Proactive vs. Reactive Supplier Audits: Managing the Mix

Article

Ziegler, August H.   (1989, ASQC)   Westinghouse Electric Corp., Baltimore, MD

Annual Quality Congress, Toronto, Ontario, Canada    Vol. 43    No. 0
QICID: 3568    May 1989    pp. 207-212
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Article Abstract

Much has been written on the subject of quality auditing, both as a function itself and as it applies to supplier control. The purpose of this paper is to provide an innovative approach to managing the mix of "proactive" and "reactive" supplier auditing activities in the military procurement environment. This approach is designed to obtain the maximum benefit for resources expanded. Although presented in terms of military procurement, the concept can be applied to commercial industries as well. In planning supplier surveillance activities, several questions traditionally face quality assurance departments. First, and most obvious, is "what are the applicable regulations and what type of program will satisfy them?" However, while many programs satisfy the intent of governing specifications, they often fall short of providing the optimum cost effective mix of activities. Therefore, the next question becomes "what is the proper balance of appraisal and prevention costs vs. the risk of failure costs?" The third question is "what is the mix of system vs. product/process audits?" And finally, "to what suppliers and products should the auditing activities be applied?" The Westinghouse Electronics Systems Group produces a variety of sophisticated defense electronics equipment. On the average, 60% of a final system is comprised of procured material dollars, 70% of which is for complex items. This paper will describe the surveillance approach applied to the complex, higher dollar procured items on key programs. The paper will begin with a general discussion of the military procurement environment and common military specifications dealing with the control of suppliers. Next, a look at the relationship between system and product/process auditing will be provided. The surveillance concept, which emphasizes a mix of "proactive" and "reactive" activities will be shown as it applies to a typical procurement cycle. The paper will conclude with a quantitative approach to managing the mix of proactive and reactive activities from a quality cost viewpoint.

Keywords

Systems analysis,Process audit


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