Supplier Evaluation, Quality Assurance, and Ethical and Legal Standards
Supplier evaluation
Qualify suppliers on capability, capacity, financial health, quality system, technical fit, service and risk. Use a weighted scorecard so criteria weights reflect business priorities, and document the evidence behind each score. Financial screening uses ratios (current ratio, debt/equity) and trend analysis; a supplier close to insolvency is a supply risk even when its price is attractive.
Quality assurance
Prevention beats detection: design review, FMEA, process capability and supplier audits reduce defects before inspection. ISO 9001 certifies that a quality system exists, not that products are defect-free. Statistical process control uses control charts; capability indices compare spread to tolerance - Cp measures spread only, while Cpk also penalizes off-centering. A Cp/Cpk of at least 1.33 is the common threshold for a capable process. Acceptance sampling (AQL) balances producer's risk (rejecting a good lot) against consumer's risk (accepting a bad lot); AQL is the defect level sampling is set against, not a target. Corrective action uses root-cause methods such as 8D or 5-Why.
Ethics and law
Conflicts of interest, gifts, confidentiality, fair dealing and antitrust (no price fixing or bid rigging) are standard topics; the FCPA bars bribery of foreign officials. Know basic contract law: the UCC for goods versus common law for services, agent authority, express and implied warranties (merchantability, fitness for purpose), indemnity, force majeure, and liquidated damages that must be a genuine pre-estimate rather than a penalty.
Worked example
A process has mean 10.1, sigma 0.1, limits 9.7–10.3. Cpk = min(10.3−10.1, 10.1−9.7)/(3 × 0.1) = 0.2/0.3 = 0.67 - not capable. Centering the process at 10.0 raises Cpk to 1.0.