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Is this acceptable as RBT within the new 9001 ... ?

Discussion in 'ISO 9001:2015 - Quality Management Systems' started by Somashekar, Aug 4, 2015.

  1. Somashekar

    Somashekar Moderator Staff Member

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    There is an order for 20 # of some standard motors from a customer urgently
    It will take about 50 days to build due to low stocks
    The marketing manager tells customer to make 100% payment for immediate delivery.
    The marketing manager knows the customer well, and his payment trends, and does not expect payments within 30 - 40 days.
    The planning and build of the standard motor is nevertheless in action.
     
  2. Ganesh Sundaresan

    Ganesh Sundaresan Active Member

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    This is in any case acceptable as factual approach to decision making.
     
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  3. Eric Twiname

    Eric Twiname Well-Known Member

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    If you are in the party adopting BBT, you might put it in that bucket instead...
    Either way, a business decision was made knowing the risks and making a judgement call based on past data and expected future performance...how could it NOT be acceptable as RBT?

    Wise, though?....it is very wise right up until the customer wires the money the next day...then it becomes foolish and potentially damaging.
     
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  4. Andy Nichols

    Andy Nichols Moderator Staff Member

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    RBT? Doesn't look like it to me. Tell the customer "immediate delivery" and knowing it takes 50 days to fulfil? That's RISKY THINKING!
     
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  5. Somashekar

    Somashekar Moderator Staff Member

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    How can we conclude that it is not RBT but RISKY THINKING, without more understanding of the context of the organization, the authority of the marketing manager and his knowledge management and risk based thinking....
    Perhaps he knows more that us that such a delivery promise will make him pay up within the time the motors will be ready.
    Are we edging out his company context., knowledge management and his RBT and bringing in our own ideal considerations .... ?
    I fear this is what the new breed of quick trained auditors to the new ISO 9001 will resort to ~~~~~
     
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  6. Jennifer Kirley

    Jennifer Kirley Moderator Staff Member

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    When looking at situations like the example, it is not for me as an auditor to declare the venture presents undue risk. Safety and environmental would provide their own opportunities for such judgments, but in a case like this I would be looking at the process in which the target was settled on, and results (and subsequent responses to the results) if the process has made it that far. Anyone can set an arbitrary, meaningless target. I am auditing processes and outcomes.

    The larger CBs are giving auditor training and our reports will continue to get reviews as per CB programs. I have one reviewer who is happy to push back against things in the report she doesn't like...some of her feedback is itself wild and I push back against her (it worked :)). Customers will always have the right to dispute a nonconformity and I will continue to urge mine to have no fear - my feelings will not be hurt as I believe that, like kids and puppies when auditors get something wrong we should be told right away.

    All that being said, I am sure many auditors will get at least some of this wrong and their clients will hesitate to dispute, but will meekly do as they believe they've been ordered. This will no doubt cause problems.
    ...my 2 cents...
     
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  7. Jennifer Kirley

    Jennifer Kirley Moderator Staff Member

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  8. Andy Nichols

    Andy Nichols Moderator Staff Member

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    It would be very clear, wouldn't it, that making a commitment to supply when you have no basis for that, will result in negative customer feedback (at some time). Let's be clear that, firstly, the standard REQUIRES that there's agreement to supply and clearly that will manifest itself in that the delivery dates weren't met. Or the process is broken - and would be a clear non-conformity. Auditors may have to wait a while before they can write an NC for such "risky" thinking - so there's a place for reporting that such an event WOULD become a nonconformity...
     
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  9. Eric Twiname

    Eric Twiname Well-Known Member

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    Amen from an auditee...not an auditor.

    Placing myself in that position...
    Risks were considered and a decision was made in light of the situation as I see it.
    If it is required that I consider both the risk and the benefit...I have done so.
    If the auditor doesn't like the decision, that is beside the point.
    I trust that the standard will govern the process (that risk was considered)...not the business (defining how I make business decisions).

    Am now in a situation where I have to choose whether to take a lower than normal downpayment for equipment since this fiscal year's budget only has $X left in it.
    The balance of payments will come from next fiscal year's budget.
    It is up to me whether to risk or not. Next year's budget may not get approved...and may not have room for the balance of payments...but that is my call to make, and my risk to take, and not for judgement from an auditor.
    I'd have a pretty hard time accepting an NC for a business decision.
    That said, I would have no issue with the NC if I hadn't even considered that it was a risk.

    If I chose not to accept the abnormal downpayment, there would be a customer complaint...so be it.
    More to the point, if I choose not to accept the abnormal downpayment, the customer may buy from my competitor.
    And if I choose to accept it...I may get stung.
    ISO can't help me out of that one...only require that I consider the downsides.
     
  10. Andy Nichols

    Andy Nichols Moderator Staff Member

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    Looking at the scenario as a pure Business Development professional aka "salesman", to do such a think At least to my way of thinking) is cavalier and NOT what even the basic premise of ISO 9001 and a QMS is about. If there's been zero negotiation about a call off of the 20 units, an agreed upon delivery schedule/set of dates - it says "immediate", then the company aren't EVEN compliant to the requirements. The payment thing is a red herring. Deal with the NA auto industry and see when they want to pay you!
     
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  11. Eric Twiname

    Eric Twiname Well-Known Member

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    LOL....agreed regarding NA auto.

    But the premise of the OP is "The marketing manager tells customer to make 100% payment for immediate delivery."

    The "negotiation" (more like ultimatum) was 100% payment up front.
    When the customer gets around to actually paying...only then will the product ship.
    The risk analysis determines that by the time "payment up front" would be received, immediate shipping would be possible.

    I run a business myself...my terms offered are either net30days or 100% up front as I see fit, customer by customer.
    Customers who purchase materials are used to net 45, net60, 2nd day 2nd month, etc....and pay accordingly regardless that they are in violation of the terms offered.
    For payment up front orders...I get the check 2nd day of 2nd month...and ship then.
    To negotiate until my terms and the PO terms match? Fogetaboutit...I would lose half of the sales and shut down their production line.

    If the basic premise of ISO9001 and a QMS is to override my knowledge of my customer's behavior and limit my actions resulting from that knowledge...then the premise is flawed.
    I don't think that is the basic premise of a QMS.
    Risk-based Thinking, IMO, is about thinking on the risks...and making the best call you can.
     
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  12. Gray Warner

    Gray Warner Member

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    I do not see my organization allowing a QMS auditor to see very much in the Accounting world. I also have not been exposed to those types of financial games. I can guarantee that the scope of the QMS will NOT get into financial games, aside from following the processes through sales, applications, credit, billing, and collection. How do you measure on time shipping in this situation? In reality, some pieces of this example would fall short of compliance even before anyone made it to RBT.
     
  13. Somashekar

    Somashekar Moderator Staff Member

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    Are lucky people better risk based thinkers ... ?
    Someone who is lucky is always relaxed and never tense.
    Will follow the gut feeling
    Will break normal routine for new experience
    Will recollect and use learning from things that went well
    Will visualize himself to be lucky and successful
    Will spread confidence around.
    .....
     
  14. Jennifer Kirley

    Jennifer Kirley Moderator Staff Member

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    No, following a gut feeling isn't risk based thinking unless risks have been first considered. The decision can always be to accept risk. That means there will still be trouble from decisions that hurt customers.
    Breaking normal routine may or may not have anything to do with risk. It may be less risky to reject the status quo.
    I think recollecting and using learnings from things that went well is a sort of data-driven decision making; such learnings can be a part of RBT because we do want to know our decisions' outcomes.
    Visualizing ones self as lucky and successful has nothing to do with risk, IMO, unless one visualizes the ability to do something risky and makes a bad choice, e.g. skydiving with no parachute.
    Spreading confidence around is a good thing as long as the confidence is not misplaced - see the parachute example.
    ...2cents...
     
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  15. Andy Nichols

    Andy Nichols Moderator Staff Member

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    Given the example posted, it would be clear to an auditor - later on - that making such a demand and telling a customer they can have product when they will, in effect have to wait, will become the source of negative feedback. I still maintain it's not (even) a RBT issue - the standard requires that there's agreement on such things before a commitment is made and clearly the client wants something which can't be delivered. I'd be also interested to see what their policy is: "Meet and exceed customer expectations"?
     
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  16. Somashekar

    Somashekar Moderator Staff Member

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    There may be a good policy and standard requiring many things. This case is of a standard motor, that is held in inventory always based on sales trends. There could be other make motors of same standard available and the customer could go and fetch. There is a risk of losing the order certainly. The marketing manager has played his best card knowing the customer well and his payment trends. Its a simple and straight case of risk based thinking...
     
  17. Andy Nichols

    Andy Nichols Moderator Staff Member

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    But the Marketing manager made a commitment for "immediate delivery" knowing that it will take time to fulfil the order. Unless you haven't given us the whole story it's not about accepting an order based on when they get paid, it's about making a commitment to supply something they said they have, but can't get to fulfilling for 50 days! As I said, that a 7.2 requirement...
     
  18. Eric Twiname

    Eric Twiname Well-Known Member

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    OP: "The marketing manager tells customer to make 100% payment for immediate delivery. "
    AN: "Unless you haven't given us the whole story it's not about accepting an order based on when they get paid,"

    Am I missing something?
    100% payment for immediate delivery means (to me anyway) I'll ship when I get paid.
    The risk is that they will pay sooner than expected...and this was considered...this is totally RBT.
     
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  19. Andy Nichols

    Andy Nichols Moderator Staff Member

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    But he can't deliver to his commitment - regardless of the payment terms. He doesn't have product in the quantity required and didn't specify the lead time. ISO 7.2.2 FAIL!
     
  20. Somashekar

    Somashekar Moderator Staff Member

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    @ AN (He doesn't have product in the quantity required and didn't specify the lead time)
    Urgently is the business word the customer used.
    He doesn't have the full 20 # motors is what we know now from the case.
    What we do not know to the extent is the Marketing manager's past information and knowledge of customer responses, and the confidence within himself to make a risk based decision, and by how much the stock are low.
    Can I present an intermediate risk....
    If the customer comes with 100% payment, say after a fortnight ..... The marketing manager says that now all the 20 motors are not available, due to recent sales. However he can deliver his complete stocks of 20 - whatever and deliver the balance within another fortnight IF 100 % payments are made now. There is every chance that this customer contract review will succeed.
    If the customer buys whatever in stock and pays for it, its a success still. (even if some recent sales has happened or not)
    If the customer still walks away, its acceptable as an outcome of his risk based decision.
    If the customer never returned again its acceptable as an outcome of his risk based decision. (its a standard motor) Someone else had stock and made a sale.
    .
    ..
    ...
    At the outset if the marketing manager offers the 20 - whatever stock against full or sale payment ., and then says it would take some more days to get stocks of the balance ~~~... Then
    1. He makes that much sale or the full sale of 20 # (Customer has the money and he needs urgently, which we know is unlikely...)
    OR
    2. Does not make the sale at all
    You would not need an experienced marketing manager to do such sale.

    So the RBT gets you options. The knowledge and experience helps you decide. And a good process interaction of it gets you moving forward.
     
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