Volume 6 · Issue 7 · July 2001
Approved Second-Party Audits of Subcontractors to Be Accepted
IASG Amends Subcontractor Registration Interpretation
It turns out that ISO 9001/2 registration is not the only
option for some subcontractors to the Big Three.
On June 20, 2001, THE OUTLOOK received an amended
version of the IASG Sanctioned QS-9000 Interpretationsinitially
issued in early June 2001 (and provided as a supplement to
the June 2001 issue)that took effect July 1, 2001. The
amendment exempts subcontractors from ISO 9001/2 registration
in some situations if they are subject to a second-party audit
by an original equipment manufacturer (OEM) or by another
party that has been approved by an OEM. It is not certain
how many subcontractors will be exempted by this change.
The amendment consists of an additional sentence added to
Interpretation C9, which relates to 22.214.171.124, Evaluation of
SubcontractorsSubcontractor Development. The full text
of the revised C9 is reprinted below. A revised version of
the Sanctioned Interpretations supplement that was provided
with the June 2001 issue is available for downloading from
its official location through links with the web sites of
the Automotive Industry Action Group
and the American Society for Quality.
The amended Interpretations can also be requested in electronic
format by e-mail or in hard copy by contacting INFORM.
The expectation is that most subcontractors to the Big Three
(Tier 2 suppliers and those further down the supply chain)
will be required to obtain registration to ISO 9001/2 as previously
reported (see "Big Three to Require ISO 9001/2 Registration
of Subcontractors", THE OUTLOOK, June 2001).
Factors to Consider With the Amendment
While the additional sentence appears to be a simple exemption
clause for a select group of Tier 2 suppliersthose subject
to second-party audits because of the criticality of their
processes or previous problems with quality systems and nonconforming
productseveral factors affect how the amendment will
work within the automotive supply chain. If your organization
is a Tier 1 supplier that uses subcontractors or is a subcontractor,
you should consider the following factors:
- The OEMs may not recognize second-party audits conducted
by another OEM or by a Tier 1 supplier approved by another
OEM. THE OUTLOOK submitted questions to the Big Threes
representatives to the DaimlerChrysler/Ford Motor Company/General
Motors Supplier Quality Requirements Task Force (SQRTF)
regarding how the OEMs will consider second-party audits
as demonstrating subcontractor compliance with 126.96.36.199 of
QS-9000. Russ Hopkins, Supplier Technical Assistance at
Ford, responded to these questionsbut only on behalf
of Fordwhile Hank Gryn of DaimlerChrysler Corporation,
provided feedback on this report. "At this point, Ford
is planning to authorize Tier 1 suppliers to conduct subcontractor
assessments for the purposes of the C9 interpretation,"
responded Hopkins. DaimlerChrysler and GM have not yet announced
how they will handle second-party audits in relation to
C9, but the amendment is applicable to all subcontractors
of QS-9000-registered companies, whether Tier 1 or not.
- The second-party audits will only be considered adequate
for subcontractor compliance if they are conducted on a
regular basis. That is, a subcontractor must undergo regularly
scheduled second-party surveillance audits (e.g., every
6 months, at least once a year when there are no nonconformances).
"Since Tier 1 suppliers are responsible for subcontractors
per QS-9000, any OEM audits of subcontractors are conducted
on an as-needed basis," explained Hopkins. "While
Ford would perform the on-site assessment as needed, the
Tier 1 would be expected to monitor subcontractors on a
regular basis, for continual improvement. Ford will monitor
the Tier 1s management of the subcontractors and will
determine the effectiveness of that management." It
remains the registrars responsibility to determine
the effectiveness of the suppliers implementation
of Interpretation C9. Indeed, Ford is reinforcing QS-9000s
expectations that subcontractors will be compliant with
QS-9000 in Q1-2001, a revised edition of Fords Q1
program that is expected to be published in August 2001.
Q1-2001 will require Tier 1 suppliers to ensure that subcontractors
(sub-suppliers) have QS-9000- or ISO/TS 16949-compliant
quality systems and to conduct annual on-site compliance
assessments at the facilities of those subcontractors identified
as having a high impact to quality.
- Records of second-party audits are more challenging to
disseminate than ISO 9001/2 registration certificates. Subcontractors
that have demonstrated compliance through second-party audits
will not be recorded in a centralized database, such as
the QS-9000 registration database maintained by the American
Society for Quality (ASQ), and there will only be audit
reports to serve as proof of their compliance. The fact
that OEMs may not recognize second-party audits done by
another OEM or approved by another OEM may be linked to
the difficulty of proving compliance. "With Ford, subcontractor
performance is expected to be a regular part of the Tier
1 quality monitoring program, showing proof of monitoring,"
acknowledged Hopkins, who also emphasized, "This tracking
is internal to the Tier 1 and Ford, and ASQ is not expected
to be utilized."
- In multisite situations, a subcontractor will need to
show compliance on a site-by-site basis. THE OUTLOOK
asked the following question on this topic: If a multisite
subcontractor receives a second-party audit of one or more
facilities but not all facilities, will only the facilities
not covered by the second-party audit need to obtain ISO
9001/2 registration? Hopkins responded on behalf of Ford
by specifying how Q1-2000 will treat the supply chain. "As
Q1-2001 is site-based, each Tier 1 and subcontractor site
will require site assessments; there is no transfer or reciprocity
between sites. However, there is nothing to stop a multisite
subcontractor company from having a corporate third-party
registration to ISO 9001/2. This may not relieve the obligation
of the Tier 1 to perform and track site assessments at each
subcontractor site per Q1-2001. Each site will be monitored
according to its scope (e.g., design and manufacturing,
manufacturing without design or inspection and test without
manufacturing or design)."
Another issue is whether a subcontractor can request a second-party
audit. There are no known arrangements at present whereby
a subcontractor could contact an OEM to request such an auditnormally
an OEM conducts a second-party audit of a subcontractor when
a significant nonconformance has occurred or there is a pattern
of nonconformances that merits an on-site assessment.
"Ford plans to conduct subcontractor site assessments
using Ford personnel only on an as-needed basis," affirmed
Hopkins. "Full subcontractor coverage is not anticipated.
The situation remains that the Tier 1 suppliers are responsible
for conducting subcontractor development, although they may
use the site assessment protocol developed by Ford, per Q1-2001."
The issue then is whether a subcontractor supplies to a Tier
1 that is approved by an OEM to conduct second-party audits
and is willing to conduct on-site assessments of the subcontractor
on a regular basis. If your organization is a subcontractor
that supplies to a Tier 1 that is approved to conduct second-party
audits, contact the Tier 1 to find out about the possibility
of being covered by its audit program.
Unless an alternative, acceptable second-party audit process
is developed, those subcontractors that supply to Tier 1s
of more than one OEM or to a number of Tier 1s have until
January 2003 to obtain ISO 9001/2 registration.
One question is: Will Q1-2001 and Interpretation C9 increase
the growth rate of QS-9000 and ISO/TS 16949 and ISO 9001/2
registrations within the automotive sector at a time when
the sector is believed to be "saturated"? THE
OUTLOOK will provide additional reports on the revisions
to ISO/TS 16949:2002 and the arrival of Q1-2001 in the future.
The Amended Interpretation
Reprinted here is the full text of Interpretation C9, which
was one of three changes contained in the latest Sanctioned
QS-9000 Interpretations and was then modified by the addition
of the sentence underlined below after its initial release
in early June 2001.
C9 Supplier Development (188.8.131.52) (7/1/01)
"Goal of subcontractor compliance" requires subcontractors
to achieve compliance within a defined period of time not
to exceed 18 months from the effective date of this sanctioned
interpretation. Minimum subcontractor compliance shall be
certification by an accredited certification body to a current
version of the ISO 9000 Quality Management Series of Standards,
excluding ISO 9003, plus any requirements specified by the
customer. Assessment by an OEM or an OEM approved second
party will be recognized as meeting subcontractor compliance
requirements to 184.108.40.206.
NOTE: The second note under 220.127.116.11 referencing "prioritization"
does not negate this requirement.
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