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ISO 9001 Clause 8.4 - Purchasing - Part 1
Episode 22 – ISO 9001 Clause 8.4 – Purchasing – Part 1
ISO 9001 Clause 8.4 – Purchasing – Part 1
In part 1 of “Purchasing” on the Quality Hub podcast, hosted by Xavier Francis, Murphy Shaw and Matthew Pilley from Core Business Solutions discuss the intricacies of ISO 9001 Clause 8.4.1. They explain the need for a structured approach to supplier selection, evaluation, and monitoring to ensure consistent quality and compliance with standards.
Well, hello everyone, and thanks for listening to the Quality Hub, and chatting with ISO experts. I’m your host, Xavier Francis, and today I’m here with Murphy Shaw and Matthew Pilley, both consultants here at Core Business Solutions. Glad to have you guys join us again.
Glad to be back. Thank you. Good morning, X.
Good to be here. Awesome. Appreciate you guys being here again.
This week is going to be the first of a three-part series on purchasing in Clause 8.4 of the ISO 9001 standard. But before we begin, let’s hear from Murphy and Matthew as they tell us just a little bit about their experience and journey. Let’s start with Murphy.
I know you’ve been here before and you’ve told us a little bit about yourself, but just a little bit overview.
Yeah, I’ve been in the ISO game for maybe 15, or 16 years now. Just a little bit about my journey. I started in the medical packaging industry where we were ISO 9001 and ISO 13485 for the medical part.
Then I got a little bit more experience on the medical device side of things, working with a CNC shop. We’re also AS9100, which is the aerospace and defense standard. So those are a couple of places where I worked before coming to Core, and I’ve been at Core now for about four years.
Yeah. Yeah. Yeah.
Time flies here, doesn’t it?
It does.
In a good way. We have a lot of fun. Yeah, we do.
We do.
Well, how about you, Matthew? Just similar to Murphy, Murphy and I worked together at our previous company, a little bit more experience with quality than Murph, only because I’m older, unfortunately. So I’ve been working in quality for a little over 20 years now, and a lot of the same background that Murph’s got.
He’s got a little bit more exposure to some different industries than I do, but the background’s mostly the same. And then he pulled me over to the dark side, so to speak, or the light side, depending upon how you look at it.
You walk towards the light. That’s great. And you’ve been here about, what, three and a half years?
No, no, no. A year and a half.
A year and a half?
Yeah. Okay.
Sorry. Well, that’s awesome, Matthew. And let’s get started.
Now, I’m going to read a little bit of Clause 8.4, which deals with purchasing. It’s a little bit more than purchasing, but we’re going to just look at that aspect. The last section of 8.4.1 reads, The organization shall determine and apply criteria for the evaluation, selection, monitoring of performance, and reevaluation of external providers, based on their ability to provide processes or products and services by requirements. The organization shall retain documented information on these activities and any necessary actions arising from the evaluations.
So, Matthew, I’ll start with you. What does all that mean?
I mean, that’s one of the longest sentences I’ve ever read.
Well, what it means is that you know, an organization is required to have a formal approach to the selection of suppliers and the monitoring of their suppliers from a performance standpoint. Okay. The standard expects that you apply controls to ensure that suppliers can consistently provide products and services that meet or exceed the organization’s expectations.
And then, in turn, you know, of course, meet the requirements set forth by their customer.
So sort of flowing down, we need you to make sure you’re doing it right. So it’s right for our customers and what we’re going to do. Yeah, exactly.
So you can’t just search online for somebody and say, hey, you know, they make ball bearings or PCBs or whatever. You have to find somebody and get a little bit more into the details before you’re going to make an order.
Yeah. You just have to take a formal approach to the selection of that supplier and understand who they are, what they do, what they can provide, you know so that you can determine how they can best support you. So the better the supplier management and purchasing processes are controlled, the better the outcome for the organization and its customers, at least that’s the intent. The standard requires that a company is required to maintain records that serve as evidence of its selection and monitoring process. Okay.
So, again, just do not pick the supplier and expect the best, but have a formal way to select suppliers, document evidence of your selections, keep monitoring those suppliers, and things like that. That’s best practice for sure. Now, Murphy, how do we approach this here at CORE?
Well, you know, with our clients, we help them implement this process and even in some cases develop procedures that outline how we plan to select, qualify, and evaluate potential new suppliers as well as existing suppliers. But before we can do that, you know, the first step is creating that list of who are your existing suppliers first. So we have visibility to that and that’s generally called the approved supplier list.
So since most of the companies we work with here at CORE are not new and they already have suppliers, are the ones that you mentioned that were their previous suppliers just sort of grandfathered in?
Yes. Yeah, because you have all that experience over the past 5-10 years using them. So we would consider them grandfathered in at this point.
Okay.
Okay. But then we would also establish that process for brand new suppliers that we may start using in the future because you do need a record of that. And, you know, finally, once you start actively purchasing from suppliers, you also have to monitor their performance over time, you know, to keep an eye on them and make sure they’re meeting your expectations.
Correct.
You have to have a way to check how they’re doing and you’re not just, hey, okay, it’s here, let’s start producing. Right. Maybe you need to make sure that things are, you know, look at validation reports, things like that, check it yourself to make sure before it goes into production.
So it’s not just as easy as picking a supplier and then going, okay, completely understandable. Now, Matthew, why is supplier selection and evaluation so critical? I mean, we talked about it a little bit, but what impact does it have on the company’s overall quality management system?
Yeah, I mean, it goes back to what I mentioned a minute ago, you know, if a company takes a controlled approach to their supplier selection process and regularly monitors their performance, they can better manage internal expectations and requirements and hopefully have, you know, better visibility to supplier performance, not only when conditions are normal, but also when industry circumstances present constraints, right? Kind of the first thing that comes to mind is, you know, COVID and supply chain challenges, right?
And everything’s like everybody was struggling with that, right? So lead times were way out and companies couldn’t get their products and so it was a big challenge that everybody had to overcome, right? Absolutely.
And we’re still kind of dealing with the after-effects of that even this many years later. So it comes down to knowing and understanding your supply base and knowing those suppliers that are top performers versus those that maybe aren’t quite as reliable. And so a formal approach allows a company to ensure that the products and services they need to deliver on their commitments to their clients continue to flow.
Okay. So you’re also looking at it, I guess, from that perspective, you say you have top performers and those that aren’t quite as reliable, might not be a bad idea to have somebody in your back pocket that can do it, but might not do it as well, might have to keep an eye on them a little more, but you’re not only dealing with one supplier of one.
Yeah. I mean, I think anybody that works in the supply chain would tell you anytime you’re in a situation where you have a single source, it’s not really where you want to be, right? In the best-case scenario, you’ve got multiple suppliers that can provide the same products and services so that you’re not in a position where you’re stuck if that one supplier can’t come through.
Because COVID hit that area more than it did another place and now you’re stuck.
For sure. All right. Excellent.
Now, Murphy, what are the key criteria that an organization should consider when selecting suppliers? We talked about it a little bit, but let’s go nuts and bolts here.
Yeah. Well, what we typically do with our customers is sit down and figure out that list of what’s important for us to know about a supplier before we start working with them. For example, is the supplier certified to an ISO 9001 or similar standard?
Not generally a requirement, but if we want it to be, then we put that requirement on. Do they have inspection processes to make sure that they’re only sending good-quality parts to us? Have they ever filed for bankruptcy before?
Yeah, it’s kind of a crazy question, but…
No, it’s kind of important because if they are one year removed from bankruptcy, do you want to use them or not? Maybe you do, but you do it with a little bit of hesitation.
Right. Right. Yeah.
Keep a closer eye on them. Yeah. It’s items like that, that most companies like to know before they start buying from them. And, you know, it’s a matter of documenting that review, okay, and qualification. CORE has a pretty neat electronic form that helps us or our clients document this and covers a lot of different criteria. That’s just a couple off the top of my head.
I mean, we have the supplier evaluation form. Yeah. I mean, that’s a great tool for sure. And there are other ones I think we’ll talk about later and throughout these podcasts. Now, Matthew, how can companies effectively monitor and maintain the performance of their suppliers to ensure ongoing compliance?
Well, probably first and foremost, a regular recurring evaluation of supplier performance is necessary and it’s required by the standard, right? The term re-evaluation is used in the standard. That regular evaluation activity, again, gives the company visibility into supplier performance and hopefully allows an organization to, you know, kind of react or pivot if supplier performance starts to kind of fall off.
If a critical supplier’s performance drops off, you’re likely going to feel it anyway, right? You’re going to be aware of it just based on, you know, daily business operations. Yeah, we can’t get this out because something wasn’t right.
And so you’ll recognize that quickly. But if, you know, supplier performance drifts kind of slowly over years, you might be less likely to pick up on it unless you intentionally say, you know, we’re going to track this and we’re going to react, you know, as results. But if supplier performance drifts kind of slowly over years, you might be, or, you know, months or years, you might be less likely to notice it unless you intentionally say, you know, we’re going to track this and we’re going to react, you know, to the results that we see as necessary.
Secondly, probably setting objectives for an organization’s purchasing process is a great way to monitor performance against a defined expectation.
I can see where slow drift certainly could be hard to track if you’re not paying attention to it, you know, because it’s a slow drift and, you know, well, it went from 80%, you know, 90% to 88% to 85%, you’re not going to notice that unless you’re paying attention to it. And likely the reason they put that in the standard to begin with, is because they’re aware of that.
Now, one last question for you, Murphy, what types of documentation and records are essential for demonstrating compliance and how should these be managed?
Yeah, so I think, you know, through a lot of these questions, we’ve kind of hit on a couple of these along the way, but, you know, if we start from the beginning, we need an approved supplier list. We need a list showing who they are, what they do for us, and when they were approved, right? So that’s number one.
Now, to get suppliers onto that list, we also need that record of review, evaluation, and qualification before we even start using them. And once they’re typically on the approved supplier list, that’s where we start to get into the monitoring and keeping an eye on them. So periodic performance reviews for suppliers, we would need records for that as well.
All right. As you sort of talked about before, we do have tools in the CORE Compliance Platform for our customers to help us manage accompanying suppliers and performance. Isn’t that right?
Yes, absolutely. You know, we have a lot of electronic tools in the core to make this easy for our customers. You know, no more fumbling through stacks of paper and manually tracking this stuff.
Yeah, so the qualification form, evaluation record, approved supplier list, you know, we have all that stuff in core. The good thing about Core is it sends you automatic reminders too. You know, so you don’t have to remember to do certain stuff.
Like back in the day, we’d have to remember to do our performance evaluations every year. The software will tell you to do it. Yep.
So that’s one of the benefits.
Well, gentlemen, this has been a great talk today. Part one of our looking at purchasing. I want to thank you for being here and we will continue this next week.
Awesome. Looking forward to coming back. Good to talk to you.
Always.
Always a pleasure for you as well. Thanks. Talk to you soon.
And we’d like to thank everyone for listening to our podcast today. We hope it’s been informative for you. Now, if you’re looking for more information about core business solutions and how we can help you with ISO certification, cybersecurity, or even customized training, please email us at info@thecoresolution.com.
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Have a great day.