Disclosing suppliers to customers - PPAP and TS16949

C

Chrisjohnson1974

#1
I did a search on this forum, but I couldn't find the information I was looking for in a timely manner.

Our company is a subsidiary of a part manufacturer, but we also sell parts made by other companies.

Now, most of the parts are made in Asia, and so if we disclose our manufacturing location or our suppliers in Asia, typically we put in the hard work to get an item specced in and we end up losing the business to a direct order from our customers to our manufacturers cutting us out of the loop.

We are not just middle-men however. We provide value-added engineering support.

I want to ask a few things:

1.) Are we under any obligation to our customers to disclose our suppliers or plant locations for our parent company that may cause us to lose our business as value-added distributors?

2.) When our customers ask us for PPAP level 3 and TS16949 certification documentation, can this information be passed from supplier to customer while 'whiting out' information that may allow the customer to identify the manufacturer? Alternately, can we originate a document that says we have paperwork from our plants without saying who or where they are?

What is the best way to give customers what they want without disclosing information that may lead to the loss of our client?

I need to provide PPAP level 3, and TS16949 without giving away information that will threaten our business, and while not breaching any ethical boundaries.

Any comments are deeply appreciated.
 
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Howard Atkins

Forum Administrator
Staff member
Admin
#2
Re: PPAP and TS16949

I understand the bind hat you are in, but as a customer I think that I have a right to know from where my purchases are coming from.
The customer should know that you are not producing the products.
What does your contract with the customer say?
 

Marc

Hunkered Down for the Duration with a Mask on...
Staff member
Admin
#3
Re: PPAP and TS16949

I would require a proprietary agreement prior to disclosure if this is something that is happening frequently. If a customer wants to know who is supplying you with services / assemblies, etc., and you see customers then bypassing you, protect yourself. Another tact might be to have a proprietary agreement prior to quote acceptance with your supplier.

I'm assuming here that you do not own the design.
 
B

Bob_M

#4
Assuming some prior agreement or design rights doesn't FORCE him to reveal his suppliers, Chrisjohnson1974 still wants to know if he HAS to name his supplier.

This question has come up at our small shop in the past. One buyer (in front of us) asked his boss why they don't just buy from our supplier. Thankfully, that buyer was soon dismissed and our customer never bought from our supplier, mainly because we owned the tooling.

So the concern about customers skipping the middleman is legit. With everyone wanting to cut costs, who want to pay a middle man right?

If Chrisjohnson1974 is supplying approved/good parts with approved PPAP and other documentation, is there any reason to supply the name of the supplier other than customer asked?

I'm not saying Chrisjohnson1974 should hide the fact that their is a sub-supplier but do they HAVE to give up the names?
 
M

MIREGMGR

#5
Another approach, if your business has physical facilities and capabilities beyond purchasing, selling and engineering/specifying, is to buy "subassemblies" from your source; conduct at least one manufacturing operation on them at your facility; and sell them as your product, made partly with a purchased subassembly.

Or, if you don't have the physical facilities and capabilities in-house, you could have the one local operation conducted by a contract manufacturer that's local to you.

For instance, you could buy the product in bulk packaging, and locally re-inspect, count and re-pack it into the packaging that the customer specifies.

Obviously this sacrifices some profit, since the locally performed operation may cost more than when performed by your low-cost source. The value of increasing your protection from being perceived as a disposable middleman might be greater than that lost profit, though.

This approach can also be useful when you can't trust your source to not figure out (perhaps from specified packaging) who your customer is, and approach them directly.
 

WCHorn

Rubber, Too Glamorous?
Trusted Information Resource
#6
Re: PPAP and TS16949

I understand the bind hat you are in, but as a customer I think that I have a right to know from where my purchases are coming from.
The customer should know that you are not producing the products.
What does your contract with the customer say?
I believe your rights in this case are defined by contract. If you don't have a legal basis for knowing the manufacturer, you have no right to that knowledge. The problem Chrisjohnson1974 describes is important. I agree the supplier should divulge that they do not manufacture the product and exactly what they do to assure conformance, but giving away the identity of the manufacturer, even with a nondisclosure agreement, is risky given the current automotive business climate.
 
#7
Hi all,

I am bumping this thread as this is precisely the question I had hoped to find support on when I registered for this forum. It feels like there was no definitive answer to the question and the question was asked in 2008. Things have most definitely changed since then.

My company is debating this exact same issue. My supervisor and I are of the mindset that we disclose everything. Upper management is afraid of losing the business once names are disclosed.

All we can find in the spec is that we have to have a PPAP on file (we do). There is no guidance after that.

I also feel that customer expectations are that all will be revealed during the PPAP process, so even if the the spec does not explicitly state we have to disclose everything, we run the risk of leaving a bad taste in a customers mouth, should things hit the fan.

Thanks in advance and I apologize if this was already addressed elsewhere. I have been a memeber of this site for about 2 hours. haha.
 

Ninja

Looking for Reality
Staff member
Super Moderator
#8
Howdy,
Some gut reactions to what you wrote...HTH
My supervisor and I are of the mindset that we disclose everything. Upper management is afraid of losing the business once names are disclosed.
I am 100% on board with upper management in this particular case. Your customer has no need to know who your suppliers are...just that you have control of the incoming product.
The customer knowing your vendor, then communicating the name/product/part number/pricing/lead time/specs/etc. to your competitor to generate competition (lower price)...been there, done that...expect it if you drop trou.

customer expectations are that all will be revealed during the PPAP process
Customer expectation is that you will hide whatever you can to protect yourself and you competitive advantage...and they will try to make you break that for their competitive advantage. They aren't there to help you, and you CANT trust that they have your best interest at heart. They have THEIR best interest at heart...period.

so even if the the spec does not explicitly state we have to disclose everything, we run the risk of leaving a bad taste in a customers mouth, should things hit the fan.
If it hits the fan, don't worry about what they taste, worry about your wallet. If it hits the fan, they already will be down on you regardless of what you reveal...holding sources and methods secret is your only hope of maintaining the business and recovering afterwards.
 

Sidney Vianna

Post Responsibly
Staff member
Admin
#9
There is no guidance after that.
In Aerospace, there is a concept that is codified in the AS9100 standard that is called WORK TRANSFER. The idea being that, if your organization was presented as the facility where the parts were going to be manufactured, and later you want to outsource it to another site or supplier, you have to make sure that such transfer is controlled and the risks assessed.

I don't think the IATF 16949 document has any equivalent restrictions, but that might be embedded in the contract between your organization and the customer. Obviously some sleazy organizations perform "bait and switch operations" whereby they mislead customers into thinking that their parts would be built in this state of the art facility, just to outsource it to questionable suppliers, after they get the contract.

How robust is your supplier approval and monitoring process? Your customer might want to know. I understand your management concerns about disclosing the suppliers you use for their parts, but they can find it via other means, such as an audit of your procurement process. Would you deny them access to your Approved Suppliers List? they might start getting suspicious.
 
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