definition and Implementation
Supplier Specialist, Local Area Manager
Completed
Progress Monitoring Supplier Local Area Manager Completed
Level 3: Fundamental RedesignInvolve senior management to determine redesign or supplier change.
Level 2 Business Care Consideration
Supplier Three-in-One Receiver, Specialist, Local Area Manager, BU Director
In Progress
Redesign Decision-Making Process
Supplier, Specialist, Local Area Manager, BU Director, three-in-one Receiver
Not Started
Hard timescales maintain process discipline and discourage premature closure.
Source: Rolls-Royce Holdings; CEB analysis.
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CONTINUOUS IMPROVEMENT PLAN SAMPLE TEMPLATE GUIDE
Supplier: __________________
Date: __________________
Purpose: __________________
Priority Metric KPIs Targeted
Current Score
Target Score
Improvement Initiatives
Action Step(s)
Owner Target Date
Date Completed
Status/Notes
1
2
3
4
5
Source: CEB analysis.
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Measure Supplier PerformanceIntroduction Improve Suppliers Next Steps and Q&A
ROADMAP FOR THE PRESENTATION
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SESSION TAKEAWAYS
CEB Resources and Recommended Next Steps
Assess Your Supplier Quality Management Maturity ■ Option 1: Functional Maturity Diagnostic (Full-Functional Assessment) ■ Option 2: Supplier Quality Management Maturity Model (Quick Self-Check)
Build a Standard Supplier ScorecardScorecard Builder (Library of Best-in-Class KPIs)
Create a Consistent Continuous Improvement PlanContinuous Improvement Plan Template
Participate in the Supplier Quality Management Benchmarking Effort in the Early Fall
1. Align scorecard metrics with elements business partners care about (i.e., metrics beyond quality).
2. Create standard global scorecards to assess supplier performance across all elements of the relationship.
3. Use scorecard results to construct actionable continuous improvement plans that establish joint accountability.
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QUESTION AND ANSWER SESSION
Logistics ■ Press “*1” on your phone to ask a question. ■ Written questions can be submitted directly into the web platform.
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