Understanding The ISO/TS 16949:2002 Standard 

7.3     Purchasing  

7.4.1 Purchasing Process 

Your organization shall: 

Ensure that purchased product conforms to specified purchase requirements 

Base the type and extent of control of your supplier and purchased product, upon the effect the purchased product has on your subsequent product realization and final product 

Evaluate and select suppliers on their ability to supply you with product in accordance with your requirements 

Establish criteria for the selection, evaluation and re-evaluation of suppliers 

Maintain records of evaluation results and actions  

Note 1 : Purchased product includes all products & services that affects customer - sub-assemblies, sequencing, sort, rework & calibration services 

Note 2 : Verify the continuity of your supplier’s QMS & its effectiveness if there are merger, acquisition, affiliations associated with your suppliers.  

7.4.1.1     Regulatory Conformity 

Purchased product or materials shall conform to applicable regulatory requirements 

7.4.1.2       Supplier QMS development 

Develop your suppliers to conform to TS 16949. As a first step, they shall be ISO 9001 certified, unless otherwise specified by your customer.  

Note:      Prioritize supplier development based on their quality performance & importance of product supplied. 

7.4.1.3       Customer-approved sources 

Where specified by contract (customer drawing or specification), you shall purchase products, materials, tool/gauge and services from approved sources.  

Using customer designated supplier, including tool/gauge suppliers does not relieve your organization of the responsibility to ensure the quality of purchased product.

Key Explanation Points and Tips: 

Þ      Clause 7.4 covers the following purchasing activities: 

Þ      Requirements to control purchased product (clauses 7.4.1; 7.4.1.1; 7.4.3; 7.4.3.1) 

Þ      Requirements to control suppliers you buy from (7.4.1; 7.4.1.2; 7.4.1.3; 7.4.3.2 

Þ      Requirements controlling your buying process (7.4.2) 

Þ      Purchased product includes raw materials, components, subassemblies, supplies, tooling, machinery and equipment, sequencing, sorting, rework, testing, calibration, maintenance, etc. 

Þ      Note that clause 7.4 requirements also apply to customer provided property which might include materials, production equipment; tooling; measuring and test equipment; facilities; transport vehicles; returnable packaging; intellectual property (drawings, specifications or proprietary information); product returned for servicing under warranty, product sent for outsourced work; etc. 

Þ      You must have specifications/criteria for purchased product. These specifications may come from your organization, customer, regulatory bodies, supplier or industry. As documents, these specifications must be controlled as per clause 4.2.4 

Þ      Many times the customer may require the use of pre-approved purchased products and suppliers. The onus is still on you to ensure that purchased product from customer-designated sources meets all requirements. 

Þ      You must control both, the product that you buy, as well as the supplier you buy from. Clauses 7.4.3 and 7.4.3.1 and 7.3.6.3 PPAP deal with requirements to control the products you buy. Your controls must primarily be based on prevention of nonconformities in both product and supplier performance. 

Þ      And clauses 7.4.1(second paragraph), 7.4.1.2; 7.4.1.3; 7.4.2c; 7.4.3.2 and 7.3.6.3 PPAP deal with requirements to control the suppliers you buy from. 

Þ      Determine how important the purchased product is to design, manufacture, assemble and maintain your end product. Keep in mind clause 7.3.2.1 which requires targets for product quality, life, reliability, durability, maintainability, timing and cost. You must apply similar criteria to purchased product going into your end product. 

Þ      Categorize your purchased products accordingly. Then determine what controls you need to ensure consistent purchased product quality and consistent supplier performance. You can apply different controls for different purchased products and suppliers. 

Þ      Besides product quality, your criteria for supplier selection and evaluation may include the potential supplier’s - financial capability; technical and manufacturing capability and capacity; reliability; reputation; flexibility to handle changes; support; service; cost; etc. The importance of these criteria will vary according to the items materials or services you purchase, and so you can apply different criteria to different supplies. You can categorize your suppliers accordingly based on these criteria. It might be useful to maintain a list of all qualified suppliers. 

Þ      Not all suppliers of purchased product need to conform to TS 16949. Look at the importance of the purchased product and their quality performance, to qualify them and prioritize their QMS development. Supplier - refers to your suppliers manufacturing site where production and/or service parts are made.  

Þ      You must promote and encourage your qualified or key suppliers to develop their QMS - starting with registration by an accredited 3^rd party Certification Body (CB) to ISO 9001:2000 (unless, otherwise specified by the customer) and eventually leading to conformity to the latest TS 16949 standard. Your supplier QMS development process could include a plan for qualified suppliers to achieve ISO certification and TS conformity within the 3 year life cycle of your organization’s registration certificate.  

Þ      If supplier development according to the above plan is not possible, then get approval in writing from affected customers for an alternate approach to supplier development, e.g. assessment by a OEM customer approved second party. Very small supplier organizations may obtain special dispensation from their OEM customers from obtaining ISO 9001 or TS 16949 certification under certain conditions. Please review specific requirements for subcontractor development at OEM customer or IATF websites.  

Þ      Where there are multiple customers for a purchased part or supplier, you must ensure that your purchased part and supplier meet all specific customer requirements (e.g. PPAP requirements). 

Þ      Where OEM customer approved suppliers are used, you must still apply all applicable TS 16949 control requirements to manage these suppliers. Also review specific requirements for customer approved suppliers at OEM customer or IATF websites.  

Þ      As per clause 4.1, you must identify your purchasing processes whether on site or off site. For each process, you must document the controls for purchased product and suppliers. You must also show the linkage and interaction of purchasing processes with other processes such as design, manufacturing, tooling maintenance, calibration, etc. 

Þ      Where any of your controlled suppliers have gone through a significant organizational change (mergers, acquisitions, etc), you must verify (e.g. get a copy of their latest ISO 9001 certification) the continuity and effectiveness of their QMS.  

Þ      You must keep records of all supplier evaluations (whether initial or periodic), including any corrective actions placed on them for any nonconformities.  

Þ      Performance indicators (to measure the effectiveness of purchasing processes in meeting requirements and achieving quality objectives) should focus on measuring supplier performance  and reducing variation in and improving purchasing p rocesses and related use of resources.  

Þ      Indicators for supplier performance may include – reduction of defects in supplied product; scrap; waste and rework; improvement in on-time delivery, service, cost, etc. Indicators for purchasing process may include reduction in supplier – quote review cycle time; contract award cycle time; purchase order-entry errors and omissions; receiving errors & omissions; etc.  

Þ      For performance indicators on supplier communications processes, see clause 5.5.3 first paragraph of key explanation points and tips.