Supplier Performance
Hendrickson/Watson & Chalin highly value the reliability of a supplier which consistently maintains on-time deliveries and provides high quality parts and service. Furthermore, we understand the importance of visibility in supplier performance as part of the supply chain management process. In order to facilitate transparency in this relationship, our Supplier Portal provides up-to-date information regarding supplier performance.
The Supplier Portal converts a supplier’s performance into a rating system. Quality, Delivery, Lead Time, and Fill Rate are calculated, as well as an Overall Rating. (Please see below for an explanation of each rating type). On the Supplier Portal, the supporting detail data is also available for each of the ratings.
Please note that evaluations and goals for each of the ratings may vary among Divisions and Suppliers.
Overall Rating
The Overall Rating is an average score which takes into account the supplier’s Quality, Delivery, Lead Time, and Fill Rate scores. This average score is a reflection of the overall performance earned by a supplier.
Overall Rating Formula:
(Quality Rating + Delivery Rating + Lead Rating + Fill Rating) ÷ 4 = Overall Rating
Note: All ratings have a minimum of 0% and a maximum of 100%.
Quality Rating
The Quality Rating is based on the PPM metric, which is the number of parts rejected per million units shipped. The calculated PPM score is then converted to a percentage. (Please note that many Hendrickson/Watson & Chalin Divisions may place more emphasis on the calculated PPM score than the converted rating.)
PPM Formula:
(Number of Parts Rejected ÷ Number of Parts Shipped) x 1,000,000 = PPM Score
Quality Rating Formula:
(2,000 – PPM Score) ÷ 2,000 = Quality Rating
Delivery Rating
The Delivery Rating, otherwise known as the On-Time Rating, is based on the supplier’s ability to deliver parts on-time according to the due date on the Purchase Order or 9J.
On-Time Delivery Rating Formula:
Number of On-Time Shipments ÷ Total Number of Shipments = Delivery Rating
Delivery Status:
- Early = Received > 3 Days Before PO Due Date
- Late = Received > 1 Day After PO Due Date
- Compliant = Neither Early nor Late
Note: Suppliers are expected to be zero (0) days late. This calculation utilizes one (1) day late in order to give the plants one (1) full business day to receive product into the system after it has been physically received to the dock.
Lead Rating
The Lead Rating is calculated as follows: The lead times of all lots are summed by part number. The summed total is then divided by the total number of lots to get the weighted average lead time. This weighted average is then converted to a percentage.
Weighted Average Lead Time Formula:
Sum of All Extended Lead Times (Lead Time for Each Lot) ÷ Total Number of Lots = Weighted Average Lead Time
Lead Time Rating Formula:
(110 – Weighted Average Lead Time) ÷ 100 = Lead Time Rating
Fill Rating
The Fill Rating is defined as the percentage of the order that is delivered on the due date.
Fill Rating Formula:
Number of Compliant Shipments ÷ Total Number of Shipments = Fill Rating
Fill Rating Status:
- Over-Filled = Quantity Received > (Quantity Scheduled x 1.03)
- Under-Filled = (Quantity Received x 1.03) < Quantity Scheduled
- Compliant = Neither Over- nor Under-filled