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Pre-shipment inspection (also preshipment inspection or PSI) is a part of supply chain management and an important quality control method for checking the quality of goods clients buy from suppliers.
PSI helps ensure that production complies with the governing specification, contract, or purchase order. A final random inspection (FRI) checks finished products, often when at least 80% of an order has been produced and export-packed. Samples are selected at random, according to standards and procedures.
Re-shipment acceptance sampling, involving inspection, and acceptance testing, may be agreed upon between a buyer, a supplier, and a bank, and it can be used to initiate payment under a letter of credit. A PSI can be performed at different stages before shipment, such as checking the total amount of goods and packing, controlling the quality or consistency of goods, checking of all documentation, as for example test reports, packaging list, or verification of compliance with standards of the destination country like ASME, CE mark and import duties.
There are three levels of defects in a pre-shipment inspection with each defect escalating into the next.
The inspection team covers the order and shipment. That is perhaps the most detailed of all the process and is when issues are most likely discovered. This step takes considerable time but importers consider it to be the de facto part of the inspection process.
Does the product work in its intended manner, which is important for electronics, toys, and the like.
UL, CE, BSI, CSA, FDA, etc. Are all parts of a safety check. It is of the best interest of the importer to be sure that all products meet the requirements, particularly for machinery and any product using electricity.
There are two types of PSI companies:
A higher form of the PSI is called expediting, in which the dates of delivery and the production are included in the control.
PSI increases burdens and costs in international trade and can be counter-productive for the country of importation and its traders.
Several countries are considering termination on the use of inspection companies' service, following upon WTO Agreement on Trade Facilitation Article 10.5 Pre-shipment Inspection : 5.1. Members shall not require the use of pre-shipment inspections in relation to tariff classification and customs valuation.
In 1988, United Nations Economic Commission for Europe, Recommendation No.18 - Recommended Measure 8.2 “Discouragement of Pre-Shipment Inspection” was adopted. This was then adopted in 1999, in UNECE Recommendation No. 27, which "encourages using the WTO instrument regarding pre-shipment inspections (PSI) where such inspections are considered necessary as an interim measure, while discouraging the practice of PSI in general." [3]
A quality management system (QMS) is a collection of business processes focused on consistently meeting customer requirements and enhancing their satisfaction. It is aligned with an organization's purpose and strategic direction. It is expressed as the organizational goals and aspirations, policies, processes, documented information, and resources needed to implement and maintain it. Early quality management systems emphasized predictable outcomes of an industrial product production line, using simple statistics and random sampling. By the 20th century, labor inputs were typically the most costly inputs in most industrialized societies, so focus shifted to team cooperation and dynamics, especially the early signaling of problems via a continual improvement cycle. In the 21st century, QMS has tended to converge with sustainability and transparency initiatives, as both investor and customer satisfaction and perceived quality are increasingly tied to these factors. Of QMS regimes, the ISO 9000 family of standards is probably the most widely implemented worldwide – the ISO 19011 audit regime applies to both and deals with quality and sustainability and their integration.
Customs is an authority or agency in a country responsible for collecting tariffs and for controlling the flow of goods, including animals, transports, personal effects, and hazardous items, into and out of a country. Traditionally, customs has been considered as the fiscal subject that charges customs duties and other taxes on import and export. In recent decades, the views on the functions of customs have considerably expanded and now covers three basic issues: taxation, security, and trade facilitation.
UN/CEFACT is the United Nations Centre for Trade Facilitation and Electronic Business. It was established as an intergovernmental body of the United Nations Economic Commission for Europe (UNECE) in 1996 and evolved from UNECE's long tradition of work in trade facilitation which began in 1957.
Quality assurance (QA) is the term used in both manufacturing and service industries to describe the systematic efforts taken to ensure that the product(s) delivered to customer(s) meet with the contractual and other agreed upon performance, design, reliability, and maintainability expectations of that customer. The core purpose of Quality Assurance is to prevent mistakes and defects in the development and production of both manufactured products, such as automobiles and shoes, and delivered services, such as automotive repair and athletic shoe design. Assuring quality and therefore avoiding problems and delays when delivering products or services to customers is what ISO 9000 defines as that "part of quality management focused on providing confidence that quality requirements will be fulfilled". This defect prevention aspect of quality assurance differs from the defect detection aspect of quality control and has been referred to as a shift left since it focuses on quality efforts earlier in product development and production and on avoiding defects in the first place rather than correcting them after the fact.
An inspection is, most generally, an organized examination or formal evaluation exercise. In engineering activities inspection involves the measurements, tests, and gauges applied to certain characteristics in regard to an object or activity. The results are usually compared to specified requirements and standards for determining whether the item or activity is in line with these targets, often with a Standard Inspection Procedure in place to ensure consistent checking. Inspections are usually non-destructive.
Current good manufacturing practices (cGMP) are those conforming to the guidelines recommended by relevant agencies. Those agencies control the authorization and licensing of the manufacture and sale of food and beverages, cosmetics, pharmaceutical products, dietary supplements, and medical devices. These guidelines provide minimum requirements that a manufacturer must meet to assure that their products are consistently high in quality, from batch to batch, for their intended use. The rules that govern each industry may differ significantly; however, the main purpose of GMP is always to prevent harm from occurring to the end user. Additional tenets include ensuring the end product is free from contamination, that it is consistent in its manufacture, that its manufacture has been well documented, that personnel are well trained, and that the product has been checked for quality more than just at the end phase. GMP is typically ensured through the effective use of a quality management system (QMS).
Non-tariff barriers to trade are trade barriers that restrict imports or exports of goods or services through mechanisms other than the simple imposition of tariffs.
PDCA is an iterative design and management method used in business for the control and continual improvement of processes and products. It is also known as the Shewhart cycle, or the control circle/cycle. Another version of this PDCA cycle is OPDCA. The added "O" stands for observation or as some versions say: "Observe the current condition." This emphasis on observation and current condition has currency with the literature on lean manufacturing and the Toyota Production System. The PDCA cycle, with Ishikawa's changes, can be traced back to S. Mizuno of the Tokyo Institute of Technology in 1959.
On commercial products, the letters CE mean that the manufacturer or importer affirms the good's conformity with European health, safety, and environmental protection standards. It is not a quality indicator or a certification mark. The CE marking is required for goods sold in the European Economic Area (EEA), but is also found on products sold elsewhere that have been manufactured to EEA standards.
MIL-STD-105 was a United States defense standard that provided procedures and tables for sampling by attributes based on Walter A. Shewhart, Harry Romig, and Harold F. Dodge sampling inspection theories and mathematical formulas. Widely adopted outside of military procurement applications.
Product certification or product qualification is the process of certifying that a certain product has passed performance tests and quality assurance tests, and meets qualification criteria stipulated in contracts, regulations, or specifications.
Trade facilitation looks at how procedures and controls governing the movement of goods across national borders can be improved to reduce associated cost burdens and maximise efficiency while safeguarding legitimate regulatory objectives. Business costs may be a direct function of collecting information and submitting declarations or an indirect consequence of border checks in the form of delays and associated time penalties, forgone business opportunities and reduced competitiveness.
An import is the receiving country in an export from the sending country. Importation and exportation are the defining financial transactions of international trade.
A Certificate of Origin or Declaration of Origin is a document widely used in international trade transactions which attests that the product listed therein has met certain criteria to be considered as originating in a particular country. A certificate of origin / declaration of origin is generally prepared and completed by the exporter or the manufacturer, and may be subject to official certification by an authorized third party. It is often submitted to a customs authority of the importing country to justify the product's eligibility for entry and/or its entitlement to preferential treatment. Guidelines for issuance of Certificates of Origin by chambers of commerce globally are issued by the International Chamber of Commerce.
The European Directorate for the Quality of Medicines & HealthCare (EDQM) is a Directorate of the Council of Europe that traces its origins and statutes to the Convention on the Elaboration of a European Pharmacopoeia.
The acceptable quality limit (AQL) is the worst tolerable process average (mean) in percentage or ratio that is still considered acceptable; that is, it is at an acceptable quality level. Closely related terms are the rejectable quality limit and rejectable quality level (RQL). In a quality control procedure, a process is said to be at an acceptable quality level if the appropriate statistic used to construct a control chart does not fall outside the bounds of the acceptable quality limits. Otherwise, the process is said to be at a rejectable control level.
Acceptance sampling uses statistical sampling to determine whether to accept or reject a production lot of material. It has been a common quality control technique used in industry.
Counterfeit electronic components are electronic parts whose origin or quality is deliberately misrepresented. Counterfeiting of electronic components can infringe the legitimate producer's trademark rights. Because counterfeit parts often have inferior specifications and/or quality, they may represent a hazard if incorporated into critical systems such as aircraft navigation, life support, military equipment, or space vehicles.
A third-party inspection agency is a business organization, complying with the ISO 17020 standards. Third-party inspection or "Category A" is the most stringent of the 3 categories of inspection organization that the standard specifies. Such organizations are third-party inspection agencies that must not be involved in any activities other than inspection and testing. Based on this requirement, the third-party inspection agency must not be involved in design, procurement, fabrication, construction, or installation. All companies and parties such as buyers, sellers, engineering companies, plant owners must have access to these agencies and use their services. Confidentiality, independence, impartiality, and integrity are important conditions for being a third-party Inspection agency.
Customs clearance can be conducted at any one of the many customs offices in China. A commercial invoice, packing list and the CIF must be provided for the shipment. It is also important to make sure that all documentation shows the complete country name as “People’s Republic of China.”