Registrar Interpretations: ISO9000 requirements for Subcontractors and Distributors

[Marc]

I thought this was a good, thought provoking listserve entry. Any comments on this one?

Date: Wed, 5 Aug 1998 14:03:37 -0600
From: ISO Standards Discussion
Subject: REQ: Sub Contracted Product/Materials/Andrews

Fellow List Members,

I am in need of your vast and varied experiences in helping to understand how best to proceed with a particular situation.

The company with which I am working is anticipating subcontracting some of its current products to outside contractors. In discussions with our primary registrar (the company is ISO 9001 registered and has been since 1992) some difference of opinion developed.

The registrar's representative indicated that if we were to subcontract our products to our vendor(s) that , unless we later performed additional "value added" tasks to the product, we would have to come up with some way of adding a disclaimer to the effect that the product was not manufactured under our ISO 9001 registered system. Up to this point we all agreed.

The point of differing opinions centered around what exactly constitutes a "value added" task. Our registrar's representative contended that if we brought the (almost) completed product back 'in-house' and then added some additional hardware or machining process to it, then we did not have to issue a disclaimer. However, the registrar representative stated that if we brought the items back 'in-house', performed quality inspections/verifications and then packaged the product that did not constitute "value added" activities. Our contention is that once we bring the product back under our roof (and under our registered quality management system), perform verifications and then package for sale we have in fact performed "value added" tasks and, therefore, a disclaimer is no longer necessary.

I believe that I understand the intent of the registrar's requirement - to prevent misrepresentation of fact - to avoid having the customer mistakenly believe that a given product was manufactured under a registered QMS, when in fact it had not been and I have no problem with that. However, I do have a problem with the stated definition of "value added" tasks. The way our registrar's representative presented it, if we added a bolt or screw to a product, then no disclaimer was necessary; however, we could verify/inspect until we were "blue in the face" and that would not constitute "value added" tasks.

I am trying to find how the ISO 900x community as a whole handles this situation (since I can't believe we are the only company to subcontract - or contemplate subcontracting - product manufacture). I would be most appreciative of hearing from those whose companies do subcontract out product manufacture, from the experienced consultants on this list and from any representatives from accredited registrars. This seems to be a gray area (at least with our registrar) and I'm hoping to get some idea of the community consensus.

Thank You for your time and attention.

Respectfully,

Ethan Andrews

 

[Marc]

Subject: Re: Sub Contracted Product/Materials/Andrews/Rodgers
Date: Thu, 6 Aug 1998 06:54:55 -0600
From: ISO Standards Discussion

From: Guy Rodgers
Subject: RE: Sub Contracted Product/Materials/Andrews/Rodgers

Andrews wrote (in part):

"However, I do have a problem with the stated definition of "value added" tasks. The way our registrar's representative presented it, if we added a bolt or screw to a product, then no disclaimer was necessary; however, we could verify/inspect until we were "blue in the face" and that would not constitute "value added" tasks."

QS-9000 3rd edition defines Value Added Production Processes as "any activity or operations for which a Customer would be willing to pay, if given the option."

This definition is used in the automotive industry to help clarify what constitutes a "site", which is defined as a supplier or sub-contractor location at which value-added production processes occur. This includes parts distributors, but excludes external locations which only stage materials for onward shipment (i.e. sequencers) This definition also excludes suppliers of indirect materials or vehicle assembly plants.

This seems to be Chrysler's contention for not registering all of their facilities to QS-9000. Because some of the facilities are vehicle assembly plants, which the content wouldn't fall under their definition of a site which provides value-added production processes. Because, we all know that Customers or Consumers only expect parts to be manufactured right, not necessarily assembled right! *smile*

The definition from ANSI/ISO/ASQC Q9002-1994 states, "A product may include service, hardware, processed materials, software, or combination thereof." So we know that it doesn't matter whether it is a product or service.

I believe the remainder of the applicability is covered in 4.3 Contract Review, specifically subparagraph 4.3.2 Review. If sub-contracting the product manufacture, then bringing in-house to inspect and package is part of the contractual agreement or specification between you and the Customer, then a disclaimer is not necessary.

However, if these parts are manufactured and subsequently marketed and sold afterwards, as your e-mail indicates, then a disclaimer or statement in purchase agreement, bill of sale, etc. may be necessary.

Best regards,

Guy Rodgers, QA Administrator
Paulo Products Company
Phone: (314) 647-7500
Fax: (314) 647-7094

 

[Marc]

From: CHARLEY SCALIES
Subject: RE: REQ: Subcontracted Product/Materials/Andrews/Scalies

In my opinion, this is another example of a particular registrar's baggage coloring the meaning and intent of the standard.
1. The standard is not about registration or certification. It is about giving assurance to the customer of the quality of the product. Frankly, if your inspection adds no value to the product being sold then, by the same reasoning, registration adds no value to a quality system.
2. No part of the standard, 4.6 included, makes a distinction between make or buy items or how they are to be treated. To convince me otherwise, they would have to give me objective evidence.
3. No amount of validly logical extrapolation of ISO requirements (and I am giving the registrar the benefit of the doubt here by calling their extrapolation validly logical) adds to the ISO requirements, or bears any force of legitimacy.
4. The registrar that goes beyond the scope of the standard also exceeds the bounds of its own accreditation. Maybe you should issue them a Corrective Action Notice

Charley

 

[barb butrym]

Gotta agree with charley on this one..registrar is ABSOLUTELY off base

 

[Marc]

That's one of my complaints - not just with the registrar but with many auditors. They have a narrow paradigm.

I put this up because there are so many different types of companies registering. For my own mind, I want to have as much ammo as I can get.

Golly! This stuff is such FUN!

 

[Don Winton]

Marc, fun it is. I think the registrar (or representative) is "way" off base. First of all, the "product" cannot be registered. How the company presents itself is not determined by registration (other than stamp restrictions). How the company presents itself and its product are up to the rules of registration and the stamp.

 

[Marc]

Don and barb - you're both correct (like Charlie) as far as I'm concerned. Don, I don't know if I'm boring you (I may be boring barb as I know she visits the listserve this comes from), but I'm trying to present some interesting thought provokers. The following, however, made things even more 'murky'. Sounds to me like a 'Double check your registrar' situation:

Subject: Re: REQ: Subcontracted Product/Materials/Andrews/Scalies/Andrews

Charley wrote (in part):
"The registrar that goes beyond the scope of the standard also exceeds the bounds of its own accreditation. Maybe you should issue them a Corrective Action Notice "

Thanks for your (always interesting and insightful) reply. The problem here is that the registrar is not invoking any ISO 900x requirement, rather a clause in our contractual agreement with them that reads in full:

"ensure that any purchased finished product, processes, or services covered under the firm's scope of registration complies with their (registrar's symbol omitted here) ISO 9000 Program assessed capability. If any finished products. processes, or services are produced or provided external to the firm's quality system, the external producer or provider may also be evaluated during the registration process. In cases where products described in the scope of registration are not traceable to a quality system registration which is recognized by (registrar's symbol omitted here), the firm shall establish and operate a procedure for notifying the prospective customer that the items in question have not been produced or provided within (registrar's symbol omitted here)'s ISO 9000 Registration Program"

As I stated in my original posting - I believe that I understand the intent of the statement - to prevent misrepresentation. I agree with this intent. However, the problem is in the defining of "finished" product and what the registrar considers to be "value added" activities. Their initial position has been that if I add a bolt then there has been "value added"; however, if I only inspect and repackage, then no value added tasks have been performed.

Is the statement above from the registrar's contract agreement unique to this particular registrar? Or are there similar statements in the contract agreements from the other leading registrars? I am hoping to hear from all of the list members who may have knowledge in this area. Also I am hoping to hear from list members from other companies that subcontract (or are considering subcontracting) manufacture of product.

This appears to be a very subjective ("gray") area and perhaps we can all get an understanding what the general consensus of the ISO 9000 professional community is.

Once again, thanks Charley for your expedient reply.

Ethan Andrews

 

[Don Winton]

Marc,

No, this is not boring. I have just been ill for a while. I believe the key phrase here is "the external producer or provider may also be evaluated during the

registration process." The key word being "may." The registrars function is to register the "supplier's" quality sytem. It occurs to me that if this particular company would subject the sub-contractor to 4.6 and 4.2.3, and document with objective evidence, things should be fine. Perhaps it is not a problem with the sub-contracting, but with the QMS as documented. Without particulars, it is hard to say. All for now. But again, it is like you said. Be sure to STUDY the registrar's contract before signing.

 

[barb butrym]

not boring me either...looking for more action in the discussion though....

Have been away, auditing. So I haven't been signing in.

I have been watching the listserv and been disappointed in some of the responses. Personally, and professionally, I have no idea where some of these people are coming from with their response.

I have a client that does everything by subcontract, and is planning a ISO9002 assessment soon. I have talked to several registrars to get their "take" and they all agree with me.....its OK..just control the subcontractor to the extent necessary, taking the "tasks" performed into consideration (i.e. critical commodity).....nothing about value added stuff....You do the CR from the customer, and purchasing of the subcontracted tasks...then you take responsibility and bill the customer...its still your system !!!

 

[Don Winton]

Barb, gotta agree with you on all points. I have also been following this particular listserve and some of the responses are, IMHO, pointless. That is part of my problem with some registrars and assessors. Although it is known that the supplier's product cannot be registered, many (by no means all) try to make this an issue. For the life of me, I cannot figure this out. You cannot place a stamp on a product or in any way imply a product is registered, period. Therefore, any changes in the product are (should be) covered by the system in place (design control, document control, etc.). A supplier could go from completely manufacturing a product to completely sub-contracting the product without a problem as long as the change is within the scope of registration and the QMS it was registered to. It would appear that this particular registrar may (emphasis, MAY) be using the letter of the contract to justify a new registration (read, mo' money). As Josh Billings once said, "The trouble with people is not that they don't know, but that they know so much that ain't so."

As far as the registrar's contracts I have read so far, I cannot find the particular clause Ethan cited above in any of them. Have you? All for now, gotta go.