Receiving Inspections' Changing Role In Supplier Quality

Author(s):

Jerry W. Claunch, C.P.M.
Jerry W. Claunch, C.P.M. President, Claunch & Associates, Inc., Palm Beach Gardens, FL 33410(561) 626-0347 - jerry@Claunch.com www.claunch.com.

83rd Annual International Conference Proceedings - 1998 

"How do we get suppliers to deliver 100% quality products?" is a question heard around the world. Many companies are desiring to have certified suppliers yet they are not developing suppliers who meet the criteria. One missing aspect is the information provided at receiving inspection. Based on the desire to eliminate inspection, most companies have reduced the number of employees in the receiving inspection department but haven't gotten the supply base to the level necessary to meet their quality requirements. There is a missing link and it resides in receiving inspection. If this is not changed, companies may never achieve certified suppliers and the process is doomed for failure. By assessing why we inspect incoming product and determining what we need to achieve, companies can effectively change their course on purchased material quality improvement. This session will present the changes necessary in receiving inspection to provide statistical data. Using this data will allow purchasing professionals to improve the quality of supplied materials.

Receiving inspection serves a vital role in supplier development but not in its traditional method. Traditionally, receiving inspections' function is to inspect product and materials for nonconformances. In order to determine where we need to go, let's look at where we've been.

A brief look at receiving inspection:
In most every company, we rely on suppliers not only for raw materials, but for components, assemblies and packaged items as well. While no one is against quality, our primary criteria are production schedules and earnings. Inspection was put in place to ensure that the product entering our facility met the requirements of the drawings and specifications. Because the workload is great, sampling inspection was instituted. Later on, in an effort to reduce costs, management began to reduce the number of inspectors. When supplier certification was presented, there was an even greater push to reduce the amount of receiving inspection. With the need to meet schedules and increase earnings, some of the product at receiving inspection is simply "sent on" because there wasn't time to wait for an inspector, and the defects showed up at the point of use or in assembly. All of this contributes to a decline in the perceived quality of the purchased materials, and encouraged the inspectors to look even harder at the products they checked to find failures, slowing the receiving inspection process even further. Fingers started pointing and they wound up pointing at Purchasing, the link to the suppliers and hopefully the change agents to the suppliers performance. Supplier certification became the rallying cry in hopes that suppliers would get the message that only 100% conforming product would be allowed to enter our facilities in the future. Now some twenty years later, it still doesn't seem to be working. Many inspectors will say "our product quality was better when we had more inspectors" and they are probably right. Our costs were higher, deliveries later, and our quality was not as good as it needed to be, yet it was better than it is today. Receiving inspectors have fears about job security but rather than change, they hold onto outdated methods and there truly is no job security for them.

Typically in receiving inspection, an inspector samples a lot of materials to see if there are any defects in the lot. Practices and methods used by inspectors vary greatly, and there is little standardization of inspection procedures. In most companies, little if any training has been conducted to direct the efforts of inspection in statistical application, and probability. Hopefully inspection has documented the past incoming quality history by item and supplier to guide them in their search of defects. Far too often though, they begin with a print, measurement devices and a strong will to protect their company and its products. When defects are found, the inspector may recommend rejection of the lot, but is often overruled due to the product being in great need. Sorting and rework became part of the tasks taken on by our companies. Then came the next failure in our efforts to improve quality; Remember the "battle of the forms" in the 1970's? By then everyone was trying to develop ways to recoup costs and increase quality, but only the attorneys gained. Nothing seemed to help and everything seemed to work against improving the quality of received materials. The answer is still the same, Supplier Certification, but the approach in most companies needs to be improved. Let's establish the criteria for certification.

Supplier certification criteria:
Supplier certification encompasses three criteria: 100% quality, on time delivery and correct counts. It sounds simple, but most companies today make the same mistake as in years past. They don't develop suppliers. We criticize, complain, threaten and search for other sources but don't focus on supplier development. Because of this, Purchasing is constantly pushed into the position of defending the suppliers and generally disappointing themselves and their company. it is important for a company to understand that it takes many departments and functional areas working together to develop suppliers. Design engineering needs to understand the requirement of the product and communicate those requirements. Scheduling needs to understand lead times and until lead times are reduced, allow the planning process to generate requirements based on lead time. Purchasing must select suppliers that have a desire and management that will improve quality, reduce lead time and provide the correct quantities of items purchased. Receiving inspection must provide information about products that is meaningful and ensures improvement in the quality. Stores must provide accurate inventory records and ensure products are issued correctly and inventory adjustments become a thing of the past. Manufacturing and assembly must work to provide application information rather than criticizing the source selection of Purchasing. Everyone needs to stop pointing the finger at someone else and recognize that we all participate in the development of suppliers. What we need is a transformation within the company which applies to every department included with this is the transformation of receiving inspection.

The steps and tools of transformation for supplier certification:

1. Find suppliers who are willing and able to improve their processes. As you will see shortly, without process improvement, your efforts to transform are of little use. Once you begin this transformation, the supplier must then prove that they will improve their processes. Take the necessary time to complete this step before you move to the next.
2. You must differentiate between specification and tolerance within your company and your suppliers. In order to get your suppliers to the level of performance required to meet certification, it is recommended that all the information you provide to suppliers separates the specifications from the tolerance. This includes information on prints, drawings, handbooks, purchase orders, operation or routing sheets and results of receiving inspection. Most companies today are still considering the total tolerance as being the specification. All information provided as a result of receiving inspection should identify and picture the spread and target of the items checked at receiving.
3. Conduct risk analysis in order to determine the features that are important to your product performance. Once this is completed, have suppliers conduct risk analysis on their processes to ensure your risk features are controlled in their processing. Failure Mode and Effect Analysis (FMEA) is the recommended risk analysis.
4. Require control plans of all suppliers. You need suppliers to understand their processes and control how they are performing. The makers of the parts are responsible for the quality, our job is to provide meaningful data about the features and the supplier must plan on how they are going to monitor their processes to ensure we get 100% conforming product.
5. Require run charting by supplier on all features identified in the risk analysis (step 3) to accompany all product that enters your facility. This run chart is just as important as the product and if it does not accompany the product, rejection of the lot must occur and the material be returned. Yes, this may delay your production, but it will only happen once. Today you have delays frequently even though you accept the material without documentation of quality - This step will begin to ensure that the suppliers accept ownership of quality and your receiving inspection will be able to verify accuracy.
6. Rejects are the manifestation of poor processes. Insist that receiving inspection provide information that makes the supplier focus on their processes and verify that improvements are realized at your company. Have receiving inspection provide histograms on all product they inspect. This histogram must be based on your receiving inspectors readings, not the run chart supplied by the supplier
7. Have receiving inspection conduct incoming product capability analysis. Unfortunately, we don't always know the process, so don't confuse this with machine or process capability. This is received material capability information and is a very useful tool to improve the quality performance of suppliers. Organized data provides facts. Make decisions on facts and provide monthly reports on Cp and Cpk of incoming product capability.
8. Insist on a performance level that gets the supplier to a fallout of 0 according to the "fallout table". This will require that the supplier apply the tools listed above and that they improve their processes. This is the step that you need to have achieved in order to certify a supplier.

Following these steps and Implementing the tools will allow your organization to make supplier certification a reality, get 100% conforming product into your company, while providing meaningful work for receiving inspection.

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