. I A PRACTICAL GUIDE TO SUPPLIER DEVELOPMENT USING THE INTERNATIONAL ISO FRAMEWORK CONTENTS Considerations 2 _________________________ Impacts 3 _________________________ - Shareholder Benefits Corporate Responsibility 4 _________________________ - Overall Governance ISO9001 Quality 5 _________________________ - Confidence in Delivery ISO14001 Environment 6 _________________________ OHSAS18001 Safety 7 _________________________ Supplier Certification 8 _________________________ - Supplier Monitoring Process Map 12 _________________________ - High Level Strategy Further Notes 13 _________________________ Modern corporate organizations should have a workable and practical supplier development program as part of their strategy. It has been predicted that those who place themselves on their supply chain map with strategic intent emerge as the clear winners on the international playing field. This white paper summarizes the key drivers within the Compliance & Governance leg- This summary includes the most successful and transparent approaches that are undertaken by today’s corporate giants- namely Corporate Responsibility, Quality Management, Environmental Management and Occupational Health & Safety Management- A practical approach using the ISO FRAMEWORK is described, with levels of compliance flagging the actual supplier development to be deployed. Andre Barnarde OWNER ISO Masters
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A PRACTICAL GUIDE TO SUPPLIER DEVELOPMENT USING THE INTERNATIONAL ISO FRAMEWORK
- Supplier Monitoring Process Map 12 _________________________
- High Level Strategy Further Notes 13 _________________________
Modern corporate organizations should have a workable and practical supplier development program as part of their strategy. It has been predicted that those who place themselves on their supply chain map with strategic intent emerge as the clear winners on the international playing field. This white paper summarizes the key drivers within the Compliance & Governance leg- This summary includes the most successful and transparent approaches that are undertaken by today’s corporate giants- namely Corporate Responsibility, Quality Management, Environmental Management and Occupational Health & Safety Management-
A practical approach using the ISO FRAMEWORK is described, with levels of compliance flagging the actual supplier development to be deployed.
Andre Barnarde OWNER ISO Masters
Supplier Development ISO Framework P a g e | 2
Figure 1
C O N S I D E R A T I O N S
Modern corporate organizations should have a workable and practical supplier development program as part of their strategy. It has been predicted that those who place themselves on their supply chain map with strategic intent emerge as the clear winners on the international playing field. This white paper summarizes the key drivers within the Compliance & Governance leg of Supply Chain Management. This summary includes the most successful and transparent approaches that are undertaken by todays corporate giants- namely Corporate Responsibility, _____________________________________________
Quality Management, Environmental Management and Safety Management. The figure above illustrates the flow of change throughout the supply chain, which is initiated from the supplier processes to the final impacts which in the long run boost shareholder confidence- It should be noted that recent changes to the ISO standards include requirements for Context of the Organization, and the need for a clear description of shareholders and interested parties, and how these parties influence the processes of the supplier’s organization.
Some of the impacts and benefits to be achieved from a well-deployed Supplier Development Program are illustrated by the table above. Each Corporate Body should consider how to ensure that its requirements are rolled out into the supply chain. Appropriate methods of communication should be used; however actual levels of compliance should be attained by means of gap-assessments and audits. Once an initial audit has been completed, the level of compliance should be entered into the Supply Chain Management database- the base-line information should then be available, and where necessary, appropriate supplier development should then be done. _____________________________________________
In practice, deployment should first be planned with respect to mission-critical suppliers. This whitepaper illustrates how levels of compliance can be indicated- for instance by classifying suppliers as ONE-STAR, TWO-STAR or THREE-STAR suppliers. Actual weighting and scoring should be designed according to internal controls of the corporate body. The following sections describe the main elements to be used to drive supplier development. _____________________________________________
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C O R P O R A T E R E S P O N S I B I L T Y / G O V E R N A N C E
This driver includes the rollout of the corporate body’s mission and values into the supply chain. Expectations would include documented and signed statements of related policies by the supplier’s executive management. It should be noted that the approach should be one of alignment, not autocracy- thus each supplier’s identity and branding should be preserved. _____________________________________________
Elements of corporate responsibility include commitment to appropriate legislation, ethics, values, fair treatment of workers and so on. Organizations may cross-reference to International Standards such as BS 10500:2011 Anti Bribery and BS13500 for guidance- Refer to the links below for more information: __________________________________________________
L I N K S F O R F U R T H E R G U I D A N C E
Anti-Bribery Article Anti-Bribery & Anti-Corruption Standard
BS10500:2011 SAI
Effective Governance Article Governance Standard BS13500 BSI
The key deliverable of the compliance leg of a supplier development program should be confidence in suppliers’ products or services. The ISO9001 standard is the world’s most successful standard, with world-wide certifications now exceeding the ONE MILLION mark. An appropriate Quality Management System should ensure consistent delivery of product or service of the supplier. Hence, the corporate body’s Supply Chain Development Program should include activities which measure the confidence in the ability of the suppliers to meet the full intent of their Quality Management Systems. __________________________________________________
It is appropriate to use a phased-in approach- While ISO9001 should be used as the bench mark, considering the array of factors in the supply chain, ratings of compliance should be measured and monitored- 100% compliance is therefore not necessarily demanded, but where mission-critical delivery is identified, such gaps should be noted and flagged- this is where the actual supplier development should then be deployed.
Where such gaps have been identified, development activities should include training, awareness, ISO consultancy and follow-up assessments.
L I N K S F O R F U R T H E R G U I D A N C E
NEW ISO 9001 Revision Quality Management Standard NEWS ITEM
I S O 1 4 0 0 1 E N V I R O N M E N T A L M A N A G E M E N T
The most significant movement at the current time is the GREEN MOVEMENT. The ISO14001 standard represents the world’s most influential means of attaining environmental compliance. An effective system ensures that a supplier’s activities are in line with current legislation, and that the environment is not adversely affected. It further ensures that the corporate body’s reputation is protected. The relevant environmental elements of the supplier should be encapsulated within the ISO14001 system- while 100% compliance is not necessarily implied, partial
ISO14001 systems should control and manage the most significant aspects, for example: Critical supplier monitoring should include status of banned substances such as RoHS (lead, mercury, cadmium, hexavalent chrome, polybrominated biphenals and polybrominated diphenyl ether and so on.
Other essential elements of Environmental Systems should include a defined waste control process, monitoring of use of energy, electricity, water, paper and other resources.
L I N K S F O R F U R T H E R G U I D A N C E
ISO 14001 Information Environmental Standard ISO14001:2015 ISO
O H S A S 1 8 0 0 1 H E A L T H & S A F E T Y M A N A G E M E N T
The third standard exerting global influence in terms of high-level compliance is the International Standard OHSAS 18001. Of primary importance here are leading indicators relating to injuries and fatalities- it should be noted that no fatalities and low levels of injuries do not necessarily imply that an organization’s Health and Safety System is effective- The risk/hazard identification system of the supplier should reveal the actual risk levels within such organization- and actions within such organizations should show a clear reduction in risk levels. _____________________________________________
Controls relating to mitigation of risk should include Behavior-Based Systems and Tools, since root cause analysis of injuries and fatalities show a clear link between organizational behavior and the occurrence of accidents. Further development of Health and Safety Systems should also include transparency in terms of long-term health of employees, not only safety. Thus, a fully functioning Supply Development Program should flag the most likely occurrences and classifications of ill health, injuries and fatalities, even
though this may be seen as an unpleasant activity. _____________________________________________
L I N K S F O R F U R T H E R G U I D A N C E
OHSAS 18001 Information OHSAS18001:2007
Standard BSI
ISO45001 Information ISO45001 FORTHCOMING Health & Safety Standard
In order to carry out a Supplier Development Program, base-line gap assessment or audits should be conducted. The planning processes will include initial selection and evaluation, after which more formal gap-assessments or audits should take place. As indicated within this this whitepaper, the framework should include the elements relating to Corporate Reasponsibility, Quality, Environment and Health & Safety. The subsequent data gathered from the such base-line activities should then be lined up so that the status of compliance is clear- the benefit of such transparency is that the relavent risk profiles within the Supply Chain Map _____________________________________________
can be continuously managed, and actual deployment of such development can then be planned for. Since it is expected that a phased-in approach of compliance of suppliers is to be the most practical strategy, classifications of supplier compliance status should therefore be built into the corporate body’s Supplier Development Program. The following tables represent a practical approach to Supplier Compliance Status Classification- the main sections and clauses of the related standards are included for illustration- Note that each corporate body’s internal measuring criteria would include further detail with regard to level of compliance, weighting, scoring and so on. _____________________________________________
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S U P P L I E R D E V E L O P M E N T C E R T I F I C A T I O N P R O G R A M
Select
Evaluate
Audit
Monitor
Develop
Tender Award
9001
14001
18001
ISO
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ONE STAR TWO STAR THREE-STAR
0-20% 20-40% 50% 60-80% 80-100%
04
Quality Management System
05
Management Responsibility
06 Resources
07 Product/Service Realization
08 Measurement Analysis & Improvement
Figure 3
The table above represents the approach organizations should used with respect to ISO9001 Quality Management. For illustration purposes, the main sections/clauses of the standard are tabled- in practice organizations need to take into account all the sub-clauses and requirements of the standard. One of the outputs of the SUPPLIER DEVELOPMENT PROGRAM is the flagging of all concerns relating to product or service delivery- this is usually recorded in the form of non-conformances. _____________________________________________
Concerns which are raised should be cross-referenced to the appropriate clause of the standard. However, it should be noted that 100% compliance to the ISO9001 is not necessarily implied. A realistic approach may include ONE-STAR, TWO-STAR and THREE-STAR levels of compliance. NOTES: The break down of each clause catorgory, such as CLAUSE 4 Quality Management System would be quantified according to the corporate body’s own internal guidance documents- such actual scoring would take place on the day of the actual assessment of such supplier. _____________________________________________
I S O 9 0 0 1 : 2 0 0 8 R E Q U I R E M E N T S
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ONE STAR TWO STAR THREE-STAR
0-20% 20-40% 50% 60-80% 80-100%
4.1 General
4.2 Policy
4.3 Planning
4.4 Implementation & Operation
4.5 Checking
4.6 Management Review
Figure 4
The table above represents the approach organizations should use with respect to ISO14001 Environmental Management and OHSAS18001 Occupational Health and Safety Management. As per the section above relating to ISO9001 Quality Management, concerns should be recorded via non-conformance systems, incident systems etc. _____________________________________________
NOTES: The break down of each clause catorgory, such as CLAUSE 4.1 General would be quantified according to the corporate body’s own internal quidance documents- such actual scoring would take place on the day of the actual assessment of such supplier. _____________________________________________
I S O 1 4 0 0 1 : 2 0 0 4 / O H S A S 1 8 0 0 1 : 2 0 0 7 R E Q U I R E M E N T S
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ONE STAR TWO STAR THREE-STAR
0-20% 20-40% 50% 60-80% 80-100%
04 Context of the Organization
05 Leadership
06 Planning
07 Support
08 Operation
09 Performance Evaluation
10 Improvement
Figure 5
Organizations should be aware that ISO9001 and ISO14001 standards have now been ratified (September 2015). Therefore Supplier Development Programs now need to make allowance for these changes. The main clauses and requirements are illustrated in the table above. The internal programs will need to take these new changes into account; in practice audit and related activities will need to have two sets of criteria until the previous versions of the standards are no longer valid. It is thus necessary that a TRANSITION PERIOD be incorporated into the SUPPLIER DEVELOPMENT
PROGRAM, such as is now being used by international Certification Bodies- while somewhat inconvenient, the internal processes and procedures relating to auditing and related Supply Chain Management activities need not be un-necessarily cumbersome. NOTES: The break down of each clause category, such as CLAUSE 04 Context of the Organization would be quantified according to the corporate body’s own internal quidance documents- such actual scoring would take place on the day of the actual assessment of such supplier The overall high level process map/summary relating to this whitepaper is illustrated below:
I S O 9 0 0 1 : 2 0 1 5 / I S O 1 4 0 0 1 : 2 0 1 5 R E Q U I R E M E N T S
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There are well-established standards, tools and references that are available within the different industries that should be used to complement an organization’s BUSINESS MANAGEMENT SYSTEM- As we have seen these encapsulate the essence of Corporate Responsibility, Quality Management, Environmental Management as well as Occupational Health & Safety Management. _____________________________________________
Within the ISO FRAMEWORK, there are a number of tools and methods which I like to think of as building blocks- these building blocks can be used within an orgainzation to faciltate day-to-day requirements and also longer term requirements such as training, process qualification and shareholder reporting. The table below gives further examples of such building blocks: _____________________________________________
Corrective Action Root Cause Analysis Preventive Action
PDCA Plan-Do-Check-Act
The 7 Quality Control Tools Six Sigma
Lean Management TQM
Total Quality Management Management
Pareto Charts
Control Charts Quality Plans ITP
Inspection & Test Plans
Incident Management Risk Management Waste Control
Restricted Substances Emergency Response Business Continuity Plans
Figure 7
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