Salt Lake City, Utah 84101
(801) 575-8430
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Purchasing Control
Scope: This document is intended to define the methods for purchasing of deliverable products and general management of the supplier base. Purpose: The purpose of this procedure is to assure that all materials and supplies purchased are in conformity with the requirements of any contract under which those materials and supplies are being purchased. To provide a positive means by which any material requiring receiving inspection, testing, or vendor certification is identified and appropriate action taken to assure compliance. To provide visibility to Management on all purchases, and to obtain required Management approval for expenditures. References: PMP-007 Control of NCR PMF-103 Receipt of Product PMF-102 Contract Review Qform-206 Receiving Inspection Log Qform-202 Supplier Questionnaire 1.0 Procurement Classes All materials and supplies purchased by PMI shall, at the time of Purchase Order or Purchase Request origination, be separated into two classes: Class I - any material that does not fall under the requirements of Class II. Class II - any material that becomes part of a deliverable end item, for which the applicable contract or Government regulations require receiving inspection, testing, or vendor certifications. Class I items may also include other types of material or contracted services, as deemed necessary by Management. Only class II materials shall be governed by the requirements of this procedure. 2.0 Determination of the Requirements During the contract review phase of an order per PMF -102, a review of the drawings and specifications shall take place. This review is to identify the following items for inclusion on the PMI Purchase Order. ü Applicable drawings, specifications, documents and their respective revision numbers.ü Material Quantities.ü Special Processing materials.ü Special processing time limits.ü Customer Specified manufacturer of the raw materials.ü Supplier furnished documents, tests, inspections or certifications .ü Customer or PMI source inspection at the Suppliers premises.ü PMI actions at receiving; inspection, test or identify, count and damage inspection.ü Special tooling inspections; customer requirement; first article or dimensionalü Supplier quality system requirements.ü Supplier special process approvals.3.0 Creation of the Purchase order The PMI purchase order shall be generated using the in house accounting system. Within the notes section of the P.O. the above noted requirements will be defined for the supplier as well as the actions for PMI upon receipt of the product. Deliverable documents such as test, inspection, and certification documents shall be entered as line item requirements on the P.O. to assure prompt delivery.The requested delivery date shall be noted on the purchase order. Long lead items must be considered at the time of placing the P.O. Long lead materials that will not support the Job delivery dates must be identified to the customer. A request to the customer should be made for alternate materials or a deviation to the customer’s delivery date. If source inspection is required either as a customer requirement or a PMI requirement, arrangements must be made with the supplier at the time of order is placed. These arrangements shall instruct the supplier to notify PMI personnel 7 days prior to requested ship date of the order and not to ship product without PMI authorization and/or signature on the supplier shipping documents. 4.0 P.O. Execution After the P.O is completed is should be reviewed by the project manager for accuracy and conformance to program requirements. The completed P.O. will then be forwarded to the selected supplier. Supplier evaluation is discussed below. Is specific instances the supplier will be contacted periodically to discuss progress of the P.O. If the supplier is deemed as a high risk supplier in the “C” or “D” category a surveillance plan may be defined on the P.O. for regular progress evaluations. Upon the delivery of the order to PMI, the order will be processes in accordance with PMP-103 receipt of product. If the product is rejected for conformance issues, the applicable PMI P.O. used to purchase the product will be held from further processing and payment suspended until the NCR report is completed per PMP-007. After the order is received and deemed acceptable the suppliers invoice may be paid. Completed P.O.s may be filed with the completed job file per PMP-002. 5.0 Purchase order revisions All changes to purchase orders that affect WIP at the supplier shall be made to the supplier in writing. The specific nature of the changes will be noted on an amended P.O. form under the same P.O. number. The revision of the P.O. shall be controlled by the date of issue of the revision. A request should be made to the supplier to identify any schedule or cost delay as a result of the P.O. change. 6.0 Supplier evaluation and re-evaluation Suppliers shall complete Q form -202 Supplier questionnaire and return to Prime Machine Manufacturing Inc for consideration as a supplier. This document will be reviewed by PMI personnel to determine if the supplier has the capabilities to provide products to PMI. Based upon review of this QFORM-202 and/or due to the complexity of products that the supplier will provide and on site visit may be required. On sited visits shall be a rare occurrence as most products purchased are raw materials from well known sources. Should an on site visit occur a trip report will be generated outlining the activities. This trip report shall be kept on file with the suppliers Qform-202 Questionnaire. Suppliers performance shall be rated at the time of delivery in accordance with Qform-206 receiving inspection log as defined in PMF-104 Receipt of Product. Suppliers shall be scored based upon their product conformance, delivery, documents and identification. Based upon the scoring methodology on Qform-206, Receiving log, a supplier shall receive and A,B,C or D score for each shipment. 6.1 Suppliers re-evaluation Suppliers re-evaluation shall consist of annual review of their scores for all receipts in that period. An average value will be determined based upon all shipments using the following formula. All “A” Scores will be valued at 4 pts. “B” Scores =3 pts, “C” scores = 2 pts and “D” scores= 1pt. All values for the period will be summed and divided by the number of shipments received. Supplier rating Formula: Sum of all scored shipments/ # of shipments= Annual score The Annual score will then be equated back to the A-D scale for simplicity using the following guideline: Annual Scores of 3-4pts=”A” rating. ü Scores of 2-3pts=”B” rating.ü Scores of 1-2pts =”C” rating.ü Scores below 1pt =”D” rating.6.2 Periodic re-evaluation ü Suppliers with A and B ratings will be considered suppliers in good standing with the preference given to the “A” supplier where possible.ü Suppliers with a “C” rating are not considered in good standing and should not be used unless no other viable supplier exists and/or the purchase is customer directed and/or the suppliers pricing will support the additional cost of monitoring. When using a supplier with a “C” rating source inspection and/or receiving inspection should be required in the purchase order to the supplier. When using a “C rated supplier a corrective action plan should be underway with the supplier to correct the deficiencies noted in the rating process.ü Suppliers with a “D” rating should not be utilized to supply product to PMI unless directed as the only supplier of a specific item by the customers specification and or direction. When compelled to use “D” rated supplier a corrective action plan must be underway with the supplier to correct the deficiencies noted in the rating process and source inspection is mandatory.6.3 Supplier Corrective action Corrective action may be requested in the following cases:
In all cases the formal document to request corrective action should be Qform-201 Non Conforming Material report. Qform-201 is to be completed and logged per PMP-007 Control of Non Conforming Material. In all cases where a part is rejected for conformance issues, the applicable PMI P.O. used to purchase the product will be held from further processing and payment suspended until the NCR report is completed per PMP-007. Written corrective action from the supplier should be entered on to the NCR Qform-201 and returned to PMI for review. Written statements of corrective action or corrective action plans submitted on supplier letter head are also acceptable. After review and acceptance by PMI personnel the P.O. may continue to be processed and suppliers invoice may be processed. In the case of using a “C” or “D” rated supplier a corrective action plan from the supplier should be received and reviewed by PMI personnel before any other orders are placed. All records of supplier actions and corrective actions should be maintained with supplier questionnaire Qform-202 in accordance with PMP-002 Control of records. 7.0 P.O. Completion The purchase order is considered completed when the following items have been verified: ü The proper quantity of items have been received.ü All items conform to stated requirements.ü All applicable documents are received.ü All NCR are complete and closed.ü Related invoice has been received.The Completed P.O. may be filed in the company accounting files.
--- End PMI PMP-004 --- Copyright 1997-2009 Prime Machine, Inc.
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