1. This site uses cookies. By continuing to use this site, you are agreeing to our use of cookies. Learn More.
Dismiss Notice
You must be a registered member in order to post messages and view/download attached files in this forum.
Click here to register.

Issuing a nonconformance for monetary loss due to nonconforming Product

Discussion in 'ISO 9001:2015 - Quality Management Systems' started by gvala, Feb 16, 2022.

Tags:
  1. gvala

    gvala Member

    Joined:
    Nov 24, 2021
    Messages:
    10
    Likes Received:
    1
    Trophy Points:
    2
    Hello,

    New to quality and looking for some new perspectives. The system I inherited calls for a nonconformance to be issued for any Nonconforming product at a cost of more than a $1000. It is not clearly defined how this cost is calculated but I have determined that the old Quality Manager was using 50% value of the sale price for scrapped parts and 20% for parts that could be reworked.

    This is clearly not the best way of doing this as some parts cost $20 and other $4000 resulting in a much higher scrap rate required for a nonconformance. Certainly the scrap rate is more important.

    I suppose I have two questions:

    1. Does Nonconforming product necessarily constitute a need for a nonconformance?

    2. What metric do you use to issue a nonconformance for nonconforming product?

    Thanks
     
    gvala, Feb 16, 2022
    #1
  2. John C. Abnet

    John C. Abnet Well-Known Member

    Joined:
    May 23, 2017
    Messages:
    709
    Likes Received:
    510
    Trophy Points:
    92
    Location:
    Upper Midwest- USA
    Welcome to the site @gvala

    1. Assuming "...need for a nonconformance" is referring to corrective action, then the answer is "no". Your organization (considering the requirements of your customer(s))
    should establish criteria for when a corrective action is taken.

    Also, withIN the context of "corrective action" there are two options....

    a) Simply correct the situation
    b) Determine root cause and eliminate.


    2. Again, the "metric" should be part of your organization's strategic approach (all while considering the needs/expectations of your customers).
    Consider what is important to YOUR organization in regards to quality metrics. Measure what matters. (by the way, once that is determined, it will be easier for your organization to identify when to take corrective action as it certainly may impact the metric(s) you choose.

    ISO 9001 is not very prescriptive. Be selfish and do what's best for YOUR organization (while ensuring the needs/expectations of your customer(s).

    Hope this helps.

    Be well.
     
    John C. Abnet, Feb 16, 2022
    #2
    Steve l and BradM like this.
  3. BradM

    BradM Moderator Staff Member

    Joined:
    Jul 31, 2015
    Messages:
    397
    Likes Received:
    316
    Trophy Points:
    62
    Location:
    Arlington, TX
    It's interesting that there is an NCI criteria based on dollar amount. I might use dollar amount to assess risk level or impact.

    But to your point, if you fail a $20.00 or $2000.00 part, there is still a failure. I would think it would be money well spent to look into what is causing the failures. Chances are there are similar process failures leading to rejects in both price ranges.
     
    BradM, Feb 16, 2022
    #3
    Jennifer Kirley and Steve l like this.
  4. gvala

    gvala Member

    Joined:
    Nov 24, 2021
    Messages:
    10
    Likes Received:
    1
    Trophy Points:
    2
    Yes I am referring to a corrective action, thank you for making the distinction.

    My point with the dollar amount as the trigger for a corrective action is that if the part is $20 I could scrap 100 before a CA is required and a $4000 would require only one. Clearly there is a larger issue with the 100 piece failure than the 1 piece.

    I am considering proposing to the higher ups that there is a more appropriate metric to base the need of a CA on.

    Thank you
     
    gvala, Feb 16, 2022
    #4
    John C. Abnet likes this.
  5. Andy Nichols

    Andy Nichols Moderator Staff Member

    Joined:
    Jul 30, 2015
    Messages:
    5,102
    Likes Received:
    2,557
    Trophy Points:
    112
    Location:
    In the "Rust Belt"
    The actual cost is higher, isn't it? This is a common point that people overlook. Consider all the other costs involved and it starts to add up much faster. Granted, one, two or three parts might not add up to much, however think of this:
    The cost of filling out the inspection/reject note.
    The cost of someone deciding it's scrap
    The cost of someone buying/moving/making replacements
    The cost of added wear and tear on gauges, tooling, equipment
    The cost of handing the scrap to the point someone removes it
    The cost of the financial adjustment if you get paid for the scrap
    The cost of all the above on the actual cost of goods sold - especially if your sales people sold it at reduced price.
    The cost (maybe) of stopping/disruption to the down stream production while replacements were made - maybe people were idled while replacements were made
    The cost (maybe) of expediting the replacement materials, cutting a PO for the extra or supplier intervention to advance the delivery of replacement materials...
     
    Last edited: Feb 17, 2022
    Andy Nichols, Feb 17, 2022
    #5
    tony s, Jennifer Kirley, Steve l and 2 others like this.
  6. RoxaneB

    RoxaneB Moderator Staff Member

    Joined:
    Jul 31, 2015
    Messages:
    926
    Likes Received:
    1,081
    Trophy Points:
    92
    Location:
    Ontario, Canada
    Have you considered setting AND/OR triggers?

    For example, "x number of nonconforming parts AND/OR nonconforming parts > $Y."

    In order for this to work, however, every nonconformance must be captured in some way for analysis to demonstrate if the 'X number' trigger has been hit or not. We took an approach like this in a previous job - each nonconformance was captured. As long as the nonconformance was below the threshold, we simply did a correction. Any nonconformance that hit a threshold lead to a corrective action.

    The benefits to such an approach - if your senior management is unsure - include:

    • Focused use of energy and resources (time, human, etc.) on those "bigger" issues that have more of an impact on the bottom line;
    • Improved process control/capability as those causes resulting in significant outliers are (hopefully) addressed; and/or,
    • Regular reviews of data allow for tighter controls (i.e., improvement) over time.

    We found that as we addressed those causes resulting in high-dollar nonconformances, there were fewer of them. When it came time to review our data, we were able to lower our $ trigger. For a time, this would increase the number of nonconformances requiring corrective action, but again, as we addressed the causes, there were fewer high-dollar nonconformances. Repeating the cycle on a regular basis can lead to lower/tighter triggers and improved process controls/capability.
     
    RoxaneB, Feb 17, 2022
    #6
  7. Steve l

    Steve l Member

    Joined:
    Feb 24, 2022
    Messages:
    8
    Likes Received:
    3
    Trophy Points:
    2
    Hi gvala, good answers here. Have you ever heard of the term Kaizen before? It's just a fancy term for continuous improvement with various tools available to you. It doesn't need to be particularly difficult. You have an opportunity for some free consultation if you involve other stakeholders, eg tooling and machinery suppliers, repairers, any other suppliers involved, leading machine operators and customers. Admit you need their help, and hold what amounts to a brainstorming and measurement session for anything up to 2.5 days to solve the challenges. Everyone benefits and you could lock in long term customers and suppliers if you offer to return the favour and help them dovetail your supply system with their inward goods and reduce their costs, you get the point? Of course it requires a vulnerability from your bosses so sell them on the benefits first before wasting time setting up something they may not approve.

    Best of luck. I must admit i had serious reservations about doing this and the consultants who taught our companies. I was blown away by the results time after time and was left with egg on my face after opposing it the first time. You live and learn, and i was by no means perfect in the beginning. The best way is to learn from others mistakes.
     
    Last edited by a moderator: Feb 25, 2022
    Steve l, Feb 25, 2022
    #7