Supplier QMS Development

Supplier QMS Development

Quality is free. It’s not a gift, but it’s free. The ‘unquality’ things are what cost money.”–P.B. Crosby

When we purchase clothes, we prefer to go to a recognized/branded store. When we purchase train or air tickets, we always connect with established travel agents. When we are searching for a job, we prefer acclaimed portals. Even for matchmaking (marriage), we always deal with legal and proven agencies.

Something similar to an organization expects from its suppliers. But there should be some proven criteria to determine whether their supplier is reliable or not. Quality Management certification as per ISO 9001 is one of the highly reputed and widely accepted criteria for organizations to decide their future suppliers.  

In the automotive sector, as per IATF 16949, the minimum requirement for supplier selection is ISO 9001 certification. Although some of the possible exclusion includes scrap metal suppliers, trucking companies who provide transport and logistics support, etc. But still, QMS certification is key to the success of the entire supply chain.

Customer – Organization (you) – Supplier

Following IATF subscribing OEM’s have Customer Specific Requirements (CSR) related to Supplier QMS Development which are stated below.

Daimler: MBST 14/06, section 1, paragraph 2

FCA USA & Italy:

• Criteria for granting self-certification status to qualified suppliers.
• If the supplier certification expires or is cancelled or withdrawn by their Certification Body, a plan for second-party audits to ensure continued compliance to IATF 16949 until the supplier is recertified.
• Exemption to be approved from FCA US Supplier Operations management.

Ford: Implement guidelines of CQI-19

Why supplier QMS certification is important?

1. Improving Supplier Performance: Quality, Cost, Delivery (QCD)
2. Reduce the Cost of Quality (COQ)
3. Resolving serious quality issues
4. Improving business alignment
5. Ease of sourcing for Purchase team
6. To ensure a robust quality management system
7. Effective compliance of Customer Specific Requirements (CSR)
8. Effective Escalation process

Following are the key requirements as per IATF 16949, Clause 8.4.2.3: Supplier Quality Management System Development.

a. Risk-based model: Based on the current performance (Quality, Cost & Delivery) and the potential risk to the customer (New business, Market return, the share of business etc.) organization can prioritize which suppliers should be certified first. Accordingly, a minimum acceptable level and a target QMS development level for each supplier can be defined as only 2^nd party audit / ISO 9001 certification / IATF 16949.

b. Authorization by customer: Although ISO 9001 certification is the minimum acceptable level of development & continuing business, customer/organization can give a waiver to the supplier for not going ahead with certification (ISO 9001/IATF 16949).

c. QMS Development progression: If customer/Organization have not given any waiver to the supplier, the following progression model can be followed by the suppliers, although they can directly certify themselves with IATF 16949.

1. Certification to ISO 9001 through third-party audit: This is a minimum requirement for all the suppliers. The certification body should be accredited by recognized IAF MLA (International Accreditation Forum: Multilateral Recognition Arrangement), where the accreditation body’s main scope includes management system certification to ISO/IEC 17021. This clarity has been given to ensure that certificate is issued by the authorised agency only (Certification body as well as Accreditation body).
2. Certification to ISO 9001 & compliance to customer-defined QMS requirements: ISO 9001 is a minimum requirement. Many Customer/Organization have their specific requirement that they expect supplier should implement. Like Maruti Suzuki has Customer Specific Requirement for Tier 2 suppliers. Many tier 1 organizations (like Delphi, Denso etc.) also have their supplier manual for their suppliers.
3. Certification to ISO 9001 with compliance to IATF 16949 through second-party audits: Majority of tier 1 is certified to IATF 16949. They expect their supplier to understand their expectations as stated in IATF. Moreover, sometimes, OEM also expects tier 2 to follow IATF guidelines irrespective of their present certification status. OEM/Tier 1 shares their CSR related to IATF 16949 and conduct a 2^nd party audit to verify whether their supplier is complying to the IATF Standard.
4. Certification to IATF 16949 through third-party audits: Tier 1, 2, 3 and further can certify themselves as per Automotive Standard from IATF approved certification body (CB). Details of authorised CB can be checked at iatfglobaloversight.org.

 Perceived benefits of Supplier certification:

1. Quantifiable business benefits
2. Improvement in delivery and lead time
3. Effective change management
4. Improvement in business share

Possible Challenges:

• How often organizations verify the quality of Third-Party Certification body for their suppliers?
• How often organizations monitor and calculate the benefits that they are deriving from the ISO 9001 / IATF 16949 status of suppliers?
• How often organizations conduct 2^nd party audits as per IATF 16949?
• How often certification to ISO 9001/IATF 16949 is only compliance to the organization rather than gaining real benefits.

References:

ISO 9001: 2015

IATF 16949: 2016

CQI 19: Sub-tier Supplier Management Process Guideline

This is the 59^th article of this Quality Management series. Every weekend, you will find useful information that will make your Management System journey Productive. Please share it with your colleagues too.

Your genuine feedback and response are extremely valuable. Please suggest topics for the coming weeks.