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?
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.