That day, when the CPK report came out, the whole room was silent for three seconds
I still remember years ago, our factory was in a frenzy to rush the mass production of a new product. At that time, a crucial sensor was a material designated by the customer from a specific supplier, using a Consignment model. This meant the materials were in our factory's warehouse, but ownership still belonged to the customer. What was the result? The yield of the first batch was directly dismal, with the CPK reported at only 1.08, and DPMO soaring to 6210! In the meeting room, everyone's faces were as gloomy as the weather outside, and the customer representative's face was even darker than the bottom of a pot. Everyone was asking: with quality this terrible, who exactly should be responsible?
Where the Problem Lies
To put it simply, Consignment means the customer places materials at your facility; you can use them anytime, and you're billed only upon usage. Sounds convenient, right? But behind this convenience, the most easily overlooked aspect is the attribution of quality responsibility. Because the materials belong to the customer, our factory's Incoming Quality Control (IQC) often turns a blind eye, thinking, "I didn't buy it anyway; if it's bad, the customer is responsible." But think about it: if these materials cause your production line to halt, significantly reduce your yield, or even lead to customer complaints, even if the ultimate responsibility lies with the customer, who will compensate you for the lost man-hours, capacity, and reputation? So, the key point is: whether it's consignment material or not, as long as it enters your factory and occupies your production line, you have a responsibility to ensure its quality.
How to Handle It in Practice
Frankly, the division of quality responsibilities for consignment materials is usually documented in the Quality Agreement signed by both parties. But don't assume that everything is fine once it's signed; many nuances are hidden in the details.
- IQC Must Be Done: Even if it's just sampling inspection, data must be recorded. For example, we later agreed with the customer that consignment materials must undergo at least AQL 0.65 sampling inspection, and the Cpk for key parameters must be greater than 1.33. If any abnormality is found, immediately notify the customer and request an improvement plan from the supplier.
- Clear Definition of Responsibility Points: The agreement should specify who is responsible for what at each stage, from supplier shipment, transportation, arrival, warehousing, all the way to usage on the machine. For instance, damage during transportation is the customer's responsibility, but if, after entering the factory, the materials become damp due to our improper warehouse management, then that is our responsibility.
- Defective Product Handling Process: This point is very important. What if consignment materials are deemed defective on your production line? Should they be returned directly to the supplier, or does the customer need to verify first? All these points must be negotiated in advance. We were stuck then because defective products had to wait for customer confirmation before disposal, resulting in a pile of defective items on the production line, affecting workflow. Later, it was changed so that as long as we internally confirm it's defective, we isolate it and simultaneously notify the customer. If the customer does not respond within 24 hours, we have the right to handle it ourselves to ensure smooth production line operation.
The Most Common Pitfalls
The most common pitfall I've encountered is "misaligned expectations" regarding the quality standards for consignment materials. The customer might believe that since it's their designated supplier, quality should be fine, allowing for relaxed standards; however, our factory side, because it's not material we purchased, might also be less proactive in tracking its quality performance. The result is that neither side manages it, only to argue when problems arise.
Another pitfall is "information opacity." Quality reports from the supplier to the customer usually don't directly reach our factory's engineers. We can only get secondhand information from the customer, leading to delays and even distortion in information transfer. Therefore, we later directly requested the customer that quality reports for consignment materials must be simultaneously sent to our factory's relevant engineers, ensuring we can grasp the situation immediately.
One Thing You Can Do Today
Go back and review the Consignment Material Quality Agreement you have. If you don't have one, ask your purchasing or customer representative for a copy today!