antigravity-skills-reference/skills/quality-nonconformance/references/decision-frameworks.md

Decision Frameworks — Quality & Non-Conformance Management

This reference provides the detailed decision logic, MRB processes, RCA methodology selection, CAPA lifecycle management, SPC interpretation workflows, inspection level determination, supplier quality escalation, and cost of quality calculation models for regulated manufacturing quality engineering.

All thresholds, regulatory references, and process expectations reflect quality engineering practice across FDA 21 CFR 820, IATF 16949, AS9100, and ISO 13485 environments.

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1. NCR Disposition Decision Trees

1.1 Universal Disposition Flow

Every non-conformance, regardless of regulatory environment, begins with this decision sequence. The flow terminates at the first applicable disposition; do not skip levels.

START: Non-conformance identified and documented
  │
  ├─ Is the part safety-critical or regulatory-controlled?
  │   ├─ YES → Can it be reworked to FULL conformance?
  │   │         ├─ YES → REWORK with approved procedure + 100% re-inspection
  │   │         └─ NO  → SCRAP (no use-as-is permitted without formal risk assessment
  │   │                   AND regulatory/customer approval)
  │   └─ NO  → Continue
  │
  ├─ Does the non-conformance affect form, fit, or function?
  │   ├─ YES → Can it be reworked to full conformance?
  │   │         ├─ YES → Is rework cost < 60% of replacement cost?
  │   │         │         ├─ YES → REWORK
  │   │         │         └─ NO  → SCRAP (rework is not economical)
  │   │         └─ NO  → Can it be repaired to acceptable function?
  │   │                   ├─ YES → REPAIR with engineering concession + customer
  │   │                   │         approval (if required by contract/standard)
  │   │                   └─ NO  → SCRAP
  │   └─ NO  → Continue
  │
  ├─ Is the non-conformance cosmetic only?
  │   ├─ YES → Does customer spec address cosmetic requirements?
  │   │         ├─ YES → Does the part meet customer cosmetic spec?
  │   │         │         ├─ YES → USE-AS-IS with documentation
  │   │         │         └─ NO  → Customer concession required → If granted: USE-AS-IS
  │   │         │                                                → If denied: REWORK or SCRAP
  │   │         └─ NO  → USE-AS-IS with engineering sign-off
  │   └─ NO  → Continue
  │
  ├─ Is this a dimensional non-conformance within material review authority?
  │   ├─ YES → Engineering analysis: does the dimension affect assembly or performance?
  │   │         ├─ YES → REWORK or SCRAP (depending on feasibility)
  │   │         └─ NO  → USE-AS-IS with documented engineering justification
  │   └─ NO  → Continue
  │
  └─ Is this a supplier-caused non-conformance?
      ├─ YES → Is the material needed immediately for production?
      │         ├─ YES → Sort/rework at supplier's cost + USE acceptable units
      │         │         + SCAR to supplier + debit memo for sort/rework cost
      │         └─ NO  → RETURN TO VENDOR with SCAR + debit memo or replacement PO
      └─ NO  → Evaluate per the functional impact path above

1.2 FDA-Regulated Environment (21 CFR 820 / ISO 13485) Specific Logic

Medical device non-conformances carry additional requirements:

Pre-Market (Design/Development):

• Non-conformances during design verification/validation must be documented in the Design History File (DHF)
• Disposition must consider risk per ISO 14971 — severity and probability of harm to the patient
• Use-as-is is rarely acceptable for a design non-conformance; it implies the design intent is wrong
• CAPA is almost always required to prevent recurrence in production

Post-Market (Production/Field):

• Non-conformances that could affect device safety or performance require evaluation for field action (recall, correction, removal) per 21 CFR 806
• The threshold is low: if there is any reasonable possibility of harm, evaluate formally
• Document the decision NOT to file a field action as rigorously as the decision to file one
• Complaint-related non-conformances must be linked to complaint records per 820.198
• MDR (Medical Device Report) obligations: death or serious injury must be reported to FDA within 30 calendar days (5 days for events requiring remedial action)

Disposition Authority Matrix:

Disposition	Who Can Authorize	Additional Requirements
Scrap	Quality Engineer or above	Documented with lot traceability
Rework	Quality Engineer + Manufacturing Engineering	Approved rework procedure; re-inspect to original spec
Repair	MRB (Quality + Engineering + Manufacturing)	Risk assessment per ISO 14971; update DHF if design-related
Use-As-Is	MRB + Design Authority	Risk assessment; documented justification; regulatory impact evaluation
RTV	Quality Engineer + Procurement	SCAR required; supplier re-qualification if repeated

1.3 Automotive Environment (IATF 16949) Specific Logic

Customer Notification Requirements:

• Any non-conformance on product shipped to the customer: notification within 24 hours of discovery
• Any process change affecting fit, form, function, or performance: PPAP resubmission required
• Use-as-is disposition: typically requires a formal deviation request to the customer through their supplier portal (e.g., GM's GQTS, Ford's MQAS, Stellantis' SQP)
• Customer may accept, reject, or accept with conditions (reduced quantity, time-limited deviation)

Control Plan Integration:

• When a non-conformance reveals a gap in the control plan, the control plan must be updated as part of the corrective action
• Special characteristics (safety/significant characteristics identified with shield or diamond symbols) have zero tolerance for non-conformance: 100% containment and immediate CAPA
• The reaction plan column of the control plan specifies the predetermined response — follow it first, then investigate

Controlled Shipping Levels:

• CS-1 (Internal Controlled Shipping): Supplier adds an additional inspection/sort step beyond normal controls and submits inspection data with each shipment
• CS-2 (External Controlled Shipping): Third-party inspection at supplier's facility, at supplier's cost, with direct reporting to customer quality
• CS-1 and CS-2 are distinct from the general supplier escalation ladder — they are customer-mandated containment measures, not supplier-initiated improvements

1.4 Aerospace Environment (AS9100) Specific Logic

Customer/Authority Approval:

• Use-as-is and repair dispositions ALWAYS require customer approval per AS9100 §8.7.1
• If the customer is a prime contractor working under a government contract, the government quality representative (DCMA or equivalent) may also need to approve
• Non-conformances on parts with key characteristics require notification to the design authority
• First Article Inspection (FAI) per AS9102 becomes invalid if a non-conformance indicates the process has changed from the qualified state — partial or full FAI resubmission may be required

Counterfeit Part Prevention:

• If a non-conformance raises suspicion of counterfeit material (unexpected material composition, incorrect markings, suspect documentation), invoke the counterfeit prevention procedure per AS9100 §8.1.4
• Quarantine the suspect material in a separate area from other MRB material
• Report to GIDEP (Government-Industry Data Exchange Program) if counterfeit is confirmed
• Do not return suspect counterfeit material to the supplier — it must be quarantined and may need to be retained as evidence

Traceability Requirements:

• Aerospace non-conformances must maintain lot, batch, heat, and serial number traceability throughout the disposition process
• Scrap disposition must include documented destruction of serialized parts to prevent re-entry into the supply chain
• OASIS database updates may be required for supplier quality events

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2. Root Cause Analysis Methodology Selection Guide

2.1 Selection Decision Matrix

Factor	5 Whys	Ishikawa + 5 Whys	8D	Fault Tree Analysis
Best for	Single-event, linear cause chain	Multi-factor, need to explore categories	Recurring issue, team-based resolution	Safety-critical, quantitative risk needed
Effort (hours)	1–2	4–8	20–40 (across all D-steps)	40–80
Team size	1–2 people	2–4 people	5–8 cross-functional	3–6 subject matter experts
When required	Internal process investigations	Complex non-conformances	Customer mandate (automotive OEMs)	Aerospace product safety; medical device risk analysis
Limitation	Assumes single linear chain	Still qualitative; hypothesis-driven	Heavyweight for simple issues	Resource-intensive; requires failure rate data for quantitative mode
Output	Root cause statement	Categorized cause hypotheses with verified root cause	Full 8D report (D0-D8)	Fault tree diagram with probability assignments

2.2 The 5 Whys: When It Works and When It Doesn't

5 Whys works well when:

• The failure is a single event with a clear before/after state change
• Each "why" can be verified with data (measurement, observation, record review)
• The causal chain does not branch — there is a single dominant cause
• The investigation can reach a systemic cause (process, system, or design issue) within 5 iterations

5 Whys fails when:

• Multiple independent causes interact to produce the failure (combinatorial causes)
• The analyst stops at "human error" or "operator mistake" — this is never a root cause
• Each "why" is answered with opinion rather than verified data
• The analysis becomes circular (Why A? Because B. Why B? Because A.)
• Organizational pressure drives toward a "convenient" root cause that avoids systemic change

Verification protocol for each "why" level:

Why Level	Question	Acceptable Evidence	Unacceptable Evidence
Why 1 (Event)	What physically happened?	Measurement data, photographs, inspection records	"The part was bad"
Why 2 (Condition)	What condition allowed it?	Process parameter logs, tool condition records	"The operator didn't check"
Why 3 (Process)	Why did the process permit this condition?	Work instruction review, process FMEA gap	"It's always been done this way"
Why 4 (System)	Why didn't the system prevent the process gap?	System audit evidence, training records, control plan review	"We need better training"
Why 5 (Management)	Why was the system gap undetected?	Management review records, resource allocation evidence, risk assessment gaps	"Management doesn't care about quality"

2.3 Ishikawa Diagram: 6M Framework Deep Dive

For each M category, specific investigation questions that separate thorough analysis from checkbox exercises:

Man (Personnel):

• Was the operator trained AND certified on this specific operation?
• When was the most recent certification renewal?
• Was this the operator's normal workstation or were they cross-trained/temporary?
• Was the shift staffing at normal levels or was this during overtime/short-staffing?
• Check operator error rate data — is this an isolated event or a pattern for this individual?

Machine (Equipment):

• When was the last preventive maintenance performed (date AND what was done)?
• Is the machine within its calibration cycle for all measuring functions?
• Were any alarms, warnings, or parameter drifts logged before the event?
• Has the machine been modified, repaired, or had a tooling change recently?
• Check the machine's historical Cpk trend — has capability been declining?

Material:

• Is this a new lot of raw material? When did the lot change?
• Were incoming inspection results within normal range, or marginal-pass?
• Does the material certificate match what was physically received (heat number, mill, composition)?
• Has the material been stored correctly (temperature, humidity, shelf life, FIFO rotation)?
• Were any material substitutions or equivalents authorized?

Method (Process):

• Is the work instruction current revision? When was it last revised?
• Does the operator actually follow the work instruction as written (observation, not assumption)?
• Were any process parameters changed recently (speeds, feeds, temperatures, pressures, cure times)?
• Was an engineering change order (ECO) recently implemented on this part or process?
• Is there a gap between the documented method and the actual method (tribal knowledge)?

Measurement:

• Was the measurement system used for this inspection validated (Gauge R&R)?
• Is the gauge within calibration? Check both certificate and physical condition.
• Was the correct measurement method used (per the control plan or inspection instruction)?
• Did the measurement environment (temperature, vibration, lighting) affect the result?
• For attribute inspections (go/no-go, visual): what is the inspection effectiveness rate?

Mother Nature (Environment):

• Were ambient conditions (temperature, humidity) within process specification?
• Were there any environmental events (power fluctuation, compressed air pressure drop, vibration from construction)?
• Is there a shift-to-shift or day-to-day correlation in the data (temperature cycling, humidity changes)?
• Was the factory HVAC system operating normally?
• For cleanroom or controlled environment processes: were environmental monitoring logs within specification?

2.4 8D Methodology: Detailed Gate Requirements

Each D-step has specific outputs required before advancing. Skipping gates creates 8Ds that look complete but don't actually solve the problem.

D-Step	Name	Required Output	Common Failure Mode
D0	Symptom & Emergency Response	Emergency response actions taken; containment effectiveness confirmed	Confusing containment with corrective action
D1	Team Formation	Cross-functional team with defined roles; includes process owner and subject matter expert	Team is all quality, no manufacturing or engineering
D2	Problem Definition	IS/IS NOT analysis completed; problem quantified with data (defect rate, PPM, Cpk shift, complaint count)	Problem statement is too broad ("quality issues") or just restates the symptom
D3	Interim Containment	Actions to protect customer while investigation proceeds; effectiveness verified (inspection data post-containment)	Containment is "100% inspection" without verifying inspection effectiveness through known-defective challenge
D4	Root Cause	Root cause(s) verified through data analysis or designed experiment; escapes the "human error" trap	Root cause = restatement of problem; no verification data; stops at symptoms
D5	Corrective Action Selection	Actions address verified root cause; mistake-proofing (poka-yoke) preferred over procedural controls	Corrective action = "retrain operators" or "add inspection step" (both are weak)
D6	Implementation	Actions implemented with documented evidence (updated WI, installed fixture, modified process); baseline performance established	Implementation date = planned date, not actual; no evidence of implementation
D7	Prevention	Systemic actions to prevent recurrence across similar processes/products; lessons learned documented; FMEA updated	D7 is copy-paste of D5; no horizontal deployment; FMEA not updated
D8	Recognition	Team acknowledged; 8D closed with effectiveness data	Closed without effectiveness data; team not recognized

2.5 Fault Tree Analysis: Construction Methodology

Step 1: Define the Top Event

• State the undesired event in specific, measurable terms
• Example: "Shaft diameter exceeds USL of 25.05mm on finished machined part"
• Not: "Bad parts" or "Quality problem"

Step 2: Identify Immediate Causes (Level 1)

• What must be true for the top event to occur?
• Use AND gates (all causes must be present) and OR gates (any single cause is sufficient)
• Example: "Shaft OD too large" can be caused by (OR gate): tool wear, incorrect tool offset, material oversize, thermal expansion, fixture misalignment

Step 3: Decompose Each Cause (Levels 2–N)

• For each Level 1 cause, ask: what causes this?
• Continue decomposing until you reach basic events (events with known failure rates or that cannot be further decomposed)
• Example: "Tool wear" caused by (AND gate): extended run time + inadequate tool change interval + no in-process SPC alert

Step 4: Quantify (when data is available)

• Assign probability values to basic events using historical data, MTBF data, or engineering estimates
• Calculate top event probability through the gate logic
• Identify the minimal cut sets (smallest combinations of basic events that cause the top event)
• Focus corrective actions on the highest-probability cut sets

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3. CAPA Writing and Verification Framework

3.1 CAPA Initiation Criteria

Always initiate CAPA for:

• Repeat non-conformance: same failure mode occurring 3+ times in 12 months
• Customer complaint involving product performance, safety, or regulatory compliance
• External audit finding (FDA, notified body, customer, registrar)
• Field failure or product return
• Trend signal: SPC control chart out-of-control pattern (not isolated point)
• Regulatory requirement change affecting existing products/processes
• Post-market surveillance data indicating potential safety concern

Consider CAPA (judgment call) for:

• Repeat non-conformance: same failure mode 2 times in 12 months
• Internal audit finding of moderate significance
• Supplier non-conformance with systemic indicators
• Near-miss event (non-conformance caught before reaching customer)
• Process deviation from validated parameters without product impact

Do NOT initiate CAPA for:

• Isolated non-conformance with clear, non-recurring cause (one-off tool breakage, power outage)
• Non-conformance fully addressed by NCR disposition with no systemic implication
• Customer cosmetic preference that doesn't violate any specification
• Minor documentation errors caught and corrected within the same day

3.2 CAPA Action Hierarchy (Effectiveness Ranking)

Corrective actions are not created equal. Rank by effectiveness and default to the highest feasible level:

Rank	Control Type	Example	Effectiveness	Typical Cost
1	Elimination	Redesign to remove the failure mode entirely	~100%	High (design change, tooling)
2	Substitution	Change material, supplier, or process to one that cannot produce the failure	~95%	Medium-High
3	Engineering Controls (Poka-Yoke)	Fixture that physically prevents incorrect assembly; sensor that stops machine on out-of-spec condition	~90%	Medium
4	Detection Controls	Automated inspection (vision system, laser gauge) that 100% inspects and auto-rejects	~85%	Medium
5	Administrative Controls	Updated work instruction, revised procedure, checklist	~50-60%	Low
6	Training	Operator retraining on existing procedure	~30-40%	Low

If your corrective action is ranked 5 or 6 and a rank 1-4 action is feasible, the CAPA will likely be challenged by auditors. Training alone is never an adequate corrective action for a significant non-conformance.

3.3 CAPA Effectiveness Verification Protocol

Phase 1: Implementation Verification (within 2 weeks of target date)

Evidence Required	What to Check	Acceptable	Not Acceptable
Document revision	Was the WI/procedure updated to reflect the change?	Revision with effective date and training records	"Will be updated in next revision"
Physical verification	Is the fixture/tool/sensor installed and operational?	Photograph + validation record	Purchase order placed but not installed
Training completion	Were affected personnel trained?	Signed training records with competency assessment	Email sent to team
System update	Were QMS documents, FMEA, control plan updated?	Updated documents with revision and approval	"Will update during next review"

Phase 2: Effectiveness Validation (90-day monitoring period)

Metric	Calculation	Pass Criteria	Fail Criteria
Recurrence rate	Count of same failure mode in monitoring period	Zero recurrences	Any recurrence
Related failure rate	Count of related failure modes in same process	No increase from baseline	Increase suggests incomplete root cause
Process capability	Cpk or Ppk for the affected characteristic	Cpk ≥ 1.33 (or target value)	Cpk below pre-CAPA level
Customer feedback	Complaints related to the addressed failure mode	Zero related complaints	Any related complaint

Phase 3: Closure Decision

Condition	Decision
Phase 1 complete + Phase 2 pass criteria met	Close CAPA
Phase 1 complete + Phase 2 shows improvement but not full elimination	Extend monitoring period by 60 days; if still improving, close with condition
Phase 1 complete + Phase 2 shows no improvement	Reopen CAPA; root cause was incorrect or action insufficient
Phase 1 incomplete (action not implemented)	CAPA remains open; escalate for resource allocation
Recurrence during monitoring	Reopen CAPA; do NOT close and open new CAPA for same issue

3.4 CAPA Timeliness Standards

CAPA Phase	Target Timeline	Regulatory Expectation
Initiation and assignment	Within 5 business days of trigger	FDA: "timely" — typically within 30 days of awareness
Investigation and root cause	Within 30 calendar days	IATF 16949: per customer timeline (often 10-day initial response)
Corrective action plan	Within 45 calendar days	AS9100: per contractual agreement
Implementation	Within 90 calendar days	Varies by complexity; document delays with justification
Effectiveness verification start	Immediately after implementation	Must be defined at initiation
Effectiveness verification completion	90 days after implementation	FDA: must demonstrate effectiveness, not just implementation
CAPA closure	Within 180 calendar days of initiation (total)	FDA warning letters cite CAPAs open > 1 year as systemic failure

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4. SPC Interpretation Decision Logic

4.1 Control Chart Selection Flowchart

START: What type of data are you charting?
  │
  ├─ CONTINUOUS (variable) data — measurements in units (mm, kg, °C, psi)
  │   ├─ Are you taking subgroups (multiple measurements per sampling event)?
  │   │   ├─ YES → What is the subgroup size (n)?
  │   │   │         ├─ n = 2 to 9  → X-bar / R chart
  │   │   │         ├─ n = 10 to 25 → X-bar / S chart
  │   │   │         └─ n > 25 → X-bar / S chart (consider reducing subgroup size)
  │   │   └─ NO (n=1, individual readings) → Individuals / Moving Range (I-MR) chart
  │   │         Use when: batch process, destructive testing, slow process,
  │   │         or when each unit is unique
  │   └─ (Verify data normality assumption for variable charts — I-MR is sensitive
  │       to non-normality; consider transformation or use nonparametric alternatives)
  │
  └─ ATTRIBUTE (discrete) data — counts or proportions
      ├─ Are you counting DEFECTIVE ITEMS (units that pass or fail)?
      │   ├─ YES → Is the sample size constant?
      │   │         ├─ YES → np-chart (count of defectives, fixed sample)
      │   │         └─ NO  → p-chart (proportion defective, variable sample)
      │   └─ NO  → You're counting DEFECTS (multiple defects possible per unit)
      │             ├─ Is the inspection area/opportunity constant?
      │             │   ├─ YES → c-chart (count of defects per unit, fixed area)
      │             │   └─ NO  → u-chart (defects per unit, variable area)
      │             └─ (Verify Poisson assumption for c/u charts)
      └─ (Attribute charts require larger sample sizes than variable charts for
          equivalent sensitivity — minimum ~50 for p/np, ~25 for c/u)

4.2 Out-of-Control Response Protocol

When a control chart signals an out-of-control condition, follow this response based on the specific signal:

Rule 1: Point beyond 3σ control limit

Response Level	Action	Timeline
Immediate	Stop process if product is being produced; quarantine output since last known good point	Within minutes
Investigation	Identify the assignable cause — what changed? Check 6M categories systematically	Within 4 hours
Containment	Sort/inspect product produced during the out-of-control period	Within 1 shift
Correction	Address the assignable cause and restart production with increased monitoring	Before next production run
Documentation	NCR if product was affected; update control chart with annotation	Within 24 hours

Rule 2: Nine consecutive points on one side of the center line (run)

Response Level	Action	Timeline
Investigation	Process mean has likely shifted. Check for: tool wear progression, material lot change, environmental drift, measurement calibration shift	Within 1 shift
Adjustment	If assignable cause found: correct. If no assignable cause found and process is still within spec, continue monitoring but increase sampling frequency	Within 24 hours
Recalculation	If the shift is intentional (process improvement) or represents a new process level, recalculate control limits with new data	After 25+ subgroups at new level

Rule 3: Six consecutive points steadily increasing or decreasing (trend)

Response Level	Action	Timeline
Investigation	Process is drifting. Most common causes: tool wear, chemical depletion, thermal drift, filter degradation	Within 1 shift
Projection	At the current drift rate, when will the process exceed the specification limit? This determines urgency	Immediate calculation
Preemptive action	Adjust the process (tool change, chemical replenishment) BEFORE it reaches the spec limit	Before projected spec limit crossing

Rule 4: Fourteen consecutive points alternating up and down (stratification/mixing)

Response Level	Action	Timeline
Investigation	This pattern indicates over-control (tampering), two alternating streams (e.g., two spindles, two cavities), or systematic measurement error	Within 24 hours
Verification	Check if the subgroup data is being collected from multiple sources that should be charted separately	Within 48 hours
Stratification	If data is from multiple streams, create separate charts for each stream	Within 1 week

4.3 Capability Index Interpretation

Cpk Value	Interpretation	Action Required
Cpk ≥ 2.00	Six Sigma capable; consider reducing inspection frequency	Maintain controls; candidate for reduced inspection or skip-lot
1.67 ≤ Cpk < 2.00	Highly capable; exceeds most customer requirements	Standard monitoring; meets IATF 16949 requirements for new processes
1.33 ≤ Cpk < 1.67	Capable; meets most industry standards	Standard SPC monitoring; meets IATF 16949 minimum for production
1.00 ≤ Cpk < 1.33	Marginally capable; producing some defects	Increase monitoring frequency; initiate process improvement; customer notification may be required
0.67 ≤ Cpk < 1.00	Not capable; significant defect production	100% inspection until process is improved; CAPA required; customer notification required
Cpk < 0.67	Severely incapable	Stop production; sort all WIP and finished goods; engineering review of process and specification

Cp vs. Cpk Interpretation:

Condition	Meaning	Action
Cp high, Cpk high	Process is both capable and centered	Optimal state; maintain
Cp high, Cpk low	Process has low variation but is not centered on the target	Adjust the process mean; do NOT reduce variation (it's already good)
Cp low, Cpk low	Process has too much variation, possibly also off-center	Reduce variation first (fundamental process improvement), then center
Cp low, Cpk ≈ Cp	Process has too much variation but is centered	Reduce variation; centering is not the issue

Pp/Ppk vs. Cp/Cpk:

Index	Uses	Represents	When to Use
Cp/Cpk	Within-subgroup variation (σ_within)	Short-term or "potential" capability	Evaluating process potential when in statistical control
Pp/Ppk	Overall variation (σ_overall) including between-subgroup shifts	Long-term or "actual" performance	Evaluating what the customer actually receives over time
Pp/Ppk < Cp/Cpk (common)	Process mean is shifting between subgroups	Between-subgroup variation is significant	Investigate what's causing the mean to shift between subgroups
Pp/Ppk ≈ Cp/Cpk	Process is stable over time	Minimal between-subgroup variation	Process is well-controlled; long-term performance matches potential

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5. Inspection Level Determination

5.1 Incoming Inspection Level Decision Matrix

Factor	Points
Supplier History
New supplier (< 5 lots received)	5
Supplier on probation/watch	5
Qualified supplier with PPM 1,000-5,000	3
Qualified supplier with PPM 500-1,000	2
Qualified supplier with PPM < 500	1
Preferred supplier with PPM < 100	0
Part Criticality
Safety-critical characteristic	5
Key characteristic (fit/function)	3
Standard characteristic	1
Cosmetic only	0
Regulatory Requirement
FDA/medical device requiring incoming inspection	5
Aerospace with special process (NADCAP)	4
Automotive with customer-designated special characteristic	3
Standard ISO 9001 environment	1
Recent Quality History (last 6 months)
NCR issued against this part/supplier combination	+3
Customer complaint traced to this component	+4
SCAR currently open against this supplier	+3
No quality issues	0

Inspection Level Assignment:

Total Points	Inspection Level	Typical Approach
0–3	Reduced / Skip-Lot	CoC review + skip-lot verification (every 3rd or 5th lot)
4–7	Normal (AQL Level II)	Standard AQL sampling per ANSI/ASQ Z1.4
8–11	Tightened (AQL Level III)	Tightened sampling or increased sample size
12+	100% / Full Inspection	100% inspection of critical characteristics

5.2 ANSI/ASQ Z1.4 Quick Reference

Sample Size Code Letters (Normal Inspection, General Level II):

Lot Size	Code Letter	Sample Size (AQL 1.0)
2–8	A	2 (Ac=0, Re=1)
9–15	B	3 (Ac=0, Re=1)
16–25	C	5 (Ac=0, Re=1)
26–50	D	8 (Ac=0, Re=1)
51–90	E	13 (Ac=1, Re=2)
91–150	F	20 (Ac=1, Re=2)
151–280	G	32 (Ac=2, Re=3)
281–500	H	50 (Ac=3, Re=4)
501–1,200	J	80 (Ac=5, Re=6)
1,201–3,200	K	125 (Ac=7, Re=8)
3,201–10,000	L	200 (Ac=10, Re=11)
10,001–35,000	M	315 (Ac=14, Re=15)
35,001–150,000	N	500 (Ac=21, Re=22)

Switching Rules:

Current Level	Switch Condition	Switch To
Normal	2 of 5 consecutive lots rejected	Tightened
Normal	10 consecutive lots accepted AND production at steady rate AND approved by responsible authority	Reduced
Tightened	5 consecutive lots accepted	Normal
Tightened	10 consecutive lots not accepted	Discontinue inspection; require supplier corrective action
Reduced	1 lot rejected	Normal
Reduced	Production irregular or other conditions warrant	Normal

5.3 Skip-Lot Qualification Requirements

Qualification Criteria (all must be met):

1. Supplier is on the Approved Supplier List with "preferred" or "qualified" status
2. Minimum 10 consecutive lots accepted at normal inspection level
3. Supplier's process capability (Cpk) for critical characteristics ≥ 1.33, verified by supplier data AND incoming inspection data
4. No open SCARs against the supplier for this part number
5. Supplier has a certified quality management system (ISO 9001 minimum; industry-specific certification preferred)
6. Written agreement documenting skip-lot terms, reversion criteria, and data submission requirements

Skip-Lot Frequencies:

Qualification Level	Inspection Frequency	Reversion Trigger
Skip-Lot 1	Every 2nd lot	1 lot rejection
Skip-Lot 2	Every 3rd lot	1 lot rejection or supplier Cpk drops below 1.33
Skip-Lot 3	Every 5th lot	1 lot rejection, Cpk concern, or supplier quality system change
CoC Reliance	CoC review only; periodic verification (annual or per-lot-change)	Any NCR, customer complaint, or audit finding

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6. Supplier Quality Escalation Ladder

6.1 Detailed Escalation Process

Level 0: Normal Operations

• Supplier meets scorecard expectations (PPM < threshold, OTD > threshold, SCAR closure on time)
• Standard incoming inspection level
• Quarterly scorecard review
• Annual audit (if risk-based schedule warrants)

Level 1: SCAR Issued

• Trigger: Single significant non-conformance (> $5,000 impact or safety/regulatory concern) OR 3+ minor non-conformances on the same part in 90 days
• Actions:
  • Formal SCAR issued with 8D or equivalent RCA requirement
  • Supplier has 10 business days for initial response (containment + preliminary root cause)
  • Supplier has 30 calendar days for full corrective action plan with implementation timeline
  • Quality engineering review of SCAR response for adequacy
  • Increase incoming inspection level for the affected part number
• Exit criteria: SCAR accepted and closed with verified effectiveness (90-day monitoring)

Level 2: Supplier on Watch / Probation

• Trigger: SCAR not responded to within timeline OR corrective action not effective (recurrence during monitoring) OR scorecard falls below minimum threshold for 2 consecutive quarters
• Actions:
  • Supplier notified of probation status in writing (Quality Manager or Director level)
  • Procurement notified; new business hold (no new part numbers awarded)
  • Increase inspection level for ALL part numbers from this supplier (not just affected part)
  • Monthly performance review calls with supplier quality management
  • Supplier must submit a comprehensive improvement plan within 15 business days
  • Consider on-site quality audit focused on the specific failure mode
• Exit criteria: Improvement plan accepted + 2 consecutive quarters meeting scorecard minimum + no new SCARs

Level 3: Controlled Shipping

• Trigger: Continued failures during watch period OR critical quality escape that reaches customer
• Actions:
  • Controlled Shipping Level 1 (CS-1): Supplier adds additional sort/inspection step with data submitted per shipment
  • If CS-1 ineffective within 60 days: Controlled Shipping Level 2 (CS-2): third-party resident inspector at supplier's facility, at supplier's expense
  • All sort/inspection costs debited to supplier
  • Weekly performance review calls with supplier VP/GM level
  • Begin qualification of alternate source (if not already underway)
• Exit criteria: 90 consecutive days of zero non-conformances under controlled shipping + root cause fully addressed + systemic improvements validated

Level 4: New Source Qualification / Phase-Out

• Trigger: No sustained improvement under controlled shipping OR supplier unwilling/unable to invest in required improvements
• Actions:
  • Formal notification to supplier of intent to transfer business
  • Accelerated alternate supplier qualification (expedite PPAP/FAI/first articles)
  • Reduce business allocation as alternate source ramps up
  • Maintain controlled shipping on remaining volume
  • Ensure last-time-buy quantities cover the transition period
  • Document all quality costs incurred for potential recovery
• Timeline: Depends on part complexity and alternate source readiness; typically 3-12 months

Level 5: ASL Removal

• Trigger: Qualification of alternate source complete OR supplier's quality system failure is fundamental (e.g., data falsification, loss of certification)
• Actions:
  • Formal removal from Approved Supplier List
  • Final shipment received and inspected under 100% inspection
  • All supplier-owned tooling at our facility: disposition per contract terms
  • Our tooling at supplier's facility: retrieve per contract terms
  • Close all open SCARs as "supplier removed"
  • Retain supplier quality file for minimum 7 years (regulatory record retention)
  • Update OASIS (aerospace) or relevant industry databases
• Re-entry: If supplier applies for re-qualification, treat as a new supplier with full qualification process; require evidence that systemic issues were addressed

6.2 Escalation Decision Quick Reference

Situation	Start at Level	Rationale
First minor NC from good supplier	Handle via NCR, no escalation	Single event doesn't warrant formal escalation
First significant NC from good supplier	Level 1 (SCAR)	Significant impact requires formal root cause
Third minor NC in 90 days from same supplier/part	Level 1 (SCAR)	Pattern indicates systemic issue
SCAR response inadequate or late	Level 2 (Watch)	Non-responsiveness is itself a quality system failure
NC reaches customer	Level 2 minimum; Level 3 if safety-related	Customer impact demands immediate escalation
Falsified documentation discovered	Level 4 minimum; Level 5 if confirmed	Trust is broken; containment scope is unknown
Sole-source supplier with quality problems	Level 1 with parallel Level 4 actions (qualify alternate)	Business continuity requires measured response; don't threaten what you can't execute

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7. Cost of Quality Calculation Models

7.1 COQ Category Definitions and Tracking

Prevention Costs (invest to prevent defects):

Cost Element	How to Measure	Typical Range (% of revenue)
Quality planning	Hours × labor rate for quality planning activities	0.2–0.5%
Process validation/qualification	Labor + equipment + materials for IQ/OQ/PQ	0.3–0.8%
Supplier qualification	Audit travel + labor + first article costs	0.1–0.3%
Training (quality-related)	Hours × labor rate + training materials	0.1–0.3%
SPC implementation/maintenance	Software licenses + labor for chart maintenance	0.1–0.2%
Design reviews / FMEA	Hours × labor rate for cross-functional reviews	0.2–0.5%
Poka-yoke development	Design + fabrication + validation of error-proofing	0.2–0.5%

Appraisal Costs (cost of verifying conformance):

Cost Element	How to Measure	Typical Range (% of revenue)
Incoming inspection	Hours × labor rate + gauge costs	0.3–0.8%
In-process inspection	Hours × labor rate (including production wait time)	0.5–1.5%
Final inspection / testing	Hours × labor rate + test equipment depreciation	0.3–1.0%
Calibration program	Service contracts + labor + standards	0.1–0.3%
Audit program (internal + external)	Labor + travel + registration fees	0.1–0.3%
Laboratory testing	Internal lab costs or external lab fees	0.2–0.5%

Internal Failure Costs (defects caught before shipment):

Cost Element	How to Measure	Typical Range (% of revenue)
Scrap	Scrapped material value + processing labor wasted	1.0–3.0%
Rework	Labor + materials for rework operations	0.5–2.0%
Re-inspection	Hours × labor rate for re-inspection after rework	0.1–0.5%
MRB processing	Hours × labor rate for disposition activities	0.1–0.3%
Root cause investigation	Hours × labor rate for RCA team activities	0.2–0.5%
Production delays	Lost production time due to quarantine, investigation	0.5–2.0%
Supplier sort/containment	Third-party sort labor or internal sort labor for supplier-caused NC	0.1–0.5%

External Failure Costs (defects that reach the customer):

Cost Element	How to Measure	Typical Range (% of revenue)
Customer returns / credits	Credit memos + return shipping + restocking labor	0.5–2.0%
Warranty claims	Claim value + processing labor	0.5–3.0%
Field service / repair	Service labor + travel + parts	0.3–1.5%
Customer complaint processing	Hours × labor rate for investigation + response	0.2–0.5%
Recall / field correction	Product replacement + notification + shipping + regulatory	0.0–5.0% (highly variable)
Regulatory action costs	Fines, consent decree compliance, increased inspections	0.0–10.0% (catastrophic when triggered)
Reputation / lost business	Lost revenue from customer defection (estimate)	Difficult to measure; typically 2-10x direct costs

7.2 COQ Business Case Model

Calculating ROI for Quality Investment:

ROI = (Failure Cost Reduction - Investment Cost) / Investment Cost × 100%

Where:
  Failure Cost Reduction = (Current internal + external failure costs)
                          - (Projected failure costs after investment)
  Investment Cost = Prevention cost increase + appraisal cost change

Rule of Thumb Multipliers:

Investment Type	Expected ROI	Payback Period
Poka-yoke (error-proofing)	5:1 to 20:1	3–6 months
SPC implementation	3:1 to 10:1	6–12 months
Supplier development program	2:1 to 8:1	12–24 months
Process validation improvement	4:1 to 15:1	6–18 months
Training program upgrade	1:1 to 3:1	12–24 months

7.3 MRB Decision Process — Economic Model

When disposition is not dictated by safety or regulatory requirements, use economic analysis:

Rework vs. Scrap Decision:

Rework if: C_rework + C_reinspect < C_replacement × (1 + premium)

Where:
  C_rework = Direct rework labor + materials + machine time
  C_reinspect = Re-inspection labor + any additional testing
  C_replacement = Purchase price or manufacturing cost of replacement unit
  premium = Schedule urgency factor (0% if no urgency, 10-50% if production impact,
            100%+ if customer delivery at risk)

Sort vs. Return Decision (for supplier-caused lots):

Sort if: (C_sort < C_return_freight + C_production_delay) AND (expected yield > 70%)

Where:
  C_sort = Sort labor hours × rate (typically $25-50/hr for manual sort,
           $50-100/hr for dimensional sort)
  C_return_freight = Shipping cost + handling + administrative
  C_production_delay = (Days of delay × daily production value at risk)
  expected yield = Estimated % of lot that will pass sort
                   (use sample data to estimate)

Use-As-Is vs. Sort/Rework Decision (non-safety, non-regulatory):

Use-as-is if: Risk_functional ≤ Acceptable_risk
              AND C_use_as_is < C_sort_or_rework
              AND engineering provides documented justification

Where:
  Risk_functional = P(failure in use) × Impact(failure)
  C_use_as_is = Warranty risk increase (estimated) + documentation cost
  C_sort_or_rework = Direct sort/rework costs + production delay costs

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8. MRB Decision Process — Detailed Workflow

8.1 MRB Meeting Structure

Frequency: Scheduled weekly; ad hoc for urgent dispositions (safety-critical, production-blocking)

Required Attendees:

• Quality Engineering (chair, facilitates and documents)
• Design/Product Engineering (functional impact assessment)
• Manufacturing Engineering (reworkability assessment)
• Production/Operations (schedule impact)
• Procurement (supplier-related dispositions, commercial impact)
• Optional: Regulatory Affairs (if regulatory implications), Customer Quality (if customer notification required)

Standard Agenda:

1. Review of new NCRs pending disposition (by priority: safety first, then production-blocking, then age)
2. Presentation of data package per NCR (measurements, photographs, process data)
3. Engineering assessment of functional impact
4. Disposition decision with documented rationale
5. Review of aging NCRs (> 15 days without disposition)
6. Review of MRB metrics (volume, cycle time, cost)

8.2 MRB Documentation Requirements

Each MRB disposition must include:

Element	Purpose	Who Provides
NCR number and description	Identification and traceability	Quality Engineering
Part number, revision, quantity	Scope of disposition	Quality Engineering
Specification violated (clause, dimension, requirement)	Clarity on what's nonconforming	Quality Engineering
Measurement data (actuals vs. tolerances)	Evidence base for disposition	Quality Engineering / Inspection
Photographs (if applicable)	Visual evidence	Quality Engineering / Inspection
Engineering justification (for use-as-is or repair)	Technical rationale for accepting deviation	Design/Product Engineering
Risk assessment (for safety-related items)	Formal risk evaluation	Design/Product Engineering + Quality
Customer approval reference (if required)	Compliance with contract/standard	Quality Engineering
Disposition decision	The decision itself	MRB consensus
Signatures of all MRB members	Accountability and traceability	All attendees
Cost impact	Financial tracking for COQ	Quality Engineering + Finance
CAPA reference (if initiated)	Link to systemic corrective action	Quality Engineering