C=O puzzle - What protection does C=0 provide a supplier?

  • Thread starter charlie broe - 2008
  • Start date
C

charlie broe - 2008

#1
I don't know if this belongs here. But here goes.

:nopity:
What protection does C = 0 provide a supplier? Can a customer return product that has been inspected and accepted by both the supplier and the customer using C = 0 and subsequently found nonconforming?

For example we produce small parts using high speed stamping. We shipped a customer one lot, one shipment of 5 million parts,. We accepted the parts using C = 0 and shipped them. Our customer accepted the shipment also using C = 0. The parts are used in an assembly. During assembly 2 nonconforming parts were discovered and all **** broke loose. Our customer required all 5 million parts to be re-inspected. We were back charged for inspection of the assembled units at our customer’s facility. The remainder of the lot was returned to us for “rework”.

After re-inspection of all 5 million parts only 20 parts were found nonconforming.

Did we have to accept this reject and the back charges from our customer?
 
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Sidney Vianna

Post Responsibly
Staff member
Admin
#2
charlie broe said:
What protection does C = 0 provide a supplier?
This is not supposed to protect the supplier, but the customer. 20 non-conforming parts that were found out of 5 million might not seem that many, but if those parts were aerospace related and could affect flight safety, I am glad they were sorted out of the lot.

Sorting of large lots when C=0 and rejected parts were found, including supplier charge back is a common practice.
 
R

ralphsulser

#3
Even with a significant increase in sample size I doubt if you would have caught 20 out of 5 million. Was the characteristic found something that could be 100% inspected in line by automated equipment? We know 100% inspection by people will be less accurate that 20 PPM
 

Jim Wynne

Staff member
Admin
#4
charlie broe said:
I don't know if this belongs here. But here goes.

:nopity:
What protection does C = 0 provide a supplier? Can a customer return product that has been inspected and accepted by both the supplier and the customer using C = 0 and subsequently found nonconforming?

For example we produce small parts using high speed stamping. We shipped a customer one lot, one shipment of 5 million parts,. We accepted the parts using C = 0 and shipped them. Our customer accepted the shipment also using C = 0. The parts are used in an assembly. During assembly 2 nonconforming parts were discovered and all **** broke loose. Our customer required all 5 million parts to be re-inspected. We were back charged for inspection of the assembled units at our customer’s facility. The remainder of the lot was returned to us for “rework”.

After re-inspection of all 5 million parts only 20 parts were found nonconforming.

Did we have to accept this reject and the back charges from our customer?
What does the contract say? While the customer is not obliged to accept any nonconforming parts, chargebacks for sorting are a matter of contractual agreement. If you didn't agree to it, you're probably only legally obligated to accept a debit for the nonconforming parts. What you need to do in order to keep the customer happy is another matter, however. One would think that when quantities are in the seven-figure range that contract review would be considered very important. All of this needs to be worked out in advance at the RFQ stage.
Also, with 5 million parts, there's no way to sort them with any kind of confidence. Will the customer stop and demand a sort every time a bad part is encountered?
 

Statistical Steven

Statistician
Staff member
Super Moderator
#5
No sampling plan (except for 100% sampling) can assure that there will be no defective parts. Every sampling plan has an associated AQL and LTPD. The AQL is the average quality level, or the percent defective that you would accept at least 95% of the time. The LTPD is the lot tolerance percent defective, or the worst quality level that you would reject 90% of the time. Since you are using a c=0 sampling plan, you would need to increase the sample size to decrease AQL and LTPD. Assuming your process is stable and 4PPM is the average, than you might want to look at a sampling plan with an AQL of 4PPM. Such a plan would require a sample size of 1.3 million parts leading to a LTPD of 2000 PPM. These numbers are approximatations.

There is no sampling plan except for 100% that gave give you a 4PPM AQL and a 5PPM LTPD. Economically, you have to continue what you do, and suffer and sort when the customer complains. Otherwise, you would have to have a 100% sampling plan.
 

Mike S.

Happy to be Alive
Trusted Information Resource
#6
I agree with JWS on the contractual issue. What did you agree to?

No sampling plan will guarantee 100% good parts and as someone else said, even 100% sampling is likely to not be that good, even if automated it's questionable to me. I gotta wonder what customer would complain about 20/5,000,000 bad parts if they were not explicit about their needs during the ordering process. They sound unreasonable to me. JMO.
 

cncmarine

Quite Involved in Discussions
#7
JSW05 said:
Also, with 5 million parts, there's no way to sort them with any kind of confidence. Will the customer stop and demand a sort every time a bad part is encountered?

My customer will.
 

Tim Folkerts

Super Moderator
#8
Do you need to use a pass/fail attribute type test? Sampling for pass/fail is very ineffective for finding small defect rates. As Statistical Steven said, you would need a HUGE sample size to detect 20 parts out of 5 million with any confidence.

Can you switch to some sort of continuous variable to test the product? Then you could start to estimate the distribution of parts and hence the % defective. A calculation of Cpk might give you and the customer a better feel for how good the product is.

Tim F.
 
R

Randy Stewart

#9
This hits close to home. IMO with a PPM of 4 a supplier should not have to pay the charges. Period.

When the Big Guns give me, as there customer, the same treatment then I may change my mind.
I received a recall on my Intrepid for the floor shifter. Now applying the accept/reject, punitive damages, charge back criteria that the B3 deploys with their suppliers I should be able to return my vehicle, get a replacement for free and receive money back to keep me as a customer.
Just think what that would cost us as suppliers!
As for sorting. The sorting costs for in-house sorts are up to 5 times what a normal sorting house would cost. They will not allow you to pull parts out of the plant so you are at their mercy. We deal with at least 2 plants that have their own sorting company on hand. \
Here is where it really gets fun. The sorting company is owned by a retired B3 employee, they offer lunches, tickets to concerts or games, etc. to assembly workers for finding the "most nonconforming parts". It's nothing but a big scam, paid for by the suppliers!
A friend of mine worked for a company that supplied the molded bumpers to one of the assembly plants. They were called on the carpet due to a black line on the plastic part. All inhouse stock (1500 pcs) was frozen and sorted. They were charged for down time and the sort, but no nonconforming parts were found. The line started up and once again the line was noticed. When the root cause was looked for it was found that one of the workers used a black sharpie to mark down lot numbers off the boxes opened and stored the marker by pushing it into a hole in the side of the box. When they removed the bumper for assembly it rubbed against the marker tip putting the "Black Line" on the part. It took 16 months to recoup the debitted money back.
 
C

charlie broe - 2008

#10
:nopity: Let me tell you about the parts involved.

We produce stampings for tier II automotive customers. This part happened to be a flat washer. There is no indication the washer was a safety item but it does go to one of the B3. We use high speed presses and I think the tooling makes 5 parts for each stroke of the press. The defective parts were the result of a press mis-feed.

Our tier I customer's automated assembly process can find every non-conforming parts everytime.

The reason for my original post was our salesmen were asking why if our parts meet C = 0, six-sigma, a defect rate of less than 5 PPM and 100% inspection is not 100% effective can a customer return parts to us. Haven't we done our job?

The price of 20 good washers is less than $1.00. The cost, to us alone, of 20 non-conforming washers is several thousand dollars - customer sorting, our in-house sorting and shipping two ways.

We have had our share of rejects as you all have had and for good reason. But with this type of reject I think we all lose.
 
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