9.

0 - SUPPLY CHAIN MANAGEMENT

Plant Dealer

Tier 3 Tier 2 Tier 1 Customer

Supplier Supplier Supplier Enthusiasm

Raw Outside Purchased

Material Processing Component
Supplier Service s

What are Your expectations of Your

suppliers?
Global Purchasing and Supply Chain

Confidential - PSA GM Purchasing & Logistic Committee 1

Elements of Control Of Non Conforming :
• New Suppliers( how to approve potential supplier).
• Customer specific requirement( Are customer requirements such as PPAP
, CQIs ,… are applied and audited )
• Follow up with tiered suppliers issues( Are issues communicated to tiered
suppliers , are there any problem solving tool is communicated , are tiered
suppliers performance monitored and action taken according to results .)
• incoming inspection : ( Are there incoming inspection plan done according
to history of tired suppliers performance , are there any sampling rules).
• Rework Flow ( Is rework identified & who approve rework and how it is
reintroduced back to line) .
• Effectiveness( Are there any improvement of tiered supplier base ) .

Confidential - PSA GM Purchasing & Logistic Committee Global 2

Purch
 SUPPLY CHAIN MANAGEMENT
Supply Chain Management, what are we searching for ?

Item QSB+ PCPA NSA Requirement Criteria of the Requirement Look for
1) Procedures that require supplier audits to support sourcing decisions, evaluation of - is the sourcing decision managed on site ?
their systems. - Links between site and corporate level
Procedures or work instructions to select and 2) Approved supplier list (e.g.: Bidlist) - is there a bidlist ?
SCM1 X X evaluate suppliers. 3) SQ SOR or equivalent, contains all customer requirements, expectations, and - criteria to be sourceable
processes, signed by supplier - list of red suppliers
4) Evidence of SQ responsibility (SQ organization chart or SQ training records) - an example of RFQ
1) Customer specific requirements implemented at tier suppliers - an example of RFQ
2) Evidence of tiered supplier compliance to product and process validation requirements. - technical specifications forwarded to Tier N including list of critical
3) Evidence that final product key/customer characteristics are identified on component characteristic (PCP)
(or material) level as well as shared and controlled (if required with SPC) with tier supplier - Supplier quotation file including technical/process feasibility
4) Process specific audits are performed - Product/process qualification files (PPAP)
5) Tracebility and FIFO requirements implemented at tier suppliers - Audit reports
Customer specific requirements are cascaded
6) Part inspection requirement including Pass Through is established and implemented - example of management on a tier N process change
SCM2 X X to all tier supply chain and deliverables of the
for each supply since design phase and updated in case of non-conformity
tier N are validated/approved by tier 1
7) All the design and process changes communicated, managing change requiremnts
are applied. Tier N supplier production transfer needs to be managed with specific
procedures similar like BTAB

Global Purchasing and Supply Chain

Confidential - PSA GM Purchasing & Logistic Committee 3

 Supply Chain Management, what are we searching for ?

Item QSB+ PCPA NSA Requirement Criteria of the Requirement Look for
1) For single issues, a systematic and disciplined approach to problem solving is - Prior to audit check whether there was any customer complaint
implemented , an Action plan is set up by the tier X and verified by the tier 1, keep due caused by tier supplier.
dates expected by customer - Example of supplier complaints towards its tier 2, verify contents
2) For any delivery of parts with deviation, tier 1 validates the formal deviation request of of the complaints
the tier X complaint. - Is there a timely management with milestones?
An escalation process is applied in case of tier 3) In the event of non-respect of a target, an actions plan to reach it is systematically - Verify content of 5 whys prepared for customer complaint
SCM3 X X X supplier issues defined and followed by the tier X supplier - Example of action plans given by tier 2
4) When a tier supplier moved from Green ranking, escalation process take into account - How is it validated and verified?
the tier 1 support of the tier X supplier to improve. Exit criteria are defined. - Example of supplier audit, evidence of audits at key suppliers
5) Regular audits are performed at suppliers plants. In case of complaint to verify action - Escalation criteria
implemented, and regular audits at key suppliers to improve their system (CQI audits,
process specific audits, PCPA...)
1) An incoming inspection control plan and the related control standards and sampling - Check identification of material released for production after
rules are established for each supplied product. receiving.
2) Incoming inspection is minimum applied at beginning of project to verify tierX controls - Verify that incoming covers key and Pass Through
and key/critical suppliers. characteristics, frequencies are reasonable.
2) Only approved (PPAP and incoming inspection release) components (material) are - See a non-conformance found during incoming.
SCM4 X X X Incoming inspection process in place used for assembled part. - Verify link between incoming frequency and supplier performance
3) At the reception of supplied product the first controls take into account the checking of (high ppm supplier).
the quantity, of the integrity of the packaging and the identification of the product. - Check incoming records for a component
4) Part inspection requirement including Pass Through is established and implemented
for each supply since design phase and updated in case of non-conformity

Global Purchasing and Supply Chain

Confidential - PSA GM Purchasing & Logistic Committee 4

 SUPPLY CHAIN MANAGEMENT
Expectations
Suppliers should have Supply Chain Management procedures similar to those
GM uses with their suppliers.
• Supplier Assessments
– Potential New Suppliers
– Manufacturing Quality Systems
– Evaluation and continuous improvement to Best Practices
• Change Management Process
– Internal changes to process, product or materials
– Supplier changes to process, product or materials
– Tool Move or Source Changes & Banking Strategies
• Advance Quality System
– Part Approval Process to GM and Tier 1
• TS requirements
• Supplier performance monitoring
Global Purchasing and Supply Chain

Confidential - PSA GM Purchasing & Logistic Committee 5

 SUPPLY CHAIN MANAGEMENT
Supplier Selection & Evaluation
• All new suppliers shall be evaluated prior to placing business
• Develop a tier supplier Quality Management System with the goal of
conforming to ISO/TS 16949 and General Motors specific requirements
• Use tools to track compliance to requirements
QSB
Shall be cascaded throughout the supply chain
Labelling
All suppliers in the supply chain should use a labelling FMEA to understand risk
and implement appropriate control methods in their labelling system
Special Processes
AIAG Special Process Assessments, CQI-9 Heat Treat System, CQI-11 Plating
System, CQI-12 Coating System, CQI-15 Welding System, and CQI-17 Solder
System

Global Purchasing and Supply Chain

Confidential - PSA GM Purchasing & Logistic Committee 6

 SUPPLY CHAIN MANAGEMENT
Performance Monitoring
All suppliers to General Motors shall have a comprehensive, documented
approach to managing their supply base including:

• Ranking system for key suppliers

• Ranking system for key metrics
• Supplier performance monitoring system to key metrics
• System to address supplier concerns & responses
• Issuance of Problem Reports & Corrective Action Requests
• Documented process for supplier improvement
• Control of Pass Through characteristics
• Current supplier quality activities (CS1, CS2, Top Focus etc)

Global Purchasing and Supply Chain

Confidential - PSA GM Purchasing & Logistic Committee 7

 SUPPLY CHAIN MANAGEMENT
Performance Monitoring
Creativity Team
Bidlist

PR/R's 1
Plant Disruptions
5 4 4 1
4 1
4 1
3 1
3 2 2 1
2 0
2 1 1 0
1 0
1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 0
Sep-05 Oct-05 Nov-05 Dec-05 Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-05 Oct-05 Nov-05 Dec-05 Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06

300% Deterioration CYTD No Change CYTD

10,000
PPM's 8,957 Stockouts
1
9,000
1
8,000
1
7,000
6,000 1
1

Six Panel Chart

5,000
4,000 1
3,000 0
2,000 0
1,000 0 0 0 0 0 0 0 0 89 0 46 0
0 0 0 0 0 0 0 0 0 0 0 0 0 0
Sep- Oct-05 Nov- Dec- Jan-06 Feb-06 Mar-06 Apr-06 May- Jun-06 Jul-06 Aug- 0
05 05 05 06 06 Sep-05 Oct-05 Nov-05 Dec-05 Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06

286% Deterioration CYTD No Change CYTD

GCA PR/R's Downtimes

1 1
1 1
1 1
1 1
1 1
1 1
0 0
0 0
0 0
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 0
Sep-05 Oct-05 Nov-05 Dec-05 Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-05 Oct-05 Nov-05 Dec-05 Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06

No Change CYTD No Change CYTD

Report Name: Supplier Activity / Charts PRR Types = Quality | Warranty | Cust. Sat. Data As Of Sep 16 2006

Global Purchasing and Supply Chain

Confidential - PSA GM Purchasing & Logistic Committee 8

 SUPPLY CHAIN MANAGEMENT SUMMARY
Organizations shall…

Use a system that manages your suppliers in a similar manner to that used by
GM to manage you

Manage their suppliers using a documented, systematic approach

Use management tools for their suppliers :

• To assess compliance and audit supplier activities
• To evaluate & select new suppliers
• Monitor supplier performance to established goals
• Have a system to track response to issues

Global Purchasing and Supply Chain

Confidential - PSA GM Purchasing & Logistic Committee 9

 SUPPLY CHAIN MANAGEMENT
What goes wrong ?

• „It is sub-supplier responsibility, not ours…” – see SQ SOR

• There is no standardized Assessment for new potential suppliers
• Tier supplier evaluation is only done during sourcing
• GM requirements are not cascaded to whole supply chain
• Poor sub-supplier APQP & PPAP activities
• No audits are performed at sub-suppliers
• No systematic approach to concern notifcation / problem solving
• No on-site verification of corrective actions
• Missing capacity analysis
• Run at Rates not performed below tier 1

Confidential - PSA GM Purchasing & Logistic Committee 10