I want a case report

Grace Loo prepared this case under the supervision of Professor Neale O’Connor for class discussion. This case is not intended to show effective or ineffective handling of decision or business processes. © 2011 by The Asia Case Research Centre, The University of Hong Kong. No part of this publication may be reproduced or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise (including the internet)—without the permission of The University of Hong Kong. Ref. 10/481C

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NEALE O’CONNOR ANNE WU SHANNON ANDERSON

PQI: MANAGEMENT OF SUPPLIERS

Taiwan-based memory manufacturer Power Quotient International Co. Ltd (“PQI”) had an established system for selecting, assessing and managing suppliers. A scoring system that assessed suppliers in areas ranging from technical expertise to service quality and responsiveness made it easy for the management to spot suppliers’ strengths and weaknesses and to decide whether to keep a supplier at arm’s length or to cultivate a strong relationship with the supplier. PQI had just completed its biannual evaluation of suppliers, several of which required further investigation. These suppliers received only average scores despite strong performance both technically and commercially. Meanwhile, PQI’s management wondered whether sharing its assessment results openly with suppliers might help to improve its relationships with them.

The Memory Industry

Memory in electronic devices stored data on integrated circuits using semiconductor technology. Different types of memory were used for different applications. Random access memory (“RAM”) was a type of volatile memory, meaning that data stored on RAM would be lost after the power to a device was switched off, and was used mostly in computing applications. The two types of RAM were static RAM (“SRAM”) and dynamic RAM (“DRAM”). SRAM was commonly used for cache memory, while DRAM was used in computing applications. Flash memory was used mostly in communication and consumer devices such as mobile phones, digital cameras, media players and digital video cameras because of its ability to retain data even when the device was powered off. Within the category of flash memory, NOR memory, which was named after the data mapping technology (Not OR),was used mostly for storing small amounts of executable code for computing devices; and NAND memory, which was named after the data mapping technology (Not AND), was used for bulk storage of data in portable USB flash drives, memory cards and solid-state drives. Advances in technology and increased competition had led to increased commoditisation of memory products, and memory was one of the most volatile segments in the semiconductor

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industry, subject to wild swings in demand and price. Between 2005 and 2007, increasing demand led memory manufacturers to expand production capacity, but the ripple effect of the US mortgage crisis had led to a drop in consumer demand and a dramatic fall in the price of DRAM by 2008. One billion unsold DRAM chips translated to a loss of almost US$10 billion for the industry worldwide, and many producers sold them below cost in order to survive. Nonetheless, the memory industry was expected to rebound in 2010 with the increasing popularity of wireless communications devices and with continuous demand for consumer and computing devices driving its growth.1 Apple was one of the largest consumers of flash memory in the world,2 and the popularity of its iPods and iPhones was expected to continue to drive the demand for flash memory, compounded by increased adoption of other smartphones. Research analysts predicted global revenues for the memory industry in 2010 to grow to US$57 billion, up 28% from the previous year.3

Company Background

Established in 1997, PQI was a Taiwan-based electronics company that had begun as a memory module manufacturer and eventually expanded into other product lines, including flash memory cards, USB flash drives, solid-state disks, DRAM modules, disk on modules, portable hard drives and portable multimedia players. In 2003, it was listed on the Taiwan Stock Exchange. In 2008, it was ranked the tenth-largest supplier in DRAM modules, flash cards and USB flash drives in the world. PQI had its own manufacturing plants in Taiwan and Suzhou in China. With subsidiaries in the US, the Netherlands, Japan, Korea, Hong Kong and China, it had more than 900 employees around the world. PQI used an assemble-to-order manufacturing model without keeping a large inventory of its products. It kept a steady inventory of structural components that made up the skeletons of its products, such as housing, and accessories. When key components such as flash, DRAM or integrated circuits (“ICs”) came in, it would assemble the orders orassemble to maintain its inventory level.. Purchases for structural components were made every three months to allow PQI to adjust its inventory according to the market situation.

Supplier Management

PQI’s purchasing activities were handled by its purchasing department, which resided within the production and material management division, a sub-division of the logistics division. The purchasing department had two teams of purchasers: general purchasers and strategic purchasers. PQI had about 70 general suppliers. General purchasers dealt with standard components and accessories, deciding which supplier to use for each order with the approval of the purchasing manager. Strategic purchasers handled the purchase of non-standardised parts. Decisions regarding which supplier to use were made by the purchasing manager with the approval of the manager of the product and material management division and the product marketing manager. Between its Taiwan and Suzhou plants, PQI had about 20 strategic purchasers.

1 KPMG (December 2009) “The Road to Recovery in the Global Semiconductor Industry: A Survey of Industry Executives—

Fourth Quarter 2009”, http://www.kpmg.com.sg/publications/LOB_ICE-SemiconductorSurveyReport.pdf (accessed 19 February 2009).

2 Deffree, S. (3 April 2008) “Apple Sneezes, FLASH Industry Gets Sick”, Electronic Design, Strategy News, http://www.edn.com/article/472396-Apple_sneezes_flash_industry_gets_sick.php (accessed 12 June 2010).

3 Databeans, Inc. (2010) “2010 Memory”, http://www.the-infoshop.com/report/data113237-2010-memory.html (accessed 22 February 2010). D o

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10/481C PQI: Management of Suppliers

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Geographic Spread

Among PQI’s 100 or so suppliers, about 30 of them were located in mainland China, out of which about 10 were mainland manufacturers, five were Taiwanese manufacturers, and the rest were joint ventures between Taiwanese and mainland Chinese businessmen. The five Taiwanese manufacturers mainly supplied structural components while the rest were carton or packaging factories. PQI preferred to work with Taiwanese manufacturers even on the mainland because it had more confidence in them.

Mainland Chinese manufactures do not purchase or use the same type of equipment as Taiwanese ones because their investment level is different. The Taiwanese businessmen also have a better grasp on the capability of machineries than mainland ones. Financial investment is a big consideration for mainland businessmen and they tend not to buy the very expensive equipment even though they have a good mastery of the technology. The precision level of the [equipment they buy] is different.

- Henry Wang, PQI’s vice-president of logistics Another reason why PQI preferred to work with Taiwanese manufacturers was because the management felt that Taiwanese manufacturers had a better grasp of quality control and were more efficient, giving PQI more confidence in placing orders with them.

Classification of Suppliers

In the mid-1990s, PQI set up a supplier management system in order to satisfy the audit requirements of one of its customers, an original design manufacturer. Under this system, PQI had to categorise its suppliers and assess them on a regular basis. PQI categorised its suppliers into three groups: • Tier 1 suppliers were international, high-power suppliers that could supply goods globally.

They generally had strong technological and production capability, and tended to be dominant players in the market.

• Tier 2 suppliers were suppliers that supplied regionally, for example to Asia or Europe. Tier 2 suppliers supplied mostly standard products, such as resistors or capacitors.

• Tier 3 suppliers were local suppliers whose products were frequently designed by their customers, such as suppliers manufacturing the housing for PQI’s USB thumb drives or portable hard drives designed by PQI.

Selection of New Suppliers

The purchasing department was responsible for sourcing new suppliers and collecting basic information about them. Purchasers also used their own industry networks to find out about the capability and credibility of potential suppliers. Once this was done, tier 1 and tier 3 suppliers would be assessed not only by the purchasing department but also by the research and development division and the product planning division. For tier 3 suppliers, PQI would also conduct onsite inspections to assess their machineries and production capacity during the selection process. Assessment of new suppliers was based on six broad areas [see Exhibits 1, 2 and 3]: • Commercial performance: the general financial status of the supplier as well as its

payment and delivery terms • Supplying capability: aspects such as the supplier’s position in the market, the scope of its

service and its flexibility in responding to customers’ needs • Technical performance: the supplier’s engineering capability and technical sophistication D o

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10/481C PQI: Management of Suppliers

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• Quality performance: whether the supplier had been certified and how it handled product defects

• Product development: whether the strategic direction of the supplier matched the direction of PQI and whether the supplier was willing to share its future direction and information with PQI

• Strategic development: various aspects of the supplier’s relationship with PQI and the extent to which the supplier was willing to invest in the relationship.

Management of Suppliers

Tier 1 Suppliers

Tier 1 suppliers were mostly IC suppliers such as Intel, Samsung and Toshiba. Theses global suppliers were strategic for PQI because their new technology was critical to PQI’s new product development. PQI maintained close relationships with all of them so it could take advantage of whatever new technology any one of them came up with. Senior staff at PQI, including those from research and development, met with tier 1 suppliers on a weekly basis in order to keep up with their products, the market and the supply situation.

Tier 2 Suppliers

PQI senior supervisors met infrequently with tier 2 suppliers, usually around once every six to 12 months, as these suppliers provided standardised products and played a relatively insignificant role in PQI’s strategic work. PQI evaluated tier 2 suppliers on a half-yearly basis, though their prices were monitored carefully and reviewed monthly. The half-yearly assessment focused on tier 2 suppliers’ supplying capability and any shifts in relationships between the two parties.

Tier 3 Suppliers

While some tier 3 suppliers provided low-end products such as cartons to PQI, others provided structural components such as housing and shared a strategic relationship with PQI. The production of many structural components required die development, which tied PQI to the supplier because die-making involved a hefty fixed cost. It was not uncommon for more than one die to be produced before parts that met the required specifications were made, or for small variations in the parts produced from different runs to occur. Hence a skilled and experienced mould-maker who worked quickly could play a critical role in helping PQI to bring new products to market in a timely manner. “When we have to find factories to make moulds for some non-standardized products, our suppliers take two months, but some may take two to three months. The window of opportunity may only last two to three months or half a year. Suppliers who can work fast will become long-term strategic partners,” Wang said. Tier 1 Suppliers Tier 2 Suppliers Tier 3 Suppliers Geographical span Global Regional Local Product focus IC Standard products,

e.g., resistors and capacitors

Low-end or structural components, such as housing

PQI’s management control

Weekly meeting for product and market information

Price monitoring on a monthly basis and evaluation every half year

Monthly review focusing on product and service quality and half-yearly evaluation focusing D

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10/481C PQI: Management of Suppliers

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on technical and production capability and buyer–supplier relationship

Table 1: Summary of Differences among PQI’s Three Tiers of Suppliers

PQI met with tier 3 suppliers on a quarterly basis to review their working relationship. PQI also worked closely with them because they frequently produced parts that involved PQI’s own design, especially with their engineering department. PQI would send staff to the suppliers’ factories to ensure that their design specifications were followed and to assist the factory in making corrections if something went wrong. PQI also sent quality control staff to check the quality of their production or to help them make improvements.

Before we start on a new product, [PQI] will send staff from different departments, QCRD [Quality Control, Research and Development] to assess our internal project management ability. They will guide us in the requirements of new products, or tell us to do a trial prototype. If we can’t meet their requirements, they will help us to correct or find up where things go wrong.

- Jimmy Lin, housing division director of Taiwan-based Foretech Industrial Co. Foretech Industrial Co. (“Foretech”), a tier-3 supplier for PQI, specialised in plastic products. The services it provided included design, forming, injection moulding and product assembly. PQI started working with Foretech when it moved its USB flash drive production from Taiwan to Suzhou in 2006. Foretech had one manufacturing plant in Taiwan, three in Guangdong province and one in Jiangsu province, and its Jiansu plant was not far from PQI’s plant in Suzhou. In addition to this proximity, PQI had selected Foretech because of its strength in providing a throughput service from mechanical design, tooling design and tooling development to mass production. PQI’s vice-president of logistics had also known Foretech’s assistant manager for a long time, and their personal relationship made it easy for the two parties to work together. Anytime there was a problem or if PQI felt that Foretech was not moving quickly enough, PQI only needed to get its vice-president of logistics to give Foretech a call to fix the problem. Foretech was frequently involved in PQI’s new product development.

Contracts

PQI renewed contracts with suppliers every two years if it was satisfied with their performance. PQI had a more or less standard contract that it used with all suppliers and it only had to vary the payment terms, penalty clause and handling of defective products with each supplier. In cases where suppliers were working with PQI’s design, the contract would also include an intellectual property clause.

Assessment

PQI evaluated its tier 3 suppliers on a monthly basis, focusing on the quality of the products and the service of the suppliers. Based on the assessment, PQI would adjust the orders it placed with each supplier. If a supplier consistently delivered defective goods, PQI would issue warnings or source from other suppliers. Every six months, a more in-depth assessment of tier 2 and tier 3 suppliers was conducted, focusing on their technical ability, their production capacity in relation to the needs of PQI and the relationship between the two parties [see Exhibit 4]. These half-yearly evaluations were read not only by the manager of the general purchasing department but also by managers D o

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10/481C PQI: Management of Suppliers

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of the production and material management division, the product quality assurance department and the quality assurance division.

Cost Management

Cost management was critical for PQI to stay competitive. When there was a new design, PQI usually got competitive quotes from two to three suppliers for comparison. PQI required suppliers to break down the costs when providing quotes so it could compare them item by item. PQI also asked suppliers to break down miscellaneous costs such as transport because such information helped PQI in assessing the suppliers’ prices. If the cost breakdown was reasonable, then PQI would focus on the profit margin of the supplier during the bargaining process. As was widely practiced in the industry, PQI would try to negotiate better prices for larger order quantities. PQI took a strategic approach toward squeezing suppliers to lower costs. According to Hawk Chao, general purchasing manager of PQI: “If [a buyer] places an order that reaches a certain quantity, [the supplier] will have to work on the unit price [to get it lower]. If we are trying to get an order and I can only get it at a certain price level, and the supplier helps us with a lower price so we can reach this target, then [the deal] is a strategic one.” Chao had worked in research and development for 11 years before he switched to purchasing, and his background gave PQI a competitive advantage in cost control. The market price of different materials and components were known to most purchasers, but for structural parts such as housing, costing was more intricate because it involved the design of the housing itself, and it was uncommon for purchasers to possess such knowledge. Chao’s knowledge about the design of structural parts provided him with a platform to communicate with suppliers because he understood how design impacted cost and whether a quoted price was reasonable or not. “When our purchasers negotiate price with suppliers, they are not just comparing the price of one supplier with another. They have a bottomline in their mind because they know which part of the costing is reasonable, which part is high and which part is low … I can look at the cost from the structural aspect and say, these are the things that need to be discussed with the supplier, this part the price is good and that part is too high,” Chao said. “When we talk to factories, they look at how we cost and they know that we are being reasonable, so there’s no big disagreement during bargaining because everything is based on reason.” Chao’s knowledge also enabled him to change the design or the material used in order to bring down the cost.

EPILOGUE

PQI had just completed its biannual evaluation of suppliers and several tier 3 suppliers who were strong in technical and commercial performance had only received average scores [see Exhibit 4]. Now it was Wang’s job to find out why and to determine what PQI should do about it. PQI had not reviewed its supplier evaluation process and Wang thought it was time he took a look at whether it was working well or not. Many companies shared their assessment results openly with their suppliers, and one of the things that Wang especially wanted to look at was whether this was something PQI should consider and whether it would help PQI to foster relationships with its suppliers. In addition to the general review, PQI has just accepted a small order from a new customer that offered great potential for future business. The order, which involved die casting, was a rush job. The purchasing manager had narrowed potential suppliers for the job down to three [see Exhibit 4]. Now the management must decide which supplier to place the order with. D o

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10/481C PQI: Management of Suppliers

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EXHIBIT 1: PQI’S SUPPLIER ASSESSMENT FORM FOR TIER 1 SUPPLIERS

Suppliers’ Assessment Form A Supplier: ______________ Date: / /_____ I. Financial Strengths: Assessment Unit: Purchasing Assessed by:

No.

Description

Assessment Score Yes No

01 Can the supplier provide yearly financial report? 02 Is the supplier listed on the stock exchange of its registered

country?

03 Is the last supplier profitable in the last financial year on its financial report?

04 Is the supplier willing to provide more favourable payment terms?

05 Is the supplier willing to provide better delivery terms? II. Supplying capability: Assessment Unit: Purchasing Assessed by:

No.

Description

Assessment Score Yes No

01 Is the supplier a major supplier in the market? 02 Does the supplier lead in terms of market share in the

market?

03 Can the supplier provide a global supply chain service? 04 Can the supplier provide a long-term and stable supply? 05 Is the supplier willing to supply frequently and repeatedly? 06 Can the supplier’s supplying capability meet PQI’s needs? 07 Can the supplier respond speedily to changing market

situations?

08 Can the supplier provide competitive pricing? 09 Is the supplier willing to provide competitive delivery

timeframe? III. Technical capability: Assessment Unit: Purchasing Assessed by:

No.

Description

Assessment Score Yes No

01 Does the supplier have leading technical capability? 02 Does the supplier have mastery over key product

technology?

03 Is the supplier willing to provide relevant technical documentation?

04 Does the supplier meet PQI’s requirements for technical support and response time?

05 Does the supplier maintain good cooperative relationship with its suppliers?

06 Is the supplier willing to commit to a long-term relationship with PQI?

07 Is the supplier willing to establish a strategic relationship with PQI?

08 Is the supplier willing to adjust changing requirements of PQI in response to changing market conditions?

Total: ______________ Yes: 2.5 No 0 Score assessment: 100-70 pass Below 70 fail D o

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Approved and signed by purchasing supervisor: Approved and signed by research and development supervisor: Approved and signed by product planning supervisor:

� Pass �Fail

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EXHIBIT 2: PQI’S SUPPLIER ASSESSMENT FORM FOR TIER 2 SUPPLIERS Supplier’s Assessment Form B Supplier: ______________ Date: / /_____ Assessment by: Purchasing Unit

No.

Description

Assessment Score Yes No

4 0 01 Can the supplier provide global supply chain service? 02 Can the supplier supply in a stable manner over a long run? 03 Is the supplier willing to supply frequently and repeatedly? 04 Can the supplier provide competitive pricing? 05 Can the supply provide competitive delivery timeframe? 06 Is the supplier willing to provide plans for cost reduction? 07 Is the supplier willing to provide relevant technical

documentations?

08 Can the supplier meet PQI’s requirements in technical support in a timely manner?

09 Is the supplier ISO9000 certified? 10 Is the supplier ISO14000 certified? 11 Can the supplier meet PQI’s requirements for ROHS report and

certification?

12 Can the supplier’s products meet the Rohs standard? 13 Is the supplier willing to provide analysis for defective products? 14 Does the suppler allow exchange of defective products? 15 Does the suppliers’ speed in responding to substandard products

meet PQI’s requirements? 16 Can the supplier meets PQI’s requirements in responding to RMA

in a timely manner?

17 When PQI raises issues about substandard products, can the supplier provide improvement measures and execute them?

18 Can the supplier meet PQI’s requirements in labelling in its delivery?

19 Is the supplier willing to provide future development direction and roadmap?

20 Is the supplier willing to participate in PQI’s new product development?

21 Is the supplier willing to provide customized solution to meet PQI’s product development?

22 Is the supplier willing to maintain a long-term relationship with PQI?

23 Does the supplier maintain a good working relationship with PQI’s management?

24 Does the supplier consider PQI as a major customer? 25 Is the supplier a manufacturer or authorized dealer? Total: ______________ Approved and signed by the purchasing supervisor: Approved and signed by division supervisor: Assessed by:

� Pass �Fail D o

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EXHIBIT 3: PQI’S TIER 3 SUPPLIER ASSESSMENT FORM FOR RESEARCH AND DEVELOPMENT DIVISION, PURCHASING DIVISION AND QUALITY CONTROL DIVISION

Suppliers’ Assessment Form C Summary Supplier: ______________ Date: / /_____ Main material: Main product: Marks Percentage Marks Remarks Research and Development

40%

Quality Control 30% Purchasing 30% Total: _________ Remark: Good: reach standard or above standard; Average: standard acceptable; Bad: no standard or standard unacceptable. Signed by Purchasing Department:

� Pass �Fail

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Supplier’s Assessment Form C Research and Development Division Supplier: ______________ Date: / /_____ Material type: Main product:

No.

Description

Assessment Remarks Good Ave-

rage Bad

5 3 0 01 Design and development, sampling (tooling), cost breakdown (price

level)

02 Component design, prototyping workflow 03 Design and development, standard work instructions 04 Can supplier provide information and suggestions for unusual

design?

05 Is supplier a manufacturer for specialized components or material? 06 New product development capability 07 Ability to adapt components. 08 Can the supplier provide samples, such as defect samples, colour

template?

09 Capability in selecting and testing original materials. 10 Capability in assessing and managing original materials. 11 Capability to work 12 Capability in engineering prototyping. 13 Quality of technical design personnel. 14 Can the supplier introduce tooling into automatic production? 15 Management of engineering project documentation 16 Engineering support 17 Response to customer complaints on engineering capability 18 Industry reputation of supplier’s technical capability 19 Plans to improve technical capability 20 Potential for future development Total: _____ Remark: Good: reach standard or above standard; Average: standard acceptable; Bad: no standard or standard unacceptable. Signature of Department Head: Approval by:

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Supplier’s Assessment Form C Purchasing Division Supplier: ______________ Date: / /_____ Material type: Main product:

No.

Description

Assessment Remarks Good Ave-

rage Bad

5 3 0 01 Can supplier supply in a stable manner on a long-term basis? 02 Is supplier willing to supply frequently? 03 Is supplier willing to provide competitive pricing and delivery

cycle?

04 Is supplier willing to provide relevant technical documents? 05 Is supplier willing to meet requests for technical support at the

required time?

06 Is supplier ISO certified? 07 Can supplier provide request for RoHS Report and guarantee? 08 Does supplier meet no lead-production (Rohs) standard? 09 Is supplier willing to provide analysis on defective goods? 10 Is supplier willing to exchange defective goods? 11 Can supplier meet PQI’s requirements in responding to sub-quality

goods?

12 Can supplier meet PQI’s requirements in responding to RMA? 13 Does supplier provide and implement improvement plans when

PQI raises quality issues?

14 Can supplier meet PQI’s requirements in labelling their final products?

15 Is supplier willing to provide information about their direction for new production development and roadmap?

16 Is supplier willing to get involved in PQI’s product development? 17 Is supplier willing to provide customized solution for PQI’s product

development?

18 Does supplier maintain good long-term working relationship with PQI?

19 Does supplier maintain good working relationship with PQI’s management?

20 Does supplier consider PQI a major customer? Total: _____ Remark: Good: reach standard or above standard; Average: standard acceptable; Bad: no standard or standard unacceptable. Signature of Department Head: Approval by:

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Supplier’s Assessment Form C Quality Control Division Supplier: ______________ Date: / /_____ Material type: Main product:

No.

Description

Assessment Remarks Good Ave-

rage Bad

5 3 0 01 Does supplier has a clear quality improvement policy that is

communicated to each staff?

02 Working environment (Is the workflow well-planned?) 03 Records of movement, maintenance and repair 04 Basic gears for testing equipment 05 Level of automation and how are tooling moulds used and

managed?

06 Standard of production planning 07 Management of quality documentations 08 Organization of quality control division 09 Does supplier has personnel specifically responsible for quality

control?

10 Workflow for material testing 11 Workflow for handling non-standardized products 12 Procedures for on-site inspection and random testing 13 Are standard and sub-standard products put in separate areas and

labelled appropriately?

14 Correction and documentation for testing and measuring equipment 15 Do they have a testing standard and system 16 Analysis of sub-standard products and improvement policy 17 Correction of sub-standard products and preventive policy 18 Production management and checking record 19 Management of quality documentation 20 Does it have a product guarantee system? Total: _____ Remark: Good: reach standard or above standard; Average: standard acceptable; Bad: no standard or standard unacceptable. Signature of Department Head: Approval by:

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EXHIBIT 4: PQI’S HALF-YEARLY SUPPLIER ASSESSMENT FORM FOR TIER 2 AND TIER 3 SUPPLIERS

Supplier’s Half-year Assessment Form Purchasing Department Supplier: A Date: 15 / 4 / 2010 . Material type: Main product:

No.

Description

Assessment Remarks Good Ave-

rage Bad

5 3 0 01 Capability in synthesizing primary material 3 02 Ability to pioneer in new product development 5 03 Industry assessment No info 04 Technical support capability 5 05 Competitiveness of pricing in primary materials 5 06 Cost down initiative as the order quantity changes 5 07 Initiating adjustments to reduce loss in response to market situation 5 08 Standardization capability 5 09 Management of delivery cycle 3 10 Production management capability 3 11 Ability to supply in a stable manner 3 12 Responsiveness to short delivery cycles 3 13 Ability to manage and label goods for delivery 3 14 Quarterly Product Roadmap Meeting 5 15 Monthly market information meeting or provision of market

information 3

16 Wish to maintain relationship with PQI 3 17 Speed in responding to substandard quality 3 18 Capability to guarantee against damage 5 19 Capability in improving product quality 5 20 Speed and capability in handling RMA (Returned Merchandize

Authorization) 3

Remarks on Assessment Results:

Remark: Good: reach standard or above standard; Average: standard acceptable; Bad: no standard or standard unacceptable. Grading: A. 100-90 priority suppliers. B. 90-70 normal suppliers. C. 70-60 suggests improvements. D. Below 60 fail. Total: _ 75____

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Supplier’s Half-year Assessment Form Purchasing Department Supplier: B Date: 01 / 4 / 2010 . Material type: Main product:

No.

Description

Assessment Remarks Good Ave-

rage Bad

5 3 0 01 Capability in synthesizing primary material 3 02 Ability to pioneer in new product development 3 03 Industry assessment No info 04 Technical support capability 5 05 Competitiveness of pricing in primary materials 3 06 Cost down initiative as order quantity changes 5 07 Initiating adjustments to reduce loss in response to market situation 3 08 Standardization capability 5 09 Management of delivery cycle 3 10 Production management capability 5 11 Ability to supply in a stable manner 5 12 Responsiveness to short delivery cycles 3 13 Ability to manage and label goods for delivery 3 14 Quarterly Product Roadmap Meeting 3 15 Monthly market information meeting or provision of market

information 3

16 Wish to maintain relationship with PQI 3 17 Speed in responding to substandard quality 5 18 Capability to guarantee against damage 5 19 Capability in improving product quality 5 20 Speed and capability in handling RMA 5 Remarks on Assessment Results:

Remark: Good: reach standard or above standard; Average: standard acceptable; Bad: no standard or standard unacceptable. Grading: A. 100-90 priority suppliers. B. 90-70 normal suppliers. C. 70-60 suggests improvements. D. Below 60 fail. Total: _ 75____

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Supplier’s Half-year Assessment Form Purchasing Department Supplier: C Date: 05 / 4 / 2010 . Material type: Main product:

No.

Description

Assessment Remarks Good Ave-

rage Bad

5 3 0 01 Capability in synthesizing primary material 3 02 Ability to pioneer in new product development 3 03 Industry assessment No info 04 Technical support capability 5 05 Competitiveness of pricing in primary materials 3 06 Cost down initiative as order quantity changes 3 07 Initiating adjustments to reduce loss in response to market situation 3 08 Standardization capability 3 09 Management of delivery cycle 5 10 Production management capability 5 11 Ability to supply in a stable manner 5 12 Responsiveness to short delivery cycles 5 13 Ability to manage and label goods for delivery 5 14 Quarterly Product Roadmap Meeting 0 15 Monthly market information meeting or provision of market

information 0

16 Wish to maintain relationship with PQI 3 17 Speed in responding to substandard quality 5 18 Capability to guarantee against damage 5 19 Capability in improving product quality 3 20 Speed and capability in handling RMA 5 Remarks on Assessment Results:

Remark: Good: reach standard or above standard; Average: standard acceptable; Bad: no standard or standard unacceptable. Grading: A. 100-90 priority suppliers. B. 90-70 normal suppliers. C. 70-60 suggests improvements. D. Below 60 fail. Total: _ 69__

D o

N ot

C op

y or

P os

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