Customer-directed sources, also known as “Directed-Buy,” refer to specific suppliers or sources that automotive manufacturers or organizations instruct their customers to use for the procurement of certain products, components, or services. In this arrangement, the customer directs the purchasing decisions of their end customers, specifying particular suppliers or sources that must be utilized for specific items. Directed-Buy can be a requirement imposed by the customer due to various reasons, including quality control, compliance with specific regulations or standards, or to maintain consistency and uniformity in the end products. Below is a more detailed explanation of Customer-directed sources:In the automotive industry, customer-directed sources play a vital role in the supply chain management process. When an automotive manufacturer or organization engages in Directed-Buy, they typically provide their customers with a list of pre-approved suppliers or sources that must be utilized to purchase specific products or components. This list is often based on stringent quality standards, technical specifications, and regulatory requirements that the suppliers must adhere to.The Directed-Buy approach is commonly observed when a particular product or component is critical to the overall performance, safety, or compliance of the end product. By specifying certain suppliers, the customer ensures that the end products meet their stringent quality and performance standards. This practice helps maintain consistency in the supply chain, reduces the risk of defects or non-conformities, and enhances customer satisfaction.For example, an automotive manufacturer may direct their customers to purchase a specific type of brake system from a pre-approved supplier with a proven track record of producing high-quality brake systems. By doing so, the manufacturer can ensure that all the vehicles using their products meet the required safety standards and deliver optimal performance on the road.Directed-Buy can also be utilized for certain services or processes, such as calibration services or rework activities, where the customer mandates the use of particular service providers to maintain the required level of quality and conformity.However, while Directed-Buy provides benefits in terms of quality control and standardization, it may also limit the customer’s freedom to choose suppliers based on factors like cost or regional availability. As such, automotive organizations must strike a balance between Directed-Buy requirements and allowing some flexibility to cater to unique customer needs or market dynamics.In conclusion, Customer-directed sources, or Directed-Buy, refer to the practice in which automotive manufacturers or organizations instruct their customers to use specific suppliers or sources for purchasing critical products, components, or services. This approach helps maintain strict quality standards, ensures compliance with regulations, and fosters consistency in the supply chain, ultimately leading to the delivery of high-quality and reliable automotive products to end customers.
Clause 220.127.116.11 Customer-directed sources (also known as “Directed–Buy”)
When specified by the customer, the organization shall purchase products, materials, or services from customer-directed sources. All requirements of Clause 8.4 Control of externally provided processes, products and services except the requirements in IATF 16949, Section 18.104.22.168 Supplier selection process are applicable to the organization’s control of customer-directed sources unless specific agreements are otherwise defined by the contract between the organization and the customer.
Purchased product includes raw materials, components, subassemblies, supplies, tooling, machinery and equipment, sequencing, sorting, rework, testing, calibration, maintenance, etc. Many times the customer may require the use of pre-approved purchased products and suppliers. The onus is still on you to ensure that purchased product from customer-designated sources meets all requirements. You must control both, the product that you buy, as well as the supplier you buy from. PPAP deal with requirements to control the products you buy. Your controls must primarily be based on prevention of non-conformities in both product and supplier performance. This requirement does not relieve you of the responsibility for ensuring the quality of subcontracted parts, materials, and services. Therefore, it would be unwise to place orders on a customer—specified supplier without first going through your evaluation and selection process. You can obviously take some short cuts but don’t make assumptions. The customer will not be sympathetic when you are late on delivery or your price escalates. If you find a supplier that can meet all your product/service requirements at a lower price you can submit details to your customer for approval. When specified by the customer, the organization in the automotive industry is required to purchase products, materials, or services from customer-directed sources. This means that if the customer mandates or directs the organization to use specific suppliers or sources for certain items, the organization must comply with this requirement. The customer’s instructions take precedence, and the organization is obligated to procure the designated products, materials, or services from the customer-approved sources. Let’s explore this requirement in more detail:
- Customer’s Specific Requirements: In some cases, the customer may have their own pre-approved suppliers or sources for certain critical products, components, or services. They may specify these sources to ensure that the products they receive meet their exact requirements and adhere to their quality standards.
- Compliance with Customer’s Standards: Purchasing from customer-directed sources ensures that the organization meets the customer’s expectations and aligns with their specific standards or regulations. It helps maintain a seamless flow of products or services that meet the customer’s unique needs.
- Quality Control and Consistency: By purchasing from customer-directed sources, the organization can ensure consistent product quality and performance across all items supplied to the customer. It reduces the risk of variations in product quality and ensures that the customer receives the same level of excellence in every order.
- Customer Satisfaction: Complying with the customer’s directed-buy requirements contributes to overall customer satisfaction. It demonstrates the organization’s commitment to fulfilling the customer’s requests and aligning with their preferences.
- Transparency and Trust: Following the customer’s instructions builds transparency and trust in the business relationship. The organization shows that it values the customer’s input and is willing to work closely with them to meet their specific needs.
- Potential Challenges: While customer-directed sourcing has its advantages, it may also present challenges for the organization, especially if the designated sources have limited capacity or are not geographically accessible. In such cases, the organization may need to work closely with the customer to find suitable alternatives that still meet the customer’s requirements.
In summary, when the customer specifies certain suppliers or sources for the purchase of products, materials, or services, the organization must adhere to these instructions. This practice ensures compliance with the customer’s standards, fosters consistency and quality, and contributes to a strong and positive relationship with the customer. However, the organization must also be prepared to address any challenges that may arise due to directed-buy requirements and work collaboratively with the customer to find the best solutions for both parties.
Control of externally provided processes, products, and services applicable to Customer-directed sources
All the requirements of “Control of externally provided processes, products, and services” are applicable to the organization’s control of customer-directed sources unless specific agreements or arrangements are defined differently in the contract between the organization and the customer. This means that the organization is responsible for implementing the same control measures and processes for customer-directed sources as it does for other externally provided processes, products, and services, unless otherwise specified in the contractual agreement with the customer.Let’s break down this statement further:
- Control of Externally Provided Processes, Products, and Services: This refers to the processes, products, and services that the organization obtains from external sources, including suppliers, contractors, or service providers. The organization is responsible for ensuring that these externally provided processes, products, and services meet the required quality and performance standards.
- Customer-Directed Sources: These are specific suppliers or sources that the customer instructs or directs the organization to use for procuring certain products, materials, or services. The customer may specify these sources due to quality requirements, technical expertise, or other specific reasons.
- Applicability of Requirements: The organization is required to apply the same control measures and requirements to customer-directed sources as it does to other external providers, unless there are specific agreements in place that define otherwise.
- Contractual Agreements: The terms and conditions of the contract between the organization and the customer may include specific provisions related to the control of customer-directed sources. If the contract outlines different arrangements or exceptions for these sources, the organization must comply with those specified terms.
- Standard Control Measures: In the absence of specific contractual agreements, the organization must follow its standard control measures, including supplier selection criteria, supplier evaluation, quality control, risk management, and any other relevant processes, to ensure that customer-directed sources meet the required standards.
- Flexibility and Customization: Contractual agreements may allow some flexibility for the organization to accommodate the customer’s preferences or unique requirements for certain products or services while maintaining overall compliance with quality and performance standards.
In summary, the organization is responsible for applying the same control measures and requirements to customer-directed sources as it does to other external providers, unless there are specific arrangements defined in the contractual agreement with the customer. This approach ensures consistent quality and adherence to standards across all externally provided processes, products, and services, including those specified by the customer.