The clause deals with the Contract/orders placed by the customer on the organizations. The purpose of the requirements is to ensure that you have established the requirements you are obliged to meet before you commence work. This is one of the most important requirements of the standard. The majority of problems downstream can be traced either to a misunderstanding of customer requirements or insufficient attention being paid to the resources required to meet customer requirements. Get these two things right and you are halfway there to satisfying your customer needs and expectations. Many organizations do business through purchase orders or simply orders over the telephone or by mail. Some organizations may not be required to enter into formal contracts by their customers. However, a contract does not need to be written and signed by both parties to be a binding agreement. Any undertaking given by one party to another for the provision of products or services is a contract whether written or not.
The review of requirements for products and services is but one of the tasks in the contract acquisition process. These are marketing, prospect acquisition, tendering, contract negotiation, contract award, and then the review. However, in a sales situation, you may simply have a catalog of products and services and a sales office taking orders over the telephone or over the counter. The review element of this operation takes a few seconds while you determine if you can supply the item requested. In an organization that produces products to specific customer requirements you may in fact carry out all the tasks in the contract acquisition process. Rather than isolate the review task and your business may benefit more from contract/order acquisition process as a whole. Your contract acquisition process need to define as appropriate:
- How potential customers are persuaded to place orders or invitations to tender ?
- How invitations to tender and customer orders are dealt with ?
- How proposals and quotations are generated, reviewed, and approved ?
- How contracts/order are negotiated?
- How contracts/orders are accepted, promulgated, and communicated to those concerned?
- How changes to contract/Order are initiated?
- How changes to contract are agreed, promulgated, and communicated to those concerned?
- What channels of communication should be established between supplier and customer?
- The authority and responsibility of those who are permitted to interface with the customer
The standard specifies reviews should be undertaken before submission of a tender or acceptance of a contract. However, having reviewed it once, there is an ongoing requirement for you to ensure you remain capable of satisfying the requirements to which you have agreed. Where the contract duration extends over several months or years, it is necessary to review periodically the requirements and your capability of meeting them. In project work these are known as project reviews and may be held at planned stages: monthly, quarterly, yearly, or when the nature of the subsequent work is to change.
Clause 8.2.3.1.1 Review of the requirements for products and services
In addition to the requirement given in ISO 9001:2015 Clause 8.2.3 Review of the requirements for products and services Clause 8.2.3.1.1 states that organization must provide a documented evidence in case there is a customer-authorized waiver for a formal review of the requirements for products and services. The requirement for the review of the requirements for products and services is given in clause 8.2.3.1 of ISO 9001:2015
Coordinating review activities
In the contracting business, where several departments of the organization have an input to the contract and its acceptability, these activities do need coordinating. When you enter into contract negotiations, the activities of your staff and those of your customer will need coordinating so that you are all working with the same set of documents. You will need to collect the contributions of those involved and ensure they are properly represented at meetings. Those who negotiate contracts on behalf of the company carry a great responsibility. A sales person who promises a short delivery to win an order invariably places an impossible burden on the company. A company’s capability is not increased by accepting contracts beyond its current level of capability. You need to ensure that your sales personnel are provided with reliable data on the capability of the organization, do not exceed their authority, and always obtain the agreement of those who will execute the contractual conditions before accepting them on their behalf. One aspect of a contract often overlooked is shipment of finished goods. You have ascertained the delivery schedule, the place of delivery, but how do you intend to ship it: by road, rail, ship, or air. It makes a lot of difference to the costs. Also delivery dates often mean the date on which the shipment arrives not the date it leaves. You therefore need to build into your schedules an appropriate lead time for shipping by the means agreed to. If you are late then you may need to employ speedier means but that will incur a premium for which you may not be paid. Your financial staff will therefore need to be involved in the review. Having agreed to the contract, you need to convey all the contractual requirements to their point of implementation in sufficient time for resources to be acquired and put to work.
Ensuring that the requirements are adequately defined and documented
In ensuring that the contract requirements are adequately defined, you should establish
where applicable that:
- There is a clear definition of the purpose of the product or service you are being
- contracted to supply.
- The conditions of use are clearly specified.
- The requirements are specified in terms of the features and characteristics that will
- make the product or service fit for its intended purpose.
- The quantity and delivery are specified.
- The contractual requirements are specified, including: warranty, payment conditions, acceptance conditions, customer supplied material, financial liability, legal matters, penalties, subcontracting, licenses, and design rights.
- The management requirements are specified, such as points of contact, program plans, work breakdown structure, progress reporting, meetings, reviews, interfaces.
- The quality assurance requirements are specified, such as quality system standards, quality plans, reports, customer surveillance, and concessions.
An adequately documented requirement would be a written contract, schedule of work, and/or specification. However simple the requirement, it is wise to have it documented in case of a dispute later. The document needs to carry an identity and if subject to change, an issue status. In the simple case this is the serial numbered invoice and in more complicated transactions, it will be a multi-page contract with official contract number, date, and signatures of both parties. The standard allows for undocumented verbal orders but requires that the order requirements are agreed before their acceptance. The third party auditor cannot confirm conformity with this requirement as there will be no objective evidence to substantiate the transaction other than the payment invoice. If the supplier confirms the agreement in writing a written statement of requirement exists. The standard does not stipulate that the agreement has to be documented only that the requirements need to be documented regardless of who produced them. The only evidence that the requirements were adequately defined is therefore the payment from the customer against the supplier’s invoice.
Resolving differences
The standard requires that before submission of a tender, or acceptance of a contract or order (statement of requirement), the tender, contract, and order are reviewed to ensure that any con tract or accepted order requirements differing from those in the tender are resolved. There is a slight conflict in this clause as it requires that before acceptance of an order, you need to ensure that any differences between your tender and the accepted order requirements are resolved. Clearly if you have not accepted the order you don’t need any accepted order requirement. But this small ambiguity doesn’t detract from the essence of the requirement. Whether or not you have submitted a formal tender, any offer you make in response to a requirement is a kind of tender. Where a customer’s needs are stated and you offer your product, you are implying that it responds to your customer’s stated needs. You need to ensure that your “tender” is compatible with your customer’s needs otherwise the customer may claim you have sold a product that is not “fit for purpose”. If the product or service you offer is in any way different than the requirement, you need to point this out to your customer in your tender or in negotiations and reach agreement. Always record the differences in the contract. Don’t rely on verbal agreements as they can be conveniently forgotten when it suits one party or the other.
Ensuring that the supplier has the capability to meet contractual requirements
The standard requires that before submission of a tender, or acceptance of a contract or order (statement of requirement), each tender, contract, and order be reviewed to ensure that the supplier has the capability to meet contract or accepted order requirements. You must surely determine that you have the necessary capability before accepting the contract as to find out afterwards that you haven’t the capability to honor your obligations could land you in deep trouble. It is important that those accepting a contract are in a position to judge whether the organization has the capability of executing it. You have to consider that:
- You have access to the products and services required.
- You have a license to supply them if appropriate.
- You have the technology to design, manufacture, or install the product.
- You have the equipment to utilize the data in the form that the customer may provide to you (e.g. CAD/CAM, NC Tapes, Advanced Shipment Notification).
- You have the skills and knowledge to execute the work required in the time required and to the specified standards.
- There is sufficient time to accomplish the task with the resources you have available.
- You have access to appropriate subcontractors and suppliers.
- There is a secure supply of the necessary materials and components.
- You can meet the terms and conditions imposed by your customer.
- You are prepared to be held to the penalty clause (if specified).
If you don’t have any of the above, you will need to determine the feasibility of acquiring the relevant license, the skills, the technology, etc. within the time-scale. Many organizations do not need staff on waiting time, waiting for the next contract. It is a common practice for companies to bid for work for which they do not have the necessary numbers of staff. However, what they need to ascertain is from where and how quickly they can obtain the appropriate staff. If a contract requires specialist skills or technologies that you don’t already possess, it is highly probable that you will not be able to acquire them in the time-scale. It is also likely that your customer will want an assurance that you have the necessary skills and technologies before the contract is placed. No organization can expect to hire extraordinary people at short notice. All you can rely on is acquiring average people. In telephone sales transactions or transactions made by a sales person without involving others in the organization, the sales personnel need to be provided with current details of the products and services available, the delivery times, prices, and process for varying the conditions.
Amendments to contract
The standard requires suppliers to identify how an amendment to a contract is made and correctly transferred to the functions concerned. There may be several reasons why a customer needs to amend the original contract — customer needs may change, your customer’s customer may change the requirement, or details unknown at the time of contract may be brought to light. Whatever the reasons you need to provide a procedure for amending existing contracts under controlled conditions. On contracts where liaison with the customer is permitted between several
individuals — e.g. a project manager, contract manger, design manager, procurement manager, manufacturing manager, quality assurance manager — it is essential to establish ground rules for changing contracts, otherwise your company may unwittingly be held liable for meeting requirements beyond the funding that was originally predicted. It is often necessary to stipulate that only those changes to contract that are received in writing from the contract authority of either party will be legally binding. Any other changes proposed, suggested, or otherwise communicated should be regarded as being invalid. Agreement between members of either project team should be followed by an official communication from the contract authority before binding either side to the agreement. Having officially made the change to the contract, a means has to be devised to communicate the change to those who will be affected by it. You will need to establish a distribution list for each contract and ensure that any amendments are issued on the same distribution list. The distribution list should be determined by establishing who acts upon information in the contract and may include the technical or design managers, the production and procurement managers, the test, commissioning, and installation managers, and the quality manager or management representative. Once established, the distribution list needs to be under control because the effect of not being informed of a change to contract may well jeopardize delivery of conforming product.
Maintaining records of the reviews
The standard requires records of reviews to be maintained. Each order or contract should be signed by a person authorized to accept such orders or contracts on behalf of the organization. You should also maintain a register of all contracts or orders and in the register indicate which were accepted and which declined. If you prescribe in your contract acquisition procedures the criteria for accepting a contract, the signature of the contract or order together with this register can be adequate evidence of contract review. If reviews require the participation of several departments in the organization, their comments on the contract, minutes of meetings, and any records of contract negotiations with the customer represent the records of the review. It is important, however, to be able to demonstrate that the contract being executed was reviewed for adequacy, for differences in the tender, and for supplier capability before work commenced.
Documented evidence of a customer-authorized waiver for the formal review of the requirements for products and services
A documented evidence of a customer-authorized waiver for the formal review of requirements for products and services typically includes the following information:
- Waiver Request: Start by clearly stating that the document is a waiver request for the formal review of requirements for the specific product or service. Include the date of the request and any unique identifier or reference number.
- Customer Information: Provide details about the customer who is authorizing the waiver. This includes the customer’s name, contact information, and any relevant identification or account numbers.
- Product/Service Description: Describe the product or service for which the waiver is being requested. Include specific details such as the product or service name, specifications, features, or any other relevant information to identify the scope of the waiver.
- Reason for Waiver: Clearly explain the reason why the formal review of requirements is being waived. This could be due to unique circumstances, urgent timelines, customer-specific requirements, or any other justifiable reason. Provide a detailed explanation to ensure clarity.
- Waiver Scope: Define the scope and duration of the waiver. Specify whether the waiver applies to all requirements or only specific aspects. Clarify if the waiver is temporary or permanent, and indicate the timeline or conditions under which the waiver will be in effect.
- Customer Authorization: Include a section where the customer provides their explicit authorization for the waiver. This can be in the form of a signature, name, title, or any other acceptable means of customer identification.
- Confirmation and Acceptance: If applicable, include a section where the organization confirms its acceptance of the customer-authorized waiver. This may include the signature or identification of a representative from the organization.
- Supporting Documentation: Include any additional documentation or information that supports the waiver request. This could include customer communications, contractual agreements, or any other relevant evidence.
- Review and Approval: Establish a process for the review and approval of the waiver request. Identify the individuals or roles responsible for reviewing and approving the waiver, ensuring that it aligns with the organization’s policies and procedures.
- Recordkeeping: Establish a system for maintaining records of the waiver request and its approval. Ensure that the documentation is securely stored, easily accessible, and can be retrieved for future reference or audits.
It’s important to note that the specific format and content of the customer-authorized waiver may vary depending on organizational requirements, industry practices, and customer agreements. It is recommended to consult with legal or compliance professionals to ensure that the waiver process adheres to relevant regulations and contractual obligations.
