2015 Supplier Scorecard Criteria Owner: Don Cook National Instruments’ Supplier Scorecard Assessment Criteria I. OVERVIEW ........................................................................................................................ 1 II. QUALITY – 30 points total ............................................................................................. 2 a. NCMR count ................................................................................................................. 2 b. DPPM............................................................................................................................ 3 c. DPPM scoring brackets................................................................................................. 4 d. SCAR, IQE, and CQE scoring ...................................................................................... 5 III. SUPPLY ASSURANCE (3 part section) ........................................................................ 6 a. On-Time Delivery formula ........................................................................................... 6 b. On-Time delivery scoring ............................................................................................. 6 c. Lead Time formula ....................................................................................................... 7 d. Lead Time scoring by commodity ................................................................................ 7 e. VDL scoring.................................................................................................................. 8 IV. TOTAL COST (3 part section) – 30 points total ............................................................. 8 a. Savings – 15%............................................................................................................... 8 b. Innovation/Flexibility – 10% ........................................................................................ 9 c. Supplier Corporate Responsibility – 5 points total ....................................................... 9 V. CUSTOMER SERVICE/SUPPORT – 10 points total ................................................... 10 a. Rating definition: NI Procurement Personnel ............................................................ 10 b. Rating Definition: NI Non-Procurement ................................................................... 10 c. Service/Support formula: ............................................................................................ 10 I. OVERVIEW The National Instruments (NI) Supplier Scorecard provides a quantitative and consistent process to measure supplier and original manufacturer performance categories critical to our success, and drive toward continual improvement in all areas important to NI. This process is designed to improve incoming material quality, reduce lead times, help achieve uninterrupted supply, enhance pricing competitiveness (lowest total cost of ownership) and improve customer service. The Supplier Scorecard uses four main assessment criteria, which provide the best gauge of product and service performance. The four criteria are Quality, Supply Assurance, Total Cost, and Customer Service and Support. These are assigned points (or percentages) totaling 100 points (Quality = 30, Supply Assurance = 30, Total Cost = 30, Customer Service/Support = 10.) The OEM Scorecard and Product Partner Scorecard measure Quality only and total 30 points. Page 1 2015 Supplier Scorecard Criteria Owner: Don Cook Below is a description of each assessment criterion (II. Through V.): II. QUALITY – 30 points total Quality is worth 30% of the total scorecard or 30 points total. The breakdown of these 30 quality points depends upon the commodity. For ASICs and electronic distributors, and product partners, the 30 points is subdivided into three categories: NCMR count, Defective parts per million (DPPM) and SCAR occurrence/severity. For all other commodities, the 30 points is subdivided into two categories: Defective parts per million (DPPM) and SCAR occurrence/severity. The point breakdown can be summarized as follows: Supplier Scorecard ASICs & Electronic Distributors 5 15 10 NCMR count DPPM SCAR occurrence/severity Total 30 OEM Scorecard DPPM SCAR , IQE, CQE, occurrence/severity Total Product Partner Scorecard NCMR count DPPM SCAR , IQE, CQE, occurrence/severity Total All other commodities Not scored 20 10 30 20 10 30 5 15 10 30 a. NCMR count (applicable only for ASICs, Electrical Distributors and Product Partners) NCMR stands for Nonconforming Material Report. ASIC, Electrical distributors and Product Partners start out with a given 5 points in Quality and lose points based on the number of NCMRs. For each NCMR, a negative one (-1) point will be applied. Page 2 2015 Supplier Scorecard Criteria Owner: Don Cook This is typically a 5 point section but if a supplier has more than 5 NCMRs in one quarter, additional points will be taken from the other quality categories. See table below for example: NCMR Count 0 1 2 3 4 5 6 Etc. Points subtracted 0 (supplier scores 5 in this category) -1 (supplier scores 4 in this category) -2 (supplier scores 3 in this category) -3 (supplier scores 2 in this category -4 (supplier scores 1 in this category) -5 (supplier scores 0 in this category) -6 (0 points from the NCMR category plus taking 1 point from another quality category Etc. Note: NI may chose to contract with Electrical distributors to manufacturer product resell solutions or product integration services. NCMRs for these types of product are removed from the NCMR count for a given scorecard distributor. The purpose being that NI wants to track NCMR count as it applies to typical distribution type components, not product integration services where the distributor has a large role in the manufacturing of the product. However, the defects themselves are reflected in a given distributors DPPM score. b. DPPM (defective parts per million) The defect rate at the piece part level. The calculation is: quantity of parts rejected X 1,000,000 quantity of parts received Rejects counted are identified within the reporting period, regardless of when the product was received, and compared with the quantity received within the same period. Multiple rejections can be recorded against one part. NI has established individual or like commodity DPPM brackets. “Bracket” means a table which details out the commodity, the DPPM ranges and the given points associated with a DPPM range. Refer to the next section for the specifics. Page 3 2015 Supplier Scorecard Criteria Owner: Don Cook c. DPPM scoring brackets (commodity specific) Supplier Scorecard: Distribution, ASIC Supplier Scorecard: OEM Scorecard : Crystal/Oscillator, Hardware Distributors Standard IC, Interconnect, Relay, Solid State Storage, DIMM Memory DPPM Score 0 - 400 401 - 800 801 - 1200 1201 - 1500 >1500 % 0.04% 0.08% 0.12% 0.15% >0.15% Points 15 12 10 5 0 Supplier Scorecard: Software, Print, DPPM Score >0 - 200 201 – 400 401 - 600 601 – 750 751 - 1000 >1000 % 0.02% 0.04% 0.06% 0.075% 0.10% >0.1% Points 20 17 15 10 5 0 Supplier Scorecard: PCB Packaging, Label DPPM Score % Points DPPM Score % Points >0 - 500 0.05% 20 0-1000 0.10% 20 501 - 1000 0.10% 17 1001-2500 0.25% 17 1001 - 1500 0.15% 15 2501-5000 0.50% 15 1501 - 2500 0.25% 10 5001-7500 0.75% 10 2501 - 5000 0.50% 5 7501 - 10000 1.00% 5 >5000 >.50% 0 10001-15000 1.15% 3 >15000 >1.15% 0 Supplier Scorecard: Cable, Metal, Plastic, Supplier Scorecard: Chassis & Backplane, Flex PCB OEM Scorecard: Power Supply OEM Scorecard: Hard Drive, RF Specific DPPM Score % Points DPPM Score % Points 0 - 2000 0.20% 20 0 - 4000 0.40% 20 2001 - 4000 0.40% 17 4001 - 7500 0.75% 17 4001 – 7500 0.75% 15 7501 – 10000 1.00% 15 7501 - 10000 1.00% 10 10001 - 20000 2.00% 10 10001 – 15000 1.15% 5 20001 – 25000 2.50% 5 > 15000 >1.15% 0 > 25000 >3.50% 0 Page 4 2015 Supplier Scorecard Criteria Owner: Don Cook Product Partner Scorecard: DPPM Score 0 - 4000 4001 - 7500 7501 – 10000 10001 - 20000 20001 – 25000 > 25000 % 0.40% 0.75% 1.00% 2.00% 2.50% >3.50% Points 15 13 11 7 5 0 d. SCAR, IQE, and CQE scoring Supplier Corrective Action (SCAR), Internal Quality Escalation (IQE), and Customer Quality Escalation (CQE) SCARs can be issued to a supplier in several cases. Such cases include supplier or Manufacturer fault NCMRs that impact NI manufacturing and/or NI customers. SCARs will be given a severity level based on impact: red = high, orange = medium, yellow = low/minor. IQEs and CQEs are internal quality issue tracking documents that may or may not result in a SCAR. Currently they only apply to OEM & Product Partner Scorecards. The severity level designations are the same as above for SCARs. Factors that NI considers when assessing SCAR severity are as follows but not limited to: Parts require sorting Repeat occurrences of problem Reject quantity such that DPPM points go to 0 (zero.) NI production is disrupted (line down situation or significant rework) Previous Corrective Action was ineffective Customer request for Corrective Action NI product is placed on shipping hold Problem of a systemic nature Safety issue NI product is recalled A supplier starts out with 10 given points in this category. A given SCAR deducts points from this 10 point bucket. It is possible to deduct points for SCARs beyond Page 5 2015 Supplier Scorecard Criteria Owner: Don Cook this 10 points. In that case, the points will be taken from another quality category. See table below for example: SCAR severity Red (high impact) Orange (medium impact) Yellow (lower impact) Points subtracted from 10 pt. starting point -9 -3 -1 Note 1: SCAR severity replaces the “penalty points” that were introduced in 2008. Note 2: A thorough 6 step root cause analysis and corrective action is required for all red and orange SCARs, including a Why Happened? and Why Escaped? Yellow rated SCARs only require a documented correction. The severity level and required fields will be shown on the NI Supplier Corrective Action form. III. SUPPLY ASSURANCE (3 part section) – 30 points total Supply Assurance is worth 30% of the total scorecard or 30 points total. Note: Section does not apply to OEM Scorecard a. On-Time Delivery formula On Time Delivery is the percentage of line items actually received “on-time” as compared to the supplier’s measured delivery date on a Purchase Order. “On-time” receipt is defined as delivery to NI’s dock from seven days early to one day late. On time delivery is measured by Receipt Date compared to Oracle PO line “Need By Date,” to determine a supplier’s On Time Delivery performance. The calculation is: number of receipts delivered on time X 100 (rounded up at .5) total number of shipments In the case of deliveries to multiple sites across NI (NIC, NIH for example), the total count of deliveries during the quarter to both sites will be compared to the number deliveries not on time. This section is weighted 15% of the total scorecard. b. On-Time delivery scoring Criteria for all suppliers Data > 98% > 97% > 96% Page 6 Score (Points) 15 14 13 2015 Supplier Scorecard Criteria Owner: Don Cook On –Time Delivery > 95% > 94% > 90% > 80% < 80% 12 10 5 2 0 c. Lead Time formula The average lead-time (including transit time) in business days for all items with a forecast greater than 0 and sourced from the supplier. The section is weighted 10% of the total scorecard. The calculation is: Sum of all Supplier lead-times (includes transit time) in days Number of part numbers purchased from Supplier (rounded down at .5) d. Lead Time scoring by commodity Following is the ranges of lead times by commodity, categorized in ranges of actual Lead Time performance for that commodity (less than average, average, and better than average). The unit of measure is business days. GCM’s have the discretion to select the specific score within the point range based on supplier performance. Lead Time Matrix for Scorecard Criteria Performance Range Below Average Average Above Average Points 0-5 6-9 10 Distribution >16 12-15 10-11 ASIC's >66 52-65 0-51 0-4 5-7 8-10 Software & Print >12 10-11 0-9 Hardware, Packaging >10 6-10 0-5 Labels >20 16-19 0-15 Metal (Extrusion, Sheet Metal) >40 16-40 0-15 Plastic Injection Molded >45 30-45 0-30 High Tech PCB's >45 35-40 0-35 Low/Medium Tech PCB's >40 31-40 0-30 Cables >60 41-60 0-40 Complex Assemblies >80 51-80 0-50 Die Cast Painted Assemblies >60 41-60 0-40 Points Page 7 2015 Supplier Scorecard Criteria Owner: Don Cook e. VDL scoring (Vendor Discrepancy List) The number of Closed VDL’s (Receiving discrepancy) which a supplier causes (as noted per the VDL responsibility of “Supplier”) will be accounted for, compared to the number of line items Received, as a percentage. The section is weighted 5% of the total scorecard. VDL’s % of lines received Points < .75% 5 points .75 – .99 3 1.0- 1.49 1 1.5 0 IV. TOTAL COST (3 part section) – 30 points total Total Cost is worth 30% of the total scorecard or 30 points total. Note: Section does not apply to OEM Scorecard a. Savings – 15% Annually, each GCM will set the Savings Expectation by supplier depending on the supplier’s ability to provide Savings. Savings point allocation: Savings/Cost Avoidance Performance Exceeded expectations Met expectations Below expectations Points: 9-15 8 0-7 Savings point allocation for OEM: Direct Cost Savings Performance Exceeded expectations Met expectations Below expectations Points: 6-7 5 0-4 Page 8 2015 Supplier Scorecard Criteria Owner: Don Cook Avoidance point allocation for OEM: Avoidance Performance Exceeded expectations Met expectations Below expectations b. Points: 7-8 6 0-5 Innovation/Flexibility – 10% The measure of a supplier’s flexibility, innovation, and overall ease of doing business with. This section is fairly subjective and will rely heavily on the GCM’s overall experience and judgment. An example of being flexible: Supplier working with NI to take back excess material and find alternate sales channels for this product An example of innovation: Supplier providing analysis and recommendations on how often their parts should be bought annually, in order to optimize buy cycles for both the supplier and NI – resulting in decreased costs for both companies Innovation/Flexibility point allocation: Innovation/Flexibility Exceeded expectations Met expectations Below expectations Points: 8-10 4-7 0-3 C. Supplier Corporate Responsibility – 5 points total This section allocates points based on the suppliers score from the 2015 NI weighted EICC RA1 supplier responsibility survey Supplier Corporate Responsibility point allocation: Supplier Corporate Responsibility for Scorecard Criteria Unacceptable level of support Acceptable level of support Excellent level of support Unacceptable level of support Page 9 Points 0 3 5 2015 Supplier Scorecard Criteria Owner: Don Cook Supplier did not complete survey after 2 email reminders or scored High Risk (Red) in EICC RA1 Survey Acceptable level of support – Supplier scored as Medium Risk (Yellow) in EICC RA1 Survey Excellent level of support Supplier scored as Low Risk (Green) in EICC RA1 Survey V. CUSTOMER SERVICE/SUPPORT – 10 points total Customer Service/Support is worth 10% of the total scorecard or 10 points total. Two main groups of NI personnel (Procurement and Non-Procurement) provide input on supplier performance through supplier survey questions. Note: This portion of the scorecard is only exercised in Q1 and Q3 quarters. Note: Section does not apply to OEM Scorecard a. Rating definition: NI Procurement Personnel The average of ratings on a scale of 1 to 5 given by the appropriate NI Procurement personnel to specific questions relating to customer service and support. Different commodity areas have different surveys. The section is weighted at 5%. b. Rating Definition: NI Non-Procurement The average of ratings on a scale of 1 to 5 given by appropriate NI NonProcurement personnel to specific questions relating to customer service and support. Different commodity areas have different surveys. The section is weighted at 5%. c. Service/Support formula: The calculation is: Sum of all rating scores Total number of ratings received (rounded) This document is stored in the following locations: http://www.ni.com/company/procurement/supplierhandbook.htm#scorecard Page 10 2015 Supplier Scorecard Criteria Owner: Don Cook http://shift2.natinst.com/manufacturing/Procurement/QuarterlySQMain.shtml \\Nirvana\Procurement\Supplier Performance\Supplier Metrics\Supplier Scorecards Page 11