Hello All,
I am attaching a supplier quality agreement that one of our customers has sent us and requested we sign. I am inquiring if they have gone too far? We are ISO 13485 certified, and it seems as though they are requesting an awful lot more than what we already do. This is the first agreement we have run into that is in this format and requires as much as they do. I was just curious if this is a common thing, or if we can push back a little on some of the aspects...

Thank-you in advance!!

Looks like a pretty standard 'Fine Print' contract. I'm not sure what they want in 4.1 Internal Documents and 4.2 External Documents. You do get some latitude (?) "6.3.1 The Supplier’s production process documentation shall include the following: (Delete those that do not apply. Add others as required.)"

Years ago when I did quoting for a company I made up a blanket 'Terms and Conditions' document that went out with all quotes.

Is there a specific part of the contract that you're uncomfortable with?

Thank-you for commenting. I guess one of my concerns is 6.5 performance reporting, that may be something that we need to clarify with them also. I wouldn't think they would care as to what our yield was as long as their products made it to them on time and within specification.

This contract is all together kind of concerning. The company is first to complain, and last to pay. They have substantial outstanding invoices, and always are willing to complain. When we try and work with them they give us nothing. They will not return parts for us to collect our data and evaluate what exactly is wrong, but demand 'replacement' parts. Our biggest concern is they are potentially setting us up for failure...

Thank-you for commenting. I guess one of my concerns is 6.5 performance reporting, that may be something that we need to clarify with them also. I wouldn't think they would care as to what our yield was as long as their products made it to them on time and within specification.

This contract is all together kind of concerning. The company is first to complain, and last to pay. They have substantial outstanding invoices, and always are willing to complain. When we try and work with them they give us nothing. They will not return parts for us to collect our data and evaluate what exactly is wrong, but demand 'replacement' parts. Our biggest concern is they are potentially setting us up for failure...Given the customer is not supplying parts they claim are poorly performing so you can give data on the dtermined causes and actions, there's not much else except to show what is done, like SPC charts on their purchased product, in your own operations.

Why they are not returning their rejected parts, paying in a timely way or working with you is open to guesswork, but such things make me suspicious. I knew a company that closed up not too long after doing that sort of thing. That makes me wonder how valuable, solvent and functional is this customer, and if you should weigh your options in the market because they might not last long anyway--either on their own or conjuring some reason to buy elsewhere. :2cents:

I have worked for companies that simply refuse to sign burdensome quality agreements. However, you have to keep an eye out for the contract - because they may cite that if you accept the contract, you accept the agreement. Then you have to revise the contract (as part of your contract review). It boils down to the risks. Will they take their business elsewhere? Would it be a loss? Is it smoke and mirrors? Do you infer that it is a contract rider, and increase pricing to cover the additional overhead? It is a strategic decision, not a quality decision. Some "big pens" need to be involved in the decision.

I agree totally with bobdoering

That's a pretty large set of demands.
I would not sign it. I would kick it up and make it clear to who I'm kicking up to what is above and beyond current practice.

This kind of contract is a business decision as there's a lot of costs involved.

Can you tell me what is being required that is not already part of your quality System?

Looks good to me, there is nothing there that wouldn't be covered by any of the Q-systems that I have been subjected to in the past 5-6 years. I appreciate a clearly defined set of rules in interaction with customers. Only thing I would change is that I would make sure to incorporate the lessons of the "history" in the agreement. E.g. no complaint handling or replacement parts without samples, or no reporting when invoices are overdue. That would probably open the discussion a bit :)

Some of the questions such as para such as 3.0, 4.0 and 6.3.4 are a bit over-reaching and are not normally required. The content of this "agreement" is supposed to be relative to your QMS. Do you have a QA POC for this customer / potential customer? If so, call and get clarification.:confused:

Hello All,
I am attaching a supplier quality agreement that one of our customers has sent us and requested we sign. I am inquiring if they have gone too far? We are ISO 13485 certified, and it seems as though they are requesting an awful lot more than what we already do. This is the first agreement we have run into that is in this format and requires as much as they do. I was just curious if this is a common thing, or if we can push back a little on some of the aspects...

Thank-you in advance!!

Hi Joconnell,

I do not think its too much. If you have a system as per ISO 13485, you should be quite comfortablke with this.

The Customer only wants to avoid any undesirable things once you start serving him and hence this is all documented in the agreement.

Thank-you all for the comments. As I first was reading through the contract, I was thinking we cover most all of this in our quality system, so why can't I send them a copy of our manual and have that be the contract. We are certified for medical devices, but we supply ONLY components for medical devices never finished product. Therefore we do not do yield reports, manufacturing deviations are only if we are for example waiting for a tip and die, and use another one to be able to make the parts to customer specs. We don't do assembley or sterilization, we are pretty basic.

Another note is that this was sent this week, and the customer asked if we could have it signed and approved before they come for a audit on 6/20... We have been working with them for 2+ years and this is the first time they have had the contract presented or asked to audit. I like the idea of if they do require the additional items above our quality system they will need to compensate, unless they start doing a lot more business with us.

Thanks again! My thoughts are it is important for things to be clear for both parties, but one cannot dictate how the other one essentailly runs their business. Maybe I am wrong, but my initial feelings about ISO was so everyone was standardized and there was an implicit trust that the other organizations were in line...

Thank-you all for the comments. As I first was reading through the contract, I was thinking we cover most all of this in our quality system, so why can't I send them a copy of our manual and have that be the contract. We are certified for medical devices, but we supply ONLY components for medical devices never finished product. Therefore we do not do yield reports, manufacturing deviations are only if we are for example waiting for a tip and die, and use another one to be able to make the parts to customer specs. We don't do assembley or sterilization, we are pretty basic.

Another note is that this was sent this week, and the customer asked if we could have it signed and approved before they come for a audit on 6/20... We have been working with them for 2+ years and this is the first time they have had the contract presented or asked to audit. I like the idea of if they do require the additional items above our quality system they will need to compensate, unless they start doing a lot more business with us.

Thanks again! My thoughts are it is important for things to be clear for both parties, but one cannot dictate how the other one essentailly runs their business. Maybe I am wrong, but my initial feelings about ISO was so everyone was standardized and there was an implicit trust that the other organizations were in line...

Unless this company gives you really profitable business, this comment by you
"This contract is all together kind of concerning. The company is first to complain, and last to pay. They have substantial outstanding invoices, and always are willing to complain. When we try and work with them they give us nothing. They will not return parts for us to collect our data and evaluate what exactly is wrong, but demand 'replacement' parts. Our biggest concern is they are potentially setting us up for failure..."
gives me the heebie jeebies much more than the supplier form which is similar in format and content to hundreds I have seen since the 1994 edition of ISO 9000 series.

I have written on numerous occasions that a supplier who lets a customer walk all over him and delay payment (and therefore is as much in breach of contract as the supplier who ships shoddy goods or makes late deliveries) needs to get a spine and tell the customer flatly that "sauce for the goose is sauce for the gander." This mans setting absolute terms on refusal of replacement or credit for goods unless and until you view, inspect, and concur the goods are nonconforming.

The matter of late payment is a hot topic. Personally, I had the courage to put some relatively big and so-called "credit-worthy" customers on "cash in advance" after they ignored warnings about late payment. My reasoning was that I was losing any profit because of the cost of money they were not paying. Therefore, if they balked at ordering and paying in advance, it was no real loss. If your bosses need a tutorial on the negative value of carrying an obnoxious customer for free credit, have them give me a call.

I have had some customers go for the internal quality manual approach. Depends on how big they are - or how big they think their britches are.

Remember this: If you sign it, it becomes customer-specific requirements. It must be controlled and can be audited.

As far as "ISO was so everyone was standardized": yeah, that was a good one. So much for Xanadu.

I have written on numerous occasions that a supplier who lets a customer walk all over him and delay payment (and therefore is as much in breach of contract as the supplier who ships shoddy goods or makes late deliveries) needs to get a spine and tell the customer flatly that "sauce for the goose is sauce for the gander." This mans setting absolute terms on refusal of replacement or credit for goods unless and until you view, inspect, and concur the goods are nonconforming.



Wes I totally agree. We give either a 12 month or a 2 year warranty on our parts, so I do see a reasonable ammount of warranty claims. I have always drawn a big line in the sand when it comes to refusing credits/replacements whereas the Quality Engineer who I took over from had a very flexible line - i.e. 'it's only just out of warranty', 'they never return the goods'
I stopped that straight away. Our parts carry a date code that can be traced to 1 day. If a customer complains and has found a fault with one of our products it gets logged, but if I don't receive it, the line goes no further.
NO RETURN, NO CREDIT! End of story.:nope:

Have you considered making a proposal to the customer to add provisions to the contract addressing late payments and return parts?

Have you considered making a proposal to the customer to add provisions to the contract addressing late payments and return parts?
Great addition in line with "sauce for goose . . ."

My question to Joconell: Are you a component supplier or a finished device manufacturer, accr to the Specs of your Customer?

To others in General (also i would like to learn here):

Is there any difference between a Quality Assurance Agreement signed with a Component Supplier and that signed with a finished device manufacturer?

The forums adivce is eagerly awaited.

Thanks

In response to your question, yes there should be a difference between a
Quality Assurance Agreement signed with a Component Supplier and that signed with a finished device manufacturer. The statement of work and /or terms and conditions of the contract should provide such language in the interest of both buyer and seller.
Typically, a component supplier has X level of potential liability. The finished devise manufacturer who supplies the end user normally has >XX potential liability. You get wht you pay for........... hopefully :cool:

this was sent this week, and the customer asked if we could have it signed and approved before they come for a audit on 6/20...
Thanks again! My thoughts are it is important for things to be clear for both parties, but one cannot dictate how the other one essentailly runs their business.

What was the outcome here Joconnell? I'm interested to know what happened. I agree with you that it's good for things to be clear for both parties, but it's true also (as Wes and others have said) that no one should be allowed to dictate how you operate & manage your business. And coming from a customer who's as poor a customer as you describe... definite warning sign.

You are perfectly right...

I really tried to look at it from both parties perspectives and come to an agreement that was a happy medium for both. I initially red-lined the agreement to what we were willing to agree on, and then the customer was willing to offer less specific demands. They did agree on the stipulations where no action or replacement would be done if they had outstanding invoices. I was very surprised, but the communication has improved immensly with this customer. This may be in light of the fact the person on their end that generated the agreement is not longer in that position. We certainly are glad that we risked pushing back and renegotiating the terms.

I would go for it...

Joconnel,

This looks like standard expectations to me. I work in consumer products (HVAC) as a supplier development engineer. Our Supplier Manual that our suppliers must agree to operate to contains much the same thing as this. I wouldn't get too upset about this. Section Six is just saying what kind of metrics your customer wants to see and, quite frankly, you ought to be keeping anyways.

All of these requirements are also something we audit to for acceptance as a new supplier and require committment to at contract renewal. Nothing sinister there but sometimes suppliers have to be "asked nicely" to do things they should already be doing to measure and control the Y's.

Here's the bottom line in any of these situations, if you want to supply them, do what they ask otherwise stop. It just comes down to how much pain this is causing you and if the business is important enough to overcome it.

Hello


New to the board. Have been going through it. What a wealth of information, knowledge and expertise. :applause:

Have actually a comment and question about this.

Instead of reviewing contracts on an individual basis (but this can sometimes be necessary as customers like to push their contracts on you), would it not be better to have some sort of procedure with requirements that any given contract can be put through. This way there are specific things that must be within the contracts and specific things that are reviewed to define compliance wiht specific rules and no no's that your company has.

At the moment I am trying to write a procedure for contract review in my company. There are many aspects of the contract to review

1) Quality Committements
2) Pricing
3) Payment terms
4) Impact on cash flow of the committment
etc etc

I have various inputs from different departments on what they want or prefer, but it seems alittle overwhelming on how to frame this and put it all together. Can anybody offer me some guidance please (or even better a template?? :D) :thanks:

A template for your "standard way of doing business" is good to have for quick response on RFPs especially if you offer the same or similar product / service line to your customers.
However, many organizations have to compete on different product lines to a very diverse customer base (i.e. commercial, military, U.S. and FMS business opportunities. In such cases, to submit a competitive proposal, you have to answer the mail on your future customer's RFP no matter how much it may depart from your prefered way of doing business.

Just a thought............ :2cents: