Question

6. Supplier Performance Measurement and Evaluation[EM1] [EM2] [EM3] System This question is worth a total of 12 points. You are Supplier Manager for Cuyahoga River Valley Aerospace (CRVA). This fictitious manufacturer is an Electra/Hydra/Mechanical company that provides major assemblies for both commercial and defense aircraft prime contractors. CRVA is headquartered in Cleveland, Ohio, and has plants in several cities and states. Each month CRVA provides its suppliers with a Supplier Performance Report. Your team has just received reports from two suppliers. The report is based upon the following performance criteria applicable to all CRVA suppliers

Performance Rating Criteria, Twelve Month Rolling Average

Quality	Performance Level	Delivery
100%	Gold	100%
99% - 99.9%	Silver	98% - 99.9%
98% - 98.9%	Bronze	95% - 97.9%
97% - 97.9%	Yellow – Needs help	91.0% - 94.9%
96.9% and below	Red – unacceptable	90.9% and below

Notes:

1) Quality performance measures total defects divided by actual deliveries in a given period.

2) On-time delivery performance measures in a given period the actual “on dock delivery dates” to the contract commitment date and shows late quantity and days variance to contract dates.

3) When applicable performance data on specific supplier part numbers is provided to a supplier for quality and delivery issues.

Your task is to review these two supplier performance reports shown below for Bent Scepter Mechanical (6-A) and for Delta Machining (6-B) and to answer the following three questions for each supplier:

What is the message of the above performance report?

What questions will you ask the supplier about the report?

What will your team’s next actions be with the supplier?

6-A) The total CRVA performance rating for Bent Scepter is shown below along with additional specific delivery performance data. (6 Points)

Supplier Performance Rating for Bent Scepter Mechanical

Syracuse, New York

For Period March 2018

Business Type Rating	Quality Quantity Received/rejected / %	Delivery Quantity Received/on-time / %
Total Cuyahoga rating	44 / 0 – 100%	50 / 44 – 88%
Commercial rating	- 0-	- 0 -
Defense rating	44 / 0 – 100%	50 / 44 – 88%
Miscellaneous rating	- 0 -	- 0 -

Early/Late Delivery Detail

To the CRVA Cleveland OH Location

For Bent Scepter

Part Number	PO/Line #	Date Contract Required	Early Quantity	Late Quantity	Days Variance
634578-9	S5556/001	30 Mar 2018		2	-1
634578-10	S5556/003	30 Mar 2018		1	-1
634578-10	S5556/004	30 Mar 2018		1	-1
634578-10	S5556/002	30 Mar 2018		2	-1

1)

2)

3)

6-B) The total CRVA performance rating for Delta Machining is shown below along with additional specific delivery performance data. (6 Points)

Supplier Performance Report for Delta Machining

Dayton, Ohio

For Period March 2018

Business Type Rating	Quality Quantity Received/rejected / %	Delivery Quantity Received/on-time / %
Total Cuyahoga rating	38,630 / 132 – 99.7%	39120 / 37438 – 95.7%
Commercial rating	952 / 5 – 99.5%	936 / 866 – 92.52%
Defense rating	37,678 / 127 – 99.7%	38,184 / 36,572 – 95.8%
Miscellaneous rating	0 -	-0 -

Additional Performance Data for delivery and quality:

Supplier Site Performance Report for Delta Machining

For Defense CRVA Site Memphis TN

For Period March 2018

Memphis Site Rating	Quality Quantity Received/rejected / %	Delivery Quantity Received/on-time / %
Defense Rating	82/4 – 95.1%	82/75 – 91.4%

Early/Late Delivery Detail

To CRVA Memphis TN Location

For Delta Machining

Part Number	PO/Line #	Date Contract Required	Early Quantity	Late Quantity	Days Variance
57759-1	S7676/001	22 Mar 2018		5	-9
57759-1	S7676/001	20 Feb 2018		1	-40
57759-1	S7676/001	19 Jan 2018		1	-70

Quality Nonconformance Detail

To the CRVA Memphis TN Location

For Delta Machining

Part Number	Rejected Quantity	Nonconformance Document No.	Nonconformance Date	PO/Line Item	Received Quantity
57759-1	2	42-2011	15 Mar 2018	S7676/001	0
57759-1	1	33-2011	19 Feb 2018	S7676/001	0
57759-1	1	22-2011	19 Jan 2018	S7676/001	0

1)

2)

3)

Answer 1

Bent Scepter Mechanical:

What is the message of the above performance report?

The delivery against the order was 88% which is not acceptable but the quality was 100% as per our laid parameters. The delay in receipt was by 1 day but it impacts our production schedule which relies heavily on timely supplies. We see a consistent dealy pattern which indicates a system problem.

What questions will you ask the supplier about the report?

Our questions are as follows:

• Reason for delay of 12 % of the supplies?
• How will you ensure such delay will not re-occur?
• How will you improve your processes to address the delay in supplies?

What will your team’s next actions be with the supplier?

In future, we will give less order to the supplier as he seems to have an issue with the production capacity as they are consistently delivering 12% less quantity. Though we notice, his quality is good. We will study his future deliveries and if he repeats same performance, we will reduce the number of orders assigned to him.

Delta Machining

What is the message of the above performance report?

Delta is a much bigger supplier and achieves almost 95% accuracy on-time delivery which is just meeting our standards. We must push him to give on-time deliveries. Further delay in delivery is also quite high in case of order no S7676/001 dated January 19, 2018, it was delayed by 70 days and another order of the same part was delayed by 40 days. The organization cannot take this kind of delay. There is a quality rejection of 3-4 %, which is again on the border of our acceptable levels. In the case of or Memphis site delivery was 91.4% on time which is unacceptable and out of quantity delivered 95.1% was acceptable I,e, just borderline quality acceptance. We need to start looking for an alternate supplier too.

What questions will you ask the supplier about the report?

We will ask following questions from Delta:

1. Ways to improve deliveries?
2. How will they address quality issues at Memphis?
3. What is their Future course of action with relation to deliveries and quality?

What will your team’s next actions be with the supplier?

Delta needs to upgrade their quality processes and on-site checking systems to meet our acceptable standards. Further, we cannot take the delay in supplies as they are a big supplier and delay put a stop to our product line, causing a huge loss in production and underutilization of manufacturing facilities. It is creating inefficiencies in our system. Delays are also of long duration and the rejection rates are high and they need to address it immediately. We need to assign a quality check system at their manufacturing base.