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. Earlier versions of the Standard (e.g. ISO9001:1994) defined this activity as Contract Review, a clear indication of its nature and purpose. ISO 9001:2000 has located it in a section (7.2.2) “Review of requirements related to the product”. In both cases the intention was to ensure that organisations were able to, and required to, clearly assess the customer requirements prior to entering into a contract, and also to determine their capability to meet those requirements.
But isn’t this obvious? Perhaps, and there isn’t currently anyone who is claiming any originality for this addition in the Standard. The imperative question at this point is, what led the creators of the Standard to believe that it was somehow important to re-state what was blatantly obvious? How often have all of us as individuals been told by others, “I didn’t know what you meant”, or “Oh, that’s what you meant”? This is obvious evidence of a supplier’s misunderstanding of their customer needs, OR a simple lack of understanding on how to accommodate their customer needs, OR just an inability to accommodate the need; perhaps in the majority of instances, a combination of these factors is what eventually leads to a customer becoming generally 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.
At its simplest, the requirement leads the potential supplier to fully understand the customer’s needs and expectations, while assessing his (the suppliers) ability to adequately meet those needs. This ability isn’t just restricted to the production and delivery of products and services; it includes provision in a time specific domain and at a level of expense which is 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.
If there is an acceptable bid, then the next stage would usually be the delivery to the potential supplier of a contract or a 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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