Looking for ideas on how to manage supplier specifications for my raw material purchases. More specifically, how to you contractually agree on what specification is to be produced in a given order?
My company has a policy that requires my engineers to obtain a signed copy of our raw material specification. The spec details all the requirements for the item, we sign it and the supplier signs it, and then we refer to that specification on our purchase order. Problem is that obtaining signed specifications is very resource intensive and internal audits are showing that it is often not done.
There is typically an agreement via email or over the phone between my engineers and the supplier's engineers. We get some sample material, test it, and then rush into production without finalizing the specification and getting signatures. The risk here is that if we have a huge customer complaint that is a result of a raw material issue we have no record or contract that supplier agreed to manufacture to our specification. Most suppliers would own up to this, but when you're into 7 figure issues that might not be the case.
I proposed a different method but I'm not sure if it will work. I'd like to program our purchasing computer system to include a copy of the latest raw material specification when we send out a purchase order, and then in the PO boilerplate state that by acknowledging and accepting the order the supplier agrees to manufacture to the included specification. This would make it a contractual agreement and relieves us of the paper chase trying to obtain signatures.
Sound like a crazy idea? How do you all accomplish this? What is the best practice here?
Thanks in advance Covers. This is my first post since Elsmar rose from the ashes. Feels like talking to a ghost.
My company has a policy that requires my engineers to obtain a signed copy of our raw material specification. The spec details all the requirements for the item, we sign it and the supplier signs it, and then we refer to that specification on our purchase order. Problem is that obtaining signed specifications is very resource intensive and internal audits are showing that it is often not done.
There is typically an agreement via email or over the phone between my engineers and the supplier's engineers. We get some sample material, test it, and then rush into production without finalizing the specification and getting signatures. The risk here is that if we have a huge customer complaint that is a result of a raw material issue we have no record or contract that supplier agreed to manufacture to our specification. Most suppliers would own up to this, but when you're into 7 figure issues that might not be the case.
I proposed a different method but I'm not sure if it will work. I'd like to program our purchasing computer system to include a copy of the latest raw material specification when we send out a purchase order, and then in the PO boilerplate state that by acknowledging and accepting the order the supplier agrees to manufacture to the included specification. This would make it a contractual agreement and relieves us of the paper chase trying to obtain signatures.
Sound like a crazy idea? How do you all accomplish this? What is the best practice here?
Thanks in advance Covers. This is my first post since Elsmar rose from the ashes. Feels like talking to a ghost.
