AS 51 version 2 -Training Module - Supplier Rating

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AS 51 version 2 -Training Module -Supplier
Rating
Issued by Jolene Kawa, Jeffrey
McMurdie Approved by Svante Mogefors, Halvar
Jonzon 30-June-2005
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Contents

• AS 51 Training Purpose and Objectives
• Abbreviations and Introduction
• Measurable Parameters (PPM, DMT, OTP)
• Service Level Parameters (S-APQP, PPAP, RESP)
• Overall Rating - Total achieved
• Overall Rating - Rating Category
• Overall Rating - Depending on No. of Relations
• Overall Rating - Example with gt1 Supplier
  Relation
• Overall Rating - Rating Period
• Overall Rating - Disputes from Suppliers
• AS 51 Training Summary
• References and Links

3
AS 51 Training Purpose

• Purpose
• Explain AS 51
• Present changes from AS 51 version 1.0 to the new
  AS 51 version 2.0 (high lighted in red)
• Demonstrate how supplier rating has been
  simplified.
• Intended Audience
• Suppliers to Autoliv plants.
• Autoliv SQ, Purchasing and Production Control or
  Logistics

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AS 51 Training Objectives

• After completing this training, you will be able
  to understand ...
• How Autoliv plants rate their suppliers
• How each rating parameter is calculated
• How Overall Rating is calculated for one Supplier
  Relation, and for more than one Supplier Relation
• How Autoliv discriminates between good and bad
  supplier performances
• How supplier performance affects supplier
  selection for new business

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AS 51 Autoliv Supplier RatingAbbreviations -
General

• Abbreviation Explanation
• PPM Parts Per Million (number of
  non-conforming parts per million produced)
• DMT Demerits
• OTP On Time Parts
• M Measurable parameters (PPM, DMT, OTP)
• S-APQP Supplier - Advanced Product Quality
  Planning
• PPAP Production Part Approval Process
• RESP Responsiveness
• SL Service Level parameters (S-APQP, PPAP, RESP)
• NCM Non Conforming Material

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AS 51 Autoliv Supplier RatingAbbreviations -
Targets, Thresholds, Weights

• Abbreviation Explanation Value
• TPPM Target for PPMs 0 PPM
• UPPM Unacceptable Level for PPMs 200 PPM
• THOTP THreshold for On Time Parts 90 on time
• WPPM Weight for PPM 25
• WDMT Weight for Demerits 25
• WOTP Weight for On Time Parts 26
• WAPQP Weight for S-APQP 8
• WPPAP Weight for PPAP 8
• WRESP Weight for RESPonsiveness 8
• These values are defined by Autoliv Head Office
  when needed.

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AS 51 Autoliv Supplier RatingIntroduction

• The Autoliv Supplier Rating is a strategic tool
  to support decision-making when dealing with our
  suppliers.
• Suppliers with UNSATISFACTORY rating will be at
  risk for obtaining new business.
• Each supplier is rated by six different
  parameters
• 3 Measurable Parameters PPM, DMT, OTP.
• 3 Service Level Parameters S-APQP, PPAP, RESP.
• All suppliers of materials for serial production
  will be rated.
• All Autoliv plants use this system.

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AS 51 Autoliv Supplier RatingMeasurable
Parameters - Overview

• This rating is unchanged.

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AS 51 Autoliv Supplier RatingMeasurable
Parameters - PPM (I)

• PPM is calculated on production parts as
  follows
• PPM calculation does not include
• Warranties or field returns.
• Pre-production parts or engineering samples .
• If parts are returned to supplier
• Only actual defective parts are counted. If the
  supplier does not provide information within 10
  days about actual defective parts found, the
  complete returned shipment is counted.
• PPAP approved parts

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AS 51 Autoliv Supplier RatingMeasurable
Parameters - PPM (II)

• How to count parts that are difficult to
  quantify
• All calculations shall be based on the unit used
  within the Autoliv MRP system, e.g.
• Individual labels or roll of labels.
• Length of threads or number of cones.
• For the following cases, PPM rating can be
  modified upon joint decision, between Autoliv and
  Supplier
• Where counting of defect parts is impossible or
  too time consuming in comparison to the cost of
  the part.
• ExampleA box of 10 000 O-rings was found to be
  defective. A representative sample from the box
  was inspected with a result of 5 defect ? 5
  will be applied 10.000 x 5 500
  non-conforming parts.

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AS 51 Autoliv Supplier RatingMeasurable
Parameters - PPM (III)

• TPPM (Target PPM) has changed from 10 to 0.
• PPM score is calculated as follows
• If PPM TPPM ? score WPPM
• If PPM ? UPPM ? score 0
• If TPPM ? PPM ? UPPM ? score

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AS 51 Autoliv Supplier RatingMeasurable
Parameters - PPM (IV)

• PPM score calculation example
• Use these values
• UPPM 200
• WPPM 25
• TPPM 0
• PPM 78 (supplier PPM)
• In this case, TPPM ? PPM ? UPPM applies, and the
  score is calculated as follows
• score
  15.25
• Round off the calculated score ? PPM score 15

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AS 51 Autoliv Supplier RatingMeasurable
Parameters - DMT (I)

• This rating was changed.
• Rating rules in AS 511.0
• Rating rules in AS 512.0

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AS 51 Autoliv Supplier RatingMeasurable
Parameters - DMT (II)

• Supplier demerits are based on the severity of
• the defective material or
• the delivery concern.
• A customer impact is a supplier defect or
  delivery concern that reached or affected an
  Autoliv customer.
• A repeat occurrence is an incident occurring
  after the supplier has implemented containment
  actions.
• For the reporting period, the total generated
  demerits are added up.

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AS 51 Autoliv Supplier RatingMeasurable
Parameters - DMT (III)

• DMT score calculation is unchanged.
• DMT is calculated as follows
• If total demerits ? WDMT ? score 0
• If total demerits ? WDMT ? score WDMT ? Total
  

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AS 51 Autoliv Supplier RatingMeasurable
Parameters - DMT (IV)

• DMT score calculation example
• Use these values
• WDMT 25
• 2 minor demerits 2x1 2
• 1 critical demerit 1x10 10
• ? total demerits 2x1 1x10 12
• In this case, total demerits ? WDMT applies, and
  the score is calculated as follows
• score WDMT ? Total 25 ? (2x1 1x10) 25 ?
  12 13
• ? DMT score 13

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AS 51 Autoliv Supplier RatingMeasurable
Parameters - OTP (I)

• OTP is calculated as follows
• Definition of delivery and delivery concern
• A delivery is defined by part number and
  engineering level, quantity and specified
  shipment time according to the suppliers
  individual purchasing agreement (e.g. INCOTERMS,
  Pull Lists).
• A delivery concern is an incident monitored by a
  NCM reportto the supplier and managed by
  Logistics. Typical examples
• Deliveries not on time
• Wrong quantity / product
• Packaging not according to specification
• AS 242 non-compliance (e.g. missing or wrong
  EDI/documents)
• AS 244 non-compliance (e.g. mislabeling)
• Crisis Management (e.g. capacity recovery,
  alternative delivery plan)

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AS 51 Autoliv Supplier RatingMeasurable
Parameters - OTP (II)

• OTP score calculation is unchanged.
• OTP is calculated as follows
• If OTP ? THOTP ? score 0
• If THOTP ? OTP ? 100 ? score

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AS 51 Autoliv Supplier RatingMeasurable
Parameters - OTP (III)

• OTP score calculation example
• Use these values
• WOTP 26
• THOTP 90
• 30 deliveries in 1 month with 1 delivery concern
• ? OTP
  ? 96.66
• In this case, THOTP ? OTP ? 100 applies, and the
  score is calculated as follows
• score
  17.3
• Round off the calculated score ? OTP score 17

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AS 51 Autoliv Supplier RatingService Level
Parameters - Overview (I)

• This rating was changed.
• Rating rules in AS 511.0
• Rating rules in AS 512.0

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AS 51 Autoliv Supplier RatingService Level
Parameters - Overview (II)

• Important Note
• Quality of Quotation (QUOT) was removed.
• Engineering Support (ENG) was replaced by
  S-APQP.
• Service Level Parameters only apply to external
  (non-Autoliv) suppliers.

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AS 51 Autoliv Supplier RatingService Level
Parameters - S-APQP

• This rating was changed.
• Rating rules in AS 511.0, Engineering Support
  (ENG)
• Rating rules in AS 512.0, S-APQP

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AS 51 Autoliv Supplier RatingService Level
Parameters - PPAP (I)

• This rating was changed.It is applicable only
  for 1st time submittals per engineering level.
  The worst PPAP score will be taken.
• Rating rules in AS 511.0
• Rating rules in AS 512.0

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AS 51 Autoliv Supplier RatingService Level
Parameters - PPAP (II)

• What is counted as an Engineering level?In AS
  51 PPAP rating is applicable only for 1st time
  submittals per engineering level. For 2nd or 3rd
  or 4th time submittals, no new rating will be
  given.
• There is a new engineering level if
• A major change is made to the part according to
  AS 101
• There is not a new engineering level if
• A minor change is made to the part according to
  AS 101

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AS 51 Autoliv Supplier RatingService Level
Parameters - RESP

• This rating was changed.
• Rating rules in AS 511.0
• Rating rules in AS 512.0

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AS 51 Autoliv Supplier RatingService Level
Parameters - Level 0

• For all Service Level Parameters, a level 0 was
  introduced.
• Level 0 gives the score N/A (Not applicable).
  This means that the parameter is not included in
• Total score
• Total possible score (total possible score is
  reduced with the weight of the not applicable
  parameter(s)
• Level 0 can be applied in the following cases
• The supplier is internal
• S-APQP or PPAP is not required at all for the
  supplier (off the shelf parts, small quantities
  or the supplier does not provide these services
  at all)
• S-APQP or PPAP is not required for the rating
  period for the supplier

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AS 51 Autoliv Supplier RatingService Level
Parameters - Example

• SL Parameter score calculation example
• Use these values
• S-APQP level 2 ? score 4
• PPAP level 1 ? score 0
• RESP level 3 ? score 8
• In a final step, we will derive the Overall
  Rating / Total achieved for all Measurable
  and Service Level Parameters used in examples so
  far.

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AS 51 Autoliv Supplier RatingOverall Rating -
Total achieved

• Summary of score calculation example
• The scores from the examples are shown below
• The Total Score is 57 out of 100. This means,
  Total achieved is 57.

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AS 51 Autoliv Supplier RatingOverall Rating -
Rating Category

• Each supplier is given a status (Rating
  Category).
• The Total achieved based upon previous examples
  was 57, which means this suppliers performance
  falls into Rating Category UNSATISFACTORY.Sup
  plier Rating Database is only used within Autoliv

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AS 51 Autoliv Supplier RatingOverall Rating -
Depending on No. of Relations

• Overall Rating One supplier relation
• Example of previous slides
• Overall Rating More than one supplier relation
• Example of future slides

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Example with gt1 Supplier Relation Supplier
Overview

• Supplier A delivered parts to 4 ALV plants during
  the last 6 months (Sep-03 to Feb-04) AOA, ASG,
  BKI, BMF.
• On the next pages, the numbers below are
  explained.

Note! The picture in this and the next slide is
taken from the internal Autoliv Supplier Rating
database
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Example with gt1 Supplier Relation Single Ratings
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• AAR did not purchase any parts in the last 6
  months.
• AOA did not rate Supplier A in 2004, but during
  the last 4 months of 2003, the 6 months score
  was 84
• Supplier A ? ASG 6M rolling 92 , and Feb-04
  91
• Supplier A ? BKI 6M rolling 66 , and Feb-04
  66
• Supplier A ? BMF 6M rolling 60 , and Feb-04
  85
• Supplier A ? Total 6M rolling 39 , and Feb-04
  65

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Example with gt1 Supplier Relation Overall Rating
- Total achieved

• Total achieved is calculated as follows
• Note M means Measurable Parameters
  SL means Service Level Parameters
• Parameters will be rated only if they are
  applicable.
• Example For Autoliv internal suppliers, Service
  Level Parameters are not rated.
• Total possible score 100 - Total weight Service
  Level Parameters
• Total possible score 100 - 24 76

Total achieved score for applicable parameters
(MSL)
x100
Total achieved
Total possible score
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Example with gt1 Supplier Relation Overall Rating
- Total PPM

• Total PPM during the 6 months rolling period
• AOA PPM 0 rejects divided by 147 200
  delivered parts 0 PPM
• ASG PPM 1 rejects divided by 709 459
  delivered parts 1 PPM
• BKI PPM 0 rejects divided by 278 400
  delivered parts 0 PPM
• BMF PPM 998 rejects divided by 277 507
  delivered parts 3596 PPM
• Total PPM 999 rejects divided by 1 412 566
  delivered parts 707 PPM
• Note Total PPM is calculated as total rejects
  from all supplier relations divided by total
  deliveries from all supplier relations, times
  1000 000
• Total PPM score 0 because 707 PPM gt 200 PPM
  UPPM .

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Example with gt1 Supplier Relation Overall Rating
- Total DMT

• Total DMT during the 6 months rolling period
• Note A supplier relation exists for every
  month where a specific supplier delivers parts to
  a specific ALV plant. In this example, there are
  22 months of reporting due to 22 supplier
  relations.
• AOA 0 demerits during 4 months of reporting
• ASG 4 demerits during 6 months of reporting
• BKI 0 demerits during 6 months of reporting
• BMF 39 demerits during 6 months of reporting
• All plants 43 demerits during 22 months of
  reporting
• Total DMT 43 demerits divided by 22 months
  1.95 ? 2
• Total DMT score 25 - 2 23 because 2 demerits
  lt 25 WDMT .

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Example with gt1 Supplier Relation Overall Rating
- Total OTP (I)

• Total OTP is calculated as a quantity-weighted-OTP
  for all supplier relations.
• Total OTP during the 6 months rolling period
• The next slide shows the Delivery and OTP data of
  all 4 plants for this example. When you put them
  in the equation above, the result will be Total
  OTP 91.6

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Example with gt1 Supplier Relation Overall Rating
- Total OTP (II)

• Delivery and OTP data for the 4 plants
• Total OTP 91.6 for all 4 supplier relations.
• THOTP 90 ? OTP ? 100 applies, andTotal OTP
  score 4.16 ? 4

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Example with gt1 Supplier Relation Overall Rating
- Service Level Parameters (I)

• Total SLP during the 6 months rolling period
• S-APQP, PPAP and RESP data for the 4 plants
  during the 6 months rolling period

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Example with gt1 Supplier Relation Overall Rating
- Service Level Parameters (II)

• SLP level for S-APQP
• 
  
  1.95 ? 2
• SLP level for PPAP
• 
  
  2.57 ? 3
• SLP level for RESP
• 
  
  2.33 ? 2
• SLP score level 2 ? score 4, level 3 ? score
  8
• Total SLP score (4 8 4) 16

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Example with gt1 Supplier Relation Overall Rating
- Summary

• Overall Rating
• Total PPM score 0
• Total DMT score 23
• Total OTP score 4
• Total SLP score 16
• Total achieved (0 23 4 16) /
  (25252624) 43 / 100 43
• This means that this suppliers performance
  falls into Rating Category UNSATISFACTORY.

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AS 51 Autoliv Supplier RatingOverall Rating -
Rating Period

• All Suppliers are rated monthly
• Measurable Parameters are calculated monthly.
• Service Level (SL) Parameters are evaluated
  monthly.
• If there is no change, the last rating will
  remain visible in the database until the next
  rating will take place. If there is no rating
  activity during 6 months, rating will become Not
  Applicable (N/A).
• For external suppliers, SL Parameters will be
  rated only if applicable. For internal suppliers,
  SL Parameters are not rated at all.
• If a supplier has not delivered any parts to
  Autoliv in a specific month/period, this supplier
  shall not be rated for that month/period.

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AS 51 Autoliv Supplier RatingOverall Rating -
Rating Period

• Ratings are submitted to Autoliv Supplier Rating
  Database by the 10th of the next month.
• Supplier Performance is published on APP (Autoliv
  Partner Portal) by the 15th of the next month.
• The Autoliv Supplier Rating Database will only be
  open for input files between the 1st and the 10th
  each month. This means that input files sent to
  the database after the 10th will not be processed
  until the 1st of the next month

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AS 51 Autoliv Supplier RatingOverall Rating -
Disputes from Suppliers

• The supplier is responsible for checking accuracy
  of their AS 51 rating.
• Suppliers that are not agreeing with their
  rating(s) should issue an AS 51 Dispute form
  found in the Library section on the APP.
• Suppliers must respond within two weeks after the
  supplier rating has been published.
• The AS 51 Dispute form shall be faxed / e-mailed
  to the appropriate person listed in the dispute
  form contact list.

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AS 51 Autoliv Supplier RatingOverall Rating - AS
51 Dispute Form on APP
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AS 51 Training Summary (I)Main Changes

• PPM
• Target PPM was changed from 10 to Zero.
• The PPM rating can be modified upon joint
  decision, between Autoliv and Supplier, where
  counting of defect parts is impossible or too
  time consuming compared to the cost of the part.
• DMT
• Supplier Demerits are now based on 3 criteria
• Minor (1), Critical (10), Customer (25).
• Major was removed.

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AS 51 Training Summary (II)Main Changes

• OTP
• A delivery is defined by part number and
  engineering level, quantity and specified
  shipment time according to the suppliers
  individual purchasing agreement (e.g. INCOTERMS,
  Pull Lists).
• A delivery concern is an incident monitored by a
  NCM report to the supplier and managed by
  Logistics.
• Typical examples of reported incidents are
  Deliveries not on time, wrong quantity / product,
  packaging not according to specification, AS 242
  non-compliance (e.g. missing or wrong
  EDI/documents), AS 244 non-compliance (e.g.
  mislabeling), Crisis Management (e.g. capacity
  recovery, alternative delivery plan).

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AS 51 Training Summary (III)Main Changes

• Service Level Parameters (SLP)
• The number of SLP changed from 4 to 3, QUOT was
  removed.
• The Service Level Weights changed from 6 to 8.
• Engineering Support (ENG) was replaced by S-APQP.
• The number of SLP criteria was reduced from 5 to
  3, a Level 0 was added giving a score N/A.
• PPAP rating is applicable only for 1st time
  submittals per engineering level.
• Suppliers with multiple PPAP submittals in one
  month will get the lowest score of these
  submittals.

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AS 51 Training Summary (IV)Main Changes

• Miscellaneous
• Ratings are compiled and submitted to APP by the
  10th of the next month.
• The Service Level Parameters are now evaluated
  and updated monthly instead of half-yearly.
• The AS 51 Supplier Overview Report now shows a
  table at the bottom with the detailed data
  leading into the summary scores which are shown
  in the graphs.
• A Supplier Dispute Procedure was introduced.

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References and Links
AS 51 Autoliv Inc. Standard Supplier Rating AS
101 Autoliv Inc. Standard Part number AS
242 Autoliv Inc. Standard EDI Messages AS
244 Autoliv Inc. Standard Package Transport
Label ASM Autoliv Supplier Manual (see
http//www.autoliv.biz) APP Autoliv Partner
Portal (see http//www.autoliv.biz)