Supplier Performance: Aggregating Supplier Quality Metrics into a Single Supplier KPI / Inde...

3 Replies

Supplier Performance: Aggregating Supplier Quality Metrics into a Single Supplier KPI / Index Value

Posted by Peter-Elias Alouche on Dec 7, 2018 9:41 am

Hi all.  Looking for some help from the general community and especially any Supplier Quality Engineers / Supplier Quality Managers / Quality Directors.  I'm trying to address a specific topic around supplier performance.  I'm working on a project to come up with a way to roll up supplier quality data into a single supplier KPI / score that would help companies compare supplier A versus supplier B using a single supplier index or score. This single supplier index would be weighted based on multiple supplier quality metrics (say on-time delivery, supplier audit performance, customer complaints resulting from a supplier defect, etc.). Has anyone ever seen/done anything like this? If you have, would be great to chat with you to learn more.

Best Regards,

Peter

Re: Supplier Performance: Aggregating Supplier Quality Metrics into a Single Supplier KPI / Index Value

Posted by Shawn Armstrong on Dec 21, 2018 3:57 pm

Good Afternoon Peter,
To get a better understand of what you are currently doing, what supplier data are you recording now? What is the purpose of you project? Are you trying to minimize what data is needed? From talking with others, there are internal suggestions but understanding more in detail would help.

Thank you,
Shawn Armstrong (ASQ CSD Chair - Elect)

Re: Supplier Performance: Aggregating Supplier Quality Metrics into a Single Supplier KPI / Index Value

Posted by Jeremiah Genest on Dec 21, 2018 5:05 pm

This sounds like a risk ranked score card. Select the criteria critical to your supply chain, based on risk. Score them. Get a final value that decisions can be driven from.

lots of literature on this. Let me know if I can provide a short bibliography.

Re: Supplier Performance: Aggregating Supplier Quality Metrics into a Single Supplier KPI / Index Value

Posted by Kaiwen Cheng on Dec 25, 2018 9:00 am

A single index is good for finding answers in a specific situation or base a business priority, but not very good to use it as a long term management approach.
The challenge and circumstance of your supply base will keep changing, therefore keeping track multiple indicators would provide a better view during decision making process.  The common ones are quality, delivery, technology, and service.  A perfect example is underneath quality, you can track for occurrence, PPM, severity, etc.  But which one is more important?  That is totally depend on the business priorities. 
The concept is exactly the same as the decision matrix where the weights are defined based on the requirement of decision.   Another way to say it is that you must define the problem properly before you can find the right answer.  I published a blog not long ago on this topic too (check it out at https://www.kcbcweb.com/blog/defining-the-problem)
There is a justified use for the single index process, and I have done that many times before.  One key thing is the “weights” shall be reviewed at least annually to ensure it aligned with business priorities.  Keep in mind, it would lose the ability for historical comparison when you changed the “weights”.  It is fine for me because we keep the original form of individual indicators, and the index is only used for identified the focus areas/ suppliers for improvements.
Please feel free to contact me directly, I am happy to share more examples in detail with you.

Kaiwen
https://www.kcbcweb.com