When T&C's (Terms and Conditions) conflict with the ISO standard

T

Tyler C

#1
Covers,

I have been faced with a recent conundrum that I need help solving.

We deal with a sole source supplier for the single most important raw material of our product. This supplier has no competition in the USA, so we have no choice but to buy from them. We have dealt with them for the last 30+ years, with very few issues. When we did have issues, they were very proactive in solving it.

About 6 months ago or so, they had a fire. They told us it was a small fire and all damage should be fixed relatively fast. Ever since this fire, the quality of their product has drastically declined. We are lucky to even get a response from them now when we encounter an issue, let alone resolution.

Anyways, we recently had an issue with the product right out of the box. We notified them, and they did reply and told us their root cause analysis identified it was transit damage.

The issue is, if it is transit damage, we should be able to hold them accountable to solving the problem (this will be a continual problem), as they are certified to ISO 9001:2008. At the very least, we should be able to hold them to clause 7.5.5-Preservation of Product.

However, the issue is that in their Terms & Conditions, as soon as the product leaves their factory, it becomes our property. My question is, are they still responsible to meet clause 7.5.5? I don't believe they could claim an exemption to this clause because I was under the impression that an exemption can only be claimed against design.

What are your opinions?
 
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Jim Wynne

Staff member
Admin
#2
Re: When T&C's conflict with the ISO standard

There is no conflict as far as I can see. The contract terms you refer to, sometimes referred to as "FOB [Free on Board] factory" release the shipper from damage occurring after the product leaves their site. The assumption is that packaging was adequate for practical purposes. Some questions that should be asked, though:

  • Was the packaging adequate? Is it the same or similar to that used in the past?
  • Was there evidence of damage at receipt of the goods (damaged packaging, e.g.)?
If the supplier exercised due care in packaging and handling, your issue is with the carrier.
 

Mark Meer

Trusted Information Resource
#3
Re: When T&C's conflict with the ISO standard

Their ISO 9001 certification is ultimately between them and their certification body.
For you, it is but a tool to gain confidence in your suppliers' operations. ...it is not for you to enforce ISO9001 non-conformances.

Unfortunately, I'd say you are bound by agreements with them, and unless "maintaining ISO 9001 compliance, subject to audit from customer (you)" was one of the terms, I don't know that you can go after their quality system.

That being said, you can certainly negotiate with them (and perhaps leverage your long history with them...).

MM
 

Sidney Vianna

Post Responsibly
Staff member
Admin
#4
Re: When T&C's conflict with the ISO standard

I was under the impression that an exemption can only be claimed against design.
You are confusing the requirement for ISO/TS 16949. Product design was the only admissible exclusion for that standard.

As for your issue, I agree with Jim. ISO 9001:2008 7.5.5 still requires the supplier to provide adequate packaging and protection to maintain product conformity until it's intended destination, irrespective of when the ownership hand-over happens. I.e, at their shipping dock or at your incoming dock.

Please note that there could be cases where, indeed, despite the fact the packaging was adequately designed, abuse and mishandling of the product during shipment can damage the product. If that is the case, the transportation company should be involved. Question is: the freight forwarder transporting the product are their suppliers or yours? Who arranges for the transport?
 
Last edited:

dsanabria

Quite Involved in Discussions
#5
Re: When T&C's conflict with the ISO standard

Covers,

I have been faced with a recent conundrum that I need help solving.

We deal with a sole source supplier for the single most important raw material of our product. This supplier has no competition in the USA, so we have no choice but to buy from them. We have dealt with them for the last 30+ years, with very few issues. When we did have issues, they were very proactive in solving it.

About 6 months ago or so, they had a fire. They told us it was a small fire and all damage should be fixed relatively fast. Ever since this fire, the quality of their product has drastically declined. We are lucky to even get a response from them now when we encounter an issue, let alone resolution.

Anyways, we recently had an issue with the product right out of the box. We notified them, and they did reply and told us their root cause analysis identified it was transit damage.

The issue is, if it is transit damage, we should be able to hold them accountable to solving the problem (this will be a continual problem), as they are certified to ISO 9001:2008. At the very least, we should be able to hold them to clause 7.5.5-Preservation of Product.

However, the issue is that in their Terms & Conditions, as soon as the product leaves their factory, it becomes our property. My question is, are they still responsible to meet clause 7.5.5? I don't believe they could claim an exemption to this clause because I was under the impression that an exemption can only be claimed against design.

What are your opinions?
Agree with all of the comments posted.

You can become proactive and visit your suppliers and review: quality, transportation, packaging and documentation. As a customer you can clarify terms and conditions or excluded them from the contract but they might choose not to listen.

Furthermore, when the new shipment comes in - take pictures and determine if it was a transport issue or a shipping / packaging issue.

Tell the transport company that you will refuse packages if they are damaged.

You can also negotiate with the supplier for better packaging - but be careful because that would mean additional cost.

I think it is time to review your risk assessment for this supplier.

As far as issuing an NCR... it is an option!
 
T

Tyler C

#6
Thank you all for the responses. After giving it more thought I did come to the same conclusion as Jim. I spoke too soon when I said there was a conflict.

There are a lot of good perspectives in these comments, things I haven't considered before. I really appreciate everyone's responses.

I believe I have enough information to resolve this issue.
 

hogheavenfarm

Quite Involved in Discussions
#7
Some of our customers have supplied us with a packaging standard (nothing ridiculous) and it simply makes sure the product is adequately protected against "normal" transit damage. That said , we also photograph many of our products just before and just after packaging, as this has helped tremendously when shipping claims arise. As a supplier, you cannot control what the shipper does. When they ignore "do not stack" labels and stack product 3 levels high, you can expect damage. Both sides need to work together on this, the supplier to make sure it is crated well, and the customer to make sure it has arrived safely. Agreements along these lines as part of the POTA certainly help, as does a blurb about immediately inspecting for damage on the packing list.
 

Ninja

Looking for Reality
Trusted Information Resource
#8
A note outside of your direct question.

If this is the case:
We deal with a sole source supplier for the single most important raw material of our product. This supplier has no competition in the USA, so we have no choice but to buy from them.
Bend over backwards to help them help you.

Pulling out ISO certs and contract clauses may not be the best choice.
In each action you choose to do...consider what happens to you if they simply say "no". Or worse, "Go away".

You need good product to show up...keep that the main point and seek how you can HELP to make that happen...not how to FORCE them to make that happen.

The company in the most danger here may be yours, not theirs.
Quoting from the movie Black Rain... "Fix the problem, not the blame."
 
T

Tyler C

#9
Thank you Ninja. Initially, I wasn't thinking very clearly for other reasons, and I felt the ISO standard was the only leverage we had against a sole source supplier that has been refusing to address issues we are consistently seeing. This one was kind of the 'last straw'.

However, your reply has helped clear my head a little by focusing me on resolution. I appreciate your rationale.
 
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