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NEALE O’CONNOR
ANNE WU
SHANNON ANDERSON

PQI: MANAGEMENT OF SUPPLIERS
Taiwan-based memory manufacturer Power Quotient International Co. Ltd (“PQI”) had an

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established system for selecting, assessing and managing suppliers. A scoring system that
assessed suppliers in areas ranging from technical expertise to service quality and
responsiveness made it easy for the management to spot suppliers’ strengths and weaknesses
and to decide whether to keep a supplier at arm’s length or to cultivate a strong relationship
with the supplier. PQI had just completed its biannual evaluation of suppliers, several of
which required further investigation. These suppliers received only average scores despite
strong performance both technically and commercially. Meanwhile, PQI’s management
op
wondered whether sharing its assessment results openly with suppliers might help to improve
its relationships with them.

The Memory Industry
Memory in electronic devices stored data on integrated circuits using semiconductor
tC

technology. Different types of memory were used for different applications. Random access
memory (“RAM”) was a type of volatile memory, meaning that data stored on RAM would
be lost after the power to a device was switched off, and was used mostly in computing
applications. The two types of RAM were static RAM (“SRAM”) and dynamic RAM
(“DRAM”). SRAM was commonly used for cache memory, while DRAM was used in
computing applications. Flash memory was used mostly in communication and consumer
devices such as mobile phones, digital cameras, media players and digital video cameras
No

because of its ability to retain data even when the device was powered off. Within the
category of flash memory, NOR memory, which was named after the data mapping
technology (Not OR),was used mostly for storing small amounts of executable code for
computing devices; and NAND memory, which was named after the data mapping
technology (Not AND), was used for bulk storage of data in portable USB flash drives,
memory cards and solid-state drives.

Advances in technology and increased competition had led to increased commoditisation of
memory products, and memory was one of the most volatile segments in the semiconductor
Do

Grace Loo prepared this case under the supervision of Professor Neale O’Connor for class discussion. This case is not intended
to show effective or ineffective handling of decision or business processes.
© 2011 by The Asia Case Research Centre, The University of Hong Kong. No part of this publication may be reproduced or
transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise (including the
internet)—without the permission of The University of Hong Kong.
Ref. 10/481C

1

This document is authorized for educator review use only by syed waqar akbar, at PIEAS - Pakistan Institute of Engineering & Applied Sciences until December 2015. Copying or posting is an
infringement of copyright. Permissions@hbsp.harvard.edu or 617.783.7860

2 This document is authorized for educator review use only by syed waqar akbar. Do 1 KPMG (December 2009) “The Road to Recovery in the Global Semiconductor Industry: A Survey of Industry Executives— Fourth Quarter 2009”.Pakistan Institute of Engineering & Applied Sciences until December 2015. With subsidiaries in the US. General purchasers dealt with standard No components and accessories. Korea. solid-state disks. One billion unsold DRAM chips translated to a loss of almost US$10 billion for the industry worldwide. and accessories. Japan. it had more than 900 employees around the world. Nonetheless. The purchasing department had two teams of purchasers: general purchasers and strategic purchasers. FLASH Industry Gets Sick”. disk on modules. the memory industry was expected to rebound in 2010 with the increasing popularity of wireless communications devices and with continuous demand for consumer and computing devices driving its growth. op PQI used an assemble-to-order manufacturing model without keeping a large inventory of its products. up 28% from the previous year.7860 . 10/481C PQI: Management of Suppliers industry. It kept a steady inventory of structural components that made up the skeletons of its products. flash cards and USB flash drives in the world. http://www. Between its Taiwan and Suzhou plants. S.edn.the-infoshop. Decisions regarding which supplier to use were made by the purchasing manager with the approval of the manager of the product and material management division and the product marketing manager. portable hard drives and portable multimedia players. When key components such as flash.pdf (accessed 19 February 2009). it was listed on the Taiwan Stock Exchange. DRAM modules. including flash memory cards.edu or 617. 2 Deffree.. compounded by increased adoption of other smartphones. http://www. Copying or posting is an infringement of copyright. deciding which supplier to use for each order with the approval of the purchasing manager.php (accessed 12 June 2010).com/report/data113237-2010-memory. but the ripple effect of the t US mortgage crisis had led to a drop in consumer demand and a dramatic fall in the price of os DRAM by 2008. such as housing. PQI had about 20 strategic purchasers.kpmg. Research analysts predicted global revenues for the memory industry in 2010 to grow to US$57 billion.2 and the popularity of its iPods and iPhones was expected to continue to rP drive the demand for flash memory. USB flash drives. increasing demand led memory manufacturers to expand production capacity. the Netherlands. http://www. which resided within the production and material management division.html (accessed 22 February 2010). tC Supplier Management PQI’s purchasing activities were handled by its purchasing department. Between 2005 and 2007. it was ranked the tenth-largest supplier in DRAM modules. PQI had its own manufacturing plants in Taiwan and Suzhou in China. Strategic purchasers handled the purchase of non-standardised parts. a sub-division of the logistics division. 3 Databeans.783.com/article/472396-Apple_sneezes_flash_industry_gets_sick. it would assemble the orders orassemble to maintain its inventory level. Permissions@hbsp. DRAM or integrated circuits (“ICs”) came in. PQI was a Taiwan-based electronics company that had begun as a yo memory module manufacturer and eventually expanded into other product lines. PQI had about 70 general suppliers. In 2008.1 Apple was one of the largest consumers of flash memory in the world. Hong Kong and China. (3 April 2008) “Apple Sneezes.harvard.com. and many producers sold them below cost in order to survive.sg/publications/LOB_ICE-SemiconductorSurveyReport. In 2003.3 Company Background Established in 1997. Purchases for structural components were made every three months to allow PQI to adjust its inventory according to the market situation. subject to wild swings in demand and price. (2010) “2010 Memory”. Inc. at PIEAS . Strategy News. Electronic Design.

Assessment of new suppliers was based on six broad areas [see Exhibits 1. PQI categorised its suppliers into three groups: • Tier 1 suppliers were international. high-power suppliers that could supply goods globally. The five Taiwanese manufacturers mainly supplied structural components while the rest were carton or packaging factories. PQI had to categorise its suppliers and assess them on a regular basis. Once this was done. Tier 2 suppliers supplied mostly standard products.harvard. Permissions@hbsp. an original design manufacturer. and the os rest were joint ventures between Taiwanese and mainland Chinese businessmen. The Taiwanese businessmen also have a better grasp on the capability of machineries than mainland ones. Purchasers also used their own industry networks to find out about the capability and credibility of potential suppliers. PQI would also conduct onsite inspections to assess their machineries and production capacity during the selection process. five were Taiwanese manufacturers. For tier 3 suppliers. Classification of Suppliers In the mid-1990s.Pakistan Institute of Engineering & Applied Sciences until December 2015. • Tier 3 suppliers were local suppliers whose products were frequently designed by their customers. 10/481C PQI: Management of Suppliers Geographic Spread t Among PQI’s 100 or so suppliers. PQI preferred to work with Taiwanese manufacturers even on the mainland because it had more confidence in them.7860 . out of which about 10 were mainland manufacturers. tC • Tier 2 suppliers were suppliers that supplied regionally. and tended to be dominant players in the market. Financial investment is a big consideration for mainland businessmen and they tend not to buy the very expensive equipment even though they have a good mastery of the technology. PQI’s vice-president of logistics yo Another reason why PQI preferred to work with Taiwanese manufacturers was because the management felt that Taiwanese manufacturers had a better grasp of quality control and were more efficient.edu or 617. for example to Asia or Europe. Copying or posting is an infringement of copyright. tier 1 and tier 3 suppliers would be assessed not only by the purchasing department but also by the research and development division and the product planning division. at PIEAS . such as suppliers manufacturing the housing for PQI’s USB thumb drives or portable hard drives designed by PQI. about 30 of them were located in mainland China. . Selection of New Suppliers No The purchasing department was responsible for sourcing new suppliers and collecting basic information about them. 2 and 3]: Do • Commercial performance: the general financial status of the supplier as well as its payment and delivery terms • Supplying capability: aspects such as the supplier’s position in the market. such as resistors or capacitors. Mainland Chinese manufactures do not purchase or use the same type of rP equipment as Taiwanese ones because their investment level is different. The precision level of the [equipment they buy] is different. the scope of its service and its flexibility in responding to customers’ needs • Technical performance: the supplier’s engineering capability and technical sophistication 3 This document is authorized for educator review use only by syed waqar akbar. giving PQI more confidence in placing orders with them. PQI set up a supplier management system in order to satisfy the audit op requirements of one of its customers. Under this system. They generally had strong technological and production capability.Henry Wang.783.

Pakistan Institute of Engineering & Applied Sciences until December 2015. Tier 2 Suppliers PQI senior supervisors met infrequently with tier 2 suppliers. our suppliers take two months. resistors and structural capacitors components.783. Low-end or e. Suppliers who can work fast will become long-term strategic partners.7860 . which tied PQI to the supplier because die-making involved a hefty fixed cost. tC The production of many structural components required die development. though their prices were monitored carefully and reviewed monthly. The window of opportunity may only last two to three months or half a year. the market and the supply situation.harvard. at PIEAS . such as Do housing PQI’s management Weekly meeting for Price monitoring on a Monthly review control product and market monthly basis and focusing on product information evaluation every half and service quality year and half-yearly evaluation focusing 4 This document is authorized for educator review use only by syed waqar akbar.g.edu or 617. Tier 3 Suppliers While some tier 3 suppliers provided low-end products such as cartons to PQI.. Theses global suppliers were strategic for PQI because their new technology was critical to PQI’s new product development. or for small variations in the parts produced from different runs to occur. Permissions@hbsp. including those from research and development.” Wang said. but some may No take two to three months. Management of Suppliers rP Tier 1 Suppliers Tier 1 suppliers were mostly IC suppliers such as Intel. Samsung and Toshiba. The half-yearly op assessment focused on tier 2 suppliers’ supplying capability and any shifts in relationships between the two parties. 10/481C PQI: Management of Suppliers • Quality performance: whether the supplier had been certified and how it handled product defects t • Product development: whether the strategic direction of the supplier matched the os direction of PQI and whether the supplier was willing to share its future direction and information with PQI • Strategic development: various aspects of the supplier’s relationship with PQI and the extent to which the supplier was willing to invest in the relationship. Senior staff at PQI. Hence a skilled and experienced mould-maker who worked quickly could play a critical role in helping PQI to bring new products to market in a timely manner. Tier 1 Suppliers Tier 2 Suppliers Tier 3 Suppliers Geographical span Global Regional Local Product focus IC Standard products. met with tier 1 suppliers on a weekly basis in yo order to keep up with their products. “When we have to find factories to make moulds for some non-standardized products. PQI evaluated tier 2 suppliers on a half-yearly basis. others provided structural components such as housing and shared a strategic relationship with PQI. as these suppliers provided standardised products and played a relatively insignificant role in PQI’s strategic work. PQI maintained close relationships with all of them so it could take advantage of whatever new technology any one of them came up with. Copying or posting is an infringement of copyright. usually around once every six to 12 months. It was not uncommon for more than one die to be produced before parts that met the required specifications were made.

focusing on their technical ability. PQI would adjust the orders it Do placed with each supplier. their production capacity in relation to the needs of PQI and the relationship between the two parties [see Exhibit 4]. penalty clause and handling of defective products with each supplier. and its Jiansu plant was not far from PQI’s plant in Suzhou. PQI would send staff to the suppliers’ factories to ensure that their design specifications were followed and to assist the factory in making corrections if something went wrong. Based on the assessment. forming. Copying or posting is an infringement of copyright. These half-yearly evaluations were read not only by the manager of the general purchasing department but also by managers 5 This document is authorized for educator review use only by syed waqar akbar.Pakistan Institute of Engineering & Applied Sciences until December 2015.Jimmy Lin. PQI only needed to get its vice-president of logistics to give Foretech a call to fix the problem. Before we start on a new product. Foretech was frequently involved in PQI’s new product development. 10/481C PQI: Management of Suppliers on technical and production capability t and buyer–supplier os relationship Table 1: Summary of Differences among PQI’s Three Tiers of Suppliers PQI met with tier 3 suppliers on a quarterly basis to review their working relationship. [PQI] will send staff from different departments. at PIEAS . especially with their engineering department. If a supplier consistently delivered defective goods.edu or 617. PQI had a more or less standard contract that it used with all suppliers and it only had to vary the payment terms. Assessment PQI evaluated its tier 3 suppliers on a monthly basis. the contract would also include an intellectual property clause. (“Foretech”). three in Guangdong province and one in Jiangsu province. .harvard. Anytime there was a problem or if PQI felt that Foretech was not moving quickly enough. op PQI started working with Foretech when it moved its USB flash drive production from Taiwan to Suzhou in 2006. Foretech Industrial Co. or tell us to do a trial prototype. If we can’t meet their requirements. Contracts PQI renewed contracts with suppliers every two years if it was satisfied with their No performance.7860 . PQI also worked closely with them because they frequently produced parts that involved PQI’s rP own design. they will help us to correct or find up where things go wrong. specialised in plastic products. Permissions@hbsp. PQI also sent quality control staff to check the quality of their production or to help them make improvements. QCRD [Quality Control. Research and Development] to assess yo our internal project management ability. Foretech had one manufacturing plant in Taiwan. Every six months. In addition to this proximity. PQI’s vice-president of logistics had also known Foretech’s tC assistant manager for a long time. The services it provided included design.783. PQI had selected Foretech because of its strength in providing a throughput service from mechanical design. They will guide us in the requirements of new products. a more in-depth assessment of tier 2 and tier 3 suppliers was conducted. In cases where suppliers were working with PQI’s design. PQI would issue warnings or source from other suppliers. a tier-3 supplier for PQI. injection moulding and product assembly. and their personal relationship made it easy for the two parties to work together. tooling design and tooling development to mass production. housing division director of Taiwan-based Foretech Industrial Co. focusing on the quality of the products and the service of the suppliers.

Do In addition to the general review.783. PQI required suppliers to break down the costs when providing quotes so it could compare them item by item.Pakistan Institute of Engineering & Applied Sciences until December 2015. this part the price is good and that part is too high. As was widely practiced in the industry. the product quality assurance department and the quality assurance division. which part is high and which part is low … I can look at the cost from the structural aspect and say. which involved die casting. so there’s no big disagreement during bargaining because everything is based on reason. They have a bottomline in their mind because they know which part of the costing is reasonable. at PIEAS . EPILOGUE No PQI had just completed its biannual evaluation of suppliers and several tier 3 suppliers who were strong in technical and commercial performance had only received average scores [see Exhibit 4]. these are the things that tC need to be discussed with the supplier. they are not just comparing the price of one supplier with another. Permissions@hbsp.7860 . “When we talk to factories. When there was a new design. they look at how we cost and they know that we are being reasonable. If we are trying to yo get an order and I can only get it at a certain price level. PQI usually got competitive quotes from two to three suppliers for comparison. Many companies shared their assessment results openly with their suppliers. Now it was Wang’s job to find out why and to determine what PQI should do about it. PQI took a strategic approach toward squeezing suppliers to lower costs. [the supplier] will have to work on the unit price [to get it lower]. The purchasing manager had narrowed potential suppliers for the job down to three [see Exhibit 4]. then [the deal] is a strategic one. According to Hawk Chao.” Chao’s knowledge also enabled him to change the design or the material used in order to bring down the cost. PQI also asked suppliers to break down miscellaneous costs such as transport because such information helped PQI in assessing the suppliers’ prices. Chao’s knowledge op about the design of structural parts provided him with a platform to communicate with suppliers because he understood how design impacted cost and whether a quoted price was reasonable or not.” Chao said.edu or 617. and one of the things that Wang especially wanted to look at was whether this was something PQI should consider and whether it would help PQI to foster relationships with its suppliers. then PQI would focus on the profit margin of the supplier during the bargaining process.harvard. general purchasing manager of PQI: “If [a buyer] places an order that reaches a certain quantity. costing was more intricate because it involved the design of the housing itself. PQI has just accepted a small order from a new customer that offered great potential for future business. Now the management must decide which supplier to place the order with. and it was uncommon for purchasers to possess such knowledge. If the cost breakdown was rP reasonable. PQI would try to negotiate better prices for larger order quantities. Copying or posting is an infringement of copyright. The order. and the supplier helps us with a lower price so we can reach this target. PQI had not reviewed its supplier evaluation process and Wang thought it was time he took a look at whether it was working well or not. 10/481C PQI: Management of Suppliers of the production and material management division. “When our purchasers negotiate price with suppliers. 6 This document is authorized for educator review use only by syed waqar akbar. The market price of different materials and components were known to most purchasers.” Chao had worked in research and development for 11 years before he switched to purchasing. and his background gave PQI a competitive advantage in cost control. t os Cost Management Cost management was critical for PQI to stay competitive. but for structural parts such as housing. was a rush job.

Financial Strengths: Assessment Unit: Purchasing Assessed by: Assessment No. at PIEAS . 10/481C PQI: Management of Suppliers EXHIBIT 1: PQI’S SUPPLIER ASSESSMENT FORM FOR TIER 1 SUPPLIERS t Suppliers’ Assessment Form A os Supplier: ______________ Date: / /_____ I.harvard.5 No 0 Score assessment: 100-70 pass Below 70 fail 7 This document is authorized for educator review use only by syed waqar akbar.Pakistan Institute of Engineering & Applied Sciences until December 2015. Copying or posting is an infringement of copyright. Description Yes No Score 01 Is the supplier a major supplier in the market? 02 Does the supplier lead in terms of market share in the op market? 03 Can the supplier provide a global supply chain service? 04 Can the supplier provide a long-term and stable supply? 05 Is the supplier willing to supply frequently and repeatedly? 06 Can the supplier’s supplying capability meet PQI’s needs? 07 Can the supplier respond speedily to changing market situations? tC 08 Can the supplier provide competitive pricing? 09 Is the supplier willing to provide competitive delivery ġ ġ ġ timeframe? III. Description Score rP Yes No 01 Can the supplier provide yearly financial report? 02 Is the supplier listed on the stock exchange of its registered country? 03 Is the last supplier profitable in the last financial year on its financial report? 04 Is the supplier willing to provide more favourable payment terms? yo 05 Is the supplier willing to provide better delivery terms? II.edu or 617. Technical capability: Assessment Unit: Purchasing Assessed by: Assessment No.783.7860 . Permissions@hbsp. Supplying capability: Assessment Unit: Purchasing Assessed by: Assessment No. Description Yes No Score 01 Does the supplier have leading technical capability? No 02 Does the supplier have mastery over key product technology? 03 Is the supplier willing to provide relevant technical documentation? 04 Does the supplier meet PQI’s requirements for technical support and response time? 05 Does the supplier maintain good cooperative relationship with its suppliers? 06 Is the supplier willing to commit to a long-term Do relationship with PQI? 07 Is the supplier willing to establish a strategic relationship with PQI? 08 Is the supplier willing to adjust changing requirements of PQI in response to changing market conditions? Total: ______________ Yes: 2.

edu or 617.7860 . Copying or posting is an infringement of copyright.783.harvard. at PIEAS . Permissions@hbsp. 10/481C PQI: Management of Suppliers t Approved and signed by purchasing supervisor: os Approved and signed by research and development supervisor: Approved and signed by product planning supervisor: rP  Pass  Fail yo op tC No Do 8 This document is authorized for educator review use only by syed waqar akbar.Pakistan Institute of Engineering & Applied Sciences until December 2015.

10/481C PQI: Management of Suppliers EXHIBIT 2: PQI’S SUPPLIER ASSESSMENT FORM FOR TIER 2 SUPPLIERS t Supplier’s Assessment Form B Supplier: ______________ Date: / /_____ os Assessment by: Purchasing Unit Assessment No.edu or 617.Pakistan Institute of Engineering & Applied Sciences until December 2015. at PIEAS .783. Permissions@hbsp.7860 . can the tC supplier provide improvement measures and execute them? 18 Can the supplier meet PQI’s requirements in labelling in its delivery? 19 Is the supplier willing to provide future development direction and roadmap? 20 Is the supplier willing to participate in PQI’s new product development? 21 Is the supplier willing to provide customized solution to meet No PQI’s product development? 22 Is the supplier willing to maintain a long-term relationship with PQI? 23 Does the supplier maintain a good working relationship with PQI’s management? 24 Does the supplier consider PQI as a major customer? 25 Is the supplier a manufacturer or authorized dealer? Total: ______________ Approved and signed by the purchasing supervisor: Do Approved and signed by division supervisor: Assessed by:  Pass  Fail 9 This document is authorized for educator review use only by syed waqar akbar. Copying or posting is an infringement of copyright. Description Yes No Score 4 0 rP 01 Can the supplier provide global supply chain service? 02 Can the supplier supply in a stable manner over a long run? 03 Is the supplier willing to supply frequently and repeatedly? 04 Can the supplier provide competitive pricing? 05 Can the supply provide competitive delivery timeframe? 06 Is the supplier willing to provide plans for cost reduction? 07 Is the supplier willing to provide relevant technical documentations? yo 08 Can the supplier meet PQI’s requirements in technical support in a timely manner? 09 Is the supplier ISO9000 certified? 10 Is the supplier ISO14000 certified? 11 Can the supplier meet PQI’s requirements for ROHS report and certification? 12 Can the supplier’s products meet the Rohs standard? op 13 Is the supplier willing to provide analysis for defective products? 14 Does the suppler allow exchange of defective products? 15 Does the suppliers’ speed in responding to substandard products ġ ġ ġ meet PQI’s requirements? 16 Can the supplier meets PQI’s requirements in responding to RMA in a timely manner? 17 When PQI raises issues about substandard products.harvard.

783. 10/481C PQI: Management of Suppliers EXHIBIT 3: PQI’S TIER 3 SUPPLIER ASSESSMENT FORM FOR RESEARCH AND DEVELOPMENT DIVISION. PURCHASING DIVISION AND QUALITY CONTROL DIVISION t Suppliers’ Assessment Form C os Summary Supplier: ______________ Date: / /_____ Main material: Main product: rP Marks Percentage Marks Remarks Research and 40% Development Quality Control 30% Purchasing 30% Total: _________ yo Remark: Good: reach standard or above standard.Pakistan Institute of Engineering & Applied Sciences until December 2015.7860 .harvard. Average: standard acceptable. Bad: no standard or standard unacceptable. Signed by Purchasing Department:   op Pass Fail tC No Do 10 This document is authorized for educator review use only by syed waqar akbar. at PIEAS . Permissions@hbsp.edu or 617. Copying or posting is an infringement of copyright.

cost breakdown (price level) 02 Component design. op 14 Can the supplier introduce tooling into automatic production? 15 Management of engineering project documentation 16 Engineering support 17 Response to customer complaints on engineering capability 18 Industry reputation of supplier’s technical capability 19 Plans to improve technical capability 20 Potential for future development tC Total: _____ Remark: Good: reach standard or above standard. such as defect samples.7860 . Description Good Ave. sampling (tooling).Pakistan Institute of Engineering & Applied Sciences until December 2015. 10/481C PQI: Management of Suppliers Supplier’s Assessment Form C Research and Development Division Supplier: ______________ Date: / /_____ t os Material type: Main product: Assessment Remarks No. Average: standard acceptable. colour template? 09 Capability in selecting and testing original materials. 08 Can the supplier provide samples. Permissions@hbsp. at PIEAS . 10 Capability in assessing and managing original materials.edu or 617. Copying or posting is an infringement of copyright.harvard. 13 Quality of technical design personnel. Bad rage 5 3 0 rP 01 Design and development. prototyping workflow 03 Design and development. Bad: no standard or standard unacceptable. standard work instructions 04 Can supplier provide information and suggestions for unusual design? 05 Is supplier a manufacturer for specialized components or material? 06 New product development capability yo 07 Ability to adapt components. 11 Capability to work 12 Capability in engineering prototyping.783. Signature of Department Head: Approval by: No Do 11 This document is authorized for educator review use only by syed waqar akbar.

Pakistan Institute of Engineering & Applied Sciences until December 2015.harvard.7860 .edu or 617. Signature of Department Head: Approval by: Do 12 This document is authorized for educator review use only by syed waqar akbar. Bad: no standard or standard unacceptable. Permissions@hbsp. Bad rage 5 3 0 rP 01 Can supplier supply in a stable manner on a long-term basis? 02 Is supplier willing to supply frequently? 03 Is supplier willing to provide competitive pricing and delivery cycle? 04 Is supplier willing to provide relevant technical documents? 05 Is supplier willing to meet requests for technical support at the required time? 06 Is supplier ISO certified? yo 07 Can supplier provide request for RoHS Report and guarantee? 08 Does supplier meet no lead-production (Rohs) standard? 09 Is supplier willing to provide analysis on defective goods? 10 Is supplier willing to exchange defective goods? 11 Can supplier meet PQI’s requirements in responding to sub-quality goods? 12 Can supplier meet PQI’s requirements in responding to RMA? 13 Does supplier provide and implement improvement plans when op PQI raises quality issues? 14 Can supplier meet PQI’s requirements in labelling their final products? 15 Is supplier willing to provide information about their direction for new production development and roadmap? 16 Is supplier willing to get involved in PQI’s product development? 17 Is supplier willing to provide customized solution for PQI’s product tC development? 18 Does supplier maintain good long-term working relationship with PQI? 19 Does supplier maintain good working relationship with PQI’s management? 20 Does supplier consider PQI a major customer? Total: _____ No Remark: Good: reach standard or above standard. Copying or posting is an infringement of copyright.783. Description Good Ave. at PIEAS . 10/481C PQI: Management of Suppliers Supplier’s Assessment Form C Purchasing Division Supplier: ______________ Date: / /_____ t os Material type: Main product: Assessment Remarks No. Average: standard acceptable.

Bad rage 5 3 0 rP 01 Does supplier has a clear quality improvement policy that is communicated to each staff? 02 Working environment (Is the workflow well-planned?) 03 Records of movement. Signature of Department Head: Approval by: No Do 13 This document is authorized for educator review use only by syed waqar akbar.edu or 617. Description Good Ave.7860 .Pakistan Institute of Engineering & Applied Sciences until December 2015. Bad: no standard or standard unacceptable. at PIEAS .harvard. Average: standard acceptable. Copying or posting is an infringement of copyright.783. 10/481C PQI: Management of Suppliers Supplier’s Assessment Form C Quality Control Division Supplier: ______________ Date: / /_____ t os Material type: Main product: Assessment Remarks No. maintenance and repair 04 Basic gears for testing equipment 05 Level of automation and how are tooling moulds used and managed? 06 Standard of production planning yo 07 Management of quality documentations 08 Organization of quality control division 09 Does supplier has personnel specifically responsible for quality control? 10 Workflow for material testing 11 Workflow for handling non-standardized products 12 Procedures for on-site inspection and random testing 13 Are standard and sub-standard products put in separate areas and op labelled appropriately? 14 Correction and documentation for testing and measuring equipment 15 Do they have a testing standard and system 16 Analysis of sub-standard products and improvement policy 17 Correction of sub-standard products and preventive policy 18 Production management and checking record 19 Management of quality documentation tC 20 Does it have a product guarantee system? Total: _____ Remark: Good: reach standard or above standard. Permissions@hbsp.

Description Good Ave. Total: _ 75____ Do 14 This document is authorized for educator review use only by syed waqar akbar. 10/481C PQI: Management of Suppliers EXHIBIT 4: PQI’S HALF-YEARLY SUPPLIER ASSESSMENT FORM FOR TIER 2 AND TIER 3 SUPPLIERS t Supplier’s Half-year Assessment Form os Purchasing Department Supplier: A Date: 15 / 4 / 2010 .harvard. 90-70 normal suppliers. Material type: Main product: Assessment Remarks rP No. Average: standard acceptable. Copying or posting is an infringement of copyright. Below 60 fail. D. C. Permissions@hbsp. Grading: A. Bad rage 5 3 0 01 Capability in synthesizing primary material 3 02 Ability to pioneer in new product development 5 03 Industry assessment No info 04 Technical support capability 5 05 Competitiveness of pricing in primary materials 5 yo 06 Cost down initiative as the order quantity changes 5 07 Initiating adjustments to reduce loss in response to market situation 5 08 Standardization capability 5 09 Management of delivery cycle 3 10 Production management capability 3 11 Ability to supply in a stable manner 3 12 Responsiveness to short delivery cycles 3 13 Ability to manage and label goods for delivery 3 op 14 Quarterly Product Roadmap Meeting 5 15 Monthly market information meeting or provision of market 3 information 16 Wish to maintain relationship with PQI 3 17 Speed in responding to substandard quality 3 18 Capability to guarantee against damage 5 19 Capability in improving product quality 5 tC 20 Speed and capability in handling RMA (Returned Merchandize 3 Authorization) Remarks on Assessment Results: No Remark: Good: reach standard or above standard.783.edu or 617. 100-90 priority suppliers. B.Pakistan Institute of Engineering & Applied Sciences until December 2015.7860 . 70-60 suggests improvements. at PIEAS . Bad: no standard or standard unacceptable.

os Material type: Main product: Assessment Remarks No.Pakistan Institute of Engineering & Applied Sciences until December 2015. 90-70 normal suppliers. No Below 60 fail. Grading: A. B. Bad: no standard or standard unacceptable. Total: _ 75____ Do 15 This document is authorized for educator review use only by syed waqar akbar. 10/481C PQI: Management of Suppliers Supplier’s Half-year Assessment Form t Purchasing Department Supplier: B Date: 01 / 4 / 2010 . Description Good Ave. D.7860 . 100-90 priority suppliers. at PIEAS . C.783.harvard. Average: standard acceptable. Permissions@hbsp. Copying or posting is an infringement of copyright. 70-60 suggests improvements.edu or 617. Bad rage 5 3 0 rP 01 Capability in synthesizing primary material 3 02 Ability to pioneer in new product development 3 03 Industry assessment No info 04 Technical support capability 5 05 Competitiveness of pricing in primary materials 3 06 Cost down initiative as order quantity changes 5 07 Initiating adjustments to reduce loss in response to market situation 3 08 Standardization capability 5 yo 09 Management of delivery cycle 3 10 Production management capability 5 11 Ability to supply in a stable manner 5 12 Responsiveness to short delivery cycles 3 13 Ability to manage and label goods for delivery 3 14 Quarterly Product Roadmap Meeting 3 15 Monthly market information meeting or provision of market 3 information op 16 Wish to maintain relationship with PQI 3 17 Speed in responding to substandard quality 5 18 Capability to guarantee against damage 5 19 Capability in improving product quality 5 20 Speed and capability in handling RMA 5 Remarks on Assessment Results: tC Remark: Good: reach standard or above standard.

Total: _ 69__ Do 16 This document is authorized for educator review use only by syed waqar akbar. 70-60 suggests improvements. No Below 60 fail. Permissions@hbsp. 90-70 normal suppliers. 100-90 priority suppliers. os Material type: Main product: Assessment Remarks No. Bad: no standard or standard unacceptable. Description Good Ave. at PIEAS .Pakistan Institute of Engineering & Applied Sciences until December 2015.edu or 617. Grading: A. Bad rage 5 3 0 rP 01 Capability in synthesizing primary material 3 02 Ability to pioneer in new product development 3 03 Industry assessment No info 04 Technical support capability 5 05 Competitiveness of pricing in primary materials 3 06 Cost down initiative as order quantity changes 3 07 Initiating adjustments to reduce loss in response to market situation 3 08 Standardization capability 3 yo 09 Management of delivery cycle 5 10 Production management capability 5 11 Ability to supply in a stable manner 5 12 Responsiveness to short delivery cycles 5 13 Ability to manage and label goods for delivery 5 14 Quarterly Product Roadmap Meeting 0 15 Monthly market information meeting or provision of market 0 information op 16 Wish to maintain relationship with PQI 3 17 Speed in responding to substandard quality 5 18 Capability to guarantee against damage 5 19 Capability in improving product quality 3 20 Speed and capability in handling RMA 5 Remarks on Assessment Results: tC Remark: Good: reach standard or above standard. D. C.harvard. 10/481C PQI: Management of Suppliers Supplier’s Half-year Assessment Form t Purchasing Department Supplier: C Date: 05 / 4 / 2010 .7860 . Average: standard acceptable. Copying or posting is an infringement of copyright. B.783.