IS 12040: Guidelines for Development of Supplier Rating System

30 Pages·2001·2.2 MB·English

by  Bureau of Indian Standards

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“The Right to Information, The Right to Live” “Step Out From the Old to the New”
IS 12040 (2001): Guidelines for Development of Supplier
Rating System [MSD 2: Quality Management]
“!ान $ एक न’ भारत का +नम-ण”
Satyanarayan Gangaram Pitroda
““IInnvveenntt aa NNeeww IInnddiiaa UUssiinngg KKnnoowwlleeddggee””
“!ान एक ऐसा खजाना > जो कभी च0राया नहB जा सकता हहहहै””ै”
Bhartṛhari—Nītiśatakam
“Knowledge is such a treasure which cannot be stolen”

.
IS 12040:2001
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Indian Standard
GUIDELINES FOR DEVELOPMENT
I RATING SYSTEM
1 (First Revision )
I
Ics 03.100.10
I

I
0 BIS 2001
BUREAU OF INDIAN STANDARDS
MANAK BHAVAN, 9 BAHADUR SHAH ZAFAR MARG
NEW DEL HI 110002
October 2001 Price Group 9
Quality Management Sectional Committee, MSD 2
FOREWORD
This Indian Standard ( First Revision ) was adopted by the Bureau of Indian Standards, after the draft finalized
bythe Quality Management Sectional Committee had been approved by the Management and Systems Division
Council. The quality ofthe product depends upon, among others, the quality of inputs. It is, therefore, essential
that the material is procured only from those suppliers who have demonstrated their capability to supply the
material of desired quality and quantity at an acceptable cost and time schedule. However, in the prevailing
practice of verification of supplier’s capability such as machinery and equipment held, availability of required
test facilities, list of orders executed or on hand and financial background are considered. This gives only a
limited view towards the capacity of the supplier and not his capability. It is, therefore essential to rate or
classify the suppliers on objective basis taking into consideration the attributes of quality, price, delivery,
service, system and such other factors as are relevant.
Supplier rating system isasystem of assessing the performance of asupplier incomparison with other suppliers
with a view to drawing up a comparative scale that can be used to arrive at any of the following decisions:
a) To assess and select a supplier from group of suppliers on rational basis for specific products;
b) To continue to procure the products from the same supplier;
c) To distribute the total requirement of a product amongst various suppliers; and
d) To optimize incoming inspection efforts including self-certification.
Every organization should carry out a detailed analysis of its needs and then evolve a suitable supplier rating
system. The supplier rating system should be as simple as possible.
This Indian Standard was originally published in 1987. This revision is based on significant developments in
the field of quality system and the experience gained in implementing the existing standard. The important
changes are given below:
a) The quality rating was e arlier based on the quantity accepted and rejected. The closeness to the
targeted value was not con s idered. Further, it was not based on process variability. This revision
based on process capability indices Cp and Cpk takes care of these deficiencies.
b) The importance of quality system has been realized world over particularly after the publication of
1S0 9000 series of standards on Quality Management System. Keeping this view, anew parameter for
supplier rating termed as ‘system rating’ has been included as a part of the overall supplier rating.
c) For user-friendliness and easy implementation, ready tables have been provided for computing quality
rating. This will minimize the computational work to be done by the users of this standard.
The composition of the Committee responsible for the formulation of this standard is given in Annex D.
In reporting the result of atest or analysis, ifthe final value, observed or calculated isto be rounded off, itshall
be done in accordance with IS 2:1960 ‘Rules for rounding off numerical values ( revised )’.
IS 12040:2001
Indian Standard
GUIDELINES FOR DEVELOPMENT OF SUPPLIER
RATING SYSTEM
(First Revision )
1 SCOPE helps in identifying potential trends of supplies to
come. Decrease inrating of aparticular supplier isa
Thisstandardlaysdowntheguidelinesfordevelopment
signal to take corrective and preventive actions.
ofsupplier rating system forprocurement ofmaterials
ofdesiredqualityandrequiredquantityattheacceptable 3.1.2 Supplier Selection
cost and time schedule.
Supplier rating actsasaguide for future comparative
2 REFERENCES supplier selection. Basedonadequate supplier rating,
the purchase department of an organization itself
TheIndian Standards listed belowcontain provisions,
may decide on supplier selection. In the absence of
which through reference in this text constitute
asupplier rating system, every time matter needs to
provisions ofthisstandard. Atthetimeofpublication,
be referred to the concerned departments for proper
the editions indicated were valid. All standards are
evaluation before selection ismade.
subject to revision, and parties to agreements based
on this standard are encouraged to investigate the
3.1.3 Management Policy
possibility ofapplying themost recent editions ofthe
standards: Management should determine trends of ratings of
suppliers and periodically review its procurement
ISNO. Title
policy.
2500 (Part 1): Sampling inspection procedures:
3.1.4 Inspection
2ooo/Iso Part 1 Attribute sampling plans
2859-1:1999 indexed byacceptable quality level Aneffective supplier rating system helps inupdating
(AQL )for isolated lot inspection the supplier’s quality plantothemost economic level
by either increasing or decreasing inspection of the
2500 (Part 2): Sampling inspection procedures:
material received orsupplier source inspection/self-
1965 Part 2 Inspection by variables for
certification.
percent defective

3.1.5 Development ofL~ng-Term Relationship with
7200( Part3): Presentation of s tatistical data:

the Supplier
1982 Part 3 Management information
system — Quality control
4 CONSIDERATION FOR DEVELOPMENT OF
1S/1S09004: Quality Management ‘Systems – SUPPLIER RATING SYSTEM
\
2000 Guidelines for performance
Theneed fordevelopment ofasupplier rating system
improvement
should be decided by the responsible management
13174 Life cycle costing: keeping the following factors into consideration:
(Part 1): 1991 Terminology
a) Cost ofthe supplier rating system versus the
(Part2): 1994 Methodology anticipated return (economic consideration ),
b) Proportion ofpurchased material versus total
3 OBJECTIVE
cost of goods shipped ( make versus buy
3.1 The main objective ofasupplier rating system in decision ),
an organization is to assess the performance of a
c) Criticality of products being purchased, and
supplier in comparison with other suppliers with a
d) Product mix and diversification
view to draw comparative scale to make decisions.
considerations.
Important aspects of a supplier rating system are
given in 3.1.1 to 3.1.5.
5 SUPPLIER RATING SYSTEM
3.1.1 Supplier Appraisal
The overall supplier rating system comprises the
Thetrend inthe supplier rating ofa particular supplier following:

1
IS 12040:2001
a) Supplier rating ( Assessment of supplier where
performance ),
Target=( U+ L)/2,Tolerance =(U–L),
b) Supplier grading ( Assessment of new and
supplier ),
UandLareupperandlowerspecification
c) Supplier preferences, and limits respectively
d) Rewards system.
Estimated Process variance =S2
6 SUPPLIER RATING
=~ (X-iy
6.1 Suppliers may berated based onanyorallofthe
n-1
following factors:
a) Quality,
b) Price,
c) Delivery, where
d) Service, and n=sample size
NOTE—ThisprovidesforQRof50eachforhitting
e) System.
thetargetandforprocesscapabilityindexequaling
6.2 Quality Rating 1.33.
For easeofcalculation, the calculated values
6.2.1 Incaseof 100percent inspection ofthematerial
of Q~for a given value of Tolerance/s and
inthe lot, quality rating will becomputed asfollows:
(~-Target )/ Tolerance are given in Table 1
and Table 2respectively.
ii) Twosided tolerance (sample size= 1)
—
where
This is often the case in chemical industry
Q,= quantity accepted, and also in tool industry.
Q~= 100-400 {(X- Target )/Tolerance}2
Q2= quantity accepted with deviation,
NOTE—Inthissituation‘s’isnotestimable.
Q~= quantity accepted with rectification, ThereforenoprovisionismadetoQRinrespect
ofprocesscapability.However,overaperiod
Q = to@lw~tity Swplied (QI +Q2+Q3+QA), oftime,whenmanylotsarereceivedand‘s’
isestimablethen 1)abovemaybeusedfor
Q.= quantity rejected, overallQR
Xl = demerit factor (lesstha n one)whenmaterial For ease of calculation, the calculated values of Q~
is accepted with deviatio n , and foragiven value of(~– Target)/Tolerance aregiven
inTable2.
X2= demerit factor (lessthan one)whenmaterial
iii) Two sided tolerance ( sample size> 1), but
isaccepted with rectification.
taqyt eitherUorL pref~ forexample,Tool,
The values of X1and X2 are to be decided by the Die,JigandFixture, etc,tomaximize itslife:
management inconsultation withquality management
Q~= 50- 50[{( ~ - Target )/Tolerance}2]
group depending upon theresulting losses associated
+25 Tolerance/4s
with the type of industry, product and specific need.
Provided that ~ i’sand~ liebetween Uand
6.2.2 Incaseofsamplinginspectionfollowingmethods L;iftheyliebeyondUorL, negativeQ~should
for different situations will be used. be imparted and treated as zero.
Q~= 100- 100[(~- Target)/Tolerance]2
6.2.2.1 Quality rating for variable parameter of a
product If tool production is non repetitive that is
sample size is 1usethe formula at(2).
a) Normal distribution expected:
For ease of calculation, the calculated values of
[For sample sizes mentioned insubsequent Q~for a given value of (;- Target)/Tolerance
paragraphs see IS2500 (Part 2) ]. are given inTable 2.
0 Two-sided tolerance (sample size> l) iv) For one sided tolerance when only U or L is
specified:
Q~= 50-200 [{( X - Target )/Tolerance}2 ]
QR= 100(F-L )/4s or 100( u-1)/4s
+25 Tolerance/4s

2
IS 12040:2001
NOTE—In this situationtoleranceis not defined. Table 1(Continued)
ThereforenoprovisionismadetoQRinrespectofprocess
S1No. Tolerance/s Quality Rating
capability. Itmaybenotedthatsupplierwithpoorer
out of 50
capabilityisautomaticallypenalizedbykeepinghigher/
loweraveragetohisdisadvantagebenefitingthecustomer. (1) (2) (3)
24 2.4 15.00
For ease of calculation, the calculated values of
Q~for agiven value of(E-L )/sor( u-Z)/s are 25 I 2.5 15.63
given inTable 3. 26 2.6 16.25
27 2.7 16.88
b) Skewed distribution expected:
28 2.8 17.50
Only U is specified for example eccentricity, 29 2.9 18.13
centrality, taper, ovality, squareness, deflection.
30 3.0 18.75
Q~= 100 U14X L 31 3.1 19.38
32 3.2 20.00
NOTE—‘s’isinfluencedbyX. Therefore,thisscore
is fairlyrepresentative. 33 3.3 20.63
34 3.4 21.25
c)Q~ofan item: /
1 35 3.5 21.88
Whensamplesizeisone,theQ~maybe considered
asQ~ofanitem.However,ifthesampleisexamined
for more than one parameter, the average Q~or
minimum among these may be considered asQ~
ofanitem.
40 I 4.0 I 25.00 I
Table 1Calculated Values ofTolerance/s 41 4.1 25.63
(Clause 6.2.2.1) 42 4.2 26.25
43 4.3 26.88
S1No. Tolerance/s Quality Rating 44 4.4 27.50
out of 50
45 4.5 28.13
(1) (2) (3)
46 4.6 28.75
1 0.1 0.63
47 4.7 29.38 ----
2 0.2 1.25
48 4.8 30.00
3 0.3 1.88
49 4.9 30.63
4 0.4 2.50
50 I 5.0 I 31.25
5 0.5 3.13
51 5.1 31.88
6 0.6 3.75
52 5.2 32.50
7 0.7 4.38
53 5.3 33.13
8 .08 5.00
54 I 5.4 I 33.75
9 0.9 5.63
55 5.5 34.38
10 1.0 6.25
56 5.6 35.00
11 1.1 6.88
57 5.7 35.63
12 1.2 7.50
58 5.8 36.25
13 1.3 8.13
59 I 5.9 I 36.88
14 1.4 8.75
60 6.0 37.50
15 1.5 9.38
61 6.1 38.13
16 1.6 10.00
62 6.2 38.75
17 1.7 10.63
63 6.3 39.38
18 1.8 11.25
64 6.4 40.00
19 1.9 11.88
65 6.5 40.63
20 2.0 12.50
66 6.6 41.25
21 2.1 13.13
67 6.7 41.88
22 2.2 13.75
68 6.8 42.50
23 2.3 14.38
69 6.9 43.13

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IS 12040:2001
Table 1(Concluded) Table 2 (Concluded)
S1No. Tolerance/s Quality Rating sl
out of 50
No.
=(1) 1(2=) (3)
70 7.0 43.75
71 7.1 44.38
72 7.2 45.00
73 7.3 45.63 (1)
1741 7.4 I 46.25 24
75 7.5 46.88 25
76 7.6 47.50 26
77 7.7 48.13 27
78 7.8 48.75 28
79 7.9 49.38 29 0.35 I 25.50 I 51.00 I 43.88 ! 65.00 I
I 80 8.0 50.00 30 0.36 24.08 48.16 43.52 64.00
31 0.37 22.62 45.24 43.16 63.00
32 0.38 21.12 42.24 42.78 62.00
33 0.39 19.58 39.16 42.40 61.00
Table 2Calculated Values ofTolerance/s
34 0.40 18.00 36.00 42.00 60.00
(Clause 6.2.2.1)
35 0.41 I 16.38 I 32.76 t 41.60 I 59.00 I
36 0.42 14.72 29.44 41.18 58.00
sl
37 0.43 13.02 26.04 40.76 57.00
No.
38 0.44 11.28 22.56 40.32 56.00
&n>l ~=1 n>l il=l 39 0.45 9.50 19.00 39.88 55.00
w
out of out of out of 40 Q.46 7.68 15.36 39.42 54.00
50 100 50 100 41 0.47 I 5.82 I 11.64 I 38.96 I 53.00 I
(1) (2) (3) (4) (5) (6) 42 0.48 3.92 7.84 38.48 52.00
T 0.00 50.00 100.00 z50.00 100.00 43 0.49 1.98 3.96 38.00 51.00
----
T a0.01 49=.98 99.96 50.00 99.00 44 0.50 0.00 0.00 37.50 50.00
T 0.05 49.50 99.00 49.88 95.00 45

4 0.10 48.00 96.00 49.50 90.00 46

0.11 47.58 95.16 49.40 89.00 47
0.12 47.12 94.24 49.28 88.00 48
0.13 46.62 93.24 49.16 87.00 49 0.75 I -62.50 1-125.00] 21.88 I 25.00 !
0.14 46.08 92.16 49.02 I 86.00 50 0.80 -78.00 -156.00 18.00 20.00
9 0.15 I 45.50 I 91.00 48.88 I 85.00 51 0.85 -94.50 –189.00 13.88 15.00
0.16 ! 44.88 ] 89.76 48.72 I 84.00 I52 0.90 -112.00 -224.00 9.50 10.00
48.56 83.00 53 0.95 –130.50 -361.00 4.88 5.00
48.38 82.00 54 1.00 -150.00 –300.00 0.00 0.00
=4+8=.20 81.00 55 1.05 I-170.501-341.001-5.13 I -5.00 I
0.20 42.00 84.00 48.00 80.00 56 1.10 -192.00 -384.00 -10.50 -10.00
0.21 41.18 82.36 47.80 79.00 57 1.15 -214.50 -429.00 -16.13 –15.00
0.22 40.32 80.64 47.58 78.00 58 1.20 -238.00 -476.00 -22.00 -20.00
0.23 39.42 78.84 47.36 77.00 59 1.25 -262.50 -525.00 -28.13 -25.00
0.24 38.48 76.96 47.12 76.00 60 1.30 -288.00 -576.00 -34.50 –30.00
0.25 37.50 75.00 46.88 75.00 61
20 0.26 36.48 72.96 46.62 74.00 62
0.27 35.42 70.84 46.36 73.00 63
0.28 34.32 68.64 46.08 72.00 64
0.29 33.18 66.36 45.80 71.00
IS 12040:2001
Table 3Calculated Values of(~- L)/s a) Vkual inspection —Each piece inthe sample
or(u-Z)/s isinspecte~ meritscoreawardedasperseriousness
ofnon-conformity:
(Clause 6.2.2.1)
Status Score
S1No. X- Llsor U-Xls Quality Rating
Unsatisfactory o
(1) (2) (3)
Satisfactory 6
1 0.1 2.5
Good 8
2 0.2 5.0
3 0.3 7.5 I Very good I 10 I
4 0.4 10.0 (This maybe treated as an illustrative example
1510.51 12.5 I only.Therelative percent Q~and/or statusgroups
1610.61 15.0 I may be chosen on practical considerations
depending onlikely losses each status imparts. )
7 0.7 17.5
Score ofeach sample piece iscalculated andthe
8 .08 20.0
average score isthe Q~of alot.
9 0.9 22.5
\
10 1.0 25.0 NOTE—Todiscriminatethepiecesasgood,bad,etc,
maintainstandardspecimensamplesandratethemas
11 1.1 I 27.5 above.
12 1.2 30.0
b)Inspection classifies apiece asconforming or
13 1.3 32.5 non-conforming or possessing number of
14 1.4 35.0 non-conformities
\
1 15 I 1.5 I 37.5 From standard inspection tables [ see IS 2500
11611.61 40.0 I (Part 1)] findsamplesize(n)andrejectionnumber
11711.71 42.5 I (r) Compute the Q~asfollows:
18 1.8 45.0 Q~= 100- 100(d/r)2
19 1.9 47.5 where ‘d’ is number of non-conformities or
r \
[ 20 2.0 I 50.0 I non-conforming pieces observed inthe sample.
12112.11 52.5 I NOTE—SeeTable4.
22 2.2 55.0
Table 4 ,...-
23 2.3 57.5
(Clause 6.2.2.2) ‘. ,
24 2.4 60.0 !’
*
25 2.5 62.5 I S1No. I IVr I Quality Rating
12612.61 65.0 I (1) (2) I (3)
12712.71 67.5 I 1 I 0.00 100.00
32 3.2 80.0 6 0.20 96.00
33 3.3 82.5 7 0.25 93.75
34 3.4 85.0 8 0.30 91.00
35 I 3.5 87.5 J 9 I 0.35 I 87.75
13613.61 90.0 I I 10 I 0.40 I 84.00
13713.71 92.5 I 11 0.45 79.75
1381 3.8 I 95.0 I 1121 0.50 I 75.00 I
39 3.9 97.5 13 0.55 69.75
40 4.0 Ioo.o 14 0.60 64.00
I 15 I 0.65 57.75 -1
6.2.2.2 Rating of aesthetic/attribute parameter of a 1161 0.70 I 51.00 I
product
1171 0.75 I 43.75 I
Any one of the following methods maybe adopted: I 18 0.80 36.00

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