PPAP Contract

From talking with our customer commodity manager, she stated that when a part is requested for PPAP and ultimately obtains full approval that part number (or family of parts) becomes "on contract".

From what I understand in their CSRs and IATF requirements, once the PPAP is approved status, the customer shall order that part from the supplier it was contracted to.

My question is, how can the supplier PPAP a part and obtain customer approval but then the customer never orders the part? After 5 years they finally communicate that they plan to order but want to be sure we are able to meet demand. After receiving this request, we found they were placing orders for that part to another supplier AND the part has been up-rev'd due to a manufacture change with a mating part? How would this be still on contract after all this? We should have the opportunity, at the very least, requote the part to the new changes.

Is there something we are missing in the standard that we can use as leverage to push back?

 

I can see that IF the customer actually investigates that we cannot hold the capacity requirements BUT, why wouldn't they even give us a chance? We've never even had the chance to build the part because the customer never ordered, so technically we can meet the capacity because the capacity is zero IMO. It almost feels like they are using us for our PPAP documentation to cover their butt and ordering from whoever. (This has happened with multiple parts)

 

Not that I'm aware of, but I may be missing something, too. Capacity should've been established prior to PPAP, so that in itself is confusing. Obviously you can, if the PPAP was approved based on production trial runs. I guess after 5 years things could change, but that is very odd they would wait that long to reach out. I don't think PPAP is necessarily a contract, as much as it is a declaration from the supplier that you can meet the demand and the specifications called out by the customer. The approved warrant just states they agree with what you stated on the warrant. A contract wouldn't come into play until a PO is received from them. If this was never received, you might be able to charge them for the PPAP because you essentially did all of that work for nothing.

 

From what we were told directly from the commodity manager, once a part is requested for PPAP and PPAP approval is obtained (PSW signed by customer), that part is placed on "contract" with said supplier. The customer classifies in their CSRs that once a part is placed on "contract" with supplier, they shall purchase from the supplier unless in emergency situations. They classify emergency situations as E-buys. E-buys still require PPAP documentation from the supplier they place the E-buy PO to but the supplier submit the documentation only when requested. We have had E-buy POs from them as well buy they are random in ordering (for obvious reasons) and sometimes become a PPAP request ("contract" if approved). I know it sounds like I answered my question by stating they have E-buy options but, if a part was quoted 5+ years ago with 0 orders placed, we should be able to reject the now requested orders regardless of "contract" status. We are having push back from them stating we have to agree to the order, regardless of current capacity, because we agreed by completing that PPAP. We all know that in the past 5 years in California a lot has changed, especially with wages, so essentially the cost of the part should increase especially since they changed suppliers with the mating part, up-reving the part we did PPAP on.

 

Is there any industry document that we can reference?

 

Check the PPAP book. I think there is a requirement for "dead tooling," that which hasn't been used in one year needing to be re-PPAPed. You don't have to agree to jack squat.