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					    The Supplier Perspective

          Ed Englehard
         Owego Heat Treat
          April 16, 2003

1                      Agenda Item 2.2
           Apprehension Prior to
         Participating in NADCAP
     If a mandate letter - start research & business
      decision justification right away!
     If no mandate letter - poll customer base in order
      to justify business decision.
     Fear of the unknown, justifying the business
      decision by the supplier's executive management:
          • A change in the way most suppliers obtain approvals from
            "divide & conquer" (one prime at a time) to third party
          • Change in cost from Prime to Supplier
          • Changes in internal processes and quality system, in terms of
            dollars & man-hours.
          • If yes, then supplier must plan appropriate resources above and
            beyond current quality system requirements.
          • If no, then supplier must plan to loose certain amount of
            business (current and future).
      First Time Preparation Actions
     In order to mitigate the apprehension of participation:
        If the classes or range of approvals under a particular
         discipline is a choice in the matter, keep the scope of
         approval limited to those areas of the supplier facility that
         will benefit from it, i.e., if you are prime approved for only
         aluminum processing and don't have exposure to aerospace
         steel processing (even though you do some steel processing)
         then just have the aluminum processing portion of the plant
        Start early & meet with quality staff often for status updates.
         Make a timeline and stick to it.
        Call the Task Group Engineer for Supplier Mentoring
         recommendations and assistance
        Go to the PRI/NADCAP website and plan to invest in
         attending a couple of quarterly meetings in order to learn
         how the system works and who the players are early in the
         effort to accreditation.
        First Time Preparation Actions
     Be sure that supplier executives attend at least one
      quarterly meeting so that they understand better the
      resource allocation requirements of the effort.
     Be sure that supplier quality personnel responsible for
      implementation attend at least one quarterly meeting so
      that they understand the process, checklists and people
      with whom they will be dealing with intimately during
      the effort to achieve the initial audit.
     Have quality personnel attend a thorough Root Cause
      and Corrective Action (RCCA) course or seminar if they
      haven't yet. PRI offers a good program on a regular
      basis around the country.

              First Time Preparation
                Actions (continued)
     Preparation Efforts:
        Start early & meet often. Make a timeline and stick to it.
        Order copies of the checklist(s) long before the audit is
         scheduled and start work immediately. You will typically
         need much more than the 60-90 days of time lapse between
         the getting on the NADCAP schedule and the audit date.
         Don't wait for the checklist to arrive along with your audit
         date - you likely will not be able to do an effective job of
         implementation before the initial audit.
        Call the TG Staff Engineer for supplier mentoring assistance
        If you are ISO/AS registered then be sure that your system is
         sound, especially in the areas of calibration, inspection &
         test equipment, process control, contract review and training.
            First Time Preparation
              Actions (continued)
     Preparation Efforts: (continued)
        If you are not ISO/AS registered and are not planning
         to do so, then be sure to get a copy of AC7004 and get
         busy on fixing your system in order to comply with it.
        If you are not ISO/AS registered and you do plan to do
         so, then make every effort to get it done before the
         NADCAP audit.
        Start early & meet often in order to benchmark
        Review all of the checklist questions objectively and
         take them seriously.

              First Time Preparation
                Actions (continued)
     Every "yes" response requires objective evidence. Mark
      down where the objective evidence exists in your system
      next to each question.
     Every "no" response requires a fix to your system in order
      to turn it into a "yes". Be sure the fix has a trail all the way
      from the top tier documents through to the work
      instruction level, as applicable.
     Run many rigorous job audits and then fix them with
      rigorous RCCA.
     REMEMBER - This audit is going to "drill down" to the
      shop floor level, it is not an audit or survey of the just the
      QC Department. Quality system work must include
      appropriate training at levels down to the shop floor.

             First Time Preparation
               Actions (continued)
     Where there is a checklist need for a procedure,
      have one in detail.
     Where there is a checklist need for an instruction,
      have one in detail. Good quality shop
      orders/travelers/operation sheets with appropriate
      process details can't be emphasized enough.
     The importance of good strong internal audit
      procedures can't be underestimated
     Remember - NADCAP auditors are process
      experts and highly professional
        Call early for your initial audit schedule so you don't
         miss any mandate deadlines
             First Time Preparation
               Actions (continued)
     When you receive your audit package, start to
      work on the pre-audit immediately so you have
      plenty of time to fix problems before the auditor
        Be sure to conduct the opening and closing meetings
         with all affected personnel
        Think about any proprietary issues before the audit and
         bring them up at the opening meeting
        Be sure you understand each finding before the auditor
         leaves. It's much easier to obtain an explanation and
         clarify terms when the auditor is there rather than to try
         to second-guess the meaning of the findings after the
         auditor has left
             Thoughts after the
                initial audit?
      First thought - Wow, what just happened??!! (Am I
       glad this week is done.)
         Take a little breather, there's usually a lot of work
           to do afterwards
      Watch the calendar - Note that the responses are due
       14 days after the end of audit and that objective
       evidence is due 21 days after the end of the audit
      Fill out the auditor questionnaire and send it in while
       still fresh in your mind
      Review the findings carefully and be prepared to
       apply RCCA lessons rigorously

         Process used for addressing
                audit findings?
      Use good RCCA practices
      Review supplier handbook
      Read findings carefully
      Answer findings thoroughly
         Address product impact issues promptly and in detail
      React to proximate causes promptly while
       working on root causes
      Drill down to quality system causes and respond
       to them completely

            Company position on NADCAP
         (feelings, benchmarking, pride etc)
          during audit/accreditation process
      Ours was a strategic business to participate driven
       not by a mandate letter per se but by polling of our
       aerospace/defense contractor base of customers.
       Positive responses to our participation represented
       about 1/3 of our business at the time.
      We had a lot of anxiety about the possibility of
       failure outright because our quality system was
       quite crude at that time (1994-1995).
      We had a lot of hope for success because we knew
       it would distinguish us among our competitors
        Company position on NADCAP (feelings,
       benchmarking, pride etc) during
        audit/accreditation process (continued)

      The effort to participate was huge and affected nearly all
       parties in the plant, especially at the shop floor level
      Achievement of the certificate represented a change in the
       company culture:
         It institutionalized professionalism all the way down to
          the shop floor
         It raised the bar for high quality performance and
          continuous improvement across the plant.
         It raised the confidence level of all parties in the plant -
          both in the company and in regards to thier individual
13       It raised quality awareness across the plant
        Where Owego Heat Treating is now (in
       regards to feelings about NADCAP)
      It is a "must have" accreditation now in our business
      It has been informally adopted throughout industry among
       the first-tier suppliers to the primes (and the sub-first tier
       level) as a serious quality "security blanket" for current and
       new suppliers. In some cases it is being established as a
       requirement for doing business at this level even if the
       prime does not have a formal flow down requirement
         This has greatly reduced the amount of quality survey
            time that we received from this level of manufacturing
         Prime visits have been dramatically reduced to a focus
            on specific engineering needs or prime-specific
            requirements; total quality survey and audit team has
            been reduced by at least 3/4 (but not entirely
14    Our process capability and quality of output has
       dramatically improved and our customer's confidence in us
        Closure (data available to show
       improvements-reduced escapes, additional
        business, less re-work scrap, etc.)
      Our rework and scrap rates have been reduced
       significantly. In the pre-NADCAP days having to
       rework 5 or 6 orders in 100 and scrap 1 order in
       1000 was not uncommon. Now those numbers are
       more like a rework rate of 2 or 3 in 1000 orders
       and a scrap rate of 1 order in 3000 orders, or less.
      Our pre-NADCAP escape rate was maybe 1 order
       in 3000 to 5000 orders. It is significantly less
       now, around 1 in 6000 to 10,000 orders. Our
       discovery and response times to escapes is much

        Closure (data available to show
       improvements-reduced escapes, additional
        business, less re-work scrap, etc.) (continued)
      We definitely have much higher compliance to
       specification requirements
      We have a much higher level of understanding of
       prime, customer and industry requirements
      We have a much higher comfort level with
       tackling new work due to a better understanding of
       the quality issues involved.
      All of our other customers have benefited from the
       practices instilled throughout the plant as noted
        Closure (data available to show
       improvements-reduced escapes, additional
        business, less re-work scrap, etc.) (continued)

      At the time we embarked on this endeavor we
       retained about 1/3 of our business. In a market
       where manufacturing volume is declining that was
       a significant accomplishment.
      We have gained market share in our region as a
       result of maintaining our NADCAP accreditation.