Supplier NCMR Process Tutorial

Modern Industries Inc. Page 1 By: Dave Anderson

Rev. 06-03-03
 What is a NCMR?
When an item does not meet specifications it is identified as discrepant and a Non-Conforming
Material Report is created.

A team meeting is held between the Material Review Board (MRB) to review discrepant items.

The MRB consists of:

Supplier Quality Engineer (SQE)
Manufacturing Engineer (ME)
Work Center Designee
Production Control (PC)

The quality information gathered on a particular part is printed on a report called the Non-
Conforming Material Report (NCMR)

Each discrepancy is assigned a unique NCMR number

Modern Industries Inc. Page 2 By: Dave Anderson

Rev. 06-03-03
 Fault & Dispositions
FAULT:
Supplier Fault
MII Fault
Customer Fault

DISPOSITIONS:
No Defect – Determined to meet all requirements.
Use As Is – Discrepant, but can be used without rework
Rework – Reworked at Modern Industries
RTV – Returned to vendor
Pending FA – Returned to vendor for Failure Analysis
These are functional failure only and will receive a temporary
disposition of MII Fault; Pending FA. Once the FA is received the
disposition will change accordingly.
Scrap – Scrapped, rework not cost effective and or possible

Modern Industries Inc. Page 3 By: Dave Anderson

Rev. 06-03-03
 Policy for Processing Supplier
Fault Items
MII Buyer, or designee, Responsibilities
Debit the Supplier specified on the NCMR
Request an RMA number from Supplier
RMA to be given to the MII Buyer within 48 hrs of request
Non-Response from Supplier; Part shipped without a RMA.
Print shipping authorization
Will have a reference PO, NCMR # and RMA # to be used for crediting the
purchase
Return discrepant part to the Supplier
The returned part is not to be sent back to Modern Industries
There is no rework purchase order open for returned Supplier Fault parts
The debit process is a financial recovery for the cost of the part

Modern Industries Inc. Page 4 By: Dave Anderson

Rev. 06-03-03
Policy for Processing Supplier Fault
Items (Outside Special Processes)
MII Buyer, or designee, Responsibilities
Debit the Supplier specified on the NCMR
If material is scrap –
Supplier shall be debited a minimum of three times the cost of service, as noted on the
PO, and up to the amount Modern has invested in the part.
This does not apply to predetermined yield agreements.
If material is reworkable –
Reverse receipt of PO and return for Rework.
Supplier to expedite the rework and return under original PO.
Request an RMA number from Supplier
RMA to be given to the MII Buyer within 48 hrs of request
Non-Response from Supplier; Part shipped without a RMA.
Print shipping authorization
Will have a reference PO, NCMR # and RMA # to be used for crediting the
purchase
Return discrepant part to the Supplier

Modern Industries Inc. Page 5 By: Dave Anderson

Rev. 06-03-03
 Modern Industries
Discrepant Material; RTV Process Flow
Discrepant Material; MII-CRP-00072 Rev Date: 06-03-03

RTV Process Flow Start End

AP to issue
Receive Product debit
From Supplier or
Customer

Product
Deemed NO Forward to AP
Discrepant

Submit
To
YES Stores

Shipping to
NCMR is forward tracking
Generated Part Deemed "UAI"
info to Purchasing

AP to issue
debit

MRB Action
§ M.E. Create Memo
§ Q.E. Shipper and ship
§ WC Rework Costs discrepant
§ P.C. Transmitted to material back to
Accounting for supplier.
Debit

Part Deemed
Unacceptable

Inventory
Routing Control to pull
Rework Internally
Decision from Bond

RTV

SQE / Buyer to contact

supplier:
Reverse PO
Move Inventory in
Receipt
q Notify of discrepancy Fourth Shift
PORV type "V"
q Obtain RMA #
q Ship to address

Modern Industries Inc. Page 6 By: Dave Anderson

Rev. 06-03-03
Processing Supplier Fault Item which
are reworked at Modern Industries
Many times rework is possible and or necessary to be completed at Modern
Industries.
The supplier will be called and rework at Modern will be requested.
Supplier must be able to complete the rework within the same day.
In the event the supplier cannot perform the rework; Modern personnel will.
The supplier will be charged back the cost of rework plus an administration fee of
$250.00

Modern Industries Inc. Page 7 By: Dave Anderson

Rev. 06-03-03
 Policy for Processing Modern
Industries Fault Items
MII Buyer, or designee, responsibilities
Write a zero dollar expense purchase order
Rework purchase order
Request an RMA # from Supplier
RMA to be given to the MII Buyer within 48 hrs of request
Non-Response from Supplier; Part shipped without a RMA.
Print shipping authorization
Return discrepant part to Supplier
Request a quote from Supplier
Quote must include a rework price and commit date
Award P.O. to Supplier
Rework must not exceed 45 days of RMA Request date or PO will be
closed and part debited as asset recovery program.

Modern Industries Inc. Page 8 By: Dave Anderson

Rev. 06-03-03
 Policy for Processing Modern
Industries Fault Items; Pending FA
MII Buyer, or designee, responsibilities
Write a zero dollar expense purchase order
Modern’s policy is we do not pay for the FA it self.
Request an RMA # from Supplier
RMA to be given to the MII Buyer within 48 hrs of request
Non-Response from Supplier; Part shipped without a RMA.
Non-response from Supplier; NCMR dispositioned as Supplier Fault; RTV –
then Debited.
Print shipping authorization
Return discrepant part to Supplier
Request a Failure Analysis from Supplier
FA must be received from the Supplier within two weeks of PO date.
Non-response from Supplier; NCMR dispositioned as Supplier Fault;
RTV – then Debited.
Failure Analysis Outcome
Supplier Fault: Rework and Return at no cost to MII
MII or Customer Fault (MII Agrees with FA): Supplier to submit rework
quote and Lead-time.

Modern Industries Inc. Page 9 By: Dave Anderson

Rev. 06-03-03
MII Expectations from Suppliers
Failure Analysis cycle is two weeks
Total rework cycle is 45 calendar days
RMA # within 48 hours of request
Quotes must be received within 10-20 days of request
Supplier quote and rework cycle to be 30 days (15 days for transit)
Supplier should only return parts with an open PO
MII will make every effort to return items received without a open or valid PO, but MII will
reject any financial responsibility for lost items which were shipped on a closed or invalid
PO number.

Supplier must send quotes and get rework PO awarded prior to shipping part to
Modern Industries.
Items received without an awarded PO will be paid at zero dollars.

We will not receive any parts from Suppliers that are greater than 3 days early.
Supplier must use approved forms
Modern Industries Inc. Page 10 By: Dave Anderson
Rev. 06-03-03
MII Buyer’s Commitment to Suppliers
Reply to Supplier’s quotes within 3 days of receipt

Notify Suppliers of open purchase orders weekly

Notify Suppliers of debits taken for each NCMR

Issue purchase orders for rework as required

Give copy of all NCMRs to Supplier Customer Service Representative

Modern Industries Inc. Page 11 By: Dave Anderson

Rev. 06-03-03
 Debits
A Debit is taken when the MII Buyer processes a Supplier Fault item and returns
the item back to the Supplier
A Debit is taken for an MII or Customer Fault rework item that the Supplier has
had for longer than 45 calendar days or past their commit date
A Debit is taken for items sent back for failure analysis and the due date is not
met. Due dates are always communicated at the time of the RMA Request.
A Debit is taken for the cost of rework, plus administration fees, of Supplier Fault
items which MII reworks in house.
The Supplier will have the opportunity to come to MII and rework the item prior to MII
reworking the item.
The supplier must commit to completing the rework the same day.
Debits show up on payment as a Debit Memo Statement
Debit Memo number is equivalent to the NCMR number.

Modern Industries Inc. Page 12 By: Dave Anderson

Rev. 06-03-03
 NCMR Reversal Process
Supplier submits a request for reversal fault on a NCMR using the NCMR
Reversal Request Form
SQE reviews the NCMR Reversal Request Form
Response of accept or reject is sent to the Supplier
If the SQE agrees with the reversal request the MRB will be notified for a re-
disposition of the item
Both the SQE and ME must agree with the reversal and sign the request
The item will then be re-dispositioned to Modern Fault and a copy is forwarded
to MII Buyer
The MII Buyer will credit the original PO which was debited.
MII Buyer opens a rework PO if necessary and processes the reversal request
to A/P
A/P posts credit to Supplier

Modern Industries Inc. Page 13 By: Dave Anderson

Rev. 06-03-03
 Modern Industries Supplier NCMR Reversal Request

NCMR / SUPPLIER INFORMATION

Supplier NCMR DATE: SUPPLIER REQUESTER PHONE # FAX #

Reversal Form
NCMR NUMBER: ITEM NUMBER: REVISION DESCRIPTION QUANTITY

CHANGE REQUESTED ATTACHED OBJECTIVE EVIDENCE

X q Dimensional data q Photos

Change to Modern Industries Responsibility q Process control data q Historical data
q Functional test data q Other
Change to Customer Responsibility q Special processing data ______________________
REASON FOR REVERSAL
*Attach Objective Evidence File As Required

MODERN INDUSTRIES RESPONSE

CHANGE REQUEST STATUS ME REPRESENTATIVE:

APPROVED DATE ___________
_____________________
NOT APPROVED DATE ___________ SQE REPRESENTATIVE:
REASON _____________________________________
_____________________________________________ ______________________
_____________________________________________

Modern Industries Inc. Page 14 By: Dave Anderson

Rev. 06-03-03