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AS 51 version 2 -Training Module - Supplier Rating

AS 51 version 2 -Training Module - Supplier Rating. Issued by: Jolene Kawa, Jeffrey McMurdie Approved by: Svante Mogefors, Halvar Jonzon 30-June-2005. Contents. AS 51 Training Purpose and Objectives Abbreviations and Introduction Measurable Parameters (PPM, DMT, OTP)

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AS 51 version 2 -Training Module - Supplier Rating

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  1. AS 51 version 2 -Training Module -Supplier Rating Issued by: Jolene Kawa, Jeffrey McMurdie Approved by: Svante Mogefors, Halvar Jonzon 30-June-2005

  2. Contents • AS 51 Training Purpose and Objectives • Abbreviations and Introduction • Measurable Parameters (PPM, DMT, OTP) • Service Level Parameters (S-APQP, PPAP, RESP) • Overall Rating - Total % achieved • Overall Rating - Rating Category • Overall Rating - Depending on No. of Relations • Overall Rating - Example with >1 Supplier Relation • Overall Rating - Rating Period • Overall Rating - Disputes from Suppliers • AS 51 Training Summary • References and Links

  3. AS 51 Training Purpose • Purpose • Explain AS 51 • Present changes from AS 51 version 1.0 to the new AS 51 version 2.0 (high lighted in red) • Demonstrate how supplier rating has been simplified. • Intended Audience • Suppliers to Autoliv plants. • Autoliv SQ, Purchasing and Production Control or Logistics

  4. AS 51 Training Objectives • After completing this training, you will be able to understand ... • How Autoliv plants rate their suppliers • How each rating parameter is calculated • How Overall Rating is calculated for one Supplier Relation, and for more than one Supplier Relation • How Autoliv discriminates between good and bad supplier performances • How supplier performance affects supplier selection for new business

  5. AS 51 Autoliv Supplier RatingAbbreviations - General Abbreviation Explanation • PPM Parts Per Million (number of non-conforming parts per million produced) • DMT Demerits • OTP On Time Parts • M Measurable parameters (PPM, DMT, OTP) • S-APQP Supplier - Advanced Product Quality Planning • PPAP Production Part Approval Process • RESP Responsiveness • SL Service Level parameters (S-APQP, PPAP, RESP) • NCM Non Conforming Material

  6. AS 51 Autoliv Supplier RatingAbbreviations - Targets, Thresholds, Weights Abbreviation Explanation Value • TPPMTarget for PPMs 0 PPM * • UPPMUnacceptable Level for PPMs 200 PPM * • THOTPTHreshold for On Time Parts 90% on time * • WPPMWeight for PPM25 • WDMTWeight for Demerits25 • WOTPWeight for On Time Parts 26 • WAPQPWeight for S-APQP8 • WPPAPWeight for PPAP8 • WRESPWeight for RESPonsiveness8 * These values are defined by Autoliv Head Office when needed.

  7. AS 51 Autoliv Supplier RatingIntroduction • The Autoliv Supplier Rating is a strategic tool to support decision-making when dealing with our suppliers. • Suppliers with “UNSATISFACTORY” rating will be at risk for obtaining new business. • Each supplier is rated by six different parameters: • 3 Measurable Parameters: PPM, DMT, OTP. • 3 Service Level Parameters: S-APQP, PPAP, RESP. • All suppliers of materials for serial production will be rated. • All Autoliv plants use this system.

  8. AS 51 Autoliv Supplier RatingMeasurable Parameters - Overview • This rating is unchanged.

  9. Defective parts scrapped/returned + reworked x 106 PPM = Total quantity received AS 51 Autoliv Supplier RatingMeasurable Parameters - PPM (I) • PPM is calculated on production parts* as follows: • PPM calculation does not include: • Warranties or field returns. • Pre-production parts or engineering samples . • If parts are returned to supplier: • Only actual defective parts are counted. If the supplier does not provide information within 10 days about actual defective parts found, the complete returned shipment is counted. *PPAP approved parts

  10. AS 51 Autoliv Supplier RatingMeasurable Parameters - PPM (II) How to count parts that are difficult to quantify: • All calculations shall be based on the unit used within the Autoliv MRP system, e.g.: • Individual labels or roll of labels. • Length of threads or number of cones. • For the following cases, PPM rating can be modified upon joint decision, between Autoliv and Supplier: • Where counting of defect parts is impossible or too time consuming in comparison to the cost of the part. • Example:A box of 10 000 O-rings was found to be defective. A representative sample from the box was inspected with a result of 5% defect: 5% will be applied: 10.000 x 5% = 500 non-conforming parts.

  11. UPPM  PPM x WPPM UPPM TPPM AS 51 Autoliv Supplier RatingMeasurable Parameters - PPM (III) • TPPM (Target PPM) has changed from 10 to 0. • PPM score is calculated as follows: • If PPM = TPPM score = WPPM • If PPM  UPPM  score = 0 • If TPPM  PPM  UPPM  score =

  12. UPPM  PPM 200  78 x WPPM x 25 UPPM TPPM 200  0 AS 51 Autoliv Supplier RatingMeasurable Parameters - PPM (IV) PPM score calculation example • Use these values: • UPPM = 200 • WPPM = 25 • TPPM = 0 • PPM = 78 (supplier PPM) • In this case, TPPM PPM  UPPM applies, and the score is calculated as follows: score = = = 15.25 • Round off the calculated score  PPM score = 15

  13. AS 51 Autoliv Supplier RatingMeasurable Parameters - DMT (I) • This rating was changed. • Rating rules in AS 51:1.0 • Rating rules in AS 51:2.0

  14. AS 51 Autoliv Supplier RatingMeasurable Parameters - DMT (II) • Supplier demerits are based on the severity of • the defective material or • the delivery concern. • A customer impact is a supplier defect or delivery concern that reached or affected an Autoliv customer. • A repeat occurrence is an incident occurring after the supplier has implemented containment actions. • For the reporting period, the total generated demerits are added up.

  15. AS 51 Autoliv Supplier RatingMeasurable Parameters - DMT (III) • DMT score calculation is unchanged. • DMT is calculated as follows: • If total demerits  WDMT  score = 0 • If total demerits  WDMT  score = WDMT Total

  16. AS 51 Autoliv Supplier RatingMeasurable Parameters - DMT (IV) DMT score calculation example • Use these values: • WDMT = 25 • 2 minor demerits = 2x1 = 2 • 1 critical demerit = 1x10 = 10 •  total demerits = 2x1 + 1x10 = 12 • In this case, total demerits  WDMT applies, and the score is calculated as follows: score = WDMT Total = 25  (2x1 + 1x10) = 25  12 = 13 •  DMT score = 13

  17. Number of delivery concerns OTP = (1  ) x100 Number of deliveries per month AS 51 Autoliv Supplier RatingMeasurable Parameters - OTP (I) • OTP is calculated as follows: • Definition of delivery and delivery concern: • A delivery is defined by part number and engineering level, quantity and specified shipment time according to the supplier’s individual purchasing agreement (e.g. INCOTERMS, “Pull Lists”). • A delivery concern is an incident monitored by a NCM reportto the supplier and managed by Logistics. Typical examples: • Deliveries not on time • Wrong quantity / product • Packaging not according to specification • AS 242 non-compliance (e.g. missing or wrong EDI/documents) • AS 244 non-compliance (e.g. mislabeling) • Crisis Management (e.g. capacity recovery, alternative delivery plan)

  18. OTP  THOTP x WOTP 100  THOTP AS 51 Autoliv Supplier RatingMeasurable Parameters - OTP (II) • OTP score calculation is unchanged. • OTP is calculated as follows: • If OTP  THOTP  score = 0 • If THOTP  OTP  100  score =

  19. OTP  THOTP 96.66  90 x WOTP x 26 No. of delivery concerns 1 100  THOTP ) x100 (1  (1 ) x100 100  90 No. of deliveries per month 30 AS 51 Autoliv Supplier RatingMeasurable Parameters - OTP (III) OTP score calculation example • Use these values: • WOTP = 26 • THOTP = 90 • 30 deliveries in 1 month with 1 delivery concern •  OTP = =  96.66 • In this case, THOTP  OTP  100 applies, and the score is calculated as follows: score = = = 17.3 • Round off the calculated score  OTP score = 17

  20. AS 51 Autoliv Supplier RatingService Level Parameters - Overview (I) • This rating was changed. • Rating rules in AS 51:1.0 • Rating rules in AS 51:2.0

  21. AS 51 Autoliv Supplier RatingService Level Parameters - Overview (II) Important Note: • Quality of Quotation (QUOT) was removed. • Engineering Support (ENG) was replaced by S-APQP. • Service Level Parameters only apply to external (non-Autoliv) suppliers.

  22. AS 51 Autoliv Supplier RatingService Level Parameters - S-APQP • This rating was changed. • Rating rules in AS 51:1.0, Engineering Support (ENG) • Rating rules in AS 51:2.0, S-APQP

  23. AS 51 Autoliv Supplier RatingService Level Parameters - PPAP (I) • This rating was changed.It is applicable only for 1st time submittals per engineering level. The worst PPAP score will be taken. • Rating rules in AS 51:1.0 • Rating rules in AS 51:2.0

  24. AS 51 Autoliv Supplier RatingService Level Parameters - PPAP (II) • What is counted as an Engineering level?In AS 51:PPAP rating is applicable only for 1st time submittals per engineering level. For 2nd or 3rd or 4th time submittals, no new rating will be given. • There is a new engineering level if • A major change is made to the part according to AS 101 • There is not a new engineering level if • A minor change is made to the part according to AS 101

  25. AS 51 Autoliv Supplier RatingService Level Parameters - RESP • This rating was changed. • Rating rules in AS 51:1.0 • Rating rules in AS 51:2.0

  26. AS 51 Autoliv Supplier RatingService Level Parameters - Level 0 • For all Service Level Parameters, a level 0 was introduced. • Level 0 gives the score N/A (Not applicable). This means that the parameter is not included in: • Total score • Total possible score (total possible score is reduced with the weight of the not applicable parameter(s) • Level 0 can be applied in the following cases: • The supplier is internal • S-APQP or PPAP is not required at all for the supplier (off the shelf parts, small quantities or the supplier does not provide these services at all) • S-APQP or PPAP is not required for the rating period for the supplier

  27. AS 51 Autoliv Supplier RatingService Level Parameters - Example SL Parameter score calculation example • Use these values: • S-APQP level 2  score = 4 • PPAP level 1  score = 0 • RESP level 3  score = 8 • In a final step, we will derive the Overall Rating / Total % achieved for all Measurable and Service Level Parameters used in examples so far.

  28. AS 51 Autoliv Supplier RatingOverall Rating - Total % achieved Summary of score calculation example • The scores from the examples are shown below: • The Total Score is 57 out of 100. This means, Total % achieved is 57%.

  29. AS 51 Autoliv Supplier RatingOverall Rating - Rating Category • Each supplier is given a status (Rating Category). • The Total % achieved based upon previous examples was 57%, which means this supplier’s performance falls into Rating Category “UNSATISFACTORY”.*Supplier Rating Database is only used within Autoliv

  30. Supplier A Autoliv Plant 1 Autoliv Plant 1 Supplier A Autoliv Plant 2 Autoliv Plant 3 Autoliv Plant 4 AS 51 Autoliv Supplier RatingOverall Rating - Depending on No. of Relations • Overall Rating – One supplier relation • Example of previous slides • Overall Rating – More than one supplier relation • Example of future slides

  31. Period minus 1 (=January -04) Period minus 5 (=September -03) 43 % 6 months Monthly values Example with >1 Supplier Relation Supplier Overview • Supplier A delivered parts to 4 ALV plants during the last 6 months (Sep-03 to Feb-04): AOA, ASG, BKI, BMF. • On the next pages, the numbers below are explained. Note! The picture in this and the next slide is taken from the internal Autoliv Supplier Rating database

  32. Example with >1 Supplier Relation Single Ratings • AAR did not purchase any parts in the last 6 months. • AOA did not rate Supplier A in 2004, but during the last 4 months of 2003, the 6 months score was 84% • Supplier A  ASG: 6M rolling = 92% , and Feb-04 = 91% • Supplier A  BKI: 6M rolling = 66% , and Feb-04 = 66% • Supplier A  BMF: 6M rolling = 60% , and Feb-04 = 85% • Supplier A  Total: 6M rolling = 39% , and Feb-04 = 65% 43 %

  33. Example with >1 Supplier Relation Overall Rating - Total % achieved • Total % achieved is calculated as follows: Note: M means Measurable Parameters SL means Service Level Parameters • Parameters will be rated only if they are applicable. • Example: For Autoliv internal suppliers, Service Level Parameters are not rated. • Total possible score = 100 - Total weight Service Level Parameters • Total possible score = 100 - 24 = 76 Total achieved score for applicable parameters (M+SL) x100 Total % achieved = Total possible score

  34. Total rejects from all supplier relations (past 6 months) x106 Total PPM = Total deliveries from all supplier relations (past 6 months) Example with >1 Supplier Relation Overall Rating - Total PPM • Total PPM during the 6 months rolling period: • AOA PPM = 0 rejects divided by 147 200 delivered parts = 0 PPM • ASG PPM = 1 rejects divided by 709 459 delivered parts = 1 PPM • BKI PPM = 0 rejects divided by 278 400 delivered parts = 0 PPM • BMF PPM = 998 rejects divided by 277 507 delivered parts = 3596 PPM • Total PPM = 999 rejects divided by 1 412 566 delivered parts = 707 PPM • Note: Total PPM is calculated as total rejects from all supplier relations divided by total deliveries from all supplier relations, times 1000 000 • Total PPM score = 0because 707 PPM > 200 PPM = UPPM .

  35. Total demerits from all supplier relations (past 6 months) x100 Total DMT = Number of supplier relations (past 6 months) Example with >1 Supplier Relation Overall Rating - Total DMT • Total DMT during the 6 months rolling period: Note: A supplier relation exists for every month where a specific supplier delivers parts to a specific ALV plant. In this example, there are 22 months of reporting due to 22 supplier relations. • AOA: 0 demerits during 4 months of reporting • ASG: 4 demerits during 6 months of reporting • BKI: 0 demerits during 6 months of reporting • BMF: 39 demerits during 6 months of reporting • All plants: 43 demerits during 22 months of reporting • Total DMT: 43 demerits divided by 22 months = 1.95  2 • Total DMT score = 25 - 2 = 23 because 2 demerits < 25 = WDMT .

  36. AOA (Delivery month1 x OTPmonth1 + Delivery month2 x OTPmonth2 +…..Delivery month6 x OTPmonth6 ) + ASG (Delivery month1 x OTPmonth1 + Delivery month2 x OTPmonth2 +…..Delivery month6 x OTPmonth6 ) + BKI (Delivery month1 x OTPmonth1 + Delivery month2 x OTPmonth2 +…..Delivery month6 x OTPmonth6 ) +BMF (Delivery month1 x OTPmonth1 + Delivery month2 x OTPmonth2 +…..Delivery month6 x OTPmonth6 ) AOA (Delivery month1 + Delivery month2 +…..Delivery month6) +ASG (Delivery month1 + Delivery month2 +…..Delivery month6) + BKI (Delivery month1 + Delivery month2 +…..Delivery month6) +BMF (Delivery month1 + Delivery month2 +…..Delivery month6) Example with >1 Supplier Relation Overall Rating - Total OTP (I) • Total OTP is calculated as a quantity-weighted-OTP for all supplier relations. • Total OTP during the 6 months rolling period = • The next slide shows the Delivery and OTP data of all 4 plants for this example. When you put them in the equation above, the result will be Total OTP = 91.6

  37. 91.6  90 x 26 100  90 Example with >1 Supplier Relation Overall Rating - Total OTP (II) • Delivery and OTP data for the 4 plants: • Total OTP = 91.6 for all 4 supplier relations. • THOTP = 90  OTP  100 applies, andTotal OTP score = = 4.16  4

  38. Total SL ratings from all supplier relations (past 6 months) x100 Total SLP = Number of supplier relations (past 6 months) Example with >1 Supplier Relation Overall Rating - Service Level Parameters (I) • Total SLP during the 6 months rolling period: • S-APQP, PPAP and RESP data for the 4 plants during the 6 months rolling period:

  39. (1+1+2+2+3+1+2+1+3+2+3+3+2+1+3+3+1+1+2+2+3+1) (24-2) 43 54 56 22 21 24 (2+2+3+1+2+2+3+3+3+3+3+3+3+3+3+3+2+2+3+3+2) (24-3) (3+3+3+2+2+2+1+2+3+2+3+3+1+1+2+2+3+3+3+3+3+2+2+2) (24-0) Example with >1 Supplier Relation Overall Rating - Service Level Parameters (II) • SLP level for S-APQP = = = 1.95  2 • SLP level for PPAP = = = 2.57  3 • SLP level for RESP • = = = 2.33  2 • SLP score: level 2  score = 4, level 3  score = 8 • Total SLP score = (4 + 8 + 4) = 16

  40. Example with >1 Supplier Relation Overall Rating - Summary • Overall Rating • Total PPM score = 0 • Total DMT score = 23 • Total OTP score = 4 • Total SLP score = 16 • Total % achieved = (0 + 23 + 4 + 16) / (25+25+26+24) = 43 / 100 = 43% • This means that this supplier’s performance falls into Rating Category “UNSATISFACTORY”.

  41. AS 51 Autoliv Supplier RatingOverall Rating - Rating Period • All Suppliers are rated monthly: • Measurable Parameters are calculated monthly. • Service Level (SL) Parameters are evaluated monthly. • If there is no change, the last rating will remain visible in the database until the next rating will take place. If there is no rating activity during 6 months, rating will become “Not Applicable (N/A)”. • For external suppliers, SL Parameters will be rated only if applicable. For internal suppliers, SL Parameters are not rated at all. • If a supplier has not delivered any parts to Autoliv in a specific month/period, this supplier shall not be rated for that month/period.

  42. AS 51 Autoliv Supplier RatingOverall Rating - Rating Period • Ratings are submitted to Autoliv Supplier Rating Database by the 10th of the next month. • Supplier Performance is published on APP (Autoliv Partner Portal) by the 15th of the next month. • The Autoliv Supplier Rating Database will only be open for input files between the 1st and the 10th each month. This means that input files sent to the database after the 10th will not be processed until the 1st of the next month

  43. AS 51 Autoliv Supplier RatingOverall Rating - Disputes from Suppliers • The supplier is responsible for checking accuracy of their AS 51 rating. • Suppliers that are not agreeing with their rating(s) should issue an AS 51 Dispute form found in the Library section on the APP. • Suppliers must respond within two weeks after the supplier rating has been published. • The AS 51 Dispute form shall be faxed / e-mailed to the appropriate person listed in the dispute form contact list.

  44. AS 51 Autoliv Supplier RatingOverall Rating - AS 51 Dispute Form on APP

  45. AS 51 Training Summary (I)Main Changes PPM • Target PPM was changed from 10 to “Zero”. • The PPM rating can be modified upon joint decision, between Autoliv and Supplier, where counting of defect parts is impossible or too time consuming compared to the cost of the part. DMT • Supplier Demerits are now based on 3 criteria: • Minor (1), Critical (10), Customer (25). • Major was removed.

  46. AS 51 Training Summary (II)Main Changes OTP • A delivery is defined by part number and engineering level, quantity and specified shipment time according to the supplier’s individual purchasing agreement (e.g. INCOTERMS, “Pull Lists”). • A delivery concern is an incident monitored by a NCM report to the supplier and managed by Logistics. • Typical examples of reported incidents are: Deliveries not on time, wrong quantity / product, packaging not according to specification, AS 242 non-compliance (e.g. missing or wrong EDI/documents), AS 244 non-compliance (e.g. mislabeling), Crisis Management (e.g. capacity recovery, alternative delivery plan).

  47. AS 51 Training Summary (III)Main Changes Service Level Parameters (SLP) • The number of SLP changed from 4 to 3, QUOT was removed. • The Service Level Weights changed from 6 to 8. • Engineering Support (ENG) was replaced by S-APQP. • The number of SLP criteria was reduced from 5 to 3, a Level 0 was added giving a score: N/A. • PPAP rating is applicable only for 1st time submittals per engineering level. • Suppliers with multiple PPAP submittals in one month will get the lowest score of these submittals.

  48. AS 51 Training Summary (IV)Main Changes Miscellaneous • Ratings are compiled and submitted to APP by the 10th of the next month. • The Service Level Parameters are now evaluated and updated monthly instead of half-yearly. • The AS 51 Supplier Overview Report now shows a table at the bottom with the detailed data leading into the summary scores which are shown in the graphs. • A Supplier Dispute Procedure was introduced.

  49. References and Links AS 51 Autoliv Inc. Standard Supplier Rating AS 101 Autoliv Inc. Standard Part number AS 242 Autoliv Inc. Standard EDI Messages AS 244 Autoliv Inc. Standard Package & Transport Label ASM Autoliv Supplier Manual (see http://www.autoliv.biz) APP Autoliv Partner Portal (see http://www.autoliv.biz)

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