Effective Supplier Quality Surveillance Processes and Practices (Best Practice)

RT-308 Topic Summary
RT 308

Overview

The quality of materials and equipment supplied to a capital project directly affects the ability of the project team to complete it on time and on budget. The fact that so many items are custom, one-of-a-kind, or made of rare materials makes supplier quality particularly important in the construction of capital projects. CII RT-308, Achieving Zero Rework through Effective Supplier Quality Practices, worked to find the most effective processes and practices for ensuring that project materials and equipment are produced, manufactured, or fabricated in strict accordance with all applicable specifications and that, once delivered to the project site, they do not require any rework.

Based on its findings, RT-308 recommends that companies consistently use the practices presented in IR308-2, Achieving Zero Rework through Effective Supplier Quality Practices, to manage supplier quality. The team further encourages readers to utilize the decision-support tool also presented in that resource, to project the cost of non-quality and to support supplier selection.

Key Findings and Implementation Tools

1 : Glossary of Terms and Acronyms

The research team developed a Glossary of Terms and Acronyms to describe the Supplier Quality System (SQS) function.  Prior to this, there was no common language to describe the SQS function. Each company uses its own terminology to describe the roles and activities of SQS personnel. Reference IR 308-2 Appendix A: Glossary of Terms and Acronyms.
 
Reference: (IR308-2)

2 : Highly Effective Organizations

The research was able to identify the characteristics of highly effective supplier quality systems in contrast to regular supplier quality systems.  In addition, they were also able to identify and categorize the practices used by highly effective organizations in order to reduce rework along the Supplier Quality Process Map.

Highly effective organizations defined as those achieving the highest level of success, from planning and selection through mechanical completion. (RS308-2, p. 12)
 
Reference: (IR308-2)

3 : Current Practices Found in the Literature about Capital Projects and Other Industries

The research team created the Supplier Quality Process Map to show how most companies in the construction industry address supplier quality. It illustrates the work flow of this process, from qualification of suppliers through mechanical completion and post-execution data collection. (RS308-1, p. 5) 

Some of the best practices in these industries include supplier partnerships, category captain management, vertical integration, supplier quality surveillance, information synchronization, and supplier relationship development.
Reference: (RS308-1)

4 : Common Practices Currently Adopted

Simplified Supplier Quality Process Map (RS308-1, p. 7)

1. Planning and Selection
The best practice includes using past performance data to evaluate whether a supplier is acceptable to add to the bidders list.
2. Execution
The best practices for execution include creating a supplier quality plan, making observations according to that plan, and documenting observations through daily reports and nonconformance reports, as required.
3.1 Releases from Shop
Prior to release from the shop, the buyer should make a final inspection and then issue a release from inspection.
3.2 Received at Site
Once the equipment or material is received at the site, it is important to perform a receipt inspection. This records any overages, shortages, or damages while in transit.
3.3 Mechanical Completion
Once the material is installed, conducting an additional to perform inspection site acceptance tests or pre-commissioning testing is recommended.
Post Execution
At each phase of the purchase order, quality personnel should provide a performance rating to record the suppliers’ performance. Organizations should retain this progressive data and make it available for the consideration of suppliers on future projects.
Reference: (RS308-1)

5 : Statistical Analysis of Current SQS Practices

The important gates noted for data collection included first release to ship date, first arrival at the site, and estimated date of mechanical completion. The instrument comprised four sections: (RS308-1, p. 10)

  1. Project Data
  2. PO Basic Data
  3. Practices Used (QA/QC, ITP, meetings)
  4. Outcomes (e.g., total number of items for a PO and total number of non-conformances or unacceptable items for each gate).

The instrument was distributed to CII members, and to non-CII members in the industry.

Reference: (RS308-1)

6 : Simulation Model

The research team developed a simulation model to capture the dynamic nature of the SQS process, and to help predict the impact of using supplier quality best practices related to inspection levels. The model utilizes the Supplier Quality Process Map developed by the team. The simulation represented the following two components: 

  1. The production or fabrication process, with a parameter (Pfab) that describes the production capability, or probability, that the item will be made in conformance with requirements.
  2. The inspection process, with a parameter (Pinsp) that describes the probability that a given inspection will identify a nonconformance if it exists, so that it can be corrected.
 
The research team introduced the concepts of Total landed Cost and Cost of Non Quality. Reference IR308-2 Appendix B for discussion.
 
Reference: (RS308-1)

7 : Implementation Tool #1

IR308-2, Achieving Zero Rework through Effective Supplier Quality Practices

According to suppliers, practices that help suppliers achieve zero rework include the following:

  • The purchase order (PO) matches the RFQ.
  • The exact specifications are sent up front, so that the bid can be more accurate (e.g., more than a few drawings, and no extraneous data).
  • Specifications are updated (e.g., some respondents reported receiving specification that was more than 30 years old and no longer feasible).
  • • Customers give suppliers feedback.
  • Customers notify suppliers immediately regarding any nonconformance reports.
  • Customers provide inspectors who add value, rather than combative ones.
  • Quality planning is held jointly between the parties.
  • Quarterly reviews are scheduled with the goal of improving performance.
  • Hold points are eliminated on the basis of clear front end planning.
  • Schedules are not shortened during the course of the PO.

In order to prevent non-conformances, supplier practices must also be examined. In other words, control and surveillance processes cannot be the only mechanisms utilized. Suppliers must be given continuous feedback throughout the PO process to improve supplier process capabilities.

After a discussion of supplier quality processes, IR308-2 then introduces the research team’s supplier selection tool, which is based on Pinsp (inspection capability) and Pfab (supplier quality capability). This tool provides a means of adding a projected cost for the cost of non-quality to the TLC in bid tabulations. It can also be utilized to determine whether the cost of increasing inspection activities at a particular supplier facility is worth the investment.

Reference: (IR308-2)

Key Performance Indicators

Improved quality

Research Publications

Achieving Zero Rework through Effective Supplier Quality Practices - RR308-11

Publication Date: 09/2015 Type: Research Report Pages: 266 Status: Reference

Achieving Zero Rework through Effective Supplier Quality Practices - IR308-2

Publication Date: 10/2014 Type: Implementation Resource Pages: 37 Status: Tool

Achieving Zero Rework through Effective Supplier Quality Practices - RS308-1

Publication Date: 09/2014 Type: Research Summary Pages: 21 Status: Supporting Product


Supporting Resources

Presentations (CII Annual Conference & Workshops)

Plenary Session - Don’t Let Your Project Sink: Achieving Zero Rework through Effective Supplier Quality Practices

Publication Date: 07/2014 Presenter: Tricia Thibodeaux Number of Slides: 12 Event Code: AC14

Implementation Session - Don’t Let Your Project Sink: Achieving Zero Rework through Effective Supplier Quality Practices

Publication Date: 07/2014 Presenter: Buck Blum Number of Slides: 47 Event Code: AC14

Session - Don't Let Your Project Sink: Achieving Zero Rework through Effective Supplier Quality Practices

Publication Date: Presenter: Number of Slides: 61 Event Code: PIW315


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