OK...stupid question. What is the difference between Direct and Indirect product?

What's the context and what's the document?

I work for a tier 1 supplier. We ship product to a packaging company who then packages the product to customer specifications, and then ships it to our final customer. The questions was is what we are shipping to the packaging company indirect or direct material?

You're on a fence there. Technically packaging is an outsourced process AND they're doing the shipping as well. I would say your product is a Direct Product by most definitions. I certainly could be wrong here so other opinions are invited.

By the way, what document is this in?

I'm not sure. I was just asked what catagory I thought it fit in. I think the original question came from sales when they requested a copy of the packaging peoples QS certificate (which they have).

I'm still not sure what the difference is...what makes them a direct supplier?

I may also be wrong on this but --- I've always view Direct /Indirect PRODUCT in the same light as intended/un-intended

If the product you are supplying is the "intended" result of the contracted process - it is Direct.

If the product is not the origional Intended item - (IE selling scrap steel pieces for re-processing) then it is indirect product.

"Packaging - items (IE boxes/materials possible used for other applications after delivery would be indirect products)

What we may be trying to determine more here is "Direct DELIVERY - vs indirect DELIVERY ?? :confused:

What the deal is....

We make a componant for a car (axles...) we then send this part to a supplier who does the final packaging.

The question was do we consider the axle a direct or indirect product when we send it to the packaging company.

From what I can gather...the riding the fence comment was correct...It is the final PRODUCT (they don't modify the actual axle in any way), but the packaging is a customer requirement, so technically, without the product being packaged correctly, the product would not be complete and would be non-conforming/not accepted...

My answer (aka: guess) was direct product, because they don't actually make any modifications to the axle itself.

Thanks for the "intended vs. un-intended" analogy...that makes it a bit clearer
:ko:

This may be way to simplistic, but a company supplies a product to a customer. The customer says the packaging is bad. Will the company go after the "subcontractor" that packaged the product or the company that is the supplier?

I guess I'm saying, does it really matter, you are the supplier and therefore the scapegoat. It's called business, and they probably don't teach it in school.

Was this possible situation run through the Product Realization/FMEA/Control Plan process?

Again...really not sure...I was just curious as to the difference between direct and indirect supplier and if there was a formal definition.

Acutally, in this case, if there is a problem with the packaging, our subcontractor (the packaging company) is responsible. Obviously, if there is a problem on a continuous basis, I'm sure we would be asked to utilize a different subcontractor.

The question about PFMEA/CP....hmmm....I'd have to go look. I'm sure it probably isn't on the CP (it's not our process...) but it may be on the PFMEA. But, our mfg. Eng. have a habit of only taking responsibility for the things they do, not what they have responsibility for. So even though we should be reveiwing to see if we are having consistant problems with this subcontractor (which we probably are doing in some way shape or form...) it's probably not an actual part of the PFMEA.

OOPS. I forgot to log in. That last post is me :p

Of course it is your process!!!!!!!! You are the supplier!

When you get paid for a product does it go to your company to distribute to your suppliers, or does the customer cut 2 checks, one for you and one for your supplier.

Sorry, I can't go on.

Sorry...I don't mean to be frustrating to you...

Let me clarify...

I was asked this morning if I thought that the product was classified as direct or indirect material. Just offhand. Nothing serious. That prompted me to be curious as to the definition of direct and indirect product. I do not know the specifics of this particular situation. (I work for a VERY LARGE company...we make lots of different product lines. I wasn't given, nor did I ask which one in particular they were speaking of, it wasn't a question that anyone was making a decision on, it was just up in the air)

I do not know if there are 2 checks or one. I understand that if there is one, we are then responsible for ensuring that our subcontractor has an approved process in place to meet the requirements set forth by our customer. I do know that the product does not return to us after the packaging company is finished with it. They ship it directly to the customer.

It sounds like:

If the customer pays the packaging company then we are shipping direct material.

If the customer is paying us (and then we in turn pay the packaging company) we are shipping INdirect material to the packaging company (becuase it has not technically gone through the entire process yet). Since the packaging is a part of customer requirements.

Right?

> It sounds like:
>
> If the customer pays the packaging company then we are
> shipping direct material.
>
> If the customer is paying us (and then we in turn pay the
> packaging company) we are shipping INdirect material to
> the packaging company (becuase it has not technically gone
> through the entire process yet). Since the packaging is a
> part of customer requirements.
>
> Right?

That sounds right, but I'm still a bit confused, my self.

> Of course it is your process!!!!!!!! You are the supplier!

Well, no Al, it's not necessarily. You may want to go over their CP/FMEA etc., but (in this case) the packaging is not technically the process of the manufacturer per se. It is the sub-contractor's (packaging supplier's) process. That's probably their core function. It is also true packaging companies are typically even responsible for the design of the packaging process in accordance with the specs you send them. But - none the less if you don't do it it's not your process.

Plating is a good example. You send out for gold plate. You define thickness, etc, but you don't design or have any part in their plating process. It's not YOUR process.

In my experience, it is the relatively rare occasion where a company outsources and defines the exact process to me used including CP/FMEA/Process Flow, etc. Yes - it happens, but I don't believe that's generally the case.

I dealt with this a lot in military manufacturing. We made many products and sent certain items to special 'packagers'. The check was to us, we paid the packaging people. They packaged and shipped according to our specifications. If the packager screwed up we were called and we were resopnsible because we subcontrated the operation (process) but all of us ended up in the solution.

Originally posted by km2red
OOPS. I forgot to log in. That last post is me :p Just remember, if you have your user options set to use 'Cookies', and if you don't 'offically' (through the logout link) Log Out, you should not have to log in again. When you come to the site it'll recognize your cookie and log you in auto-magically.

Doesn't matter to me how you do it. Personally I just hate to log in manually. Just an FYI :ko:

Marc,

To respectfully disagree I say that the customer is the customer and relies on a product from the supplier. If packaging is a concern it neeeds to be addressed during contract review. Not by the receipt of a corrective action.

Would you agree that the supplier should at least monitor the sub-contractor for a perioid of time?

This always leads me back to FMEA and control plan requirements.

> To respectfully disagree I say that the customer is the
> customer and relies on a product from the supplier. If
> packaging is a concern it neeeds to be addressed during
> contract review. Not by the receipt of a corrective
> action.

I don't see that as the issue. Sure - it would be addressed during contract review - if known then. I don't see how that relates to who 'owns' sub-contracted process(es).

> Would you agree that the supplier should at least monitor
> the sub-contractor for a perioid of time?

Generally. Sometimes not. That depends upon the criticality and complexity of the sub-contracted process(es), the experience with that company (e.g.: have they been doing something similar to another product for your company for the last 30 years?) and a number of other possible factors including (of course) customer requirements (yes - those possibly were determined, when known, back as far as contract review).

> This always leads me back to FMEA and control plan requirements.

If they have one. If this thread was in the QS or TS 16949 forum I'd be more along your strict line of thinking but this is the General ISO Topics forum and everything automotive does not always apply in ISO. Most of my ISO clients have never heard of a control plan or an FMEA. They may have similar systems which do the same thing and in a similar {or different, for that matter...} way, but the terms Control Plan, FMEA, etc. are foreign to them.<hr>One size does NOT fit all!

I've been thinking about this and there are two extremes I have seen in sub-contracting a process out. Loose: Hire warehouse. Hire 'temps'. Document process the 'temps' have to follow and other 'appropriate' documentation (such as monitoring methodology). Train temps. Monitor process per your 'appropriate' documentation. Ship direct to customer {or back to us - either way it's the same main idea} Tight: The situation I cited earlier where the sub-contractor was also a Mil house whose processes were also monitored by DCAS. We provided the part with the mission profile (when appropriate) and a Mil Spec packaging requirement. They designed, developed and maintained the product (packaging) per the cited Mil Spec (and remember, automotive companies each have their own packaging requirements) and their process(es). Then they typically shipped directly to the customer (US Government). The government paid us and we paid the packaging house.As you can see in list item 1 the company subbing out owns the process while in the second list item the sub-contrator owns the process.

Marc:

We fall into the second catagory you discribe. The packaging company we use is QS 9000 registered. We tell them the requirements, they then design how they are going to meet those requirements. (The people I was discussing this with yesterday are not in the office, otherwise I would try and get more information.)

I know that we are responsible in the grand scheme of things, but I can't imagine the packaging process is on our CP. It may be on the PFMEA in the sense of "incorrect packaging" - "contact sub-contactor, monitor process, etc.", but I don't think their process is spelled out on our PFMEA. (I don't know the specific product to pull it up...). I would expect my subcontractor to have a PFMEA and a CP (they are QS...).

My initial reaction yesterday was direct material (since no modifications are done to the product itself) but I may resend that decision based on this discussion. I now think we are shipping them INDIRECT material since the packaging is a customer specification. While our packaging company is responsible for problems that arise, I think we would still be issued the PRR if they received a shipment of product that was packaged incorrectly. The final direct material is acutally shipped out by the packaging company after packaging is completed.

Is it correct to say that if you ship anything other than the finished product (that meets all customer requirements) to someone you are shipping indirect product? (assume please that you are not shipping non-conforming product)

Or... is indirect product only outside the product loop (eg: selling scrap for re-processing...the scrap has nothing to do with the product we're creating...)

I'm going to keep my fence sitting position for now. I would have to know the document where it is used and in what context.

I always based my basic definition of 'direct' and 'in-direct' on whether or not the product was shipped from the company. If we shipped directly - it was direct. If we didn't - it wasn't. But - we all know about definitions (as I straddle the fence). :thedeal:

Marc,

> This always leads me back to FMEA and control plan requirements.

If they have one. If this thread was in the QS or TS 16949 forum I'd be more along your strict line of thinking but this is the General ISO Topics forum and everything automotive does not always apply in ISO. Most of my ISO clients have never heard of a control plan or an FMEA. They may have similar systems which do the same thing and in a similar {or different, for that matter...} way, but the terms Control Plan, FMEA, etc. are foreign to them.
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Agreed! My views can be strict at times. But still have in my head:

"A" supplies "B"

"B" could care less if "A" uses subcontractors "C", "D", and "E".

"A" will still get gigged.:)

I am a (eg.) sunbed manufacture, I buy a plastic canopy to go on my bed, that subcontractor (ISO 94) is a direct supplier to me. If that canopy has a sticker on it, the subcontractor of my subcontractor is an indirect supplier to me. Just to add to the confusion:p

gpainter:

The crazy thing is, THAT makes sense to me...

Perhaps, in that light, we are a direct supplier to our packaging compay (they are getting the final product they expect from us), but our packaging company is an indirect supplier to our customer (since they are providing a service THROUGH us).

And to think I thought this was a quick answer question...I should know better...:ko:

This is why I keep going back to ask specifically what document is it in and what do the words say. This is because you have to establish the view point. It's like getting in a pissing match over whether to call something a process or a system, a sub-process of a system or a sub-process of a process. It sounds simple, but - as I always say - one size does not fit all.

If I can't see where it is written and precisely what is written, I can't begin to realistically evaluate.