Section 7.4 Purchasing

Section 7.4 Purchasing

The organisation shall have documented procedures for:

 Purchasing control;

 Purchasing information;

 Verification of purchased product.

Proof How an organisation controls the purchase of materials, products and services from suppliers and third parties.

Likely documentation  Documented procedures for the evaluation of suppliers;

 Documented procedures for the evaluation of a purchased product or service.

Note: Supplier selection and verification can be an absolute minefield for small businesses and the chosen process needs careful consideration – particularly with respect to reliability, availability and mutual respect.

When an organisation has to purchase products, materials and/or services from suppliers who have not been previously specified in a contract or by a customer, they are normally selected on their ability to meet the organ-isation’s requirements giving due consideration to the quality, statutory obli-gations, timescale and cost. A list of approved suppliers and subcontractors needs to be maintained by the organisation and this should contain the following information:

 Previous performance in supplying to similar specifications and requirements;

 Stocking of high-volume standard items conforming to relevant national and/or international standards (or supplied with a statement of conformity);

 Compliance with an approved third-party product or quality registration scheme;

 Recommendation by other similar purchasers or manufacturers of equipment;

 Trial order and evaluation of performance.

5.7.4.1 Purchasing Process

The organisation should have available a process to ensure appropriate selec-tion, evaluation and control of all purchased products. All supplies and sub-contracts should be subject to an authorised purchase order that provides full details of the type and extent of supply.

5.7.4.2 Section 7.4.1 Purchasing Process

Section 7.4.1 Purchasing process

The organisation shall have procedures to:

 Ensure that purchased product conforms to purchase requirements;

 Evaluate, reevaluate and select suppliers.

Proof The controls that an organisation has in place to ensure that purchased products and services are of an acceptable standard.

Likely documentation

 Approved list of suppliers;

 Supplier evaluations;

 Purchasing procedures;

 Purchase orders.

5.7.4.2.1 Purchasing Processes and Procedures

The organisation is responsible for producing purchasing processes and procedures that include:

 Identification of requirements;

 Selection of suppliers;

 Quotations and tenders;

 Purchase price;

 Order forms;

 Verification of purchased products;

 Non-conforming purchased products;

 Contract administration and associated purchase documentation;

 Supplier control and development;

 Risk assessment.

5.7.4.2.2 Suppliers

Having identified their suppliers (usually selected from previous experience, past history, test results on similar projects or published experience from other

users), an organisation should establish a system by which the supplier/sub-contractor is clearly advised exactly what is required and by when. This is often achieved by use of a purchase order system.

Note: The organisation shall evaluate and select suppliers based on their ability to supply product in accordance with the organisation’s requirements. Criteria for selection, evaluation and reevaluation shall be established and records of the results of evaluations and any necessary actions arising from the evaluation shall be maintained.

5.7.4.2.3 Subcontractors

If a supplier uses subcontractors, it is important that they can be relied on to produce a quality product, have the ability to meet subcontractual requirements (including quality assurance) and do not reduce the quality of the final product.

The supplier (who is normally referred to as the prime contractor) must ensure that all items purchased from a subcontractor are covered by a purchasing document. This document will contain details of the product ordered, type, class, style, grade and the title/number/issue of the relevant standard, specifi-cation, drawing, inspection instruction, etc., that it must conform to. The prime contractor should ensure that subcontractors have their own QMS and that the purchased product or service is satisfactory.

5.7.4.3 Section 7.4.2 Purchasing Information

Section 7.4.2

Purchasing information

Purchasing documents shall describe:

 The product to be purchased;

 Requirements for approval or qualification of product, service, procedure, process, equipment and personnel;

 QMS requirements.

Proof The details that need to be provided by an organisation when placing an order with a supplier.

Likely documentation  Approved list of suppliers;

 Supplier evaluations;

 Purchasing procedures;

 Purchase orders;

 Stock control procedures.

A process should be established to ensure that purchasing documents contain sufficient details about:

 The product to be purchased;

 The necessary approval and qualification requirements (i.e. procedures, processes, etc.) for product, equipment and personnel;

 The QMS requirements;

 Agreement on quality assurance – whether the prime contractor can completely rely on the subcontractor’s quality assurance scheme or whether some (or all) of the product will have to be tested by the prime contractor or via a third party;

 Agreement on verification methods by the purchaser at source or on delivery; whether this should be by sample or on a 100% basis; whether this inspection should be at the prime contractor’s or the subcontractor’s premises;

 Settlement of quality disputes – who, how, when and where.

5.7.4.4 Section 7.4.3 Verification of Purchased Product

Section 7.4.3 Verification of purchased product

The organisation shall establish procedures to verify that the purchased product meets specified purchase requirements.

Proof The controls that an organisation has in place to ensure that products and services provided by suppliers meet their original requirements.

Likely documentation  Approved list of suppliers;

 Supplier evaluations;

 Purchasing procedures;

 Purchase orders;

 Stock control procedures.

It is essential that all goods and services received from a third party are checked to confirm that they are those that were ordered, the delivery is on time and they are of good quality. The amount of inspection will depend on how critical the supplied goods and service is to the end product and the amount of inspection should be compatible with the risk or inconvenience if the item is later found to be faulty.

A consumable item (e.g. low-cost items such as lights bulbs, duplicating paper) is normally only checked for correct identity, correct quantity and any signs of damage. It would be unwise to perform detailed inspections on these items which, if found to be faulty, could be replaced within a short time at little comparative expense. Conversely, detailed inspections should always be per-formed on major components, as, if they are faulty, the rectification could be expensive and time-consuming.

It should also be appreciated that the worst possible time to identify an item as a reject is when it is handed over to the final customer. If the product (or its components) can be checked at earlier stages, it is time well spent.

5.7.4.4.1 In-Inspection

Receiving or in-inspection should be documented to confirm that it has taken place and that the goods or services are deemed fit for use in the next stage of the process. This may often be by a completing a goods received note or marking the supplier’s delivery note. The delivery should also be checked against the purchase order to ensure that it is complete. Should the inspection identify the delivery as a reject, the items should be segregated, labelled or identified to avoid them being used in error.

5.7.4.4.2 Goods Inwards

In industry, there are very few suppliers who are not actually purchasers themselves. Large and small companies have to obtain consumables, compo-nents and sometimes complete assemblies from a subcontractor at some stage or other and therefore, the quality of the supplier’s final product, to a consid-erable degree, depends on the quality of the subcontractor’s goods.

To be certain that the items purchased, or obtained, from a third party are up to the required standard, the prime contractor will have to set up some kind of quality inspection, unless, that is, the supplier himself operates a fully satis-factory and recognised QMS.

The term ‘goods inwards’ describes the procedures designed to cover this type of inspection and it is a very important quality assurance function.

5.7.4.4.3 Inspection and Testing

It is the prime contractor’s responsibility to ensure that inspection and tests are always performed on all incoming goods and that no incoming material is used or processed until it has been inspected or otherwise verified to confirm that it is up to the specified requirements.

The prime contractor will have to show in their Quality Plan exactly how this is to be achieved and precisely what inspections and tests are to be carried out to confirm quality. It is then up to the purchaser to decide if this is enough or whether they would like to see additional or supplementary inspections carried out. The amount of inspection will, of course, vary according to the degree of control exercised by the subcontractor, their past performance and records – for example, are they assessed to ISO 9001:2008.

This inspection should complement and be in addition to the existing quality control procedures and must be clearly laid down. Records should detail who actually carried out the inspection that released the product, the assembly line and despatch services. The inspection must:

 Consider that all incoming material, where quality is unproved, should remain suspect until proven as satisfactory;

 Ensure that written control procedures are available to establish a product has:

 Not been inspected;

 Been inspected and approved or

 Been inspected and rejected.

 Ensure that any defective material that is received from a third party is subject to the same controls as defective material that may occur in their own production.

5.7.4.4.4 Inspection Procedures

Ineffective or incomplete control usually leads to costly defects. The prime contractor must, therefore, ensure that all processes are carried out under strictly controlled conditions. These conditions should be covered by WIs that define the process, suitable equipment and if a special working environment is required.

Workmanship criteria will have to be fully documented using either written standards, photographs, sketches or representative samples.

5.7.4.4.5 Control of Quality

The choice of how quality is controlled and the type of inspection is normally left up to the prime contractor who may decide on a stage inspection, sampling inspection, final inspection or perhaps even a combination of all methods as being more appropriate. For manufacturers, the method chosen should cover every phase of manufacture, assembly and installation and the instructions should include the following details:

 Identification of material;

 Detailed operations to be performed;

 Tools or test equipment required;

 Requirements for operational checks, calibration and equipment availability;

 Methods of inspection;

 Environmental conditions to be maintained during operation or inspection;

 Criteria for passing or failing the test;

 Sampling techniques and related decision criteria if applicable.

5.7.4.4.6 Non-Compliance

Inspection and testing is normally carried out on completion of installation and maintenance activities, with results being documented. If items fail to comply with agreed contract criteria, then they should either be repaired, replaced or identified for subsequent evaluation and decision. All repaired items need to be reinspected to ensure their acceptability prior to being used.

In document ISO 9001-2008 for Small Businesses (Page 176-182)