Tracking Premium Freight - Service Provider - Requires tracking INCIDENTS vs. $?

[Sam]

I agree with Don Wood. ALL premmium freight should be tracked, regardless of who is responsible. Reason being, any request for delivery outside the scope of what you have planned puts a burden on manufacturing. This will result in a negative impact for other deliveries.

 

[Tom W]

I agree with Don Wood. ALL premmium freight should be tracked, regardless of who is responsible. Reason being, any request for delivery outside the scope of what you have planned puts a burden on manufacturing. This will result in a negative impact for other deliveries.

Question: Well you have convinced me that tracking premium freight, reguardless of who pays for it MIGHT be a good idea. I still struggle with the interpretation that an organization should track premium freight even if they might not be aware of it. If our customer incurrs premium freight isn't that their responsibility to track it? Is there a company out there today that has the resources to track their customer's premium freight? Again we are limiting this to additional charges or costs for delivery above the original agreed delivery only. Not addition operating costs.

 

[Sam]

Question: Well you have convinced me that tracking premium freight, reguardless of who pays for it MIGHT be a good idea. I still struggle with the interpretation that an organization should track premium freight even if they might not be aware of it. If our customer incurrs premium freight isn't that their responsibility to track it? Is there a company out there today that has the resources to track their customer's premium freight? Again we are limiting this to additional charges or costs for delivery above the original agreed delivery only. Not addition operating costs.

If the customer is responsible then he should also be keeping track. I am only concerned with the affect premium freight has on our company. And if I have customers that are requesting overnight deliveries after the order has been placed and planned then it's going to upset my Mfg cycle.
I track who the customers are and at least with that infomation I will know that I will have to make adjustments ahead of time.

 

[Tom W]

Thanks for all your replies. I can see clearly now the rain is gone.

 

[karin]

Re: Tracking Premium Freight - Service Provider

We are currently debating how to address this within my company. We are QS certified working on TS2 upgrade. Since some time has passed since the last post I'm wondering if anyone who has gone thru a TS2 audit has clarification of this. I read the standard literally -- "all premium freight" -- I don't see where it says "based on your company's interpretation of premium freight"

As some previous posters stated, there's no value in tracking all premium freight for our company, but I can name plenty of other areas of TS2 that don't add value either but I guarantee if we don't address it, it will result in a nonconformance.

But here's a twist our Acct Dept brought up -- if we ship premium freight to a customer and it's collect, how do we know the $$$$ of the shipping charge?

UGH UGH UGH ... anyone have anything clearer to add?

Karin

 

[Don Wood - 2011]

Premium Freight

1. The minimum requirement requires tracking INCIDENTS of premium freight, not dollars. You don't have to worry about tracking collect shipment costs, or ANY premium shipment costs, unless you want to. Obviously, there can be some value in putting $ on premium freight, but between collect shipments and delays between incurring a charge and receiving a bill, the IAOB decided it was less burdensome on suppliers to just track incidents at a minimum.

2. Premium frieght is defined in Section 3 of TS2 on page 3 as "extra costs or charges incurred additional to contracted delivery NOTE This can be caused by method, quantity, unscheduled or late deliveries, etc" In other words, if it's different from you usual method of shipment, and it costs more, track it as either a measure of supplier performance or customer satisfaction.

3. The intent here is to promote effective AND efficient delivery performance, according to the ISO 9000 definitions of "effective" and "efficient". The auto industry feels that, one way or another, THEY will end up paying for premium freight - either on the next contract, or in terms of potential poor quality (including on-time delivery) due to the last minute scrambling that typically accompanies a premium shipment (after all, if organizations or their suppliers weren't running behind, they wouldn't need to ship premium in the first place).

And yes, I know that oftentimes customers do it to organizations by changing schedules late in the game - we ALL know that happens. But there's not much we can do about that, is there? It's not right, it's not fair - but it IS automotive.

Hope this helps!
DW

 

[karin]

That helps a ton, thanks Don.

 

[xfngrs]

Hi all,

We recently had a CAR from a 3rd party audit on this issue and have to get a response in by 9/19/08. So....

My first question is, is this thread still accurate? Have there been any changes in interpretation?

Then next, okay we "track" the premium freight occurrances...then what?
Do you tie it into Management Review?
Do you tie it back to Supplier ratings?
How do you determine how much is good/bad?

 

[Sam]

It looks to me that the previous interpretations are still correct. As for wht to do with your data; depends on your customer requirements and your own internal needs. Ford, for example, requires you to track and report your QOS data monthly.
We only track premium freight on in-bound shipments and record the dollar value monthly. We meet quarterly to review and prepare a CAR when necessary.

 

[Don Wood - 2011]

Hi all,

We recently had a CAR from a 3rd party audit on this issue and have to get a response in by 9/19/08. So....

My first question is, is this thread still accurate? Have there been any changes in interpretation?

Then next, okay we "track" the premium freight occurrances...then what?
Do you tie it into Management Review?
Do you tie it back to Supplier ratings?
How do you determine how much is good/bad?

I was sleazing around the IAOB website a couple of weeks ago, and saw no new interpretations or FAQs concerning this requirement.

Anytime TS (or ISO, for that matter) wants you to track something, there's generally an implication that they want you to DO something about it.

Linking to MR and supplier ratings is a good idea. But first, I'd try a common-sense approach. Collect data and trend it, then set priorities. If it is a problem, why? Who are your problem children in the supply base? On the outbound side, what's causing YOU to ship premium? Is it particular customers, or jobs? Is it seasonal, or cyclical in some other way? Each of these trends could drive different corrective actions in your QMS.

If premium freight doesn't seem to be a big problem for your organization, then you shouldn't have to take much action. but you'll need to be able to PROVE it's not much of a problem first, hence the recommendations on data collection and trending. Again, including premium freight metrics as part of MR is a good idea (if you're spending a bunch of money on premium). For me, it's always been a given to include premium freight as part of supplier ratings.

Hope this helps!
DW