MT475 Unit 7 Supplier Quality Scorecard Review Example

The Cheaper Glass Costs More: An MT475 Unit 7 Supplier Quality Review of Two Insulated Glass Suppliers

[Student Name]

Purdue University Global

MT475: Quality Management

Unit 7 Supplier Quality Review

[Instructor Name]

[Date]

Overlook Skylight Company, Brennan Glass, Coyle Glass and every figure are composite; the sources cited are real.

Why the Scorecard Comes First

The scorecard comes before price, and that order is the review's purpose. A buyer who sees price first reads every defect figure as an argument against the cheaper supplier. A buyer who sees the evidence first can judge price in its light. Deming (1986) urged companies to end the practice of awarding business on price tag alone, because the lowest price often carries the highest total cost.

The Scorecard

Overlook Skylight Company bought about 320,000 insulated glass units in the last twelve months, 62 percent from Brennan Glass and 38 percent from Coyle Glass. Four measures cover the year.

Incoming rejects, units failing receiving inspection for chips, scratches or seal defects: 4,187 parts per million for Brennan and 17,646 for Coyle, more than four times as many.

Field seal failures traced to the supplier, units whose seal failed after installation and whose lot code pointed back to the supplier: 620 per million for Brennan and 2,403 for Coyle.

On-time delivery: 96.2 percent for Brennan and 91.8 percent for Coyle.

Corrective action speed, measured from Overlook's written problem report to the supplier's verified fix: 9 days for Brennan and 34 for Coyle.

The Cost of Each Supplier's Quality

Each measure has a cost. A rejected unit costs about $24 to handle, return and replace. A field seal failure costs about $900, because replacing glass in an installed skylight means a service call, an installer's time on a roof, new glass and freight. Late deliveries cost about $0.15 a unit for Brennan and $0.40 for Coyle in expediting and line changes.

Per unit, rejects add about $0.10 for Brennan and $0.42 for Coyle. Field failures add about $0.56 for Brennan and $2.16 for Coyle. Brennan's unit price is $40.60 and Coyle's $39.20. Adding quality and delivery costs, Brennan's total cost is about $41.41 a unit and Coyle's about $42.18.

The supplier that is $1.40 cheaper on the invoice is about 77 cents more expensive once its failures are paid for.

Across Coyle's 121,600 units, the difference is about $94,000 a year.

The Lot Trace

The review also traced the day 11 spike from Unit 4. All 33 skylights that failed that day carried insulated glass from a single Coyle lot. Overlook's lab cut and measured ten retained units from the lot: the secondary seal, the outer bead that keeps moisture out of the space between the panes, averaged 3.1 millimeters, against Overlook's minimum specification of 4.0. Coyle's certificate for the lot reported the seal as conforming. Overlook's incoming inspection checks for visible damage but does not measure seal thickness, so the thin lot passed receiving and was built into skylights. Montgomery (2020) notes that acceptance sampling can only find defects in the characteristics it actually measures, and seal thickness was not one of them.

The trace confirms a point from the Unit 6 seminar: the failure was partly the supplier's and partly Overlook's, since its appraisal did not test the property that failed.

The Decision

Volume will move from a 62 to 38 split to 80 percent Brennan and 20 percent Coyle at the next contract renewal, keeping a second source so Overlook is not dependent on one supplier. Coyle keeps its 20 percent on three conditions: incoming rejects below 8,000 parts per million for two consecutive quarters, corrective actions closed within 14 days and a measured seal-thickness report with every lot. If Coyle meets them for a year, its share can rise again.

Overlook will also change its own appraisal: receiving will measure seal thickness on a sample of every glass lot from both suppliers, for roughly $9,000 a year in technician hours.

What Each Supplier Hears

The review will be shared with both suppliers, not only with Overlook's purchasing team. Brennan will hear that its quality and responsiveness have earned more volume and that Overlook expects capacity planning for the larger share within sixty days. Coyle will hear the specific numbers behind the reduction, the lot trace and the three conditions for keeping and regaining volume. A supplier that knows exactly why it lost business and how to win it back is more likely to improve than one that simply receives smaller orders.

Limits

Field failure rates depend on lot codes recorded at installation, and some service calls lack them. The $900 field failure cost is an average that varies widely by job. And Brennan's capacity to take more volume has not been confirmed; the decision depends on Brennan agreeing to the larger share without longer lead times. Juran and Godfrey (1999) recommend supplier decisions that rest on joint planning rather than on one-sided scorecards, so the next step is a meeting with each supplier to share this review.

References

Deming, W. E. (1986). Out of the crisis. MIT Press.

Juran, J. M., & Godfrey, A. B. (Eds.). (1999). Juran's quality handbook (5th ed.). McGraw-Hill.

Montgomery, D. C. (2020). Introduction to statistical quality control (8th ed.). Wiley.