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COMMUNICATIONS Organizations need to communicate effectively. Raw data information may be communicated through EDI, faxes, or the Internet. Beyond raw data, information must be communicated such as the status of the relationship, plans, financial status, and other qualitative updates. Typically, the relationship status between the two parties is monitored and dealt with by the client's buyer and the vendor's sales and customer service personnel. QAS relationships tend not to live up to their full potential when these two groups of people also handle information concerning engineering, quality, billing, accounts receivable, and planning. In order to effectively communicate, organizations should be looking to have the relevant engineering personnel (quality and process) directly communicate with each other. In order to facilitate the effective introduction of new parts and engineering changes, the planners in both organizations should also have direct lines of communication. When a financial issue is raised (typically invoicing), the vendor's accounts receivable and the client's accounts payable people should directly communicate.
Setting expectation levels for the relationship is key. The first expectation is that the relationship will be a win-win situation. It must be understood that this type of relationship will only succeed if it is managed properly and communication remains open and honest.
The second expectation is that the relationship can expand to be as large as either partner is capable of handling. However experience has shown that one party, having seen the benefits of the relationship, tries to overextend the abilities of themselves or the other party. (An example would be the client demanding that the vendor take on an additional product. The vendor, for whatever reason, cannot do it but sees the overall relationship in jeopardy if they decline.) In the agreement, and when communications are taking place, both parties should be constantly open about what can be done and what is not doable. CORRECTIVE ACTION TEAMS As part of a QAS implementation, CATs are formed. The leaders of the teams are typically the client's buyer and the vendor's sales/customer service representative as they are the people that manage the overall relationship. Team members include the people who have been mentioned before: planners, engineers, financial personnel, and any other person who impacts the quality processes (operational and administrative) between the two organizations. If the relationship is strategic enough, an informal meeting of the executives of the organizations early in the relationship is not inappropriate, as they may be called upon at a later date to settle issues or authorize expansion of the relationship. To form the CATs, the team leaders identify the relative personnel within their own organization. The two organizations then engage in joint education. The education consists of team building, the concepts of QAS, root-cause analysis, and the details of the relationship between the organizations. Lines of communication are established, with error correction and disaster recovery responsibilities defined. Depending upon the size of the organizations, escalation procedures and timing may also be established. OH NO! IT'S THE "F" WORD! So, what happens when a failure occurs? The team leaders decide which team members to involve and the level of severity (dictating the time of response required). Then the members determine the root cause of the failure. Once a root cause is determined, procedures are put in place to eliminate the failure from happening again. When the teams are truly functioning well, the team leaders are informed of the action that the members took to rectify an error correction issue. IT'S WORKING! How do you know? There are several benchmarks that can help the organizations determine if the relationship is working. Calculate the number of failures per quantity shipped. This is done both on a product-by-product basis and on a total quantity basis. As the relationship settles in, this factor should drop. If it doesn't, look for communication issues between the engineers as the first root cause investigated. Calculate on-time delivery. Product-by-product and overall shipments again are separated. This should be well under control, on a product-by-product basis, within the realm of 1.5 times the supply lead time of the vendor. Calculate the number of invoice discrepancies. This should be 100 percent within one month. The number of hits per total number of line items is the metric you want to calculate. When CATs are used, calculate the time of correction for each type of issue (e.g., invoice discrepancy). The team should be reducing the amount of time as each type of situation presents itself. It is typically helpful to present this in a graphical format and send to each team member regularly. Based on the relationships, other benchmarks can be created (e.g., increased inventory turns). The one big factor will be, "How many times have we regretted the decision?" In the experience of the author, following common sense and building strong commitment by both parties to seeing this through will result in the answer of "zero." SUMMARY QAS works. It is beneficial to all parties when implemented properly between two parties working on a win-win platform. STAY CONNECTED To stay current on Lean Management Basics and Best Practices, subscribe to our weekly MBBP Bulletin... and we'll send you our PowerPoint presentation, "Introduction to Kaizen Based Lean Manufacturing™." All at no cost of course.
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