AS9100 7.4 "Purchasing of a Service" - Stress and Design Analysis

S

soc1214

#1
Hello, this is my first time posting, so hopefully I am doing this per the specifications.

The Company I work for provides a body (our employee) to the Large OEM's for Stress and Design analysis work. We are looking at using a payroll company to "hire" employees, and then have them go to our customers locations to work per our contract. I am having a hard time trying to apply 7.4 to this business model, as we don't have a physical good exchanging between us and the payroll company. We would provide them the names and contact info for the employee, but they will still be our employee, just being paid by a different company. This is being done so that we can pay lower costs for the employee, but get a better margin on the contract from our customer.

So my question is, does this example fall under the 7.4 requirement of purchasing?
 
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dsanabria

Quite Involved in Discussions
#3
Hello, this is my first time posting, so hopefully I am doing this per the specifications.

The Company I work for provides a body (our employee) to the Large OEM's for Stress and Design analysis work. We are looking at using a payroll company to "hire" employees, and then have them go to our customers locations to work per our contract. I am having a hard time trying to apply 7.4 to this business model, as we don't have a physical good exchanging between us and the payroll company. We would provide them the names and contact info for the employee, but they will still be our employee, just being paid by a different company. This is being done so that we can pay lower costs for the employee, but get a better margin on the contract from our customer.

So my question is, does this example fall under the 7.4 requirement of purchasing?
Just a couple of question for clarification:

Are you looking to exclude 7.4 from your QMS?

Are you looking for an external source to determine competence?

Are you looking for clarification if this temporary company that does not enhance your product?

Note: The organization shall ensure that purchased product conforms to specified purchase requirements. The type and extent of control applied to the supplier and the purchased product shall be dependent upon the effect of the purchased product on subsequent product realization or the final product.
 
S

soc1214

#4
We currently have a exclusion to 7.4 in our system. The External Source is only paying the person. We are telling the external source who to find. What we get from our customer is a request to provide them Qty "X" Engineers with a certain job experience. We then find the resumes and provide them to our customer. They vet the resumes, perform an interview, and then tell us who they want to work for them. We then would go to the payroll company and tell them to hire the employee and have them report to our company for us to let them know where to go. Our Customers would not know anything about the payroll company.

More what I am looking for, is under this scenario is the payroll company a supplier that would fall under the definition of 7.4?
 

John Broomfield

Staff member
Super Moderator
#5
Hello, this is my first time posting, so hopefully I am doing this per the specifications.

The Company I work for provides a body (our employee) to the Large OEM's for Stress and Design analysis work. We are looking at using a payroll company to "hire" employees, and then have them go to our customers locations to work per our contract. I am having a hard time trying to apply 7.4 to this business model, as we don't have a physical good exchanging between us and the payroll company. We would provide them the names and contact info for the employee, but they will still be our employee, just being paid by a different company. This is being done so that we can pay lower costs for the employee, but get a better margin on the contract from our customer.

So my question is, does this example fall under the 7.4 requirement of purchasing?
soc1214,

Clause 7.4 applies to the purchasing of services too, especially when these services affect the quality of your services (or products).

You'll need service supplier selection criteria and evidence that you have applied those criteria to the selection and re-selection of your service supplier.

Your service supplier works to a contract agreed with you wherein you will have specified your requirements and the acceptance criteria. You will also have agreed the basis for determining conformity to the contract requirements including the requirements for the quality of service.

Instead of a physical good you are receiving a service that benefits your company (and your company's customers) in some way. Being clear on these benefits helps you to determine how much to pay for these services and provides the basis for the payment of damages should your supplier fail to perform.

I hope this solves your problem.

John
 

Pjservan

Involved In Discussions
#6
You are walking a thin line here.

If you take the position that they are indeed your employees and not the payroll agency (which does occur in some instances with temp agencies) then you still can exclude 7.4. Just explain how personnel qualification, training and competence is defined and achieved. You will need to maintain records for them.

Otherwise, it looks like you are outsourcing your the service in that case 7.4 does apply.

The bottom line, however, is how are you conveying job requirements to this "service providers" and is it effective. Once this is is defined you will have a clear basis for inclusion or exclusion of a standard requirement.
 

yodon

Staff member
Super Moderator
#7
Let me take a slightly different approach...

The Company I work for provides a body (our employee) to the Large OEM's for Stress and Design analysis work. We are looking at using a payroll company to "hire" employees, and then have them go to our customers locations to work per our contract. I am having a hard time trying to apply 7.4 to this business model, as we don't have a physical good exchanging between us and the payroll company. We would provide them the names and contact info for the employee, but they will still be our employee, just being paid by a different company. This is being done so that we can pay lower costs for the employee, but get a better margin on the contract from our customer.
My take would be that everything shown in strikeout is just a business decision. You say it's still your employee and so you should be wholly responsible for ensuring that your employee has the competence to perform that activity, you are wholly responsible for the quality of work performed, and you have complete management responsibility over that employee. I don't see 7.4 applying at all.

The payroll company is the only outsourced service you're using and since it wouldn't affect product quality, I don't see them falling under the clause.
 
S

soc1214

#8
Yodon,

That is what I felt and was having a hard time explaining this to our auditor. Thank you all for your thougths on this subject.
 
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