CLASS 6, RELATIONSHIP MANAGEMENT
Contract Administration is the essence of Supplier Management
Key Elements to Consider:
Ensuring understanding (mutual understanding that is)
Clear Statement of Work
Respond to Vendor Questions during Solicitation Phase,
After Award, Conduct Pre-performance Conference. Discuss:
Delivery
Acceptance
Reporting
Changes
Delays
Roles
and Responsibilities
Contract Administration includes such diverse
functions as:
Performance
Monitoring
Progress (CPM, Gantt Charts, Reports, Inspection)
Surveillance
(discussed in the lecture on Quality)
Delivery
(expediting)
Documenting
History - Supplier Evaluation
Supplier Motivation (review from Class 4)
Punishment
(or Disincentives)
Rewards
(or Incentives)
Assistance
Training
(on your ways of doing things)
Quality
audits and procurement system reviews
Problem
solving and mutual resolution
Processing Payments
Review
(invoices, costs, services/deliverables provided)
Verify/validate
progress
Approve
and disperse
Administer Change Orders and Modifications
Initiate
Review
Negotiate
Incorporate
into contract
Transition between contractors
Disputes Resolution (formal, informal, ADR)
Termination/Partial Termination
For
convenience
For
default
Close-out
Staffing for Contract Management:
Oversight
and Quality Assurance (QAR, COTR)
Administrative
Contracting Officer
Expediter
Termination
Contracting Officer
Cost Price
Specialists
Auditors
(Students: Research and Discuss Defense Contract Management
Agency (DCMA) and In-Plant K-Admin Activities)
QUALITY is
conformance to specifications (review from Class 2)
"Fitness for Use" is different than Quality in that -
A quality product may not be fit for use in that the
latter deals with specification adequacy, not product conformance to that
specification. It may be said that
Total Quality, from a Manufacturing perspective, is attained when a product is
fit for its intended use.
Traditional role of inspection has been de-emphasized in favor of:
Effectiveness of design
Process control and continuous
improvement (discuss SPC and envelope of quality)
Five general factors affect the quality of purchased material:
·
Adequate/appropriate
specifications
·
Selection of qualified
suppliers
·
Supplier understanding
of quality requirement
·
Supplier motivation to
achieve quality reqmt.
·
Measurement of supplier
conformance by:
§
Inspection upon receipt
of items, and/or
§
Quality assurance (of
suppliers QC program)
Suppliers are generally responsible for quality control;
the Buyer is responsible for quality assurance.
Quality has costs associated with its attainment (or lack thereof)
Quality Schools of Thought:
Phillip Crosby and the Quality College:
The "Cost of Quality" (Crosby) is the cost of doing things
wrong, hence -
effective quality programs result in cost avoidance to the firm
Deming and the Deming Prize - Japan (relate to Malcom Baldridge Prize
in U.S.)
Deming's view: Management is
responsible for 85% of Quality Problems (such as design, manufacturing process,
engineering, training, purchasing, customer relations)
ISO 9000 Quality Standards
Undesirable quality costs include:
Scrap, Rework, Repair, Loss of Customer Goodwill
Most quality advocates espouse quality as a "top down, bottom up
effort"
-------------------------------
CASES:
Hardy
| OLD SCHOOL | CURRENT POSTURE |
| Productivity and quality are conflicting goals |
Productivity gains are |
| Quality defined as conformance to specifications or standards |
Quality is correctly defined requirements which satisfy user needs |
| Quality measured by degree of non-conformance | Quality measured by continuous process/product improvement and user satisfaction |
| Quality is achieved through intensive product inspection | Quality determined by product design and is achieved by effective process controls |
| Some defects allowed if product meets minimum quality standards | Defects are prevented through process control |
| Quality is a separate function focused on evaluation of production | Quality is part of every function in all phases of the product life cycle |
| Workers are blamed for poor quality | Management is responsible for quality |
| Supplier relationships are short termed, competitive based, and oriented towards acquisition costs | Supplier relationships are long term/quality oriented |
Quality
and the JIT Manufacturing Perspective
JIT Elements Relating to Purchasing include:
Quality and Conformance (more important
than price) -
Emphasis shifting from lowest price to
lowest cost characteristics of -
Quality
Performance
Delivery
Long-term supplier/relationships are
encouraged
(Although average in U.S. has historically
be approximately 1-2 years
Advantages? (Willingness to invest in
process, R&D, training; conduct value analysis, improved learning curve
Some "Sole or Single Source"
Contracts may be necessary, however, at least two vendors supplying materials
may be wise to keep competition viable (primary and alternate supplier)
Formal vendor evaluation/certification
programs imperative in JIT
JIT is characterized by frequent
deliveries of small quantities directly to point of consumption on factory
floor
Once vendors are certified, little or no
incoming inspection is needed
Vendors are involved in production
decisions, i.e. scheduling, needs and materials determination
JIT Purchasing can become an excuse to
take advantage of vendors when firms MM and other management practices are at
fault (i.e. faulty planning, design, marketing forecasting, etc.)
True Just In Time Production Lowers Everyone's
Inventory (buyer and supplier alike)
Evaluation of a Quality Program:
Organization for Quality:
Defined
responsibility, authority of personnel assigned QC responsibilities
Management
involvement, review, and commitment
Training
Sufficient
resources allocated (personnel, equipment, facilities, funding, etc.)
Effectiveness of Planning:
Review of
requirements (specification review)
Identify
special controls, processes, equipment, skills required
Determine
required documentation, reporting, staff involvement
Review Work Instructions for -
Clarity
Do-ability
Contribution
to desired level of quality
Develop and Maintain Responsive Corrective Action
Programs (Post Detection Actions) -
Correction of
work instructions
Vendor
analysis and corrective action (jointly with vendors)
Improved
technical data packages to vendors
Analysis of
elements of cost of quality (scrap, rework, repair data, both internally and
externally caused) to determine causes of defects, costs of quality trend
analysis)
Introduce
improvements and corrections
Maintain effective
follow-up
Maintenance of Standards and Drawings
Current
Adequate
Configuration
and change control
Adequacy/Availability of Test Equipment
Control Over Purchased Items
Source
selection and vendor qualification
Vendor
quality level is your quality level
Ongoing
vendor evaluation programs
Feedback,
correction of identified non-conformance's
In-process Inspection at Critical Points During
Manufacture (or Service)
(Critical
points are established based upon their ability to impact product quality)
Completed Item Testing and Evaluation
Sampling
End item
inspection/tear down
Performance
validation/verification
Handling of Materials (Storage, Delivery) to Preserve
Quality, Minimize Damage and Loss
Disposition of Non-conforming Vendor Supplied
Materials
Information System to Provide Feedback
Internal - to
identify faulty processes, causes on non-conforming products
External - to identify defective items
getting to customers