In the purchasing contract with a tier one supplier, the expected the “0-kilometer” quality or failure rate is not to exceed 500 parts per million (ppm). These are failures seen before the product leaves the OEM manufacturing floor requiring product rework on the assembly line or as the vehicle rolled off the end of the assembly line. The contract is signed and the development staff sets about developing the product. The design is set, there are trial production runs and run at rates and 18-24 months later the product is coming off the end of the OEM manufacturing line at production volumes.
Shortly after production start, the OEM notices the quality is not consistent with contractual obligations of 500 ppm. A dissection of the product and conversation with the supplier finds that there is one component, had a failure rate of 500 ppm, and there are at least two of these components and sometimes three in the product. Meaning the best failure rate will be somewhere between 1000 – 1500 ppm just for this one component, that does not include any other failure opportunities.
The purchasing objective and the engineering design quality targets were incongruent. We will write more on how this was uncovered later, but for now, we should note that purchasing contract and the technical documentation of the product did not match. There was no way the purchasing and manufacturing objective could be met with this design. This quality problem was foreseeable and able to mathematically calculate. It could have easily been discovered in an effective design review. The supplier of the subassemblies to the tier one knew their part quality and readily divulged that the failure rate for ONE their parts would be at least 500ppm, and the final product had two at least, and 30% of the time it had three.
A connection between purchasing and development does not end when the contract is signed. Nor do these conversations only happen when the cost of the project or product increase. It is difficult to keep each entity’s priorities in focus when the relationship ends at contract signing. Purchasing and manufacturing should have been part of design reviews and discussions with the supplier beyond product cost and delivery dates. Of course, that is all well and good to say after the fact. But that is the point isn’t it? We do not get better unless we critique our past performance.Tags: business, Learning Organization, product development, project management, Quality