IATF 16949 - Monitoring Suppliers for Premium Freight

#1
Clause 8.4.2.4 states "At a minimum, the following supplier performance indicators shall be monitored:" ".....d) number of occurrences of premium freight"

What is your interpretation of this:
1 - Premium freight we, the organization, incur due to the supplier actions/inaction?
2 - Premium freight the supplier incurs shipping to us, the organization?
3 - both?

Here's my concern...if we need to be tracking the supplier's premium freight shipments to us (organization) how do you gather this???? Do suppliers readily give this information up?

TYIA!
 
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Jim Wynne

Staff member
Admin
#2
Clause 8.4.2.4 states "At a minimum, the following supplier performance indicators shall be monitored:" ".....d) number of occurrences of premium freight"

What is your interpretation of this:
1 - Premium freight we, the organization, incur due to the supplier actions/inaction?
2 - Premium freight the supplier incurs shipping to us, the organization?
3 - both?

Here's my concern...if we need to be tracking the supplier's premium freight shipments to us (organization) how do you gather this???? Do suppliers readily give this information up?

TYIA!
Your #1 is irrelevant to the idea of monitoring supplier performance. Furthermore, #2 is not always due to poor performance by a supplier. Sometimes suppliers will expedite shipments in order to get their customer out of a bind. The key thing to monitor is when a supplier must use premium freight when something they've done (or not done) is the cause of it.
 

Bran

Starting to get Involved
#3
High occurrences of premium freight could be a proactive indicator of a supplier that is having troubles - quality or otherwise. The issue is, as you point out, that there is almost no way to tell when a supplier is using premium freight, unless they are billing you for it. EDI or ASN may also indicate a shipment date, but I'm not sure, and suppliers are not setup with EDI in many organizations.

The only way I know to systematically accomplish this is to include a requirement on the purchase order or PO attachments that the supplier must provide notice of premium freight to your organization whenever it occurs. The organization will (always I think?) be reliant on the supplier to provide this information.

I think the standard is well-intentioned here but the requirement doesn't seem practical.
 

Emmyd

Involved In Discussions
#4
What our auditor looks for on this clause is how much/many times we incur premium freight to get our product to our customer due to a stockout/production issue that we have control over.

Our customer does expedited pickups all the time, but they are due to problems/sudden orders on their side.

Our suppliers expedite orders to us, but if it is their fault, they pay for it.

Bottom line - if your company has to pay for for premium freight (and won't be reimbursed for it), you have to keep track of it. As Bran stated, too many instances of this could indicate that you, as a company, could be having internal issues (think systemic problems, financial issues, etc) that could affect customers in the future.
 

Jim Wynne

Staff member
Admin
#5
What our auditor looks for on this clause is how much/many times we incur premium freight to get our product to our customer due to a stockout/production issue that we have control over.
The clause applies to the organization's own supplier-monitoring activities, not to the organization itself.
 

Jim Wynne

Staff member
Admin
#6
The issue is, as you point out, that there is almost no way to tell when a supplier is using premium freight, unless they are billing you for it.
The people who do the receiving know. Also, nearly all shipments include packing lists, and most packing lists indicate the method of shipment.
 

Emmyd

Involved In Discussions
#7
The clause applies to the organization's own supplier-monitoring activities, not to the organization itself.
That may be a part of the standard's intent, but our auditor views it as what we pay for rather than what our suppliers do. Most of our supplier's are customer directed, so we have absolutely zero recourse when monitoring our supplier's performance and problems are found.
 

Jim Wynne

Staff member
Admin
#8
That may be a part of the standard's intent, but our auditor views it as what we pay for rather than what our suppliers do. Most of our supplier's are customer directed, so we have absolutely zero recourse when monitoring our supplier's performance and problems are found.
It's not part of the standard's intent; it is the standard's intent. It can be dangerous thing to allow third-party auditors to make up their own requirements.
 

Bran

Starting to get Involved
#10
That may be a part of the standard's intent, but our auditor views it as what we pay for rather than what our suppliers do.
IATF 8.4.2.4 is a subsection of ISO 8.4 Control of externally provided processes, products and services (supplier control). This is a requirement to be applied to an organization's suppliers, not the organization itself. Would definitely be worth challenging his thinking if it comes up again
 
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