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BN-IN-005 Specification for SupplierInspecitionTable of Contents

1. Purpose2. General3. Responsibilities4. Procedure5. Flowchart6. References7. Attachments

1. Purpose

This procedure applies to Company inspection of purchased materials, components and equipment at source, i.e. at thesuppliers plant or at those of his sub suppliers, during the manufacturing process. The procedure describes howCompany supplier inspection is:

defined executed reported

2. General

Suppliers have an important contribution to make to attaining a projects quality objectives. Companys interface withthe suppliers is to a large extent entrusted to the inspection department within the overall mission of the procurementdepartment. This procedure is intended to formalise the inspection department actions.

3. Responsibilities

Company engineering department defines project requirements, including inspection and tests to be carried out, in thevarious documents forming part of the purchase order.

Company procurement department is responsible for placing, administrating, inspecting, expediting and eventuallyclosing out the purchase order.

The supplier is responsible for the execution of the purchase order, in particular for presenting the material and/orequipment to specified requirements, with the corresponding documentation.

The Company manager inspection is responsible for:

proposing the inspection level according to the nature and content of the purchase order and the assessedcapabilities of the supplier for project approval;

Consulting with or seeking the assistance of others e.g. engineering department, client or Authorities, inaccordance with project procedures as may be necessary;

designating an inspector to carryout inspection at the suppliers in accordance with the approved Inspectionand Test Plan (ITP), and monitoring the inspectors actions;

reviewing the performance of the supplier from a quality viewpoint (as reported by the inspector) and taking orinitiating corrective action should the need arise;

reporting to project procurement manager and project management concerning inspection at suppliers.The Company inspector, or the inspector seconded from another organisation, shall carryout the inspection programmeas defined by the Company manager inspection and report his findings to the latter in the prescribed manner.

4. Procedure
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4.1 Definition of Purchase Order Technical Requirements

Requirements are defined by the Company engineering department in the following documents attached to and formingan integral part of the purchase order:

the requirements the specifications the drawings

In addition requirements may be further defined in the following, cited in the requisitions, specifications or drawings:

national or international standards; standards or codes of practice of trade associations or comparable organisations; authorities regulations of the country in which the material and/or equipment will be manufactured and the

country in which they will be installed and utilised.

Technical requirements defined include:

materials to be used; performance of finished materials and/or equipment; inspection and test methods to be used; lists of documents required from the supplier to define his inspection and test procedures and to record

results.

4.2 Suppliers Quality System

Where possible bidders, i.e. potential suppliers, are selected from companies having in place a formal quality systemcorresponding to the ISO 9001, ISO 9002 or ISO 9003 standard or to a standard considered to be equivalent.

However, for commercial or technical reasons use may have to be made of suppliers who have not as yet a formalquality system. In this case they will be assessed to ensure that their internal procedures encompass at least the majorelements of the appropriate quality standard.

Thus a selected supplier will have its own inspection department whose mission is:

to define procedures, procure inspection and test facilities and employ qualified staff to give assurance thatthe expected quality can be obtained and maintained for his product(s);

to adapt the suppliers inspection system for each purchase order to ensure that specified requirements areattained.

The Requisition requires that the supplier produces documents defining how in fact the purchase order quality

requirements will be met. These include typically:

weld procedure specifications; procedure qualification records; non destruction examination procedures; test procedures.

These documents are to be reviewed and approved by Company engineering department.

The suppliers ITP lists and summarises in one single document all the inspection and test requirements extracted fromthe approved requisitions, specifications, drawings, standards, codes and regulations. Thus the ITP is not a primarydocument for approval, but it is nevertheless checked and stamped (if applicable) by the inspector to see that it reflects

the sum of approved inspection and test requirements expressed elsewhere.

It should be noted that for supply and erect purchase orders and subcontracts, the inspector must only review and


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presence at hold points, hold points being on key points only general inspection visits, arranged as far as possible to coincide with hold points final inspection.

IPC = Close Progressive Inspection Comprising:

pre-inspection meeting presence at hold points, hold points being more dense that with IP regular, frequent inspection visits final inspection.

R =Resident inspector, provided:

when required by contractual obligations or when requested by the project manager or when deemed necessary by the manager inspection due to workload in any one location or to ensure

specified quality is attained.

The manager inspection or his substitute shall select an inspector either from within his own department or assign thework to another Company entity or to an approved outside inspection agency. In the latter case the manager inspectionshall exercise full control over its activities.

The purchase order package shall be filed in the inspection department office and thus be available to the inspector.When another Company entity or an outside organisation is used, then a copy of the package shall be transmitted to italong with the formal assignment on form RB25013, copy attached.

Designation by the manager inspection or his substitute of a standard inspection level only defines an outlineprogramme. The inspector shall review the situation during the pre-inspection meeting, or as soon as possiblethereafter, so as to be able to convert the chosen inspection level into a more precise programme with dates, or at leastapproximate dates. This can often be done in a convenient fashion by marking up the suppliers barchart.

In defining hold points, they should be kept to a practical and necessary minimum. An excess of hold points may bedifficult for the inspector to honour and devalues the essential hold points.

During the course of the inspection operation, the level of inspection shall be kept under review in the light of the easeor the difficulty that the supplier demonstrates in meeting his obligations. This enables the manager inspection or hissubstitute in collaboration with the inspector to increase (or decrease) the level of inspection.

4.4 Sub Suppliers

It is rare that a supplier produces everything himself. Almost always some work is given to sub-suppliers. Theinvolvement of the latter may be limited to the supply of raw materials or semi-finished products or may extend to themanufacture and sometimes the design of major components or ensembles. At the limit, a supplier may manufacture

nothing himself and sublet all work to sub-suppliers. Alternatively a supplier may distribute the work over a number ofdifferent establishments within his own organisation. They may be widely dispersed geographically and may work todifferent internal procedures. This is particularly true of major packaged units.

The supplier is required to submit for the approval of the project procurement manager a list of the principal sub-suppliers he proposes to use.

Following this approval, the subsequent concerns of Company are that:

the supplier may not exercise sufficient control over the sub-suppliers or over his own establishments toensure purchase order requirements, in particular quality requirements, are met;

the precise requirements defined in the purchase order may not have been transmitted onwards to sub-suppliers or to all the suppliers own establishments involved.


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The inspector shall ensure that Companys concerns are met by:

if the information is not already available, obtaining during the pre-inspection meeting a list of sub-supplierstheir address and references with details of their scope of work for approval by the project procurementmanager;

finding out from the supplier which member of his staff is responsible for overseeing the quality of sub-let workand how that responsibility is exercised, e.g. by regular visits, etc.; reviewing the suppliers (unpriced) suborders to ensure that necessary quality requirements have been

transmitted onwards, and that engaged sub-suppliers are those named on the Company approved list and/ormentioned in the requisition;

ensuring that sub-let work is covered in the suppliers ITP or alternately ensuring that the supplier obtains ITPsat least from his major sub-suppliers;

arranging with the supplier, pre-inspection meetings with and inspection visits to the major sub-suppliers.However it must be understood that it is the supplier who is responsible for the quality of work of his sub-suppliers. Theinspector shall never give an instruction directly to a sub-supplier and must be accompanied by a representative of thesupplier when visiting a sub-supplier.

4.5 Information Basis for Inspection

It is an obligation of the inspector to familiarise himself with the purchase order package as well as any other relevantdrawings, specifications, standards and codes mentioned therein but not present in the package. It must be noted thatspecific client requirements must be reflected in the Company requisitions, specifications etc. and also appear in thesupplier documentation for review by Company engineering department.

All inspection and tests must be carried out and the results assessed with respect to a contractual document and theCompany Inspection Guide as a reference document (ref. 6.3).

The inspector would not normally be able to carry a complete set with him, instead he should find all necessarydocuments at the suppliers. However, it is desirable that he has already in hand:

key documents such as for example the requisition and the general arrangement drawing; from supplier print control department an up-to-date list of supplier documents showing Company approval

status.

4.6 Pre-Inspection Meeting

The inspector shall contact the supplier to arrange a Pre-Inspection Meeting (PIM) at the suppliers, normally at theestablishment where most of the work takes place. Further, PIMs may also be required at the major sub-suppliers (see4.4 above).

The manager inspection or his substitute shall liaise with the inspector and all other potential PIM attendees such as:

Company specialist engineer; authority representative; client.

The PIM is concentrated on inspection and associated matters to which the necessary time must be consecrated. Forthis reason commercial, contractual or pure engineering questions should be the subject of meetings separate from thePIM.

Whilst the PIM should take place as early as possible, if it is to be productive:

the purchase order shall have been formally placed; the principal supplier drawings, specifications and procedures shall have been submitted to Company

engineering department and be returned at least in Code 2 i.e. reviewed with comments as noted;

the supplier shall have decided how his work will be divided between his own establishments and his sub-


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suppliers;

the supplier shall have produced his ITP.The following topics shall in so far as each is applicable be discussed at a PIM:

1. Suppliers organisation:

organisation chart; who is in overall charge of purchase order? who is in charge of inspection? address/phone/fax/transmission & communications.

2. Purchase order review:

reception by supplier and his acknowledgement; scope of supply as per requisition;

suppliers understanding of specified requirements; overall schedule/bar charts; delivery dates.

3. Status of Company applicable documents as per requisition.

4. Availability at the supplier of relevant standards and codes as referred to the requisition and specifications.

5. Status of Supplier Furnished Documents as per requisition, further detailed by suppliers own List of Drawings andOther Documents.

6. Materials status:

available at suppliers; bought out items, list of suborders with status; unpriced copies of suborders; quality requirements in suborder texts.

7. Division of works between suppliers establishments (if he has more than one) and outside subcontractors:

lists of names and addresses and scope of each; subcontract status, unpriced copies of subcontracts, quality requirements in subcontract texts; suppliers supervision of subcontracted work; inspection arrangements at each place where work will take

place.

8. ITP:

review; hold points.

9. Manufacturing processes and testing:

WPSs and PQRs; welder qualifications; materials; testing, destructive and non destructive;

third parties, laboratories; authorities.


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10. Quality records:

model inspection and test record forms; manufacturing data book index;

data book compilation and approval.

11. Non-conformances/concessions.

12. Final inspection:

release for shipment; non acceptance.

13. Inspection visit arrangements.

14. Action list derived from items 1 to 13 above.

The PIM shall include visits to the workshops, stores, drawing office and administrative office as appropriate so as to setthe discussions in a practical, relevant context.

The inspector shall prepare minutes, preferably during the meeting with all parties signing. For this he could useinspection report form no. REC25009. Alternatively the supplier could prepare the minutes on his own format.Distribution shall be according to the project Document Distribution Schedule (DDS). See 4.14 below.

4.7 Interface with Expediting

Company procurement department expedite suppliers to ensure that during the life of purchase order all necessarysteps are taken in a timely manner so that specified materials and equipment as well as their correspondingdocumentation are completed and delivered to met project schedule requirements. Expediting is carried out accordingto the procedure cited in ref. 6.2 below.

The inspector through his visits to a supplier is able to assist the expediting operation. He shall do this by:

before an inspection visit obtaining from expediting and engineering lists showing status of documents andnoting any particular points needing expediting.

at the suppliers, reviewing the situation, bringing to the suppliers attention points needing expediting. generally noting and reporting on progress in the suppliers document preparation, procurement,

manufacturing, testing and shipment operations.

detecting in good time and reporting on a deteriorating situation, real or potential, at the suppliers likely toretard delivery.

This shall be done by means of the inspection reports and by contacts with the expeditor of the procurementdepartment. However in assisting expediting, the inspector shall at all times give priority to his inspection function. Inparticular he shall only note and pass on information, he shall not actively expedite the supplier himself.

4.8 Suppliers Quality Records

Suppliers quality records are the ensemble of documents established during the course of the purchase order to:

define how specified quality is to be attained, e.g. test procedures; record that it has been attained, e.g. inspection and test records; record concessions given i.e. non conforming materials or situations accepted.

They are built-up progressively over the life of the purchase order in a Manufacturing Data Book (MDB), thus creatinga comprehensive record. The MDB is an integral part of the suppliers responsibility and the material and/or equipment


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cannot be accepted by Company without it.

Successive steps in the creation, processing and acceptance of quality records are as follows:

The supplier submits his procedures and upon review by Company engineering formalised by a stamp andsignature on the originals returned to the supplier.

The supplier submits models of his inspection and test record forms to the inspector during the PIM andagrees final versions to be used (as far as possible the supplier should use his standard forms).

The supplier completes and signs off the record forms as he progresses in his inspection and test program. Each Company inspector has a rubber stamp with his name or sequence number and two boxes marked

witnessed and checked (i.e. checked after the event). The inspector shall stamp each document, such asinspection or test record, material certificates, procedures, etc., tick one box or the other as appropriate andsign it upon review.

The required contents of the MDB are outlined in the requisition. During the PIM the inspector shall agree thespecific detailed index of the MDB. For example it could be decided that certain documents, such as weldingprocedure specifications could be in a common section, whilst other records could be more appropriately filedby item of equipment.

Once the contents are agreed, the supplier shall physically create the basic MDB with separators, chapterheadings, index, etc. and file each document progressively as soon as it is approved, so as to create anongoing up-to-date record of quality status.

The complete MDB shall be presented with the material and/or equipment for final inspection. An incompleteMDB is a motive for the inspector to refuse final acceptance.

4.9 Non Conformance Report (NCR)

An anomaly, actual or potential, occurs when material, equipment, a procedure or documentation is not in accordancewith specified requirements.

Should the anomaly be potential, i.e. noted before the material is fabricated or processed, then Company engineering isinformed. Engineering may decide to modify and re-issue a drawing or specification to take account of the anomaly,which then is in effect eliminated.

On the other hand engineering, whilst maintaining unchanged the drawing or specification, may accept the anomaly asa Concession. This could apply for example to allow the substitution of materials. The resulting concession form shallbe duly filed in the MDB.

Should the anomaly only be detected after the event, e.g. a fabrication does not fall within specified dimensional limits, itis either corrected by the supplier as part of his normal procedures, or if it entails special treatment, then it should beclassed as a Non Conformance. A supplier with a comprehensive quality system will enter the anomaly into his ownnon conformance system.

In the absence of such an action on the part of the supplier, the inspector may at his own discretion issue a CompanyNon Conformance Report (NCR), using form no. RB25010, copy attached. It shall be distributed according to theproject DDS. See 4.14 below. The inspection department maintains a Non-Conformance Log per project (see formRB25015 and 4.14 below).

An NCR shall be closed out by the issue of a Release Note.

In a more general manner the Company inspector may obtain from the supplier agreement to deal with a problem usinga Quality Control Memorandum (QCM) form no. RB25012 copy attached. Here the agreed action is written on the formand signed by both parties. The QCM is attached to the relevant inspection report and distributed with it. See 4.14below.

4.10 Final Inspection and Release for Shipment

When the whole or an agreed part of the material and/or equipment supplied under a purchase order is complete inmanufacture and its documentation i.e. the MDB or the appropriate part thereof, is complete, the supplier callsCompany for final inspection.

The inspector shall duly inspect the material and/or equipment and MDB. If he considers it complete and meeting


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specified requirements, he may accept using an inspection Release Note, as per form no. RB25011, copy attached.

If on the other hand he finds the material and/or equipment and/or the MDB unacceptable, he shall formalise hisdecision by issuing to the supplier a NCR as per form RB25010, copy attached. It shall be distributed in accordancewith the project DDS. See 4.14 below.

4.11Inspection Visits and Reporting

Before the visit the inspector shall:

re-familiarise himself with the relevant documents; see expediting and engineering to inform himself of the current situation and to see in what measure he may

be able to help these two services;

contact the supplier to clarify the purpose of the visit (if it is not already clear).Inspection visits are broadly speaking of two types:

a well defined inspection or test generally being a witness point or a hold point; a visit to view work in progress or completed i.e. a tour of the shops and other work areas.

In either case the inspector shall carry out the inspection or witness the test in the presence of the suppliers inspectionpersonnel. Before leaving he shall inform the supplier of his conclusions:

either favourable, with no particular comment to make; or, in case of a problem or something needing further action, by writing a QCM (see form RB25012) and

asking the supplier to sign it and then action it.

in the case of an important problem coming to light, the inspector may ask the supplier to establish a NCR orissue a Company NCR using form RB25010, copy attached.

Any supplier inspection or test records presented during the visit shall be reviewed by the inspector, stamped

witnessed or checked and signed.

Within 24 hours of his return the inspector shall produce a report on the inspection report form and continuation sheetno.RB25009. It shall be distributed according to the project DDS. See 4.14 below.

For a specific inspection or test point inspection report section headings shall be:

references, etc.; identity of material/equipment inspected/tested; reference document i.e. specification, drawing or code to which inspection/test is carried out; definition of inspection/test method; details of inspection/test equipment; criteria of acceptance/results obtained; acceptance/non acceptance decision with definition of corrective action (attach copy of QCM or NCR).

A copy of the suppliers inspection and test record duly stamped and signed may be attached if it is not too bulky.

(In any case the inspector shall ensure that the original is filed in the suppliers MDB).

For a more general inspection visit the inspection report headings shall be (where relevant):

documentation; materials; cutting and shaping;


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welding and heat treatment; machining; assembly; painting; inspection and testing.

4.12WaiversShould the manager inspection consider that any inspection point invitation from the supplier shall not befollow-up, then, after consultation with the project and engineering, the inspection waiver shall be formalised by afacsimile or letter addressed to the supplier. This applies particularly to previously agreed hold points and finalinspection. Inspection release notes will not be issued for materials or equipment not subjected to inspection

Distribution shall be to the project DDS, to include the site and engineering.

4.13 Management Reporting

The manager inspection shall through the actions of his inspectors and where necessary by his own direct contactsmonitor the performance of each supplier. He shall report per project by means of an inspection status report, seeexample attached and see 4.14 below. Concerning this report the manager inspection shall:

establish an initial issue as soon as the first purchase orders become available (see 4.3 above); update it regularly.

Its purpose is to inform the project and client and permit them to comment on defined inspection levels and on theirexecution.

4.14 Inspection Department Records

The inspection department can generate the following documents for each purchase order:

Inspection/expediting assignments;

PIM agendas and minutes; inspection reports; QCM; NCR/log; inspection release notes.

Each of these classes of documents shall be numbered consecutively 001, 002, followed by the inspector's initials perpurchase order. In the case of the NCR's only, there shall be a log, regularly updated.

The "Inspection Status Report" is regularly issued per project (i.e. covering all purchase orders to date on that project).Each revision is dated and has an issue no.

All of these documents are distributed according to the project DDS.

Samples of all forms are attached to this procedure, see 7 below. Concerning filing in the inspection department all ofthese documents are filed in the purchase order file. In addition the NCR's shall be the subject of a file per project.

4.15 Company Assessment of Supplier

Company assesses performance of a potential or actual supplier by means of one or more of the following:

Assessment by the project procurement manager when a purchase order is complete. The presence or the absence of a quality system formally certified as conforming to a recognised quality

standard.


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For further details see Sections 6.1 below for referenced documents.

5. flowchart


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6. References

Document Number Title Level


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6.1 CM-PE-711 Supplier Quality System Requirements 26.2 BN-EX-001 Expediting Activities 36.3 BN-G-UP201 Inspection Guide 5

7. Attachments

1. RB25013 Sample of Inspection/Expediting Assignment form2. RB25014 Sample of Pre-Inspection Meeting Agenda3. RB25009 Sample of Inspection Report form (front page and continuation sheet)4. RB25010 Sample of Non Conformance Report form5. RB25015 Sample of Supplier Non-Conformance Log6. RB25012 Sample of Quality Control Memorandum form7. RB25011 Sample of Inspection Release Note form8. Sample of Inspection Status Report -Click here for pdf ...
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