At what price ppm?

What is the true measure of quality? In baseball it's batting and earned-run averages. In football it's yardage gained and allowed. In automotive parts supply it's defective parts per million units (ppm). Or is it?

Automakers hand out quality awards to their suppliers based on a number of criteria, not the least of which is ppm. Supplier quality programs are geared to make ppms as low as possible. But there is an ongoing debate about the importance of ppm among quality experts.

"It is the ultimate measurable, but it's one part of overall quality," says Mike Sinnaeve, director of quality and continuous improvement for Magna International Corp.'s Decoma Exterior Group, which boasts a number of zero- and low-ppm facilities. Kola Phillips, senior vice president of operations at Breed Technologies Inc., says, "It's just one of the vital things we measure. The other is customer satisfaction." Mr. Phillips says all five of Breed's plants have single-digit ppm numbers.

Zero ppm is a good goal as long as the measurement is related to customer functions" says quality expert O.P. Gupta, vice president of Zexel Torsion Inc.'s North American Operations. "Correlation of ppm to customer function should be very strong."

Quality Function Deployment (QFD), which compares customer requirements to a supplier's internal specifications, is one technique suppliers use to ensure that their ppm criteria line up with what their customers expect, says Mr. Gupta. "Sometimes the correlation is so weak that the internal measurement can be eliminated," he adds. Mr. Gupta notes that today's tendency is to tailor internal specifications to what the customer is demanding, "but I'm not sure it's become part of the industry culture yet."

Not paying attention to QFD could result in a defect-free part arriving at a customer's assembly plant and causing a fit problem with another supplier's part. Such a situation can reflect negatively on a suppliers' quality standing with that customer.

"You could have a stack up of tolerances that could cause a problem," explains Mr. Sinnaeve. "Our part could be at one end of the accepted tolerance and the part next to ours is at the other end of the accepted tolerance and they might not fit. Both parts are defect-free, but there is still a problem."

At this point, usually during a vehicle's pilot build phase, a cross-functional meeting between both suppliers and the automaker takes place to decide which is the most economical part to change. "An underbody part may be more likely to be changed than one with a Class A finish:' says Mr. Sinnaeve.

This kind of occurrence can be prevented, say the experts, with advanced quality planning. "You need to involve all the right disciplines early and design for manufacturability; look at it systematically," says Mr. Sinnaeve. "All suppliers and customers involved should work as a team."

He cites an example of a brainstorming session for the side cladding of Chrysler's new minivan. A one-day early planning meeting resulted in 54 ideas to improve the component, including cost savings. Suppliers of mating components, assembly plant personnel, automaker design and purchasing personnel and sub-suppliers need to be involved in the advanced planning process.

"Involving our suppliers up front is a major issue," says Mr. Sinnaeve, adding that helping sub-suppliers with QS-9000 certification is a step in the right direction. Obviously, it's much easier for Tier I suppliers to deliver defect-free parts to automakers when the raw materials and sub-assemblies they receive are flawless.

Breed's Mr. Phillips says his company's interbal ppm specifications already are "very, very close" to customer functional requirements, and that the secrets to Breed's quality success lies in employee empowertment.

"We give autonomy to our employees," he says. "They have the power to stop the line when one thing goes wrong. That is one big thing that helps this company."

In addition, all Breed workstations are mistake-proofed, employees are part of the team that writes operating procedures, and top management is included in monthly continuous improvement meetings.

"We have a sense of urgency in our company," says Mr. Phillips. "Employees have immediate access to all management to get problems solved."

Other important quality monitors and measurements that go beyond ppm include Quality Operating System (QOS) and Cost of Quality Systems (CQS). QOS continually reviews a company's processes for quality. CQS analyzes the cost of inspections and prevention activity as well as external and internal failures. "If you spend money on prevention, the rate of failures and their associated costs will go down," says Mr. Phillips.

Even though ppm is only one part of the overall quality picture, it is still a very large part. And automakers continue to raise their expectations. Ten years ago, 200 ppm was considered the norm. Today, 100 ppm is acceptable. Suppliers are now getting targets in the 25 to 60 ppm range.

Breed's Mr. Phillips sums up the industry's future: "Unless you are single-digit ppm in the auto industry by the year 2000, you will not survive."