PRI & Nadcap Overview

PRI & Nadcap Overview Chicago, IL December 5 2012

1 Joseph G Pinto Executive Vice President & Chief Operating Officer © 2013 Performance Review Institute

• Performance Review Institute (PRI) Overview • Industry Managed Supply Chain Oversight and

Control Program – Aerospace Case Study (Nadcap)

• How could PRI’s Industry Managed Approach benefit the Medical Device Industry?

Agenda 2

© 2013 Performance Review Institute

PRI is a global provider of customer focused solutions designed to improve process and product quality by adding value, reducing total cost and promoting collaboration among stakeholders in industries where safety and quality are shared goals.

PRI is a not-for-profit affiliate of SAE International and is led by a Board of Directors with responsibility for strategic direction and financial stability.

About PRI 3


Established PRI Programs 4

Special Process, System and Product Qualification

Qualified Products List is

similar to Nadcap. Focuses on Products

rather than processes.

Provides personnel

qualification, developed and managed by

industry.

Improves the quality of personnel, products and processes through public

and onsite training classes and

memberships.

ANAB approved Registrar committed to

improving the quality of: Personnel, Products &

Processes AS9100, ISO9000,

ISO14001

Industry Managed

Complementary

Professional Development

Management Systems

Product Qualification

Accreditation (Qualification)


PRI Historical Highlights 5

1985 Government/Industry Equal Partner Conference identifies the need to minimize redundant process audits

1990 SAE launches PRI as a separately incorporated 501(c)6. Nadcap launched. 5 NDT audits conducted

1992 GEAE and Allied Signal mandate Nadcap to NDT supply chain. 70 NDT Audits conducted

1994 Heat Treat, Welding, Chemical Processing, Coatings, Material Test Labs added

1995 PRI Registrar created to provide QMS/ EMS in support of existing qualification programs

2000 Nadcap Europe established with U.K. office

2002 Nadcap business support software launched - eAuditNet

2003 Nadcap Asia launched

2008 PRI launches Professional Development programs

2011 Board approved exploration of new industry models: Transportation & Power Generation, Nuclear and Medical Devices.

2012 Approximately 5000 audits for all special processes across all industry-managed programs Transportation and Power Generation (TPG) Program initiated


Agenda 6





Nadcap Definition

The leading, worldwide industry-managed

cooperative program of major companies designed

to manage a cost effective consensus approach to

special processes/products and provide continual

improvement within the aerospace industry.

Compliance – Control – Cost Savings – Risk Reduction

7


Nadcap - Regulatory Requirements & Acceptance

European Aviation Safety Agency

AMC No.2 to EASA Part 21A.139(b)(1)(ii) - Vendor and sub-contractor assessment, audit and control - Production Organization Approval (POA) holder using other party supplier certification

“Other party supplier certification is a method whereby a supplier contracts with an appropriately recognised or accredited Other Party (OP) for the purpose of obtaining a certification from that OP. The assessment and surveillance of suppliers by an OP should be deemed to satisfy the requirements of 21A.139(b)(1)(ii) when the conditions of this AMC are satisfied.”

Federal Aviation Administration

Order 8120.12A - Production Approval Holder Use of Other-Parties to Supplement Their Supplier Control Program

“Other-party registration is a method whereby a supplier contracts with an appropriately recognized or accredited other-party for the purpose of obtaining a registration. The recognized or accredited other-party organization is normally a professional society, such as the Society of Automotive Engineers, the National Aerospace and Defense Contractors Accreditation Program, the American Society of Mechanical Engineers, or an ISO 9000 registrar accredited by a group such as the ANSI-ASQ National Accreditation Board (ANAB). Registration indicates that the supplier has satisfactorily demonstrated an inspection and quality control system or manufacturing process that meets the requirements of the other-party on a continuing basis.”

8


Tactical

Board of Directors

Nadcap Management Council (NMC)

Technical Task Groups

Special Processes Nondestructive Testing, Materials Testing, Heat Treating, Coatings, Chemical Processing, Welding, NMSE, Non Metallic Materials Testing & Conventional Machining Measurement & Inspection Systems & Products Electronics, Sealants, Elastomer Seals, AQS (AC7004), Fluid Distribution Systems & Composites

Technical Experts • Determine requirements • Develop documents • Accept corrective action • Final decision on accreditation

Supplier Support Committee (SSC)

Policy Executive Leaders • Legal entity • Fiduciary responsibility • Set policy • Provide the vision

Senior quality leaders & managers • Oversee operation of Nadcap • Establish/implement policy & procedure • Task group coordination & development • Identify/develop/deploy improvement

9 PRI & Nadcap Organizational Structure


Nadcap OEMs


Nadcap Accreditation Today 11

Special Processes Systems & Products

Non-Destructive Testing

Welding

Chemical Processing

Heat Treating

Materials Testing Laboratories

Coatings

Non-Conventional Machining

Conventional Machining as a Special Process

Surface Enhancement

Non Metallic Materials Testing

Electronics

Fluid Distribution Systems

Sealants

Aerospace Quality Systems

Composites

Elastomer Seals

Castings & Forgings Raw Materials

Future Processes

Measurement & Inspection

Non Metallic Materials

Manufacturing


• OEMs reach consensus on core audit criteria

• OEMs mandate Nadcap to supply chain as part of the supplier approval process

• Suppliers schedule and pay for the audit

• PRI contracts OEM approved Auditors who conduct on-site process audits to industry managed checklist

• Audit data is entered into eAuditNet (PRI’s in-house web based audit management system)

• PRI Staff Engineers review the audit report packages and work with Suppliers to close non-conformances

• Task Groups review audit packages, identify issues and vote to grant accreditation or request additional actions

• OEMs work with PRI to measure program effectiveness and continually assess and improve Nadcap for all participants

Nadcap Process Flow 12


Nadcap Audits: Percent by Region 13

92.3% 94.3% 85.1%

74.2% 69.2% 59.4% 58.9% 60.2% 58.9% 57.6% 56.4% 55.1% 55.8%

7.5% 5.2% 14.6%

23.6% 24.6%

26.1% 30.9% 29.3% 30.0% 30.7% 30.6% 31.1% 29.8%

0.2% 0.5% 0.2% 2.3% 6.2% 9.5% 10.3% 10.5% 11.1% 11.8% 13.0% 13.8% 14.4%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012Plan

2012YTD

Americas Europe Asia

Correct as of October 2012 © 2013 Performance Review Institute

Shared Program Management

AUDIT CHECKLIST

PROCESS EVALUATION/

IMPROVEMENT

CORRECTIVE ACTIONS AS REQUIRED

AUDIT RESULTS

AUDIT CONDUCTED

AUDITOR QUALIFICATION &

SELECTION INDUSTRY EXPERTS

MANAGE ALL KEY STEPS

14


PRI and Industry Working Together

OEMs Suppliers PRI Staff

Establish

Audit Checklist

Criteria

Audit Checklist Criteria:

Document containing audit questions to determine compliance to established industry standards and OEM requirements.

15



AUDIT CHECKLIST

PROCESS EVALUATION/

IMPROVEMENT


AUDIT RESULTS

AUDIT CONDUCTED




16


• Required auditor skills, knowledge and abilities are defined by Nadcap Task Groups

• Potential candidates complete an on-line pre-screening questionnaire and, if qualified, are interviewed by PRI Staff

• Task Group interview with powers of approval or rejection

• Testing/Certification may be required for acceptance as an Auditor

• Approved Auditor candidate completes extensive training and evaluation

• Candidates are approved after successfully performing an audit under observation

• Continual performance monitoring through on-site observation by Task Group and Supplier feedback

• Continued training at annual Auditor Conference and technical advisories

Industry Qualifies & Selects Auditors 17

Auditors average 30 years of industry experience



AUDIT CHECKLIST

PROCESS EVALUATION/

IMPROVEMENT


AUDIT RESULTS

AUDIT CONDUCTED




AUDIT RESULTS

18


General Focus vs. Commodity Specific Audit ISO 9001 Nadcap

Written evidence of a quality management system is required

Management system is present and effectively used in special processes (AS9100, AS9110, AC7004)

Checklists are developed by individual Registrars and are general in nature (Caveat: Aerospace Standards have checklists)

All interested parties are given the opportunity to participate in technical checklist development through open meetings Checklists are based on industry standards and customer specifications

Focus is on general employee competence Focus is on operator performance to acceptable levels

General process oriented audit with a focus on compliance to the quality system as written

Job audit includes all interrelated processes for effectiveness Involves audit of P.O. or process specific jobs

Audit duration based upon company population and additional industry-specific factors

Audits take 3 – 5 days, depending on the detailed audit scope

Findings are resolved and closed by the Auditor who found them

Audits are reviewed by experienced special process specific Staff Engineers and the industry Task Group

Annual or semi-annual surveillances conducted by the same lead Auditor

Different Auditor is usually assigned for each periodic process audit

No traceability / less transparent to industry (Caveat: AS has limited transparency through OASIS)

Complete traceability through eAuditNet including objective evidence of implementation of corrective actions

19


General focus audit – is not process specific

Does the Supplier define the processes employed for calibrating, inspection, measuring, and testing?

Electronics (PCBs) Chemical Processing

Nadcap audit- is process specific

General Focus vs. Commodity Specific Audit 20

Is there a procedure for the analysis of electrical

test failures, which include failure analysis, non-

conformance assessment and mandates for

documented corrective actions?

Are the fluorescent penetrant inspection (FPI)

dryer ovens calibrated every three months at multiple points across the usable

range?

Is measuring and test equipment used to control or monitor the control of a

process (within parameters) maintained in a calibration system compliant with ISO

10012-1? (I.e. temperature gages, conductivity meters,

voltmeters, rectifiers)

Electronics (PCBs) NDT Chemical Processing

NDT



AUDIT CHECKLIST

PROCESS EVALUATION/

IMPROVEMENT


AUDIT RESULTS

AUDIT CONDUCTED




AUDIT RESULTS

21


22

• All audits are electronically recorded in an in-house web based system called eAuditNet

• The Auditor will submit into eAuditNet:

– Completed checklist

– Required attachments

– Write-up and grading of non-conformances

• Supplier will submit into eAuditNet:

– Responses to non-conformances

– Supplier feedback form (evaluation of the Auditor)

• Upon Audit report submission:

– All automatic notifications are sent to designated OEM, Suppliers, PRI Staff and Auditors

– Time control metrics are automatically initiated and sent to OEMs

Audit Management System - eAuditNet


Shared Program Management 23

AUDIT CHECKLIST

PROCESS EVALUATION/

IMPROVEMENT


AUDIT RESULTS

AUDIT CONDUCTED

AUDITOR QUALIFICATION & SELECTION

INDUSTRY EXPERTS



Non-Conformance Corrective Action Process

Supplier • Supplier submits root cause analysis and objective evidence of

corrective actions for each non-conformance

PRI • Staff Engineer reviews the audit report, works with the Supplier to close and

approve corrective actions

Task Group

• Reviews each non-conformance, approves or rejects the Supplier’s response • All issues must be resolved prior to closure of the audit by Task Group • Votes to accredit the Supplier if all corrective actions are acceptable • If the audit fails, Supplier must start the Nadcap process again (initial audit)

PRI

• Issues certificate of accreditation (period of validity dependent on merit status)

• Schedules next audit (reaccreditation audit)

24


Shared Program Management 25

AUDIT CHECKLIST

PROCESS EVALUATION/

IMPROVEMENT


AUDIT RESULTS

AUDIT CONDUCTED

AUDITOR QUALIFICATION & SELECTION

INDUSTRY EXPERTS



26

Nadcap Management

Council

Ethics and Appeals

Committee

Oversight Committee

Metrics Committee

Standardization Committee

Globalization and Strategy Committee

Date Location

18-22 February 2013 Dallas, Texas, USA

3-7 June 2013 Paris, France

21-25 October 2013 Pittsburgh, Pennsylvania, USA

Industry Managed Program Continuous improvement achieved through industry-managed committee structure meeting via teleconference and face to face three times per year.

Upcoming Nadcap meetings:


Agenda 27





28

A Recent Quality Related Product Recall 2010: FDA issues a Class II recall on an Automated External Defibrillator ¹.

Root cause: Printed Circuit Board Assembly (PCBA)

(1) Trautman, K. (2010). Purchasing Controls – Background & Examples. Retrieved November 02, 2012, from FDANews.com

• Supplier has incorrectly applied solder flux • Ineffective cleaning

Specific root-causes

•20,525 devices were recalled • Contamination could have lead to inoperability

Product failure/recall

•Although individual supplier could resolve issue, the industry remains exposed

•Customers remain exposed to potential consequences •Highly likely industry will face similar issues from other

suppliers

Threat to life & profits


29

Root cause: Printed Circuit Board Assembly (PCBA)

Supplier has incorrectly applied solder flux Ineffective cleaning

Nadcap process compliance is used as a preventative measure: AC7120 Revision B – audit criteria for circuit card assembly 17.1 Reflow Soldering 17.1.14.C Are soldering defects including solder joint touchup identified, recorded and addressed in a continuous improvement plan? 17.1.15.C Is the cleaning method being used as per the procedure and is the maximum time permitted between reflow and cleaning being observed? Audit Note: Maximum allowed time of 8 hours unless otherwise specified by customer or manufacturer’s recommendation. 20 Coatings and Encapsulation 20.1.C Is there objective evidence of cleanliness verification?

How would Nadcap address this issue?


30 Establishing Medical Device Industry Requirements (Electronics Example)

Industry • Industry defines scope of Electronics Task Group • Nomination of technical experts

PRI • PRI facilitates establishment of Task Group and guiding procedures

Industry • Development of audit criteria • Interview and selection of Auditors

PRI • Conduct pilot audit program

Industry • Issue mandate to supply-base • Continual development of program


Benefits to OEMs • Conduct more in-depth, technically superior special process audits

• Increases number of consistent audits of the supply chain

• Establish stringent industry consensus standards that satisfy the requirements of all participants

• Identify and reduce risk of exposure to lower-quality suppliers

• Provides industry-wide early warning advisories for potential product impact and escapes (defective products)

• Provides complete visibility of supplier behaviors and transparency of audit results in a secure and retrievable format

• Program reduces costs of supply chain oversight and control

• Utilizes technically superior auditors to assure process familiarity

• Effectiveness of OEM’s Quality team increased – able to look beyond baseline requirements and focus on problem areas and suppliers

• Improves flow down of industry and customer requirements to sub-tier suppliers

• eAuditNet supports procurement to identify accredited suppliers (Qualified Manufacturers List)

• Global Supply Chain managed through single real-time system (eAuditNet)

31


• Provides routine special process audits accepted by industry

• *85% report supplier quality improvements after accreditation, including more than one-third reducing scrap rates, reworks and escapes (defective products)

• Promotes lean and continuous improvement practices, leading to higher quality and lower overall cost

• Industry accepted and consistent technical requirements leading to uniform process controls and greater operational efficiency

• Develops a structured approach to special process and product manufacturing

• Can use accreditation to increase client-base

• Opportunity to participate in development of audit criteria and program operations

Benefits to Suppliers 32

*Aerospace data © 2013 Performance Review Institute

Questions 33

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Documents

PRI & Nadcap Overview