Collaborative Excellence: Merging Quality and Supply Chain

[Transcript]

[00:00:00] Jan Griffiths: This is the Auto Supply Chain Prophets podcast, where you'll hear from experts of all facets of supply chain in the auto industry to help you prepare for the future. I'm Jan Griffiths, your co-host and producer.

[00:00:17] Terry Onica: I'm Terry Onica, your podcast co-host. Let's dive in.

[00:00:23] Jan Griffiths: Hello and welcome to another episode of the Auto Supply Chain Prophets podcast. Let's check in with my co-host, Terry Onica. Terry, what have you been up to?

[00:00:31] Terry Onica: Well, last week, I got to go to Southeastern High School in Detroit and be a part of their career readiness day, and that was a lot of fun. They cycled me through five different classes. So, I talked a lot about my early fears and all these things that I had to overcome to get to where I was at today. And then, in the end, I asked them what was the next action, following our podcast format, that they were going to take tomorrow and do. And so, it was just a lot of fun. Xavier Thomas was my ambassador, so he followed me around all day, and I tell you, I was so impressed with him. Just a wonderful student. It's so exciting to see that he wants to go into cyber security and is just so helpful and polite. It was amazing. I really enjoyed it.

[00:01:13] Jan Griffiths: Great. Well, let's see, what have I been up to? I just got back from Wales, and most people who know me well know that I call Wales and the US both homes. I am split right down the middle between my beloved home country, where I grew up in Wales, and where I started my career, and the country I'm in now, in the US. So, my heart really is in two places. And Terry, as I look back on my career, most of my time was in supply chain and purchasing related type functions. I spent a little bit of time on supplier quality. I was the director of supplier quality for Maytag.

[00:01:55] Terry Onica: Really?

[00:01:56] Jan Griffiths: Yeah, and it's really interesting to see how the quality function in the supply chain in many organizations is completely separate, but they really need to be together, don't they, Terry?

[00:02:08] Terry Onica: You'll get no argument from me on that one.

[00:02:10] Jan Griffiths: And that's why I'm thrilled today that we have on the show somebody who is a recognized leader in the quality function in automotive. He has significant experience in the tier-one supply base, but he's also worked with AIAG as a Quality Steering Committee Co-chair, and he is on the Nissan Supplier Quality Council. So, he's got a lot of credibility behind him. He knows the industry. He knows the function, and I'm going to guess that he's with us on this, that he's a believer that quality and supply chain need to be together, but let's find out. So, let's welcome to the show, Steve Povenz. Steve, welcome to the show.

[00:02:59] Steve Povenz: Oh, thank you. Thank you, Jan. Thank you, Terry. Yeah, it's wonderful to be with you, and yes, without a doubt, right? Yes, supply chain and quality really do need to be together.

[00:03:11] Terry Onica: Steve, why should quality and supply chain be together?

[00:03:15] Steve Povenz: Terry, when we first met, we had the conversation, and I had joked with you a little bit, and I said, 'Quality, Terry, is everything.' But you could also turn around and say to me, 'Oh, Steve, supply chain is everything,' and the truth is, we would both be right. There is no quality without a supply chain, and it's important that we recognize that. In fact, we could even say that it starts with supply chain. No matter where you're at, you're dependent upon your supply chain for your performance as an organization.

[00:03:50] Terry Onica: In your opinion, Steve, why in so many organizations are they not working together? In my experience on the supply chain side, they're always mostly siloed. It's very rare they're working together. So, why do you think that is?

[00:04:03] Steve Povenz: Well, I can speak from the quality side and be very honest with you and say that the quality function has a lot of work to do. There's still too much of this perception of quality that shows up when there's a problem with the customer, or something went wrong, or it's time for the audit, and they're going to leave behind a pile of audit non-conformances. And quality, really, they need to go up when there isn't a problem, right? They need to be that collaborator and go and work with their colleagues in other functions and get to know them and understand what their pain points are and be more of the problem solver than just going up when there is a problem and delivering the bad news.

[00:04:47] Jan Griffiths: Sometimes they come across as the victim, quality. It's like, 'Oh no, but it's not us,' and they can be very defensive, right? No, no, no, it's the scrappy supplier that you picked, or it's the bad design; it's not us. Sometimes, I feel like they play the victim, Steve.

[00:05:03] Steve Povenz: Yeah, that's a very good point. They need to take accountability just as much as anyone else for the systems that we have and the processes that we work under to ensure that we have a robust and resilient supply chain, and they need to feel part of that ownership.

[00:05:20] Terry Onica: And you know when you look at IATF 16949, where quality is really forced into the position is through the scorecard, right? Because the performance scorecards in IATF, it contains quality and delivery, yet still we see so much kind of throwing it over the wall. And so, what are your thoughts on that? Like, why does that happen? Why isn't there more working together and understanding? I need to understand that side of the house a little bit better.

[00:05:50] Jan Griffiths: Yeah, and to follow that, Steve, what have you done in your career to help build a bridge with supply chain and other functions?

[00:05:59] Steve Povenz: Quality is the scorecard gatekeeper or the voice of the customer gatekeeper. That doesn't mean that they're responsible for everything on there that is not quality-related, but they're the ones that are going to receive in that scorecard. They're going to help interpret that scorecard and communicate it to the rest of the organization regarding where we stand with the customer. One of the best ways that I've found is to do a regular cross-functional review; that means getting all of the key stakeholders in, whether it's from your supply chain team, your quality team, or your sales team if that's relevant to what's going on. In fact, it is because they need to know so they're not blindsided by anything when they're in front of the customer. But bringing them together for a regular review and an update on the scorecard and exactly where we stand, and if there's something that needs to be followed up on, and acting to come out of that with the appropriate function to make sure we get taken care of.

[00:07:08] Terry Onica: One of the things you're aware of because we shared them with you is our 24 Essential Supply Chain Processes, and when Cathy Fisher and I developed them, one of the reasons was to really take what are those key intersection points that we have between supply chain and quality, and where can we start the discussions and try to help facilitate this in the areas of common ground and then obviously after that bring in IT and where can we automate these processes? In your opinion, what do you think of the 24 essential supply chain processes, and how could they help the quality professionals?

[00:07:42] Steve Povenz: Yeah, I love those, and I was just recently exposed to those, and I love them, right? Because they're really quality management system processes, and they're an excellent roadmap for an organization to use that maybe is struggling in those areas. It starts with the strength of the supply chain. Utilizing the 24 Essential Processes of the Supply Chain really sets you up for planning, execution, monitoring, and corrective action; that whole PDCA cycle that needs to take place within the supply chain. If the quality professional is not engaged with those and doesn't understand what's being done upstream, that's going to make their job a lot more difficult in manufacturing.

[00:08:33] Terry Onica: We used those 24 Essential Supply Chain Processes with an automotive tier one in the UK, and we made sure that the plant manager, quality manager, supply chain manager, and IT were all in the same meetings. And we were just going through the schedules that they go to their suppliers because, obviously, that has a big impact, right? If you don't get the right schedule from your suppliers. And what we found when we were in discussions was that they were using purchase orders and not scheduled orders. They weren't doing things repetitively. And when the gentleman found out, like, because I was telling him that you can do that right in your ERP, why are you doing these purchase orders? There's a much better way to do that, and then you can get that out electronically to your suppliers. And he jokingly said, 'That's going to save me nine days of work.' And the quality manager, it was really great because he heard that; this is now educating him as to why potentially something might go wrong with the scorecard with delivery; he found that very enlightening. And then, having IT there to say okay, 'Oh yeah, we can help you with this, we can turn it on.' I can't remember the reason why they weren't doing repetitive scheduling, but I saw it firsthand; we found a nugget there to really help them in that process. So, it really can help everybody get on the same page, and I just think it can be so effective. It's a great place, too, for quality professionals to look at those 24 processes and start to say, 'Where should I learn better in the supply chain?' So, I'm glad you feel the same way.

[00:09:56] Steve Povenz: Yeah, and I love what you said about having IT at the table, bringing them to the table because they can offer solutions to make the job easier. They automate the job and take that element of spreadsheets or whatever we're doing out of the equation and bring that technology into it. And having quality involved as well is really important in that linkage to the scorecard because, again, it really does start with the supply chain. All functions throughout the organization need to be committed to that common goal of safely delivering quality products to our customers on time, every time, at the lowest possible cost, and we need to continue to work to drive that cost down, and quite often, the use of technology can help us. Whether it's more accurate ordering, faster responses throughout the supply chain, and that connection to our operations, leveraging technology to do that is really vital.

[00:11:05] Terry Onica: And I even look at AI in the future. One of the big things I always say is, 'You can't use Artificial Intelligence when you have spreadsheets all over the place, right?' and you don't know where your data's at, and everything's done manually. It's just impossible to get there. And I think in quality of all places if we could mine data, maybe it's corrective actions, you know, we could find some real nuggets out there that might help us to produce better quality the first time out and not have anything later on.

[00:11:31] Steve Povenz: Yes, for sure. There are some wonderful tools out there that can help us with our corrective actions and keeping that archive of our data that's easily retrievable and searchable to get the data that we want. But even looking beyond that and closer to our operations and the manufacturer of the parts and collecting the data, how are we doing that? Are we writing our information down on a spreadsheet or a notepad that we have to take somewhere else, or can it get lost on a desk or drop on the floor? When we don't have that evidence of conformance, we wouldn't have that vital data that we need to tell us how our process is performing so that we truly understand what's needed. Do we need to take action for improvement? Or if something goes wrong, we can go back and see how the process was performing at a specific point in time. We can book them to problems. So, coming into my world, that data collection and that really important that we reduce the risk of error and make it very easy on our operators that are performing the work to be accurate and effective in what they do.

[00:12:44] Jan Griffiths: Yeah, I think one of the finest examples that we've seen of using technology is the Penn Engineering. Terry, when we interviewed the guys from PennEngineering about their QMS, how they were able to take, again, multiple different data sources and spreadsheets and really pull that whole quality management system together and have visibility. It enabled them to have consistency. They had the right data. They were able to respond quickly and effectively, which all impacts the bottom line. So, it is about technology. Yes. Technology is an enabler. But listening to you talk, Steve, at the end of the day, it comes back to leadership and culture. I have worked in organizations where quality and supply chain are separate, and I'll speak more specifically to supplier quality. As a supply chain leader, I've had responsibility for supply quality and I've worked for organizations where it's fallen under the responsibility of operations or fallen under the responsibility of central quality. I would say this, and there's some people out there not going to like me for saying this, but this is from my experience and my opinion, is that it almost doesn't matter; it depends on the leadership, and if the leadership works together and collaborate and get along and are on the same page, it all works magically. And I look back on my last corporate role, and I had a tremendous relationship with the head of central quality. Honestly, it didn't matter where supplier quality sat, whether it was under my umbrella or under her umbrella because we were both focused on the same mission and the same outcome. We wanted the right decision for the business, not a decision that's just sub-optimized for one function, and that's what makes a difference.

[00:14:36] Steve Povenz: And you're absolutely right there. No matter where supplier quality resides, if it's in the supply chain or it's reporting up to the quality function, if we're siloed, one silo is going to be disappointed and feel like they're not being served. It's vitally important for quality function leadership along with the supply chain leadership to be synced up, to be seeing things the same way, to have that common goal, and how we're going to get there.

[00:15:05] Jan Griffiths: And once you have that, you've got leadership on the same page, and you've got a mission; now you start to integrate technology into all of that, whether it's your ERP system, the QMS, whatever it is. Now, you've got a winning combination that will give you a competitive advantage.

[00:15:24] Steve Povenz: Yes. Now we're really clicking, right? We've got the goal. We understand what we need to achieve. We're going to work together to get there. You can improve effectiveness and efficiency, but you're also driving down costs, and utilizing technology is also about getting that data that we need quickly and having it retrievable at the time that we need it. Nobody's going out and searching, which is a waste of time. They could be working on something else. If you've got a question, you have a concern, or there's a problem with a customer, you can get the data that you need at the time that you need it and get it back so that decisions can be made. And if there really is something wrong, it can prevent the spread of what's going on.

[00:16:07] Terry Onica: One of the things I see is a big difference between MMOG/LE and IATF 16949; in MMOG/LE, it's mandatory. You have to be using your ERP systems and EDI; you have to be using technology. You'll fail the score. You'll get a level-C score if you don't do that. In IATF, I know that they don't require that you have to use any kind of automated system. And looking at the next version of IATF 16949, which I heard is due out pretty soon, and your past role as a Chair of the Quality Steering Committee, what are some of your thoughts that we need going forward in IATF 16949 in the next version?

[00:16:45] Steve Povenz: I think there's certainly an opportunity to promote the use of technology in your quality management system. It's difficult to say that you must do certain things and do them in a certain way because every organization is different. But by promoting the use of technology in understanding internally what your pain points are, maybe it is in data collection, maybe it's in your supply tool, maybe it's in your control plan. Do you have good revision control? Is your control planning your PFMEA up? IATF 16949 would certainly be auditable, and the auditor can ask to see the plan. Why did you choose that specific scenario, and where to adopt technology? Tell me how it's being effective. That's great. What are you working on next?

[00:17:40] Terry Onica: I'm taking a class about reinventing your organization, and she made a comment on the first day. In the past cycle, it's been 75 years. We've ridden out before, and there's been a major change, and now that's going down to six years. I often worry myself in the area of when I see supply chain and quality that with all these spreadsheets and where we're at today that I worry we are way back many years, and our customers are changing, and what we're doing, and what they expect every six years. We've got to speed things up and be able to get things faster and more effective. So, when she said that, I really started thinking about the environment I'm in and how important this message of how you have to reinvent faster. So, we've got to change the way we do automotive manufacturing and operations at our assembly plants today, whether they're the OEM or suppliers.

[00:18:34] Steve Povenz: Yes, we do. And I wouldn't wait for it to become part of a standard, right? Or something that gets released out and is mandated. The time to start was yesterday. If you haven't, then let's go today. Look at the pain points in your organization. Understand what's causing you delays and extra work, or maybe errors, and start there. See where you can integrate technology into your quality management system and, make sure it's effective, and move on to the next thing.

[00:19:03] Terry Onica: Steve, outside of technology, as we look at IATF 16949, is there anything that needs to be changed for where we're going, in particular with going from the internal combustion engine to EVs?

[00:19:15] Steve Povenz: Yes, there certainly is. My most recent background has been around the body structure and impact energy management, and with the EV AV technology, that area is rapidly changing as well, and the processes that we are using it's no longer just about protecting the occupants. We now have this large battery that needs protection in the vehicle, that means they're taking on additional risk, right? New products and new processes that means risk. Couple that with our speed to market because we're going at a breakneck speed now more than ever, and it's going to continue to get more. We were taking on this increased risk when we had less time to mitigate that risk. So, I think, while the last revision of the IATF 16949 really was focused on risk, I think that we need to even strengthen that more and look at our supply flows and look at making sure that we have processes that are agile so that we can adapt to this added risk in the time that we need to execute on the deliverables and get to market with a quality product.

[00:20:34] Terry Onica: So, in talking about IATF 16949, can you tell us about your role at AIAG, being the co-chair of the Quality Steering Committee? Can you give us any insights, or is there a way people can volunteer to be a part of that or give feedback?

[00:20:49] Steve Povenz: I've really enjoyed my engagement in volunteering; it's really been a high point of my career. It started out as just a volunteering opportunity and turned into something I didn't expect how much I would get back from networking with like-minded professionals that were experiencing some of the same problems that I was in and how they handled those but is working really hard to bring you to get industry best practices out so people can use them. They're working on ways to do that faster, and I think we saw that with the most recent revisions to the APQP, manually in control plan, how those were separated out. I also know that some of my quality professionals say, 'Hey, I wish AIAG would do this.' I hear that from time to time and really get involved. There's a lot of opportunities where they're asking for feedback. They're asking for volunteers. Go to the quality summit that's in October. There are a lot of great Q&A sessions there where your voice can be heard as part of the industry, and they welcome that feedback. So, just take advantage of those opportunities to get involved.

[00:22:02] Terry Onica: I was just thinking along the lines of technology because we all agree we need to move faster; how would you get management to say, 'We got to stop using spreadsheets. We have to move forward and automate our tools here.'

[00:22:15] Steve Povenz: So, I can think of a very specific example of where we automated data collection; again, this is in the quality area, right? We automated data collection because our startup process was taking too long. It was impacting our OEE, and of course, the plant manager is very interested in improving OEE, and he wanted to know why we weren't hitting our target, and one of the leading reasons was the delay at startup in verifying that we had a good part because of the manual data collection that we were doing. Automating that and taking out about 80 percent of that time made a significant improvement in the OEE.

[00:23:00] Terry Onica: So, in your opinion, you're saying understand kind of what the plant manager's trying to achieve and find a way to tie that into some of their objectives.

[00:23:08] Steve Povenz: So, back to the pain points, in listening to what your plant manager really cares about and tying that into an opportunity. But what are those pain points that are driving the metrics? They're driving your P&L. Where are you losing money? Where can you gain efficiencies and really make those advances? That's what your plant manager is going to care about.

[00:23:31] Terry Onica: And as you said, in that case, tying it to OEE, which was something he was very concerned about, so that's good. Awesome.

[00:23:38] Jan Griffiths: Steve, what is one thing that leaders in the automotive supply chain could do right now to help improve the collaboration with their quality counterparts?

[00:23:52] Steve Povenz: Invite them into your space. I'm sure that they would love to be invited to come in where their expertise could be used. If you have a daily huddle or a staff meeting, invite them in to be an observer and to listen to what some of your pain points are. What are some of the problems that you're experiencing that the quality leader might be able to help with? Whether it be a corrective action process that needs to be strengthened or implemented, maybe there's a problem supplier that's struggling, in particular, that you could use some help in going in and visiting or auditing. The quality professional would certainly love that opportunity to help; just inviting them in and, developing that relationship, solving problems together will go a long way to bridging that gap and breaking down the silos.

[00:24:46] Terry Onica: I love it, breaking down the silos. Be the first to reach out your hand and say, 'Let's do this; let's start collaborating together instead of working independently.

[00:24:53] Jan Griffiths: There it is. Steve Povenz, thank you so much for joining us today.

[00:24:58] Steve Povenz: Oh, it was my pleasure. Thank you very much, Jan. Thank you, Terry.

[00:25:01] Jan Griffiths: Are you ready to find the money in your supply chain? Visit www.autosupplychainprophets.com to learn how or click the link in the show notes below.