Scenario 1:

A company reached out to me with a question. I thought it was an odd question coming from them. Did the parts they receive require an 8130-3? This was for some hardware, and we first established that the part numbers did not fit the definition of Standard Parts. So, under the circumstances presented and the requirements in their own manual the answer was yes. They then showed me the documentation received with the parts which they had already received and placed into working shop stock. There was no 8130-3 and just a typical C of C which did not mention a TSO or PMA statement, and the parts were not received from a TC/PC (Type Certificate/Production Certificate) holder. Based on this, I also informed them that under these circumstances I could not issue a DAR 8130-3 either, if requested. So, what caused this?

I asked to see their Purchase Order (PO) which at first, they thought irrelevant, but after asking again they provided it. Clearly on their PO standard Terms & Conditions it stated that unless the parts were standard parts, that for New parts trace to the OEM with an 8130-3 or EASA Form 1 is required. The initial root cause:

• The supplier did not fulfill the PO Terms & Conditions.
• This company’s receiving inspectors did not flag the parts for not having met their own requirements as expressed in their Terms & Conditions.

Why?

What prompted me to write this article is that this is not an isolated case.

I like to ask this question in a lot of my classes: Is a Purchase Order (PO) a contract? Yes, it is (business law 101). Are any Terms & Conditions (T&C) in a PO a part of that contract? Yes, they are.

Investigating for the root cause a little deeper, it seems both parties agreed to the transaction and available documentation (which was subsequently shown to be inadequate) during the quoting process. The actual PO was then subsequently issued by the company to the supplier whose T&Cs were not heeded by either party.

We need to talk.

Here are some quick, honest assessments of things occurring in our marketplace regarding this type of occurrence:

• When the supplier is confronted about not meeting the subsequent T&Cs in the PO, the supplier forwards all the emails exchanged whereby during the quoting process the company was shown the available pictures and documentation, and the company inferred their acceptance (by any number of means), so why reject it now?
• The purchasing employee of the company is primarily driven by the availability of the Part Number, price, and condition, and meeting their quotas for work output. Satisfied with this, the purchaser paid scant attention to the documentation provided and trace, and truth be known the purchaser is not after all, a documentation forensics expert. If it gets through their receiving inspectors, it must be good, right? Not to mention the supplier is on their Approved Suppliers List, so they must be good, right? There, I said it, and I meant it.
• The supplier, satisfied with the results of the quoting process, did not read the T&Cs issued in the subsequent PO.
• The company’s receiving inspector stated that those T&Cs are boiler plate, standard text on every PO, and that if there were any real special requirements it would be added as free text just below the PN field for the inspector to look for. Really?

And there you have it.

Scenario 2:

Here’s another example I encountered during an audit. I was reviewing the records associated with an order that had just shipped. The records reviewed included the customer’s PO and all documents sent with the order. From the review it became obvious that a requirement stated in the customer’s PO had not been complied with, resulting in an NCR (Non-Conforming Report). The Corrective Action included remedial training for all their sales employees. The focus of the training was that regardless of the outcome of the quoting process, the subsequently issued PO from the customer has to be carefully reviewed to assure all its requirements are being met.

Scenario 3:

Here's another pesky scenario which contributes to non-compliance with T&Cs. For Scenario 2 a good question to ask is, didn’t the supplier’s Shipping Inspector read the customer’s PO for any special requirements? Some of you do and some of you don’t. I encounter this during my observations of shipping inspections during audits. For those of you that don’t, the answer is always that if there had been any special requirements T&Cs, their ERP system would have it noted for the inspector to check during the shipping process, so the actual customer PO would not have to be reviewed. For many such arrangements those special requirements would be reflected in the Pick Ticket. That’s acceptable of course…but here’s the problem. Someone has to carefully review all T&Cs on the customer PO and manually enter that in the system. This requires discipline which is not consistently evident.

During audits when I’m told that any customer special requirement T&Cs will be noted on the Pick Ticket, I’ll ask to see the customer’s PO anyway, and guess what? Occasionally something was missed, a failure in the process.

Scenario 4:

An unfortunate but common practice which leads to missed T&Cs is that they are not easily accessible. The two common examples:

• The T&Cs are stated to be at their website. You’ll be surprised at how often the link does not work. Also, if the PO with the link actually works, when the PO is copied or printed, the hyperlink feature won’t work and the web address has to be manually entered, a long process. Such posted T&Cs may be technically acceptable, but if we’re honest they seldom get read.
• The customer makes the supplier sign or acknowledge the customer’s standard T&Cs. In some cases, it may be a part of an agreement or contract. Regardless, how do you flow this down into your system?

I know many of you have best practices regarding these scenarios. If you don’t mind sharing those, put them in the comments.

Over ‘n out

Roy ‘Royboy’ Resto

www.Linkedin.com/in/royresto

www.AimSolutionsConsulting.com

Written without the aid of AI content.