A Pro-Active Risk Management Approach Guides Pg&E's Supplier Quality Assurance Team

Jamie Martin, Vice President of Supply Chain and Chief Procurement Officer, Pacific Gas and Electric Company

Most business professionals are familiar with the Project Management Triangle, which consists of quality, cost, and time.

The basic premise is one has control only over two of them.

However, at Pacific Gas and Electric Company (PG&E), our Supplier Quality Assurance Department has redefined this long-standing paradigm.

When working with our more than 450 active material suppliers, SQA’s pro-active approach considers those three factors.

Of course, quality is the bottom line. We measure it, track it and check it. Cost is seen in savings because there’s less product failure, which means less rework and lower maintenance and replacement costs. Time is also seen as savings because there’s less work time lost due to replacing the inferior product.

How do we belie this long-standing business axiom? Well, the success of the partnership with our suppliers comes from using technology that integrates various quality management systems:

• To measure incoming material quality, PG&E’s SQAmeasures Defective Parts Per Million (DPPM). This helped SQA drive the quality to 99.97 percent defect-free materials.

• To standardize the qualification of suppliers and verify that the product meets specifications, a Product Qualification Process (PPQP) was implemented.

To verify a supplier’s Quality Management System (QMS), audits were performed per ISO9001-2015.

• Audit scores improved from an average of 70 percent in 2015 to 77 percent in 2019.

• To ensure that only approved products from qualified suppliers are approved for use, SQA established a Qualified Supplier List (QSL) as an integrated system in tracking supplier locations and approved materials.

• To track and manage changes with suppliers and products, the electronic Supplier Change Request (eSCR) system was implemented as an integrated change management solution. eSCR resulted in $8.5 million in material savings.

• To meet regulatory requirements, a Materials Traceability system was developed as part of the online Supplier Portal. This portal allows suppliers to deliver associated test reports and datasheets for products purchased. As a result, PG&E experienced an added benefit of $4.6 million in material savings.

We’re focused on pro-active Quality Assurance (QA). We’ve introduced procedures such as the PPQP and the QMS audits. Integrating technology solutions have helped us align better with our suppliers to increase efficiency and delivery of quality products.

Two examples of enterprise technology implementation are in the eSCRand Materials Traceability program. Both are used to support the processing of supplier change requests and for suppliers to submit material datasheets.

PG&E’s Supplier Portal uses theHANA cloud-based technology platform to interface with suppliers. This allows suppliers to provide necessary information for teams to make evaluations that are automatically managed through the system. Enterprise-level technology allows PG&E to process digitized information and reduce risk.

To quantify a supplier’s quality performance, information from DPPM, audits, corrective actions, and historical data are compiled as weighted elements into a Quality Performance Rating (QPR) expression that provides a score per supplier.

Today, the benefits of these systems are shown incost savings and with our major suppliers delivering a substantially improved defect-free product.

Quality. Cost. Time. PG&E’s SQA team has proven that you can have all three sides of the Iron Triangle when it comes to making sure you have a product that helps to safely deliver energy to 16 million customers every day.