Supply Chain Metrics Management

This Month

ISO 9001:2015 Standard – What’s It All About? August 11, 2016 ASQ Phoenix Chapter Meeting.  Speaker: Walter Tighe. Free and Open to the Public.

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Our newsletters provide information on business management systems and process improvement methods. These systems include ISO 9001 QMS, AS9100 Aviation, Space and Defense, ISO/TS 16949 Automotive, ISO 27001 Information Security, ISO 13485 Medical Devices, ISO 14001 Environmental Management Standard, and others. Subjects include performance improvement methods such as Six Sigma, Lean Enterprise, and other topics of interest to our readers.

Do You have a Subject of Interest for a future 2016 Newsletter?  Please let us know.

Supply Chain Metrics Management


Focusing on the measurable elements of the business, key performance indicators, or KPIs, are specific metrics critical to determining how well an organization is performing. Eliminating waste, delivering products and services on time, can impact defects and delays.

When involving a supply chain, often composed of numerous organizations, the complexities around measuring performance are apparent. Establishing meaningful supply chain KPIs is essential to driving operational excellence throughout the entire supply.

Based on the newly released ASQ and APQC Global State of Quality 2 Research Study, ASQ and APQC called upon several renowned supply chain experts around the world for their insight into the role and importance of establishing KPIs that effectively measure and predict supply chain performance.


In addition to KPIs, suppliers must have open and honest relationships with customers. Furthermore, buyers should share their organization’s mission and vision to help suppliers understand the impact that defects or delays could have on the end customer. Suppliers will be compelled to think differently-to help eliminate waste, improve efficiency and quality, and have products and services delivered on time. This is critical because when you need the suppliers for exceptions, like spikes or reductions in demand, the suppliers will be more willing to work with you.


Highlights of the study show that:
  • 30% of survey respondents train Tier 1 suppliers on their quality management system. 64% don’t train any of their suppliers.
  • 50% of survey respondents indicated that supply chain disruptions are the most concerning risk within the organization.
Study Results Question: If your company does not provide training and monitor your suppliers to your needs and their capabilities, how will your disruptions decease, and your risks be reduced?       

To properly manage the supply chain, a series of KPIs is needed to uncover performance improvement opportunities.

Finished-product, first-pass quality yield for primary products.

Finished-product, first-pass quality yield is an important KPI to monitor the quality and performance of the supply chain. First-pass yield measures how many units are completed in the first pass through the supply chain with no rework. If an organization decides not to measure final-product, first-pass yield, it risks high levels of process inefficiency and waste. First-pass yield helps companies capture and identify high-waste and low-efficiency areas for process improvement and additional monitoring.


Percentage of defective parts per million.
Percentage of defective parts per million is a KPI that measures the amount of defective parts out of total parts produced. This KPI focuses on the quality of the process and output before the product or unit is shipped. In most supply chains, defective parts per million should be tracked on some form of control chart with an upper and lower limit-essentially, the expectation of how well the supply chain should operate. Defective part per million is often used in process improvement initiatives as a stake in the ground for performance.


Warranty costs (repair and replacement) as a percentage of sales.

Warranty costs as a percentage of sales compares the cost spent on repairs and replacement of distributed units to sales. This metric focuses on the amount of units that are defective after distribution to the customer- rather than in process. The warranty costs KPI can be used to track the effectiveness of the quality control group as well as the quality of product being produced. Warranty costs can have a huge impact on organizations. The parts being supplied might not be meeting the needs of the business, and ultimately the consumer.

It is up to the leadership of the supply chain team to verify that the vendor or partner can meet the requirements of the component, and the requirements of Cost effectiveness indicators allow for an organization to better manage and measure their cost effectiveness performance, both internally and externally.


Scrap and rework costs as a percentage of sales.

The scrap and rework cost indicator measures the quality of and waste in the supply chain process. This KPI will be tied inherently to other process efficiency indicators, such as defective parts per million, as it measures the cost of poor quality. In any supply chain organization, a poorly managed process can lead to increased scrap and rework costs.
Organizations that currently don’t measure their supply chain effectiveness can put in place the necessary KPIs to boost their business by determining what the “right measurements” are and tie them to the drivers of your business.


Seeking more information on performance measurement? Contact us and we will send you a comprehensive metrics selection (KPIs) to consider utilizing in many areas of your business. 


AS9100:2016 Transition Update



Many of our clients and newsletter recipients’ are certified to the AS9100C Aviation, Space and Defense QMS Standard.

Within our recent Newsletters, we have mentioned that April 2016 was the projected date of the AS9100D:2016 Standard. As we know, April has come and gone, and the AS9100:2016 series of standards still have not been published.

The IAQG goal was to publish all of the standards throughout the world in April 2016, have the online training course for new auditors available in August 2016, update OASIS to the next version (Next Gen) in October 2016 and begin auditing shortly thereafter.

There is now a delay in translating the documents in Europe and since the IAQG endeavors to release the documents across all sections at the same time, this delay has caused a delay in the release of the standards for all sectors. There has been much brainstorming on ways to expedite the current timeline which hopefully will allow for the documents to be released earlier, but as of now, this is the latest information we have:

  • AS9100D:2016 to be published in October 2016
  • AS9101:2016 and  AS9110:2016 published in November 2016
  • AS9120:2016 published in December 2016
  •  All audits after June 1st 2017 must be to the new version of the applicable standard, though that date may move up a month to May
  • All companies currently certified to AS9100, 9110 or 9120 should complete their transition audit by June 15, 2018 (to allow enough time for any NCR’s to be processed and entered into OASIS prior to the 15 September 2018 deadline)
  • All companies currently certified to AS9100, 9110 or 9120 must have their new AS91XX:2016 certificate published in OASIS by 15 September 2018 (though that date may slip a bit for various reasons) – Any company that has not successfully upgraded to the new standard(s) by 15 September 2018 will have their certification revoked and their history in OASIS erased.
What is less certain is the following:
  • The availability of the online training course required of all auditors in the scheme (to include accreditation body auditors like ANAB) – Hopefully that is still on schedule for the fall even though the standards will not be released worldwide by then – TBD.
  • The date that that ANAB will be able to audit certification bodies so that third party audits can conduct audits.

One thing is certain: The September 15, 2018 deadline is not going to change, it is set in stone.  Stay Tuned!   

Contact us with questions and any assistance with your future AS9100D:2016 transition needs.  


Service Sector – The Largest Employer

It is very likely that you, or your family are involved in the services sector as a service provider, now the largest part of the world economy accounting for over 70 % of global Gross Domestic Product (GDP) or approximately USD 55 trillion in 2014 (World Bank Development Indicators 2015).

No surprise, therefore, that the provision of services, or “intangible” goods, has outstripped the industrial sector in most developed and developing countries as the worldʼs fastest-growing part of the economy, and the largest employer.  According to U.S. sources, the sector was responsible for 90% of all the jobs created in 2015, and is projected to account for about 79% of total employment by 2018.

Developing standards for services and ensuring they make a positive contribution to the globalization of the services sector is one of the priorities of the ISO Strategy 2016-2020. The Strategy pinpoints ISOʼs major strategic directions, a key objective of which is to eliminate global barriers and prejudices by making sure ISO International Standards can be used everywhere by government, business and society.

See the ISO Focus Article – The Service Economy (PDF)


Although the report also found that service providers faced challenges in improving their market position, business performance, the service provider-suppliers relationships and the service provider-clients relationship, the implementation of service standards and their impact on service providers and users indicating some very positive benefits of using service standards.

Standards are seen as catalysts to spur better access for consumers and businesses to services that are cheaper and provide a wider variety than those currently available, and to untapped opportunities in cross-border trade in services.


Selecting Quality Measures


Beyond supply chain metrics, selecting the right overall quality measures can have a tremendous impact on overall performance outcomes and the culture of quality throughout an organization. The challenge is figuring out the right balance to ensure that measures are not so standardized that they lose the value to affect performance.

The Discoveries Global State of Quality Research identified the following measures being used:

  • Defects per million: 82% manufacturing vs. 38% service
  • First pass yield: 88% manufacturing vs. 43% service
  • Percent on-time delivery: 97% manufacturing vs. 58% service
  • Measures of safety: 96% manufacturing vs. 63% service
  • Internal failures: 96% manufacturing vs. 67% service
  • Percent compliant: 96% manufacturing vs. 83% service
  • Employee satisfaction: 91% manufacturing vs. 94% service
  • Customer satisfaction: 98% manufacturing vs. 96% service
Using quality measures, organizations can effectively use them in the establishment of strategic goals, for trending and predictive analysis to enable pre-emptive and not just reactive decision making, and in rewarding employees through performance compensation. Data show that the majority of organizations use measures in a more mature way, but there are a few significant differences among manufacturing, services, and healthcare respondents.



In the News

Thirty-four Organizations Apply for the 2016 Baldrige Award    


Demonstrating the relevance and value of the Baldrige Excellence Framework to organizations of multiple sizes and sectors, the 2016 Baldrige Award applicants include 21 healthcare organizations, four education organizations, four nonprofit organizations, three small businesses, and two service businesses. The organizations are based in 20 U.S. states and represent every major region of the United States.

Thousands of organizations worldwide use the Baldrige framework and criteria, which are regularly revised to reflect leading practices, to guide operations, and improve performance. This proven framework offers organizations an integrated leadership guide to key management areas, including strategy, operations, data and information, and results. 

For more information, visit the Baldrige Program Website.

For information on SES Breakthrough Performance Model, a holistic organizational improvement approach for sustainable results, visit our website.
A Celebration of 70 Years!

Throughout 2016, the American Society for Quality (ASQ) will be marking its 70th anniversary.

ASQ members will find expanded content including trivia time to test your knowledge of ASQ, submit your earliest or most memorable experience as a member of ASQ’s global quality community, and more. Be sure to check out ASQ TV with many topics of interest for improving your organizations performance.
For more information visit the ASQ Website.


Training Courses
Don’t see a course or schedule that fits your needs?  Contact us.
Survey Says-Quick Poll Results 
What is the most critical factor in creating a culture of quality?
#1 – 52.8% Leadership support and engagement
#2 – 29.2% Making quality everyone’s responsibility
#3 – 10.1% Empowering employees
#4 –   7.8% Driving out fear
Source: Quality Progress Magazine, May 2016

With ISO 9001:2015, meaningful leadership involvement with the expanded leadership requirements will require the quality group to engage top management in the early stages of the transition. This must be viewed as a top priority and an essential step for success.


Best Regards,

Walter Tighe and SES Team
Sustaining Edge Solutions, Inc.
Toll Free 888-572-9642


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