1.When unqualified raw materials are accepted under concessions as per the evaluation results, System Management Department shall lodge a claim against the supplier, according to the relevant provisions in Quality Warranty Agreement signed with the supplier, for an amount equivalent to 5-50% of the total value of the lot of materials including the unqualified ones, and shall send a written form of Notice of Claim for Supply Quality Problems for prompt handling of the claim.
2. The departments/units affected by unqualified raw materials during use shall fill out a standard Claim Application Form based on the economic losses verified by System Management Department which are caused by the use of the aforementioned unqualified materials on Jushi, and the relevant persons in charge of the departments/units applying for the claim and System Management Department respectively shall confirm in signing to lodge the claim.
1. Handling of unqualified incoming raw materials
Working procedure: Rejection of unqualified incoming raw materials by Scheduling & Logistics Department > Application for materials evaluation by Purchasing Department > Arrangement of materials evaluation by System Management Department > Decision on the treatment methods of unqualified raw materials in evaluation > Delivery of a written notice from System Management Department to related suppliers
Scheduling & Logistics Department rejects the raw materials which are found to be unqualified in the incoming inspection, and the materials temporarily warehoused shall be isolated and identified with signs. In the meantime, it shall advise System Management Department and Purchasing Department for handling of these materials, upon which System Management Department immediately sends the written forms of Notice of Non-Conforming Raw Materials and Feedback on Supply Quality to related suppliers and Purchasing Department.
Purchasing Department applies for evaluation of unqualified incoming raw materials by filling out Evaluation Form of Unqualified Incoming Raw Materials, and then submits the completed form to System Management Department for arranging an evaluation. During the evaluation, the concerned functional departments and materials use departments shall issue their opinions before System Management Department concludes the evaluation with a summary opinion in signing (Treatment methods of the unqualified materials in the summary opinion mainly include: immediate return of materials, immediate replacement, accepting a selected portion, and making concessions to accept the materials).
2. Handling of unqualified raw materials during normal use
Working procedure: The department that recognizes unqualified materials during use isolates the materials and meanwhile notifies System Management Department for handling > Site verification by System Management Department > The recognizing department fills out an application form for material evaluation > Arrangement of an evaluation by System Management Department > Decision on the treatment methods of unqualified raw materials in evaluation > Delivery of a written notice from System Management Department to related suppliers
The department that recognizes unqualified materials during use isolates them and meanwhile notifies System Management Department for handling. Then related personnel from System Management Department conduct an on-site verification, and the recognizing department fills out an application form to be submitted to System Management Department for material evaluation. During the evaluation, the concerned functional departments and Purchasing Department shall issue their opinions before System Management Department concludes the evaluation with a summary opinion in signing (Treatment methods of the unqualified materials in the summary opinion mainly include: immediate return or replacement of the materials, immediate acceptance of a select of the materials, immediate suspension of the materials for processing, immediate processing of the materials for use, etc.) . In the meantime, System Management Department shall promptly issue a written form of Feedback on Supply Quality to or communicate by phone with the relevant suppliers for handling of the unqualified materials.
The evaluation on suppliers consists of two parts: quarterly evaluation and annual evaluation
Quarterly evaluation: Relevant personnel in System Management Department and/or Purchasing Department will perform quarterly evaluations on suppliers to give evaluation scores on such aspects as quality warranty capability, production/delivery capability and serving capability. The results of quarterly evaluations will be taken as an important basis for purchase quota adjustment and annual evaluations. According to the accumulated results of its quarterly evaluation scores, certain adjustments will be made on the purchase quota for a supplier, including reduction of purchase quota, suspension of purchase and request of rectification within a time limit, and disqualifying the supplier by terminating the purchase.
Annual evaluation: It is usually performed at a time just before Suppliers Conference by an evaluation team made up of relevant personnel from System Management Department, Purchasing Department or other related departments. Excellent suppliers will be determined according to the results of annual evaluations and awarded with the title of “Excellent Supplier” at the Suppliers Conference and with other rewards including priority in supply to Jushi, increase of purchase quota and priority in getting the goods payment.
Working procedure: Documents approval for developing new suppliers > Testing sample products from a potential supplier > Assessing the potential supplier > Entering into relevant agreements with the supplier > Including the supplier in the List of Suppliers for bulk supply
1. Purchasing Department requires to develop new suppliers and asks potential suppliers to fill out the Examination and Approval Form for Developing New Suppliers and provide copies of their business licenses, organization code certificates, tax registration certificates, system certificates and so on. All these documents will then be examined by System Management Department for approval.
2. The approval of the documents shall be followed by the testing on sample products from potential suppliers. In principle, it is compulsory to successively go through all the three steps including laboratory testing, middle-scale pilot production and large-scale pilot production; yet one or two of these steps can be skipped according to the actual situations.
3. The potential supplier will be assessed in scored items according to Qualification Assessment Form for Developing New Suppliers. All the members of the assessment team will jointly issue the conclusive opinion, with which the person in charge of System Management Department provides the final approval comments.
4. Entering into relevant agreements (i.e., Quality Warranty Agreement, Agreement on Code of Business Ethics of Suppliers etc.)
5. Including the supplier in the List of Suppliers for bulk supply.