Transcript Supplier Quality Process Map - Construction Industry Institute

Don’t Let Your Project Sink
RT308 – Achieving Zero Rework through Effective
Supplier Quality Practices
2014 CII Annual Conference
July 21–23 • Indianapolis, Indiana
Meet your Captain and Crew
Captain
Buck Blum, CB&I
Crew Members
Kim LaScola Needy, University of Arkansas
Brad Monroe, Dresser-Rand
Don Ellis, DuPont
Ken Walsh, San Diego State University
2
Randy Moreland, Shell
RT308 – Achieving Zero Rework through
Effective Supplier Quality Practices
Buck Blum, CB&I
Vince Carney, Southern Co.
Kim Needy, Rufaidah AlMaian
University of Arkansas
Don Ellis, DuPont
Gene Nikstad, CH2M HILL
Don Holte, Procter & Gamble
Jim Peters, Bechtel Corp.
Phil Klefas, Aramco Services
Tricia Thibodeaux, Fluor
Terry McMillan, Alstom Power
Ken Walsh, Thais Alves, Shamail
Ahmad, Yoshua Neuman, Duc
Huy Nguyen San Diego State Univ.
Brad Monroe, Dresser-Rand
Randy Moreland, Shell
3
Gary Weiler, Leidos Constructors
Essential Question
What are the most effective processes and practices for
ensuring that project materials and equipment are produced,
manufactured, or fabricated in strict accordance with all
applicable specifications, and that they are delivered to the
project site without any need for rework?
4
Implementation Session Learning Objectives
• Explain the methods used
• Explain the supplier quality process map
• Demonstrate the impact of identifying non-conformances
across several stages of the supply process
• Utilize the cost-tradeoff curves to incorporate resource
decisions into supplier selection processes
5
Methods
Qualitative Analysis
• Literature review regarding construction and other industries
• Documentation from contractors and owners
• Interviews at contractor and supplier facilities
• Supplier focus groups
Quantitative Analysis
• Hard data from POs using a data collection instrument
• Simulation modeling of the supplier quality work process
6
Qualitative Analysis –
Supplier Quality Process Map
7
SQ Process Map. Adapted from Alves et al. (2013).
Qualitative Analysis –
Literature and Documentation Review
• Inside the construction
industry
8
• Outside the construction
industry
– CII Literature
– Healthcare
– General Capital Facilities
Literature
– Manufacturing
– Documents currently used by
CII members
– Aerospace
– Food and Restaurant
– Shipbuilding
Test Your Knowledge – Boarding Pass
Who is responsible for creating the
Inspection and Test Plan?
A. Owner
B. Contractor
C. Supplier
ie
r
0%
Su
pp
l
0%
Co
nt
ra
ct
or
Ow
ne
r
0%
Qualitative Analysis – Literature Review
Supplier Quality Process Map
10
Qualitative Analysis – Literature Review
Findings
• Supplier partnerships.
• Involvement of fewer, dependable suppliers.
• Feedback system between the buyer and supplier with supplier
improvement opportunities based on measurable objectives.
• Careful supplier selection process focusing on quality aspects.
• Top management involvement and commitment for continuous
improvement.
11
Qualitative Analysis – Interviews
Demographics
• Six interviews with contractors
• Interviewees represent the following functions
– Procurement; Project Services and Inspection; Supplier Quality and
Material Planning; and Operations and Quality Management
• Categories of questions
– Supplier quality organization, Supplier quality system, Metrics,
Data, Assessment, Supporting documents, and Suppliers
12
Qualitative Analysis – Interviews
Findings
• Companies with highly effective Supplier Quality
system have high involvement from top
management (leadership) to improve the Supplier
Quality system.
• Companies with internal databases have better
Supplier Quality system. Information is visible and
can be pulled in several formats by any department to
use them for analysis and future decisions.
13
Qualitative Analysis – Supplier Focus Groups
Demographics
• 3 supplier focus groups with 11 participants (9 companies)
– Average company size = 2,392 employees
– Average annual volume of sales = $928M
– Average number of years supplying the industry = 49 years
• Suppliers represented four commodity categories
– Tagged/engineered equipment
– Fabricated structural steel
– Fabricated pipe spools
14–
Manufactured/bulk goods (non-engineered/bulk valves)
Qualitative Analysis – Supplier Focus Groups
Questions
1. How is QA/QC currently performed in your organization
and your suppliers?
2. What are the best practices related to QA/QC you
commonly find in the industry?
3. What would it take for you to meet all applicable
requirements contained in an order without rework
(Supplier Wish List)?
15
Test Your Knowledge – Boarding Pass
For critical equipment or materials, do
you conduct an upfront joint quality
planning meeting with your suppliers?
A. Yes
B. No
0%
No
Ye
s
0%
Qualitative Analysis –
Supplier Focus Groups Wish List Findings
•
Provide relevant specifications for each project
•
Provide updated specifications
•
Standardize specifications and applications
•
Match the PO to the RFQ
•
Provide positive feedback
•
Participate in up-front joint quality planning
•
Hold early stakeholder meetings and periodic reviews
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Qualitative Analysis - Summary
•Providing the exact specifications to suppliers.
•Improving and updating specifications to be
standardized.
•Partnership with
supplier and
involvement of
fewer suppliers.
•Careful selection of
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suppliers.
•High involvement form top management.
•Development and usage of Supplier Quality
System database.
•Improvement of joint quality planning with
suppliers
Implementation Resource
1. Introduction
2. Supplier Quality Processes Map
3. Estimating the Impact of the Cost of Non-Quality
– Appendix I: Glossary of Terms and Acronyms
– Appendix II: Total Landed Cost Discussion
– Appendix III: Detailed Supplier Quality Process Map
– Appendix IV: Research Team 308 Members
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Implementation Resource – RACI
Task
Owner
Contractor
Supplier
Supplier Quality Plan
I
A,R
R
Inspection & Test Plan
C,I
A,C
R
2. Execution
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Non-conformance
C,I
A,R
R
Responsible, Accountable,
Consult,
Inform
Responsible, Accountable, Consult, Inform
RACI Definitions
• Responsible: actually completes the task or activity
• Accountable: veto power for an activity.
• Consult: must be consulted prior to a final decision or
action
• Inform: need to be informed after a decision or action is
taken
Implementation Resource – RACI
Task
Owner
Contractor
Supplier
Supplier Quality Plan
I
A,R
R
Inspection & Test Plan
C,I
A,C
R
2. Execution
22
Non-conformance
C,I
A,R
R
Responsible, Accountable,
Consult,
Inform
Responsible, Accountable, Consult, Inform
Quantitative Analysis – PO Data Collection
Instrument – Categories
• Material Categories
– Tagged/Engineered
Equipment
– Project Data
– Fabricated Structural Steel
– Practices
– Fabricated Pipe Spools
– Outcomes
– Non-Engineered/Bulk Valves
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• Categories of Questions
– PO Basic Data
Quantitative Analysis – PO Data Collection
Instrument – Demographics
Loca on of Suppliers
Inside USA
Outside USA
Mul ple Loca ons
Loca vs.
on Emerging
of Suppliers
Developed
Nations
Developed Na ons
Emerging Na ons
N=108
3%
3%
13%
33%
64%
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84%
Mul ple Loca ons
Quantitative Analysis – PO Data Collection
Instrument – Demographics
60%
50%
50%
47%
38%
Percent of POs
Percent of POs
40%
40%
31%
30%
20%
30%
24%
20%
12%
11%
10%
2%
4%
4%
0%
100K-1M
1.0E5-1.0E6
1M-10M
10M-100M
1.0E6-1.0E7
1.0E7-1.0E8
100M-1B 1.0E9-1.0E10
1B-10B 1.0E10-1.0E11
10B-100B
1.0E8-1.0E9
Es mated total installed cost of projects ($)
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27%
10%
0%
1.0E4-1.0E5
10K-100K
1.0E6-1.0E7
1M-10M
Total cost of PO ($)
1.0E5-1.0E6
100K-1M
1.0E7-1.0E8
10M-100M
Quantitative Analysis – PO Data Collection
Instrument – Demographics
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Quantitative Analysis – Practices
1. Conducting surveillance in the supplier’s facility
2. Tracking of surveillance effort
3. Using a quality control plan / inspection and testing plan
4. Having meetings with suppliers to discuss quality
5. Performance rating of the supplier after execution
6. Projecting the cost of surveillance effort
7. Using suppliers with registered/certified quality
management system
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Test Your Knowledge – Boarding Pass
Does more in-process inspection
reduce the number of nonconformances identified at a job site?
A. Yes
B. No
0%
No
Ye
s
0%
Test Your Knowledge – Boarding Pass
Does the use of industry-certified
suppliers reduce the number of nonconformances identified at a job site?
A. Yes
B. No
0%
No
Ye
s
0%
Test Your Knowledge – Boarding Pass
Do more meetings with suppliers
reduce the number of nonconformances identified at a job site?
A. Yes
B. No
0%
No
Ye
s
0%
Quantitative Analysis – Impacts
Practices
Does it make
a difference?
How?, Why?, or When?
Conducting surveillance in the
supplier’s facility
Yes
A greater number of NCs are found when more surveillance is
conducted
Tracking of surveillance effort
Yes
Companies can learn how much is spent on their surveillance effort
and identify potential causes for more/less inspection
Using a Quality control plan /
inspection and testing plan
Yes
Improves supplier quality outcomes, by finding problems earlier in the
process, resources and money utilized for the inspection effort will
pay off in terms of the quality of the final products
Having Meetings with suppliers to
discuss quality
Yes
Pro-active meeting held before execution/fabrication help find NC
earlier, at the supplier’s shop rather than on site
Performance rating of the supplier
after execution
Yes
But, only if the owner/contractor works together with the supplier and
the performance rating is shared to proactively improve the supplier’s
outcomes and prevent NCs from happening
Projecting the cost of surveillance
effort
Yes
A greater number of NCs are found when the cost of the surveillance
effort is projected
Using suppliers with
registered/certified quality
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management system
No
No statistical difference was found in the amount or location of NCs
Highly Effective Companies
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Cross Analysis and Conclusions
Findings from Quantitative
Analysis
Findings from Qualitative
Analysis
Careful
supplier
selection
Observation and inspection
of supplier work
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Involvement from upper
management
Detailed
planning
Strategic partnership with
and
suppliers
Early detection of quality tracking for
problems
inspection
Accuracy of project
effort
specifications (update &
standardize)
Improvement
of feedback
process with
suppliers
Qualitative Analysis –
Supplier Quality Process Map
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SQ Process Map. Adapted from Alves et al. (2013).
Simplified Map
Prec
1.execution
Process Capability (Pfab)
2.Release
3.Receive
Inspection Capability (Pinsp)
Pmc
4.MC
Latent NC
Quantitative Analysis – Modeling
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Cost of Rework Model - Validation
1.0
0.9
Simulation result
Love et al 1999
Josephson 1999
PA 2014
RT 308 Data
Percentile
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
0
0.02
0.04
0.06
0.08
0.1
0.12
0.14
Rework Fraction
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0.16
0.18
0.2
Test Your Knowledge – Boarding Pass
If in-process inspection is eliminated to
save costs, how much is the expected
rework cost increased?
0%
10
0%
0%
50
%
0%
10
%
A. 10%
B. 50%
C. 100%
Example
• Total Landed Cost:
– Pfab = 75%
– PO cost = $5,000,000
– Pinsp = 70% at a cost of $100,000
• TLC = $5,000,000 + $100,000 = $5,100,000
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fNQ = 0.4
CostNQ = (0.4) * 5,000,000 = $2,000,000.
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TLC+NQ = $5,100,000+ $2,000,000 = $7,100,000
Example
Supplier A
Supplier B
Supplier C
PO Cost = $4,000,000
PO Cost = $5,000,000
PO Cost = $6,000,000
Quality Effort Cost =
$150,000
Quality Effort Cost =
$100,000
Quality Effort Cost =
$50,000
Pfab = 40%
Pfab = 75%
Pfab = 90%
(Pinsp)Total = 70%
(Pinsp)Total = 70%
(Pinsp)Total = 70%
fNQ =0.9
fNQ =0.4
fNQ =0.15
CostNQ = $3,600,000
CostNQ = $2,000,000
CostNQ = $900,000
TLC+NQ = $7,750,000
TLC+NQ = $7,100,000
TLC+NQ = $6,950,000
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Example
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Example
Supplier A
Supplier B
Supplier C
PO Cost = $4,000,000
PO Cost = $5,000,000
PO Cost = $6,000,000
Quality Effort Cost =
$150,000
Quality Effort Cost =
$100,000
Quality Effort Cost =
$50,000
Pfab = 40%
Pfab = 75%
Pfab = 90%
(Pinsp)Total = 70%
(Pinsp)Total = 70%
(Pinsp)Total = 70%
fNQ =0.9
fNQ =0.4
fNQ =0.15
CostNQ = $3,600,000
CostNQ = $2,000,000
CostNQ = $900,000
TLC+NQ = $7,750,000
TLC+NQ = $7,100,000
TLC+NQ = $6,950,000
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Conclusions and Recommendations
1. Finding: The literature review did not find any new work
processes.
Recommendation: Utilize the existing work processes
consistently (e.g. assigning criticality factors considering
supplier performance and evaluation).
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Conclusions and Recommendations
2. Finding: Inspection during the execution is an effective
and cost efficient method to help ensure supplier quality.
Recommendation: Early implementation of supplier
quality work processes have the most impact on
outcomes.
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Conclusions and Recommendations
3. Finding: Companies need a tool to examine the tradeoff
between a supplier’s fabrication capability and the level of
inspection.
Recommendation: Utilize the decision support tool
described in the Implementation Resource to project the
cost of non-quality and to assist in making decisions on
supplier selection.
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Q&A – Don’t Let Your Project Sink
• Did you survive?
47