Subject: Supplier Escapes Charge-Back Agreement
As we presented in the last supplier meeting, TCTC is embarking on new initiatives to further improve our product quality and factory efficiency. Our record shows that many quality escapes and factory downtime incidents were caused by supplier quality problems found at our factory and in the field. Rejects at our factory, irrespective of value of the component or material, cause expensive factory downtime, delayed delivery, disruption to production plans and loss sales opportunity. Escapes or defects found on the field cause rework, costly repairs and customers complaints. It is absolutely critical that all our suppliers ensure delivery of defect free components or materials to our factory.
In order to raise quality awareness among our suppliers, we have decided to implement the
process. Our primary objective is not to recover the full costs of poor quality, but to bring to your attention to any quality issues caused by you as our supplier, and require that you implement corrective actions to prevent quality problems in the future. Of course, we do reserve the right to recover full costs from you in case of significant quality issues.
The effective date of our "Supplier Escape Charge-Back" process is 2007. For each verified quality escape (quality incident), we will debit your account based on the rate stipulated in the attached procedure.
We would like to request that you acknowledge receipt of this letter and sign on the below agreement. With the higher awareness, we hope you will put processes in place to ensure that your defective materials are not sent to TCTC.