Boeing's supplier ratings are based on a 12-month rolling average with three levels of visibility: site level (where the product is delivered), business-group level and company level (a composite rating of the supplier). Suppliers are rated on three areas: Delivery, General Performance Assessment (GPA), and Quality.
Delivery refers to the percentage of pieces the supplier delivered on time to Boeing during a 12-month period. It measures performance against the scheduled due date of each purchase-order-line item. Delivery also includes performance on consumption based purchase orders, measured daily by the amount of part numbers outside established inventory range (maximum and minimum) as related to total part number opportunities.
GPA provides a comprehensive assessment of a supplier's business management performance on four distinct business models – Production (such as raw material and parts suppliers), Development (research, concept and technology development suppliers), Support services (providers of spare parts, modifications, retrofits, training and product support), and Shared services (IT procurement, employee financial services and site-services suppliers). Boeing experts in supplier management, supplier quality, engineering, and finance evaluate and assess supplier performance in the areas of management, scheduling, technical issues, cost and quality. GPA evaluations consist of key performance indicators (KPI) unique to each category and business model evaluation. GPAs are conducted on key suppliers, which are identified based on who is in the top 50% of Boeing's supply base dollars spent or on the business needs of specific program requirements.
Quality rating is determined by using one or more of the following methods based on the types of supplier products and services provided: Traditional, Value-based, Index-based. Traditional method is based on the percentage of pieces accepted (rejected quantity subtracted from the received quantity and divided by received quantity) from the supplier during a 12-month period. Value-based method considers the cost of product nonconformance subtracted from the price of products received during a 12-month period. This method is used for suppliers of complex parts, assemblies and kits, electronics and major structures in which the traditional method does not make sense. The cost of non-conformance includes costs incurred from defect detection and resolution to corrective action. Index-based method relies on scorecard criteria of quality KPIs selected by Boeing and the supplier. This is used for service suppliers, system integrators, modification and maintenance programs, and programs that are in development or prototypes for which the traditional and value methods do not make sense. An example of quality exception report is as follows:
Suppliers are categorized into five color-coded threshold standards:
Red: Unsatisfactory supplier performance, clearly failing to meet expectations. Delivery is less than 90% and quality is less than 98% for 12-month period. GPA is less than 1.
Yellow: Improvement is needed in supplier performance to meet expectations. For 12-month period, delivery and quality performance are at 90% and 98%, respectively. GPA is less than 2.8 but is greater than or equal to 1.
Bronze: Satisfactory supplier performance, meeting expectations. Delivery performance is 96% and quality performance is 99.55% for 12-month period. GPA is less than 3.8 but greater than or equal to 2.8 with no yellow or red ratings.
Silver: Very good supplier performance, meeting or exceeding expectations. Delivery performance is 98% and quality performance is 99.8% for 12-month period. GPA is less than 4.8 but greater than or equal to 3.8 with no yellow or red ratings.
Gold: Exceptional supplier performance, clearly exceeding expectations. Delivery and quality performance are 100% for 12-month period. GPA is greater than 4.8 with no yellow or red ratings.
The following figures present two example scenarios with performance calculations:
Source: Parks, K., Connor, T. 2011. The way to engage: An insider look at how Boeing's supplier rating system keeps the aviation giant focused on continuous improvement. Quality Progress, April 2011, 21-27.
6 responses to “Boeing’s Supplier Performance Measurement Rating System”
We would like to receive a Boeing Score Card for past performance by us to evaluate quality of service by Western Air International. This gives us an idea for improvement and footprint for future sales to you. Regards, Jeannette Duffield
Thank you for your comment. I am glad you found the information useful. Unfortunately, I missed the comment and couldn’t respond earlier. In case this might still be of interest let me know and I will be in touch.
is the BEST supplier system usage across all of Boeing?
Boeing’s supplier management vision (http://www.boeingsuppliers.com/brochure.pdf) states that “Boeing is committed to achieving a lean enterprise by building strong relationships throughout our extended family of suppliers. One key is our Supplier Performance Measurement (SPM) Report — a tool to facilitate performance improvement by providing suppliers with valuable feedback.” Hence, in principle, the organization embraces the supplier management system.
Nice Reports ! Thanks for the information related to Supplier Quality Control
Thank you.