Concessions

C

Carrie

#1
I have a question regarding concessions in section 8.3. The company that I am working for uses a product no-waiver policy. If the company produces a grade that is off-spec, they re-grade it as a non-prime material and sell it at a reduced price. This re-graded material may or may not be sold to the customer who originally ordered the prime material.

My question is, if the original customer buys the re-graded material, would this be considered a concession, or can they use the argument that the material has been re-graded with a different set of specifications and sold as the re-graded material, not as the prime material.

The reason I am asking is to determine what sort of record keeping will have to be done. Should all re-graded material be documented as a concession or not.

Thanks for your help!
 
Elsmar Forum Sponsor

SteelMaiden

Super Moderator
Super Moderator
#2
Carrie,

If you are not offering them the off-spec material at a concession, (reduced price, whatever), to fill the original order you should not have to worry about concession records. We do the same type of thing, but if we are offering this regraded material, we usually lower the price (unless it does meet someone else's requirements), and then enter a new (from stock) order from the customer that is buying it.

You should have records somewhere that show this material was nonconforming to the originally scheduled material requirements so that you have data to go back to for analysis of process control.
 
N

noboxwine

#3
Dear Carrie,

Right on Steel Maiden ! You will not have to go through a formal “concession process” for regarded material. But, you may be interested to see if over time you have any specific grades that continually get knocked down. So, simply keep records and use the data as a potential problem solving aid. I always use a database for records of nonconforming product; Access, Approach, etc. Or even a simple Excel sheet would suffice. You decide what is best for you and I bet you’ll find an opportunity somewhere in the future. Good luck and good day.

:bigwave:
 
#4
Off-spec material?

Carrie, welcome to the Cove.

I agree with SteelMaiden with respect to using the off-spec to fill the original order. I would add, that if the original order is lowered because of the customer buying off-spec (for example The customer originally ordered 10k lbs of the material, but changes the order to 8K of spec and 2K of off-spec), then you might have an issue. It would appear that the customer is just working around the requirement of "no waiver".

Also, noboxwine's comments are also valid. The questions would be:

How often is off-spec material being produced?
How can it be avoided?
Does off-spec material indicated loss of process control?

Many more questions need to be answered as well, and noboxwine's recommendation to start tracking (if you aren't doing so already) is a good one to follow.
 
A

Al the Elf

#5
Is cost a customer requirement ?

The thoughts about not needing concessions for regraded material all ring true, but assuming some aspect of customer requirements includes lowest possible cost, or you have the parallel internal objective - highest profit - then regrading stuff could be costing you money or increasing cost to customer (in macro terms).

As such, should such material immediately trigger the CA/PA loop, as something that has the potential to dissatisfy customers or fail your objectives ?

Why wait until you've got a stack of historical evidence ?

Of course if the lower grade material is manufactured at exactly the same cost as the higher grade, then my point becomes obsolete !

Cheers, Al.
 
Top Bottom