The Supplier Perspective

1. Ed Englehard Owego Heat Treat April 16, 2003 The Supplier Perspective Agenda Item 2.2

2. Apprehension Prior to Participating in NADCAP • If a mandate letter - start research & business decision justification right away! • If no mandate letter - poll customer base in order to justify business decision. • Fear of the unknown, justifying the business decision by the supplier's executive management: • A change in the way most suppliers obtain approvals from "divide & conquer" (one prime at a time) to third party • Change in cost from Prime to Supplier • Changes in internal processes and quality system, in terms of dollars & man-hours. • If yes, then supplier must plan appropriate resources above and beyond current quality system requirements. • If no, then supplier must plan to loose certain amount of business (current and future).

3. First Time Preparation Actions • In order to mitigate the apprehension of participation: • If the classes or range of approvals under a particular discipline is a choice in the matter, keep the scope of approval limited to those areas of the supplier facility that will benefit from it, i.e., if you are prime approved for only aluminum processing and don't have exposure to aerospace steel processing (even though you do some steel processing) then just have the aluminum processing portion of the plant accredited. • Start early & meet with quality staff often for status updates. Make a timeline and stick to it. • Call the Task Group Engineer for Supplier Mentoring recommendations and assistance • Go to the PRI/NADCAP website and plan to invest in attending a couple of quarterly meetings in order to learn how the system works and who the players are early in the effort to accreditation.

4. First Time Preparation Actions (continued) • Be sure that supplier executives attend at least one quarterly meeting so that they understand better the resource allocation requirements of the effort. • Be sure that supplier quality personnel responsible for implementation attend at least one quarterly meeting so that they understand the process, checklists and people with whom they will be dealing with intimately during the effort to achieve the initial audit. • Have quality personnel attend a thorough Root Cause and Corrective Action (RCCA) course or seminar if they haven't yet. PRI offers a good program on a regular basis around the country.

5. First Time Preparation Actions (continued) • Preparation Efforts: • Start early & meet often. Make a timeline and stick to it. • Order copies of the checklist(s) long before the audit is scheduled and start work immediately. You will typically need much more than the 60-90 days of time lapse between the getting on the NADCAP schedule and the audit date. Don't wait for the checklist to arrive along with your audit date - you likely will not be able to do an effective job of implementation before the initial audit. • Call the TG Staff Engineer for supplier mentoring assistance • If you are ISO/AS registered then be sure that your system is sound, especially in the areas of calibration, inspection & test equipment, process control, contract review and training.

6. First Time Preparation Actions (continued) • Preparation Efforts: (continued) • If you are not ISO/AS registered and are not planning to do so, then be sure to get a copy of AC7004 and get busy on fixing your system in order to comply with it. • If you are not ISO/AS registered and you do plan to do so, then make every effort to get it done before the NADCAP audit. • Start early & meet often in order to benchmark progress. • Review all of the checklist questions objectively and take them seriously.

7. First Time Preparation Actions (continued) • Every "yes" response requires objective evidence. Mark down where the objective evidence exists in your system next to each question. • Every "no" response requires a fix to your system in order to turn it into a "yes". Be sure the fix has a trail all the way from the top tier documents through to the work instruction level, as applicable. • Run many rigorous job audits and then fix them with rigorous RCCA. • REMEMBER - This audit is going to "drill down" to the shop floor level, it is not an audit or survey of the just the QC Department. Quality system work must include appropriate training at levels down to the shop floor.

8. First Time Preparation Actions (continued) • Where there is a checklist need for a procedure, have one in detail. • Where there is a checklist need for an instruction, have one in detail. Good quality shop orders/travelers/operation sheets with appropriate process details can't be emphasized enough. • The importance of good strong internal audit procedures can't be underestimated • Remember - NADCAP auditors are process experts and highly professional • Call early for your initial audit schedule so you don't miss any mandate deadlines

9. First Time Preparation Actions (continued) • When you receive your audit package, start to work on the pre-audit immediately so you have plenty of time to fix problems before the auditor arrives. • Be sure to conduct the opening and closing meetings with all affected personnel • Think about any proprietary issues before the audit and bring them up at the opening meeting • Be sure you understand each finding before the auditor leaves. It's much easier to obtain an explanation and clarify terms when the auditor is there rather than to try to second-guess the meaning of the findings after the auditor has left

10. Thoughts after the initial audit? • First thought - Wow, what just happened??!! (Am I glad this week is done.) • Take a little breather, there's usually a lot of work to do afterwards • Watch the calendar - Note that the responses are due 14 days after the end of audit and that objective evidence is due 21 days after the end of the audit • Fill out the auditor questionnaire and send it in while still fresh in your mind • Review the findings carefully and be prepared to apply RCCA lessons rigorously

11. Process used for addressing audit findings? • Use good RCCA practices • Review supplier handbook • Read findings carefully • Answer findings thoroughly • Address product impact issues promptly and in detail • React to proximate causes promptly while working on root causes • Drill down to quality system causes and respond to them completely

12. Company position on NADCAP (feelings, benchmarking, pride etc) during audit/accreditation process • Ours was a strategic business to participate driven not by a mandate letter per se but by polling of our aerospace/defense contractor base of customers. Positive responses to our participation represented about 1/3 of our business at the time. • We had a lot of anxiety about the possibility of failure outright because our quality system was quite crude at that time (1994-1995). • We had a lot of hope for success because we knew it would distinguish us among our competitors

13. Company position on NADCAP (feelings, benchmarking, pride etc) during audit/accreditation process (continued) • The effort to participate was huge and affected nearly all parties in the plant, especially at the shop floor level • Achievement of the certificate represented a change in the company culture: • It institutionalized professionalism all the way down to the shop floor • It raised the bar for high quality performance and continuous improvement across the plant. • It raised the confidence level of all parties in the plant - both in the company and in regards to thier individual abilities • It raised quality awareness across the plant

14. Where Owego Heat Treating is now (in regards to feelings about NADCAP) • It is a "must have" accreditation now in our business practices • It has been informally adopted throughout industry among the first-tier suppliers to the primes (and the sub-first tier level) as a serious quality "security blanket" for current and new suppliers. In some cases it is being established as a requirement for doing business at this level even if the prime does not have a formal flow down requirement • This has greatly reduced the amount of quality survey time that we received from this level of manufacturing • Prime visits have been dramatically reduced to a focus on specific engineering needs or prime-specific requirements; total quality survey and audit team has been reduced by at least 3/4 (but not entirely eliminated) • Our process capability and quality of output has dramatically improved and our customer's confidence in us has increased as a result.

15. Closure (data available to show improvements-reduced escapes, additional business, less re-work scrap, etc.) • Our rework and scrap rates have been reduced significantly. In the pre-NADCAP days having to rework 5 or 6 orders in 100 and scrap 1 order in 1000 was not uncommon. Now those numbers are more like a rework rate of 2 or 3 in 1000 orders and a scrap rate of 1 order in 3000 orders, or less. • Our pre-NADCAP escape rate was maybe 1 order in 3000 to 5000 orders. It is significantly less now, around 1 in 6000 to 10,000 orders. Our discovery and response times to escapes is much improved.

16. Closure (data available to show improvements-reduced escapes, additional business, less re-work scrap, etc.) (continued) • We definitely have much higher compliance to specification requirements • We have a much higher level of understanding of prime, customer and industry requirements • We have a much higher comfort level with tackling new work due to a better understanding of the quality issues involved. • All of our other customers have benefited from the practices instilled throughout the plant as noted above.

17. Closure (data available to show improvements-reduced escapes, additional business, less re-work scrap, etc.) (continued) • At the time we embarked on this endeavor we retained about 1/3 of our business. In a market where manufacturing volume is declining that was a significant accomplishment. • We have gained market share in our region as a result of maintaining our NADCAP accreditation.