Control of Price Lists

[Marc]

This has been a topic on the listserve. Thought this was a good 'food for thought' part of the thread.

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From: ISO Standards Discussion <jennejohnn@UWSTOUT.EDU>
Date: Tue, 1 Feb 2000 07:40:13 -0600
Subject: Re: Controlled pricelists /../Salinger/Whitcomb/Naish

From: PNaish@aol.com

Gary,

You bring up an interesting point about the supplier catalogue control. I have seen auditors who require it and others who have ignored it. In many cases it depended upon what they were used for.

Example one: One company uses the catalogues in their receiving dept to verify the material against. Must be controlled as it is used for making a quality decision about the acceptability of the material to be used in the product.

Example two: A distributor buys from the manufacturer and sells to the end user. The distributor sends pages from the catalogue with the specifications of the material. Should be controlled as part of contract review. The distributor and customer are agreeing on what the customer is to get. (Usually have not seen an auditor take this view but had one who consistantly does and says and I agree it is part of the contract agreement between the companies.

Example three: A company either manufacturer or distributor get price lists from the supplier of material or product. It is a general guideline to pricing but the final contract review is between the buyer and seller as to the exact price. I have seen numerous examples where a customer is given 1,000 piece pricing when they order 100 because they are "a good customer". I have seen ship and debits (which means the distributor sells it to the customer at a given price but the manufacturer is debited for a discount special). The price list and the price have no actual relationship here. Since no quality decision is being made off the price list and the price is as mutually agreed to whether verbally, faxed, or as listed, I see no reason to control the pricelist for that reason.

Example four: Pricelist (or computer pricing) used internally to quote or tell a customer what the price will be for an order. Needs to be controlled because quality decision relating to contract review is made from the information on the list (or in the system). I have seen a company get a minor deviation for this because pricing was as per current price lists but sales had the wrong revision and told the customer the wrong price. Billing billed off the price list and the customer was upset. They had a number of credit memos issued since the price mutually agreed upon did not match the price billed.

Supplier specifications are the same way or should be when they are being used by Engineering or the customer to make a quality decision about the accpetablity or usability of the material in their product. I have two excellent example of what happens when they are not controlled properly that were spend to a company I worked for in high Tech Electronics.

Example one: chip manufacturer indicated the speed of a chip to be 60 nano seconds. They changed the die and did not notify anyone of the change nor did the part number change. The new die speed the chip up to 45 to 50 nano seconds. All of our product that used it started failing. It took a lot of work to figure out what happened. It also cost a lot of money for engineering and rework of all our product affected due to the speed change.

BTW: This is typical if you read catalogue and spec sheets from manufacturers - "parts subject to change without notification" is in many of the catalogue and brochures. I have always wondered how a company can print that and see that they are meeting customer needs. When they make a change should they be required to notify thier customers?

Example two: A hard drive manufacturer sent out a data sheet for a new product to a distributor. The distributor passed it on to engineering. Engineering designed the product around the hard drive specification. The drive manufacturer made a change but did not notify the distributor nor our company. Again we had to redesign after the product didn't work.

Now I have seen some say that it is the customer's responsibility to ask but in both cases when the sales department was asked if anything changed they said no. So who owns the notice to the customer and who should be making sure the spec sheets and catalogues reflect the product. Is the customer required each day to get a letter from the vendor's engineers saying there are no changes?

Phyllis

[Marc]

From: ISO Standards Discussion <jennejohnn@UWSTOUT.EDU>
Date: Tue, 1 Feb 2000 07:49:04 -0600
Subject: Re: Controlled pricelists /../Salinger/Whitcomb/Humphries

From: Edwin Humphries <edwin@e-quality.com.au>

Gary,

> A strange thought came to me, and I am sure this will send some folks
> over the edge. Take your sales department out of the scope of the
> certification and you then don't have to worry about controlled or
> uncontrolled pricelists, and then you handle pricing issues in Contract
> Review.

Not sure I like that approach!

> Here is another such example or questionable call that goes along the
> same line. I have a friend whose company was certified, but only after
> two tries. In the second try, the auditor said that the purchasing
> department needed to "control" the catalogs they use to buy product
> from inorder to assure that they get the correct product and price that
> was ordered. Isn't this along the same line as the pricelist issue? And
> wouldn't we have a responsible expectation a receiving procedure would
> do some sort of inspection or is it necessary to go back to the
> "controlled catalog" to verify product. I don't see much difference in this
> finding and the pricelist finding. Of course I realize some PO would have
> to be created, but this doesn't address the "Controlling" of catalogs. My
> heavens many companies get and use 100's of catalogs.

Seems to me there are several issues here:

1. The stupidity of the auditor in insisting on the right to nominate what are controlled documents and what aren't.

2. The stupidity of the auditor in insisting that the company controls documents over which it has no control (isn't that an oxymoron - or is it the auditor who's simply a moron?)

3. The stupidity of the auditor in not realising that it is the supplier's responsibility to deliver what is ordered - a responsibility that does not end if the customer orders goods from a superseded catalogue.

Actually, I'm wrong - there's only one issue: the stupidity of the auditor!

Best Regards
Edwin Humphries

[Marc]

From: ISO Standards Discussion <jennejohnn@UWSTOUT.EDU>
Date: Thu, 3 Feb 2000 07:24:58 -0600
Subject: Re: Controlled pricelists /.../Humphries/Naish

From: PNaish@aol.com

Edwin wrote:

> 1. The stupidity of the auditor in insisting on the right to
> nominate what are controlled documents and what aren't.

First of all I don't believe the auditor is stupid and feel this inappropriate but aside from that fact: the auditor is trying to determine what does and does not comply with the standard and is it effective. Since we did not have a full understanding of the use of the documents, we can not judge the decision based on the document type alone. The most pertinent questions are: Is it used for making a "quality" decision relating to the effective running of the quality system? If the answer is yes then it needs to have some sort of control. How you define that control and make sure it is effective is then up to the company to show to the auditor. If no quality decision is being made then there is no need for control.

> 2. The stupidity of the auditor in insisting that the company
> controls documents over which it has no control (isn't that an
> oxymoron - or is it the auditor who's simply a moron?)

If they have no control and they don't need them why do they print them? If they are not to be used and the company or the customer needs to do something besides them why have them? Every company I have seen who prints them does so that the customer can see what to order and can order from them. If the customer is going to order from them then they should be considered part of contract review and thus should be controlled. No one can preclude a company or an engineer from keeping out of date documents hidden in their desk somewhere but since they should be able to keep track of the version and when there are changes notify the customer of the change as per 4.3 contract review for informing the customer of change as well as 4.4 for design for the manufacturer who designs.

If no one is going to take responsibility for making sure the catalogues are current and we are to expect the customer to ask each time they buy and the seller to know all the items and their intricate changes then I am sure there will be a lot more time spent in the world of sales.

> 3. The stupidity of the auditor in not realising that it is the
> supplier's responsibility to deliver what is ordered - a
> responsibility that does not end if the customer orders goods
> from a superseded catalogue.

So you agree it its the supplier's responsibility to deliver what is ordered that does not end if the customer orders from a superceded catalogue. So how does the supplier notify the customer of the change and when do they notify the customer of the change?

Phyllis

[Marc]

From: ISO Standards Discussion <jennejohnn@UWSTOUT.EDU>
Date: Tue, 15 Feb 2000 15:13:35 -0600
Subject: Re: Controlled pricelists /..Naish/Humphries/Naish

From: PNaish@aol.com

We seem to be focusing a lot of attention on the price list as opposed to the catalogue. My line of focus was primarily on the catalogues as opposed to price lists so lets separate the two for the time being.

The price list: Does the supplier guarantee pricing to the price list for a period of time. That is the price is good until November 2000. If so and there is no disclaimer as to subject to change without notice, then the supplier must live by those prices until November 2000. I have a couple of clients who produce these type of price lists and control who they send them to using internal document control procedures.

I also have several other clients who receive these same types of price lists from their supplier. And the suppliers do the same thing and update them at the end of one price list's effectivity of the new pricing. Internally the client (distributors mostly) must make sure that if they are using this price list to quote or sell product to a customer that all their sales people have the current version and therefore must control them internally as well as externally.

(A side note: aside from ISO their are legal ramifications to publishing a catalogue or price list with an effectivity date and refusing to sell at that price before the expiration date unless you have included the disclaimer of subject to change.)

Catalogues: This is the area that I feel is the most abused. If the catologue stipulates the design specifications to which a customer is placing an order, then it needs to have some controls on it or the sales person needs to know each time it changes and notify the customer.

I could list dozens of examples of this not occurring. The catalogue stipulates a size or a value and an engineer makes a decision off the spec. When the part comes in the part does not meet the spec because the spec has changed and no one has notified the customer.

This is made even worse in the case of distributed products. If (and that is a mighty big IF since I find it rarely happens with the distributors I work with), if the sales person at the manufacturer tells the distributor it is usually sent in a letter some period of time after the parts are changed and rarely gets to the sales people as it gets sent to some billing department and frequently discarded.

I have seen responses that purchase makes sure each time they order a part that the price has not changed and that may be true in some cases but not all. But what is more important is when does purchasing ask if any dimension or part of the spec been changed?

Now logic would say that if the part were changed the manufacturer would change the part number. The problem is that if the manufacturer believes the change will not affect a customer and is a better than they do not change the part number. Even if they do change the part number I have seen a number of ISO registered manufacturers who simply substitute the new part number without even telling the customer. I have had several clients or distributors with clients who had a line shut down because this occurred. The client ordered to the description in the catalogue and the change was not identified to anyone along the way.

Additionally, I have had one client recently have this occur and when he requested a corrective action from the supplier the supplier indicated they don't need to correct the problem and they don't provide corrective actions to the customer. Interesting since the supplier is ISO registered. Unfortunately this is a sole sourced part and the client has no alternatives but to live with the problem.

Also interestingly enough the supplier was certified by the same registrar as a previous discussion of a company who does not provide corrective action responses to customers.

Back to the price lists and the catalogues. I agree with Edwin that some of the auditors try to impose their own thoughts. But some companies do not listen to the questions and do not want to understand the impact. If the auditor asked if they used the lists to make any decisions from but they kept saying they are for reference only I expect the customer may not understand the question. If you are making a decision based on the document then control it. If not what do you need it for. If you use it to get additional information from the supplier then I say you do not need to control them as the information provided as per the requests stand on their own and thus the others are truly a reference or a starting point only.

Bottom line: if you use the document to make a decision of any kind control it.

Phyllis Naish