Sorting Cost
Meaning ~ Expense of manually isolating non-conforming items from a suspect shipment to secure a clean point for the production line without halts.
Controlled Shipping Level 2
Meaning
Supplier escalation procedures require an external, unbiased auditing body to inspect finished goods before they are cleared for dispatch. Buyers impose controlled shipping level 2 when a supplier fails to resolve quality defects during the initial containment phase or when a catastrophic failure occurs. This standard governs the final quality gate of the manufacturing facility, utilizing a third-party inspection agency paid for by the supplier.
It remains in effect until the root cause of the defect is permanently resolved and verified by the buyer.
Involvement Level
External auditors enter the factory to establish a secure inspection station that is completely independent of the supplier’s production team. In controlled shipping level 2, the third-party inspector re-evaluates all units that have already passed both the production line and the supplier’s internal containment gate. This double-layer inspection ensures that no defective parts can bypass the control system.
Remediation Exit
Clear performance metrics must be achieved before the supplier is released from this intensive containment program. The supplier must run the production process for a specified number of consecutive days with zero defects detected by the external inspector. This exit criteria ensures that the corrective actions are effective and permanent.
Escalation Impact
Severe penalties accompany this status, reflecting the high risk the supplier poses to the buyer’s supply chain. The supplier must pay the daily fees of the third-party inspectors, which creates a massive financial burden. Additionally, the supplier is often placed on a new business hold, preventing them from bidding on new programs while the containment is active.