Paccar Presentation 061714 - NAPM

Report
Supplier Performance Mgt
“Program Overview”
June 17, 2014
Enhancing the value creation process together
Quality
Technology
Innovation
SPM Program
•Annual Supplier Plan
•Detailed Project Tracking
•Quarterly Meetings
•Balanced Scorecard
•Annual Business Goals
•Supplier Ranking
Goals &
Metrics
Planning
Step 1
•Recognition of
Best
•Adjust Action
Plans on Results
Step 4
Step 2
Recognition
Execution
•Broad Supplier
and PACCAR
Engagement
•Clear
Engagement
Model
Step 3
SPM Program Expectations –Step 1
PACCAR:
• Cross -Functional Input
• Data Consolidation
• Information Availability
• Regular Quarterly Updates
• Review and Accept
Performance Target
Supplier:
• Understand PACCAR KPI’s
• Set Performance Targets
together
Current Scorecard on ePortal
SPM Scorecard – KPIs
Product Development
Operations Support
Business Alignment
Desired Engineering Behaviors
Lead time Requirement (OE)
Financial Risk Assessment Score
Design
Related
Cost Out
Performance to Requested Delivery
YOY Cost Impact
PPAP Performance
NCP PPM
Performance
Raw Material Cost Management
Product Reliability
Logistics
Cost
Performance
Alignment to PACCAR Processes
Aftermarket Warranty
Lead time Requirement (OES)
Aftermarket Profitability (nonproprietary)
Aftermarket Program Support
Aftermarket OTD
(Past Due %)
Aftermarket Profitability
(proprietary)
SPM Scorecard – KPIs
Product Development
Operations Support
Business Alignment
Desired Engineering Behaviors
Lead time Requirement (OE)
Financial Risk Assessment Score
Design
Related
Cost Out
Performance to Requested Delivery
YOY Cost Impact
PPAP Performance
NCP PPM
Performance
Raw Material Cost Management
Product Reliability
Logistics
Cost
Performance
Alignment to PACCAR Processes
Aftermarket Warranty
Lead time Requirement (OES)
Aftermarket Profitability (nonproprietary)
Aftermarket Program Support
Aftermarket OTD
(Past Due %)
Aftermarket Profitability
(proprietary)
SPM Scorecard – KPIs
Product Development
Operations Support
Business Alignment
Desired Engineering Behaviors
Lead time Requirement (OE)
Financial Risk Assessment Score
Design
Related
Cost Out
Performance to Requested Delivery
YOY Cost Impact
PPAP Performance
NCP PPM
Performance
Raw Material Cost Management
Product Reliability
Logistics
Cost
Performance
Alignment to PACCAR Processes
Aftermarket Warranty
Lead time Requirement (OES)
Aftermarket Profitability (nonproprietary)
Aftermarket Program Support
Aftermarket OTD
(Past Due %)
Aftermarket Profitability
(proprietary)
SPM Scorecard – KPIs
Product Development
Operations Support
Business Alignment
Desired Engineering Behaviors
Lead time Requirement (OE)
Financial Risk Assessment Score
Design
Related
Cost Out
Performance to Requested Delivery
YOY Cost Impact
PPAP Performance
NCP PPM
Performance
Raw Material Cost Management
Product Reliability
Logistics
Cost
Performance
Alignment to PACCAR Processes
Aftermarket Warranty
Lead time Requirement (OES)
Aftermarket Profitability (nonproprietary)
Aftermarket Program Support
Aftermarket OTD
(Past Due %)
Aftermarket Profitability
(proprietary)
SPM Scorecard – KPI Performance Levels
Product Development
KPI
Desired Engineering
Behaviors
Design
Related
Cost Out
PPAP Performance
Product Reliability
Definition
Evaluation of Product Innovation, Eng. Support and Problem
Solving Abilities
Level A
Exceptional
Product Design Cost Reduction (different design, material,
etc) as a percent impact over estimated current year spend
>1%
On Time + Approval / 2
100%
Warranty PPM (rolling 12 months) and recalls
Aftermarket Warranty % of warranty recovery and % claim approval
Subjective evaluation of supplier's support of PPD's
Aftermarket Program
marketing/sales programs as well as order and change
Support
management
< 50 Warranty
PPM AND zero
recalls
Warranty
recovery is 98% or
more and claim
approval is 95% or
more
Excellent
SPM Scorecard – KPI Performance Levels
Operations Support
KPI
Definition
Lead time Requirement Supplier lead time (average) compared to 14 days
(OE)
desired lead time excluding transit
Level A
14 days or less
Performance to
Requested Delivery
Monthly on time performance compared to our
requested delivery date
> 98% on time
NCP PPM
Performance
Rolling 12 months PPM as defined in SQ manual
< 50 PPM
Logistics
Cost
Performance
Percent improvement from a prev year cost per lb (Cost
per lb = Total freight cost from all supplier locations to
all plants / total weight)
Lead time Requirement Current supplier lead time compared to desired lead
(OES)
time
Aftermarket OTD
(Past Due %)
3 Months Rolling Average Past Due % = lines past due /
total lines due for that period
> 3%
15 PDC and 2 DSP or
better
0-1% Past Due
SPM Scorecard – KPI Performance Levels
Business Alignment
KPI
Definition
Financial Risk Assessment
Financial risk measured with the z score
Score
All cost movements (CMP's, LTA, raw material,
YOY Cost Impact
etc.) annualized dollar impact / current year
estimated spend
Raw Material Cost
Management
Alignment to PACCAR
Processes
Raw material impact measured via CPF for
surcharges/increases
Alignment with major initiatives at PCAR, 6σ,
Overall Cost Competiveness, Warranty
Recovery, etc.
(non-proprietary)
Supplier's Profit & Sales growth v. that of its
competitors and Subjective evaluation of how
Aftermarket Profitability supplier positions PPD v. competing channels.
(proprietary)
Compare PPD’s cost v. PACCAR OE cost
Level A
Consistently Healthy (3 Yrs)
Able to deliver > 3% net fav
impact for the year
Able to offset or willing to
absorb 100% of negative RM
impact
Fully Aligned
Profit growth is positive and
exceeds both its sales growth
as well as the profit growth of
its competitors. Supplier
favorably positions PACCAR v.
other aftermarket channels.
OES = OE cost + reasonable
packaging
New SPM Scorecard
SPM Program Expectations – Step 2
PACCAR:
• Provide Annual Planning
Format
• Review and Provide Quarterly
Feedback
Supplier:
• Establish Plans
• Provide Quarterly Status
Updates
• Track Detailed Project
Execution
Supplier Annual Performance Plan
Supplier Detailed Project Plan
ID and Track All
projects
Track key dates
Identifies Project
Owners, Comments
and projected Impact
Supplier Loads plan to collaboration SharePoint and can be accessed by
PACCAR Internal team members (Controlled Access )
SPM Program Expectations – Step 3
PACCAR:
• Cross-Functional Support
• Tools and Templates to Assist
with Project Execution
• Participate in the Regular
Project Meetings
Supplier:
• Commit Resources
• Drive Project Execution
• Engage PACCAR Team
• Regular Update of
Performance and Action Plans
SPM Governance – Engagement Process
Review Type
Characteristics
Participants
Annual Review
• Performance evaluation and overall
strategy discussion for the next year
• Senior management
(executive) representative
from each side
Quarterly Review
• Based on agreed KPI’s and performance
measures, checking to ensure that
expected performance is likely to be met
• Supplier Management Team
• PACCAR Cross Functional
Team lead by Purchasing
Outputs
• Agreement that the
KPI’s and general
direction and
approach are
appropriate
• Agreement on actions
needed to achieve
KPI’s
• Sr. Leadership as Desired
Specific Review
(monthly or as
needed basis)
• Focused on a particular area for
improvement
• Supplier Representative
• Action planning, evidence based, uses
tools to find causes and develop actions
and improvement strategies, uses formal
improvement process
• SQ Representative
• Based on a need to manage change in
behaviors (of supplier or ourselves).
Focused on shorter term issues rather
than strategy or all KPI’s
• Purchasing Representative
• Process Owners
• Clear action plan
leading to specific
improvement or to the
behavior changes
required
• Review dates for next
session
Consistent Engagement Timeline
Quarterly
Review
Annual
Review
J
F
M
Meetings as
Needed
A
M
Quarterly
Review
J
CMP Day
J
A
Quarterly
Review
S
Meetings as
Needed
O
N
D
Innovation Day
SPM Program Expectations – Step 4
PACCAR:
• Recognize Top Performing
Suppliers
• Award Additional Business
Based on Performance
Supplier:
• Review and Adjust
Performance as Needed
SPM - Recognition
• Recognition:
–
Supplier Awards
• Growth:
–
Additional Business
–
Improved Business Performance
SPM Program Benefits
• Business Growth
• Improved Business Performance
SPM Program
SPM Program
SPM Program
SPM Program
Next Steps
• Identify Key Point of Contact for SPM Program
– Set up SharePoint Access
• Participate in the First Quarterly Review
• Establish Annual Performance Targets
• Develop Performance Improvement Plan
Thank you
Enhancing the value creation process together

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