Pacific Gas & Electric

Advancements in Supplier Quality

Assurance Programs

Jim AdamsonDirector of Supplier Quality AssuranceElectric / Gas T&D, Hydro, Solar &Fossil Fuel Power Generation

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SQA Function / Supplier Life Cycle

PG&E Engineering confirms part design

meets fit, form, function & System

Compatibility based on specs & standards

SQA confirms capability to meet

spec. / stds. in daily production via

supplier ISO site audit, PPQP &

supplier accountable to quality terms &

conditions

Supplier Continuous Improvement driven

by Inspections, Audits, Surveillance, Monthly Meetings &

KPIs: DPPM, SCARs, MPR,

Scorecard

Chronic Suppliers: Executive

awareness, Biweekly meetings with a

deadline for recovery or QSL removal with award to high quality

suppliers

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4

What assures supplier

leadership awareness of

issues & consequences

enabling resource

prioritization?

What assures issue

alignment? It’s a data

driven process with

key measurables

followed by routine

meetings & onsite

visual verification

What process confirms the

material specification &

standards are met beyond

the initial Engineering

samples?

What enables safety,

reliability & affordability?

Every part meets design

intent enabling system

function to design intent,

employee / public safety,

& reliable energy delivery

at the lowest cost to our

customers

2

Director

Electric/PGEN*

SQA Manager

Cert. ASQ CQEs

Material

Qualification

Continuous

Improvement

MPRs

Change Control

Procedures

Gas SQA

Manager

Cert. ASQ CQEs

Material

Qualification

MPRs

Continuous

Improvement

Change Control

Procedures

Material

Records

QMS Audits & Compliance

Manager

Cert. ASQ CQAs

New Site ISO Qualification

Qualification Maintenance

Probation Sites

Material Inspection Manager

Cert. ASQ CQIs

Source Inspection

Receiving Inspection

Contracted Inspection

Admin

Key

35 2015 SQA Staff

7 Contracted Services

* Non-Nuclear

Supplier Quality Assurance - Materials

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New Quality Programs

Material Quality

• 90% Reduction in Defects

• Supplier Mentoring - worst to best

• Driven Distributors to manage material suppliers to PG&E requirements

Value to Lines of

Business

• Rapid qualification for new equipment technologies & suppliers

• Customers Satisfaction at 95.1%

• $20M cost eliminated annually (ROI: 3)

Suppliers

• Accountability / Behavior Change

• Investing in automated equipment & new advanced manufacturing facilities

• Growth in size / capability QA staff

Sourcing

• Improved Security of Supply

• Improved Scorecard model driving all supplier measureables: safety, quality, delivery, cost, diversity, and green

Results

1. Supplier Qualification Manual

2. Quality Management Manual

3. ISO9001 Auditing Program

4. SAP Qualified Supplier List

5. Quality Terms & Conditions

6. Annual Supplier Requirements

Letter for Quality

New Programs with Great Results

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Best in Class Performance & Improving

4th – 20,800

3rd – 10,100

1st – 4,200

Performance Benchmark

Quartiles

2nd – 6,000

2,500

19,507

5,593

2,459

393

4,196

1,887 951

1,814

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

2012 2013 2014 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 YTD

All DPPM

DPPM Target

99.82% Defect Free

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Quality Management Manual

Objective

Quality Mgmt, System

ISO9001 Compliance

Standardize Process

Accountability

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Requirements

PG&E Audit for compliance

to ISO 9001 or equivalent

Record Retention

Qualification Process

Sub-Supplier Control

Change Management

Notification

Post Qualification reporting

http://www.pge.com/en/b2b/purc

hasing/suppliers/index.page

Supplier Qualification Manual

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Performance Requirements

Scorecard DPPM Performance

Criteria

Qualification Process

Sub-Supplier Control

Change Management

Notification

Vision to achieve zero

customer defects

Notification of significant

issues upon awareness

Annual Supplier Requirements Letter

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Supplier Resource Requirements

Product / Site Qualifications

Provide a Sr. Project Manager

as point person to coordinate

all activities & documents

Maintain a project timeline &

a qualification plan according

to PG&E requirements

Identify sub-suppliers and tier

one’s process to qualify

Lead routine team meeting,

issue minutes, timelines,

qualification plan, & corrective

actions for any failures

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To assure safety, reliability,

and affordability of procured

material, PG&E has

established policies for

material quality that require

supplier compliance.

Non-compliance of PG&E

policies and/or problematic

quality may lead to supplier

probation with additional

supplier cost related to

oversight performed by

PG&E Supplier Quality

and/or contracted 3rd parties,

and/or business diverted to

an alternate supplier.

Contract Terms & Conditions - Quality

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SAP Qualified Supplier List (QSL)

• Access to approved sites & products

• Audit schedule for site re-qualification

• Tracking of QMS non-conformances

• 1,100+ Suppliers & Sub-Suppliers

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Material

Problem

Reports

Supplier

Management

Corrective

Actions

Qualification

Business

Allocation

& Strategy

Material

Inspection

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2

3

4

5

6

SQA Quality Programs

Metrics & Allocation

Supplier & Product Qualification

MPR

Material Inspection

SCAR & Failure Analysis / Purge

SCM-2105S; Supplier Management Standard

SCM-2105P-02; QMS Audit Procedure QSL

SCM-2105P-03; Supplier Qualification Procedure PPQP

SCM-2105P-01; FA Procedure 1st Article / sub-set of PPQP

SCM-2101S; Mat’l Inspection Standard

SCM-2101P-01, RI Procedure SAP

SCM-2101P-02 to 08, 10; SI Report

SCM-2101P-09, LDCPE RI SAP

SCM-2106S; MPR Standard

SCM-2106P-01, MPR Procedure MPR

SCM-2106S; MPR Standard

SCM-2106P-02; SCAR & FA Procedure SCAR & FA Notification

SCM-2106P-04; Quarantine & Purge Procedure Purge

SCM-2105S; Supplier Management Standard

SCM-2105P-04; Managing SQ Procedure SQ Metrics

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Policies / Procedures

To eliminate confusion and

assure roles & responsibilities

are known, these documents

must be clear & standardized

Web Based

• 54 procedures

– Manuals

– Policies

– Inspection Procedures

– Job Aids

– Check lists

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Material Problem Reports (MPRs)

System to identify material defects related to:

• Supplier Material Quality, Installation Quality, Maintenance Quality,

and Design Opportunities

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Communicating with PG&E Leadership

Executive Meeting Cadence

• Every Month - VPs / Directors / Managers / Engineers

– MPR Report

– MPR review

• Every two Months - SVPs / VPs / Directors

– CFST - KPIs / Accomplishments / Challenges / Opportunities

– MQ&S - KPIs / Accomplishments / Challenges / Opportunities

• Every Six Months - EVPs / SVPs / VPs

– CPP - Customer Procurement Plan

• SQA Update – KPIs / Accomplishments / Challenges /

Opportunities

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Best in Class Performance & Improving

4th – 20,800

3rd – 10,100

1st – 4,200

Performance Benchmark

Quartiles

2nd – 6,000

2,500

19,507

5,593

2,459

393

4,196

1,887 951

1,814

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

2012 2013 2014 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 YTD

All DPPM

DPPM Target

99.82% Defect Free

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Communicating Value to Executives

Progress on KPIs

New Quality Programs &

Progress

Enabling New Technology

for increased reliability &

Security of Supply

Risks & Challenges

Opportunities for

Continuous Improvement

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Material Problem Reports (MPR)

Understanding material

issues beyond initial

quality via MPRs

Issue Prioritization

Top Open / Resolved

Sharing cross functionally

for awareness & for

further action in the field

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The Pursuit To be World Class

For the purpose of continuous improvement PG&E had an

independent study of our Quality Management System that was

carried out by Dr. Godfrey (Chairman of the Juran Institute for 12

years) and Dr. Hoerl. Below are their comments for Supplier Quality

Assurance.

• “We were impressed with the close linkage with engineering risk

assessment to establish priorities, the use of manufacturing site

inspections when that gives better insight into product quality and

the processes to create the product, feedback loops with

suppliers, and the new Supplier Quality Manual.”

• “Some of the major oil companies and pharmaceutical companies

also have outstanding programs. PG&E may in the not so distant

future be comparable to some of the best programs in these

industries not just the leader in the gas operations industry”.

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Vision for the Future - Alliance

It is just as important for this industry to receive zero material

defects as any other. How can utilities efficiently improve?

• Benchmark. As iron sharpens iron, we will improve together

• Create a utility industry forum with those participating agree

on standardized supplier quality programs:

– ISO9001 supplier audit program. Contribute audit

resources and share the Qualified Suppliers List (QSL)

like Nuclear Procurement Issues Committee (NUPIC).

– Use a common supplier qualification manual that is

adaptable to each utilities’ unique specifications &

standards.

– Standardize Key Performance Indicators for quality

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Question & Answers

Safety

Reliability

Affordability

Team Work is the Enabler21

Key

Terms

• RI Receiving Inspection

• SI Source Inspection

• KPIs Key Performance Indicators

• DPPM Defective Parts Per Million

• SCAR Supplier Corrective Action Request

• MPR Material Problem Report

• SoS Security of Supply

• PPQP PG&E Parts Qualification Plan

• QSL Qualified Supplier List

• SQA Supplier Quality Assurance

• QMS Quality Management System

• NUPIC Nuclear Procurement Issues Committee22