About ABB
ABB is a technology leader in electrification and automation, enabling a more sustainable and resource-efficient future. The company's solutions connect engineering know-how and software to optimize how things are manufactured, moved, powered, and operated.
ABB Motion keeps the world turning, while saving energy every day. ABB innovates and pushes the boundaries of technology to enable the low-carbon future for customers, industries, and societies. With digitally enabled drives, motors, and services, customers and partners achieve better performance, safety, and reliability. ABB offers a combination of domain expertise and technology to deliver optimum drive and motor solutions for a wide range of applications in all industrial segments. Through its global presence, ABB is always close to serve its customers. Building on over 130 years of cumulative experience in electric powertrains, ABB learns and improves every day.
ABB values quality, customer focus, and integrity. This means striving to produce the highest possible quality of goods and services, delivering them to customers on time and as promised, while following a robust compliance and integrity program. ABB aims to meet or exceed customer expectations.
The ability to achieve these goals depends on supplier collaboration. Suppliers must comply with ABB's standards and be committed to making continuous and sustainable improvement in a transparent way.
Supplying to ABB
ABB Large Motors and Generators (MOLM), IEC LV Motors (MOIM), and Product Group Traction and eMobility Motors purchase globally significant volumes of materials and services. To support ABB throughout the entire lifecycle of its products, clear supplier guidelines are required. The aim is to ensure that ABB's external suppliers provide the right quality, on-time deliveries at optimal cost, and fulfill lead time requirements. These guidelines clarify the direction suppliers should take to develop their systems and structure for sustaining ABB's requirements. Various elements are detailed in the following chapters.
The purpose of the Global Supplier Quality Manual is to provide a general overview of what ABB expects from its suppliers, fostering an understanding of related interactions and interfaces.
The manual also clarifies requirements regarding ABB Supplier Code of Conduct and Sustainability strategy, including statements on compliance with relevant legislation. Cooperation with existing suppliers should be streamlined through closely linked processes, common rules, and means of communication.
This document is applicable to both existing ABB suppliers and companies desiring to become ABB's suppliers. It provides guidance on building supplier operations that meet ABB's company requirements.
1. ABB Supplier Code of Conduct
[People] At ABB, business is conducted in a way that respects employees, society, and the environment. ABB treats its partners as part of its “extended enterprise”, sourcing goods and services from suppliers aligned with these standards. Further details are available in the Supplier Code of Conduct and the ABB Supplier Sustainability Implementation Guide.
ABB requires its suppliers to adhere to the ABB Supplier Code of Conduct.
This ABB Supplier Code of Conduct defines the main principles underlying business activities as an ABB supplier.
ABB maintains a zero-tolerance policy for unethical business behavior, including bribery, corruption, child labor, and forced labor. Suppliers are expected to adhere to similar standards and conduct business ethically. Suppliers must comply with all applicable laws and regulations, the requirements set out in this ABB Supplier Code of Conduct, and their contractual obligations.
More specific guidance, including information on hazardous substances and conflict minerals, and contact points for questions, is available on the Supplying to ABB and Integrity web pages.
2. Sustainability
“At ABB, we embed sustainability in everything we do to create long-term value. This starts with helping our customers reduce their emissions and preserve resources, which is where we make the biggest impact, and extends to our own operations, to our suppliers, and the communities we serve. We strive always to be an exemplary corporate citizen wherever we operate.”
— Björn Rosengren, CEO
ABB has always taken a sustainable approach to business. Sustainability is a key part of ABB's company Purpose and the value created for all stakeholders.
ABB believes that sustainable development means progress towards a healthier and more prosperous world for future generations. This involves balancing the needs of society, the environment, and the economy. To achieve this, ABB acts and embeds this approach across its value chain, creating superior value for all stakeholders.
Strong supplier performance, ensuring resilient, cost-effective, and sustainable supply chains, is critical for business success and ABB's growth plans. Customers, investors, the media, and employees increasingly demand visibility related to sustainability performance and business ethics throughout the value chain.
ABB's Purpose is visualized through key commitments: enabling a low-carbon society, promoting social progress, preserving resources, upholding integrity, and ensuring transparency.
2.1. Environmental Management System
In addition to contractual obligations, suppliers must follow the ABB Supplier Code of Conduct, which requires environmentally sustainable practices and basic environmental management system requirements. ABB strongly encourages suppliers to become ISO 14001 certified.
2.2. Hazardous Materials
Suppliers must comply with relevant hazardous materials regulations, such as EU Directives REACH and RoHS. ABB maintains its own list of prohibited or restricted hazardous substances in products delivered to ABB. Suppliers must inform ABB about any listed substance and its residuals in delivered products. The "ABB List of Prohibited and Restricted Substances" is available on ABB's website and is updated bi-annually.
ABB expects suppliers to actively support ongoing efforts to manage and demonstrate product compliance with regulations such as REACH, RoHS, and Conflict Minerals. ABB encourages suppliers and sub-contractors to adopt similar standards and comply with regulatory requirements.
Find the ABB List of Prohibited and Restricted Substances here.
2.3. Material Compliance
ABB ensures that the materials used do not contribute to environmental degradation or lead to conflict and exploitation in producing countries. This commitment is outlined in ABB's Policy on Health, Safety, Environment, Security, and Sustainability, as well as the Supplier Code of Conduct. ABB has systems in place to monitor the source of certain minerals and phase out hazardous substances in its products and processes.
ABB supports responsible minerals sourcing and industry initiatives, working with suppliers to facilitate conflict-free sourcing that contributes to economic growth. ABB is a member of the Responsible Minerals Initiative (RMI) and adheres to OECD guidelines for conflict minerals transparency.
2.4. Carbon Emissions and a Circular Economy
ABB strives to become a carbon-neutral supplier and expects the same from its suppliers. Suppliers should evaluate and reduce their carbon emissions by setting ambitious targets and consider signing up to the Science Based Targets Initiative.
ABB also contributes to a circular economy by encouraging suppliers to reduce waste and rejects, and to use reusable, recycled, or recyclable materials, including for packaging.
ABB encourages suppliers to share their sustainability efforts and propose opportunities to reduce carbon emissions and foster a circular economy within ABB's value chain, particularly for direct materials, large product development initiatives, and project businesses.
2.5. Social Responsibility
Suppliers must comply with all applicable international and local laws and regulations regarding human rights, labor rights, and fair labor conditions, as well as the ABB Supplier Code of Conduct and contractual obligations. Suppliers should operate in a socially responsible manner.
ABB has a zero-tolerance policy for child labor, compulsory or forced labor, modern slavery, poor working conditions for young workers, and pregnant or nursing female workers at supplier sites. Suppliers should abide by principles in the Universal Declaration of Human Rights, UN Guiding Principles on Business and Human Rights, OECD Guidelines for Multinational Enterprises, ILO Core Conventions, and the UK Modern Slavery Act, supporting and respecting internationally proclaimed human rights, ensuring equality of opportunity, and respecting workers' rights to collective bargaining.
Suppliers should establish effective mechanisms and procedures to evaluate and select sub-suppliers based on their ability to meet these principles and maintain evidence of ongoing compliance. Suppliers should inform ABB about their social responsibility performance upon request.
2.6. Occupational Health and Safety Management
Suppliers must comply with all applicable international and local laws and regulations regarding occupational health and safety management, the ABB Supplier Code of Conduct, and contractual obligations.
Suppliers should identify occupational health and safety risks within their scope of supply to ABB and provide employees, contractors, customers, and other stakeholders with safe and healthy working conditions at their premises or any other location where work is performed for ABB.
ABB strongly encourages suppliers to implement an occupational health and safety management system, such as ISO 45001 or similar. Suppliers should inform ABB about their occupational health and safety management performance upon request.
3. Supplier On-Boarding and Qualification
To digitalize business interactions, ABB uses the Strategic Sourcing Suite (SSS) by SAP Ariba™ for sourcing, supplier management, and contracting.
Each potential ABB supplier must undergo a two-step verification process: registration and qualification. Participation in tenders, registration, and qualification with ABB are free of charge for all suppliers.
ABB has established a process for requesting, onboarding, and qualifying suppliers. This process outlines the scope and requirements from the initial request to add a supplier until they are qualified in ABB's supplier management system, SAP Ariba™.
The process provides information and oversight to ensure suppliers meet ABB's requirements, including business integrity, financial stability, health and safety, performance, and product quality, in line with the ABB Supplier Code of Conduct.
The chapters of this Supplier Quality Manual are arranged to reflect ABB's interactions with suppliers, divided into five hierarchical sections.
Find out more information on Becoming a supplier - ABB Group.
The supplier lifecycle includes stages such as De-sourcing, Development, Rating, Measurement, Production & Product Qualification, and Company Qualification.
4. Company Qualification
4.1. Registration
In the registration step, suppliers must complete a questionnaire via the SAP Ariba™ system. Suppliers will receive an email with instructions to create a SAP Ariba™ account and complete the questionnaire. ABB will review the submitted responses.
Find out more information on Becoming a supplier - ABB Group.
4.2. Qualification
Qualification is a risk-based process assessing the supplier at a company level, tailored to specific risks and the supplier's value chain. Supplier Qualification is conducted within the SAP Ariba™ system.
The objective is to evaluate risks in the supplier's value chain across areas including:
- Quality Management
- Sustainability and Human Rights
- Health / Safety / Environmental
- Quality and Continuous Improvement
- Operation Excellence and Supply Chain
- Data Security
4.2.1. Supplier Audits
The goal of audits is to identify and investigate main risks at the supplier site and define a risk mitigation plan. Re-assessment and re-approval for quality are required for suppliers disqualified previously or who have not supplied ABB for 36 months.
If a supplier has multiple manufacturing sites, each site may require its own supplier quality and/or critical process audit. Distributors are expected to have rigorous sub-tier supplier oversight consistent with this manual.
ABB reserves the right to audit and inspect supplier operations and facilities, with reasonable notice, to verify compliance.
4.2.2. Supplier Quality Process audit (SQP)
SQP is an ABB supplier assessment method that audits fundamental process and system elements, including:
- Health & Safety
- Human Rights
- Quality Management System
- Product and Process Development
- Sub-supplier and Incoming Goods Management
- Production Execution
- Transportation and Handling
4.2.3. Critical Manufacturing Process Assessments
Processes such as Casting, Forging, Heat treatment, Impregnation, Insulated copper wire, Machining, Permanent magnets, Rotor die-casting, Stamping, Surface treatment, Welding, and Winding Assembly can be considered critical and evaluated with process-specific audits. Audits can also be conducted for critical materials like electrical steel, copper, aluminum, and insulation materials.
4.2.4. Sustainable Supply Base Management (SSBM) Audit
During new supplier qualification via SAP Ariba™, suppliers receive a self-assessment questionnaire including sustainability questions. ABB evaluates these responses; high-risk findings may lead to an SSBM audit at the supplier's premises.
Existing suppliers may also undergo SSBM assessment based on country, material code, and business volume, typically on a 5-year cycle. The goal is to ensure compliance with the ABB Supplier Code of Conduct, support continuous improvement of sustainability performance, and provide a competitive, sustainable supply chain.
SSBM assessment covers six sections: General management, Working hours, Remuneration, Social benefits, Health & safety, and Environment.
5. Production & Product Qualification
5.1. Purpose
ABB's primary process for production and product qualification is the Production Part Approval Process (PPAP). PPAP is a structured method to define and establish steps ensuring the material/part satisfies the customer. It provides evidence that the supplier understands ABB's engineering design records and specification requirements, demonstrating the capability to produce products that consistently meet all requirements during actual production runs at the quoted production rate.
5.2. Scope
Included - All Tier 1 Suppliers:
- Raw material
- Direct material
- Indirect material: high-risk components
- Components purchased from external vendors for serial and/or regular production in MOIM & MOLM plants
- Components purchased from other ABB companies for serial and/or regular production in MOIM & MOLM plants
- Buy-Resale items purchased by the MOIM & MOLM businesses
Excluded - Suppliers:
- Indirect material: low-risk components
- Components purchased from other MOIM, MOLM, MOTR & MONM plants
- Tier 2, Tier 3, and all Sub-Tier suppliers (however, MOIM & MOLM Tier 1 suppliers should have similar documents and requirements for their supply base)
5.3. Product Approval Process
Suppliers must agree to introduce and maintain a quality management system compliant with ISO 9001 or IATF 16949, or a similar certified standard recognized by ABB. Certified suppliers must submit copies of their quality system certifications to ABB.
Uncertified suppliers must present their plan for ISO 9001 registration and management of Quality and will be subject to a Supplier Quality Process audit by ABB.
The New Supplier and/or Product Approval Process involves:
- ABB identifying the need for a supplier and mapping potential suppliers.
- ABB providing suppliers with technical and quality requirements.
- ABB & Supplier assessing maturity levels (Health and Safety, Integrity, Sustainability) and technical capabilities (personnel knowledge, production technology, performance capability).
- ABB & Supplier engaging in SAP Ariba™ on-boarding and qualification.
- ABB & Supplier conducting the Production and product approval process, including Audits and PPAP.
- ABB granting final approval for the supplier to deliver.
5.4. Technical capability assessment
This is a preliminary assessment of the supplier's technical readiness and ability to manufacture components or parts for ABB, focusing on their capability to deliver the required quantity with agreed delivery reliability. The assessment can be conducted on-site and examines:
- Personnel knowledge
- Production technology in use
- Performance capability
5.5. Production Part Approval Process (PPAP)
5.5.1. Purpose
The Production Part Approval Process (PPAP) is a rigorous process ensuring the supplier's ability to manufacture sustainable, high-quality parts at a proven volume. PPAP emphasizes supplier processes and capability to yield conforming material.
Suppliers must obtain PPAP approval from ABB before the first regular delivery of production parts. The PPAP process results in a Part Submission Warrant (PSW), executed and documented by both ABB and the supplier.
The Production Part Approval Process (PPAP) involves several steps:
- ABB defines the extent of PPAP.
- ABB & Supplier hold the PPAP kick-off Meeting.
- ABB generates a limited volume Production Order (PO) for pre-sample parts.
- Supplier starts working with PPAP elements.
- Supplier begins manufacturing (Control Plan must be approved by ABB).
- ABB performs a First Article Inspection at ABB Plant.
- ABB conducts a Production Trial Run (PTR) at ABB plant.
- Supplier finalizes PPAP documents.
- ABB approves Parts and PPAP (PSW).
- ABB & Supplier hold the PPAP final review meeting.
5.5.2. Risk Levels
Risk determination is based on factors including critical manufacturing processes, use in safety-critical applications, compliance requirements, export, long lead-times, new suppliers, plant location changes, new component designs, transfers, and historical supplier performance. AIAG defines five risk levels; ABB MOIM & MOLM primarily uses three: High Risk, Medium Risk, and Low Risk (exempt from PPAP).
5.5.3. PPAP Elements
ABB SQE determines necessary PPAP elements based on risk analysis. The standard PPAP elements and their deliverables are listed below:
| PPAP Element | PPAP Deliverable | PPAP Level 4 | Description |
|---|---|---|---|
| 1 | Design Records | Supplier must assure design records (technical drawings, bill of materials, instructions, connection diagrams) are available and up-to-date. If ABB is responsible for design, a copy of ABB drawing is provided. If the supplier is responsible for design, a released drawing in the supplier's system is required. Design records may reference other documents like specifications; referenced documentation must be attached. One design record can represent multiple products. | |
| 2 | Engineering Change Documents | A document detailing the change, often called "Engineering Change Notice," or covered by ABB PO or other engineering authorization. | |
| 3 | Engineering Trial Approval | This approval typically involves an Engineering Trial with production parts performed at the ABB plant. A "temporary deviation" may be required to send parts to ABB before PPAP. ABB may require other "Engineering Approvals." | |
| 4 | DFMEA | Design Failure Mode and Effects Analysis, demonstrating that potential failure modes and associated risks have been addressed to eliminate or minimize their effects through product design changes and improvements. | |
| 5 | Process Flow Diagram | Mandatory | Documents and clarifies all steps and sequence involved in manufacturing a part. Primary process steps must align with PFMEA and Control Plan. The flow should cover the entire manufacturing process from receiving to shipping. |
| 6 | PFMEA | Mandatory | Supplier must apply failure mode effect analysis to all process steps defined in the Process Flow Diagram, including subcontracted processes. PFMEA follows process steps and sequence, identifying potential process-related failure modes during manufacture and assembly. |
| 7 | Control Plan | Mandatory | Identifies process characteristics and sources of variation (input variables) that cause variation in product characteristics (output variables). It follows PFMEA steps and provides details on how potential failure modes are checked to ensure the process is under control and within specification limits. |
| 8 | Measurement System Analysis | Ensures the applied measurement technique is reliable and consistent. The measurement system must be designed and validated for appropriate measurement devices and personnel competence. Gage R&R or attribute gage study methods are typically used. Measurement devices and gauges must be calibrated and handled properly. | |
| 9 | Dimensional Results | Mandatory | A list of critical-to-quality (CTQ) dimensions noted on the drawing and critical factors of PFMEA, showing product characteristic, specification, measurement results, and assessment (ok/not ok). |
| 10 | Approved Materials and/or Material Performance Test | Mandatory | Supplier must assure selected materials align with specifications. Performance tests simulate product lifecycle conditions. Test reports should include individual test details, date, specifications used, results, and pass/fail assessment. |
| 11 | Process Studies (SPC/Cpk) | Supplier should identify, evaluate, and eliminate special causes of variation. This section typically shows Statistical Process Control charts for critical characteristics, demonstrating stable process variability. | |
| 12 | Approval of Lab | For external/commercial laboratories, suppliers must submit test results on the original report, including general laboratory qualification like ISO/IEC 17025. | |
| 13 | Appearance Approval | Appearance Approval Report (AAR) aims to eliminate potential non-conformities related to visual defects (color, grain, surface). It includes part images, marking images, and painting test requirements. | |
| 14 | Sample Product | Supplier should prepare sample parts representing the standard production process. Sample quantity and delivery plan should be agreed upon. | |
| 15 | Master Sample | A signed "golden sample" used to train operators on subjective inspections, representing the production level. | |
| 16 | Measurement Tools / Checking Aids | Supplier is responsible for ensuring measurement tools and checking aids align with the design level. Pictures of special tools and calibration records are required. | |
| 17.1 | Reverse Engineering of Existing Parts | Required if the part was previously produced by a different supplier or ABB. It is a part-to-drawing comparison. | |
| 17.2 | Compliance Requirements (RoHS, etc.) | Mandatory | Details compliance requirements such as REACH, RoHS, and customer-specific requirements. |
| 17.3 | Enhanced Control Plan for Launch (GP12) | This is implemented for the first 3 months of production. | |
| 17.4 | Sub-Tier Supplier Oversight | Defines oversight for sub-tier suppliers (approval, qualification, surveillance). Mandatory for Critical Manufacturing Processes. | |
| 17.5 | Production Trial Run (PTR) at ABB Plants | ABB performs and coordinates low-volume trials at ABB plants. | |
| 17.6 | Run-at-Rate (GP9) | Conducted when volume is critical to ABB. Proves ability to run production and yield defined volume with expected quality. | |
| 17.7 | Packaging | Required to prevent delivery failure. Packaging must be designed according to ABB standards, including HSE and circularity aspects, and presented with supporting visuals. | |
| 17.8 | ABB owned assets | Mandatory | List all ABB owned tooling, equipment, machines, etc., defining tagging, identification, and end-of-life. Pictures are required. |
| 17.9 | Preventive Maintenance | Define the preventive maintenance plan for both ABB-owned and supplier-owned assets. | |
| 17.10 | Rework & Repair | Mandatory | Define what rework or repair requires ABB involvement or approval, and what is allowed without it. |
| 17.11 | Frozen Process Change Request & Approval Acknowledgement | A document signed by supplier management stating they will request and obtain approval from ABB prior to any serial-production process changes. | |
| 17.12 | Supplier Deviation Request & Approval Acknowledgement | Mandatory | A document signed by supplier management stating they will request and obtain approval from ABB prior to shipping non-conforming parts to ABB. |
| 17.13 | Other | Placeholder for other requirements identified by the qualification team. | |
| 18 | Part Submission Warrant (PSW) | Mandatory | PSW declares that all requirements are consistently met. Upon completion of PPAP requirements, the supplier completes the PSW. ABB reviews and verifies documents and samples. If no issues are found, ABB signs and shares the PSW with the supplier. |
5.6. Procedures for Regular Production
This section focuses on serial and regular production. Changes to frozen manufacturing processes during PPAP must be communicated and approved by ABB in advance. Any out-of-specification parts intended for shipment to ABB require advance communication and approval. This section also covers activities related to suppliers sending non-conforming material to ABB.
5.7. Frozen Process Change Request (FPCR)
During the PPAP process, ABB and the Supplier agree on manufacturing processes or areas where the Frozen Process Change Request (FPCR) applies. The FPCR scope includes processes like impregnation, rotor die-casting, and heat treatment, as well as materials like insulation materials and electrical steel.
If, during the PPAP process, it is agreed to freeze certain manufacturing processes or parts thereof, the following FPCR process is followed:
In principle, ABB encourages suppliers to continuously improve their manufacturing processes, and this FPCR is not automatically valid.
- Supplier submits Frozen Process Change Request (FPCR) document to ABB.
- ABB reviews the FPCR document and determines needed actions.
- ABB communicates approval and needed actions to the supplier.
- Supplier completes actions according to the request.
- Supplier implements the changes.
5.8. Supplier Deviation Request (SDR)
Suppliers are responsible for sending conforming parts to ABB. If non-conforming parts are to be delivered, a formal Supplier Deviation Request (SDR) must be submitted to ABB. The request will be investigated by ABB Supply Quality Management, whose representative will approve or reject non-conforming parts before shipment.
- Supplier submits Supplier Deviation Request (SDR) to ABB.
- ABB reviews the SDR and makes a decision (approve or not).
- ABB communicates approval or denial to the supplier.
- Supplier completes actions agreed with ABB.
- ABB coordinates SDR-approved shipment with ABB production.
5.9. Non-Conformity Report (NCR) / Quality Notification (QN) / Reclamation Process
Non-conformity may involve deviations from drawings or purchase order requirements, such as quality, appearance, packaging, metallurgy, labeling, quantity, handling, shipping, delivery, cleanliness, or dimensional/performance issues. When non-conformity is detected in a supplier's process or product, the supplier must inform ABB instantly and without delay.
The supplier shall analyze the root cause and define corrective and preventive actions using suitable and recognized tools (e.g., 8D). Suppliers must supply products or materials that fulfill their purchasing specifications and any other relevant agreed specifications or features.
5.9.1. Problem Solving Method
8D (Eight Disciplines) is a problem-solving method for handling supplier deviations. Its purpose is to identify, correct, and eliminate recurring problems, aiding product and process improvement. The 8D model establishes permanent corrective actions based on statistical analysis, focusing on the problem's origin and root causes. The system includes stages for team formation, problem definition, containment actions, root cause analysis, permanent corrective action, implementation and validation, preventive actions, and lessons learned.
5.9.2. Feed Forward
Suppliers must notify all ABB plants when they become aware of shipping non-conforming material to ABB.
5.9.3. Sorting & Rework
Suppliers are responsible for sending compliant parts. If non-compliant parts are sent despite inspection measures, ABB typically rejects the material batch. ABB is not obligated to sort non-conforming parts but may do so for scheduling reasons or require the supplier to sort at ABB's premises. ABB may also modify non-compliant materials.
5.9.4. Cost Recovery
ABB reserves the right to invoice costs incurred for sorting, reworking, or repairing. Cost recovery applies to:
- Cost of goods for returned or scrapped non-conforming material (auto-debited or invoiced).
- Cost of ABB (or third-party) labor and materials for sorting/reworking suspect material (auto-debited or invoiced). The labor rate is ABB's standard production labor rate x 1.5.
- An administrative fee (approximately $100) is charged for each Nonconformity Report (NCR) or Quality Notice (QN) submitted. ABB's Local Division Supplier Quality Engineer determines this fee case-by-case.
- ABB Category Management may agree on covering other special costs, such as value-add costs by ABB, premium freight charges, or liquidated damages due to supplier faults.
5.10. Surveillance Audits
5.10.1. Purpose
ABB Auditors conduct audits to ensure supplier adherence to Quality Management System, HSE, Human Rights, and Production Processes. Audits aim to mitigate risk by confirming no degradation of the manufacturing process and observing continual supplier maturity.
The frequency and depth of surveillance audits are determined by factors such as heightened risk, critical manufacturing processes, prior audit performance, and supplier quality performance. ABB provides advance notice of audit dates and content. For acute issues or identified risks, ABB may perform audits without advance notice. Suppliers must grant full access to their facilities, documents, processes, personnel, and sub-tier suppliers.
Corrective and preventive actions (CAPA) must be completed and documented within three months after the audit.
6. Measure
To achieve quality, delivery capability, and cost efficiency, and to strengthen the supply chain partnership, ABB expects perfect quality and on-time delivery from suppliers.
Supplier performance is measured and graded using key performance indicators, including Quality Performance (Parts Per Million - PPM) and Delivery Performance (Supplier Confirmed on Time Delivery - COTD).
6.1. Quality Performance - Supplier PPM (SPPM)
SPPM measures the suppliers' PPM of components identified at ABB facilities or in the field (during warranty). The formula is: SPPM = (Parts with defects / Parts delivered) × 1,000,000.
When a batch is rejected at an ABB site, the entire batch negatively impacts the supplier's PPM. Sorted or reworked parts also negatively impact PPM. ABB makes identified non-conforming material available to suppliers, either physically or via descriptions/pictures.
6.2. Delivery Performance - Supplier Confirmed on Time Delivery (COTD)
Supplier-COTD measures performance against On Time Delivery to the agreed delivery location based on incoterms. Early and late deliveries negatively impact supplier performance.
COTD definition considers:
- Against agreed delivery date (contractual or first confirmed date). ABB measures COTD based on jointly agreed delivery dates.
- On-time window: -7 to 0 days.
- Reference month: Month of the confirmed date (not the actual delivery date).
- Measurement level: Purchase Order (PO) line item.
Deliveries are categorized as EARLY (more than 7 days too early), ON-TIME (on delivery date or up to 7 days early), and LATE (after delivery date). The category "early" is used for visualizations and process analytics. All days are measured in calendar days.
The COTD formula is: COTD = (PO line items on time / PO line items) × 100%.
6.3. Supplier Scorecard for Quality
ABB's Supplier Performance Evaluation (SPE) process evaluates existing supplier performance, provides global internal access to results, and offers feedback and action plans. SPE is integrated into ABB's global Supply Base Management System, covering Quality, Delivery, Commercial, Technology, Sustainability, and Risk Management.
Results are published internally and are available to suppliers. Suppliers with an overall result below 80% must have an action plan in place, which ABB's category management follows up on.
7. Classification
The primary purpose of supplier classification is to implement the Category strategy by channeling spend to the most competitive and highest quality suppliers (labeled Preferred or Approved) and away from suppliers that do not fit the strategy (labeled Blocked).
The procedure defines supplier classes, their requirements, the process for assignment, and related responsibilities within ABB. The goals are to activate the category strategy and align ABB's supply base with strategic targets, ensuring consistency in products, services, and pricing.
Suppliers of MOLM and MOIM are classified in SAP Ariba™ as follows: Preferred, Approved, Conditionally Approved, and Blocked.
- Preferred: The highest classification, assigned by a Global Category Manager. It signifies a primary target for business growth and strategic collaboration. Suppliers must be approved by audits or SPE, have passed onboarding/qualification, and have approved production processes/parts.
- Approved: The second highest classification. Suppliers are competitive by commercial analysis, approved by audits/SPE, have passed onboarding/qualification, have approved production processes/parts, and demonstrate proven overall low risk.
- Conditionally Approved: Suppliers supported by the sourcing strategy but whose performance has dropped or who are new and not yet established as Preferred or Approved.
- Blocked: Suppliers with whom no new business is to be placed.
8. Development
ABB encourages suppliers to drive continuous improvement in their operations to achieve "first time right" quality with fewer variations and to eliminate waste in the supply chain. Continuous improvement is essential for enhancing quality, on-time delivery, and productivity.
Continuous improvement requires standardized work processes and monitoring. Standardized, uniform processes must be maintained and further developed. The goal is excellent supplier relations and performance.
PDCA (Plan-Do-Check-Act) is a management method used for process control and continuous improvement. It is based on scientific principles and iteration, allowing users to refine processes and achieve optimal operations and output.
- Plan: Establish objectives and processes required to deliver desired results.
- Do: Carry out the objectives from the previous step.
- Check: Evaluate data and results gathered during the 'Do' phase to identify issues with the process.
- Act: Improve the process based on findings from the 'Check' phase.
9. Desourcing
The De-sourcing process ensures targeted suppliers are professionally phased out, with reasons and decisions documented, communicated to the supplier, and made available globally to the SCM community. Key reasons for De-Sourcing include supply base consolidation, supplier underperformance, compliance or integrity issues, legal and integrity concerns, non-compliance to the Code of Conduct, SSBM, and Material compliance (CM).
10. Abbreviations
This section provides definitions for key abbreviations used throughout the manual:
- 8D: A structured problem-solving tool focusing on eight disciplines to solve problems.
- AIAG: Automotive Industry Action Group.
- C-OTD: Confirmed on Time Delivery.
- CAPA: Corrective Actions and Preventative Actions.
- CTQ: Critical to Quality.
- DFMEA: Design Failure Mode and Effects Analysis, applied to product design.
- FMEA: Failure Mode and Effects Analysis, a methodology to identify potential failure modes, assess risks, rank issues, and identify corrective actions.
- FPCR: Frozen Process Change Request.
- KPI: Key Performance Indicator.
- MOIM: Motion Business IEC LV Motors Division.
- MOLM: Motion Business Large Motors and Generators Division.
- NCR: Non-Conformity Report.
- PFMEA: Process Failure Mode and Effect Analysis, applied to manufacturing and assembly processes.
- PO: Purchase Order.
- PPAP: Production Part Approval Process, as defined by AIAG.
- PPM: Parts Per Million.
- PTR: Production Trial Run.
- QN: Quality Notification.
- RoHS: Restriction of Hazardous Substances.
- SDR: Supplier Deviation Request.
- SPC: Statistical Process Control.
- SPE: Supplier Performance Evaluation.
- SQE: Supplier Quality Engineer (various titles exist within ABB).
- SQP: Supplier Quality Process Audit.
Document Information
Prepared by: Pasi Viitaharju, Tuomas Siltala (2023/05/30)
Approved by: Sari Huttunen, Kari Löllö (2023/06/30)
Owning organization: ABB MOLM, MOIM and Traction and eMobility Motors.
© Copyright 2023 ABB. All rights reserved. Specifications subject to change without notice.
