Quality assurance keeps suppliers consistent
By Christopher Reilly -- Purchasing, 12/10/1998
A few years ago, pulp and paper manufacturer Champion International launched a quality assurance program that was targeted at developing cost-effective specifications and eliminating variations in suppliers' manufacturing processes. The result: Millions of dollars in cost savings.Savings that have been created by the "SQA" program--supplier quality assurance--are largely due to yield and productivity improvements at all of Champion's nine domestic mills that participate in the program. But Gregory E. Conlon, the company's director of supply management, points out that measurable improvements in packaging, transportation, and handling materials also have contributed to what Champion pegs as "tens of millions of dollars saved."
"The program examines two aspects of quality: design quality and conformance quality," says Gregory E. Conlon, the company's director of supply management. "Variations in either aspect can be trying, but if the design is inappropriate, other problems down the line are a common result."
Taking variations out of the process, Conlon explains, provides for better productivity (from reduced rework and higher operating rates), higher quality, and more consistent operations, all of which contribute to cost savings.
The program was born when, in the late '80s, Champion's mill managers began to realize that they could cut costs by eliminating the rework caused by unacceptable variations in its manufacturing processes. Reducing inventory and material costs were also priorities, so management determined that extending quality assurance efforts to its suppliers' processes was of equal importance.
Buy-in by mills was key
Conlon attributes much of the SQA program's success to the way it was set up. Champion began testing an informal quality program at one of its paper mills in 1990, and found "unambiguous results," encouraging management to further develop the program and extend it to its other mills.
At first, the SQA program was simple and informal. Unlike countless other large-company programs that don't succeed, it wasn't handed down to the mills from corporate heavens. Instead, key personnel at the individual mills were left to set their own implementation schedules and develop the finer points, such as how cross-functional teams could communicate most effectively with suppliers.
The company's general goal was to develop SQA as the company's signature quality program used by all of its mills. "We had been known as a producer of quality pulp and paper products, and we wanted to build on that reputation to stand out as a quality company," Conlon says.
To extend the program across all the company's locations, management simply sold the idea based on its inherent merits. "It can be difficult to get people to change the way they do their jobs," Conlon says, "especially when it's on a large scale--but we worked to minimize that problem."
Conlon explains that there's a great deal of buy-in and ownership in the program among the personnel at the mills. Before the program's inception, mill managers were left to their own devices for establishing quality, which was often a hit-or-miss endeavor. Champion had no previous company-wide quality control system and no formal method of evaluating suppliers. "On the surface, the program may have appeared to be more work for the mills' employees, but after a short time they recognized that the SQA process would eventually make their jobs a lot easier," he says.
Laying the foundation
From infancy to full development, the SQA program took about three years per mill on average. The logistics of the program are set up in a way that encourages communication with suppliers. Each of the company's manufacturing locations has an SQA coordinator responsible for the process. Each major area within the mill, such as wet-end chemistry, converting, pulping, packaging, etc., has a cross-functional SQA team that acts as a liaison between the supplier representatives and the SQA coordinator.
Cross-functional teams usually are comprised of four or five members representing various business functions, including purchasing, engineering, operations, research and development, and sales. The nature of the team is such that it may interact with the supplier on a variety of levels to cover all aspects of the supplier/manufacturer relationship.
Within the individual mills, team members look at the current specifications of a particular product or process and compare them to the suppliers' standard specifications. On occasion, there is a degree of leeway that the team may explore to bring about major cost savings. By asking questions and sharing data, Champion might gain insight into an alternative product or a different specification that can provide the company's paper products with a higher level of brightness or opacity, or reduce cost.
The teams developed for each area of the mill have a representative who reports to the mill's SQA coordinator. Each mill's SQA coordinator then reports to Jeff Giles, manager of the SQA process, who reports to Greg Conlon.
At the paper mills, the SQA coordinator manages the overall plan and is responsible for the bulk of the record keeping. This is done using Champion's proprietary, on-line computer system to monitor supplier data, which are compiled largely by certificates of analysis (COA), corrective action request (CAR) forms, and periodic supplier data provided to Champion. The COA form precedes delivery of the product. CAR forms are completed and filed for any non-conformance to specifications, delivery problems, or any other supplier-related issue.
After a CAR form has been issued, the quality team is alerted that a non-conformance has occurred and that adjustments must be made, (either by improving the supplier's process to eliminate the variation or, in a few cases, by widening the specification if it cannot realistically be met on a regular basis). Compromise sometimes plays a role in getting the adjustments made and the specifications locked in, but if no workable compromise can be reached, Champion will look for a new supplier that can better meet its needs, and the process begins again with the new supplier.
Cost-effective specs
It's also possible that the specification provided exceeds what is needed. In that case, the team may experiment with a lesser design spec to see if costs can be reduced. Either way, the tentative cycle goes on until agreement is reached and the raw-material specifications are finally locked into the process.
"The program helps us improve our process by making our suppliers understand exactly what we're trying to manufacture, what our customers' requirements are, and how we might best meet those requirements," Conlon says.
After Champion's customers' expectations are understood, Champion begins working with suppliers to ensure that processes are in place to meet expectations consistently. For this, there are a number of preliminary steps to take before a process specification is approved and put into general practice.
"We develop tentative specifications that our suppliers must meet," Conlon notes, adding that the plant will operate under those specs for a period of time while the quality team tests statistical process control and evaluates supplier and product performance. For instance, certain specifications are established with suppliers for raw materials, such as pH or percent-of-solids content. Each material must be within an established range in order to be accepted by Champion. If not, the delivery is rejected and a CAR form is generated reflecting the non-conformance of quality, which is addressed immediately by the supplier and is considered in the supplier's evaluation.
"If they [the suppliers] are able to meet our standards, we enroll them and adopt the specifications," he says. Then the specifications are put into full operation.
One way Champion was able to cut costs involves the process used by the mills to wrap the finished paper products for shipping. "We used to wrap finished paper products 21/3 times around the roll, to give the paper adequate protection during shipment," Conlon says. Through the communication process of the SQA program, Champion was given a number of suggestions from its suppliers on wrapping techniques.
The company tried a few of the suppliers ideas, but did not immediately find success. "Finally, we changed to a higher-quality grade of wrapper, which cut down the amount of wrapping required," he notes, "The result was a significant cost savings because we drastically cut our wrapper consumption, and we were able to pass on some of the savings to our customers."
Conlon explains that there are a few challenges that must be addressed in order for a quality control program to be effective. "You have to commit some resources to implementing the program--it's not free," he says. "It requires considerable time spent monitoring the process and providing feedback to suppliers. And it requires discipline and accuracy from both sides [supplier and manufacturer] with regard to that feedback," he says.
According to Conlon, the program removes the capability to be arbitrary, which is especially important to purchasing managers who know suppliers who are quick to promise, but sometimes lack the capability to deliver.
Evaluate suppliers
After operations have been going on for several months, the SQA team evaluates supplier performance. Champion bases these evaluations on four main categories: product and process performance; quality of service (including on-time delivery); total quality, which involves quality systems and environmental and safety issues; and total cost, dealing with competitive pricing and whether the supplier offers cost-reduction strategies.
Suppliers are required to provide quarterly reports detailing statistical information essential to benchmarking performance, Conlon says. Champion backs up this information with its own statistical analysis and evaluates the performance of the supplier on a scale of zero to 100%. The supplier will then receive developing (zero to 79%), silver (80% to 89%) or gold (90% to 100%) designation.
New suppliers are typically evaluated quarterly or semi-annually. If the supplier has a longer-term relationship with the company, evaluations are usually scheduled annually.
Communication is key
"If there is any one thing that has been the driving force behind the program's success, it is the communication that has fostered some lasting relationships with our suppliers," says Connie Pentti, SQA Coordinator at Champion's Quinnesec, Mich., paper mill, which has 35 suppliers currently enrolled. "And we've had a lot of feedback from our suppliers that the program makes their jobs easier because they truly understand our needs and expectations, and those of our customers."
Pentti says strong lines of communication also help in troubleshooting manufacturing problems to bring swift remedies. "We were having a problem with scratching on one of our finished coated paper products," she says. "The SQA program enabled us to quickly determine the cause of the scratching--a non-conformance of the coating material used--and we were able to quickly correct the problem."
Champion communicates with customers and suppliers through a variety of methods, such as tracking consumer-oriented products, creating focus groups, questionnaires, discussions, plant visits and other forms of feedback. "We also have a systematic complaint process, under which if a customer has a complaint, it is forwarded to the proper channels so that it may be resolved," adds Pentti.
Open communication is an added benefit of the program. So fundamental is communication in the quality process, it is not uncommon for Champion to bring its suppliers together with its customers for strategy sessions.
"If we are trying to develop a new product," Conlon says, "Or a customer is looking to establish itself in a particular area of the market, we'll pull together the appropriate suppliers and customers and have discussions about product capabilities and attributes, and what might be possible if we did things a little differently."
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