In an attempt to define an effective set of management processes, ISO 9001:2000 has a section devoted to the management of the contract process. Previous versions of the Standard (e.g. ISO9001:1994) described this process as Contract Review, an unmistakable indication of its original nature and intended purpose. ISO 9001:2000 has located it in a section (7.2.2) “Review of requirements related to the product”. In both instances the goal was to make sure that organisations were able to, and required to, clearly evaluate the customer needs before obligating themselves to a contract, and also to find out the extent of their ability to meet these particular requirements.
But isn’t this obvious? Possibly, and no one is claiming any originality for this inclusion in the Standard. The real question is what led the compilers of the Standard to believe it to be necessary to re-state the obvious. How often as individuals have we been told, “I didn’t know you meant that”, or “Oh, that’s what you meant”? These are clear indications of a supplier’s misunderstanding of the customer requirement, OR a lack of understanding of how to meet the customer requirement, OR simply an inability to meet the requirement; maybe in most cases, a combination of these leads to a customer becoming dissatisfied. Contract Review as we will call it here, is designed to eliminate any misunderstanding of the requirement, while providing an assurance of the supplier’s ability and capability to meet the requirements.
Put simply, the requirement directs the potential supplier to develop a complete understanding of the customer’s requirements and specific expectations, while gauging his (the suppliers) ability to meet these requirements to an acceptable standard. This ability isn’t simply confined to the production and delivery of a product or service; it contains provision in a time specific domain and at a cost acceptable to the client. In addition, there is an implied though not directly expressed requirement, if not otherwise outlined, that the product in question does the job it was intended for, meets legislative requirements, and will be guaranteed in an acceptable way after the sale. The Standard requires the potential supplier to verify this prior to the submission of a bid or quote.
Assuming an acceptable bid, the next step would normally be the delivery to the supplier of a contract or purchase order. The Standard demands a review of this document before any acceptance, to verify the ongoing acceptable status of the requirement and the ability of the organisation to accommodate the obligations set forth in the offered contract. This latter element might seem obvious to the point of being unnecessary, but with any organisation there is a great temptation to accept any and all orders, particularly during a general down-turn in business prospects, and to worry about the consequences later. This strategy is not good for either party, so the requirement is for the potential supplier to conduct another review where key aspects of the proffered contract are compared to the organisations ability to deliver to the requirements. These include:
1. Ensuring that the product (or service) requirements are (adequately) defined.
2. Any requirements that differ from those previously expressed (the bid invitation and quotation) are resolved.
3. Confirming that the organisation has the ability to meet the defined requirements.
Most observers of this review requirement would probably agree on the reasonableness of the requirements, and maybe add further detail, but independent audit experience suggests this review is seldom carried out with any rigour, frequently being confined to a cursory assessment by a sales department manager, more concerned with incoming order value than the organisations technical and administrative ability to deliver.
If companies are to improve their image in the market place, and with their customer base, the requirement to seriously review the commitments they are about to make with any new contract is an essential step towards this improvement strategy.
Ed. Bones is a chartered quality professional and an IRCA registered Lead Auditor. He is also a senior partner with the Meon Consulting Group, supplying expert audit and consultant services for ISO9001 & ISO14001 management systems. The company web site provides detailed information for your perusal, and includes the special offer of FREE Advice. Want to learn more?
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