Audit Nonconformance - 7.2.2 - Contract Review (Review of Requirements)

[glenn0004]

At our last external audit we received a NC under 7.2.2 -
Our process allow the details of a service contract to be entered on our system based on a copy of the service agreement which has been signed by the customer but is awaiting a company directors signature (us). The service contract supports a device that has been sold to the customer... at the point the device order is alreay being processed. Standard documentation is always used and all devices and costs are clearly defined via a proposal to the customer prior to any order. Our external auditor took the view that until the service agreement is signed by the company we have not met the requirements of 7.2.2 even though standard documentation is used and all details have been previously expressed. Obtaining a directors signature before processing the agreement will increase the time taken to deliver the device and thus affect customer satisfaction...your thoughts

 

[somashekar]

Re: 7.2.2 - contract review (review of requirements),

...your thoughts

My thoughts ....
Why must the company director sign the agreement in your procedure ?

Obtaining a directors signature before processing the agreement will increase the time taken to deliver the device and thus affect customer satisfaction

You have already stated one consequence of waiting for director signature. Can you state some prospects of director signature ?
If there are a set of responsible officers authorised to take decisions then they as well wet it rather than the director. The director can be consulted by any means of internal communication before the signoff based on the business case and weightage.
The auditor has reason and evidence to believe that it has not been authorised.

 

[Sidney Vianna]

Re: 7.2.2 - contract review (review of requirements),

..your thoughts

Welcome to the world of auditors that like to operate outside of the real business world, forget common sense at home and like to write up non sensical NC's to pretend they have found something worth reporting.

How many times have your director decided to change anything to the terms of delivery, AFTER the contract came back signed from the customer?

 

[Randy]

Re: 7.2.2 - contract review (review of requirements),

Remove or modify the requirement.

This is no different than a patient telling a doctor "It hurts when I..." and the doctor coming back by saying, "Then don't do it."

 

[JRKH]

Agree with the others. The question becomes why must the director sign the agreement at all? What advantage is there to this requirement in your process?
It appears that, since you already allow processing to start without his signature, the question is already answered...
Just change your procedure to eliminate the requirement.

Randy - I read another post of yours this morning about "Painting yourself into a corner"...I think that here we have a perfect example of what you were talking about.

Peace
James

 

[JaneB]

Re: 7.2.2 - contract review (review of requirements),

Remove or modify the requirement.

This is no different than a patient telling a doctor "It hurts when I..." and the doctor coming back by saying, "Then don't do it."

Good analogy, Randy. I like it.

 

[glenn0004]

Re: 7.2.2 - contract review (review of requirements),

My thoughts ....
Why must the company director sign the agreement in your procedure ?

You have already stated one consequence of waiting for director signature. Can you state some prospects of director signature ?
If there are a set of responsible officers authorised to take decisions then they as well wet it rather than the director. The director can be consulted by any means of internal communication before the signoff based on the business case and weightage.
The auditor has reason and evidence to believe that it has not been authorised.

Many thanks for all of the replies . . a bit more background info first. Our company is split into 6 regions, all with Sales and Service Directors who take appropriate resposibility for the business and the agreement of contracts within their areas, (some regions will allow the signature of a lower level of manager). The contract will always need a company signature from us as its a legal contract. On standard documentation the sales order is entered, copy paperwork sent to all relative departments at the same time as the service contract is sent for approval from the local director. We need the service contract set inplace ASAP to ensure that the the contract is inplace on the system at the time of installing the equipment to the customer. The process is the same even if a lower manager is able to sign the contract.

 

[kgott]

glenn0004, when you take JRKH's advise and change the process; it wouldn’t hurt to document the details of person or persons authorised to sign and or process orders. Also wouldnt hurt to show their (busienss) signaure alongside their name.

You can do this with a work instruction, procedure or a note to this effect in you management system manual. That way you got documentry evidence and won't get caught on this again.

Hope this helps

 

[JaneB]

Re: 7.2.2 - contract review (review of requirements),

Many thanks for all of the replies . . a bit more background info first. Our company is split into 6 regions, all with Sales and Service Directors who take appropriate resposibility for the business and the agreement of contracts within their areas, (some regions will allow the signature of a lower level of manager). The contract will always need a company signature from us as its a legal contract. On standard documentation the sales order is entered, copy paperwork sent to all relative departments at the same time as the service contract is sent for approval from the local director. We need the service contract set inplace ASAP to ensure that the the contract is inplace on the system at the time of installing the equipment to the customer. The process is the same even if a lower manager is able to sign the contract.

Something has to change - practice or procedure.

If the procedure stipulates you must wait until the / a director signs, but you actually don't, then you've given the auditor a rod to beat you with. Why not write the procedure (or whatever) to allow yourself the flexibility to run the business as you deem suitable? For example, you could write something like 'a director reviews and signs the contract at a later time' or write in a business rule that says you start work without waiting on the formal signature. It's your system (not any auditor's), so make it work the way you want it.

Though the questions others have raised, eg, how often has a director rejected the paperwork/refused to sign it etc are also relevant. And can be used (if need be) to justify the business rule/pragmatic approach.

I agree with Sidney's point of view and disagree with your auditor. My thoughts are that this is a pain-in the-rear-end auditor and one I am not particularly impressed with. After all, you stipulate that standard contracts are used and all details have been fully set out in a proposal! Requiring everything to wait until a director has signed off on the subsequent service contract is the kind of nitpickiness that gives 'quality' and 'auditors' a bad name, dammit.

 

[JRKH]

On the one hand we can say that the auditor might be "nit-picking", and expend energy on running down the auditor, but on the other hand we might just say well it's a small and easy fix so let's just do it and move on...

Nothing in the auditor's finding requires a change in process, it only requires a change in documentation. A change that more accurately reflects how things are actually done. It is pointed out that the manager's signature is deemed necessary since the Contract is a Legal document. That is all fine and good. But such signature would probably not technically or legally be needed until the day of shipment.
So the simple solution is to remove the requirement for the signature from any interference with the actual production of the product and define it in a way that says it is required before shipping the product to the customer. This could be as simple as changing one or two sentences in a single procedure.
Problem solved and everyone can move on...

Peace
James