LIST OF ABBREVIATIONS IEC International Electrotechnical Commission ISO International Organization for Standardization ME Manufacturing Engineer department QSHEMS Quality Safety Health E
Rationale
In an increasingly competitive global market, manufacturing companies are facing relentless pressure to maintain and enhance their competitiveness To succeed in this challenging business environment, Supplier Management becomes incredibly important and strategic As highlighted in studies by Humphreys et al (2001) and Yeung & Chin (2004), Supplier Management is not just about sourcing, but also involves a range of complex activities such as supplier assessment and selection, monitoring supplier activities, and supplier certification These activities not only ensure a reliable and quality supply source but also optimize cost and time efficiency in the supply chain
The research by Trent & Monczka (1999) has indicated that supply quality plays a crucial role in influencing the quality of an organization's products, processes, and services
An unreliable supplier quality can lead to imbalances in input ratios in products, causing instability and uncertainty in the manufacturing process Additionally, a supplier's ability to meet customer requirements also plays a significant role in the organization's success in the market
Therefore, mastering and optimizing the Supplier Management process is not only crucial for maintaining and enhancing the quality of products and services but also an effective way to strengthen competitiveness and achieve sustainable success in today's global market This is why the author chose the topic “THE ROLE OF SUPPLIER
MANAGEMENT IN QUALITY MANAGEMENT SYSTEM: A CASE STUDY OF TIPA-TOSHIBA” By conducting a detailed study on the role of Supplier Management in the Quality Management System at TIPA, the author hopes to gain deeper insights into how TIPA applies Supplier Management strategies to optimize its manufacturing and supply operations, thereby improving product quality, optimizing costs, and fostering sustainable market growth
Objectives
o Researching TIPA's Supplier Management Process o Analyzing and evaluating TIPA's Supplier Management Process o Proposing solutions to improve issues in TIPA's Supplier Management process.
Scope and object
Scope: The research focuses on the Supplier Management Process at Toshiba during period 23A: from April 1, 2023, to September 31, 2023
Object: To study the Supplier Management Process at the Quality Assurance department.
Research methodology
Qualitative research methods: The author conducts a literature review on Supplier
Management theories and documents related to the Supplier Management Process at TIPA Subsequently, the author analyzes and discusses with internal staff and internal documents to understand how the company manages suppliers
Quantitative research methods: The author gathers data related to suppliers in
TIPA's management process, with modifications made to ensure data security for the company Using actual data to analyze the most comprehensive overview of the supplier evaluation process at TIPA.
Structure of thesis
The structure of the report consists of 4 chapters:
Chapter 1: Introduction about TIPA-Toshiba
Chapter 3: Analysis of the status of Supplier Management at TIPA-Toshiba
Chapter 4: Proposing an integrated solution of Power BI and supplier localization to enhance the Supplier Management System at TIPA-Toshiba
INTRODUCTION ABOUT TIPA-TOSHIBA
General information
1.1.1 Toshiba's Formation and Development History
Toshiba Corporation, a renowned Japanese company, manufactures electronics and computers for both consumer and business purposes Its headquarters are located in Tokyo
Formed in 1939 through the merger of Tokyo Electric Company, Ltd and Shibaura Engineering Works, Ltd., it was initially known as Tokyo Shibaura Electric Company, Ltd (Japanese: Tōkyō Shibaura Denki KK) The company adopted its current name in 1978
Dating back to 1875, Shibaura's origins trace to inventor Tanaka Hisashige's factory, which focused on producing engines for ocean-going vessels Mitsui Business Combine (zaibatsu) assumed control and transitioned into manufacturing powerful steam engines, then expanded into machine tools in the 1890s With Mitsui's backing, Tokyo Electric Light Company began producing electric lightbulbs with bamboo filaments in 1890 After World War II, the merged corporation severed ties with Mitsui due to the dissolution of the zaibatsu but reconnected in 1973
US General Electric Company had close ties with Toshiba's predecessor companies
In exchange for GE's assistance in modernizing Tokyo Electric's technology, the company granted General Electric an interest in 1907, leading to the mass production of Mazda electric lamps in Japan A similar agreement was signed with Shibaura in 1909, marking the significant introduction of Western technology into Japan GE remains one of Toshiba's major shareholders
Collaborating with Sony Corporation and International Business Machines Corporation (IBM), Toshiba developed the Cell Broadband Engine over four years starting in 2001 This advanced computer chip powers various products, including the Sony Playstation 3, Toshiba high-definition televisions, and IBM supercomputers Toshiba launched a line of notebook computers based on the Cell processor in 2008
Toshiba's product range includes laptops, high-definition televisions, DVD players, digital video recorders, printers, copiers, lighting products, surveillance systems, medical imaging equipment, and liquid crystal displays Additionally, it manufactures industrial motors, electronics, and electricity production equipment Numerous subsidiaries operate in foreign countries
Business philosophy: “Committed to people, committed to the future”
Toshiba Industrial Products Asia Co., Ltd (referred to as TIPA) – a subsidiary of Toshiba Corporation in Vietnam – was established in 2008 The company's new factory aims to produce and export highly efficient industrial electric motors that meet global standards
Throughout Toshiba's 115-year history of developing and manufacturing electric industrial motors, it has consistently contributed to social development
With the new factory and extensive experience operating in Vietnam, TIPA plays a crucial role in Toshiba Corporation's global manufacturing network It works alongside TIPS in Japan and TIC in the US, manufacturing components essential for Toshiba's electric motors
Some basic information about TIPA in table below:
Table 1.1: The Basic Information about TIPA International Name Toshiba Industrial Products Asia Co., Ltd
Address Plot No.309, Road 9, Amata Industrial Park, Long Binh Ward,
Bien Hoa City, Dong Nai Province, Viet Nam
Manage by Dong Nai Provincial Tax Department
Investor: 100% Toshiba Corporation Headcount 1.013 (October 2023)
Business content Manufactures high-efficiency motors for industrial use and supply them globally, primarily in North America and Japan
TIPA consists of three workshops and one main office, comprising two LVM plants and one HEV plant The total construction area spans 38.805m², accommodating over 1.013 employees across various departments With its production capacity aligned with market demand, the factory can manufacture up to 1,2 million high-performance engines and key components annually
Figure 1.2: The Front of Image about TIPA plant
The TIPA Plant is overseen by a general manager based in Japan, with department heads leading each department and supervising engineers and supervisors They manage the overall operations of the plant through practical activities and TIPA's Improvement System Moreover, departments are connected via Microsoft Teams to facilitate communication Engineers and Production Supervisors directly oversee their teams to ensure all factory operations are carried out flawlessly
Figure 1.3: The Organizational Structure of TIPA
The organizational chart of the factory includes:
General Manager: Directly oversees the operations of the factory headquartered in
Supportive Sector: Under the leadership of the General Manager, manages all departments within the factory, including QSHEC, Chief of Safety Committee, Machining and Electricity Safety Committee, Transport Safety Committee, Energy Saving & CO2 Emission Committee, and Document Center Controller
Planning: Responsible for production planning monthly
Production: Responsible for product drawings
Manufacturing: Responsible for product manufacturing
Quality Assurance: This department includes Quality Assurance and Quality
Control, responsible for product quality
Other departments are responsible for factory operations and support production processes such as Human Resources, Accounting, Information Systems, Purchasing, Sales, etc.
The Product of TIPA
Figure 1.4: Motor 3-phase high-efficiency electric motor used in industry
The innovative new IEC motor series is designed to not only meet but exceed the rigorous standards set by IEC 60034, while also satisfying the competitive demands of the global market, all while maintaining the esteemed quality and reputation associated with the Toshiba brand
The IEC motor series boasts numerous and diverse applications Leveraging over 20 years of success with high-performance motor series, the updated design of the IEC motor series incorporates various features, making it one of the most energy-efficient motors available for a wide range of industrial uses
Furthermore, Toshiba offers comprehensive global supply chain management solutions to meet the needs of clients both domestically and internationally With a 120- year history of electric motor production, Toshiba has been manufacturing highly efficient
9 motor series for over two decades Through continuous efforts to improve quality, the IE3 motor series has become a standard IEC motor known for its safety and energy efficiency in the industrial sector By aligning with advancements in IEC 60034 standards, Toshiba ensures that its products address usage requirements and deliver genuine value to the product community.
Introduction to the Quality Department at TIPA
1.3.1 Quality Safety Heath Environment Management System
TIPA places utmost importance on quality, safety, health, environment, and compliance with laws They are committed to introducing our eco-friendly motors of excellent quality to society, fostering a safe and comfortable workplace, and strengthening environmental protection initiatives for the well-being of all employees Through our environmental protection endeavors, TIPA actively contributes to realizing Toshiba's Environmental Vision 2050, which envisions affluent lifestyles in harmony with the Earth, as well as the ongoing Environmental Action Plan We strive to create a society characterized by reduced electricity consumption, lower CO2 emissions, and the conservation of natural resources through the widespread adoption of environmentally friendly, premium efficiency motors
QSHEMS (Quality – Safety – Health - Environment Management System) was established and implemented to ensure the stable provision of high-quality products, maintain safe working conditions, and uphold environmental friendliness while fully satisfying clients and complying with legal requirements
To achieve complete client satisfaction, TIPA employs an effective combination system integrating ISO 9001:2015, ISO 14001:2015, and ISO 45001:2018 standards This system controls procedures, operations, products, and services, continuously improving corrective actions for any non-conforming activities
The entire quality management system at TIPA is overseen by QMS Admins, responsible for developing a quality management system tailored to each production area
10 and process All quality procedures at TIPA are documented on File Explorer, ensuring easy access for all Technicians and Engineers The quality management system undergoes annual evaluation based on ISO 9001:2015 standards issued by IAF
This system controls audit-related documents pertaining to product quality and establishes standards for each product code across various quality inspection fields As each type of product possesses unique characteristics and materials, the standards vary depending on the price and significance of each item Moreover, TIPA's quality management system is systematically integrated from raw materials to finished products within the plant File Explorer serves as the repository for all data pertaining to management and quality standards across units within the Quality Department The quality management system commences with TIPA-M-001
Figure 1.5: The Quality Management System manual at TIPA
The quality department at TIPA is structured into two divisions: The Quality Assurance Department, comprising 6 teams primarily responsible for overseeing quality management systems at the factory according to ISO standards This includes input quality control, Nameplate printing, management of measuring tools, and supplier audits The Quality Control Department consists of 3 teams overseeing quality control on the production line and throughout the entire plant
At TIPA, the quality control process spans from materials to finished products, with direct oversight from Operators and Technicians In case of a quality issue, the Operator reports to the Technician, who then escalates the matter to higher authorities The Quality Engineer is tasked with resolving issues raised by the Technicians Currently, the quality control process within the Quality Department is organized according to each production unit at TIPA The department's responsibilities encompass all manufacturing activities, from controlling the quality of incoming materials to ensuring product quality
Figure 1.6: The Functional Units in Quality Department at TIPA
1.3.3 The functions of the Quality Department o Quality Department has jurisdiction over the following affairs o Matters regarding quality assurance o Matters regarding quality control and inspection
LVM QA: LVM Quality Assurance Section
12 o Quality Assurance Section has jurisdiction over the following affairs: o Establishment and coordination of quality management and assurance system o Coordination and promotion of quality management activities o Establishment and control of basic quality management policy regulation and standards o Summary and analysis of quality information and quality data o Analysis, countermeasures, and report when receiving customer claims o Promotion of instruction and training of quality control skills o Management and control of inspection, measuring and test equipment o Issuance and storage of test record of products o Documentation, audit, and certificate of NVLAP o Controlling of incoming parts quality including supplier audit o Cooperation with Human Resource for management of ISO 9001/14001/45001 integrated system o Guarantee of the product quality as of the shipping o Quality guidance for the clients and customer o Matters regarding quality assurance among of the departments, in-country product contractors, and overseas production base
LVM QC: LVM Quality Control Section
Quality Control Section has jurisdiction over the following affairs: o Controlling of the quality of all in-process and final products o Establishment and control of quality inspection instructions o Issuance and storage of inspection record of products in process o Promotion of instruction and training of quality control skills o Approval of finished products o Controlling of repaired motor and new samples
THEORETICAL OVERVIEW
Quality Management System
The American Society for Quality (Accessed in 2024) defines “Quality” as the set of characteristics of a product or service that demonstrates its ability to meet customer needs The essence of Quality Management is managing processes to achieve maximum customer satisfaction at the lowest cost for the organization while continuously improving
Quality management involves overseeing every aspect and task necessary to uphold a desired standard of excellence This encompasses establishing quality policies, devising and executing quality plans, guaranteeing quality assurance, and conducting quality control and enhancement initiatives According to Lagrosen & Lagrosen (2005), quality management consists of four main components: quality planning, quality assurance, quality control, and quality improvement The process of implementing all four components within an organization is referred to as Total Quality Management Research findings by Liu et al (2003) on quality implementation in public housing projects in Hong Kong indicate an increase in customer satisfaction after implementing ISO 9000 Additionally, housing projects constructed by ISO 9000-certified firms tend to exhibit notably fewer defects on average compared to projects undertaken by non-ISO 9000-certified entities
The Quality Management System is a method used to manage and optimize performance to provide services and reduce costs (Raisinghani et al., 2011) According to Fajrah & Putri (2016), companies that have implemented QMS can demonstrate their ability to meet consumer needs and requirements Therefore, there is a need for standards to manage risks, resource management, measurement, and improvement The purpose of implementing the Quality Management System is to improve the quality of defective products (rework) and rework (rework) (Shaari et al., 2015) According to Shaari et al
(2015), the Quality Management System is used to enhance quality, commitment and responsibility, goals, appropriate management responsibilities, and their application in various aspects, service quality, quality control, and quality improvement within the quality system, while striving for further improvement.
Supplier Management
The American Society for Quality (Accessed in 2024) characterizes a "Supplier" as a source of material, service, or information input that is offered to a specific process Essentially, suppliers are fundamental to a business's supply chain and contribute significantly to the innate value of its products These suppliers sometimes make use of drop shipping strategies to deliver goods right to the customers of the buyer It's common for suppliers to function as manufacturers or distributors When acting as distributors, they obtain goods from a variety of manufacturers and then disseminate them to their customers
There are many terms related to Supplier Management that are mentioned, as sometimes it is defined differently in various documents Essentially, Supplier Management is defined by Lechner (2019) as managing relationships with suppliers, specifying detailed topics identified: o Supplier base (including segmentation of the portfolio and selection of suppliers) o Sourcing strategies (considering geography, number of suppliers, and vertical cooperation intensity) o Qualification of suppliers (involving implementation of testing and approval processes) o Supplier evaluation (involving assessment of performance based on uniform evaluation criteria) o Risk management (including assessment of contingency risks and preparation of emergency plans)
15 o Classification of suppliers (including classification and selection of preferred suppliers) o Supplier development (aiming at performance improvement and agreement on targets) o Change management procedures (encompassing implementation and management of technical and procedural changes) o Supplier integration (focusing on integration and intensification of cooperation) o Supplier auditing (involving review of technical and commercial performance) o Supplier control (including controlling the achievement of objectives and addressing weak points) o Change of supplier procedures (covering phase-out and conversion processes)
The importance of Supplier Management
The reason for the increasing importance of Supplier Management is the shift among many manufacturers towards emphasizing their core competencies, moving away from vertical integration, and thus relying on suppliers to gain a competitive edge (Leenders et al., 1994) Effective suppliers can play a pivotal role in assisting manufacturers with the development of new products and processes, enhancing long-term quality, and cutting costs, while potentially improving delivery performance as well Therefore, for manufacturers, "the challenge is to maximize the performance of [good suppliers] better than competitive rivals" (Monczka et al., 1993) Particularly for companies heavily reliant on parts and materials, cost savings are paramount In such scenarios, even a 1% reduction in purchasing costs can yield a profit impact similar to an 8-10% increase in sales volume (Davis, 1994) Collaborating closely with suppliers leads to swift reductions in unit costs and, over time, the potential for improved quality at reduced expenses (Larson, 1994)
Supplier Management is an integral part of any successful quality management system, where it provides raw materials and essential components to help the company manufacture its products, so it is essential to ensure that suppliers are providing high-quality materials and excellent customer service
By effectively managing relationships with suppliers, companies can reduce costs, minimize risks, increase supply chain efficiency, and improve product quality.
The role of Supplier Management in Quality Management System
One of the key components of ISO 9001:2015 (clause 8.4) is managing external providers, including purchasing from suppliers The standard emphasizes the following factors related to Supplier Management:
Supplier selection: Organizations should establish criteria for evaluating and selecting suppliers This may be based on the supplier's ability to provide products or services that meet the organization's requirements
Supplier evaluation: ISO 9001 requires organizations to periodically review and assess their suppliers This is to ensure that suppliers continue to meet the established criteria and maintain stable quality in the products or services they provide
Performance monitoring: In addition to initial evaluation, organizations should monitor the performance of suppliers This can be done through regular reviews, audits, or inspections Poor supplier performance can affect product quality, so it is necessary to have measures to address any deviations
Documented information: ISO 9001 emphasizes the importance of maintaining documented information on evaluations, selection criteria, and actions resulting from evaluations
Risk management: It is important to assess and manage risks related to the products and services that the organization procures If suppliers face significant risks (e.g., supply chain disruptions or inconsistent quality), the organization needs to have mitigation strategies in place
Key Principles of Effective Sustainable Supplier Management
In the effective operation of Suitable Supplier Management, evaluation can be used for various purposes such as selecting sustainable suppliers, developing sustainable suppliers, and monitoring sustainable suppliers (Hervani et al., 2005)
Selecting sustainable suppliers, developing sustainable suppliers, and monitoring sustainable suppliers are independent yet interconnected core processes in Suitable Supplier Management introduced by Hahn et al (1990) Illustrated in Figure 2.1
Figure 2.1: Proposed framework on Sustainable Supplier Management
The process of selecting suppliers encompasses several steps (De Boer et al., 2001)
It typically commences with identifying needs and specifications, followed by the establishment of criteria Traditionally, these criteria are utilized for both the evaluation of suppliers during the selection process and for supplier monitoring and development processes Following preliminary assessment and initial capability evaluation based on the information provided by suppliers, the final detailed evaluation and selection process occurs among qualified suppliers According to Genovese et al (2010), the selection of sustainable suppliers involves companies identifying and evaluating suitable suppliers and
18 their upstream supply chains to choose the best-performing options concerning three sustainability aspects along the upstream supply chain
Supplier monitoring constitutes an independent yet interconnected process with Supplier Management, after the supplier selection phase (Kleinsorge et al., 1992) The monitoring of sustainable suppliers entails ongoing analysis and assessment of information concerning suppliers and their supply chains to ensure compliance with established minimum requirements and enhance performance across three sustainability dimensions (Hervani et al., 2005; Ragazzi et al., 2012) Consequently, the evaluation of supplier monitoring can inform decisions regarding supplier replacement, encourage initiatives for supplier development, and facilitate continuous monitoring of the progress and effectiveness of development endeavors
The supplier development process is often initiated through the assessment of supplier and supply chain performance during either the supplier selection phase or supplier monitoring (Hahn et al., 1990) Within this framework, the three supplier development processes depicted in Figure 2.1 have distinct focuses: the development process initiated in the quality assessment phase is geared towards meeting the buyer's minimum requirements, whereas the process triggered during final selection or ongoing evaluation primarily targets performance enhancements surpassing minimum standards Following performance assessment, the development process commences by establishing appropriate development activities Subsequently, the potential effectiveness of these activities is evaluated, and the most suitable ones are chosen for implementation Hence, a clear performance evaluation is integral to the development, selection, and monitoring processes (Bai & Sarkis, 2011) Following the implementation of selected development activities, the performance of the supplier and supply chain undergoes reassessment to gauge capability, inform final selection decisions, or facilitate continuous improvement efforts
Support tools
A flowchart represents a visual depiction of a series of steps or operations It serves as a graphical method of conveying the chronological sequence of events or actions from one individual to another Flowcharts, also known by various other names such as block diagrams, flow diagrams, system charts, run diagrams, process charts, logic charts, and iteration diagrams, have been standardized by both the International and American National Standard Institute (ANSI, 1970)
In assembly language programming, six basic symbols are commonly used for creating flowcharts: terminal symbols, process symbols, input/output symbols, decision symbols, connector symbols, and predefined process symbols These symbols play a fundamental role in structuring the flowchart for assembly language programming While there are numerous standard assembly language flowchart symbols, it's important to note that this list does not encompass all possible symbols used in assembly language flowcharts
Table 2.1: Basic Symbols in Flowchart
Represents internal operations within the Processor or
Utilized for Input/Output operations, indicating data retrieval or result output
Decision Used for binary-format questions (Yes/No, True/False)
Ensures flowchart clarity without intersecting lines or reverse flow
Indicates the beginning or end of the program, process, or interrupt routine
Direction Shows direction of flow
(Source: ASQ Accessed in 2024) Pareto chart
Pareto analysis is a quality control tool that arranges data in descending order, from the highest to lowest frequency of occurrences, with the total frequency equating to 100 percent Often referred to as the "80/20 rule," the Pareto principle states that 80 percent of defects in a system stem from only 20 percent of the possible causes Juran proposed that
21 quality control processes like Pareto analysis aid in distinguishing the "vital few" from the
"trivial many" (Cravener et al., 1993), a principle deemed "universal" for planning and control While the Pareto 80/20 principle lacks theoretical derivation, it has gained approval through practical application This empirical approach is widely utilized across various human endeavors today The significance of the Pareto principle lies in prioritizing the 20 percent of causes that matter most, while still acknowledging the remaining 80 percent Conventional wisdom, supported by numerous case studies in quality literature, advocates for management to concentrate improvement efforts on the most prevalent problem (Radson & Boyd, 1997)
(Source: Coskun et al., 2010) PDCA Cycle
The PDCA cycle, also known as the Deming cycle or Shewhart cycle (Strotmann et al., 2017), is a lean manufacturing methodology developed in 1930 Initially, the PDCA cycle was utilized as a tool for quality control of products (Sangpikul, 2017) However, it quickly evolved into a method enabling improvements in organizational processes (Sangpikul, 2017; Maruta et al., 2012) Presently, the PDCA cycle is distinguished by its continuous improvement approach (Albuquerque, 2015) and is acknowledged as a logical framework for enhancing activities (Sangpikul, 2017; Zhang, 2013)
The letters in the acronym represent the four stages that make up the complete cycle, shown in the figure: P - Plan, D - Do, C - Check, A - Act (Improvement)
Figure 2.4: Deming’s PDCA for Process Control (1950s)
The following rows describe the four stages of the PDCA cycle Gorenflo & Moran (2010):
Plan: In this stage, the focus is on identifying the problem, its root causes, and potential areas for improvement Planning involves defining the scope, allocating resources, setting a timeline, and selecting specific methods to implement the improvement plan effectively
Do: This phase entails executing the action plan, documenting all relevant information, and noting any unexpected events, lessons learned, and insights gained during the implementation process
Check: The Check step involves analyzing the outcomes of the implemented measures A comparison is made between the situation before and after the solutions were implemented to determine if any improvements have been achieved and if the set goals have been met Visual aids such as Pareto charts or Ishikawa diagrams can aid in this analysis
Act: In the final phase, procedures are established to sustain the improvements achieved, provided that the intended goals have been met If data is insufficient or circumstances have changed, the process may be repeated to gather fresh data and reassess
23 the improvement efforts However, if the actions have not resulted in significant improvements, the project may be terminated, and a new one initiated from the planning phase
Sakichi Toyoda, the Japanese industrialist, inventor, and founder of Toyota Industries, developed the 5 Whys technique in the 1930s It gained popularity in the 1970s and is still used by Toyota today to solve problems Taiichi Ohno, the architect of the Toyota Production System, described the 5 Whys as “the basis of Toyota’s scientific approach,” stating that by asking "why" five times, the nature of the problem and its solution become clear (Taiichi, 2006) This tool has been widely adopted beyond Toyota and is now used in Kaizen, Lean manufacturing, and Six Sigma The method is straightforward: when a problem occurs, you identify its root cause by asking "Why?" five times Once a countermeasure is identified, you implement it to prevent the issue from recurring
ANALYSIS OF THE STATUS OF SUPPLIER MANAGEMENT AT TIPA-TOSHIBA
Overview of Supplier Management at TIPA
Table 3.1: The supplier selection and evaluation process
Step In charge Follow chart Description
1 PC, PR, ME Material demand
3 PC/PR, ME Contact supplier for sampling
5 PR/PC Supplier capability profile assessment
6 PR/PC, ME, QA Audit at the factory
7 PR/PC, ME, QA Supplier selection and acceptance criteria
9 PR/PC Supplier activity monitoring
10 PC, PR, QA Re-evaluation
TIPA conducts supplier evaluations to verify their ability to meet the manufacturer's contract requirements, ensuring that the supplier's processes and conditions are always stable and committed to delivering products that meet the requirements
Frequency: Every 3 years (for suppliers with ISO certification) and every 1 year (for suppliers without ISO certification)
The Supplier Audit team of the QA department is responsible for developing and implementing the supplier evaluation schedule Suppliers are responsible for taking necessary corrective actions based on inspection findings
Figure 3.1: Supplier classification at TIPA
TIPA categorizes supplier groups into 3 Groups:
Table 3.2: Supplier classification at TIPA
No Supplier Description Product example
Group 1 Trading International standard products
Machined mechanical products requested by
The parent companies of TIPA, including TIC and TIPS
Figure 3.2: Supplier classification by Main-Sub type
TIP's suppliers are also divided into main and auxiliary suppliers
Typically, one type of material will have up to 3 auxiliary suppliers to meet the demand adequately and to guard against any issues that may arise with these suppliers; there will be alternative suppliers available
TIPA ensures that no single type of product has only one supplier, even products from parent companies TIC and TIPS
Table 3.3: Current suppliers at TIPA
Group 3 Toshiba Group 4 Not audit
Table 3.4: Suppliers with ISO certification
Other standards include quality, environmental, safety, pricing, geographical location
In these: o Period: Suppliers due of periods o Outstanding: 3 suppliers with the highest defect rates in the component group o Increase: The previous period supplier had serious defect that affected the production progress & cost losses of TIPA & suppliers
The evaluation cycle for each supplier at TIPA is 3 years (for companies with ISO certification) and 1 year (for companies without ISO certification)
Table 3.5: Supplier classification by Period group
No Supplier name Address Group name Company type Local/
1 Supplier A2 DONGNAI GROUP A Manufacturing LOCAL Y 3
2 Supplier A10 BINHDUONG GROUP A Trading LOCAL Y 3
3 Supplier B1 TP.HCM GROUP B Manufacturing LOCAL Y 3
4 Supplier B2 DONGNAI GROUP B Manufacturing LOCAL N 1
5 Supplier B3 BINHDUONG GROUP B Manufacturing LOCAL N 1
TIPA will base on the statistics of non-conforming products each month, then proceed to draw a Pareto chart
Suppliers that fall within the 20% ratio will be classified as 'Outstanding' (usually 4-
3 suppliers) If a supplier is within the 20% range but the non-conformance rate is not significant, it will not be considered
Figure 3.3: Illustration of selecting suppliers by Outstanding group
The suppliers in the Outstanding group are Supplier 1, Supplier 2, Supplier 3, and Supplier 4
If a supplier falls within the 20% ratio but the number of non-conformities compared to the preceding supplier is not significant, it will not be listed in the Outstanding group
Figure 3.4: Illustration of selecting suppliers by Outstanding group
The suppliers in the Outstanding group are Supplier 1 and Supplier 2
Supplier 3 and Supplier 4 also fall within the 20% ratio, but their defect rates are equal and not significant compared to Supplier 1 and Supplier 2 Therefore, these two suppliers will not be included in the Outstanding list
This is the group of suppliers causing the highest number of defects according to the recent statistics, or they may have fewer defects but significantly impact the factory's productivity
TIPA should limit these suppliers as much as possible
Table 3.6: The received material control process
Step In charge Follow chart Description
3 PC Check parts item quantity and status packing
7 QA Control the nonconforming products
8 QA Request the supplier has
With a production output of 35.000-50.000 motors per month, and most of the materials used in motor production at TIPA being purchased from external sources, with only a few materials being self-processed by TIPA, the total amount of input materials per month is extremely large
The Receiving Department is responsible for controlling the quality of input materials before they are used in production at the TIPA factory The Incoming Quality Control
Department is responsible for inspecting the quality of input materials at TIPA's warehouses This department works directly with suppliers to ensure the quality of input materials and stores them in the best conditions to minimize any issues from the smallest material basket at TIPA
Quality control for products in production must be based on standards, and it must be ensured that the materials are verified accurately before production begins The TIPA factory deals with a diverse range of input materials serving the production from raw materials to finished products Different suppliers will provide different types of goods For the main product line, Motors, the TIPA factory imports various types of items ranging from steel shafts, aluminum, to finished products such as motor covers, casings, etc
TIPA is divided into 2 departments for receiving input materials: Receiving 1 and Receiving 2:
Receiving 1 is responsible for receiving internal components of the motor or small external components of the motor
Receiving 2 is responsible for receiving large external components, such as cast steel parts
After receiving the goods, MFG staff conduct inspections regarding the type and product code
Receiving department employees then check the quantity and quality according to the procedure Each product code has its own standard, which is fully documented on the check sheet Samples are taken for inspection according to the standard, quality is checked, and the results are recorded on the check sheet The check sheets are stored in paper form with a minimum retention period of 5 years
If the quality inspection passes, the product is labeled as "Pass" and awaits storage in the warehouse
At the end of the process, the stored information will be transferred to the TIPA Improvement system
Handling non-conforming products at input
Table 3.7: The non-conforming product control process in the input process
Step In charge Follow chart Description
Receiving department employees conduct sampling and inspections according to TIPA's regulations
If non-conforming products are found, samples are isolated for inspection and repair
If the defects cannot be repaired, contact is made with the supplier to either replace or cancel the shipment
Handling non-conforming products in the production process
Table 3.8: The non-conforming product control process in the production process
Step In charge Follow chart Description
Handing with the rules of
7 ME/PE/QA/QC Evaluate and suggest the countermeasure
(Source: Author collected) Step 1: Detect NCP
All employees can detect the NCP
All NCP are identified by the pink card
The person who detects non-conforming products records the information on a Pink tag, signs their name in the "Written by", and then hangs the tag on the non-conforming product
The person responsible for repairing will document the corrective actions taken
QA/QC staff will inspect and confirm the product after repair If it meets the standards, they will cut the right-hand corner of the tag and retrieve it for storage
Each section must have a separate area for NCP When detecting NCP, it must be brought to this area immediately to isolate and wait for handling
The detector input the data into "Line out control system" of "TIPA Improvement"
Here, there will be two cases:
Case 1: All NCP which input into "Line out control" must be handling with the rules specified on this page including: o Confirm NG code & the section will repair o Record the repair status o Confirm finished
Case 2: The defect which occurs the first time or occurred batch, don't have the repair method, and the serious defects, must be reported by form “NCP Report” (Appendix)
The detector has to report for their superior by using the form NCP Report then hand it over to QA to fill in the code
QA shall update that information of NCP into the list control, then send to the evaluate department
Step 7: Evaluate and suggest the countermeasure
The PE department evaluates the cases which are related to the requirements of the drawing & design
QA/QC evaluate the cases which are related to the appearance, color, subjective feeling & the dimensions
After evaluating the non-conforming, and suggest countermeasure, including:
Repair (to meet specifications): send for ME to make the repair method, depending on the function and suitability, there will be an appropriate processing department assignment
Accepted with or without repair by concession but not inconsistent with the provisions required to comply
Rejected or scrapped: If the canceled product needs to be declared to customs, it will be done according to the company's regulations
In case of defect of supplier: QA will notify about quantity and quality, PR will notify on issues related to the purchase of goods (as compensation, return to supplier) to take the action
The person who approves the countermeasure is Assistant Senior Manager or higher of the PE/ME/ QA/QC department
QA will notify the nonconformities to the related department to follow In case it is required by contract, the expected usage or repair of NCP shall be reported to CS
QA/QC is responsible to check after NCP is finished: o Repair: checking results after repairing o Concession: record SO used o Scrap: checking canceled status o Other: checking the correct execution of the countermeasure
Current State of Supplier Management at TIPA
TIPA is divided into 2 periods and relies on the quality status of the previous period to set quality objectives for the next period
Table 3.9: Period division at TIPA
In this section, the author only presents a portion of the supplier evaluation table for the Manufacturing group and the data Supplier names have been changed to ensure the security of company data
Table 3.10: List of domestic suppliers belonging to Period group 23B
No Supplier name Address Group name
Company type LOCAL/OVERSEA ISO certification Year 23B
1 Supplier A2 THAINGUYEN Group A Manufacturing LOCAL Yes 3 Yes
2 Supplier A9 DONGNAI Group A Manufacturing LOCAL Yes 3 Yes
3 Supplier B1 DONGNAI Group B Manufacturing LOCAL Yes 3 Yes
4 Supplier B4 BINHDUONG Group C Manufacturing LOCAL Yes 3 Yes
5 Supplier B6 TP.HCM Group C Manufacturing LOCAL Yes 3 Yes
6 Supplier B9 DONGNAI Group C Manufacturing LOCAL No 1 Yes
7 Supplier C3 TP.HCM Group C Manufacturing LOCAL No 1 Yes
8 Supplier D1 BINHDUONG Group D Manufacturing LOCAL No 1 Yes
9 Supplier D2 BINHDUONG Group D Manufacturing LOCAL No 1 Yes
Table 3.11: List of oversea suppliers belonging to Period group 23B
No Supplier name Nationality Group name
Company type LOCAL/OVERSEA ISO certification Year 23B
1 Supplier A1 CHINA Group A Manufacturing OVERSEA Yes 3 Yes
2 Supplier A2 MALAYSIA Group A Manufacturing OVERSEA Yes 3 Yes
3 Supplier A3 MEXICO Group A Manufacturing OVERSEA Yes 3 Yes
4 Supplier B1 CHINA Group B Manufacturing OVERSEA Yes 3 Yes
5 Supplier B2 USA Group B Manufacturing OVERSEA Yes 3 Yes
6 Supplier B3 TAIWAN Group B Manufacturing OVERSEA Yes 3 Yes
7 Supplier C1 HONGKONG Group C Manufacturing OVERSEA Yes 3 Yes
8 Supplier D1 CHINA Group D Manufacturing OVERSEA Yes 3 Yes
Based on the data from the previous period, only the group of domestic suppliers exceeded the company's error threshold
The author analyzes only the groups of Domestic Suppliers
Purpose: o Improve the quality status of suppliers with high error rates in period 22B (measured by component group) o Goal for period 23B: Reduce the error rate by 20% per supplier compared to period 23A o Evaluation condition: Top 3 suppliers with the highest error rates in the group
Figure 3.6: Pareto chart of supplier group A
Based on Figure 3.6, the suppliers classified as Outstanding are: Supplier A1, Supplier A2, Supplier A3, and Supplier A4
Figure 3.7: Pareto chart of supplier group B
Based on Figure 3.7, the suppliers classified as Outstanding are: Supplier B1, Supplier B2, Supplier B3, and Supplier B4
Figure 3.8: Pareto chart of supplier group C
Based on Figure 3.8, the suppliers classified as Outstanding are: Supplier C1 and Supplier C2
Figure 3.9: Pareto chart of supplier group D
Based to Figure 3.9, the suppliers classified as Outstanding are: Supplier D1 and Supplier D2
Figure 3.10: Pareto chart of supplier group E
Based to Figure 3.10, the suppliers classified as Outstanding is: Supplier E1
Table 3.12: List of suppliers belonging to the Outstanding group
No Suppliers Address Group name
According to TIPA's data, in period 23A, the supplier in the Increase group is Supplier E1
Figure 3.11: Assessment plan for suppliers in the Domestic Manufacturing group for period 23B
Figure 3.12: Assessment plan for suppliers in the Oversea Manufacturing group for period 23B
2 Supplier A1 THAINGUYEN Outstanding o Audit online
3 Supplier A2 THAINGUYEN Period/Outstanding o Audit online
9 Supplier B3 LONGAN Outstanding o Audit online
Audit & Send results Responsibility Feb-24 Mar-23 Note
No Suppliers name Address Group name Reason
1 Supplier A1 CHINA Group A Period Yes o
2 Supplier B1 CHINA Group B Period Yes o
7 Supplier C1 HONGKONG Group C Period Yes o
8 Supplier D1 CHINA Group D Period No o
No Suppliers name Nationality Group name Reason
Group B Not audit at the factory
TIPA Send documents to suppliers for self-assessment.
1) TIPA Send documents to suppliers for self-assessment
TIPA plans to go to supplier
Assessing the advantages and limitations of Supplier Management at TIPA 46 1 Advantages
Structured Process: TIPA's approach to Supplier Management is meticulous and systematic This is evident in the supplier audit process, control of incoming products, and the handling of non-conforming products Each step in these processes is defined and executed thoughtfully The advantage of this rigorous structure is the ability to maintain a high level of accuracy and consistency It also allows for easy tracking and diagnosis of any issues that might arise
Early Detection and Isolation of Non-Conforming Products: TIPA’s system for early detection and isolation of non-conforming products further exhibits their commitment to quality By identifying and separating these products at the earliest stage possible, they minimize the possibility of defective materials being mistakenly used in production This process also allows for timely response in addressing these issues, either through repairing the products or contacting the suppliers to resolve the defects
Cross-functional Collaboration: The collaboration of Quality Assurance, Quality
Control, and Manufacturing Engineering departments in TIPA provides a robust check against product defects This was exemplified in their handling of non-conforming products By assigning roles across these diverse but related departments, TIPA ensures a comprehensive analysis and more nuanced understanding of product non-conformities The cross-departmental collaboration not only helps to quickly identify errors but also to devise and implement the most effective countermeasures
Active Supplier Evaluation: Toshiba’s approach to supplier evaluation is both dynamic and consequences oriented The periodic reviews based on the previous period's quality situation allow for constant learning and adaptation Furthermore, by focusing more on suppliers that provide main materials and cause most errors, Toshiba demonstrates a priority for factors with the greatest impact on product quality This efficient audit strategy
47 aids in ensuring only high-quality materials are used in their products, thereby maintaining their product integrity
Manual supplier classification: Currently, the Supplier Audit department of the QA division still utilizes Excel to classify suppliers into the Outstanding group All error data within the factory is managed and updated daily by the QA Official team At the end of each period, the Supplier Audit team begins extracting data from the Official’s file to classify suppliers This supplier classification process takes one week to complete as there is only one staff member, and they have to manually classify using Excel by drawing a Pareto chart
Table 3 13: 5 Whys for manual supplier classification
Question Why is compiling the supplier evaluation list time-consuming?
Why 1 Finding outstanding group and top errors is time-consuming
Why 2 Each group has to manually filter the data
Why 3 The QA Audit team has only one method for data filtering
Problem Risk of errors and time-consuming process
Solution Implementing Power BI for data analysis
Figure 3.13: Illustrate how TIPA currently uses to find suppliers by group
Table 3.14: Actual time for each step when using the old method
No Content Step Actualy time
Extract NG data form Official's file
Converting 6-month columns into 1-month column 6,00
Finding Top 3 Errors by Pareto for 18 suppliers 72,00
Filtering suppliers due for evaluation in the next period 1,00
3 Make the report Summarize all Pareto Charts for PowerPoint presentation 30,00
It can be seen that the time-consuming process is 134,02 minutes, with the most time- consuming step being "Filter by Pareto," accounting for 71,63% Although this method allows for some level of analysis, the process is time-consuming and prone to human error Handling a large data file manually increases the likelihood of data inaccuracies
Absence of Parent Supplier Evaluation: According to TIPA regulations, there is a criterion for not evaluating the parent supplier TIPA's parent supplier is a company within the Toshiba group, and these companies purchase TIPA's final products and act as intermediaries to resell them to TIPA Since all companies within the Toshiba group share the same supplier evaluation criteria, evaluating the parent supplier is considered
"impractical" and would consume time and resources
However, in reality, the parent supplier still provides defective goods to TIPA While the quantity of defects may not be significant, the cost of the goods is quite high, with some
49 items valued at hundreds of dollars If TIPA cannot repair the defects on its own, it is forced to return the goods to the supplier and wait for replacements, causing significant time and cost constraints
Figure 3.14: Illustrate the error rate from parent suppliers
Table 3.15: 5 Whys for Absence of Parent Supplier Evaluation
Question Why choose the parent suppliers?
Why 1 TIPA hasn't found suppliers
Why 2 TIPA lacks data to find suppliers
Why 3 The company is new and the products have high standards
Problem Inability to control parent suppliers; results in wasted time due to unrepairable errors
While purchasing from the parent supplier may offer advantages in supplier selection and quality assurance, the inability to control other suppliers sourced by the parent supplier is a significant limitation
PROPOSING AN INTEGRATED SOLUTION OF POWER BI AND
Integrating Power BI for Data Analysis
The author noticed that at the end of each semester, the QA staff had to collect the suppliers to be evaluated by group using Excel The time required to complete this task was at least 4 days, as there were numerous groups and suppliers The steps to filter out the suppliers belonging to the Outstanding group are outlined in the table below:
Table 4.1: Filtering suppliers by group process
No Job Description Illustration Image
1 Extract NG data from Official's file
Classify errors by each supplier
(Sources: Author Collection) Integration with Power BI:
Currently, TIPA utilizes Power BI, but it is only used in higher-level departments Power BI has not been widely used in the lower-level departments under the factory With some existing resources, the author suggests that TIPA should expand the scope of Power
BI usage to enhance speed and accuracy in handling large amounts of data
4.1.2 Benefits of Integrating with Power BI:
To address the challenges associated with manually classifying suppliers, the proposed solution involves integrating Power BI with Excel, serving three main objectives
Firstly, it aims to expedite the process of identifying suppliers in the Outstanding group
Secondly, Power BI will directly source data from the Official team's file, eliminating the need for the Audit Supplier team to manually retrieve this data As the Official's file updates this data daily, this direct integration will significantly minimize the risk of errors that occur during manual data retrieval
Lastly, Power BI also enhances the presentation of reports, offering a more visually appealing layout and increased readability
This multipronged approach therefore not only streamlines the process but also improves the accuracy of the data and the overall comprehensibility of reports
Goal: To streamline the process of filtering suppliers into the Period and Outstanding groups, reducing errors in data retrieval from files by the QA Official team
This project will follow the PDCA cycle with a deployment timeframe of one month
With the participation of the QA Official team and QA Audit team, the plan will be implemented within 1 month It will begin with training sessions on Power BI usage for team members, followed by testing with the data from the previous evaluation period (Period 23A) After completing the reports, a verification step will be conducted to ensure that the data obtained using Power BI matches the data obtained using Excel The final step involves continuous updates and data checks to promptly address any discrepancies
Table 4.2: Details of the Power BI integrated project
No Action Start End PIC
Training on using Power BI 4/4/2024 10/4/2024
Perform Excel integration into Power BI 15/4/2024 16/4/2024
Compare the predicted results with the old method 17/4/2024 23/4/2024
Figure 4.1: Tracking the steps in the Power BI integration project
QA will conduct a one-week training session for individuals involved in the supplier audit process After completing the training, they will begin experimenting with the old data (Period 23A)
They will change the format in Excel to columns using VBA software within Excel to handle large amounts of data
Figure 4.2: Illustrate the data migration
After obtaining all necessary data, proceed to build a report with the following requirements:
Filter suppliers in the Period group (up to the evaluation deadline of period 23B) Compare the error rates of each supplier against the TIPA target
Identify suppliers responsible for 80% of errors
Figure 4.3: DAX used in Power BI
Figure 4.4: Illustrate the reporting results using Power BI
The report provides all the information requested by the Audit team, including:
Defect Target by Supplier: This table offers a comparative view of each supplier's error rate per group against Toshiba's pre-defined target for period 23A
The error rate will be computed by dividing the number of defects by the total input and juxtaposed with the target This provides a clear visual cue for the performance of each supplier
Suppliers whose defect ratios meet or exceed the target will be highlighted in red to mark that they require improvement Conversely, those with a defect ratio under the target will be highlighted in green to signify those who are performing well
This system allows a quick and straightforward way to monitor supplier performance and identify areas for improvement
Pareto of Supplier by Group: The Pareto analysis identifies the suppliers within a group that contribute the most to the defects
This table visualizes that by highlighting the top 20% of suppliers causing errors in orange, thus marking them as priorities for potential improvements The remaining 80% of suppliers responsible for less substantial error rates will be marked in gray
The Pareto analysis, incorporated into a dynamic chart, offers a systematic way to prioritize actions for reducing errors It allows TIPA to focus resources on the supplier issues that will have the greatest potential for improvement
Supplier List in Period: This table will maintain a record of suppliers due for an evaluation in period 23A
This will include the supplier's name, group, and whether the supplier holds an ISO certification
This information will not only serve as a ready reference for internal use but also enable TIPA to verify supplier credentials, manage the evaluation schedule, and ensure ISO compliance if required
Compare the chart after using Power BI with the chart after using Excel
Figure 4.5: Comparing results from Power BI and Excel
The comparison results indicate that both datasets are completely consistent
Table 4.3: Comparison of processing time between the two methods
NG data form Official's file
Filtering 6 group names within 6 months
Converting 6- month columns into 1-month column
Copy Power BI file from previous period
Finding Top 3 Suppliers by Pareto for 6 groups
Finding Top 3 Errors by Pareto for 18 suppliers
Filtering suppliers due for evaluation in the next period
Copy Power BI file from previous period
Summarize all Pareto Charts for PowerPoint presentation
After comparing the time between the two methods, the author found that the time saved was up to 66,54% This could be a good method to reduce both time and human errors
Continuously monitor and compare the data; if errors are detected, they should be corrected immediately.
Supplier localization
TIPA does not solely rely on its parent supplier; it also has backup alternative suppliers to replace the parent supplier, if necessary, although the number of these alternative suppliers is limited Items purchased from the parent supplier are high-standard and expensive, so local suppliers may not be able to meet these standards
However, not all items imported from the parent supplier can only be produced by foreign companies; there are many items that domestic companies can supply Therefore, the author proposes an improvement solution to the parent supplier issue by expanding the scope of local supplier localization as a substitute for the parent supplier
Table 4.4: 5 Whys for Motivation of Supplier Localization
Question Why choose an alternative supplier?
Why 1 Parent suppliers cannot be controlled
Why 2 Company policy prohibits evaluating parent suppliers
Why 3 Parent supplier is an intermediary, and Toshiba Group uses the same evaluation process and standards Problem
Inability to control defects from not evaluating the parent supplier; results in wasted time and extra costs due to unrepairable errors
Firstly, it significantly saves time in terms of the geographical location of domestic suppliers, reducing transportation time This can improve the overall efficiency of the supply chain and ensure timely delivery
Secondly, it helps reduce costs By localizing suppliers, TIPA bypasses unnecessary customs fees associated with international transactions This not only reduces operating costs but also streamlines financial processes
Lastly, supplier control is enhanced When separated from the parent supplier, all remaining suppliers are brought under scrutiny This strengthens monitoring across various aspects such as quality, delivery, and performance
Goal: Expand the scope of domestic supplier localization as a replacement for the parent supplier
This approach also involves seeking a new supplier; hence it must adhere to TIPA's standards and regulations outlined in the Supplier Selection and Evaluation Process as referenced by the author in section 3.1.1
Step 1: Assess the current effectiveness of the domestic supplier localization initiative
For example, consider Group D, which the part name Bearing Based on the available data from existing suppliers, compare the parent supplier with domestic suppliers
The comparison results are as follows:
Table 4.5: Comparing parent supplier and alternative suppliers
Supplirer Part name Part Item ISO Lead time Location Quatity Price/psc
TIPS Bearing 0465 Yes 16 days Japan 100 $4,00
DK Bearing 0465 Yes 9 days Dong Nai 600 $2,80
PMC Bearing 0465 No 11 days Dong Nai 240 $3,00
SLR Bearing 0465 Yes 10 days HCMC 476 $2,60
The author compared the geographical location and delivery time of the suppliers The comparison table shows that all three domestic suppliers have a geographical advantage and shorter delivery times TIPA has also begun transitioning from the parent supplier to domestic suppliers, as evidenced by the lowest number of orders placed with the parent supplier among the four suppliers
Table 4.6: Comparison of Benefits Between Parent Suppliers and Local Suppliers
Reduce delivering time 16 days 11 days
Supplier control Not control TIPA - PRO - 025 Reduce intermediary purchasing costs $4,00/psc $3,00/psc
The most noticeable benefit lies in the significant reduction of lead time due to the location of the manufacturing site in Vietnam Additionally, when selecting suppliers other than parent suppliers, TIPA retains the right to monitor and evaluate suppliers according to the company's TIPA-PRO-025 standard This approach can effectively address a major issue, namely pricing, by potentially reducing costs from intermediary suppliers like parent suppliers
Step 2: Developing the Supplier Localization Plan
To expand the scope, the QA department will identify potential suppliers capable of replacing the parent supplier
The QA, PR and ME departments will search for information and assess potential suppliers based on the following requirements:
ISO 9001 Certification: The purchasing department needs to check whether potential suppliers have achieved and maintained ISO 9001 quality certification for at least 3 years They may request documentation to prove the maintenance of this certification and verify its validity with the certification body
Reputation: Purchasing needs to consider the reputation of the supplier through relevant information regarding past engagements with other large companies This aims to demonstrate the supplier's credibility and delivery capability
Lead Time: The buyer needs to ensure that the new supplier can meet the delivery time requirements of the company, within a maximum of 3 weeks from the order date They may inquire about the supplier's production process and lead time to ensure feasibility
Supply Capacity: Purchasing needs to ensure that the supplier has the ability to supply large quantities of goods and meet the company's demand The supply capacity should be at least 1.000 pcs per month
Step 3: Designing the supplier evaluation matrix
Establish a team to develop a simple evaluation plan (Table 4.7) and carry out the evaluation The author interviewed the QA manager to compile the following matrix (Appendix)
Table 4.7: The fundamental evaluation framework employed by the company
Contact person Employee X and Employee Y
Rate by QA, ME, PC
No Criteria Grade Weight (%) Total
The weightings assigned to the factors depicted in the diagram (Table 4.7) indicate a clear emphasis on quality, delivery, and total cost, with relatively less priority given to environment and cooperation Discussions with suppliers seldom touch upon cooperation and environmental aspects Instead, the primary focus remains on cost optimization, with quality and timely delivery only becoming significant in urgent scenarios or when leveraged to negotiate reduced prices
Step 4: Deploying the supplier evaluation matrix within the company
The evaluation team conducts its assessment according to the expectations specified in the contract with each supplier All departments involved in daily interactions with suppliers, including procurement planning, sourcing, quality, and product development, participate in this process The result is an evaluation table that encompasses five key aspects of supplier performance, with each aspect accompanied by a set of predefined secondary metrics (Table 4.8)
Table 4.8: The factors are considered in relative frequency
Performance indicators Expectations Rating Company A Company B Delivery
Table 4.9: Comparison table of company scores on a 3,90-point scale
After comparing supplier A and supplier B through the evaluation of supplier information, it was found that supplier B scored higher Therefore, supplier B was chosen as the potential supplier
After completing all procedures, proceed with purchasing a small quantity and continuously monitor the delivery for the next 60 days Continuously evaluate the performance of this new supplier according to the criteria specified by TIPA (TIPA-PRO- 025)
Based on the evaluation results, make necessary adjustments to the domestic supplier localization strategy on a large scale If the performance of the new suppliers meets the requirements, proceed to fully integrate them into TIPA's supply chain If they fail to meet expectations, identify areas for improvement and provide constructive feedback or consider other potential suppliers