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Customer Supplied Property - System breakdowns at every level including sales

P

piney

#1
Greetings!

Our company has always had difficulties in managing property that is customer supplied; that is to be included in the build of their equipment. i.e we will build equipment for the customer, and they supply certain major components..engines, transmissions, pumps, etc.

Our current procedure in a nutshell is as follows:
1. Each customer provides our purchasing department with a complete list of components that they intend to supply
2. The purchasing department cuts a purchase order for these items and enters the information into our system under that PO.
3. The customer is instructed to provide paperwork that includes this PO with each item they ship to us.
4. Our receiving department receives the parts/components from the customer and verifies through the PO and information in the system that what has been supplied, is what was specified.

This procedure may seem fairly cut and dry but we have found that there have been breakdowns at every level including the sales department, the customer, and within our production department not wanting to jump through the hoops that we have outlined for customer supplied property.

It is for this reason that I ask if anyone has come up with something better?

One idea that has been discussed is that a new procedure should be developed for presentation to the customer at the sales level. It is here that we need have exact specifications as to what the customer intends to supply (i.e. will the engine come with a compressor, air filters, mufflers) and exact delivery dates of long lead items, so that we are better able to schedule production of each unit.

Please reply with suggestions or procedures you have found that may work in our situation.

Regards,
Jeff
 
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Jim Wynne

Staff member
Admin
#2
piney said:
This procedure may seem fairly cut and dry but we have found that there have been breakdowns at every level including the sales department, the customer, and within our production department not wanting to jump through the hoops that we have outlined for customer supplied property.

It is for this reason that I ask if anyone has come up with something better?

It looks like your general procedure is OK, but can you be more specific when in describing "breakdowns"?
 

Wes Bucey

Prophet of Profit
#3
I sympathize with the problem.

This is definitely a Contract Review situation.

I always resolved the situation by stipulating in customer contracts that customer-supplied equipment (means of production, like dies, tools, etc.) would be handled as if they were our own or were leased from the customer with the single stipulation of a label or engraving identifying it as customer's. This meant it would fall under our normal MRO system.

We would further stipulate that customer-supplied parts, materials, and components would be treated as if purchased from independent third parties - certs and inspection tickets required to be accepted into our system.

Accounting for customer-supplied components to be incorporated into their product was pretty strict, including CAR expenses charged back for nonconformance attributed to customer's components. Scrap and cost of quality of those customer-supplied components were always maintained and shared with customer.

I suspect two issues are causing the most problems:
  1. Fear of challenging quality of customer-supplied material
  2. Inadequate inventory control - to know whether customer-supplied material causes production problems because of quality, delivery schedule, packaging, inadequate "kitting" (ensuring all necessary "associated components" are included with each main component) because the contract between customer and supplier was not crystal clear.
Solution to those means having courage to face customer and state the issues.
 
P

piney

#4
Thank you for your reply Wes.

Yes the issue is mainly the fact that we need to have customer supplied property more clearly defined at the contract review stage.

Is there more information out there in terms of past experiences other forum readers have had???
 
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