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MINISTRY OF EDUCATION AND TRAINING

<b>HO CHI MINH CITY UNIVERSITY OF TECHNOLOGY AND EDUCATION FACULTY FOR HIGH QUALITY TRAINING </b>

<b> CAPSTONE PROJECT INDUSTRIAL MANAGEMENT</b>

<b>Ho Chi Minh City, November 2023</b>

<b>LECTURER: PhD. TO TRAN LAM GIANGSTUDENT: NGUYEN THI UT</b>

<small>S K L 0 1 2 3 8 4</small>

<b>ASSESSMENT OF APPLICATION OF SUPPLIER QUALITY MANAGEMENT PROCEDURE AT BOSCH </b>

<b>VIETNAM CO., LTD </b>

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<b>MINISTRY OF EDUCATION & TRAINING </b>

<b> HO CHI MINH CITY UNIVERSITY OF TECHNOLOGY AND EDUCATION </b>

<b>Major: Industrial Management </b>

<i><b>Ho Chi Minh City, November 2023</b></i>

<b>ASSESSMENT OF APPLICATION OF SUPPLIER QUALITY MANAGEMENT PROCEDURE AT BOSCH </b>

<b>VIETNAM CO., LTD</b>

<b>Advisor: PhD. To Tran Lam Giang </b>

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In addition, I would also like to thank the Board of Directors of Bosch Vietnam Co., Ltd. for allowing and creating favorable conditions to intern at the company. I would like to thank Ms. Nguyen Thi Anh Nguyet and Mr. Le Xuan Ngoc of the department PQA for supporting and creating conditions to complete the thesis during the internship at the company.

However, due to limitations in professional knowledge as well as practical experience and limited internship time here, errors in the thesis are inevitable. I really hope to receive comments from teachers. These comments will always be the motivation for me to try harder.

<b>Once again, I sincerely thank all. </b>

<i>Ho Chi Minh City, 2/11/2023 </i>

<b>Student name Nguyen Thi Ut </b>

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IATF ^{International Automotive Task Force}KPI ^{Key Performance Indicator}

LOG ^{Logistics Department}MSE ^{Manufacturing department}PQA ^{Purchasing Quality Assurance}R&D ^{Research and development}SPC ^{Statistical Process Control}SQM ^{Supplier Quality Management}TEF ^{Technical Function Department}

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<b>LIST OF TABLE </b>

Table 2.1 Symbols and function in flowchart ... 23

Table 3.1 Flowchart control quality input process ... 30

Table 3.2 Flowchart reaction plan when detecting defects on coils ... 32

Table 3.3 Type of defect and measure... 37

Table 3.4 Element quantity and defect rate from January to May 2023 ... 37

Table 3.5 The number of coils used and reject rate from January to May 2023 ... 38

Table 3.6 Require information in 8D report ... 39

Table 3.7 Quality Score ... 41

Table 3.8 Delivery Score ... 41

Table 3.9 Resolve the problem score ... 41

Table 3.10 Action for overall score ... 42

Table 3.11 Score of Supplier ABC in 2022 ... 42

Table 3.12 Flowchart of audit process ... 43

Table 4.1 Detail plan ... 47

Table 4.2 Meeting agenda ... 48

Table 4.3 Use 5xwhy to define root cause ... 48

Table 4.4 Identify tasks and person in charge (PIC) and deadline ... 48

Table 4.5 Defect and how to detect ... 49

Table 4.6 Timeline of training video ... 50

Table 4.7 Type of question on the test ... 50

Table 4.8 Data before and after apply WI ... 51

Table 4.9 Feedback from operator about WI and training ... 51

Table 4.10 List of potential suppliers ... 53

Table 4.11 Price Score ... 54

Table 4.12 Delivery times score ... 54

Table 4.13 Reputation score ... 54

Table 4.14 Supply ability score ... 55

Table 4.15 Score Suppliers ... 55

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<b>LIST OF FIGURES </b>

Figure 1.1. Logo company ... 3

Figure 1.2 Proportion of sales by business fields ... 4

Figure 1.3 Bosch’s Brand in Mobility Solutions... 4

Figure 1.4 Product of HcP ... 6

Figure 1.5 Company organizational structure of HcP ... 7

Figure 1.6 Structure of departments in the quality management department. ... 8

Figure 2.1 Classify suppliers by risk level ... 12

Figure 2.2 Select a new supplier process ... 13

Figure 2.3 8D step ... 18

Figure 2.4 Fishbone analysis to find the part dimension out-off standard ... 22

Figure 2.5 5xwhy analysis example ... 22

Figure 2.6 Pareto Chart of the Distribution of the Forbes List ... 23

Figure 2.7 Example for flowchart ... 25

Figure 2.8 Phases of the PDCA cycle ... 26

Figure 3.1 Pushbelt manufacturing process ... 29

Figure 3.2 Defect on coil (corrosion) ... 33

Figure 4.1 Elements production process ... 37

Figure 4.2 Reject rate of quantity coil from Jan to May 2023 ... 38

Figure 4.3 Gantt Chart ... 47

Figure 4.4 Check coil before production ... 49

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<b>TABLE OF CONTENT </b>

<b>INTRODUCTION TO THE REPORT ... 1</b>

1. Overview of the study ... 1

2. Purpose of the study ... 2

3. Scope and object ... 2

4. Research methodology ... 2

5. Structure of report ... 2

<b>CHAPTER 1: INTRODUCTION TO THE COMPANY ... 3</b>

1.1 Overview on Bosch group ... 3

1.2 Introduction to Bosch Long Thanh ... 5

<b>CHAPTER 2: THEORETICAL BASIS ... 10</b>

2.1 Quality ... 10

2.2 Supplier Quality Management ... 11

2.3 Tools to improve supplier quality management. ... 17

2.3 Support tools ... 26

<b>CHAPTER 3: REALITY OF APPLICATION SUPPLIERS QUALITY MANAGEMENT PROCEDURE AT BOSCH LONG THANH ... 29</b>

3.1 Overview of product at Bosch ... 29

3.2 Overview of supplier quality management at Bosch ... 30

3.3 Current status of ABC supplier quality management at Bosch ... 37

<b>CHAPTER 4: SOLUTIONS TO IMPROVE THE SUPPLIER QUALITY MANAGEMENT PROCEDURE AT BOSCH LONG THANH ... 45</b>

4.1 Assessing the advantages and limits of quality management on supplier ABC45 4.2 The solutions to improve the supplier quality management procedure at Bosch

Long Thanh ... 46

<b>CONCLUSION ... 57</b>

<b>REFERENCES ... 58</b>

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<b>INTRODUCTION TO THE REPORT </b>

<b>1. Overview of the study </b>

Integration brings companies the chance to export their goods to the international market. It is the opportunity to increase their production volume, market expansion as well as the reputation. How can domestic companies achieve such goals? The key that helps companies achieving such goals is quality (Zhao & Gu, 2023). Quality brings opportunities for businesses but also enhances competitions between businesses (Adams & Richey, 2014). Businesses face many competitors and must make efforts to maintain or improve their business performance to compete internationally.

In the manufacturing sector, companies need to improve the quality of their products to gain advantage with customers. Manufacturers deal with significant challenges when it comes to ensuring the quality of their suppliers' products. This challenge becomes even more pronounced as manufacturing outsourcing becomes more common, increasing their reliance on suppliers for maintaining product quality. Managing supplier quality becomes increasingly complex as suppliers take on larger and more intricate production tasks. It's not unusual to discover that incidents related to product quality can be traced back to issues with supplier quality. For example, in 2007, Mattel encountered a quality scandal when lead paints were found in toys sourced from Chinese suppliers (Tang 2008). In another example, Boeing experienced significant delays in launching its new 787 Dreamliner, partly due to quality issues with components provided by its suppliers (Sanders 2009).

Bosch, a well-known corporation for manufacturing high-quality products, has promoted progress in the automotive industry through the Bosch Long Thanh - an important member of the Bosch group. Bosch Long Thanh is specified in manufacturing transmission belts for gasoline vehicles, creating products with high reliability and performance. Bosch Long Thanh only produces one type of product and provides it for customers in automotive industry . It is a reason why the company needs to prioritize quality control of this product code, especially in controlling suppliers (because the company cannot control the quality of raw materials). For the urgent reasons mentioned

<i><b>above, the author chose the topic "Assesment of application of supplier quality </b></i>

<i><b>management procedure at Bosch Vietnam Co., LTD" with the goal of ensuring that the </b></i>

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company will continue getting high quality products. Besides, it helps to optimize costs and enhance competition in the business environment in the future.

<b>2. Purpose of the study </b>

- To comprehend supplier quality management procedure at Bosch Long Thanh - To analyze the supplier quality management (SQM) procedure and evaluate advantages and limitations based on reality implementation.

- To recommend solutions for improving supplier quality management at Bosch corp.

<b>3. Scope and object </b>

- Scope: The study focuses on the SQM activities of Bosch Long Thanh from January 1<small>st</small> 2023 – May 31<small>st</small> 2023

- Research object: Supplier quality control activities at Bosch Long Thanh

<b>4. Research methodology </b>

- Qualitative research methods: The author has conducted research on theories and documents on supplier quality management. Then, the author analyzed and discussed with internal employees and internal documents to understand how the company manages supplier quality.

- Quantitative research methods The author collected the results of the solution through an online questionnaire survey to collect information from subjects participating in the improvement after one month.

<b>5. Structure of report </b>

The thesis is divided into 4 chapters, including: Chapter 1: Introduction about Bosch Long Thanh. Chapter 2: Theoretical basis.

Chapter 3: Analysis of application supplier quality management procedure at Bosch Vietnam

Chapter 4: The solution to improve the supplier quality management procedure at Bosch Vietnam

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<b>CHAPTER 1: INTRODUCTION TO THE COMPANY </b>

<b>1.1 Overview on Bosch group </b>

<i><b>* Introduction to Bosch group: </b></i>

Bosch is a technology and equipment provider specified in the automotive industry, and it has business relationships with nearly all global automotive companies. Additionally, the group operates in various other sectors including handheld tools, household appliances, clean energy, security systems, smart homes, packaging solutions, construction solutions, mobility solutions, IoT and Industry 4.0.

The company's headquarters locates in Gerlingen, near Stuttgart, Germany. Stefan Hartung assumed the position of chairman in 2022. As of December 31, 2021, the Bosch Group has expanded its presence to 440 branches and subsidiaries in 60 countries worldwide, collaborating with 402,600 colleagues across the globe. The group has also allocated a total of 6.1 billion Euros for research and product development, supported by 76,100 researchers and engineers worldwide.

Company logo:

Figure 1.1. Logo company

<i>(Source: Internet) </i>

Slogan: “Invented for life”

Bosch business areas includes mobility solutions, industrial technology, consumer goods, and energy and building technology. Their contribution in the group revenue is

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Page 4 presented in figure 1.2

Figure 1.2 Proportion of sales by business fields

<i>(Source: Bosch internal document) </i>

From the provided chart, it is evident that the mobile solutions sector commands the largest share of the group's overall sales. Consequently, it is crucial to prioritize tailored strategies for the growth and development of this sector to effectively target and capture the pertinent market segments.

Bosch brands in this field includes:

Figure 1.3 Bosch’s Brand in Mobility Solutions

<i>(Source: Bosch internal document) </i>

<i><b>* Overview on Bosch Vietnam </b></i>

- International name: Bosch Vietnam Co., LTD - Business area: Powertrain Solutions

<b>PROPORTION OF SALES BY BUSINESS FIELDS</b>

<small>Industrial TechnologyMobility SolutionsConsumer GoodsEnergy and Building Technology</small>

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Page 5 - Headquater: Ho Chi Minh City, Vietnam

Bosch established its first representative office in Ho Chi Minh City in 1994. Since 2007, the company has gone further with the establishment of Robert Bosch (Vietnam) Co., Ltd. to represent its operations. At the moment, Bosch Vietnam operates diversely in all differences from sales, production, research and development (R&D) to global service centers.

Bosch Vietnam has two branches in Hanoi and Da Nang. Together with the powertrain factory in Dong Nai province, Bosch produces continuously variable transmission (CVT) belts for cars. The company also organizes R&D activities in Vietnam. Robert Bosch Engineering & Business Solutions Vietnam Co., Ltd. operates as a center for R&D of technology and industrial solutions. In addition, the Automotive Technology R&D Center in Ho Chi Minh also contributed to Bosch's development in Vietnam. Not only that, Bosch also supports technical and professional development through the Bosch Industrial Technical Vocational Training Center (Bosch TGA).

In 2021, Bosch recorded revenue in Vietnam of about 192 million Euro (accounting for 0.2% of the group's revenue of 78.7 billion Euro). As of December 31, 2021, the company employed more than 5,000 associates and had diverse business operations in Vietnam.

<b>1.2 Introduction to HcP * Introduction to HcP </b>

- Name: Bosch Viet Nam Co., LTD

- Address: Road No. 8, Long Thanh Industrial Park, Long Thanh District, Dong Nai. - Scale: The Ho Chi Minh city Plant (HcP) was established in April 2008 with a first phase investment of 30 million Euro and a second phase of 55 million Euro in 2015. Bosch Vietnam is invested in technologies and facilities, advanced infrastructure with an area of 16,000 m2.

- Market: Globally, especially China and Japan.

<b>* Company evolution </b>

22/10/2007: Project the HcP factory construction

01/08/2008: Operate the first transmission belt assembly line at a rented factory in high-tech park.

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2018: Celebrate 10 years of establishment and marking the milestone of 25 million products produced at HcP

<b>* Vision and mission: Bosch builds its value on a series of core values that underpin </b>

the future such as responsibility and sustainability, openness and trust, fairness, innovation,

<b>legality, trust and diversity. * Product </b>

HcP operates as a factory specified in the continuous production of continuously variable transmission belts (CVT). This is also where Bosch began producing the first transmission belts in Vietnam. This is an important component that makes up the CVT gearbox because without the pushbelt, or if the pushbelt is broken, the vehicle will not run. The pushbelt ensures that the car engine operates as efficiently as possible, the engine is always maintained at an ideal performance level, ensuring low fuel consumption and reducing CO2 emissions. Each completed CVT belt is made up of 19 - 400 belt eyes arranged in series with each other and two sets of loops mounted on both shoulders of the belt eyes. Loop sets are made up of about 6 - 12 individual loops nested together.

Figure 1.4 Product of HcP

<i>(Source: Bosch internal document) </i>

In 2008, Bosch started CVT wire production activities in Dong Nai, Vietnam. Since the first production, the factory has achieved an impressive number of 1.6 million CVT products. In March 2018, its wire products reached more than 25 million products supplied

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to the market. Currently, CVT are being produced at 3 Bosch factories around the world, including the Netherlands, Vietnam and Mexico. Among these, the factory in Vietnam ranks first in terms of scale and financial revenue, far surpassing Bosch factories globally. This company is supplier of assembly automobile manufacturing companies such as Honda, Jatco, Huyndai...

<b>* Company organizational structure of HcP </b>

The company's organizational structure is divided into two main groups: Commercial (HcP/PC) and Technical (HcP/PT) and specific affiliated departments responsible for functions according to that segment.

Figure 1.5 Company organizational structure of HcP

<i>(Source: Bosch internal document) </i>

Within the scope of the topic, the main mentioned parts will be QMM, MFG1 and LOG, TEF.

- QMM (Quality Management): ensures quality throughout the company. From managing the quality of inputs, production processes and product outputs to maintaining the factory-wide quality management system.

- MFG1 (Manufacturing): responsible for element production

- LOG (Logistics): in charge of work related to purchasing raw materials, transportation, customs clearance for goods at the company and warehouse control activities.

- TEF (Technical Function): in charge of the technical aspects in the factory from software to hardware, even usage documents.

<b>* Structure and functions of departments in the quality management department. </b>

At the HcP factory, the quality department is responsible for quality management and quality methods for the factory, maintaining and continuously improving the

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company's quality system with the aim of ensuring customer satisfaction. Customers are always at the highest level.

Figure 1.6 Structure of departments in the quality management department.

<i>(Source: Bosch internal document) </i>

The quality management and methods department (PS/QMM-HcP) is divided into 5 groups with different functions in controlling and managing factory-wide quality standards and the IATF 16949:2016 system. Groups are divided according to specific functions and roles:

PS/QMM1-HcP: This group works directly with customers (Punch, Jatco, Hyundai,.) to record customer notifications about requests, products, complaints, etc.

PS/QMM3-HcP: This group is responsible for ensuring quality processes, monitoring operations, resolving production stoppages and coordinating with production departments to resolve process issues that cause defected products in processes as well as identifying and tracing errors and incidents to prevent non-conforming products at the end of the line.

PS/QMM6-HcP: This group measures and analyzes product-related chemical experiments, metallurgical process measurements, welding, belt testing, calibration, and measurement instructions that are being used to produce power transmission belts.

PS/QMM7-HcP: QMM7's orientation for Bosch and HcP is determined based on 5 quality principles: Innovation, Customer Satisfaction, Collaboration, Responsibility, Consistency. This team implements quality management system process management, implements internal audit processes and evaluates IATF 16949:2016 quality system and support quality management methods (FMEA, SPC, problem solving, etc.)

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PQA/HcP: This team is responsible for purchasing quality control for suppliers and ensure supplier compliance with Bosch quality standards in the supply of materials used to produce drive belts at the factory

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<b>CHAPTER 2: THEORETICAL BASIS</b>

<b>2.1 Quality </b>

<i>Crosby (2001) defined that “Quality is conformance to requirements”. It means that </i>

the formulation of product quality should be based on the analysis of customer wants and requirements for the product. Besides, from customer aspect, Juran (1950) also indicated

<i>requirements are identified by the customer demands as “Quality is fitness for use”. It is a </i>

key force leading to delighted customers, firm profitability, and the economic growth of nations (Deming 1982; Kennedy 1987; Rust, Zahorik, and Keiningham 1995).

On the other hand, from manufacturer’s aspect, Ishikawa (1990) believed that company-wide quality control did not just mean the quality of the product being sold. It also included the quality of the management, the company itself, after-sales service to the customer, and the human beings involved. Golder and Mitra (2012) defined quality as a set of three distinct states of an offering’s attributes’ relative performance generated while producing, experiencing, and evaluating the offering. Each state of quality is a comparative assessment of an offering’s attribute’s performance relative to a reference standard desired by either firms or customers. With a focus on the firm, the quality production process has been the domain of engineering, operations, and management research. Producing an offering is a function of attribute design, process design, resource inputs, and various methods of controlling the production process. From Schematic production system of Kumar, S. A., & Suresh, N. (2006), products need to go through 3 stages before reaching customers: from materials – procedure and packaging.

Quality management (QM) is the act of overseeing all activities and tasks that must be accomplished to maintain a desired level of excellence. This includes the determination of a quality policy, creating and implementing quality planning and assurance, and quality control and quality improvement. According to Lagrosen (2005), there are four main components of Quality Management: quality planning, quality assurance, quality control and quality improvement. The process of implementing all four components in an organization is referred to as Total Quality Management (TQM). Results of a study by Liu (2003) on quality implementation in public housing projects in Hong Kong showed increased customer satisfaction after ISO 9000 implementation. Furthermore, the average number of defects in housing projects built by companies with ISO 9000 certification was

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significantly less than the number of defects in housing projects built by companies without ISO 9000 certification.

<b>2.2 Supplier Quality Management </b>

A supplier is defined in ISO 9000: 2015 as an organization that provides products. A supplier can be a manufacturer, a distributor, a retailer, a contractor, a subcontractor, or a supplier of products. For example, an organization chooses to purchase a product or service from a supplier because they don’t have the capacity to manufacture it on their own, lack the necessary skills, or the business needs to focus on what it does best. According to Karana & Kandachar (2008), the competitive market rising from the increase in product consumption makes product designers consider more about materials than before. That makes more and more companies in the manufacturing sector need to manage the quality of materials or quality of suppliers

SQM is the process of monitoring a supplier’s ability to meet the customer’s needs. It is the process of monitoring a supplier’s ability to meet the customer’s needs. SQM is defined as a collection of management activities which are necessary ingredients for enhancing the quality performance of an organization through the blending of supplier activities with the buyer activities and simultaneous engagement and communication between the two partiers (Chakravarty, 2014, 103-4). SQM is regarded as a key ingredient that is imperative for improving internal quality performance (Zsidisin et al., 2016; Lee and Li 2018). In the supply chain literature, SQM has been operationalized through three dimensions: supplier selection, supplier development, and supplier integration (Lo and Yeung, 2006).

The business environment is highly competitive, and companies are dealing with supply chains that have become more unpredictable. In this evolving landscape, both buyers and suppliers are realizing the benefits of fostering collaborative partnerships.

- With suppliers: Granting preferential buyer benefits is a key weapon in the arsenal of relationship marketing activity (Palmatier, et al. 2007b). Supplier benefits was measured by three items covering profit, market position, and customer acquisition (Geyskens & Steenkamp 2000), to reflect the direct benefits of doing business with the buyer.

- With buyers: Buyer benefits measured the extent to which the supplier granted preferential treatment to the buyer, in the form of value-added services, direct investments,

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process adaptations, or special treatment (Palmatier, et al. 2007b). Buyer benefits entail the preferential treatment a supplier gives to a specific buyer in exchange for its past actions or future loyalty. For example, because Toyota is a top customer for most of its suppliers, the firm receives far more attention and innovative offerings from suppliers than its competitors (Marksberry 2012).

Suppliers must be classified according to several specific requirements that meet the particular needs of a company (2019). Standards may include lead times, methods of delivery, quantity, quality, packaging, storage and other requirements. Categorizing suppliers helps figure out which ones are important and what needs to be taken into account. This makes it easier to keep track of suppliers and make re-evaluating them more efficient.

The ISO 9001 standard classifies suppliers in three ways: - Supply of raw materials, materials and equipment. - Provide products and services.

- Providing outsourcing services.

Classify suppliers by risk level and accordingly prioritize performance quality assessments.

Figure 2.1 Classify suppliers by risk level

<i> (Source: complianceonline.com) Highest risk suppliers - Suppliers with the biggest supply and/or quality risk will be </i>

evaluated every year. This includes things like supplier's corrective action, return rate,

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time delivery, and customer complaints related to the supplier. These are the ones that have a big impact on how good or available the product is.

<i>Heavy Risk suppliers - This is the second level of risk when it comes to supply </i>

and/or quality. It'll be reviewed every two years based on the supplier's corrective action and delivery on time. It has a direct effect on the product, but it also affects the availability of other options.

<i> Moderate Risk suppliers - Suppliers only affect the product indirectly. They'll be </i>

evaluated every 3 years, based on how quickly they deliver and how much they charge.

<i>Low-risk suppliers - The lowest level of supply and or quality risk. Suppliers don't </i>

have a big effect on the final product.

<b>c. Supplier Quality Management activites * Selecting a new supplier </b>

Figure 2.2 Select a new supplier process.

<i>(Adapted from A.J. Van Weele, Purchasing Management 1994.) </i>

Once the specifications have been developed, a buying team led by the supply manager will prequalify suppliers, generate requests for proposals, evaluate the proposals, and select a supplier based on established selection criteria.

<i><b>Step 1: Define requirements </b></i>

Define the elements to create the required product (materials, components, properties, etc.)

<i><b>Step 2: Select supplier </b></i>

Quality has always been one of the most important performance criteria even with a conventional purchasing strategy (Dickson, 1966). He states that three factors (1) the ability to meet quality standards; (2) the ability to deliver products on time; (3) the performance history, are the most critical determinants in choosing suppliers.

Sagar and Singh (2012) suggested that supplier selection criteria can change over time depending on the politics, economy, social and environmental factors of a business.. They suggested 21 key criteria to consider, including price, quality and standards,

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reputation, industry position, delivery, finances, quality system, technical ability, production facilities, production capacity, long term relationship, trustworthiness, compliance, speed, impact, communication, warrantees, and claim policies (ISO 9001/ISO 14000 certified), attitude, anorexia and obesity, packaging capacity, and past performance. Developing an approved suppliers list: the potential suppliers are defined. Manufacture companies utilize an approved supplier list to assess the performance of each supplier in terms of cost, quality and delivery. By categorizing the company's suppliers, it will be easier to select the most appropriate supplier.

<i><b>Step 3: Contract Agreement </b></i>

After defining a potential supplier, the buyer will negotiate with suppliers. They will discuss requirements for materials (technical drawings, structural components, aesthetic requirements, etc.) and sign a contract. In the contract, there will be an agreement between both parties on operating strategies and supplier development activities (if necessary).

Supplier development is any activity or resource investment initiated by a buying organization to improve the performance of its supplier (Krause, et al. 1998). The cooperative effort between a buying firm and its suppliers aims to upgrade suppliers’ technical, quality, delivery, and cost management capabilities and foster ongoing improvements (Handfield, et al. 2000; Krause 1999). Capability development refers to the buying firm’s investments and efforts to increase a supplier’s capabilities, so that it can meet the buyer’s short- or long-term needs. (Krause, et al. 1998; Mahapatra, et al. 2012), capability development investments might include (onsite) training to suppliers, offering technical and quality expertise and advice, site visits or personnel exchanges between the supplier’s and the buyer’s facilities, involvement in the buyer’s new product design and development, and information sharing (Krause 1999; Krause, et al. 1998). Carr and Kaynak (2007) also find that supplier investments are likely to increase provided product quality, which should result in better sales for the supplier. In this sense, capability development is a relational investment that can improve the buyer–seller relationship (Li, et al. 2012).

<i><b>Step 4: Suppliers Evaluation </b></i>

To ensure suppliers always maintain the quality of raw materials, buyers need to take assessment measures. This step in the process is critical for assuring that an effective supplier base is in place, a key contributor to the firm’s competitive position.

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The ISO 9001: 2015 standard states that an organization should define and select the criteria for evaluating, selecting, monitoring performance and re-assessing suppliers, based on availability, processes or products or services tailored to their requirements.

<i><b>* Auditing suppliers </b></i>

Supplier audit involves the examination and assessment of a supplier's activities, both historical and ongoing, to identify any discrepancies in their processes as compared to the regulations, ISO standards, and the agreed-upon commitments between the supplier and the actual company. This audit serves as a means to review and verify the supplier's performance. There are two main types of suppliers evaluation: Off-site audit and on-site audit.

1) Questionnaire-type supplier audits (Off-site audit)

According to Young (2019), a questionnaire is useful for gathering basic factual information about an organization rather than assessing the effectiveness and efficiency of its 28 processes. Furthermore, Young proposed that a questionnaire would include questions such as: What are the supplier's quality standards? How many employees are employed by the organization and how many are employed in the quality assurance function? What industry does the supplier serve and at what rate? The most effective way to obtain more detailed and reliable information is to conduct an on-site audit of the supplier.

2) On-site supplier audits

On-site audits will give the SQM team all the information from questionnaire-based reviews and more, such as: the structure of the company's quality management system, performance data, manage products and processes. Supplier internal audit results and certification audits. And a tactile feeling of how the company operates and the atmosphere in the organization. According to Young (2019), one way is to check the supplier informally while the SQM team visit their facility. This method gets a lot of valuable insights just by looking around the production area, the warehouse and other properties.

<i><b>* Supplier Re-evaluation </b></i>

Re-evaluation is one of the essential requirements of ISO 9001-2015. In order to manage external suppliers, it is necessary to ensure that they always maintain their quality management system and provide reliable evidence that they are always competent and

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perform as required. Re-evaluation also helps the organization to predict what events could lead to a non-compliance or potentially a quality issue. This will enable the supplier to improve and avoid issues.

<i><b>* Monitoring and assessing supplier performance </b></i>

The ISO 9001:2015 standard includes the imperative of managing supplier performance, enabling organizations to consistently oversee and assess the performance of their suppliers. Essentially, this requirement allows organizations to continually observe and analyze trends and alterations in supplier operations. Such monitoring serves a pivotal role by assisting organizations in addressing issues when a supplier falls short of meeting specified requirements. It also empowers them to take corrective actions and implement preventive measures to avert the recurrence of such problems.

<i><b>- KPI method </b></i>

KPI stands for Key Performance Indicator, and it's a way to measure how well a certain activity or process is doing. The goal is to use it as a benchmark for each process or activity, depending on what you want to accomplish (factorial, 2017). KPI can be a really useful tool if you use it correctly (Young,2019). A supplier's KPIs are a good way to get an idea of how well they're doing, like if they're delivering on time, if they're responding to orders, if they're meeting quotes and requests, if they're making mistakes, and if they're being inspected and audited. You need to figure out what kind of information and data you need to control these KPIs, who the provider is, how it's tracked, who the analysts, reports, and reviewers are, and so on.

To qualify as a Key Performance Indicator (KPI), we need to follow its specific criteria. A KPI should be specific, with a well-defined and distinct target, ensuring its objectives are easily understandable and measurable. Measurability is a fundamental characteristic; if a KPI cannot be measured, it fails to serve its purpose as a performance indicator. KPIs should also be feasible, with realistic targets to ensure they are attainable and effective in measuring success. Lastly, KPIs must be relevant, focusing on monitoring factors that hold genuine significance to the organization while avoiding the allocation of resources to indicators that do not contribute to the company's overarching goals.

<i><b>- Supplier Scorecard </b></i>

The management practice in question seeks to enhance traditional financial performance measures with factors influencing future performance, including customer

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satisfaction, the development of human and intellectual capital, and learning initiatives. Notably, conventional balanced scorecards often overlook environmental considerations. This concept was introduced by Robert Kaplan, a co-inventor of activity-based accounting, and David Norton in 1996, aligning with the definition of the balanced scorecard as provided on the Business Dictionary website.

<b>2.3 Tools to improve supplier quality management. </b>

Managing quality suppliers is essential for ensuring the quality of products and services in your supply chain. Various methodologies and approaches can be employed to achieve this goal. Two common approaches are the 8D (Eight Disciplines) and PDCA (Plan-Do-Check-Act) cycles. All these approaches have in common, that they follow a scientific and methodical way to solve the problem. PDCA is used for problems that have low complexity and involve many employees while 8D is used in many organizations only to solve problems created by claims - quickly and efficiently.

<b>* 8D ( 8 Disciplines) method </b>

The automotive industry is one of the leading sectors that direct the economy and technology, especially in most developed and developing countries. In this study, the automotive sector choosing because this sector is where many quality management tools are first tried and applied. 8D methodology is applied to complaints one by one in the automotive industry as customer complaints come (Divanoğlu,2022). The core content of the 8D method is the identification of the fundamental problem, identifying and understanding of the root causes as well as sustainably eliminating these root causes. A comprehensible explanation is necessary for all steps (Kaplík, Prístavka, 2013).

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Page 18 Figure 2.3 8D step

<i>(Source: Internet) </i>

According to Ford Global 8D system, 8 steps:

<i><b>D1: Establishing Problem Solving Team / Project </b></i>

According to Krajnc (2012), the purpose of this step is to establish a team with adequate knowledge about the product or process, where the problem occurred, and experience in technical disciplines needed to solve the problem and remedial action. enough to cover all the necessary knowledge and experience and small enough to work effectively. It is recommended to assemble a team composed of 4–10 members.

<i><b>D2: Problem Description </b></i>

The problem description is the detailed description of the situation, facts collection, structuring and analysis of the problem. It limits the problem and separates it from not affected areas. The description must be unambiguous, understandable and generally comprehensible. Documented evidence (e.g flow diagrams) are to be provided if necessary to the description and simplification of the problem analysis. The problem description must contain information which permits to reproduce the nonconformity. Within the problem description the target state is also explained and the interaction in the superior system is described.

<i><b>D3: Containment Actions </b></i>

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When a problem is detected, preventive measures should be immediately implemented to reduce the impact and ensure the product or service is not affected. This includes suspending production or supply, sorting products, inspecting incoming products, and recalling delivered products. Information about the problem and preventive measures must be recorded, and all this needs to be thoroughly evaluated to avoid unwanted side effects.

Examples for containment actions are putting lots on hold and sorting manufactured products, initiation of incoming inspection for delivered products, etc. Furthermore, products which are already on the transport to the customer, in intermediate stores or already at the customer’s side are to be taken into consideration. In addition, it must be ensured that information about the non-conformity is forwarded within the affected area (e.g next shift) as well as to potential affected areas (e.g. other lines/plants). Containment actions must be documented together with the associated results. Before containment actions are implemented possible unrequested side effects should be assessed.

<i><b>D4: Cause and Effect Analysis </b></i>

The cause-and-effect analysis determines why the problem could occur and why it has not been detected (non-detection). The root cause is determined if the reason for the

<i><b>deviation can clearly be identified, reproduced and proved. Failure Modes from FMEA </b></i>

must be taken into account. In the process of root cause identification, problem-solving technics such as five whys analysis and Ishikawa diagram can be used.

<i><b>D5: Define Corrective Actions and Proving Effectiveness </b></i>

The essence of this step is to select the best permanent corrective action to eliminate the root cause and the best permanent corrective action for the location of leakage. The place of leakage in the process is seen as the earliest point in the process that is closest to the root cause where the problem should be revealed but was not. For both of these measures, there should be verified their effectiveness and whether their implementation would not have any adverse effect.

<i><b>D6: Implementing Corrective Actions and Tracking Effectiveness </b></i>

The purpose of this step is to plan, implement and validate selected permanent corrective actions. Temporary protective measures should be taken before permanent corrective action is taken. If necessary, it can be adjusted to meet customer requirements. f, however, the customer does not request a limit associated with the process capability,

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the 8D team verifies whether the capability complies with internal requirements. The results must be documented.

<i><b>D7: Establish Preventive Actions </b></i>

In this step, the team analyses whether the corrective action implemented would prevent or improve the quality of similar products and processes. Any omission requires an explanation. It has to be assured that the defined measures will be implemented.

<i><b>D8: Final Meeting </b></i>

The problem solving has to be assessed in a meeting with the participation of possibly all involved people. Prerequisite for the completion of the problem solving is the completion of the steps D1 to D7. Analysis is performed to identify the strengths of the team's effort in the problem-solving process, and the problems encountered. For a complaint which refers to former or running problem solving with known root cause, the step D8 does not have to be executed again.

Result: Discussion/Debriefing and evaluation of the steps D1 to D7, conclusion of the problem solving with agreement of the involved persons and if necessary, the customer, acknowledgment of the teamwork by the sponsor have taken place.

In this method, failures are solved using simple problem-solving techniques such as: Failure Mode Effect Analysis (FMEA), five whys analysis, Ishikawa, flowchart. FMEA is used quite a lot in 8D, but because of the scope of the topic, the author does not mention it in this thesis. If a problem has many root causes such as the Fishbone diagram, 5xwhys and Pareto can help to unearth them. While Fishbone enables grouping them into different categories, 5xwhy helps to dig deeper into each root cause. The 5xwhys method is especially useful when there is no evident root cause, while Pareto helps to grade the known causes and prioritize the response to each.

The fishbone diagram, also known as the Ishikawa diagram or cause-and-effect diagram (Coccia, 2018; Ilie & Ciocoiu 2010; Septiawan & Bekti, 2016). It is a powerful analytical tool used to identify and understand the root causes of a specific issue. The name "Ishikawa diagram" is derived from Kaoru Ishikawa, a leading expert in quality control in Japan, who first introduced this tool in the 1960s (Coccia, 2018). The fishbone diagram helps us analyze and categorize in detail the factors that contribute to the poor quality of a product or service. Typically, the main causes stem from the inadequacy of factors such as

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- Identify the Problem: Clearly define the issue you want to address.

- Describe the Problem: Provide a detailed description of the problem, including its effects and relevant information.

- Identify Main and Potential Causes: Determine both the primary root causes and any potential underlying causes contributing to the problem.

- Prioritize Criteria: Establish criteria to prioritize the identified causes.

- Construct the Fishbone Diagram: Create the fishbone diagram by drawing a horizontal arrow pointing to the problem statement. Attach lines (bones) perpendicular to the spine, each representing a major category of potential causes. Label these categories based on relevant factors.

- Analyze the Diagram: Examine the diagram to identify relationships between different causes and their contribution to the problem.

- Gain Leadership Acceptance and Document: Present the fishbone diagram to leadership or relevant stakeholders for approval. Once accepted, document the findings, including prioritized causes and recommended actions.

This is a fishbone analysis to find the part dimension out-off standard

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manufacturing and Six Sigma. The method is remarkably simple: when a problem occurs, you drill down to its root cause by asking "Why?" five times. Then, when a countermeasure becomes apparent, you follow it through to prevent the issue from recurring.

Figure 2.4 5why analysis

<i>(Source: Internet) </i>

For mass-production products an overall history (Pareto Analysis regarding all customers overtime) is recommended to be maintained to identify reoccurring problems. The Pareto Principle (also known as the 80-20 rule) states that for many phenomena, about 80% of the consequences are produced by 20% of the causes. According to Berger (2006), the Pareto chart is also known as the Pareto principle or the 80/20 principle, the number representing this rule. The 80/20 principle helps identify and focus on approximately 20% of the factors that cause approximately or 80% of the potential problems. From there, it

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In assembly language programming, there are 6 basic symbols that are used in the flowcharting of the assembly language program. These are the terminal symbols, process symbols, input/output symbols, decision symbols, connector symbols, and predefined process symbols. These symbols are the ones that are most commonly used in the structure of the assembly language programming. There are many standard assembly language flowcharting symbols. However, this is not a list of all possible assembly language flowchart symbols.

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Table 2.1 Symbols and function in flowchart

Process Indicates any type of internal operation inside the Processor or Memory

Input/ Output Used for any Input / Output (I/O) operation. Indicates that the computer is to obtain data or output results Decision Used to ask a question that can be

answered in a binary format (Yes/No, True/False)

Connector Allows the flowchart to be drawn without intersecting lines or without a reverse flow

Predefined Process

Used to invoke a subroutine or an interrupt program

Terminal Indicates the starting or ending of the program, process, or interrupt program

Flowlines Shows direction of flow.

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The letters in the acronym represent the four stages that make up the complete cycle, shown in the figure: P - Plan, D - Do, C - Check, A - Act (Improvement).

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Phase 2: Do

Carry out action plans (contribute to increasing productivity, quality and eliminating the causes of problems). Conducted with the support of management. At this stage, some commonly used tools include flow charts and check sheets (Jagusiak-Kocik, 2017).

Phase 3: Check

According to Chen (2019) at this stage, it is necessary to check whether the action plan in the previous stage was implemented according to plan and evaluate the results of the action taken. Compare the results achieved to see whether the improvements meet the requirements and whether the established goals are achieved.

Phase 4: Act

According to Sokovic et al (2010), “Act” is the most important stage in the PDCA cycle after project completion when restarting the continuous improvement cycle in the future. Furthermore, there is a need to “standardize” solutions to prevent them from occurring in the future (Johnson, 2002).

<b>2.3 Support tools </b>

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<b>* 5S </b>

5S was introduced by Osada before 1980, which is the abbreviation of 5 Japanese words: Seiri (Sort), Seiton (Set in order) , Seiso (Shine), Seiketsu (Standardize), Shitsuke (Sustain) .

According to Ta Thi Kieu An and colleagues (2010), 5S is defined as:

- Seiri (Sort): eliminate unnecessary things in the workplace. Determine the “right amount” of what is needed

- Seiton (Straighten): Arrange remaining items appropriately to increase efficiency and convenience

- Seiso (Shine): Clean and limit sources of dirt

- Seikesu (Standardize): Take care and maintain workplace hygiene by continuously implementing Seiri, Seiton, Seiso with 3 "no" principles: no useless objects, no clutter and no dirty things.

- Shitsuke (Sustain): Create the habit of working voluntarily in the right way.

According to Nguyen Dinh Phan and Dang Ngoc Su (2012), 5S makes the workplace more comfortable for employees: When implementing 5S, you must first discuss and agree with everyone on what is necessary and how unnecessary. Then, discuss and agree on which items to put where are most convenient for everyone to use and work together to clean the workplace.

<b>* Kanban (Just in time) </b>

The Japanese word “kanban”, meaning “visual board” or a “sign”, has been used in the sense of a process definition since the 1950s. It was first developed and applied by Toyota as a scheduling system for just-in-time manufacturing.

Its core purpose is minimizing waste activities without sacrificing productivity. The main goal is to create more value for the customer without generating more costs.

❖ Principles of Kanban System: - Visualize work.

- Limit work in process. - Focus on flow.

- Continuous Improvement ❖ Kanban Cards

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