SAMPLE COMPANY Page 1 of 6 SOP # 10-1 Revision: 0 Prepared by: _ Effective Date: Approved by: _ Title: RECEIVING, INSPECTION & STOCKING OF PARTS & MATERIALS Policy: All parts, components and materials utilized in production of products will be received in an organized manner and inspected for conformance prior to stocking to provide initial quality control of assemblies. Any items or shipments rejected will be properly quarantined from other inventory items until disposition. Purpose: This procedure outlines the steps for the receiving and inspection of materials, components, parts, finished goods, etc., and the stocking of these items or the disposition of rejected items. Scope: This procedure applies to the receipt of all inventory items. Procedures: 1.0 Receiving 1.1 All incoming shipments must be examined for apparent package damage. If the shipment has apparent damage, notify Purchasing immediately. Purchasing will decide to either accept or reject the shipment from the carrier. 1.2 If the shipment shows no signs of damage or Purchasing has decided to accept a damaged shipment, count the pieces (i.e., packages, skids, barrels) and confirm with the bill of lading and note any exceptions (i.e., package damage or shortages). 1.3 Obtain packing list from shipment and record in Receiving log (Exhibit 1). Record date and receiving log number on the vendor's packing list. 1.4 Deliver shipment and packing list (or Receiving and Inspection Report) to the receiving area. 1.5 Any Non-production shipments (i.e., office supplies) will be logged in the Receiving log and delivered to the proper department. RECEIVING, INSPECTION & STOCKING OF PARTS & MATERIALSPage 2 of 6 2.0 Inspection 2.1 At the receiving area, each shipment will be unpackaged and all items piece counted and matched to the packing list. The first portion of Part I of the Receiving and Inspection Report (Exhibit 2) should be completed. 2.2 The shipment will then be inspected for conformance according to the inspection level required for each part number (see Exhibit 3). If multiple part number classes are included in the shipment, each class will be segregated and inspected accordingly. Part II of the Receiving and Inspection Report should then be completed. 3.0 Stocking 3.1 If the shipment has no discrepancies or rejected items, the packing list or Receiving and Inspection Report, will be signed off and forwarded to Purchasing. 3.2 Accepted parts will then be tagged and taken to their appropriate areas and stocked (i.e., shelf, bin, rack, etc.) according to part Number. 4.0 Rejection, Discrepancies and Disposition 4.1 Any count discrepancies will be noted on the packing list or Receiving and Inspection Report, signed and forwarded to Purchasing. Purchasing will then follow-up with the vendor to resolve the shipping discrepancy. 4.2 If there is a non-conformance discrepancy, the suspect goods will be red-tagged and separated (quarantined) from other inventory and immediately taken to the quality control hold area for disposition. 4.3 If only partial goods in the shipment are of non- conformance, the accepted goods should be noted on the paperwork and stocked per above procedure. 4.4 Quality Control will review and authorize all rejections and complete Part III of the Receiving and Inspection Report. Goods found to be in conformance or suitable for their intended use and accepted by Quality Control will have the red tag removed and be returned to the receiving area for stocking. Quality Control will note on the report the justification for any accepted parts and forward the report along with the packing list to Purchasing. RECEIVING, INSPECTION & STOCKING OF PARTS & MATERIALSPage 3 of 6 Goods rejected by Quality Control will continue to be quarantined and red tagged until disposed. Purchasing will determine and arrange for the appropriate disposition of rejected items (i.e., return to vendor for credit, scrap, etc.). Receiving Log Date Sender Carrier #Pkgs. Received By EXHIBIT 1 RECEIVING AND INSPECTION REPORT PART I RECEIVING DATE: _________________ VENDOR/SUPPLIER/SUBCONTRACTOR: ______________________________________________________________ P.O. OR CONTRACT NO.: ______________________ INSPECTI QUANTITIES ON ITEM NO. DESCRIPTION CRITERIA ORDERE RECEIV INSPEC ACCEPT REJECT D ED TED ED ED RECEIVED BY:________________________________ PART II INSPECTION INSPECTED BY:_______________________________ Sample Lot Conformance/Discrepancies to Specifications YES NO YES NO Lot Size:_____________________ Shipping Damage Functional Markings/Finish Dimensions Sample Qty:___________________ Attributes Other Accepted:_____________________ Date:____________ Rejected:____________________ Date:________ Place in Stock Cause for Rejection:_____________________________ Forward to Next Operation _____________________________________________ ________________________________________________ _____________________________________________ ________________________________________________ _____________________________________________ PART III REJECTED PARTS DISPOSITION Return to Vendor Conditional Acceptance Approvals ___________________________________________ ________________________________________ Signature Signature Remarks:__________________________________________________________________ _______________________ __________________________________________________________________________ __________________________________________________________________________ ______________________________________________ Further comments may be noted on back of report or additional sheets if necessary. EXHIBIT 2 INVENTORY INSPECTION LEVELS The following are generic descriptions of the type of inspections that should be performed for various classes of inventory items. These descriptions are not completely comprehensive for all the possible types of inventory that can be received and therefore, the inspector should use appropriate judgement to determine any special inspection procedures that may be necessary for unique items. The inspection levels are intended to be cumulative in that higher level inspections will also include all lower level inspection procedures. The percentage of the total parts inspected will be according to the part number specifications. For example, an inspection level indication of "Level II, 25" would require that 25% of the parts received in the shipment will be examined at a Level II inspection. If defects or rejected items are discovered within a shipment and less than a 100% inspection has been performed, the receiving inspector will consult with the Quality Control Manager to determine the appropriate action for assurance of the remainder of the shipment. Level I: Visual inspection of the shipment or lot. Items appear reasonably to match packing list description(s). Nothing comes to the attention of the inspector as noticeable defects or as unusual and unordinary. Level II: Actual hands-on visual inspection of individual parts. Each part inspected will be analyzed for the quality of workmanship and construction and the appearance of any defects. Level III: A functional test of the part will be performed as appropriate for the item. For example, pneumatic parts should indicate function when attached to compressed air source; moving parts should rotate, slide etc.; electrical components should operate, light, etc. Level IV: The part will be inspected against a set performance or measurement standard as indicated in the part file. For example, structural items will be measured for compliance to drawings within specified tolerances, electrical and mechanical devices will function according to specified performance standards. EXHIBIT 3