Outsourcing vs. Purchasing - Definitions of Outsourcing and Purchasing

[Fischer F]

ISO/TS16949:2002
Does anybody have a clear definition for outsourcing and purchasing. Were to draw the border? (if you refer to the product definition)
Or do you apply all purchasing requirements to “outsource” suppliers and the other way round?

[Roger Eastin]

I've always understood outsourcing to mean that you subcontract part of your process to a company outside of your own (for cost reasons, usually). This applies to any of the processes included in your quality system. As such you ensure that you have the same type of control on their processes that you would your own. This is done at the Purchasing level. Purchasing has a responsibiity for not just outsourced processes, but raw materials, equipment procurement, etc. However, you could also outsource the purchasing function to another company. In that case, it would be up to the orginal company to define the controls on purchasing and so on.

[Marc]

I realize this is an 'oldie', but was wondering if you folks have any other thoughts on this.

[gpainter]

In most contracts you as the supplier are responsible for all outsourced processes. So, you have to excercise and determine the control need to assure your Customer of a conforming product.

[Randy Stewart]

What does the PO state and what does the Scope of Work describe?
Look at both the ones between you and your customer and you and your supplier. It is easier to pass all the purchasing requirments to the subcontractor, but due to some limitations you may have to get the part back prior to shipping to your customer.
Just ensure that your outsource is living up to the agreement you have with them.

[Mike S.]

I agree with what is written so far, but FWIW if for some reason you wanted the "technical" definitions I'll bet a purchasing trade group would have it -- I think it is called something like the American Asso. of Purchasing management or something like that. Google it. They're an anal group those purchasing folks, and I'll bet they have official definitions.

[howste]

Here is the text of a DRAFT guidance document by TC 176 that was circulated for approval in December 2002. I assume that it didn't make it through the vote, since it hasn't been published yet. It should at least give an idea of what TC 176 is thinking though...

1) Introduction

The aim of this document is to provide guidance on the intent of ISO 9001:2000 clause 4.1, regarding the control of outsourced processes, and to clarify the relationship between this requirement and those contained in ISO 9001:2000 clause 7.4 (Purchasing)

2) Guidance

ISO 9001:2000 clause 4.1 states:
“Where an organization chooses to outsource any process that affects product conformity with requirements, the organization shall ensure control over such processes. Control of such outsourced processes shall be identified within the quality management system.”

2.1) What is an “outsourced process”?

An “outsourced process” is a process that is provided by an external organization.

Note: ISO 9000:2000 clause 3.4.1 defines “process” as “set of interrelated or interacting activities which transforms inputs into outputs”

An outsourced process can be purchased from an independent supplier, or provided by another part of a larger group of organizations. It may be provided within the work environment of the organization, at an independent site or in some other manner.
There is often an ongoing (long-term) relationship between the organization and the provider of the outsourced process.

2.2) Control of Outsourced processes

Outsourced processes typically involve interactions with other processes needed for the organization’s quality management system. These other processes may be carried out by the organization itself, or by other providers of outsourced processes. Where a process is outsourced, therefore, the organization needs to control not only the conformity of the output of the process, but also the process itself, including its interactions with other processes. For any outsourced process that affects the organization’s ability to provide conforming product, the organization has to demonstrate that it exercises sufficient control to ensure this process is performed according to the relevant requirements of ISO 9001:2000. The nature of this control will depend on the nature of the outsourced process and the risk involved. Control may include, for example, a contractual agreement with the provider of the outsourced process including the specification of and/or validation requirements for the process, quality management system requirements, on-site inspections or verifications, and/or audits.

2.3) “Outsourcing” versus “Purchasing”

ISO 9001:2000 clause 7.4 (Purchasing) requirements apply to all purchased products, which typically involve a relatively clear interface between the organization and its supplier, and for which conformity to specified requirements can be verified by inspection of the product or by other activities.

Note: A product is defined in ISO 9000:2000 clause 3.4.2 as “the output of a process”, and includes hardware, software, services, or processed materials

For outsourced processes, it is often not possible, practical or economically viable to verify the conformity of the resulting product by subsequent monitoring or measurement. In some cases, deficiencies may become apparent only after the provider of the outsourced process has delivered the product to the organization’s customer. In these cases, ISO 9001:2000 clause 4.1 also applies, and the organization must ensure control not only of the purchased product, but also of the process that is being outsourced.

[p_tww]

my understanding is
Purchasing- what you bought is a start for your own process
outsourced- what you bought is a part of your process, it's not start/end of your process.
The company should use similar purchasing control means for outsoured process provider.
the control means is basing on the product impact from outsourced process provider.