4.6.2.2 Subcontractor Premium Freight

N

Norman

#1
How do QS-9000 certified companies keep track of the premium frieght that their subcontractors pay to deliver on-time?

How are subcontractors notifying QS-9000 certified companies that they are paying extra for freight?
How do you drive this requirement down the supply chain?

Does anyone have an example of a record to show an auditor?

Any input is appreciated. We are stumped here.
:confused:
 
Elsmar Forum Sponsor
D

D.Scott

#2
ONLY MY OPINION - DO NOT TAKE AS GOSPEL!

We are QS-9000 and have survived a whole bunch of audits without running into a problem with this issue. We are required to have a system to monitor the delivery performance of subcontractors including tracking excess freight (both ours and theirs). There is no requirement to report it to anyone. We have asked our subcontractors to report excess freight to us (in our purchase orders) and if they report any, we record it. We don't go to any extremes to find out if they do actually report everything to us. We do include any charges we incur.

My belief is that the requirement is meant to prompt corrective actions on "problems" indicated by repeated excess charges. The Big 3 wants to drive prices down and excess freight is a driver in the other direction.

Be sure you have a delivery monitoring system for ALL subcontractors and be able to show a log with the title "Excess Freight" or some such thing. Even if there is nothing on the log, IMHO you meet the requirements.

Dave
 

SteelMaiden

Super Moderator
Super Moderator
#3
Greetings!

We kept a very simple spreadsheet to record premium freight. If we had to pay anything other than the standard transportation costs we recorded the difference between standard and premium costs. If delivery was paid for by suppliers and for some reason it ended up getting shipped next day or 2nd day we just denoted that premium freight was paid by the supplier. If we knew what those freight charges were, we recorded, otherwise we just noted they were paid by the supplier.

We made sure to document what we were going to track, as in the fact that we were not going to track amounts when paid by the supplier for delivered price items. The spreadsheet showed dates received, date ordered, date promised (to see if premium charges were because we were not allowing enough lead time or the supplier was not providing timely service) and things like bill of lading, company (supplier or customer), and actual costs if known.

Our registrar had no problems with it, and it worked well for us. We reviewed in quality steering committee and used the results for corrective/preventive actions, etc.
 
N
#4
Premium freight silliness

This thread hits on a major pet peeve of mine. I am, for the most part, a fan of QS9000 but clause 4.6.2.2 is just plain stupid. Sure we keep records of both premium charges paid by both us and the subcontractors. But, let's be honest those records aren't worth the paper or the electronic space they are recorded on. If a replacement part shows up here in a taxi (don't laugh) you have got a pretty good idea someone is paying premium freight, but otherwise fuhgetaboutit. Subcontractors are required to report premium freight that they have incurred but they don't do it. Do you blame them? No way is a subcontractor going to admit to extra freight costs caused by their delays, do overs, rejects or poor planning. They swallow the costs and hope you don't notice that we are at risk dealing with them. These are simple facts of business life. Nice idea QS9000, but completely impractical. There is no way I know of to get meaningful data. Measuring delivery performance suffices IMHO. Pie in the sky thinking. We survey subcontractors quarterly to remind them to submit premium frieght numbers but they just resent it and our purchasing personnel are none too thrilled about it either. I have no good answers when they complain other than, "sorry, I didn't write the standard". We all have more important things to do.
 
Last edited by a moderator:
A

Al Dyer

#5
Call me somewhat retentive (someone will) but I like to know when one of my suppliers is having problems with shipping product.

If those costs are excessive there is a very good chance that their processes are not working properly. If I have a supplier with a messed up process that affects me and my customer and I am going to investigate as to protect the customer.

At the very least when our supplier requests a price increase I will have records that prove that they have a problem and we won't talk until those situations are corrected.

I would venture to say that anytime there is a premium freight cost there is a loss of revenue and profit. How long can a company run at losses like those. Sure, they may be some kind of loss leader, but it better not affect me.

MHO
 
N
#6
Problem Subcontractors

I agree Al that if a subcontractor is having problems we all want to know about it. My experience has been that this ususally becomes evident from them not meeting 100% on-time delivery requirements or they call up and request extensions to the delivery date on a regular basis. The only time you get indications from premium freight is when it is obvious (i.e. different carrier from ususal, arrives in a taxi, arrives by helicopter!! etc.). I have yet to have a supplier admit that they screwed up, had to run a extra shift/overtime or had to move heaven and earth to make a shipment. If we need to expedite an order we get billed for every incidental cost. If they need to expedite an order because of something they screwed up, we will never hear about. I just don't think that getting subcontractor performance data via premium freight is practical or works at all. If someone has a good way of getting this data, please enlighten me because I don't see how we are supposed to get their internal information. Sure some subcontractors are up front with this information when you ask for it but the vast majority are not.
 
A

Al Dyer

#7
Niel,

Tough nut to crack. I guess I can only sat that you are the customer and dictate your supplier requirements and visit them now and again for a review. There are always people that will "hide" the truth.

But, a good review of their systems can catch such activities. Look at production rates, maintenence reports, time studies, control plans, management goals, send away the M.R. and talk to the shipping people over a cup of coffee.

Be inventive and the holes can be filled. :bigwave:
 
G

Greg Maggard

#8
I agree, if you want the real nuts and bolts facts talk to the employee (the expert running in the problem area). There is were you can get the facts to fix the problem. If you want it to look good on paper go talk to Management.:biglaugh:
I'm dealing with that now at the new place. :eek: premium shipping is a bit costly here. Over a10 month period they could have payed $ more hourly to employees and 5 years worth of TS/QS and ISO setup and revisions all by Third party exclusively:frust:

OH well, that will all change!:evidence:
 
M

Martijn TVM

#9
Glad we don't have this problem

Just my pennies worth. the problem is that subcontractors don;t always report on premium freight charges. So what. We're not paying for it. If there is any reason to believe that they would have a unstable process ofcourse you go over and check that. Finding that out by the freight information they supply, doesn't seem like the way to do that. that is like measuring the opinion of a nation by asking 5 people. They report 1 instance of extra freight charges the incure twenty or indeed only one.

But then again if you cannot trust the information your suppliers sent you??? sounds like something is wrong then to, no?

Of course making sure your supplier is in good condition to ensure a future is really important but if my supplier would really suffer from freight charges .....

Well maybe every part of the industry is different on this. our company is only a house build between skyscrapers on both sides. Big suppliers and Big customers. It is not that we have much power over our suppliers. Customer decides that the material we need to use comes from e.g. Du Pont then it comes from Du Pont.

So what is wrong with recording the instances that you do get. Make a log and who cares that it is empty.

We don't have to keep a seperate log because our ERP system records it for us but the idea is the same.

Or maybe my pennies worth isn't worth a dime.


Martijn
 
G

Greg Maggard

#10
Good answer.:)

Now look at what the missed shipments cause to your customer or supplier. Possibility of no cost saving. Might even go up in cost
In turn not cost reduction back to the customer or even you. Reaction time, less lead time. Schedule problems. :eek:

These are just a few Items. "MUDA" avoid waste of any kind if possible. Today no problem.....Tomorrow maybe a different story.

Our cost here are crazy O.T. Utilities, raw materials, lost facilities space etc... because no detail has been taken to focus on problems, just fire fighting.:frust: :thedeal:
 
Thread starter Similar threads Forum Replies Date
F Tracking Subcontractor Premium Freight QS-9000 - American Automotive Manufacturers Standard 3
T Difference between a subcontractor and a supplier ISO 9000, ISO 9001, and ISO 9004 Quality Management Systems Standards 21
P Sterilization Subcontractor of OEM ISO 13485:2016 - Medical Device Quality Management Systems 3
J What are a Taiwanese Medical device subcontractor's legal responsibilities with Taiwan regulations? Other Medical Device Regulations World-Wide 2
S Responsibilities between government owner and private subcontractor of a power plant seeking ISO 9001 certification ISO 9000, ISO 9001, and ISO 9004 Quality Management Systems Standards 9
P Subcontractor site in EC certificate EU Medical Device Regulations 2
M TS16949 Control regulation with business partner(Subcontractor) ISO 9000, ISO 9001, and ISO 9004 Quality Management Systems Standards 2
P Sterilization Subcontractor - Quality Control ISO 13485:2016 - Medical Device Quality Management Systems 3
O NADCAP AC 7108 - Subcontractor Laboratory Certification AS9100, IAQG, NADCAP and Aerospace related Standards and Requirements 6
J Product not in the Registration Scope of a Critical Subcontractor/Supplier CE Marking (Conformité Européene) / CB Scheme 11
F Tips, Guidelines and Checklist to conduct Audit of Supplier & Subcontractor Document Control Systems, Procedures, Forms and Templates 5
T Subcontractor Model to Shelter Model - How to include in ISO 9001 ISO 9000, ISO 9001, and ISO 9004 Quality Management Systems Standards 6
S Aviation Parts Design Subcontractor Assessments - Example forms, etc. wanted AS9100, IAQG, NADCAP and Aerospace related Standards and Requirements 2
S Developing Documentation and Defining Processes as Subcontractor IATF 16949 - Automotive Quality Systems Standard 6
D Subcontractor Requirements when a Customer Chooses the Subcontractor ISO 9000, ISO 9001, and ISO 9004 Quality Management Systems Standards 5
R Subcontractor Agreement for Engineering Services Quality Manager and Management Related Issues 3
N Auditing a Software Code Subcontractor (Supplier) ISO 13485:2016 - Medical Device Quality Management Systems 4
M What determines a Critical Subcontractor? Other ISO and International Standards and European Regulations 5
T Packaging Subcontractor Certification - Class I and Class II Medical Devices Supplier Quality Assurance and other Supplier Issues 2
S Medical Device Subcontractor Significant Change EU Medical Device Regulations 9
T Control of Medical Device Software Subcontractor ISO 13485:2016 - Medical Device Quality Management Systems 1
A Is a subcontractor required to be ISO 13485 certified? ISO 13485:2016 - Medical Device Quality Management Systems 27
I Taiwan Medical Device Product Approval Process using a Subcontractor Other Medical Device Related Standards 10
T Opportunity to become senior 'Subcontractor Quality Management' Engineer Career and Occupation Discussions 13
Z Subcontractor Assessment - Change control process Quality Manager and Management Related Issues 2
A EN/AS 9100 - Subcontractor audit and auditor requirements AS9100, IAQG, NADCAP and Aerospace related Standards and Requirements 5
L Label placed on medical device by subcontractor based outside USA ISO 13485:2016 - Medical Device Quality Management Systems 4
M Justifying Subcontractor (with no QMS) Service - Class 1 Medical Instruments ISO 13485:2016 - Medical Device Quality Management Systems 10
T Process Instructions via BOM for Subcontractor? (PCB Population) Manufacturing and Related Processes 2
T Medical Devices Manufacturing Cleanroom Protocol and Subcontractor ISO 13485:2016 - Medical Device Quality Management Systems 4
R TS Certification Scope - Semiconductor subcontractor providing assembly and testing IATF 16949 - Automotive Quality Systems Standard 14
G Risk Analysis for a Subcontractor ISO 13485:2016 - Medical Device Quality Management Systems 1
L Subcontractor in terms of CAN/CAS 13485:2003 CMDCAS vs. DIN EN ISO 13485:2003 ISO 13485:2016 - Medical Device Quality Management Systems 5
C Semiconductor Subcontractor Quality System Supplier Quality Assurance and other Supplier Issues 6
M TS16949 section 7.0 Product Realization - Subcontractor with no Design responsibility Design and Development of Products and Processes 3
B Supplier Development - Cited for 'no evidence of subcontractor development' Supplier Quality Assurance and other Supplier Issues 7
Q Outsourcing & the Control Plan (Ours and the Subcontractor's) - Links, etc. APQP and PPAP 10
T Seeking: Subcontractor Satisfaction questionnaire - Construction Industry Document Control Systems, Procedures, Forms and Templates 4
D Supplier/Subcontractor Survey Questionnaire Supplier Quality Assurance and other Supplier Issues 6
D Subcontractor Development - What is Minimum Required? Clause 4.6.2.1 QS-9000 - American Automotive Manufacturers Standard 13
R Subcontractor Development - 4.6.2.1 QS-9000 - American Automotive Manufacturers Standard 5
A Subcontractor (Supplier) SPC Supplier Quality Assurance and other Supplier Issues 4
S New Subcontractor Plant Registration QS-9000 - American Automotive Manufacturers Standard 3
A Who is compliant to the new subcontractor development guidelines? QS-9000 - American Automotive Manufacturers Standard 16
D Requirements for Supplier and Subcontractor Certification - July 2002 - Sanctions Supplier Quality Assurance and other Supplier Issues 3
Q Supplier and Subcontractor Supplier Quality Assurance and other Supplier Issues 8
Q Level of PPAP submission for Subcontractor APQP and PPAP 3
A QS-9000 Clause 4.6.2.1 and Interpretation C9 - Subcontractor Development QS-9000 - American Automotive Manufacturers Standard 41
A ISO 9001 at Subcontractor end ISO 9000, ISO 9001, and ISO 9004 Quality Management Systems Standards 3
A Are You Meeting Subcontractor (Supplier) Development Requirements? Supplier Quality Assurance and other Supplier Issues 10

Similar threads

Top Bottom