BN-IN-005 Specification for Supplier Inspecition

Table of Contents 1. 2. 3. 4. 5. 6. 7. Purpose General Responsibilities Procedure Flowchart References Attachments

1. Purpose
This procedure applies to Company inspection of purchased materials, components and equipment at source, i.e. at the suppliers plant or at those of his sub suppliers, during the manufacturing process. The procedure describes how Company supplier inspection is:

defined executed reported

2. General
Suppliers have an important contribution to make to attaining a projects quality objectives. Companys interface with the suppliers is to a large extent entrusted to the inspection department within the overall mission of the procurement department. This procedure is intended to formalise the inspection department actions.

3. Responsibilities
Company engineering department defines project requirements, including inspection and tests to be carried out, in the various documents forming part of the purchase order. Company procurement department is responsible for placing, administrating, inspecting, expediting and eventually closing out the purchase order. The supplier is responsible for the execution of the purchase order, in particular for presenting the material and/or equipment to specified requirements, with the corresponding documentation. The Company manager inspection is responsible for:

proposing the inspection level according to the nature and content of the purchase order and the assessed capabilities of the supplier for project approval; Consulting with or seeking the assistance of others e.g. engineering department, client or Authorities, in accordance with project procedures as may be necessary; designating an inspector to carryout inspection at the suppliers in accordance with the app roved Inspection and Test Plan (ITP), and monitoring the inspectors actions; reviewing the performance of the supplier from a quality viewpoint (as reported by the inspector) and taking or initiating corrective action should the need arise; reporting to project procurement manager and project management concerning inspection at suppliers.

The Company inspector, or the inspector seconded from another organisation, shall carryout the inspection programme as defined by the Company manager inspection and report his findings to the latter in the prescribed manner.

4. Procedure

4.1 Definition of Purchase Order Technical Requirements

Requirements are defined by the Company engineering department in the following documents attached to and forming an integral part of the purchase order:

the requirements the specifications the drawings

In addition requirements may be further defined in the following, cited in the requisitions, specifications or drawings:

national or international standards; standards or codes of practice of trade associations or comparable organisations; authorities regulations of the country in which the material and/or equipment will be manufactured and the country in which they will be installed and utilised.

Technical requirements defined include:

materials to be used; performance of finished materials and/or equipment; inspection and test methods to be used; lists of documents required from the supplier to define his inspection and test procedures and to record results.

4.2 Suppliers Quality System

Where possible bidders, i.e. potential suppliers, are selected from companies having in place a formal quality system corresponding to the ISO 9001, ISO 9002 or ISO 9003 standard or to a standard considered to be equivalent. However, for commercial or technical reasons use may have to be made of suppliers who have not as yet a formal quality system. In this case they will be assessed to ensure that their internal procedures encompass at least the major elements of the appropriate quality standard. Thus a selected supplier will have its own inspection department whose mission is:

to define procedures, procure inspection and test facilities and employ qualified staff to give assurance that the expected quality can be obtained and maintained for his product(s); to adapt the suppliers inspection system for each purchase order to ensure that specified requirements are attained.

The Requisition requires that the supplier produces documents defining how in fact the purchase order quality requirements will be met. These include typically:

weld procedure specifications; procedure qualification records; non destruction examination procedures; test procedures.

These documents are to be reviewed and approved by Company engineering department. The suppliers ITP lists and summarises in one single document all the inspection and test requirements extracted from the approved requisitions, specifications, drawings, standards, codes and regulations. Thus the ITP is not a primary document for approval, but it is nevertheless checked and stamped (if applicable) by the inspector to see that it reflects the sum of approved inspection and test requirements expressed elsewhere. It should be noted that for supply and erect purchase orders and subcontracts, the inspector must only review and

agree inspection points in the ITP for activities taking place off site. Concerning inspection activities on site, it is the construction department which is responsible. The inspector shall thus ensure that separate ITPs are produced for review by the inspection department and the construction department. The supplier is expected to produce his ITP according to his own format. He may give this document some other title, but whatever it is called, it should normally incorporate the following features:

the necessary references to project, purchase order no., definition of material or equipment concerned, etc.; a chronological list of operations starting from approval of documents through to final shipment; the corresponding inspection and test points; for each inspection or test point the frequency, e.g. 10% or once per shift etc.; for each inspection or test point, the reference document applicable, i.e. specification, code, etc. and the acceptance criteria; references of inspection or test record forms to be used; columns for supplier, Company and possibly the client or a representative of an Authority to indicate by means of a letter his involvement, thus:

R = Reviews W = Witnesses H = Hold point When the supplier presents his ITP for review by the inspector, he shall include the inspection and test record forms he proposes to use. In general Company expects the supplier to use his own standard forms. It is only in the case of the content or format being found inadequate, that the inspector shall request the supplier to modify the forms or produce new ones. The supplier is entirely responsible for the quality of his product and to attain this, he works through his own quality system of which his inspection department is a part. It is the role of the Company inspector to monitor performance of the supplier by means of his visits operating through the suppliers own inspection department. It is only when the suppliers performance is shown to be inadequate that he shall take a more pro-active role.

4.3 Definition by Company of a Programme of Inspection

As soon as the procurement department places a purchase order, the inspection department receives a package comprising:

the purchase order; supporting documentation such as the requisitions, drawings, data sheets and specifications.

Having reviewed this package to determine the nature and importance to the project of the material or/or equipment concerned, and in the light of Companys assessment of the suppliers capability (see 4.15 below), the manager inspection or his substitute shall:

select the appropriate level of inspection; complete and issue for approval by the project the first issue of the inspection status report covering the initial issue of purchase orders (see 4.13 below).

Concerning standard levels of inspection, they are in ascending order of depth/ completeness: N = No inspection F = Final inspection only IP = Progressive Inspection comprising:

pre-inspection meeting (if required)

presence at hold points, hold points being on key points only general inspection visits, arranged as far as possible to coincide with hold points final inspection.

IPC = Close Progressive Inspection Comprising:

pre-inspection meeting presence at hold points, hold points being more dense that with IP regular, frequent inspection visits final inspection.

R =Resident inspector, provided:

when required by contractual obligations or when requested by the project manager or when deemed necessary by the manager inspection due to workload in any one location or to ensure specified quality is attained.

The manager inspection or his substitute shall select an inspector either from within his own department or assign the work to another Company entity or to an approved outside inspection agency. In the latter case the manager inspection shall exercise full control over its activities. The purchase order package shall be filed in the inspection department office and thus be available to the inspector. When another Company entity or an outside organisation is used, then a copy of the package shall be transmitted to it along with the formal assignment on form RB25013, copy attached. Designation by the manager inspection or his substitute of a standard inspection level only defines an outline programme. The inspector shall review the situation during the pre-inspection meeting, or as soon as possible thereafter, so as to be able to convert the chosen inspection level into a more precise programme with dates, or at least approximate dates. This can often be done in a convenient fashion by marking up the suppliers barchart. In defining hold points, they should be kept to a practical and necessary minimum. An excess of hold points may be difficult for the inspector to honour and devalues the essential hold points. During the course of the inspection operation, the level of inspection shall be kept under review in the light of the ease or the difficulty that the supplier demonstrates in meeting his obligations. This enables the manager inspection or his substitute in collaboration with the inspector to increase (or decrease) the level of inspection.

4.4 Sub Suppliers

It is rare that a supplier produces everything himself. Almost always some work is given to sub-suppliers. The involvement of the latter may be limited to the supply of raw materials or semi-finished products or may extend to the manufacture and sometimes the design of major components or ensembles. At the limit, a supplier may manufacture nothing himself and sublet all work to sub-suppliers. Alternatively a supplier may distribute the work over a number of different establishments within his own organisation. They may be widely dispersed geographically and may work to different internal procedures. This is particularly true of major packaged units. The supplier is required to submit for the approval of the project procurement manager a list of the principal subsuppliers he proposes to use. Following this approval, the subsequent concerns of Company are that:

the supplier may not exercise sufficient control over the sub-suppliers or over his own establishments to ensure purchase order requirements, in particular quality requirements, are met; the precise requirements defined in the purchase order may not have been transmitted onwards to subsuppliers or to all the suppliers own establishments involved.

The inspector shall ensure that Companys concerns are met by:

if the information is not already available, obtaining during the pre-inspection meeting a list of sub-suppliers their address and references with details of their scope of work for approval by the project procurement manager; finding out from the supplier which member of his staff is responsible for overseeing the quality of sub-let work and how that responsibility is exercised, e.g. by regular visits, etc.; reviewing the suppliers (unpriced) suborders to ensure that necessary quality requirements have been transmitted onwards, and that engaged sub-suppliers are those named on the Company approved list and/or mentioned in the requisition; ensuring that sub-let work is covered in the suppliers ITP or alternately ensuring that the supplier obtains ITPs at least from his major sub-suppliers; arranging with the supplier, pre-inspection meetings with and inspection visits to the major sub-suppliers.

However it must be understood that it is the supplier who is responsible for the quality of work of his sub-suppliers. The inspector shall never give an instruction directly to a sub-supplier and must be accompanied by a representative of the supplier when visiting a sub-supplier.

4.5 Information Basis for Inspection

It is an obligation of the inspector to familiarise himself with the purchase order package as well as any other relevant drawings, specifications, standards and codes mentioned therein but not present in the package. It must be noted that specific client requirements must be reflected in the Company requisitions, specifications etc. and also appear in the supplier documentation for review by Company engineering department. All inspection and tests must be carried out and the results assessed with respect to a contractual document and the Company Inspection Guide as a reference document (ref. 6.3). The inspector would not normally be able to carry a complete set with him, instead he should find all necessary documents at the suppliers. However, it is desirable that he has already in hand:

key documents such as for example the requisition and the general arrangement drawing; from supplier print control department an up-to-date list of supplier documents showing Company approval status.

4.6 Pre-Inspection Meeting

The inspector shall contact the supplier to arrange a Pre-Inspection Meeting (PIM) at the suppliers, normally at the establishment where most of the work takes place. Further, PIMs may also be required at the major sub-suppliers (see 4.4 above). The manager inspection or his substitute shall liaise with the inspector and all other potential PIM attendees such as:

Company specialist engineer; authority representative; client.

The PIM is concentrated on inspection and associated matters to which the necessary time must be consecrated. For this reason commercial, contractual or pure engineering questions should be the subject of meetings separate from the PIM. Whilst the PIM should take place as early as possible, if it is to be productive:

the purchase order shall have been formally placed; the principal supplier drawings, specifications and procedures shall have been submitted to Company engineering department and be returned at least in Code 2 i.e. reviewed with comments as noted; the supplier shall have decided how his work will be divided between his own establishments and his sub-

suppliers;

the supplier shall have produced his ITP.

The following topics shall in so far as each is applicable be discussed at a PIM: 1. Suppliers organisation:

organisation chart; who is in overall charge of purchase order? who is in charge of inspection? address/phone/fax/transmission & communications.

2. Purchase order review:

reception by supplier and his acknowledgement; scope of supply as per requisition; suppliers understanding of specified requirements; overall schedule/bar charts; delivery dates.

3. Status of Company applicable documents as per requisition. 4. Availability at the supplier of relevant standards and codes as referred to the requisition and specifications. 5. Status of Supplier Furnished Documents as per requisition, further detailed by suppliers own List of Drawings and Other Documents. 6. Materials status:

available at suppliers; bought out items, list of suborders with status; unpriced copies of suborders; quality requirements in suborder texts.

7. Division of works between suppliers establishments (if he has more than one) and outside subcontractors:

lists of names and addresses and scope of each; subcontract status, unpriced copies of subcontracts, quality requirements in subcontract texts; suppliers supervision of subcontracted work; inspection arrangements at each place where work will take place.

8. ITP:

review; hold points.

9. Manufacturing processes and testing:

WPSs and PQRs; welder qualifications; materials; testing, destructive and non destructive; third parties, laboratories; authorities.

10. Quality records:

model inspection and test record forms; manufacturing data book index; data book compilation and approval.

11. Non-conformances/concessions. 12. Final inspection:

release for shipment; non acceptance.

13. Inspection visit arrangements. 14. Action list derived from items 1 to 13 above. The PIM shall include visits to the workshops, stores, drawing office and administrative office as appropriate so as to set the discussions in a practical, relevant context. The inspector shall prepare minutes, preferably during the meeting with all parties signing. For this he could use inspection report form no. REC25009. Alternatively the supplier could prepare the minutes on his own format. Distribution shall be according to the project Document Distribution Schedule (DDS). See 4.14 below.

4.7 Interface with Expediting

Company procurement department expedite suppliers to ensure that during the life of purchase order all necessary steps are taken in a timely manner so that specified materials and equipment as well as their corresponding documentation are completed and delivered to met project schedule requirements. Expediting is carried out according to the procedure cited in ref. 6.2 below. The inspector through his visits to a supplier is able to assist the expediting operation. He shall do this by:

before an inspection visit obtaining from expediting and engineering lists showing status of documents and noting any particular points needing expediting. at the suppliers, reviewing the situation, bringing to the suppliers attention points needing expediting. generally noting and reporting on progress in the suppliers document preparation, procurement, manufacturing, testing and shipment operations. detecting in good time and reporting on a deteriorating situation, real or potential, at the suppliers likely to retard delivery.

This shall be done by means of the inspection reports and by contacts with the expeditor of the procurement department. However in assisting expediting, the inspector shall at all times give priority to his inspection function. In particular he shall only note and pass on information, he shall not actively expedite the supplier himself.

4.8 Suppliers Quality Records

Suppliers quality records are the ensemble of documents established during the course of the purchase order to:

define how specified quality is to be attained, e.g. test procedures; record that it has been attained, e.g. inspection and test records; record concessions given i.e. non conforming materials or situations accepted.

They are built-up progressively over the life of the purchase order in a Manufacturing Data Book (MDB), thus creating a comprehensive record. The MDB is an integral part of the suppliers responsibility and the material and/or equipment

cannot be accepted by Company without it. Successive steps in the creation, processing and acceptance of quality records are as follows:

The supplier submits his procedures and upon review by Company engineering formalised by a stamp and signature on the originals returned to the supplier. The supplier submits models of his inspection and test record forms to the inspector during the PIM and agrees final versions to be used (as far as possible the supplier should use his standard forms). The supplier completes and signs off the record forms as he progresses in his inspection and test program. Each Company inspector has a rubber stamp with his name or sequence number and two boxes marked witnessed and checked (i.e. checked after the event). The inspector shall stamp each document, such as inspection or test record, material certificates, procedures, etc., tick one box or the other as appropriate and sign it upon review. The required contents of the MDB are outlined in the requisition. During the PIM the inspector shall agree the specific detailed index of the MDB. For example it could be decided that certain documents, such as welding procedure specifications could be in a common section, whilst other records could be more appropriately filed by item of equipment. Once the contents are agreed, the supplier shall physically create the basic MDB with separators, chapter headings, index, etc. and file each document progressively as soon as it is approved, so as to create an ongoing up-to-date record of quality status. The complete MDB shall be presented with the material and/or equipment for final inspection. An incomplete MDB is a motive for the inspector to refuse final acceptance.

4.9 Non Conformance Report (NCR)

An anomaly, actual or potential, occurs when material, equipment, a procedure or documentation is not in accordance with specified requirements. Should the anomaly be potential, i.e. noted before the material is fabricated or processed, then Company engineering is informed. Engineering may decide to modify and re-issue a drawing or specification to take account of the anomaly, which then is in effect eliminated. On the other hand engineering, whilst maintaining unchanged the drawing or specification, may accept the anomaly as a Concession. This could apply for example to allow the substitution of materials. The resulting concession form shall be duly filed in the MDB. Should the anomaly only be detected after the event, e.g. a fabrication does not fall within specified dimensional limits, it is either corrected by the supplier as part of his normal procedures, or if it entails special treatment, then it should be classed as a Non Conformance. A supplier with a comprehensive quality system will enter the anomaly into his own non conformance system. In the absence of such an action on the part of the supplier, the inspector may at his own discretion issue a Company Non Conformance Report (NCR), using form no. RB25010, copy attached. It shall be distributed according to the project DDS. See 4.14 below. The inspection department maintains a Non-Conformance Log per project (see form RB25015 and 4.14 below). An NCR shall be closed out by the issue of a Release Note. In a more general manner the Company inspector may obtain from the supplier agreement to deal with a problem using a Quality Control Memorandum (QCM) form no. RB25012 copy attached. Here the agreed action is written on the form and signed by both parties. The QCM is attached to the relevant inspection report and distributed with it. See 4.14 below. 4.10 Final Inspection and Release for Shipment When the whole or an agreed part of the material and/or equipment supplied under a purchase order is complete in manufacture and its documentation i.e. the MDB or the appropriate part thereof, is complete, the supplier calls Company for final inspection. The inspector shall duly inspect the material and/or equipment and MDB. If he considers it complete and meeting

specified requirements, he may accept using an inspection Release Note, as per form no. RB25011, copy attached. If on the other hand he finds the material and/or equipment and/or the MDB unacceptable, he shall formalise his decision by issuing to the supplier a NCR as per form RB25010, copy attached. It shall be distributed in accordance with the project DDS. See 4.14 below. 4.11 Inspection Visits and Reporting Before the visit the inspector shall:

re-familiarise himself with the relevant documents; see expediting and engineering to inform himself of the current situation and to see in what measure he may be able to help these two services; contact the supplier to clarify the purpose of the visit (if it is not already clear).

Inspection visits are broadly speaking of two types:

a well defined inspection or test generally being a witness point or a hold point; a visit to view work in progress or completed i.e. a tour of the shops and other work areas.

In either case the inspector shall carry out the inspection or witness the test in the presence of the suppliers inspection personnel. Before leaving he shall inform the supplier of his conclusions:

either favourable, with no particular comment to make; or, in case of a problem or something needing further action, by writing a QCM (see form RB25012) and asking the supplier to sign it and then action it. in the case of an important problem coming to light, the inspector may ask the supplier to establish a NCR or issue a Company NCR using form RB25010, copy attached.

Any supplier inspection or test records presented during the visit shall be reviewed by the inspector, stamped witnessed or checked and signed. Within 24 hours of his return the inspector shall produce a report on the inspection report form and continuation sheet no.RB25009. It shall be distributed according to the project DDS. See 4.14 below. For a specific inspection or test point inspection report section headings shall be:

references, etc.; identity of material/equipment inspected/tested; reference document i.e. specification, drawing or code to which inspection/test is carried out; definition of inspection/test method; details of inspection/test equipment; criteria of acceptance/results obtained; acceptance/non acceptance decision with definition of corrective action (attach copy of QCM or NCR).

A copy of the suppliers inspection and test record duly stamped and signed may be attached if it is not too bulky. (In any case the inspector shall ensure that the original is filed in the suppliers MDB). For a more general inspection visit the inspection report headings shall be (where relevant):

documentation; materials; cutting and shaping;

welding and heat treatment; machining; assembly; painting; inspection and testing.

4.12 WaiversShould the manager inspection consider that any inspection point invitation from the supplier shall not be follow-up, then, after consultation with the project and engineering, the inspection waiver shall be formalised by a facsimile or letter addressed to the supplier. This applies particularly to previously agreed hold points and final inspection. Inspection release notes will not be issued for materials or equipment not subjected to inspection Distribution shall be to the project DDS, to include the site and engineering.

4.13 Management Reporting

The manager inspection shall through the actions of his inspectors and where necessary by his own direct contacts monitor the performance of each supplier. He shall report per project by means of an inspection status report, see example attached and see 4.14 below. Concerning this report the manager inspection shall:

establish an initial issue as soon as the first purchase orders become available (see 4.3 above); update it regularly.

Its purpose is to inform the project and client and permit them to comment on defined inspection levels and on their execution.

4.14 Inspection Department Records

The inspection department can generate the following documents for each purchase order:

Inspection/expediting assignments; PIM agendas and minutes; inspection reports; QCM; NCR/log; inspection release notes.

Each of these classes of documents shall be numbered consecutively 001, 002, followed by the inspector's initials per purchase order. In the case of the NCR's only, there shall be a log, regularly updated. The "Inspection Status Report" is regularly issued per project (i.e. covering all purchase orders to date on that project). Each revision is dated and has an issue no. All of these documents are distributed according to the project DDS. Samples of all forms are attached to this procedure, see 7 below. Concerning filing in the inspection department all of these documents are filed in the purchase order file. In addition the NCR's shall be the subject of a file per project.

4.15 Company Assessment of Supplier

Company assesses performance of a potential or actual supplier by means of one or more of the following:

Assessment by the project procurement manager when a purchase order is complete. The presence or the absence of a quality system formally certified as conforming to a recognised quality standard.

For further details see Sections 6.1 below for referenced documents.

5. flowchart

6. References
Document Number Title Level

6.1 6.2 6.3

CM-PE-711 BN-EX-001 BN-G-UP201

Supplier Quality System Requirements Expediting Activities Inspection Guide

2 3 5

7. Attachments
1. 2. 3. 4. 5. 6. 7. 8. RB25013 Sample of Inspection/Expediting Assignment form RB25014 Sample of Pre-Inspection Meeting Agenda RB25009 Sample of Inspection Report form (front page and continuation sheet) RB25010 Sample of Non Conformance Report form RB25015 Sample of Supplier Non-Conformance Log RB25012 Sample of Quality Control Memorandum form RB25011 Sample of Inspection Release Note form Sample of Inspection Status Report - Click here for pdf ...