Manufacturing overages & nonconforming material documentation

#1
Hello Everyone!

I recently audited a machine shop manufacturer who produces overages when they produce a lot of parts. I am aware this is a common practice, but I was curious as to how nonconforming materials are handled when they don't compromise the purchase order quantity. For this example, let's say that the supplier receives an order to produce 100 parts, however, they plan and to produce 110 parts-- an overage of 10 parts. If the manufacturer identifies that nonconforming parts have been produced they will perform a 100% lot inspection (C=0 sampling) to identify and segregate any other nonconforming materials. However, this particular supplier will not issue a nonconforming material form/report and document the nonconformance unless it affects the purchase order quantity. For example, if the supplier identifies that 1, 2, 3... 9 parts are nonconforming, they won't document the nonconformance because they are still able to ship 100 conforming parts to us. Is this a widely accepted practice? Have others come across this? What is the correct practice for overages?

Thanks!
 
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Tidge

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#2
On the surface, it appears that there is something of a disconnect between the purchaser and the supplier.

The buyer's POV is that they expect to get conforming product; this is the reason that they have acceptance sampling. The fact that the buyer switches to 100% inspection implies that they cannot tolerate any level of non-conformance in their activities downstream of incoming inspection.

The supplier's POV is that they can only making conforming parts at a rate of something like 95%, which is presumably why they build at 110%.

The buyer and the supplier ought to have worked out their agreement ahead of time! If the agreement is to deliver conforming parts, the supplier is clearly not living up to that agreement and really ought to make corrections in their process. The most straightforward is obviously that the supplier inspects the parts prior to shipping, but somehow I feel that is not on the table (for a variety of reasons). If the supplier previous disclosed that they only guarantee some fraction of conforming parts per lot, then it is incumbent on the buyer to take the necessary corrective actions within their system. This could include switching to 100% inspection of each lot, or finding a new supplier (assuming no design changes to improve manufacturability at the suppplier).

Edit: I'm curious if anyone has familiarity with the concept of 'supplier sweeps'. I am aware of circumstances where a buyer has sought extra parts from a supplier, but the supplier has (for whatever reason) stopped production of the part but is willing to provide previously made overages. Locally, we call these 'parts swept from the factory floor '.
 
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#3
Not that uncommon, we generally overproduce parts like this because when the customer calls up asking for one or two parts, the cost of tooling back up to make them would make the cost of the part skyrocket. Obviously, for parts that are sequential shipments we only ship the PO, but at the end of a run we commonly add a few extra, especially if the part is labor intensive, this has been quite beneficial for us in the long run, so it has become common practice for us. I am sure others do the same. The risk of course, is change orders or other revisions, which could cause your NOS parts to become unusable, or require modification. As for counting them for nonconformance purposes, that is just playing with numbers. I cannot see that affecting much unless the amount is stock is significant, a few extras are not likely to really alter the math any, depending again on the amounts shipped vs stocked extras.
 

Mike S.

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#4
I'm not familiar with this standard, but if it is like ISO9001 I don't see a need (shall) for a "a nonconforming material form/report" to be generated. They do need to ensure the NC parts are identified and dispositioned and not shipped or mixed with good parts. I can see a work order stating 110 made, 3 NC parts, all 3 scrapped, 107 to next operation.
 
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