Post on 24-May-2015
description
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QUALITY AUDIT
PURCHASE PROCESS OF A PUBLIC DEPARTMENT
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F-09-149 AFTAB
SP-09-140 EJAZ
OUR KOALITY TEAM
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Defining Quality Perfection
Consistency
Eliminating Waste
Speed Of Delivery
Compliance With Policies And Procedure
Providing A Good, Usable Product
Doing It Right The First Time
Delighting Or Pleasing Costumers
Total Customer Service And Satisfaction
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Large and Equipment Intensive Organization
Huge Variety of Non Standardized Equipment
High Stake Logistic Support Operations
Annual Budget Worth Billions Rs
Newly Implemented Procurement Management System
(IESS)
Shortfalls Against Basic Quality Dimensions
Introduction
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To carry out Quality Audit of the Purchasing Process of ABC
Public Dept and suggest key improvements for quality
purchase of spares at affordable prices reducing the
administrative & logistic delays and focus on soft issues
after analysis of various shortfalls
Project Statement
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The scope of this case study will be limited to procurement of
vehicle spares within country (local level) by a regional
component of the National Level Organization
Project Scope
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Process Flow
Sources of Procurement
Problems Being Faced
Methodology
Quality Audit and Analysis
Voice of the Stake Holders
Performance Statistics
Input by Various Professionals
Identification of Problem Areas
Core Issues
Recommendations & Conclusion
How to Proceed
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YesStart Demand
on Store
Aval
EndItems Issued
NA Certificate
Demand on Bulk Depot
Purchase Process
Delivery By Vendor & Inspection
AvalItems Issued
Yes
No (Not Aval)
No (Not Aval)
Process Flow
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Sources Of Procurement
Govt Industries
Indigenous Manufacturers
OEM / OPM
Importers
Local Whole Sellers
Shopkeepers
Gen Order Suppliers (90 %)
…….isn’t this alarming ????.isn’t this alarming ????
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Grey Areas
Diversified Equipment Type
Different Suppliers
Variation - Fatal for Quality
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Comprehensiveness of Documentation System
Good Ethical Practices
Flexible System
Fair Play & Justice
Ability to Reach Out Source
Simplicity in System
Effective Vendor Evaluation System
Vendor Pre Qualification
Supplier Relationship
Supplier Satisfaction
Speed of Delivery System
JIT
Price for Money
Quality Indicators
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Quality Consciousness of Vendors Maintainability of Logistic Stock Storage Life Inspection Methods Training of HR Assessment of Life Cycle Guarantee / Warrantee Supply Chain Mgmt Payment Schedule SOPs Availability Empowerment Ease of Demand Process Vendor Data Base Performance Based Vendor
Assessment Vendor Appraisals
Quality Indicators
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Methodology, Quality Audit And Voice Of Stake Holders
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Methodology
Benchmarking (Organization following Best Practices)
Questionnaire
Interviews
Quality Audit
Average of 3 x Comparable Outfits
Comparison With KSB
Identification of Vital Issues
Analysis of Vital Issues; Input of Stakeholders, Professionals
Key Suggestions for Optimum Performance
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Quality Audit
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Quality Audit & Comparison
Ser Category
PUBLIC SECTOR KSB PUMPS
Marks obtained
Quality %Marks
obtainedQuality %
1Documentation and Transparency
17 68% 20 80%
2Practicality, Speed, Effectiveness
9 23% 34 85%
3 Supply Chain Mgmt 7 28% 22 88%
4 Vendor Mgmt 7 16% 29 64%
5 Quality 8 32% 21 84%
6 Cost Effectiveness 4 27% 13 87%
7 Training 5 33% 13 87%
8 Customer Focus 6 30% 17 85%
9 Soft Issues 4 10% 31 78%
67 27% 200 80%
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Comparison
0102030405060708090
Document Speed Supply Vendor Quality Cost Trg Customer Soft
Public Private
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Voice Of The Stakeholders
• SUPPLIERS
• CUSTOMERS
• EMPLOYEES
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Voice Of The Suppliers
Environment not conducive (Soft Issues)
Uneven allotment of business
Lack of respect in dealings, sitting place,
refreshments
Wastage of time, summon for meager issues
Bureaucratic Culture
Lack of info / specs on Tenders
No proprietary / long term relation
Delayed & unclean payments
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Voice Of Customer
Reactive, Rather Than
Proactive
Waiting Room
Delays
Quality Of Spares / Qos
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Need Adequate Training
Processing Delays
Motivation
Voice Of Employees
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Performance Statistics And Input By Professionals
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Rejection Rate
Month Rejection % of Sample 1
Rejection % of Sample 2
Rejection % of Sample 3 Average %
Sep-07 33 23 19 25Oct-07 23 33 24 27Nov-07 19 32 27 26Dec-07 25 28 29 27Jan-08 25 29 30 28Feb-08 23 28 36 29Mar-08 32 22 31 28Apr-08 26 36 26 29May-08 15 37 29 27Jun-08 33 37 22 31Total 254 305 273 277
Average 25 31 27 28
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Rejection Rates
0
5
10
15
20
25
30
35
Sep-07
Oct-07
Nov-07
Dec-07
Jan-08
Feb-08
Mar-08
Apr-08
May-08
Jun-08
Average %
Average %
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Process DelaysDemand
Serial Prep Time (Days) Time Taken to get NA (Days) Purchase Process Delivery /
Inspection Total Process Time
1 6 47 12 12 77
2 7 51 13 9 80
3 5 49 19 13 86
4 6 41 12 14 73
5 3 43 11 18 75
6 8 5 2 2 17
7 6 6 3 2 17
8 9 49 12 18 88
9 5 32 19 13 69
10 7 47 15 16 85
11 3 49 14 12 78
12 4 41 17 19 81
13 5 43 13 28 89
14 6 44 19 12 81
15 8 25 21 15 69
Total Days 1065
Average Days 71
Average Months 2.4
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Total Process Time
0
20
40
60
80
100
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Total Process Time
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Performance Statistics
• Rejection Rate - 28% (< 15%)
• Timely Delivery - 50% (>85%)
• Accuracy Of Order - 80% (>99%)
• Delays In Processing - 2-3 Months (1
Wk)
• Availability In Depots - 10% (>70%)
• Customer Satisfaction - 50% (>80%)
• Supplier Satisfaction - 50% (>70%)
• Cost Effectiveness - 40% > Than Mkt Price
• Durability/ Quality - 40% (90%)
• Waste/ Dead Inventory - 40% (<15%)
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Input By Professionals• Various Interactive Sessions During QITC Course
• Mr Kamran Moosa, CEO PIQC
• Mr Shafqat Iqbal, Former Dir PNAC
• Brig Iftikhar
• Gen (R) Mian Salimuddin, CASE Faculty
• HoDs Proc & QM KSB
• Dir QM, NESCOM
• Dir QA, AWC
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Identification Of Problem Areas And Core Issues
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Identified Problem Areas
Process Inefficiency
Soft & Ethical Aspects
Bad Vendor Management
Technical & Training Issues
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Process Inefficiency
Dependence On Non Availability Voucher From Depot
Lack Of IT Culture
Untrained Employees
Denial Of Repeat Orders / Proprietary
System Overload (Bulk Depot Non Functional)
Bulk Purchase Of Un Required Items At The End Of Fin Yr (Bar Chart)
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Utilization Trend Of Annual Budget
0
5
10
15
20
25
30
35
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Soft / Ethical Aspects Less Accountability (Bad Inventory Management/JIT)
Process Violation; Compromised Price/Quality
No Respect For Suppliers
Non Conducive Environment, Intricate Documentation & Payment Procedures
Diminishing Mutually Beneficial Relationship
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Bad Vendor Management Variance In Price & Quality
Inefficient Tendering Process Without Mention Of Specs
Suppliers Pre-qualification
Old Suppliers Base; General Order Suppliers
No Effort To Reach Out Close To Actual Source
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Technical / Training
Old Vintage, Non Commercial Equipment
Less quality awareness of all stakeholders
Priority to economics only / lowest price
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Key Recommendations
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Recommendations Selection Of Quality Vendors: OEM/OPM/Sole Distributors
Process Simplification & Speed: Remove False Customers,
Inventory Mgmt Through IT
Training: Employees And Vendors
Quality Of Supplier: Less Inspection, Quality Contracts
Purchase Criteria: Quality Instead Of Lowest Price
Reduction Of Waste/ Dead Inventory
Forecasting
No Mandatory Consumption Of Budget
Accountability For Surplus/Dead Inventory
Reward System For On Performance
Customer Focus
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Vendor Management Factors
Selection Of Quality Conscious Vendors
Concept Of Partnership And Trust
Performance Rating And Rewards
Respect For Vendors
Mutually Beneficial Relation
Vendor Relationship Model (Vrm)
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VRMVRM
SPEEDY CLEAN SPEEDY CLEAN PAYMENTSPAYMENTS
SUPPLIER FOCUS
BUSINESS SECURITY
CoQ
TRAINING
INFO & TEAM WORK
RECOGNITION
WIN WIN RELATIO
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Vendor Relationship Model Vendor Relationship Model Vendor Relationship Model Vendor Relationship Model
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CONCLUSION
A reduced variation, simplified processes and creation of an environment of trust and respect between all stakeholders can lead to a long-term and mutually beneficial relation; thereby exponentially improving the quality & speed .
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4343
If You Have Your Sight, You Are Blessed.
If You Have Insight, You Are A Thousand Times
Blessed
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