APPENDIX C – PROCESS EFFECTIVENESS ASSESSMENT REPORT (PEAR)

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Auditing Company Process Effectiveness 2
Auditing Company Logo
Name
Assessment Report
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Organization: ABC Corporation Site: San Diego CA OIN: 0123456789

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PEAR Number: 004 Audit Report Number: 1500234-01 Issue Date: August 23, 2010
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Process Name: Purchasing

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Process details, including associated process interfaces:
The purchasing process is defined in a single procedure, PUR 7.4-01 Purchasing Rev D dated 5/12/2009.
The top level process map shows the process is linked to the Contract Review and Manufacturing processes.
The Purchasing process utilizes the purchasing module inside the SAP ERP, which includes the approved
supplier register and register of verification delegations.
Input to the process includes: Customer flow-down requirements, supplier selection and approval requests,
purchase requisitions, MRP buy signals.
Output of the process: raw material, parts and assemblies delivered meeting requirements and on time.
Resources: The Purchasing Manager has full responsibility for the purchasing process. Buyers are authorized
to purchase based on a documented corporate policy setting dollar limit ranges based on pay grade. Buyers
are responsible for supplier on time delivery and product quality.

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Applicable 9100/9110/9120 clause(s): 5.4.1, 5.4.2, 5.6, 7.1.2, 7.3, 7.4, 8.4, 8.5.2

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Organization’s method for determining process effectiveness:
The process owner has access to reports summarizing Receiving Inspection rejections and MRB open actions.
Supplier on-time delivery is not reviewed in a formal report, and is only investigated when production raises
complaints as production runs out of materials. Financial reports from the SAP ERP show the following: Open
PO, PO Variance, Inventory Levels, Inventory Turnover.

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Auditor observations and comments supporting process effectiveness determination:
While a procedure for the purchasing process was released and in use, there was no process description
showing how the process management approach has been established for the process. The audit discovered
significant interfaces with the Design and Development Process and Configuration Management Process (flow-
down of engineering requirements)

Analysis of supplier performance data has been on hold since the Purchasing Manager is now helping the
Buyers catch up on placing purchased orders. The last Management Review records showed that supplier
OTD and quality ratings were not presented nor discussed. The management team has established objectives
for the Purchasing Process to achieve 98% on-time delivery and 100% acceptable quality from suppliers. PUR
7.4-01 Purchasing Rev D defines the AOD period as monthly, for both OTD and quality.

The audit team requested a report showing the last 12 months of supplier delivery performance. The report
showed the overall delivery performance has a negative trend and is presently at 68% on-time. The Quality
Department has a trended report showing the all-up lot acceptance rate in Receiving Inspection has dipped
below 80% in the last month.

There was no evidence (records) that training for procedure PUR 7.4-01 Purchasing Rev D has been
completed for the Buyers. Interviews with Buyers showed a lack of understanding of responsibility and
approach for issuing corrective actions to suppliers. Buyers were not aware of the organization’s risk
management policy and procedures.

The Approved Supplier List located in SAP does not include the scope of approval for supplier presently
delivering products. There is no process established for how delegations of verifications are carried out nor is
there a register of delegations in use (SAP does not included delegation details)

Recent customer complaints and returned products for fracture critical castings PN 2345-123-AB were
determined to be purchased from XYZ Castings. The castings failed post machining pressure tests at the
customer and were determined to have unacceptable levels of porosity. XYZ Castings reports they can not
locate the radiographic records for the production lot in question. XYZ Casting was recently approved for use
by Purchasing with multiple open purchase orders for deliveries scheduled out over the next two years. There
is no description of delegation details for radiographic inspection at XYZ Castings. A review of the MRB area
showed a large backlog of rejected castings awaiting return to the suppliers. XYZ Castings are in containment
in MRB, awaiting the submission of radiographic records and chemical/physical certifications. There was no
risk management plan for bringing on board a new casting supplier.

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Statement of Effectiveness Level:
The process is:
X 1. Not implemented; planned results are not achieved.
2. Implemented; planned results are not achieved and appropriate actions not taken.
3. Implemented; planned results are not achieved, but appropriate actions being taken.
4. Implemented; planned results are achieved.

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Auditor Name(s): Auditee Representative Acknowledgement
Name:
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Signature(s): Signature(s):

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