Geoffrey R. Sommerville, C.Q.A.
Geoffrey R. Sommerville, C.Q.A., Director Quality, Union Pacific Railroad, Omaha, NE 68179, 402/ 2712294.
Wayne W. Mattson, C.P.M.
Wayne W. Mattson, C.P.M., Sr. Manager Material Transportation, Union Pacific Railroad, Omaha, NE 68179, 402/ 2712294.
Since 1988 our company, the Union Pacific Railroad, (UPRR), realized that there was a need to exercise more effective control over the items we purchased, particularly since we were in the developmental stages of our internal Total Quality Management System. At UPRR it was quickly realized that we could not inspect every item received from our suppliers. However, we knew that if we were to substantially improve our service to our customers considerable improvement would be required of our internal processes and of our suppliers. There was need to place the responsibility for product and service quality directly on the supplier. Union Pacific Railroad determined that the best approach was to require that the supplier design, develop and implement their own comprehensive quality assurance program.
Our next hurdle to overcome was the determination of what minimum quality system requirement/standard should be specified. Our investigations found that there were many standards under development within the United States. Our company, a major American railroad required one that was suitable for the type of materials, services and equipment it purchased but also needed wide exposure throughout the Rail Industry. In November 1989 we adopted the Association of American Railroads Quality System Standard (AAR M-1003) as the base line from which to assess our supplier's quality programs.
After implementing this program with our materials suppliers, it became apparent that there was a need to exercise more effective control over the providers of transportation services. The carrier program objectives were to establish an effective and organized method or approach to accomplish continuous quality improvement within the transportation freight carriers.
We have identified 14 key motor carrier suppliers from among 300 active carriers, of which 12 are service contractors. These key carriers represent 85 percent of our total purchase dollars for transportation suppliers.
A key carrier meets one or all of the following characteristics: 1) high dollar volumes carried, 2) opportunity for performance improvement, and 3) importance of service within key shipping lanes.
HOW QUALITY REQUIREMENTS ARE DEFINED AND COMMUNICATED TO CARRIERS
Carrier quality requirements, indicators, quality system and service process requirements were established based on the experience gained by implementing our material supplier certification and recognition program. As a sidebar we reviewed several industries through benchmarking endeavors with key companies within and outside the rail industry. We found that while several companies told us that they intended to concentrate on their carriers to date none of them had current programs in place to deal with their motor freight carriers.
We developed and designed our Quality Requirements Booklet based on this research. This booklet provides a comprehensive 17-step description of our quality requirements. It defines a systematic approach for supplier use, to assess, measure and verify their ability to meet and exceed UP's quality systems requirements.
In addition, we publish our Supply Department Business Plan that supports the integration of the UP's Business Objectives and quality systems and processes.
These published requirements were provided as carriers were indoctrinated into our program. Specific service quality requirements are given directly to our suppliers through transportation purchase orders or contracts which contain our specifications.
METHODS USED TO ASSURE THAT QUALITY REQUIREMENTS ARE MET BY SUPPLIERS
Joint on-site audits and assessments of a carriers' quality systems allow the carrier to demonstrate their ability to deliver quality processes and services. By reviewing a carriers inspection procedures, for example, allows monitoring of the specific work instructions which outlines the essential tasks involved in daily operations and integrity of the entire carriers' quality program. On-site audits are used to review and validate that these suppliers meet or exceed our quality requirements.
Significant quality results not meeting requirements are conveyed directly and immediately to the carrier by telephone, fax, letter or face-to-face meetings. Additionally, supplier evaluation scores are prepared by transportation personnel and from internal customers, and the quality group, to assess the supplier's service quality. This annual score is shared with the supplier in a face-to-face feedback meeting.
HOW PROCUREMENT ACTIVITIES WERE EVALUATED AND IMPROVED
The transportation procurement activity is evaluated through the use of internal customer and external supplier surveys. Performance feedback is obtained on how we can improve our processes. Survey and audit results are analyzed, prioritized, and action plans developed and implemented. Results of action plans are reviewed and adjusted using a standardized problem solving process.
As interest grows in carrier quality assessments in other companies, competitive benchmarking will yield information which will allow an understanding and comparison of current processes with those which are the best practices. These benchmarks will be performed within and outside of the rail industry.
CURRENT PLANS AND ACTIONS TO IMPROVE CARRIERS' ABILITIES TO MEET KEY QUALITY
AND RESPONSE TIME REQUIREMENTS
Current plans include working with carriers to develop team approaches to problem solving techniques and integration with our Total Quality Management process. Future plans include the expansion into Phase 11 Certification Process.
Include Strategic Alliances as described below can be developed with carriers who are critical to the operation of the railroad. Additionally, supplier evaluation scores are prepared by transportation personnel with input from internal customers and the quality group, these scores are used to assess the carrier's overall service quality. This annual evaluation is shared with the carrier in a face-to-face feedback meeting.
UP's current actions include a Supplier Certification and Recognition Program to drive our key carriers toward world class quality, thereby insuring we have the best carriers in the industry. Supplier Evaluation is integrated within this program to improve quality, service, price, delivery and response time performance from our key carriers and suppliers. top suppliers who continually exceed these requirements are recognized with our annual "Outstanding Supplier Quality Award."
We are continuing to develop and expand our relationships with all key suppliers into long-term commitments of two years or more into strategic alliances. These strategic alliance agreements have five basic requirements: quality, mutual agreement, performance standards, open relationship and mutual benefits to each party. All strategic alliances must meet mini- mum standards in each of these five requirements.
A SIMPLIFIED CARRIER AUDIT PROCEDURE
THE PURPOSE OF THE ON-SITE QUALITY SYSTEM AUDIT OF A CARRIER IS TO PROVIDE THE INDIVIDUAL CARRIERS WITH THE QUALITY REQUIREMENTS NECESSARY TO DO BUSINESS WITH OUR COMPANY. WE ARE COMMITTED TO OUR TOTAL QUALITY MANAGEMENT SYSTEM AND WE EXPECT THAT ALL OUR KEY CARRIERS TO MEET OR EXCEED OUR QUALITY REQUIREMENTS. WE STAND READY TO WORK WITH THE CARRIERS IN IMPLEMENTING A QUALITY SYSTEM THAT WILL FULFILL THESE REQUIREMENTS.
A TYPICAL CARRIER QUALITY AUDIT
This audit is intended to provide a uniform and consistent rating method to determine the quality capabilities of a transportation carrier. The result of this audit will be used to determine which carriers are meeting the requirements and which need corrective actions.
The Carrier Quality Audit Process will be used in all areas as directed by the Supply Transportation & Quality groups along with using Departments.
Request for Carrier Quality Audit Process will be directed to the Senior Manager Material Transportation. Director of Quality in the Supply Department has the responsibility to direct and manage the Carrier Audit Process. The Senior Manager Material Transportation will notify the auditee of the forthcoming audit and make arrangements,:or the visit. The Senior Manager Material Transportation will assemble an audit team for each visit which will include as a minimum a representative from; transportation, user, and quality groups, or any other persons deemed necessary.
Each carrier to be audited will be sent a copy of the checklist and the requirements prior to the actual audit. At the beginning of each audit, the lead auditor will outline the items to be audited to the carrier's managers and quality personnel. During the audit, the lead auditor shall explain the grading of each question to the location's personnel and make appropriate comments on the checklist form.
The on-site audit begins with a meeting of the audit team and the carrier's terminal manager, operations manager, sales manager, maintenance manager and quality manager. Often the carrier will have a representative from the general headquarters at the meeting to participate in the audit. Also, the quality manager is often from the headquarters or is a regional director of quality.
The purpose of the on-site audit is explained to the carrier's representatives by the Senior Manager Material Transportation and the lead auditor. The carrier's quality manual and quality procedures are then reviewed for application to the actual work being done within the terminal. Note, only a few carriers have been found to have a complete quality manual and procedures. The quality checks within the carrier's operation manual are used as a reference for the audit in the absence of a formal quality manual or procedures.
The terminal manager's review of the local pick up and delivery operation is audited first to determine if quality procedures for this critical operation are implemented and realized. The pick up reports should reflect on-time pick ups or reasons why late pick ups were made. Actual notations on the report and summaries of failures will indicate management activity to understand failures and make corrections to meet carrier standards. The lack of an active review of these activities would be a strong indicator of failure to implement a quality program and procedures. An active quality program normally displays a very active role by the terminal manager in controlling pick up and delivery operations, ensuring continuous improvement and minimizing failures.
The dock operation is then audited to determine use of quality procedures in receiving inbound material from shippers and other terminals and loading outbound trailers. The flow of information in terms of bills of lading must be managed so that materials are transferred efficiently without loss or damage during the dock operation. Quality procedures and work instructions stating how checks are made at each step of the transfer process should be available to dock workers and supervisors. Notations made on the trailer loading manifest and independent matching of all bills of lading with the manifest will insure that outbound trailers are properly loaded and prepared for delivery. Lack of work instructions and relevant quality procedures usually will be accompanied by poor dock operations and excessive damage or loss of material.
One part of the on-site audit that really reveals whether the terminal is utilizing a quality program is the audit of the "hold" area for materials that have lost identification due to lost paperwork or improper shipment by a prior terminal. The quality procedure should outline a system of checks to identify the material and prepare it for reshipment. Work instructions should include preparation of a "hold" list for these materials indicating their status and designated place on the dock. A good quality program will have this "hold" list readily available at the claims desk. Updates and notations made on the list will reflect an active effort to solve this quality problem and clear all held material.
The claims desk Is responsible for settling customer complaints about damages and lost material. The on-site audit will reveal the number of claims, their level of severity and what the carrier is doing to resolve current claims. The quality procedure will identify these statistics through a system of record checks. More important, it will outline a systematic investigation of why the claims are occurring. This effort to determine the reasons why claims are occurring is most often overlooked in the quality program implementation and training. A thorough review of the quality manual and procedures will reveal if the investigation of claim causes is required and where this effort to determine causes is recorded. Lack of such specific procedures may indicate that a process of continuous improvement is not being pursued with the intensity necessary to insure progress.
The on-site audit of the maintenance function should reveal if the carrier's equipment is being maintained at the level necessary to perform the pick up and delivery functions without delay or breakdown. A series of quality checks that are called for in the quality procedures will substantiate if the necessary maintenance operations are being scheduled, performed and recorded. An audit check of the rate of breakdown or equipment failure at the terminal will reveal if such a program of maintenance is being pursued at a level necessary to reduce road failures. The maintenance records should reflect an effort to analyze these road failures and improve on the overall condition of the terminal's equipment.
The carrier's quality manual and procedures should outline the necessary training to put the quality program in place. Without this quality training the carrier's employees may have difficulty completely understanding the quality program and how the quality procedures will aid in the process of continuous improvement. The on-site audit should reveal if this training is taking place and whether each employee's participation is properly reported. Failure to record training progress should be noted and corrected.
At the conclusion, the lead auditor will compile the major findings, verbally report and discuss them as appropriate. Corrective action will be required as outlined in the formal written report. The lead auditor will assist the auditee in fully understandings the findings. The auditee is expected to submit a plan of corrective action to the auditing agency within the agreed time as stated in the formal report.
The auditee's written corrective action plan with verifiable dates will be reviewed by the UPRR auditing team and/or the lead auditor. The auditee will be notified in writing if the plan is satisfactory. The auditee will be reaudited within the time limits as shown on the corrective action plan. A one time thirty day extension, on the corrective action plan, may be approved by the lead auditor if deemed necessary, and only if formally requested in writing by the auditee.