Mexico Plant - Remote Location or Supplier?

S

Sharon_Noble

Here is my dilema... My company is a Mfg site in British Columbia Canada. We are certified to TS 16949 (electronic modules for automotive) and ISO 9001 (wire harnesses and cables non automotive) We recently opened up a facility in Fresnillo Mexico to produce some of our wire harnesses. They are going for independant ISO 9001 certification in Oct 2007. We technically do not own the company as we pay another company who in turn pays the employees. They are not responsible for processes such as Sales, Purchasing, Engineering... All they do is receive raw material (that we order), manufacture the harness, then ship to us for inspection and we ship to our customers. How would you do Internal Audits for this location? Would they be able to recieve certification if they only perform those processes? We send them work orders based on our customer orders and purchase raw material based on that. If you were to visit this facility for an audit what would you audit? Would they have to come audit our facility here in BC for things such as Purchasing, Sales, Engineering,,, The plant manager will be a part of our management review and their quality metrics will be included into our Balanced Scorecard. Sorry I am fairly new to the "Quality" sceen and would appreciate some help as I have to go down there Aug 19th and do their Internal Audits in prep for the ceritification audit. I am an internal auditor here but I'm not sure how to audit this facility, also the language barrier is a little daunting!
Thanks
 

Helmut Jilling

Auditor / Consultant
Here is my dilema... My company is a Mfg site in British Columbia Canada. We are certified to TS 16949 (electronic modules for automotive) and ISO 9001 (wire harnesses and cables non automotive) We recently opened up a facility in Fresnillo Mexico to produce some of our wire harnesses. They are going for independant ISO 9001 certification in Oct 2007. We technically do not own the company as we pay another company who in turn pays the employees. They are not responsible for processes such as Sales, Purchasing, Engineering... All they do is receive raw material (that we order), manufacture the harness, then ship to us for inspection and we ship to our customers. How would you do Internal Audits for this location? Would they be able to recieve certification if they only perform those processes? We send them work orders based on our customer orders and purchase raw material based on that. If you were to visit this facility for an audit what would you audit? Would they have to come audit our facility here in BC for things such as Purchasing, Sales, Engineering,,, The plant manager will be a part of our management review and their quality metrics will be included into our Balanced Scorecard. Sorry I am fairly new to the "Quality" sceen and would appreciate some help as I have to go down there Aug 19th and do their Internal Audits in prep for the ceritification audit. I am an internal auditor here but I'm not sure how to audit this facility, also the language barrier is a little daunting!
Thanks


Your example kept going back and forth as to which status. That might have to be left to the CB to decide.

However, whether they are a suplier or a remote site, they can have their own certificate. They can have their own internal audits. Somewhere, they would have to justify the exclusions - they have to occur somewhere, after all. The decision would probably hinge on that and ownership.
 
S

Sharon_Noble

Your example kept going back and forth as to which status.
That is my problem I'm not really sure how the CB will see it. So how would I complete the internal audit when I'm not really sure as to the status? Here are some questions I have:
1) If we purchase all the raw material for their production would that make their inventory "Customer Property"?
2) How would they measure Customer Satisfaction when there is not a defined "Customer"? (Us or our end customer?)
3) If management review is conducted in Canada, will the CB need to view our MR minutes?
4) Should I audit their "Customer-related Processes" with the end customer in mind?

I probably have a ton more questions but I will leave it at that!
thanks
 
Last edited by a moderator:

Jim Wynne

Leader
Admin
1) If we purchase all the raw material for their production would that make their inventory "Customer Property"?
Yes. If they don't own the material, and you do, then it's your property.

2) How would they measure Customer Satisfaction when there is not a defined "Customer"? (Us or our end customer?)

"No defined customer" would mean that they make the product, but never ship it to anyone. :confused: You're the customer. The end user is your customer.

3) If management review is conducted in Canada, will the CB need to view our MR minutes?
If the Mexico operation is being independtly registered to ISO 9001, they will have to have their own management review process. If, on the other hand, you extend your ISO registration to include the Mexican operation (and as Helmut suggests, this will probably require input from the CB) the strategy will be different.
4) Should I audit their "Customer-related Processes" with the end customer in mind?
Not necessarily. Of course, whomever the end user is must be kept in mind, but if you're forming a customer-supplier relationship with the Mexican operation, and you're the customer, then your relationships with the end user would be considered separately, I think.

I probably have a ton more questions but I will leave it at that!
thanks

It's actually fairly simple: if the operation in Mexico is a subsidiary of yours, then you might want to consider a blanket ISO certification. If they're not, then you won't, and you will treat them just as you would any other supplier.
 

michellemmm

Quest For Quality
We technically do not own the company as we pay another company who in turn pays the employees.

Your situation is a common one. I have dealt with this type for the past ten years.

They are not responsible for processes such as Sales, Purchasing, Engineering... All they do is receive raw material (that we order), manufacture the harness, then ship to us for inspection and we ship to our customers. How would you do Internal Audits for this location?

1- You still have to issue a PO /labor only. (Sales and contract verification and review)
2- The Material is considered customer supplied material. (Customer becomes the supplier) Hence supplier evaluation, SCAR, right material, right spec, right quantity, right arrival time, etc.
3- Manufacturing processes are based on customer requirements. They still have to have a product realization plan.
4- they don't design the product, but they have to perform process design, process control, First Article Approval, and process engineering.
5- They still have to purchase some material locally, such as solder bar, solder wire, flux, packaging, etc. This is beneficial because you can take advantage of EVA tax return.[/QUOTE]

Would they be able to recieve certification if they only perform those processes? .

Absoluetly!

We send them work orders based on our customer orders and purchase raw material based on that. If you were to visit this facility for an audit what would you audit? Would they have to come audit our facility here in BC for things such as Purchasing, Sales, Engineering,,,


If you define responsibilities clearly and assign sales, purchasing, and engineering clearly (no matter how insignificant the functions are), your HQ does not need to get involved.

Your HQ can be considered as external training source. The Mexico plant have to perform need assessment and schedule training and assess effectiveness. Email correspondence should be classified as customer communication and records need to be kept.

The plant manager will be a part of our management review and their quality metrics will be included into our Balanced Scorecard. Sorry I am fairly new to the "Quality" sceen and would appreciate some help as I have to go down there Aug 19th and do their Internal Audits in prep for the ceritification audit. I am an internal auditor here but I'm not sure how to audit this facility, also the language barrier is a little daunting!
Thanks

You are not the only one who experiences the language barrier.

Two years ago, TUV auditor asked one of the operators if she knows where to find procedures. She turned around and said that they don't have any procedure...LOL. The auditor laughed because he could see the work instruction in front of her....

Last week, I was training two supervisors in Mexico. I don't speak the language and they did not speak English. I was teaching them how to do a turtle chart. I used Google translator. It took me four times longer, but they got it and did a wonderful job.

Normally, Mexico plants get written-up for insufficient PAR and not following up with CAR and ECNs. They have not mastered planning and following up. The system should be set on accountability. The continual improvement should be very systematic. Make sure the safety is considered in every process procedure and work instruction.

Good Luck,
Michelle
 
S

Sharon_Noble

Thanks Michelle... :)
I just received the Quality Manual for the Mexico Plant. (written by our Director of Quality then translated into Spanish)
Here are the exclusions:
7.3, 7.5.1, 7.5.4, 7.2.1, 7.2.2, 7.2.3, 7.4.1, 7.5.2
Does this make sense?
 

michellemmm

Quest For Quality
Thanks Michelle... :)
I just received the Quality Manual for the Mexico Plant. (written by our Director of Quality then translated into Spanish)
Here are the exclusions:
7.3, 7.5.1, 7.5.4, 7.2.1, 7.2.2, 7.2.3, 7.4.1, 7.5.2
Does this make sense?

NO it doesn't.

Even if they can exclude certain sections, the auditor won't leave it alone and examines the validity of exclusions...

Many companies assume a QM is plug and play. Mexican employees need 10x training. They need to be asked to comeup with their QM first, then show them the difficiencies. By doing this, they become more receptive in adopting your QM.

I make my Mexican clients to have a manual with both Spanish and English text. One paragraph at a time. This creates customer confidence.

Have they been through ISO training? They need to realize how ISO frame work will help them improve the operation.

My suggestion is to:
1- Review their org chart.
2- Draw a responsibility matrix process flow and exclude design of product. Compare the map against org chart and reassign QMS responsibilities.
The top horizantal line should not correspond with job titles. They are depicting responsibilities. It is common for one individual to wear multiple hats.

I am attaching an example for reference.

3- Assign responsibilities. Discuss (Train) new responsibilities with the Mexican staff.
4- Discuss/Train staff on Quality Objectives and teach them how QMS is going to help them achieve QO.
5- Ask them to come up with an implementation action plan.
6- Review performance matrix. (Monthly or quarterly)
7- Create an outlet for demonstration of individuality, independence from HQ, and creativity. Make sure the boundaries and limits for creativity are established and controlled closely. The changes should coincide with overall objectives. Cost per benefit is a difficult concept for them to evaluate. Nurture suggestions no matter how insignifican they are.....

They love to change anything submitted to them with best of intention. Five years ago, I had to meet someone for lunch. The meeting place was close to a particular mall. I got a taxi and asked him to take me to that mall. He decided that the mall was too small and dirty... so he should take me to the best mall in town.:lmao:

Michelle
 

Attachments

  • RM 4.1 - Responsibility Matrix.pdf
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V

vandenbar

Sharon,

IMHO all those exclusions don't make sense. To exclude this facility from 7.5.1, for example, removes the need for them to control the manufacturing process at all, no work instructions, drawings, specifications necessary to produce the product. I don't think all those exclusions will be acceptable by a registrar and they don't seem to meet "1.2 Application" of the standard which states ".... and such exclusions do not affect the organization's ability, or responsibility, to provide product that meets customer and applicable regulatory requirements." If you exclude 7.2.1 you don't even need to determine what the customer and statutory requirements are.
 

michellemmm

Quest For Quality
Sharon,

IMHO all those exclusions don't make sense. To exclude this facility from 7.5.1, for example, removes the need for them to control the manufacturing process at all, no work instructions, drawings, specifications necessary to produce the product. I don't think all those exclusions will be acceptable by a registrar and they don't seem to meet "1.2 Application" of the standard which states ".... and such exclusions do not affect the organization's ability, or responsibility, to provide product that meets customer and applicable regulatory requirements." If you exclude 7.2.1 you don't even need to determine what the customer and statutory requirements are.

Exactly!!!
 
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