03.07 Factory Quality System SQE: On-Site Presence, Traceability, and Claims
Governance metadata | Owner: Head of Supply Chain | Last reviewed: 2026-10-22 | Next review: 2027-01-31
Contract manufacturing commercial terms: see 03.02; this document covers how to stay in control during mass production: on-site responsibilities, incoming / in-process / outgoing inspection, batch traceability, and linking to claims. Safety-related issues escalate to 07.05.
1. Minimum SQE Staffing and Cadence
| Role | Frequency | Output | Escalation trigger |
|---|---|---|---|
| On-site / patrol IQC | Weekly for the first 3 months; biweekly in steady state | Incoming PPM, concession acceptance forms | Critical material PPM breaks the red line |
| In-process IPQC | Daily sampling at critical stations | First-pass yield, line-stop events | FTY below target for 3 consecutive days |
| OQC | Every batch | Outgoing inspection report, AQL | Batch fails |
| Batch traceability | Mandatory | SN / batch / material LOT mapping | LOT cannot be located within 2 hours → P1 |
2. Default Quality Thresholds (Recommended; Adjustable by Category)
| Metric | Ramp phase | Steady state | Action |
|---|---|---|---|
| Incoming PPM (critical materials) | <200 | <100 | Stop batches from that supplier when exceeded |
| Incoming PPM (structural parts) | <800 | <500 | Concessions require dual sign-off by SQE + Hardware |
| First-pass yield FTY | ≥92% | ≥97% | Trigger the 03.02 deduction clause after consecutive misses |
| Outgoing AQL | Critical 1.0 / Minor 2.5 | Same as left | Rejected batches go to a rework work order |
| Major customer complaints per month | 0 | 0 | Triggers 07.05 |
3. Incoming — In-Process — Outgoing Closed Loop
Supplier shipment → IQC (AQL / tightened) → Qualified inbound / return and claim
↓
IPQC critical stations → Line-stop authority (quality manager)
↓
OQC + aging → Warehouse-ready and sellable
↓
After-sales customer complaint → LOT reverse lookup → Claim / recall assessment (07.05/07.09)Concession Acceptance Rules (Default)
- Limited to non-safety, non-cosmetic critical items
- Requires three signatures: SQE + Hardware + Sales (if it affects the user experience)
- Concession batches are tagged, and customer complaints attribute to them first
4. Claims Linked to the Contract (Template Level, Subject to Legal Review)
| Issue | Default action |
|---|---|
| Batch-level functional defect | The responsible party bears the material replacement / rework cost; that batch's shipments are stopped |
| Concealed defects / falsified reports | Terminate the partnership evaluation + material and tooling count |
| Material substitution | Apply the audit logic of 06.05 in reverse to the mass-production factory |
| Delivery fraud | Align with the 03.02 breach of contract and final payment clauses |
The specific compensation cap is governed by the contract between the parties (this repository copy is not the contract text).
5. Cross-References with Dual Sourcing / PSI
- A single supplier's quality deteriorates → merge into the 03.06 switching assessment
- Batch line stop → update output and DOS in 03.05
- Claim recovery timing → affects cash in 07.07
7. Related Documents
03.02 / 03.06 / 07.05 / 01.13 / 03.05 / 06.05
8. Alignment with the 03.02 Guaranteed Yield
- Monthly FTY / customer complaint data serves as an attachment to the 03.02 deductions
- Disputes: the mutually agreed sampling standard and third-party re-inspection prevail (contract)
9. Minimum Production-Line Visibility Set
- Top 5 defect Pareto (weekly)
- Line-stop duration
- Concession acceptance share (>5% requires an SQE special topic)
10. Defect Code Dictionary (Minimum)
| Code | Meaning | Typical responsibility |
|---|---|---|
| IQC-Dimension | Incoming dimension out of tolerance | Supplier |
| IPQC-ColdJoint | In-process soldering | Factory |
| OQC-Appearance | Scratches / contamination | Factory packaging |
| CS-Function | After-sales function | Pending attribution |
11. Link to 07.09
Batch safety-class defects → notify Finance / Legal within 24h to assess whether to escalate to the recall path.
12. Supplier Tiering (Quality Dimension)
| Tier | Standard (indicative) | Order share |
|---|---|---|
| A | PPM compliant + on time | Primary supplier |
| B | Occasional exceedance | ≤30% |
| C | Consecutive exceedance | Stop new orders until remediation |
13. Corrective Action 8D Triggers
Major customer complaint or consecutive exceedance → supplier 8D; our SQE follows up to verify closure.
No A-tier restoration until closure.
14. Switching with 03.06
Quality stays at C tier with no improvement for 30 days → start the 03.06 switching assessment.
15. Minimum Inspection Equipment List
- Calipers / optical projector
- Powered test fixtures
- Aging racks
- Weighing (packaging)
16. Report Filing
Monthly PPM, concession forms, customer complaint attribution → filed in the shared drive / knowledge base 03.07 attachment area; GR post-mortems may cite them.
18. Incoming Inspection Work Instruction (IWI) Structure
| Chapter | Content |
|---|---|
| 1 | Applicable materials and version |
| 2 | Sampling level |
| 3 | Appearance / dimensions / function |
| 4 | Judgment and identification |
| 5 | Nonconforming product handling |
One IWI per critical material; changes go through ECN.
19. Process Quality Targets (Station Level)
| Station | Target FTY |
|---|---|
| SMT | ≥98% |
| Assembly | ≥97% |
| Testing | ≥99% |
Below target for 3 consecutive days → stop the line and analyze.
20. Customer Complaint Attribution Closed Loop
CS work order → hardware / software / packaging / transport → SQE opens a nonconformance → closure verification.
21. Link to 06.02 VOC
Monthly top functional negative reviews feed the SQE Pareto, preventing "just rewriting the customer service script".
23. Supplier Quality Scorecard (Monthly)
| Item | Weight | Data source |
|---|---|---|
| Incoming PPM | 35% | IQC |
| On-time delivery | 25% | Warehouse |
| 8D closed on time | 20% | SQE |
| Customer complaint attribution share | 20% | CS |
Overall <70: downgrade to B; <50: stop new orders; 2 consecutive months <50: start the 03.06 switching assessment.
24. Claim Calculation (Illustrative; the Contract Prevails)
Claim amount = material cost of the defective batch
+ rework labor hours
+ our line-stop losses (if contractually agreed)
+ emergency air freight premium (if caused by the supplier)
Deduction cap = as agreed in the contract (e.g. 30% of the current period's payable amount)25. Mandatory Fields on the Concession Acceptance Form
| Field | Content |
|---|---|
| LOT | |
| Defect description | |
| Affected function / appearance | |
| Customer risk | None / Low / Medium |
| Three-party sign-off | SQE + Hardware + (Sales) |
| Validity period and quantity cap |
No form, no inbound.
26. Link to 01.13
The four scorecard metrics map into the KPI Base; consecutive red lights automatically trigger a weekly meeting call-out.
27. Checklist (Final)
[ ] The scorecard is live
[ ] The claim formula is consistent with the contract
[ ] The concession form template is loaded into the system
[ ] The switching triggers with 03.06 are defined