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Supply Chain Process Capability & Product Realization Process Strategy Streams

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  1. Supply Chain Process Capability& Product Realization ProcessStrategy Streams IAQG General Assembly San Diego, April 7, 2006 Barbara O’Dell The Boeing Company IAQG Stream Leader Supply Chain Process Capability Bernard Lauras Airbus European Sector leader Product Realisation Process

  2. Sub Tier Control as a Source of RiskTo Regulators and Customers No Change From Montreal Poor Control of Sub Tiers is viewed as a Risk Source of Non-Conforming Product Methods used by Suppliers to Control Sub-Tiers are not well understood Supplier doesn’t know how to control their (sub-tier) suppliers Sub Tier system insufficient to detect & prevent non-conformance Reduced level of interaction with Sub Tiers compared to with suppliers Few industry standards and Best Practices published on how to perform excellent supplier control . No common vocabulary or scoring (Lack of Transparency) (Lack of Visibility)

  3. SCMH provides a framework for organizing and integrating our work Stand alone requirements (9102, 9131, 9103, etc) Supply Chain Mgmnt Handbook Industry best practices on how to meet requirements Supplier Mgmnt Life Cycle Pre Production Validation Ongoing Approval Change Mgmnt Supplier Selection No Change From Montreal 9100 Requirements

  4. Supply Chain Process Capability Name changed from Sub Tier Process Control No Change From Montreal Often, the value stream includes companies operating at many levels, and one standard should be consistently applied Ideal Stream Typical Stream OEM OEM First Tier First Tier OEM Sub Tier Sub Tier Sub Tier First Tier

  5. SCMH chapters have been renumbered and include Product Realization Activities 6.0 Controlling Non-Conf Product 7.0 Work Transfer Management 9.0 On going Approval And Maintenance 3.0 New Product Introduction 4.0 Process Control 2.0 Requirements and Flowdown 1.0 Supplier Selection & Capability Assessment 5.0 Product Verification & Acceptance 8.0 Supply Chain Mgmnt and Performance Measures 10.0 Program Management In work by Product Realization Stream In work by Supply Chain Process Capability Stream

  6. For every “chapter” in the Handbook We’ll follow this roadmap Phase 1: Collect aerospace and other industry best practices, standardize the knowledge & agree on core requirements Phase 2: Create best practice material first, then mature into a guideline or toan industry standard document (910X standard). Maturity assessment may be developed here. Implementation Process should be defined here (pilot phase as required). Phase3: Standardized training provided by industry accepted trainers Phase 4: Implementation Process. Depending on guideline vs 910X decision, the document may be deployed company by company, or by standardized audit checklist, or by industry certification as part of the ICOP/9104 system. Implementation must include maturity assessment.

  7. Supply Chain Process Capability have been tasked Chapters 1 and 2 6.0 Controlling Non-Conf Product 7.0 Work Transfer Management 9.0 On going Approval And Maintenance 10.0 Program Management 3.0 New Product Introduction 4.0 Process Control 2.0 Requirements and Flowdown 1.0 Supplier Selection & Capability Assessment 5.0 Product Verification & Acceptance 8.0 Supply Chain Mgmnt and Performance Measures In work by Product Realization Stream In work by Supply Chain Process Capability Stream

  8. Chapter 1 - Supplier Selectionand Capability Assessment & Maintenance & Maintenance Project Management Project Management product product Controlling Non-Conf Controlling Non-Conf Work Transfer Management Work Transfer Management On going Approval On going Approval and Acceptance and Acceptance Supply Chain Mgt and Supply Chain Mgt and Product Verification Product Verification Supplier Selection Supplier Selection Process Control Process Control Requirement & Flow down Requirement & Flow down New Product Introduction New Product Introduction & Capability assessment & Capability assessment Performance Measures Performance Measures O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O IAQG SCMH Chapters Supply Chain Processes Sales Volume & Option Forecasting Sales Volume & Option Forecasting Contract requirement flow down Contract requirement flow down New product introduction / New product introduction /LCM SC design & major Components sourcing SC design & major Components sourcing Suppliers sourcing selection & qualification Suppliers sourcing selection & qualification Sales & Operation Planning Sales & Operation Planning Manage the Supply Chain Manage the Supply Chain Master Scheduling & sequencing Master Scheduling & sequencing Supplier Development Supplier Development Planned change management Planned change management Performance Monitoring and Decision support Performance Monitoring and Decision support Plant, material, skills & capacity planning & Scheduling Plant, material, skills & capacity planning & Scheduling Manufacturing Manufacturing Post Delivery Support and services Post Delivery Support Order Management (internal & external) Order Management (internal & external) Inventory planning & optimization Inventory planning & optimization Logistic Management Logistic Management Non Conformity Management Non Conformity Management

  9. Chapter 1 - Supplier Maturity Assessment per Supply Chain Process Example • Four levels of maturity (Maturity model CMMI like) • Undefined : No Process, Method, Tools/ No Process, Method, Tools/ and Appropriate Behaviours • Defined • Applied • Optimising: Implemented and optimised, continuous improvement • Four domains assessed: • People & Organisation • Processes • Tools & Data • Performances Metrics 1 1 2 2 3 3 4 4 Non Conformity Non Conformity Undefined Undefined Defined Defined Applied Applied Optimizing Optimizing Management Management No clear Accountability No clear Accountability Expert firefighters Expert firefighters Clear accountability Clear accountability Multifunctional team Multifunctional team People & Organization People & Organization No Problem solving No Problem solving Cross functions Cross functions Highly Skilled Highly Skilled skills skills Highly skilled Highly skilled Reactive needs Reactive needs Ad hoc firefighting Ad hoc firefighting Root cause process in Root cause process in Mature process for root Mature process for root Process Process actions actions place place cause & preventive cause & preventive Customer Stimulus Customer Stimulus actions actions Process playbooks Process playbooks Limited preventive actions Limited preventive actions Manual : Fax e Manual : Fax e - - mail mail Multiple Data base Multiple Data base Integrated database, clear Integrateddatabase, clear Internal & external Internal & external Tools & Data Tools & Data Expectation Supplier performance workflows, internal workflows, internal collaboration. collaboration. Spreadsheet Spreadsheet collaboration collaboration Real time intelligent Real time intelligent workflows workflows No measurement of No measurement of Measuring performance Measuring performance Performance drives action Performance drives action 3+ regular review of 3+ regular review of Performance Performance Performance Performance plans plans metrics effectiveness metrics effectiveness Metrics Metrics

  10. Chapter 1 - Decision making process Standard Questionnaire and Assessment results independent from the size of company and product/project criticality… Supplier Assessment Results Decision to select or not based on risk analysis like 9134 “Supply Chain Risk Management guideline” (Special action plan if not capable but need to select) Each Company to apply weighting to each process as appropriate to their Product, Customer, Risks, etc…

  11. Chapter 1 : Supplier Selection & Capability Assessment • Deliverables by Seville • Agree on the definition of the 15 Supply Chain Mgmnt processes • Agree on the maturity matrix concept and finalize its content • Conduct pilot assessments, using the maturity matrix and model, in all sectors • Finalise decision matrix and questionnaire • Actions to be completed later • Validate questionnaire and Maturity Model during on the pilot phase • Publish questionnaire and Maturity Model decision matrices • Issue training package • Identify Requirements,Guideline and Best Practices

  12. Brainstorm of Causes Affinitize Causes Supplier Customer C & S Reqts Def Contr. Rev Change Mgt Customer C & S Supplier Chapter 2: Requirements & Flowdown Suppliers Produce Non-conforming Product because they do not understand the requirements or do not receive the requirements. WHY?

  13. Chapter 2.0 Requirements and Flowdown • 2.0 Requirements and Flowdown • 2.1 How to clearly identify and communicate requirements throughout the supply chain • 2.2 How to generate a shared understanding of the requirements • 2.3 How to manage revisions to requirements after initial contract/purchase order release

  14. Chapter 2 - Requirements and Flowdown • Deliverables by Seville: • Connect to others doing similar work (Missile Defense Agency, Space Quality Improvement Council) to see if we can combine efforts • Communicate our work to others (AIA, ASQ) • Collect best practices and white papers from aerospace and other industries • Actions to be completed later • Benchmark Medical Device Industry and SEA on Requirements & Flowdown • Publish guidelines/best practices by June 07

  15. Product Realization Activities have been tasked Chapters 3, 4 and 7 6.0 Controlling Non-Conf Product 7.0 Work Transfer Management 9.0 On going Approval And Maintenance 10.0 Program Management 3.0 New Product Introduction 4.0 Process Control 2.0 Requirements and Flowdown 1.0 Supplier Selection & Capability Assessment 5.0 Product Verification & Acceptance 8.0 Supply Chain Mgmnt and Performance Measures In work by Product Realization Stream In work by Supply Chain Process Capability Stream

  16. Chapter 3 – New Product Introduction No Change From Montreal • Background: • The Aerospace Industry developed a successful product introduction process based on a 20%-80% outsource ratio and the industry has migrated to a 80%-20% outsource ratio • This change was gradual and a change in the product introduction process was not undertaken • Corrective Action proposed: • Develop a product introduction process that accurately predicts supplier performance at production levels

  17. Chapter 3 – New Product Introduction • Status: • Benchmarking performed: • Dell computers • Toyota USA • Knowles (Medical) • Lessons learned and brainstorming have produced Sub-chapters headings

  18. Chapter 3 – New product introduction • 3.1 Pre-production Process validation (product specific) • 3.2 Review of Quality Planning including Key Characteristics • 3.3 Product and Process Qualification • 3.4 Pre-approval of test methods (where applicable) • 3.5 FAI (9102) • 3.6 Design Change Requirements • 3.7 Product Maturity Assurance 3.0 New Product Introduction

  19. Chapter 3 - New product introduction • Deliverables by Seville: • Confirm sub-chapters headings, resolve overlaps with other chapters • Collect best practices from IAQG and other companies • Actions to be completed later • Publish guidelines/best practices by June 07

  20. Chapter 4 - Process Control No Change From Montreal • 9103 (Variation Management of Key Characteristics) not sufficiently and adequately deployed • Value not clearly identified or understood • All functions to be involved, not only Quality • Lack of buy-in • Training required • Need to explain how to apply 9103 based upon supplier & product complexity • Lack of skills

  21. Chapter 4 - Process Control • Since Montreal, EAQG has worked on 9103 education package: • Common part (key concepts with IAQG banner) for all companies using the training • Some area to be adapted by each company when training its staff or its suppliers (examples, tools, forms, etc…) • Education package content: • Will focus on value of doing it and risks and/or costs of not doing it • Should take difficulties of doing it into consideration • Work is on going

  22. Chapter 4 - Process Control9103 deployment Constraints • Application of 9103 should be risk oriented (not used if no added value, should focus on the results, not on the tool or the process) • More chance to succeed if convinced of business value than if strict mandate: Improve communication and learn more from supplier experience and constraints • 3 ways of flowing 9103 down (deployment drivers) ? • Mandated (high risk product and/or existing key characteristics) • Guideline • Best practices sharing Mandate from customer At supplier own initiative or supplier development • Need to create a global culture (prime, suppliers) rather than one way (mandate) => engagement within all levels and functions of the supply chain

  23. Chapter 4 - Process ControlFurther Actions • Measure the effectiveness of 9103 deployment and its benefits on the overall business • Build on lessons learned • See how to define key characteristics • Introduce concept of FAI stage 1 (initial) and stage 2 (confirm capability at ramp up) • Evaluate how to use 9103 results to optimize design for manufacturing

  24. Chapter 4 - Process ControlInterconnection between several topics “Global Process Control” brainstorming : We can build from 9103 but shall not limit to it and shall not consider it as the only key factor of success

  25. Chapter 4 - Process Control 4.0 Process Control 4.1 Variation management of Key Characteristics (9103) 4.2 Root cause analysis and problem Solving 4.3 Process capability and control 4.4 Design for Manufacturing and Relation with Manufacturing Capability 4.5 Process Change Requirements 4.6 Industrial Capability and Capacity Assessment 4.7 First Article Inspection 4.8 Special Process Control

  26. Chapter 4 - Process ControlProposed Short Term Action plan • Deliverables by Seville: • Finalize 9103 education package • Be ready for deployment of the 9103 training • Actions to be completed later • Start to work on Root Cause Analysis and Problem solving • Evaluate the effectiveness of 9103 deployment • Reviewing opportunity for Process Control improvement based on feedback from deployment (industry expectations) • Build on 9103 (evolution of the standard or complementary standards or methodology)

  27. Chapter 7 – Work Transfer Supplier A Supplier B • Unsuccessful work transfer is a major problem for the industry and we feel it is one of our priorities • We have not standardised process to do it

  28. Chapter 7 – Work Transfer • Collected Industry Best Practices (Benchmarking) • Dell computers • Toyota USA • Knowles (Medical) • Standardize Knowledge and Lessons learned • Pre-transition Program Planning • Pre-production meeting(s) – upfront effort • Multidiscipline Team (Agreement: quality, eng., purch.) • Capture Hidden Factory – Last Article audit (product and process) • Receiving Supplier Process Capability & Assessment • Supplier Development – as required

  29. Chapter 7 – Work Transfer • Deliverables in Seville: • Confirm sub-chapters headings • Identify overlaps, existing/needed standards • Collect best practices from IAQG and other companies • Actions to be completed later • Develop a transition process from best practices, ensuring risks are identified and mitigated prior to the work transfer decision and launch • Publish guidelines/best practices by June 07

  30. Supply Chain Management HandbookNext steps • Finalize Chapter Headings and Sub Chapter titles and content/objectives to eliminate overlaps, improve clarity and integration (June 06) • SAE has provided a “public web space” for our team to communicate with the general public on our progress. We will populate this web space in coordination with the IAQG communications team