A Green Scorecard That Hides Line Stoppages and Rescheduled Promise Dates
A molded-components supplier has been green on your monthly scorecard for seven consecutive months: 98.6% OTD and 41 PPM. The scorecard pulls OTD from the supplier's ASN transmission date and PPM only from defects found at your incoming inspection. A new quality engineer notices that the supplier's on-time figure improves whenever it re-confirms a promise date in the portal, and that your assembly line has had four stoppages in eight weeks, each traced to the same supplier's parts, plus $38,000 in premium freight and 2,400 parts sorted at your expense. Incoming inspection samples only 29 pieces per lot under your AQL plan, and the supplier's internal scrap rate has risen from 3% to 9%. The supplier's account manager cites the green scorecard in a commercial discussion and asks for a price increase, arguing performance is excellent. Your VP wants a one-page summary before the quarterly business review.
1. Diagnose why the scorecard is misleading and specify how the metrics should be redefined.
Read the worked answer
The scorecard is measuring the wrong events and using a weak detection method:
- OTD: measured against a re-confirmable promise date, so the supplier can move the target and always look on time. Redefine as delivery against the original acknowledged date; track re-confirmations separately and report them as a change count.
- PPM: counts only incoming-inspection failures, so defects found at the line, at downstream operations, or in the field are invisible. A 29-piece sample under an AQL plan has low power to detect low defect rates; it cannot support a 41 PPM claim. Add line rejections, stoppages, sorts, and field returns to a single nonconformance rate.
- CoPQ: premium freight, sorting, and downtime are excluded. Report them monthly and attribute them to the supplier when traceable.
- Leading indicators: internal scrap rising from 3% to 9% is an early warning and should appear on the scorecard even though it is self-reported. Validate it during visits.
Freeze the definitions in a supplier scorecard procedure, use one data source of record, and reconcile the new numbers with the old ones before publishing. Do not change definitions silently mid-quarter; explain the change at the QBR.
2. What should the VP present at the quarterly business review, and how should the supplier's price request be handled?
Read the worked answer
Present a balanced but factual picture:
- What the old scorecard said - green for seven months.
- What operations experienced - four stoppages, 2,400 parts sorted, $38,000 premium freight, scrap up from 3% to 9%.
- Why the gap exists - metric definitions and detection limits, not a sudden supplier collapse.
- Corrected performance - delivery against original dates, total nonconformance rate, CoPQ.
- Improvement plan - joint root cause on the scrap trend, containment for the affected part family, and targets with dates.
Handle the price request separately from the performance review. Do not trade quality performance for price in the same conversation; that invites scorecard manipulation. Ask for an open-book justification of the increase, offset it against verified CoPQ and productivity opportunities, and make any increase conditional on agreed quality and delivery targets. If the supplier disputes the data, agree on a joint data-validation session before commercial terms are discussed. The message to the supplier is: we want a stable, profitable supplier, and accurate metrics are the basis for both.
3. What controls would you put in place so the scorecard cannot be gamed again?
Read the worked answer
Use four controls:
- Definition ownership: a documented metric dictionary approved by quality, supply chain, and the supplier, with formulas, data sources, and exclusions. Changes require change control.
- Data independence: OTD from your ERP receipt/commit dates, not the supplier's ASN; nonconformance data from receiving, line, and warranty systems; periodic reconciliation to the supplier's data.
- Audit the data: sample and verify supplier-reported scrap and yield during process audits; require lot-level traceability so escapes can be attributed.
- Review cadence: monthly operational review with the supplier and quarterly business review with trends, not single points. Use red/amber/green thresholds with defined escalation, and a rule that a green score with any line stoppage triggers a review.
Also add a behavioral safeguard: reward early disclosure of problems. If a supplier is penalized more for reporting a near-miss than for hiding it, the data will degrade again.