Supplier Selection & Qualification A Podcast presentation for members of the Customer-Supplier Division and ASQ Pres

1. Supplier Selection & Qualification A Podcast presentation for members of the Customer-Supplier Division and ASQ Presented by Betty Rose ASQ-CQE Sr. Supplier Engineer Global Supply Chain Tektronix, Inc. ( a Danaher company) betty.rose@tektronix.com

2. How to Find a Supplier that matches your technology requirements • Previous experience/knowledge of the supplier • You have worked with the supplier in a previous life (you do take your business cards with you, don’t you?!!) • Your network, including ASQ meetings • ASK : ”do you know of a company that….” • Searches • Internet • Search firms Betty Rose (betty.rose@tektronix.com)

3. First Contact • Introductory letter & inquiry to determine if there is interest in working with your company • Include survey form to be filled out • Technology mix (does it mesh with your business) • Who are current customers • RFQ • For NPI or sensitive parts, use a similar part for quoting • Otherwise, send actual drawing (2-D or model) • Ask for a cost model Betty Rose (betty.rose@tektronix.com)

4. The primary purpose of the audit is to determine if the potential supplier’s capabilities match your requirements The Audit • Pre-audit work • The most important question you can ask : How do you know ? • Form teams to cover the technical/quality audit and the various business audits (financials, business & purchasing systems, etc.) to allow for stronger focus • Plant tour • General appearance • Process documentation • Operator demeanor/attitude (ask questions regarding handling of defective material) • WIP • Postings (charts, graphs, reminders) that are on display • Safety Betty Rose (betty.rose@tektronix.com)

5. The Audit continued • Quality Department • Staff & org chart • Relationship to the Manufacturing Department • SOPs and processes specific to QA • Their suppliers : qualification, incoming material, discrepant material • Metrology : MSV, gage R&R, calibration certificates, etc • Pareto of yield losses and quality targets • MRB Betty Rose (betty.rose@tektronix.com)

6. The Audit continued • Customer returns • Pareto of common causes • What processes exist to handle and which departments are involved • CLCA : is there a written process • Are there targets • For current customers, what data currently precedes or accompanies shipments • You want to know if your data requirements are unusual • Do they use • Cost models • Cost reduction goals Betty Rose (betty.rose@tektronix.com)

7. The Audit continued How do you perform an Audit when travel is not an option ??? • It will take longer to qualify a potential supplier • The data becomes your eyes • Examples of data they request of their suppliers • Data collected on the factory floor • QA release data • Data sent with a shipment to a customer • Other data relevant to your parts/material • Remember to ask the most important question “how do you know”. The next most important question is “can you demonstrate it” Betty Rose (betty.rose@tektronix.com)

8. Making a Decision • Unique technology vs. common or commodity • Decide how the various criteria are to be weighted based on your company’s objectives Example of a scoring used : 6 categories • General category (maintenance, housekeeping, ethics, environmental policies, openess) 6% • Quality 37% • Cost 16% • Availability (delivery & flexibility, risk management) 19% • Technology (fit has already been ascertained; this category looks at technology management & the design process) 12% • Customer satisfaction (account support & communication) 10% Betty Rose (betty.rose@tektronix.com)

9. Approved status clears a supplier for business • Conditional status requires follow-up, corrective action and improvement • Not Approved indicates supplier is too risky/costly to fix. Business with this supplier is not recommended. Making a Decision continued • Evaluation based on a 500 point scoring system. 1-5 points available for each of the 100 questions • Minimum acceptable score of ≥ 60% is required in each category for “Approved” status • Suppliers who do not meet the minimum acceptable evaluation score will either be rejected or put on a corrective action plan to improve performance before business is placed with them Betty Rose (betty.rose@tektronix.com)

10. Execution Now that the supplier has been selected, it’s time for the supplier to PERFORM • Production trials : how do you define “production trial”, how many, size, data to be reported • What goes into inventory & what gets scrapped • Perform measurement correlation, MSV, gage R&R, etc • Checklist with sign offs may be necessary to ascertain all steps were taken Betty Rose (betty.rose@tektronix.com)

11. Monitoring & Improvement Important: For continuous improvement by your supplier, do what you said you would do during the audit & approval process !! • Change control for permanent & temporary changes • How are out of spec parts/material to be handled • Are you getting the VOE you required and are you looking at it • Are you getting CLCA when needed and are you responding • Set up periodical business and technical reviews • Supplier performance evaluations based on meeting targets such as price, quality delivery, etc. Betty Rose (betty.rose@tektronix.com)