Supply Net

The Road to Supplier Performance Excellence

Introduction

Federal-Mogul Motorparts uses the following criteria to rate the performance of our suppliers for all Federal-Mogul Motorparts manufacturing and distribution facilities.

Purpose

• Identification of continuous improvement and cost-savings opportunities
• Promote and encourage improved communication on performance issues
• Provide objective data for use in supplier management and sourcing decisions
• Recognition of exceptional supplier performance

Terminology

Category :

These are the main groupings by which suppliers will be measured. The initial set of categories for which measurements will be compiled are Delivery, Quality and Supplier Cost-Saving Suggestions (SCSS). Each category has assigned weighting, which is rolled into the overall score. Category scores range from 0 to 100 points.

Overall Rating :

The Overall Rating is a description of the performance level of supply as viewed by Federal-Mogul Motorparts. Scores for each category are multiplied by the weighting, and the summation entails the overall score for the supplier. Overall Ratings associated to the overall score are as follows :

Overall Rating Weighted Point Score :

• Preferred: 90 to 100
• Acceptable: 70 to 89
• Developmental: 0 to 69

“Preferred“ Supplier Rating:

• Federal-Mogul Motorparts will work with these suppliers on new product development.
• Federal-Mogul Motorparts will assist these suppliers in maintaining a competitive position.
• Federal-Mogul Motorparts will maintain a listing of “Approved for New Business“ suppliers.

“Acceptable“ Supplier Rating :

• Federal-Mogul Motorparts will require a plan from the supplier outlining how to achieve preferred status.
• Federal-Mogul Motorparts will monitor supplier improvement.

“Developmental“ Supplier Rating:

• Federal-Mogul Motorparts requires corrective action if the supplier is rated at this level for three consecutive months during the calendar year.
• The supplier must provide plans to improve performance to an acceptable level.
• Federal-Mogul Motorparts will look at alternative sources if performance does not improve.

Supplier Rating Qualifications :

The rating system will entail any supplier deemed appropriate by the Federal-Mogul Motorparts Manufacturing/Distribution Purchasing Team.

Supplier Scores and Category Weighting

As illustrated above, there are three main categories by which suppliers are measured :

• Delivery 40%
• Quality 40%
• Supplier Cost-Saving Suggestions (SCSS) 20%

A value is displayed in each category on the Global Scorecard for every Federal-Mogul Motorparts facility receiving product(s) or service(s) from the supplier.

Quality Category: Rating Criteria

The Quality category is comprised of two components :

• Parts Per Million (PPM) 50%
• Quantity of supplier corrective action requests (SCARs) 50%

PPM is based on SCARs. Both the number of SCARs and PPM are reported monthly. SCAR responsiveness does not factor into the supplier’s Overall Score. Currently, it is only displayed on the Scorecard.

Delivery Category : Rating Criteria

On-time delivery:

The delivery score is based on the average percentage across using plants for the current month. On-time delivery percentage has a window of one day early and zero days late to the due date and +/- 5% of order quantity. The on-time delivery percentage is determined by line items received on time divided by the number of line items due by the supplier for the month.

Consignment programs receive a 100% delivery percentage unless a stockout is caused. The score is reduced by 10% for each day of the stockout.

SCSS (Supplier Cost-Saving Suggestions): Rating Criteria

5% target performance :

SCSS are targeted at 5% of the year’s forecasted dollars spent. The supplier must make SCSS submittals to the plant or the commodity manager.