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HKU918

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NEALE OCONNOR
ANNE WU
SHANNON ANDERSON

PQI: MANAGEMENT OF SUPPLIERS


Taiwan-based memory manufacturer Power Quotient International Co. Ltd (PQI) had an

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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 arms 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, PQIs management
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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
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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
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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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Grace Loo prepared this case under the supervision of Professor Neale OConnor 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 meanselectronic, mechanical, photocopying, recording, or otherwise (including the
internet)without the permission of The University of Hong Kong.
Ref. 10/481C

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10/481C PQI: Management of Suppliers

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

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US mortgage crisis had led to a drop in consumer demand and a dramatic fall in the price of

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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

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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

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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.
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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.
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Supplier Management
PQIs 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
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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.
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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).

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infringement of copyright. Permissions@hbsp.harvard.edu or 617.783.7860
10/481C PQI: Management of Suppliers

Geographic Spread

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Among PQIs 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

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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

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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, PQIs vice-president of logistics

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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
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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.
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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 PQIs USB thumb drives or
portable hard drives designed by PQI.

Selection of New Suppliers


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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]:
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Commercial performance: the general financial status of the supplier as well as its
payment and delivery terms
Supplying capability: aspects such as the suppliers position in the market, the scope of its
service and its flexibility in responding to customers needs
Technical performance: the suppliers engineering capability and technical sophistication

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infringement of copyright. Permissions@hbsp.harvard.edu or 617.783.7860
10/481C PQI: Management of Suppliers

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

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Product development: whether the strategic direction of the supplier matched the

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direction of PQI and whether the supplier was willing to share its future direction and
information with PQI
Strategic development: various aspects of the suppliers relationship with PQI and the
extent to which the supplier was willing to invest in the relationship.

Management of Suppliers

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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 PQIs 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

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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 PQIs strategic work. PQI evaluated tier 2 suppliers on a half-yearly basis,
though their prices were monitored carefully and reviewed monthly. The half-yearly
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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.
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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
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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, Low-end or
e.g., resistors and structural
capacitors components, such as
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housing
PQIs management Weekly meeting for Price monitoring on a Monthly review
control product and market monthly basis and focusing on product
information evaluation every half and service quality
year and half-yearly
evaluation focusing

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10/481C PQI: Management of Suppliers

on technical and
production capability

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and buyersupplier

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relationship

Table 1: Summary of Differences among PQIs 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 PQIs

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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

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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 cant
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.
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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 PQIs
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. PQIs vice-president of logistics had also known Foretechs
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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 PQIs new product development.

Contracts
PQI renewed contracts with suppliers every two years if it was satisfied with their
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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 PQIs 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
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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

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10/481C PQI: Management of Suppliers

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

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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

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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

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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. Chaos knowledge
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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
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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 theres no big disagreement during bargaining because everything is
based on reason. Chaos knowledge also enabled him to change the design or the material
used in order to bring down the cost.

EPILOGUE
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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 Wangs 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.
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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.

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10/481C PQI: Management of Suppliers

EXHIBIT 1: PQIS SUPPLIER ASSESSMENT FORM FOR TIER 1 SUPPLIERS

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Suppliers Assessment Form A

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Supplier: ______________ Date: / /_____

I. Financial Strengths: Assessment Unit: Purchasing Assessed by:


Assessment
No. Description Score

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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?

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05 Is the supplier willing to provide better delivery terms?

II. Supplying capability: Assessment Unit: Purchasing Assessed by:


Assessment
No. Description Yes No Score

01 Is the supplier a major supplier in the market?


02 Does the supplier lead in terms of market share in the
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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 suppliers supplying capability meet PQIs needs?
07 Can the supplier respond speedily to changing market
situations?
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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:


Assessment
No. Description Yes No Score
01 Does the supplier have leading technical capability?
No

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 PQIs 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
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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

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10/481C PQI: Management of Suppliers

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Approved and signed by purchasing supervisor:

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Approved and signed by research and development supervisor:

Approved and signed by product planning supervisor:

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 Pass  Fail

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No
Do

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infringement of copyright. Permissions@hbsp.harvard.edu or 617.783.7860
10/481C PQI: Management of Suppliers

EXHIBIT 2: PQIS SUPPLIER ASSESSMENT FORM FOR TIER 2 SUPPLIERS

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Suppliers Assessment Form B
Supplier: ______________ Date: / /_____

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Assessment by: Purchasing Unit
Assessment
No. Description Yes No Score
4 0

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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?

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08 Can the supplier meet PQIs 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 PQIs requirements for ROHS report and
certification?
12 Can the suppliers products meet the Rohs standard?
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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 PQIs requirements?
16 Can the supplier meets PQIs requirements in responding to RMA
in a timely manner?
17 When PQI raises issues about substandard products, can the
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supplier provide improvement measures and execute them?


18 Can the supplier meet PQIs 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 PQIs new product
development?
21 Is the supplier willing to provide customized solution to meet
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PQIs 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
PQIs 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:


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Approved and signed by division supervisor:


Assessed by:

 Pass  Fail

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10/481C PQI: Management of Suppliers

EXHIBIT 3: PQIS TIER 3 SUPPLIER ASSESSMENT FORM FOR RESEARCH AND


DEVELOPMENT DIVISION, PURCHASING DIVISION AND QUALITY CONTROL DIVISION

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Suppliers Assessment Form C

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Summary Supplier: ______________ Date: / /_____

Main material:
Main product:

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Marks Percentage Marks Remarks
Research and 40%
Development
Quality Control 30%
Purchasing 30%

Total: _________

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Remark: Good: reach standard or above standard; Average: standard acceptable; Bad: no standard or
standard unacceptable.

Signed by Purchasing Department:

 
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Pass Fail
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No
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infringement of copyright. Permissions@hbsp.harvard.edu or 617.783.7860
10/481C PQI: Management of Suppliers

Suppliers Assessment Form C


Research and Development Division Supplier: ______________ Date: / /_____

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Material type:
Main product:
Assessment Remarks
No. Description Good Ave- Bad
rage
5 3 0

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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

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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.
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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 suppliers technical capability
19 Plans to improve technical capability
20 Potential for future development
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Total: _____
Remark: Good: reach standard or above standard; Average: standard acceptable; Bad: no standard or
standard unacceptable.

Signature of Department Head: Approval by:


No
Do

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infringement of copyright. Permissions@hbsp.harvard.edu or 617.783.7860
10/481C PQI: Management of Suppliers

Suppliers Assessment Form C


Purchasing Division Supplier: ______________ Date: / /_____

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Material type:
Main product:
Assessment Remarks
No. Description Good Ave- Bad
rage
5 3 0

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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?

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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 PQIs requirements in responding to sub-quality
goods?
12 Can supplier meet PQIs requirements in responding to RMA?
13 Does supplier provide and implement improvement plans when
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PQI raises quality issues?
14 Can supplier meet PQIs 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 PQIs product development?
17 Is supplier willing to provide customized solution for PQIs product
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development?
18 Does supplier maintain good long-term working relationship with
PQI?
19 Does supplier maintain good working relationship with PQIs
management?
20 Does supplier consider PQI a major customer?
Total: _____
No

Remark: Good: reach standard or above standard; Average: standard acceptable; Bad: no standard or
standard unacceptable.

Signature of Department Head: Approval by:


Do

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infringement of copyright. Permissions@hbsp.harvard.edu or 617.783.7860
10/481C PQI: Management of Suppliers

Suppliers Assessment Form C


Quality Control Division Supplier: ______________ Date: / /_____

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os
Material type:
Main product:
Assessment Remarks
No. Description Good Ave- Bad
rage
5 3 0

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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

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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
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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
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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:


No
Do

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infringement of copyright. Permissions@hbsp.harvard.edu or 617.783.7860
10/481C PQI: Management of Suppliers

EXHIBIT 4: PQIS HALF-YEARLY SUPPLIER ASSESSMENT FORM FOR TIER 2 AND


TIER 3 SUPPLIERS

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Suppliers Half-year Assessment Form

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Purchasing Department Supplier: A Date: 15 / 4 / 2010 .
Material type:
Main product:
Assessment Remarks

rP
No. Description Good Ave- Bad
rage
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

yo
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
op
14 Quarterly Product Roadmap Meeting 5
15 Monthly market information meeting or provision of market 3
information
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
tC

20 Speed and capability in handling RMA (Returned Merchandize 3


Authorization)
Remarks on Assessment Results:
No

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____
Do

14

This document is authorized for educator review use only by syed waqar akbar, at PIEAS - Pakistan Institute of Engineering & Applied Sciences until December 2015. Copying or posting is an
infringement of copyright. Permissions@hbsp.harvard.edu or 617.783.7860
10/481C PQI: Management of Suppliers

Suppliers Half-year Assessment Form

t
Purchasing Department Supplier: B Date: 01 / 4 / 2010 .

os
Material type:
Main product:
Assessment Remarks
No. Description Good Ave- Bad
rage
5 3 0

rP
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

yo
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 3
information
op
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:
tC

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.
No

Below 60 fail.
Total: _ 75____
Do

15

This document is authorized for educator review use only by syed waqar akbar, at PIEAS - Pakistan Institute of Engineering & Applied Sciences until December 2015. Copying or posting is an
infringement of copyright. Permissions@hbsp.harvard.edu or 617.783.7860
10/481C PQI: Management of Suppliers

Suppliers Half-year Assessment Form

t
Purchasing Department Supplier: C Date: 05 / 4 / 2010 .

os
Material type:
Main product:
Assessment Remarks
No. Description Good Ave- Bad
rage
5 3 0

rP
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

yo
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 0
information
op
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:
tC

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.
No

Below 60 fail.
Total: _ 69__
Do

16

This document is authorized for educator review use only by syed waqar akbar, at PIEAS - Pakistan Institute of Engineering & Applied Sciences until December 2015. Copying or posting is an
infringement of copyright. Permissions@hbsp.harvard.edu or 617.783.7860