Outsourced Processes - Firm examples required

[DrM2u]

Ok, here's my :

Scenario One
We "purchase" a phosphated part for inclusion into an assembly.

Clearly a purchased product not an outsourced process.

Yes, it may seem like a purchased product, but ... if you have any special requirements for the phosphate treating (i.e. not an industry standard or an off-the-shelf standard item) then the requirements should be specified in the PO and you could/should qualify the supplier before placing the PO (hence you are implementing some controls). In such a case you get in the grey area between purchasing & outsourcing, very much like outsourcing the production of a specific component.

Scenario Two
We purchase an un-phosphated part. We then send that part out to another supplier for phosphating.

Question - does this now become an "outsourced" process?

If it does - what on earth difference does it make providing I approve the supplier of the process the same as i do the supplier of the product?

The phosphating is definitely an outsourced process. The procurement of the 'clear' item/part could be an outsourced process if the item is a non-standard, not-off-the-shelf item. If it is a standard item (i.e. a standard size screw) then the level of controls exercised over the supplier are not the same as for an outsourced process.

Scenario Three
We purchase an un-phosphated part. We inspect that product for some visual aspect. We then send that part back to the same supplier for phosphating. (under a diff P.O.)

Now this is very much like Scenario One except for some added waste: the transportation forth and back just to look at the parts.

What I am trying to get at is this: purchasing is involved in outsourced processes as well as in the procurement of standard items. The level of controls exercised over suppliers depends if the product is specific or standard, and so does the criteria for qualifying the suppliers. Additional functions might become involved in the controls exercised over suppliers of custom products.

An outsourced process does not necesarily implies that the product has to be transfered from your facility to the supplier's facility. To me an outsourced process is any process that the organization does not have the capacity or capability to perform efficiently and effectively, and the organization contracts the said process to another organization. I have encountered situations where a supplier was performing an 'outsourced' process within the customer's facility (i.e. assembly, sorting, inspection).

 

[Richard Pike]

Thanks for your valuable input!

I am trying to stay with the "topic" so hope you take my comments in the spirit they are intended.

Ok, here's my :

Yes, it may seem like a purchased product, but ... if you have any special requirements for the phosphate treating (i.e. not an industry standard or an off-the-shelf standard item) then the requirements should be specified in the PO and you could/should qualify the supplier before placing the PO (hence you are implementing some controls).
No Prob but "off topic" .All suppliers should be qualified, regardless of what they are supplying
In such a case you get in the grey area between purchasing & outsourcing, very much like outsourcing the production of a specific component.
Yes This is what I am trying to challenge - the grey area.

The phosphating is definitely an outsourced process.
tentatively agreed
The procurement of the 'clear' item/part could be an outsourced process if the item is a non-standard, not-off-the-shelf item.
cannot agree ! 99% of product procured in the Auto industry would then be classified as outsourced.
If it is a standard item (i.e. a standard size screw) then the level of controls exercised over the supplier are not the same as for an outsourced process.
yes but "off topic" More complicated or more critical products may require more control - but this is not related to "outsourced Processes"

Now this is very much like Scenario One except for some added waste: the transportation forth and back just to look at the parts.
yes but "off topic" was quoted to establish a principle

What I am trying to get at is this: purchasing is involved in outsourced processes as well as in the procurement of standard items. The level of controls exercised over suppliers depends if the product is specific or standard, and so does the criteria for qualifying the suppliers. Additional functions might become involved in the controls exercised over suppliers of custom products.
yes agreed but "off topic" as previously queried "custom" does not mean "outsourced"

An outsourced process does not necesarily implies that the product has to be transfered from your facility to the supplier's facility. To me an outsourced process is any process that the organization does not have the capacity or capability to perform efficiently and effectively, and the organization contracts the said process to another organization. I have encountered situations where a supplier was performing an 'outsourced' process within the customer's facility (i.e. assembly, sorting, inspection).
No problem with this - except i would add that "cost" may also be a factor. Still "off topic" .

I would like to refer back to the example

A phospheted product (made to my specification) is purchased.

The same product is purchased unphospated (say I want to perform a specific operation myself (instead of including in my specification). I then send it back for phosphating.

Is this now "outsourced" and if so SO WHAT ! I am not qualified to tell the phosphater how to control their process.

Yes, I can agree with the Supplier on certain production verification and demonstration of conformance, but I do that with normal purchased product!

All I am seeing at the moment, is an additional requirement, that simply adds no value at all, but thats why I am requesting help and examples.

 

[Richard Pike]

Guidance from the official ISO site:
Explanation and intent of the requirement in ISO 9001 can be found at :

http://www.iso.org/iso/iso_catalogu...001_2008/guidance_on_outsourced_processes.htm

Best regards,

Antoine

Yes thanks . I have that but as requested in the Original post am specifically looking for examples (which hopefully the forum will challenge / agree )

Personal opinion of the "explanation" is that its ok ish for a quick glance but goes no where near a proper clarification..

 

[Richard Pike]

ISO 9001 - Tips on Outsourced processes

What is the definition of an outsourced process?

Thanks for that. A lot of information but I dont think he addresses the grey area sufficiently.

Perhaps the question should be what is the difference between an outsourced process and a purchased product.

I have absolutely no problem with understanding Internal Audits, Calibration, Maintenance, Documentation Achieving, etc as outsourced Processes necessary for the function of my QMS. I think those are quite clear.

Buying a Phosphated Product from a Supplier? If that is classified as "an outsourced process" then there is a whole mountain of worms which will be opened.

If we accept that that would be a purchased product (not process)

The what is the difference between me purchasing the Product from one supplier and the phosphating from another - or - purchasing both from one?

thanks group

 

[Richard Pike]

Richard, I have been working with a construction who will take on a 'design & build' project but they have no architects themselves so they outsource the design function. They are still responsible for the design but it is done by another organisation.

Another example is where a training organisation do the sales function but they outsource the delivery of training to sub-contract trainers (like myself).

Yep - completely agreed - thanks.

 

[Richard Pike]

I think you may be reading more into the requirement than there is.

Here's how we control our outsourced processes. As you can see, we do refer to our Receiving procedure.

Hope it helps!

Thanks your method looks sound ( and maybe ill pinch an idea there)

I don't have a problem on controlling outsourced tho. -- just in identifying the difference between outsourced processes and purchased product.

 

[DrM2u]

I don't have a problem on controlling outsourced tho. -- just in identifying the difference between outsourced processes and purchased product.

Richard, I understand what you are trying to and it is a challenging undertake. I believe that in order to identify the difference between outsourced processes and purchased product we all need to come to an agreement on what the definitions of the two are. I am going to propose two definitions for consideration and for all to elaborate and build on:

Purchased product is any product procured by an organization from another source to be incorporated or used in the production of the final product. Note that I did not say 'independent source' because there are sister companies that supply eachother and are not totally independent of eachother. Also note that 'product' is defined in accordance with the ISO 9001:2008 standard.

Outsourced process is any process that is part of the overall product realization process and is not performed by the organization. Note that the 'overall product realization process' means all the processes employed by the organization to meet customer's requirements related to the product. Therefore an outsourced process is by definition still a process employed by the organization adn should be controlled as determined by the organization.

Regardless of what the final difinitions might be, what clasifies as outsourced process and purchased product varies from situation to situation. One example that comes to mind: I have encountered manufacturers of similar fasteners but where the outsourced processes were not the same. One of them was outsourcing all of the plating processes while another was performing all the secondary processes in-house (heat treating, plating, etc). So if one would ask if the plating process is an outsourced process then the answer is 'it depends on the situation'. At the same time the finished fastener could be a purchased product. Could plating be outsourced? Of course ... Any process could be outsourced. Think about the business brokers: they do not produce a tangible product however their product is the service of connecting the customer to the producer, almost like an outsourced procurement process.

 

[Richard Pike]

Richard, I understand what you are trying to and it is a challenging undertake. I believe that in order to identify the difference between outsourced processes and purchased product we all need to come to an agreement on what the definitions of the two are. I am going to propose two definitions for consideration and for all to elaborate and build on:

Purchased product is any product procured by an organization from another source to be incorporated or used in the production of the final product. Note that I did not say 'independent source' because there are sister companies that supply eachother and are not totally independent of eachother. Also note that 'product' is defined in accordance with the ISO 9001:2008 standard.

I'm splitting hairs - used in production? Would I be correct that this includes "assembly" If it does, then Agreed

Outsourced process is any process that is part of the overall product realization process and is not performed by the organization. Dont agree with this one. ISO "outsourced processes" refers to the QMS and not to Product Realisation. If you were to say all Production Realisation activities (with the exception of "Production" then I could agree.

This is where the problem lies. "part of the overall production realization process"
1) Is getting a supplier to manufacture a screw for me that I will use in my assembly - an outsourced process? As I mentioned if this is YES then a whole mountain of worms is opened.

2) If i get a supplier to manufacture a screw that is phosphated an "outsourced process"? If so - then the worms will invade again.

Most people will (i think) agree that in those scenarios I am "purchasing" a screw. (even tho it is specifically manufactured to my specification)

3) again I ask -- Supplier 1 gives me a screw and supplier 2 phosphates it, it supplier 2 "outsourced".

General note to the subject.

ISO makes NO reference to outsourced products - (Please refer to text if I am wrong) they refer to outsourced processes.

It is my contention, which I am trying to verify, that ISO never intended this to include purchased products - or any subsequent value adding activity to a product.

I also argue that "phosphating" is a "product" even if that "product" is achieved via a technical "process". I say "technical process" as opposed to "management process".

I also argue that where ISO refers to QMS - it is referring to "Management Processes" NOT Technical Processes. (and certainly not to the management OF processes)

But that is of course why this forum is so good.. people can put forward their arguement, and if its controversial - its so damn tough to defend

 

[Groo3]

We utilize several outsourded processes, these include:

• Heat Treating,
• Gamma Irradiation,
• most of our scale calibrations,
• our corporate Customer Care group manages the primary aspects of our contract review,
• our corporate R&D group handles all new product development work (scale-up and the verification / validation are done at our site).
• etc.

 

[DrM2u]

This is where the problem lies. "part of the overall production realization process"

Richard, the definition of 'product' could include an assembly service so we're in agreement on that. I also agree with you that the definition of 'outsourced process' should be expanded to include any QMS process. After all it could be a support process, like maintenance or calibration. On the other hand it would be rather hard to justify outsourcing management. Anyone else on the definitions?