Part Submission Warrant (PSW) dispute

G

gp7000

#1
We recently approved a level-2 PSW for one part and we instructed our supplier to go ahead and make 20,000 parts. Now during our assembly, we find that the parts don't meet the plating spec on our drawing. The supplier never asked us to explain the spec and we never told them to deviate from this spec.

Now our supplier argues that since we approved the PSW, we should be responsible for these defect parts. We argue that they should take all the responsibility since they didn't meet the spec on the drawing.

Thanks for your input.
 
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Jim Wynne

Staff member
Admin
#2
gp7000 said:
We recently approved a level-2 PSW for one part and we instructed our supplier to go ahead and make 20,000 parts. Now during our assembly, we find that the parts don't meet the plating spec on our drawing. The supplier never asked us to explain the spec and we never told them to deviate from this spec.

Now our supplier argues that since we approved the PSW, we should be responsible for these defect parts. We argue that they should take all the responsibility since they didn't meet the spec on the drawing.

Thanks for your input.
The warrant you approved presumably stated that the supplier met all of the requirements and specifications. Unless the supplier offered an explicit disclaimer with regard to the plating specifications, the supplier should be responsible for the nonconforming parts.
 

Wes Bucey

Quite Involved in Discussions
#3
There may be a middle ground here.
What exactly did the customer do as its approval for the PSW? Did it look at a plating cert? What did the cert say? Did it test the part functionally? What happened? What is different in the production process than in the approval process that the plating difference was not noted until production? Did the supplier do plating in-house or outsource? Did he rely on the expertise of his plating supplier to meet the spec? How bad is the plating difference? Does it render the part nonfunctional? Any chance of a one-time waiver? Can the parts be stripped and replated? etc. ad infinitum.

Frankly, I always spent my time looking for solutions instead of someone to accuse or blame. I lasted a pretty long time and I don't have any former suppliers who would like to catch me in a dark alley and no bosses who thought I was a wuss. Even the customers I fired were willing to give me referrals.
 
G

gp7000

#4
Thank you guys for the quick reply.

To JSW05:
Supplier didn't offer any disclaimer with regard to the plating spec.

To Wes Bucey:

Supplier provides us a plastic part with brass terminal pin insert molded.
The drawing for the terminal pin requires copper flash and tin-lead plating to the brass. The supplier misunderstood copper flash and didn't plate a thin layer copper to the brass. It then did the tin plating alone without any lead.
Before we approved the PSW for both the plastic part and terminal pin, we
did all the PPAP requirement for the plastic part but didn't analyze if the plating is correctly done. We assumed the supplier has the knowledge. It turned out the supplier outsourced the terminal pin.

Only when we welded this part with other components during our production, we found out the welding problem. Then we analyzed the terminal pin and found out no lead or no copper flash are performed. Due to the welding problem, we can't use the whole part. The pin can't be replated either since it's already molded with plastic.

When we pointed out to our supplier that they didn't follow the spec. They argued that they made the parts after we signed PSW.

The issue here isn't just the loss dispute since the total amount isn't that big. However, we want to know under this situation, who should take the responsibility? This is important because if it happens again in the future for much large loss, legal process may be called in.

I think this kind of situation should be common in automotive industry where multi-tier suppliers are widely used for many components.

We sincerely welcome your help.
 

Wes Bucey

Quite Involved in Discussions
#5
It seems to me as a dispassionate observer that the customer needs to beef up its approval process to the point of requiring material and plating certifications PLUS functional testing of samples for suitability for intended purpose.

I still think the emphasis should be on resolving the root cause of what went wrong and fixing that without rancor or haste to assess blame. The fact that I (as a subcontractor who may have supplied the pin in question) would have routinely supplied a plating cert to the Standard called out on the print (whether the cert was requested or not) is immaterial because it is well known that I am obsessive about details like that.

The burden was clearly on the customer to identify critical characteristics, such as plating, which would affect the use of the product, and to put assurances in place to guard against nonconformance. Part of those assurances is to communicate the criticality of the characteristic to everyone in the supply chain.

I see no reason to demand the supplier be penalized for not reading the customer's mind. I certainly would not bring this issue to court if I were the customer - there is a possibility the supplier could prevail because of vague or ambiguous requirements and juries could construe the burden to be on the customer who gave a written approval of a product and neglected to test for functional suitability or did not require a certificate of plating conformance from the plater. At the best, the customer would take a chance of looking foolish in public for NOT being obsessive about details.
 
G

gp7000

#6
Thanks Wes for the good advice.

I have shared your message with some of our QA team. They corrected me with the functional test we did before approving PSW. The PSW was approved about 5 months ago when terminal pin with tin-only passed our functional testing (welded to other parts and tested). Due to other issues with the project, production got delayed until last month. Five months later, the welding started to fail significantly. The reason could be oxidation.

The spec is very clearly stated as "Finish: A. Copper flash .0001 max thick before tin-lead plate. B. Tin-lead plate (electrodeposited) per mil-P-81728 .0003-.0005 thick bright finish."

Therefore our QA team believes that the supplier should be solely responsible for this issue. Since the supplier is the one who submitted PSW, they carry the liability for any nonconformance. As a customer we can't analyze and verify all the aspects such as material and plating detail. If the material fails and we find the material isn't as specified, the supplier will be responsible. The plating is similar. Although the ideal case is that we analyze the plating detail, we rely on supplier to conform to our spec. FYI, during the PPAP, we did obtain all the material certification on plastic and pin except the plating certificate. And the supplier should require a certificate of plating from its subcontractor.

Back to the legal issue, if the current issue caused multi million dollar loss, wouldn't the supplier be liable?
 
G

gp7000

#7
Wes,

Do you think we should consult a product liability lawyer specialized in automotive industry?

We want to clearly understand our liability so that we can improve our process dealing with suppliers and prevent big dispute in the future.
 

Wes Bucey

Quite Involved in Discussions
#8
gp7000 said:
Thanks Wes for the good advice.

I have shared your message with some of our QA team. They corrected me with the functional test we did before approving PSW. The PSW was approved about 5 months ago when terminal pin with tin-only passed our functional testing (welded to other parts and tested). Due to other issues with the project, production got delayed until last month. Five months later, the welding started to fail significantly. The reason could be oxidation.

The spec is very clearly stated as "Finish: A. Copper flash .0001 max thick before tin-lead plate. B. Tin-lead plate (electrodeposited) per mil-P-81728 .0003-.0005 thick bright finish."

Therefore our QA team believes that the supplier should be solely responsible for this issue. Since the supplier is the one who submitted PSW, they carry the liability for any nonconformance. As a customer we can't analyze and verify all the aspects such as material and plating detail. If the material fails and we find the material isn't as specified, the supplier will be responsible. The plating is similar. Although the ideal case is that we analyze the plating detail, we rely on supplier to conform to our spec. FYI, during the PPAP, we did obtain all the material certification on plastic and pin except the plating certificate. And the supplier should require a certificate of plating from its subcontractor.

Back to the legal issue, if the current issue caused multi million dollar loss, wouldn't the supplier be liable?[/quote]That's why they have trials - to determine who is liable. That said, I know plenty of attorneys who would take the supplier's case with an expectation of winning or forcing a favorable settlement.

One of the things you haven't produced yet is expert testimony from some metallurgists who can demonstrate the failure is solely due to the lack of copper flash. There are many mitigating factors for the supplier inherent in the data you lay before us. If it were my call to make, I'd look at making the supplier an ally and jointly look for the root cause of the failure - plating error? or too long between plating and production? improper storage at customer's inventory prior to production? etc. rather than waste time, money, and energy looking for a fall guy.
 

Wes Bucey

Quite Involved in Discussions
#9
gp7000 said:
Wes,

Do you think we should consult a product liability lawyer specialized in automotive industry?

We want to clearly understand our liability so that we can improve our process dealing with suppliers and prevent big dispute in the future.
Sorry, I missed this one -
Make sure you have all your facts straight before you involve an attorney. Most good attorneys will tell you to do that before they will proceed on the case - the difference is that their meters will be running at the same time, adding to your cost.

I have seen several cases where plaintiffs pulled the trigger before they had their facts straight and ended up a lot poorer with egg dripping off their chin when defendants successfully countersued and won. I have seen a lot more cases where plaintiffs have sued and settled the case during the discovery process when deposing expert witnesses, having learned the plaintiff's position was not rock solid.

Litigation is the last resort, not the first, for smart organizations.
 

Wes Bucey

Quite Involved in Discussions
#10
Wes Bucey said:
Sorry, I missed this one -
Make sure you have all your facts straight before you involve an attorney. Most good attorneys will tell you to do that before they will proceed on the case - the difference is that their meters will be running at the same time, adding to your cost.

I have seen several cases where plaintiffs pulled the trigger before they had their facts straight and ended up a lot poorer with egg dripping off their chin when defendants successfully countersued and won. I have seen a lot more cases where plaintiffs have sued and settled the case during the discovery process when deposing expert witnesses, having learned the plaintiff's position was not rock solid.

Litigation is the last resort, not the first, for smart organizations.
Having written this first post, I now recognize you may have been asking about referring to a product liability attorney on general principles, not just allied with this plating issue. The more encompassing answer is there are risk assessment firms, some free services by product liability insurance companies and some not-for-profit trade associations who can provide plenty of information about risk proofing your organization, its products, and services from liability,

I would first start with my insurance carrier and keep asking for referrals.

Think of lawyers as kids with hammers - everything looks like a nail! To a lawyer, a primary paycheck comes from litigation and correction, not investigation and prevention.
 
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