MARITIME QUALITY CONSULTANTS, INC.

                         NEWSLETTER       Vol. 3

CUSTOMER-RELATED PROCESSES

One of the most important steps in any business transaction is reaching an understanding with the customer on the product or service to be provided.  In the Maritime Industry, the product or service ranges from multi-million dollar new buildings and chartering contracts to relatively inexpensive services such as cargo surveys, line handling, and ship agency.

7.2.2 Revisions of Requirements Related to Product requires that, before accepting a contract or order, the company supplying the product or service must review it to ensure that:

1. The customer's requirements are adequately defined and documented;
2. Any differences between the contract and those in the company's tender (or general terms and conditions) are resolved; and
3. The company has the capability to meet the contract or accepted order requirements.

It's important to note that 7.2.2 applies to the company's contracts with customers (as opposed to contracts the company has with suppliers and sub-contractors).  Contracts with suppliers and sub-contractors are covered in 7.4 Purchasing.

Contracts for Products:

If the company is a shipyard building or repairing vessels, the contract process usually begins with the customer's request for quotation based on a specification.  This is followed by a bid tendered by the shipyard.  If the yard is on the customer's "short list" negotiations follow on specific customer requirements such as equipment type, quantity/quality of construction, delivery date and price.  The contract is not finalized until both the shipyard and customer agree on all terms.  The shipyard then has covered both (a) and (b) above.  Hopefully, the shipyard has determined that it has the capability or will develop the capability to build or repair the vessel as required by (c) above.

All of this is just good common sense business practice.   Why would a company take on a contract when they don't know what the customer wants?  If the shipyard agrees to something they can't produce, there will be complaints, penalties, and lawsuits.

ISO 9001 also requires that any changes to the contract be handled in the same way as the original contract.  That is, the shipyard needs to be sure they understand the customer's requirements and these requirements must be adequately documented.  The customer's representative may use a Change Order Form to request a change.  The shipyard then reviews the change and discusses price and time with the customer before issuing the change to the yard.  The shipyard's procedure for contracting will include methods of ensuring that all functions concerned with the change are notified in a timely manner.

The shipyard will keep a contract file including the customer's request for quotation, the shipyard's bid package, copies of all contract negotiation documentation, the final signed contract and all change orders.  These are the records that show the shipyard has followed their contracting procedures.

In summary, an ISO 9001 certified shipyard will have documented procedures for contracting that include:

1. Who is responsible for contracts and how they are negotiated and signed.
2. How agreed contracts are communicated to all functions concerned.
3. How contracts are reviewed before they are signed.
4. How amendments to contracts are handled and communicated to all functions concerned.
5. What records of contracts and amendments are kept on file.

Contracts for Services:

So how do service companies such as Steamship Agencies or Marine Surveyors comply with these requirements?  A telephone call, facsimile, or email from the customer initiates most of their business.  Quite often the customer just gives a verbal order.

For every order, the company should make sure the order is recorded and, when appropriate, confirm the order by fax.  A written acknowledgement of the order gives the customer opportunity to either confirm or send a revised order with the correct information.  Contract changes should be handled the same way and the company should keep records of all communications.   Again, it is important for the company to ensure that all persons involved know what is required to serve the customer.

ISO 9001 certified companies strive to consistently meet customer needs and requirements.  They start by ensuring customer requirements are fully understood and documented.  Every company seeking ISO 9001 certification must comply with 7.2 Customer-Related Quality System requirements.

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Created by JoAnne Sterling, Sterling's Business Services, jaganann@earthlink.net.
Copyright © 1999 [Maritime Quality Consultants, Inc.]. All rights reserved.
Revised: 11/01/04