How to create beneficial supplier partnerships in ISO 9001
During implementation of ISO 9001:2015, productive supplier partnerships are a crucial part of making each party involved in the process satisfied. Clause 8.4 (Control of externally provided processes, products and services) of ISO 9001 requires extreme due diligence by the organization to ensure that all components and services used in creating your own products and services are compliant with all requirements and are suitable for their stated intent. In a typical manufacturing organization, there may be five departments involved in the purchasing process. That’s the reason why building effective supplier partnerships can be challenging. In this article, read about how to improve productivity and reduce costs.
The complexity of purchasing
Engineering is typically tasked with specifying the requirements or part numbers for each component. Production Planning creates the purchasing request. Purchasing is tasked with finding an appropriate approved supplier and placing an order. Manufacturing is often responsible for requesting consumables and supplies. Quality is typically involved in design review, supplier approval, incorporating quality requirements into purchase orders, and receiving and inspecting the purchased products.
This series of processes contains many variables, opportunities for error and there is often less than harmonious interaction between departments. For more about supplier performance, read the article How to evaluate supplier performance according to ISO 9001:2015.
The historical purchasing conundrum
There is an ageless challenge involved in purchasing. Do you want it to meet specification, do you want it at the lowest cost, or do you want it on time? The various departments involved in product realization are typically at odds in this perennial debate.
The challenge arises from evaluating the criticality, availability, reliability and cost of ownership of each component and then fitting it into a schedule and budget. While that controversy is being debated, engineering or purchasing is tasked with finding suppliers and distributors who can meet all three requirements of spec compliance, cost and lead time.
Once they find suppliers and distributors, the quality organization must evaluate if the supplier meets their quality requirements. They must also determine if they are to be added to the approved supplier list, and what commodities they are approved to supply.
Then, the supplier must decide if they want the organization as a customer! Will the organization continually be at odds with the supplier over cost and delivery issues? Does the organization pay its invoices in a timely manner? Will there be quality customer service issues? If the supplier is a sole source, will there always be adversarial relationships? If the supplier has many organizations needing their products, will there be priority issues or shortages?
A more effective way to comply with 8.4
After having a career as a quality control engineer, then running three manufacturing companies, I can tell you that the scenario described above is all too common. The solution was presented during my tenure as a senior consultant to Dell Computer. I was part of the team that wrote their supplier quality manual.
Dell evolved a breakthrough philosophy in acquiring the commodities they needed to build and deliver reliable computers. It was dubbed Supplier Partnerships.
In the product design phase, likely suppliers were invited to attend design review meetings. For each component or assembly, the requirements were presented, and the suppliers contributed to creating the specifications for the commodities they could supply. Before the process was complete, there was already a tacit agreement that the potential supplier could meet Dell’s needs. The supplier was already engaged and eager to do business with Dell.
Everyone was a winner
Since potential suppliers were already screened and interviewed by the design team, the subsequent approval process became more harmonious. The supplier quality representative, a purchasing agent, the engineering team were continually involved in the purchasing process.
When a supplier went through the formal approval process as required by 8.4, there was already an understanding of the requirements for performance, price and delivery. It was also clear to the potential supplier that if they were selected, they would continue to be part of the product evolution, they had to comply with all quality requirements, they would have advanced projections of delivery requirements and they would be paid on a specific date.
Each supplier was a success partner, not a vendor. Everyone was a winner. Even though the entire process of evaluation, acquisition and testing could take as long as a year, there was long list of companies that wanted to be approved suppliers to Dell.
In the article Why should companies perform a second-party audit of their supplier’s QMS? learn more about audits of your suppliers.
It’s about error proofing the entire process
As with most of the requirements of ISO 9001:2015, there are opportunities for quality champions to contribute to streamlining processes and removing tollgates. They also have a chance to demonstrate how the various departments can collaborate to drive defects from their products and services, while also lowering cost. The purchasing process should never be a debate over meeting specs, price and lead time.
Clause 8.4 should be about error-proofing the entire process from product specification to receipt and acceptance. That is best accomplished by each of the departments making purchasing a partnership both internally and externally.
To learn more how to handle suppliers enroll in this free online training ISO 9001:2015 Foundations Course.
About the author:
Tom Taormina, CMC, CMQ/OE, is a subject matter expert in the ISO 9000 series of Standards. He has written ten books on the beneficial use of the Standard. He has worked with more than 700 companies and was one of the first Quality Control Engineers at NASA’s Mission Control Center during Projects Gemini and Apollo.