Does TPI agencies comes under outsourced process as per Q1

In the recent audit we had AAR stating TPI is not in the approved supplier list. We opposed the AAR and Auditor replied " APPEAL to API".

My Question is:

1) Does TPI activities comes under outsourced process?
2) If the customer PO states about the TPI requirement, even then its the responsibility of organization to approve the TPI and shall be listed out in the ASL?

gbalakishore said:

In the recent audit we had AAR stating TPI is not in the approved supplier list. We opposed the AAR and Auditor replied " APPEAL to API".

My Question is:

1) Does TPI activities comes under outsourced process?
2) If the customer PO states about the TPI requirement, even then its the responsibility of organization to approve the TPI and shall be listed out in the ASL?

Click to expand...

Hi,gbalakishore,
Would you provide detailed information regarding this NC, which is included the objective evidence, nonconformance description, correction, root cause analysis, and corrective actions of one to help you resolve this problem?

Description Clause No.: 5.6.1.6
Where an organization chooses to outsource any activity within the scope of its quality management system, the organization shall ensure that all applicable elements of its quality management system are satisfied and shall maintain responsibility for product conformance to specified requirements, including applicable API product specifications, associated with product realization.

Objective Evidence:
External service providers is not identified in QMS system & types of control applied in Purchase procedure RM-WP-02 rev 01 dt 20.04.2021.
1) RM verification by facility nominated TPI agencies. E.g. Bureau veritas.
2) AMC services for machine maintenance service providers. E.g. AUTO UT.
3) List of external service providers – RM/F/13 not evident.

Non-conformance/Concern Description:
External service providers are not identified with their types of controls.

We have submitted the response to API as below:

Correction:
No correction is required.
Root Cause Analysis:
As per clause API Q1 5.6.1.6, the identified outsource activities within the scope of the management system are procuring green pipes, Coupling Stocks, Coupling threading from group companies and external Calibration.

In 5.6.1.6 of API Q1, there is no such term external service provider. It specifies the outsource activity shall be identified by the organisation

In the above case, the Third-Party Agency (Bureau veritas) was approved by Customer for inspection of raw-material at Suppliers premises and the same was captured on the Purchase Order to ensure the Customer requirements are met. As desired by the Customer, the inspection activity was done by the TPIA.
Auto UT machines are calibrated by the Original Equipment Manufacturers (OEMs) and they were already under the approved suppliers list.
In RM/F/13 not evident, because raw material purchase is a procurement process and not an out sourced activity such as heat treatment, threading, or testing. However, the Approve Suppliers List along with the scope of supply was maintained.
As per 5.6.1.6, the above are not outsourced activities and hence they were not identified. Refer note in introduction of Applicability of API Specification Q1 which is as below:

• API Q1 applies to those activities that otherwise may be considered a service (such as heat treatment, threading, or testing) if these activities or the results of these activities are identified as an API monogrammable product under any applicable API product specification in the API Monogram Program.

Corrective Action:
No corrective action is required as per Q1

Date of Completion and Implementation:

API Response is as below:

Please note that outsourced processes means your facility shall ensure that it meets specified requirements. Customer approval does not ensure your facility meets the requirements. A full response is required.

Hope this helps...

Hi,gbalakishore,
I understand the invalid meaning expressed you want in this NC, but the question raised by the API reviewer is so right.
At first, you should refer to the definition of outsourced activity be specified as follows:
3.1.16 outsourced activity
Function or process that is performed by an external supplier on behalf of the organization.
Although the Third-Party Agency(Bureau veritas) was approved by the customer for inspection of raw material at suppliers premise and the same was captured on the Purchase Order as well as the inspection activity was done by the TPIA, your organization still should require TPIA to meet the requirements specified in your QMS and maintain responsibility for raw material conformance to specified requirements. Hence, the inspection record of raw-material performed by TPIA was still needs to be verified by your organization so as to meet the customer requirements.
The raw material purchase is actually a procurement process and not an outsourced activity, but the inspection of raw material actually is an outsourced activity as it was performed by TPIA, not your organization. so your organization should verify it.
Second, the AMC services for machine maintenance service providers were calibrated by OEMs, they as well as their approval scope are included in the ASL.but your organization should verify the type and extent of control applied by the AUTO UT, internally and to their supply chain, in order to meet your organization`s requirements.
Final, We recommend that The Procurement Control Procedure was revised by your organization to deal with this NC, which specified the following contents:
1）ensure that externally provided processes remain within the control of your QMS;
2) define both the controls that it intends to apply to an external service provider and those it intends to apply to the resulting output;
3) take into consideration:
—— the potential impact of the externally provided process, products and services on the organization's ability to consistently meet customer and applicable statutory and regulations requirements;
—— the effectiveness of the controls applied by the external service provider.
——determine the verification, or other activities, necessary to ensure that externally provided processes, products, and services meet requirements.
Hope it can help you .

Many API auditors and API reviewers are confused about the difference between purchasing and outsourcing, which makes it very difficult to appeal these types of findings. I have had some success appealing similar findings and I think your initial response looks ok, but even perfect responses can be rejected by reviewers.

Note that the nonconformance statement doesn't actually state how your organization does not conform to the referenced requirement. Read them both again - 5.6.1.6 does not require you to identify "external service providers with their types of controls", so not doing this is not a nonconformance to 5.6.1.6. You can try to argue this point, but you will likely be rejected (even if you are right). However, this makes both addressing and appealing this finding more difficult.

You could try again to emphasize that these are purchases (for which you apply supplier controls per 5.6.1 and verification per 5.6.3), rather than outsourced activities within the scope of your QMS. The official API interpretation at the top of the fourth page at the below link support this view:
(broken link removed)

Alternatively, you could explain how you met the actual written outsourcing requirement. This has two components:
1. ensure that all applicable elements of its quality management system are satisfied
2. shall maintain responsibility for product conformance to specified requirements
I think the second component is normally satisfied by default, unless you add some disclaimer that you are not responsible. The first component is hazy. What are the "applicable elements" of your QMS for these purchases? How do you ensure they are satisfied? If you can identify the applicable elements and how you have ensured that they are satisfied, you should be able to explain to API how you are already meeting this requirement.

gbalakishore said:

My Question is:

1) Does TPI activities comes under outsourced process?
2) If the customer PO states about the TPI requirement, even then its the responsibility of organization to approve the TPI and shall be listed out in the ASL?

Click to expand...

@jmech is correct. Subtle difference between outsourcing and purchasing. TPI stands for THIRD PARTY INSPECTOR, and, obviously, this is something requested by your customer to provide them with additional confidence, but the TPI is not replacing your own inspection processes and it would be equivalent to have the customer performing a source inspection.

As for having them in the ASL, that would not hurt and the basic criteria to include them is the concurrence of acceptability by the customer.

Jmech and Sidney are correct, but this nonconformance is very sensitive unless your organization can provide some evidence that indicates you are not responsible for verifying these activities.

Thank You Jmech, Lingli, Sidney....for your suggestions...

This is the reply i was giving to API ... @ Jmech, sidney, Lingli any suggestions from your side..

First of all we would like clarify you here that the activity carried by the third party agency is on behalf of the customer but not as per our requirement. This was requested by our customer to provide them with additional confidence to achieve the best results for the final product.

Even though the RM material is inspected by the TPI at Supplier premises as per the customer requirement, we will carry inspection of the received material at our premises as per our documented procedure to ensure that the received material meets the requirements of Purchase Order and our TDC requirements.

Refer Attached Incoming inspection reports QC F ____ dated_____
Refer Attached Procedure for Incoming Inspection QC P ___ Rev __ Dated___

As per system we are maintain Approved supplier list for general critical & Non-critical items separately and for raw materials separately.
The approved AMC suppliers for AUTO UT Machines are addressed in the Approved supplier list for general critical & Non-critical items.

Refer Attached Approved Supplier PUR F ___ Dated:_______ and Approved Supplier List for Raw materials RM F ___ dated_______

Since we are meeting the requirements of Clause 5.6 of API Q1 there is no negative impact.

After brain storming for the past two days.... we came to conclusion that All the external service providers to be updated in the Approved supplier list.. Including API as we are certified by API ( an external certification Service) to run our business.