The purpose of this report is to develop an Approved Vendor List using Lean Sigma-Six guidelines for MorphoTrust USA. The company is undergoing a corporate wide implementation of Lean Sigma-Six methodologies which includes creating a definitive process for approving vendors that deliver the upmost in business value while reducing waste incurred by the customer. To that end, it is imperative for MorphoTrust USA to create a standard procedure for the vendor approval process based on the vendor’s critical factors and scorecard assessment.
As a multi-million-dollar company, MorphoTrust USA offers its clients safe identity management solutions tailored to fit their needs and the company’s goal of “One Person, One Identity” in order to “simplify, protect and secure the lives of the American people” . The company works with all levels of government (local, state, and federal) delivering exhaustive identity verifications without endangering the privacy of the individual. MorphoTrust USA offers complete identity solutions including ID issuance, applicant enrollment processes, biometric collection, and secure data management.
In order to further ensure trust and security, MorphoTrust USA is implementing a corporate wide restructuring through the utilization of Lean Sigma-Six methodologies. Part of the Lean Sigma-Six structure includes the creation and employment of an Approved Vendor List (AVL). By standardizing an AVL based on the vendor’s critical factors and scorecard assessments, MorphoTrust USA will streamline the AVL process making it more efficient while removing waste issues previously plaguing the company.
It is imperative that MorphoTrust USA implements Lean Sigma-Six methodologies in order to ensure the continued security of individual and corporate identity data due to the ever-increasing utilization of the Internet and Identity Fraud. By employing an AVL based on Lean Sigma-Six, MorphoTrust USA will continue to provide their customers the assurance of secure identity information that will not be compromised via outside sources or vendors.
To this end, improving Supply Chain Management by implementing an Approved Vendor List (AVL) according to Lean Sigma-Six protocols including proposing a definitive evaluation criteria, continued reevaluations with measured frequency, and constructing a corporate-wide procedure for vendor approval. The once designed and employed, the AVL will be used on all current vendors and going forward on all prospective vendors seeking to service MorphoTrust USA. This will start the reduction of waste due to too many vendor sources, increase efficiency as using the AVL will eliminate the need for each department having to evaluate a vendor, and thus decrease company costs and generate greater profits across all corporate sectors. The speed of delivery from vendors will increase due to the Lean Sigma Six incorporation as will the efficiency of each department and each employee of MorphoTrust USA.
The following image outlines the purpose of implementing Lean Sigma Six to the Supply Chain Management system:
(Image omitted for preview. Available via download)
This AVL process affords accountability of the vendors to achieve the AVL status and to maintain their status as each reevaluation. Additionally, safeguards will be employed to notify AVL users of those vendors who are limited or banned from supplying. Any vendor can re-apply to the AVL once they are certain to have removed any issues that caused their removal from the AVL.
An Approved Vendor List is a Lean Sigma Six term used to define a group or listing of supply vendors that have met or exceeded a set of approval standards established by the business entity. It involves a formal approval process for evaluating vendors including an assessment of critical factors (Security, Purchases, and Current Status) and a scorecard (Key Performance Metrics) in order to determine the merits of placing or maintaining the vendor on the Approved Vendor List.
The Vendor Approval Process’ objective is to provide MorphoTrust USA with standard procedures for approving vendors into the Supply Chain. The approval will be based upon the critical factors assessed to each vendor, whether current or future. The Process should also include procedures for period reevaluation of current vendors and those under probation or wishing to return to AVP status from banned.
The following process map gives an outline of the current state of the vendor approval process at MorphoTrust USA. The current MorphoTrust USA vendor approval process is very limited in affording any true security or relevant information concerning the supply venders used or to be used by the company. There is no standardized formal approval process thus making it impossible to streamline the procedure throughout the corporate structure. Plus, this allows for inadequate or different criteria judging from department to department making it possible for some vendors to receive approval in one location but not in another.
Additionally, the current status of a vendor is not regulated or updated appropriately. The means for determining reevaluation is solely based upon the vendor’s financial reports and a credit check performed once a year. This leaves open the possibility for negligence and interruption of delivery service should a vendor begin to suffer financially within that time frame.
In determining existing AVP processes from other companies, emphasis was placed on researching entities with the same or near same level of security requirements as MorphoTrust USA. In doing so, it made sense that the structure and rigidity of the approval process would be similar in nature, detail, and sensitivity. According to Assemblymag.com , an effective method for supplier evaluation is to develop four basic groups or classes of vendors:
1. Full Partner – meets all expectations set forth;
2. Associate Partner – is good but needs a bit more work to achieve full partner status;
3. High Risk – a vendor that is currently in use in the production process but will probably be removed once completed. Not recommended for future purchasing; and
4. Incapable – a vender unwilling or unable to meet most or any expectations of the supplier evaluation criteria.
The importance of obtaining “full partner” vendors is crucial to the achievement of Lean Sigma Six requirements. The basic concerns includes finding like-minded or goal oriented vendors with similar corporate ideologies, 100% demonstrated on-time delivery performance, fully ISO 9000 or QS 9000 approved, 24 support and response for any and all issues or emergencies, and consistently meets or exceeds in technology, quality, responsiveness, delivery, efficiency, and lower cost overall.
Several companies currently embrace this supplier evaluation criterion including Union Pacific RailRoad, Lockheed Martin, and Boeing. Each of these entities are on par with MorphoTrust USA in requiring stringent vendor security and accountability in order to comply with all local, state, and federal regulations concerning sensitive information and data.
For MorphoTrust USA, the following vendor statuses are developed:
1. New – no previous purchase history with MorphoTrust;
2. Pilot Approval – vendor has reached a minimum rating threshold for approval. They are treated as an “approved” vendor but with more frequent reevaluations;
3. Approved – can supply to MorphoTrust without restrictions;
4. Probationary – current vendors moved to remedial status. They must accept and understand their evaluation issues and put in place certain processes to eliminates them by the next reevaluation;
5. Debarred – vendor does not meet the requirements set forth by MorphoTrust and are not able to do any business with the company.
An Approved Vendor List (AVL) should be based upon the following flow chart:
(Chart omitted for preview. Available via download)
With this Vendor Approval Process, the current or future vendor completes a new vendor request form along with an IRS W-8 or W-9 form and submits them along with their most current financial reports. If this information does not meet with satisfaction, the vendor is denied approval. If the reports are satisfactory, the next phase involves evaluating the critical factors of supply and demand, security, purchase amount, and current vendor status. A vendor evaluation is then performed based upon the critical factors with the outcome possibilities of debarred (banned), probationary, or approved. If debarred, the vendor is denied approval. If probationary, the vendor has limits for purchase and must meet certain corrective actions in order to achieve approved status. If approved, the vendor is placed on the AVL with approval status until the next evaluation period.
The benefits of MorphoTrust USA implementing a Lean Sigma Six Approved Vendor List (AVL) are significant in terms of efficiency, standardization, and cost effectiveness. The AVL brings to the company a more secure and link minded partnership with vendors who display excellent financial reports, customer service records, and ability to handle any and all situations that may arise when doing business with MorphoTrust. It affords the company to become Lean Sigma Six compliant with vendor relationships while reducing the internal costs and time usage when accessing suppliers. The standardization will bring a level of ease that allows any employee within any department to access the AVL at any time while knowing the information is current and relevant.
Part of implementing the Lean Sigma Six requirements corporate-wide includes MorphoTrust USA to establish an Approved Vendor List (AVL). The AVL is more than a listing of suppliers but rather a gathering of high-quality vendors dedicated to the same goal – security, customer service, and consistency of business. The AVL businesses will meet or exceed all standards developed by MorphoTrust USA in selection and achievement as an approved supplier. The ability to become Lean Sigma Six certified opens new avenues to MorphoTrust for continued growth and success with its current and future customers.
"Approved Vendor List." Industrial Third-Party Inspection Services. n.d. http://www.inspection-for-industry.com/approved-vendor-list.html.
"Boeing Supplier List." Boeing. com. n.d. www.boeingsuppliers.com/quality/IR0451.pdf.
Harry, M., P. Mann, O. De Hodgins, and R. Hulbert. Practitioner’s Guide to Statistics and Lean Sigma Six for Process Improvements. Hoboken: John Wiley & Sons Publishers, 2010.
"History - Company - MorphoTrust USA" Home - MorphoTrust USA. n.p., n.d. http://www.morphotrust.com/pages/204-history.
"Home - MorphoTrust USA" Home - MorphoTrust USA. n.d. http://www.morphotrust.com.
"Introduction" www.morphotrust.com. n.d. www.morphotrust.com/files/847-MorphoTrust_One_page_intro_091112_final.pdf.
Lilley, M., and D. DeCoste. "Project Times | Demystifying Lean Six Sigma." Project Times | Articles | Blogs | Training | Jobs. 1 May 2012. http://www.projecttimes.com/articles/demystifying-lean-six-sigma.html.
"Lockheed Martin Â· Suppliers." Lockheed Martin Â· Lockheed Martin. n.d. http://www.lockheedmartin.com/us/suppliers.html.
"Mission, Vision & Values." www.morphotrust.com. n.d. www.morphotrust.com/files/819-MTUSA_MissionVisionValues.pdf.
"Plaquette." morphotrust.com. n.d. www.safran-group.com/IMG/pdf/Plaquette-30-juin-GB-V-30-7.pdf.
"UP: Track Materials Vendor List." uprr.com. n.d. http://www.uprr.com/customers/ind-dev/vendor_list.shtml.
"How to Evaluate Suppliers." Assembly Magazine | Processes, technologies and strategies for assembling parts in automotive, medical, aerospace & appliances. n.d. http://www.assemblymag.com/articles/82672-how-to-evaluate-suppliers.