New Quality Strategy Develops Top Suppliers
Any business that wants to remain an A-grade supplier is also dependent on the quality of its sub-suppliers. That is why a German metal manufacturer analyzed and revised the process organization of its supplier management from the ground up. With the help of software from Babtec, complaints could be reduced by 30 percent – and C-grade suppliers to zero.
Under the motto “Press, Draw, and Stamp,” Heinrichs GmbH & Co. KG from Lennestadt in the Sauerland region has been manufacturing metal parts and assemblies for over 100 years, particularly for the automotive industry and its suppliers. The product portfolio of 2,600 articles includes parts made of all common steel and stainless steel grades, non-ferrous metals, and special materials in thicknesses of 0.05 to 20 millimeters. The company’s 286 employees in Germany generated a turnover of around 61 million euros in 2015. Among the company’s approximately 180 customers are well-known automobile manufacturers and suppliers, among them, Daimler, BMW, and VW, Wabco, JCl, and Hi-Steel.
The company’s quality management has been certified for many years in accordance with ISO/TS 16949 and EN ISO 9001. There is also an environmental management system in accordance with ISO 14001. An A-grade supplier of prestigious OEMs and suppliers itself, Heinrichs places just as high demands on the quality of its own suppliers. The company initiated a new Quality Strategy (Q strategy) in September 2015 in order to improve its suppliers for the long term and to selectively develop weaker suppliers. As part of implementing this strategy, supplier management was to be completely re-thought and existing processes analyzed and, if necessary, re-organized. The focus was to be on actual processes rather than thinking in terms of departments. Up until 2013, supplier assessment was made manually using Excel, and there was no structured process. The result was an extremely high expenditure for data maintenance as well as an acquisition of information connected to spending a good deal of time when necessary. The initial activities toward an improved supplier assessment followed in 2014. Newly scheduled audits initially had an impact, however, only on quantity and did not provide the hoped-for improvement. With the launch of the new Q strategy in September 2015, supplier management was approached afresh from the ground up and transferred from Purchasing to the Quality Management department. The decision for this came directly from senior management. Only this large-scale restructuring of the business organization brought the hoped-for success.
Entirely in terms of the revised QM standard ISO 9001, greater emphasis was to be placed on process orientation; the individual activities of specific departments were therefore no longer to be considered but rather all activities and procedures of an organization were to be looked at holistically. In order to come to a positive overall result, a process result as well as suitable key performance indicators were to be defined for every process. The question of input and output was always crucial: Where does the process begin, and where does it end? How do you transform customer requirements into customer satisfaction?
Turtle for process orientation
For implementing this project, Heinrichs relied on the support of the so-called turtle model. This model owes its name to the similarity with a turtle, whereby the actual process can be thought of as a body and the respective process steps as limbs. The goals were a clear reduction of complaints and the long-lasting development of Heinrichs’ own suppliers. Based on this and in extensive project meetings, all processes that affect supplier management were analyzed and in part completely re-organized. Not only employees of quality management took part in these meetings, but also process participants from all relevant departments were included. Work was carried out according to a structured Business Process Management (BPM), in which demands on workers and tools as well as the strategy, culture, and methods for the process were determined.
In this way, a whole series of new requirements were identified and assessment criteria were defined for the suppliers. Heinrichs today thus expects from its suppliers a management system whose functional capability is verified by certification in accordance with ISO/TS 16949, VDA 6.1, or DIN EN ISO 9001. Furthermore, only the fulfillment of additional criteria, for example, carrying out a supplier audit and concluding a quality assurance agreement, will lead to admission to the pool of suppliers. The actual supplier assessment is made using clearly defined criteria such as the number of complaints, a timely response, adherence to quantity stipulations as well as pricing and supplier flexibility. Subsequently, compliance with deadlines, costs, and quality will result in a classification as an A-grade supplier. Defects, e.g., a weak process audit, increased rate of complaints, or the field failure of components, ensure a classification as a B- or C-grade supplier.
Perspective with Supplier Cockpit
Efficient processes are one thing. Implementing these processes using appropriate tools is another. As part of the new Q strategy, the possibilities of the CAQ system from Babtec that had been deployed at Heinrichs since 2002 were put to the test and new potentials were recognized. The software documented the entire product life cycle from incoming and outgoing goods to audit management to complaint management. The standard software was able to wholly support the new processes, without costly adjustments. Supplier management in particular could be upgraded in doing so and thus was designed more transparently. Babtec’s Supplier Cockpit tool plays a key role in this process. Process participants company-wide have access in the Cockpit to all relevant suppliers via flexible access authorization settings. Important information, such as verification documents, certificates, and address data, are stored directly within the software’s database. Additional selections can be made using a variable address catalog. So, for example, all suppliers that produce parts for a particular OEM or show whatever kind of complaint rate can be grouped at the touch of a button. Customer inquiries, to which a response was previously found only after a long search through mountains of documents, can now similarly be answered on the telephone. The same applies to carrying out audits. Today, these take place completely at a desk without going near a machine at all – all relevant information, e.g., about which measures were initiated by whom, when, and where, are immediately available in the software. External audits of suppliers are planned and initiated based on the assessments stored in the Supplier Cockpit. The software automatically provides information about all the standard deadlines planned in the process. B- and C-grade suppliers can be selectively developed in this way. More attention can thus be paid to them than the already fault-free A-grade suppliers.
No more C-grade suppliers
A look at your own processes helps keep things running in supplier management. A good process organization is the basis for successful collaboration with suppliers. Because what counts is, first and foremost, the process itself. Only when the optimum solution is found for the process, CAQ software can also develop its full potential in order to successfully reach the process goals. In the case of Heinrichs, the result is quite impressive. The new process organization combined with the seamless implementation in Babtec.Q has reduced the complaint rate by 30 percent since September 2015. The number of C-grade suppliers stands today at zero. It goes without saying that Heinrichs continues to be recognized as a respected A-grade supplier.
Head of Quality Management
Heinrichs GmbH & Co. KG