@techwavedev/agi-agent-kit 1.5.3 → 1.6.1

package/templates/skills/extended/other/quality-nonconformance/references/decision-frameworks.md

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+# Decision Frameworks — Quality & Non-Conformance Management
+
+This reference provides the detailed decision logic, MRB processes, RCA methodology selection,
+CAPA lifecycle management, SPC interpretation workflows, inspection level determination,
+supplier quality escalation, and cost of quality calculation models for regulated manufacturing
+quality engineering.
+
+All thresholds, regulatory references, and process expectations reflect quality engineering
+practice across FDA 21 CFR 820, IATF 16949, AS9100, and ISO 13485 environments.
+
+---
+
+## 1. NCR Disposition Decision Trees
+
+### 1.1 Universal Disposition Flow
+
+Every non-conformance, regardless of regulatory environment, begins with this decision sequence.
+The flow terminates at the first applicable disposition; do not skip levels.
+
+```
+START: Non-conformance identified and documented
+  │
+  ├─ Is the part safety-critical or regulatory-controlled?
+  │   ├─ YES → Can it be reworked to FULL conformance?
+  │   │         ├─ YES → REWORK with approved procedure + 100% re-inspection
+  │   │         └─ NO  → SCRAP (no use-as-is permitted without formal risk assessment
+  │   │                   AND regulatory/customer approval)
+  │   └─ NO  → Continue
+  │
+  ├─ Does the non-conformance affect form, fit, or function?
+  │   ├─ YES → Can it be reworked to full conformance?
+  │   │         ├─ YES → Is rework cost < 60% of replacement cost?
+  │   │         │         ├─ YES → REWORK
+  │   │         │         └─ NO  → SCRAP (rework is not economical)
+  │   │         └─ NO  → Can it be repaired to acceptable function?
+  │   │                   ├─ YES → REPAIR with engineering concession + customer
+  │   │                   │         approval (if required by contract/standard)
+  │   │                   └─ NO  → SCRAP
+  │   └─ NO  → Continue
+  │
+  ├─ Is the non-conformance cosmetic only?
+  │   ├─ YES → Does customer spec address cosmetic requirements?
+  │   │         ├─ YES → Does the part meet customer cosmetic spec?
+  │   │         │         ├─ YES → USE-AS-IS with documentation
+  │   │         │         └─ NO  → Customer concession required → If granted: USE-AS-IS
+  │   │         │                                                → If denied: REWORK or SCRAP
+  │   │         └─ NO  → USE-AS-IS with engineering sign-off
+  │   └─ NO  → Continue
+  │
+  ├─ Is this a dimensional non-conformance within material review authority?
+  │   ├─ YES → Engineering analysis: does the dimension affect assembly or performance?
+  │   │         ├─ YES → REWORK or SCRAP (depending on feasibility)
+  │   │         └─ NO  → USE-AS-IS with documented engineering justification
+  │   └─ NO  → Continue
+  │
+  └─ Is this a supplier-caused non-conformance?
+      ├─ YES → Is the material needed immediately for production?
+      │         ├─ YES → Sort/rework at supplier's cost + USE acceptable units
+      │         │         + SCAR to supplier + debit memo for sort/rework cost
+      │         └─ NO  → RETURN TO VENDOR with SCAR + debit memo or replacement PO
+      └─ NO  → Evaluate per the functional impact path above
+```
+
+### 1.2 FDA-Regulated Environment (21 CFR 820 / ISO 13485) Specific Logic
+
+Medical device non-conformances carry additional requirements:
+
+**Pre-Market (Design/Development):**
+- Non-conformances during design verification/validation must be documented in the Design History File (DHF)
+- Disposition must consider risk per ISO 14971 — severity and probability of harm to the patient
+- Use-as-is is rarely acceptable for a design non-conformance; it implies the design intent is wrong
+- CAPA is almost always required to prevent recurrence in production
+
+**Post-Market (Production/Field):**
+- Non-conformances that could affect device safety or performance require evaluation for field action (recall, correction, removal) per 21 CFR 806
+- The threshold is low: if there is any reasonable possibility of harm, evaluate formally
+- Document the decision NOT to file a field action as rigorously as the decision to file one
+- Complaint-related non-conformances must be linked to complaint records per 820.198
+- MDR (Medical Device Report) obligations: death or serious injury must be reported to FDA within 30 calendar days (5 days for events requiring remedial action)
+
+**Disposition Authority Matrix:**
+
+| Disposition | Who Can Authorize | Additional Requirements |
+|---|---|---|
+| Scrap | Quality Engineer or above | Documented with lot traceability |
+| Rework | Quality Engineer + Manufacturing Engineering | Approved rework procedure; re-inspect to original spec |
+| Repair | MRB (Quality + Engineering + Manufacturing) | Risk assessment per ISO 14971; update DHF if design-related |
+| Use-As-Is | MRB + Design Authority | Risk assessment; documented justification; regulatory impact evaluation |
+| RTV | Quality Engineer + Procurement | SCAR required; supplier re-qualification if repeated |
+
+### 1.3 Automotive Environment (IATF 16949) Specific Logic
+
+**Customer Notification Requirements:**
+- Any non-conformance on product shipped to the customer: notification within 24 hours of discovery
+- Any process change affecting fit, form, function, or performance: PPAP resubmission required
+- Use-as-is disposition: typically requires a formal deviation request to the customer through their supplier portal (e.g., GM's GQTS, Ford's MQAS, Stellantis' SQP)
+- Customer may accept, reject, or accept with conditions (reduced quantity, time-limited deviation)
+
+**Control Plan Integration:**
+- When a non-conformance reveals a gap in the control plan, the control plan must be updated as part of the corrective action
+- Special characteristics (safety/significant characteristics identified with shield or diamond symbols) have zero tolerance for non-conformance: 100% containment and immediate CAPA
+- The reaction plan column of the control plan specifies the predetermined response — follow it first, then investigate
+
+**Controlled Shipping Levels:**
+- **CS-1 (Internal Controlled Shipping):** Supplier adds an additional inspection/sort step beyond normal controls and submits inspection data with each shipment
+- **CS-2 (External Controlled Shipping):** Third-party inspection at supplier's facility, at supplier's cost, with direct reporting to customer quality
+- CS-1 and CS-2 are distinct from the general supplier escalation ladder — they are customer-mandated containment measures, not supplier-initiated improvements
+
+### 1.4 Aerospace Environment (AS9100) Specific Logic
+
+**Customer/Authority Approval:**
+- Use-as-is and repair dispositions ALWAYS require customer approval per AS9100 §8.7.1
+- If the customer is a prime contractor working under a government contract, the government quality representative (DCMA or equivalent) may also need to approve
+- Non-conformances on parts with key characteristics require notification to the design authority
+- First Article Inspection (FAI) per AS9102 becomes invalid if a non-conformance indicates the process has changed from the qualified state — partial or full FAI resubmission may be required
+
+**Counterfeit Part Prevention:**
+- If a non-conformance raises suspicion of counterfeit material (unexpected material composition, incorrect markings, suspect documentation), invoke the counterfeit prevention procedure per AS9100 §8.1.4
+- Quarantine the suspect material in a separate area from other MRB material
+- Report to GIDEP (Government-Industry Data Exchange Program) if counterfeit is confirmed
+- Do not return suspect counterfeit material to the supplier — it must be quarantined and may need to be retained as evidence
+
+**Traceability Requirements:**
+- Aerospace non-conformances must maintain lot, batch, heat, and serial number traceability throughout the disposition process
+- Scrap disposition must include documented destruction of serialized parts to prevent re-entry into the supply chain
+- OASIS database updates may be required for supplier quality events
+
+---
+
+## 2. Root Cause Analysis Methodology Selection Guide
+
+### 2.1 Selection Decision Matrix
+
+| Factor | 5 Whys | Ishikawa + 5 Whys | 8D | Fault Tree Analysis |
+|---|---|---|---|---|
+| **Best for** | Single-event, linear cause chain | Multi-factor, need to explore categories | Recurring issue, team-based resolution | Safety-critical, quantitative risk needed |
+| **Effort (hours)** | 1–2 | 4–8 | 20–40 (across all D-steps) | 40–80 |
+| **Team size** | 1–2 people | 2–4 people | 5–8 cross-functional | 3–6 subject matter experts |
+| **When required** | Internal process investigations | Complex non-conformances | Customer mandate (automotive OEMs) | Aerospace product safety; medical device risk analysis |
+| **Limitation** | Assumes single linear chain | Still qualitative; hypothesis-driven | Heavyweight for simple issues | Resource-intensive; requires failure rate data for quantitative mode |
+| **Output** | Root cause statement | Categorized cause hypotheses with verified root cause | Full 8D report (D0-D8) | Fault tree diagram with probability assignments |
+
+### 2.2 The 5 Whys: When It Works and When It Doesn't
+
+**5 Whys works well when:**
+- The failure is a single event with a clear before/after state change
+- Each "why" can be verified with data (measurement, observation, record review)
+- The causal chain does not branch — there is a single dominant cause
+- The investigation can reach a systemic cause (process, system, or design issue) within 5 iterations
+
+**5 Whys fails when:**
+- Multiple independent causes interact to produce the failure (combinatorial causes)
+- The analyst stops at "human error" or "operator mistake" — this is never a root cause
+- Each "why" is answered with opinion rather than verified data
+- The analysis becomes circular (Why A? Because B. Why B? Because A.)
+- Organizational pressure drives toward a "convenient" root cause that avoids systemic change
+
+**Verification protocol for each "why" level:**
+
+| Why Level | Question | Acceptable Evidence | Unacceptable Evidence |
+|---|---|---|---|
+| Why 1 (Event) | What physically happened? | Measurement data, photographs, inspection records | "The part was bad" |
+| Why 2 (Condition) | What condition allowed it? | Process parameter logs, tool condition records | "The operator didn't check" |
+| Why 3 (Process) | Why did the process permit this condition? | Work instruction review, process FMEA gap | "It's always been done this way" |
+| Why 4 (System) | Why didn't the system prevent the process gap? | System audit evidence, training records, control plan review | "We need better training" |
+| Why 5 (Management) | Why was the system gap undetected? | Management review records, resource allocation evidence, risk assessment gaps | "Management doesn't care about quality" |
+
+### 2.3 Ishikawa Diagram: 6M Framework Deep Dive
+
+For each M category, specific investigation questions that separate thorough analysis from checkbox exercises:
+
+**Man (Personnel):**
+- Was the operator trained AND certified on this specific operation?
+- When was the most recent certification renewal?
+- Was this the operator's normal workstation or were they cross-trained/temporary?
+- Was the shift staffing at normal levels or was this during overtime/short-staffing?
+- Check operator error rate data — is this an isolated event or a pattern for this individual?
+
+**Machine (Equipment):**
+- When was the last preventive maintenance performed (date AND what was done)?
+- Is the machine within its calibration cycle for all measuring functions?
+- Were any alarms, warnings, or parameter drifts logged before the event?
+- Has the machine been modified, repaired, or had a tooling change recently?
+- Check the machine's historical Cpk trend — has capability been declining?
+
+**Material:**
+- Is this a new lot of raw material? When did the lot change?
+- Were incoming inspection results within normal range, or marginal-pass?
+- Does the material certificate match what was physically received (heat number, mill, composition)?
+- Has the material been stored correctly (temperature, humidity, shelf life, FIFO rotation)?
+- Were any material substitutions or equivalents authorized?
+
+**Method (Process):**
+- Is the work instruction current revision? When was it last revised?
+- Does the operator actually follow the work instruction as written (observation, not assumption)?
+- Were any process parameters changed recently (speeds, feeds, temperatures, pressures, cure times)?
+- Was an engineering change order (ECO) recently implemented on this part or process?
+- Is there a gap between the documented method and the actual method (tribal knowledge)?
+
+**Measurement:**
+- Was the measurement system used for this inspection validated (Gauge R&R)?
+- Is the gauge within calibration? Check both certificate and physical condition.
+- Was the correct measurement method used (per the control plan or inspection instruction)?
+- Did the measurement environment (temperature, vibration, lighting) affect the result?
+- For attribute inspections (go/no-go, visual): what is the inspection effectiveness rate?
+
+**Mother Nature (Environment):**
+- Were ambient conditions (temperature, humidity) within process specification?
+- Were there any environmental events (power fluctuation, compressed air pressure drop, vibration from construction)?
+- Is there a shift-to-shift or day-to-day correlation in the data (temperature cycling, humidity changes)?
+- Was the factory HVAC system operating normally?
+- For cleanroom or controlled environment processes: were environmental monitoring logs within specification?
+
+### 2.4 8D Methodology: Detailed Gate Requirements
+
+Each D-step has specific outputs required before advancing. Skipping gates creates 8Ds that look complete but don't actually solve the problem.
+
+| D-Step | Name | Required Output | Common Failure Mode |
+|---|---|---|---|
+| D0 | Symptom & Emergency Response | Emergency response actions taken; containment effectiveness confirmed | Confusing containment with corrective action |
+| D1 | Team Formation | Cross-functional team with defined roles; includes process owner and subject matter expert | Team is all quality, no manufacturing or engineering |
+| D2 | Problem Definition | IS/IS NOT analysis completed; problem quantified with data (defect rate, PPM, Cpk shift, complaint count) | Problem statement is too broad ("quality issues") or just restates the symptom |
+| D3 | Interim Containment | Actions to protect customer while investigation proceeds; effectiveness verified (inspection data post-containment) | Containment is "100% inspection" without verifying inspection effectiveness through known-defective challenge |
+| D4 | Root Cause | Root cause(s) verified through data analysis or designed experiment; escapes the "human error" trap | Root cause = restatement of problem; no verification data; stops at symptoms |
+| D5 | Corrective Action Selection | Actions address verified root cause; mistake-proofing (poka-yoke) preferred over procedural controls | Corrective action = "retrain operators" or "add inspection step" (both are weak) |
+| D6 | Implementation | Actions implemented with documented evidence (updated WI, installed fixture, modified process); baseline performance established | Implementation date = planned date, not actual; no evidence of implementation |
+| D7 | Prevention | Systemic actions to prevent recurrence across similar processes/products; lessons learned documented; FMEA updated | D7 is copy-paste of D5; no horizontal deployment; FMEA not updated |
+| D8 | Recognition | Team acknowledged; 8D closed with effectiveness data | Closed without effectiveness data; team not recognized |
+
+### 2.5 Fault Tree Analysis: Construction Methodology
+
+**Step 1: Define the Top Event**
+- State the undesired event in specific, measurable terms
+- Example: "Shaft diameter exceeds USL of 25.05mm on finished machined part"
+- Not: "Bad parts" or "Quality problem"
+
+**Step 2: Identify Immediate Causes (Level 1)**
+- What must be true for the top event to occur?
+- Use AND gates (all causes must be present) and OR gates (any single cause is sufficient)
+- Example: "Shaft OD too large" can be caused by (OR gate): tool wear, incorrect tool offset, material oversize, thermal expansion, fixture misalignment
+
+**Step 3: Decompose Each Cause (Levels 2–N)**
+- For each Level 1 cause, ask: what causes this?
+- Continue decomposing until you reach basic events (events with known failure rates or that cannot be further decomposed)
+- Example: "Tool wear" caused by (AND gate): extended run time + inadequate tool change interval + no in-process SPC alert
+
+**Step 4: Quantify (when data is available)**
+- Assign probability values to basic events using historical data, MTBF data, or engineering estimates
+- Calculate top event probability through the gate logic
+- Identify the minimal cut sets (smallest combinations of basic events that cause the top event)
+- Focus corrective actions on the highest-probability cut sets
+
+---
+
+## 3. CAPA Writing and Verification Framework
+
+### 3.1 CAPA Initiation Criteria
+
+**Always initiate CAPA for:**
+- Repeat non-conformance: same failure mode occurring 3+ times in 12 months
+- Customer complaint involving product performance, safety, or regulatory compliance
+- External audit finding (FDA, notified body, customer, registrar)
+- Field failure or product return
+- Trend signal: SPC control chart out-of-control pattern (not isolated point)
+- Regulatory requirement change affecting existing products/processes
+- Post-market surveillance data indicating potential safety concern
+
+**Consider CAPA (judgment call) for:**
+- Repeat non-conformance: same failure mode 2 times in 12 months
+- Internal audit finding of moderate significance
+- Supplier non-conformance with systemic indicators
+- Near-miss event (non-conformance caught before reaching customer)
+- Process deviation from validated parameters without product impact
+
+**Do NOT initiate CAPA for:**
+- Isolated non-conformance with clear, non-recurring cause (one-off tool breakage, power outage)
+- Non-conformance fully addressed by NCR disposition with no systemic implication
+- Customer cosmetic preference that doesn't violate any specification
+- Minor documentation errors caught and corrected within the same day
+
+### 3.2 CAPA Action Hierarchy (Effectiveness Ranking)
+
+Corrective actions are not created equal. Rank by effectiveness and default to the highest feasible level:
+
+| Rank | Control Type | Example | Effectiveness | Typical Cost |
+|---|---|---|---|---|
+| 1 | **Elimination** | Redesign to remove the failure mode entirely | ~100% | High (design change, tooling) |
+| 2 | **Substitution** | Change material, supplier, or process to one that cannot produce the failure | ~95% | Medium-High |
+| 3 | **Engineering Controls (Poka-Yoke)** | Fixture that physically prevents incorrect assembly; sensor that stops machine on out-of-spec condition | ~90% | Medium |
+| 4 | **Detection Controls** | Automated inspection (vision system, laser gauge) that 100% inspects and auto-rejects | ~85% | Medium |
+| 5 | **Administrative Controls** | Updated work instruction, revised procedure, checklist | ~50-60% | Low |
+| 6 | **Training** | Operator retraining on existing procedure | ~30-40% | Low |
+
+If your corrective action is ranked 5 or 6 and a rank 1-4 action is feasible, the CAPA will likely be challenged by auditors. Training alone is never an adequate corrective action for a significant non-conformance.
+
+### 3.3 CAPA Effectiveness Verification Protocol
+
+**Phase 1: Implementation Verification (within 2 weeks of target date)**
+
+| Evidence Required | What to Check | Acceptable | Not Acceptable |
+|---|---|---|---|
+| Document revision | Was the WI/procedure updated to reflect the change? | Revision with effective date and training records | "Will be updated in next revision" |
+| Physical verification | Is the fixture/tool/sensor installed and operational? | Photograph + validation record | Purchase order placed but not installed |
+| Training completion | Were affected personnel trained? | Signed training records with competency assessment | Email sent to team |
+| System update | Were QMS documents, FMEA, control plan updated? | Updated documents with revision and approval | "Will update during next review" |
+
+**Phase 2: Effectiveness Validation (90-day monitoring period)**
+
+| Metric | Calculation | Pass Criteria | Fail Criteria |
+|---|---|---|---|
+| Recurrence rate | Count of same failure mode in monitoring period | Zero recurrences | Any recurrence |
+| Related failure rate | Count of related failure modes in same process | No increase from baseline | Increase suggests incomplete root cause |
+| Process capability | Cpk or Ppk for the affected characteristic | Cpk ≥ 1.33 (or target value) | Cpk below pre-CAPA level |
+| Customer feedback | Complaints related to the addressed failure mode | Zero related complaints | Any related complaint |
+
+**Phase 3: Closure Decision**
+
+| Condition | Decision |
+|---|---|
+| Phase 1 complete + Phase 2 pass criteria met | Close CAPA |
+| Phase 1 complete + Phase 2 shows improvement but not full elimination | Extend monitoring period by 60 days; if still improving, close with condition |
+| Phase 1 complete + Phase 2 shows no improvement | Reopen CAPA; root cause was incorrect or action insufficient |
+| Phase 1 incomplete (action not implemented) | CAPA remains open; escalate for resource allocation |
+| Recurrence during monitoring | Reopen CAPA; do NOT close and open new CAPA for same issue |
+
+### 3.4 CAPA Timeliness Standards
+
+| CAPA Phase | Target Timeline | Regulatory Expectation |
+|---|---|---|
+| Initiation and assignment | Within 5 business days of trigger | FDA: "timely" — typically within 30 days of awareness |
+| Investigation and root cause | Within 30 calendar days | IATF 16949: per customer timeline (often 10-day initial response) |
+| Corrective action plan | Within 45 calendar days | AS9100: per contractual agreement |
+| Implementation | Within 90 calendar days | Varies by complexity; document delays with justification |
+| Effectiveness verification start | Immediately after implementation | Must be defined at initiation |
+| Effectiveness verification completion | 90 days after implementation | FDA: must demonstrate effectiveness, not just implementation |
+| CAPA closure | Within 180 calendar days of initiation (total) | FDA warning letters cite CAPAs open > 1 year as systemic failure |
+
+---
+
+## 4. SPC Interpretation Decision Logic
+
+### 4.1 Control Chart Selection Flowchart
+
+```
+START: What type of data are you charting?
+  │
+  ├─ CONTINUOUS (variable) data — measurements in units (mm, kg, °C, psi)
+  │   ├─ Are you taking subgroups (multiple measurements per sampling event)?
+  │   │   ├─ YES → What is the subgroup size (n)?
+  │   │   │         ├─ n = 2 to 9  → X-bar / R chart
+  │   │   │         ├─ n = 10 to 25 → X-bar / S chart
+  │   │   │         └─ n > 25 → X-bar / S chart (consider reducing subgroup size)
+  │   │   └─ NO (n=1, individual readings) → Individuals / Moving Range (I-MR) chart
+  │   │         Use when: batch process, destructive testing, slow process,
+  │   │         or when each unit is unique
+  │   └─ (Verify data normality assumption for variable charts — I-MR is sensitive
+  │       to non-normality; consider transformation or use nonparametric alternatives)
+  │
+  └─ ATTRIBUTE (discrete) data — counts or proportions
+      ├─ Are you counting DEFECTIVE ITEMS (units that pass or fail)?
+      │   ├─ YES → Is the sample size constant?
+      │   │         ├─ YES → np-chart (count of defectives, fixed sample)
+      │   │         └─ NO  → p-chart (proportion defective, variable sample)
+      │   └─ NO  → You're counting DEFECTS (multiple defects possible per unit)
+      │             ├─ Is the inspection area/opportunity constant?
+      │             │   ├─ YES → c-chart (count of defects per unit, fixed area)
+      │             │   └─ NO  → u-chart (defects per unit, variable area)
+      │             └─ (Verify Poisson assumption for c/u charts)
+      └─ (Attribute charts require larger sample sizes than variable charts for
+          equivalent sensitivity — minimum ~50 for p/np, ~25 for c/u)
+```
+
+### 4.2 Out-of-Control Response Protocol
+
+When a control chart signals an out-of-control condition, follow this response based on the specific signal:
+
+**Rule 1: Point beyond 3σ control limit**
+
+| Response Level | Action | Timeline |
+|---|---|---|
+| Immediate | Stop process if product is being produced; quarantine output since last known good point | Within minutes |
+| Investigation | Identify the assignable cause — what changed? Check 6M categories systematically | Within 4 hours |
+| Containment | Sort/inspect product produced during the out-of-control period | Within 1 shift |
+| Correction | Address the assignable cause and restart production with increased monitoring | Before next production run |
+| Documentation | NCR if product was affected; update control chart with annotation | Within 24 hours |
+
+**Rule 2: Nine consecutive points on one side of the center line (run)**
+
+| Response Level | Action | Timeline |
+|---|---|---|
+| Investigation | Process mean has likely shifted. Check for: tool wear progression, material lot change, environmental drift, measurement calibration shift | Within 1 shift |
+| Adjustment | If assignable cause found: correct. If no assignable cause found and process is still within spec, continue monitoring but increase sampling frequency | Within 24 hours |
+| Recalculation | If the shift is intentional (process improvement) or represents a new process level, recalculate control limits with new data | After 25+ subgroups at new level |
+
+**Rule 3: Six consecutive points steadily increasing or decreasing (trend)**
+
+| Response Level | Action | Timeline |
+|---|---|---|
+| Investigation | Process is drifting. Most common causes: tool wear, chemical depletion, thermal drift, filter degradation | Within 1 shift |
+| Projection | At the current drift rate, when will the process exceed the specification limit? This determines urgency | Immediate calculation |
+| Preemptive action | Adjust the process (tool change, chemical replenishment) BEFORE it reaches the spec limit | Before projected spec limit crossing |
+
+**Rule 4: Fourteen consecutive points alternating up and down (stratification/mixing)**
+
+| Response Level | Action | Timeline |
+|---|---|---|
+| Investigation | This pattern indicates over-control (tampering), two alternating streams (e.g., two spindles, two cavities), or systematic measurement error | Within 24 hours |
+| Verification | Check if the subgroup data is being collected from multiple sources that should be charted separately | Within 48 hours |
+| Stratification | If data is from multiple streams, create separate charts for each stream | Within 1 week |
+
+### 4.3 Capability Index Interpretation
+
+| Cpk Value | Interpretation | Action Required |
+|---|---|---|
+| Cpk ≥ 2.00 | Six Sigma capable; consider reducing inspection frequency | Maintain controls; candidate for reduced inspection or skip-lot |
+| 1.67 ≤ Cpk < 2.00 | Highly capable; exceeds most customer requirements | Standard monitoring; meets IATF 16949 requirements for new processes |
+| 1.33 ≤ Cpk < 1.67 | Capable; meets most industry standards | Standard SPC monitoring; meets IATF 16949 minimum for production |
+| 1.00 ≤ Cpk < 1.33 | Marginally capable; producing some defects | Increase monitoring frequency; initiate process improvement; customer notification may be required |
+| 0.67 ≤ Cpk < 1.00 | Not capable; significant defect production | 100% inspection until process is improved; CAPA required; customer notification required |
+| Cpk < 0.67 | Severely incapable | Stop production; sort all WIP and finished goods; engineering review of process and specification |
+
+**Cp vs. Cpk Interpretation:**
+
+| Condition | Meaning | Action |
+|---|---|---|
+| Cp high, Cpk high | Process is both capable and centered | Optimal state; maintain |
+| Cp high, Cpk low | Process has low variation but is not centered on the target | Adjust the process mean; do NOT reduce variation (it's already good) |
+| Cp low, Cpk low | Process has too much variation, possibly also off-center | Reduce variation first (fundamental process improvement), then center |
+| Cp low, Cpk ≈ Cp | Process has too much variation but is centered | Reduce variation; centering is not the issue |
+
+**Pp/Ppk vs. Cp/Cpk:**
+
+| Index | Uses | Represents | When to Use |
+|---|---|---|---|
+| Cp/Cpk | Within-subgroup variation (σ_within) | Short-term or "potential" capability | Evaluating process potential when in statistical control |
+| Pp/Ppk | Overall variation (σ_overall) including between-subgroup shifts | Long-term or "actual" performance | Evaluating what the customer actually receives over time |
+| Pp/Ppk < Cp/Cpk (common) | Process mean is shifting between subgroups | Between-subgroup variation is significant | Investigate what's causing the mean to shift between subgroups |
+| Pp/Ppk ≈ Cp/Cpk | Process is stable over time | Minimal between-subgroup variation | Process is well-controlled; long-term performance matches potential |
+
+---
+
+## 5. Inspection Level Determination
+
+### 5.1 Incoming Inspection Level Decision Matrix
+
+| Factor | Points |
+|---|---|
+| **Supplier History** | |
+| New supplier (< 5 lots received) | 5 |
+| Supplier on probation/watch | 5 |
+| Qualified supplier with PPM 1,000-5,000 | 3 |
+| Qualified supplier with PPM 500-1,000 | 2 |
+| Qualified supplier with PPM < 500 | 1 |
+| Preferred supplier with PPM < 100 | 0 |
+| **Part Criticality** | |
+| Safety-critical characteristic | 5 |
+| Key characteristic (fit/function) | 3 |
+| Standard characteristic | 1 |
+| Cosmetic only | 0 |
+| **Regulatory Requirement** | |
+| FDA/medical device requiring incoming inspection | 5 |
+| Aerospace with special process (NADCAP) | 4 |
+| Automotive with customer-designated special characteristic | 3 |
+| Standard ISO 9001 environment | 1 |
+| **Recent Quality History (last 6 months)** | |
+| NCR issued against this part/supplier combination | +3 |
+| Customer complaint traced to this component | +4 |
+| SCAR currently open against this supplier | +3 |
+| No quality issues | 0 |
+
+**Inspection Level Assignment:**
+
+| Total Points | Inspection Level | Typical Approach |
+|---|---|---|
+| 0–3 | Reduced / Skip-Lot | CoC review + skip-lot verification (every 3rd or 5th lot) |
+| 4–7 | Normal (AQL Level II) | Standard AQL sampling per ANSI/ASQ Z1.4 |
+| 8–11 | Tightened (AQL Level III) | Tightened sampling or increased sample size |
+| 12+ | 100% / Full Inspection | 100% inspection of critical characteristics |
+
+### 5.2 ANSI/ASQ Z1.4 Quick Reference
+
+**Sample Size Code Letters (Normal Inspection, General Level II):**
+
+| Lot Size | Code Letter | Sample Size (AQL 1.0) |
+|---|---|---|
+| 2–8 | A | 2 (Ac=0, Re=1) |
+| 9–15 | B | 3 (Ac=0, Re=1) |
+| 16–25 | C | 5 (Ac=0, Re=1) |
+| 26–50 | D | 8 (Ac=0, Re=1) |
+| 51–90 | E | 13 (Ac=1, Re=2) |
+| 91–150 | F | 20 (Ac=1, Re=2) |
+| 151–280 | G | 32 (Ac=2, Re=3) |
+| 281–500 | H | 50 (Ac=3, Re=4) |
+| 501–1,200 | J | 80 (Ac=5, Re=6) |
+| 1,201–3,200 | K | 125 (Ac=7, Re=8) |
+| 3,201–10,000 | L | 200 (Ac=10, Re=11) |
+| 10,001–35,000 | M | 315 (Ac=14, Re=15) |
+| 35,001–150,000 | N | 500 (Ac=21, Re=22) |
+
+**Switching Rules:**
+
+| Current Level | Switch Condition | Switch To |
+|---|---|---|
+| Normal | 2 of 5 consecutive lots rejected | Tightened |
+| Normal | 10 consecutive lots accepted AND production at steady rate AND approved by responsible authority | Reduced |
+| Tightened | 5 consecutive lots accepted | Normal |
+| Tightened | 10 consecutive lots not accepted | Discontinue inspection; require supplier corrective action |
+| Reduced | 1 lot rejected | Normal |
+| Reduced | Production irregular or other conditions warrant | Normal |
+
+### 5.3 Skip-Lot Qualification Requirements
+
+**Qualification Criteria (all must be met):**
+1. Supplier is on the Approved Supplier List with "preferred" or "qualified" status
+2. Minimum 10 consecutive lots accepted at normal inspection level
+3. Supplier's process capability (Cpk) for critical characteristics ≥ 1.33, verified by supplier data AND incoming inspection data
+4. No open SCARs against the supplier for this part number
+5. Supplier has a certified quality management system (ISO 9001 minimum; industry-specific certification preferred)
+6. Written agreement documenting skip-lot terms, reversion criteria, and data submission requirements
+
+**Skip-Lot Frequencies:**
+
+| Qualification Level | Inspection Frequency | Reversion Trigger |
+|---|---|---|
+| Skip-Lot 1 | Every 2nd lot | 1 lot rejection |
+| Skip-Lot 2 | Every 3rd lot | 1 lot rejection or supplier Cpk drops below 1.33 |
+| Skip-Lot 3 | Every 5th lot | 1 lot rejection, Cpk concern, or supplier quality system change |
+| CoC Reliance | CoC review only; periodic verification (annual or per-lot-change) | Any NCR, customer complaint, or audit finding |
+
+---
+
+## 6. Supplier Quality Escalation Ladder
+
+### 6.1 Detailed Escalation Process
+
+**Level 0: Normal Operations**
+- Supplier meets scorecard expectations (PPM < threshold, OTD > threshold, SCAR closure on time)
+- Standard incoming inspection level
+- Quarterly scorecard review
+- Annual audit (if risk-based schedule warrants)
+
+**Level 1: SCAR Issued**
+- **Trigger:** Single significant non-conformance (> $5,000 impact or safety/regulatory concern) OR 3+ minor non-conformances on the same part in 90 days
+- **Actions:**
+  - Formal SCAR issued with 8D or equivalent RCA requirement
+  - Supplier has 10 business days for initial response (containment + preliminary root cause)
+  - Supplier has 30 calendar days for full corrective action plan with implementation timeline
+  - Quality engineering review of SCAR response for adequacy
+  - Increase incoming inspection level for the affected part number
+- **Exit criteria:** SCAR accepted and closed with verified effectiveness (90-day monitoring)
+
+**Level 2: Supplier on Watch / Probation**
+- **Trigger:** SCAR not responded to within timeline OR corrective action not effective (recurrence during monitoring) OR scorecard falls below minimum threshold for 2 consecutive quarters
+- **Actions:**
+  - Supplier notified of probation status in writing (Quality Manager or Director level)
+  - Procurement notified; new business hold (no new part numbers awarded)
+  - Increase inspection level for ALL part numbers from this supplier (not just affected part)
+  - Monthly performance review calls with supplier quality management
+  - Supplier must submit a comprehensive improvement plan within 15 business days
+  - Consider on-site quality audit focused on the specific failure mode
+- **Exit criteria:** Improvement plan accepted + 2 consecutive quarters meeting scorecard minimum + no new SCARs
+
+**Level 3: Controlled Shipping**
+- **Trigger:** Continued failures during watch period OR critical quality escape that reaches customer
+- **Actions:**
+  - Controlled Shipping Level 1 (CS-1): Supplier adds additional sort/inspection step with data submitted per shipment
+  - If CS-1 ineffective within 60 days: Controlled Shipping Level 2 (CS-2): third-party resident inspector at supplier's facility, at supplier's expense
+  - All sort/inspection costs debited to supplier
+  - Weekly performance review calls with supplier VP/GM level
+  - Begin qualification of alternate source (if not already underway)
+- **Exit criteria:** 90 consecutive days of zero non-conformances under controlled shipping + root cause fully addressed + systemic improvements validated
+
+**Level 4: New Source Qualification / Phase-Out**
+- **Trigger:** No sustained improvement under controlled shipping OR supplier unwilling/unable to invest in required improvements
+- **Actions:**
+  - Formal notification to supplier of intent to transfer business
+  - Accelerated alternate supplier qualification (expedite PPAP/FAI/first articles)
+  - Reduce business allocation as alternate source ramps up
+  - Maintain controlled shipping on remaining volume
+  - Ensure last-time-buy quantities cover the transition period
+  - Document all quality costs incurred for potential recovery
+- **Timeline:** Depends on part complexity and alternate source readiness; typically 3-12 months
+
+**Level 5: ASL Removal**
+- **Trigger:** Qualification of alternate source complete OR supplier's quality system failure is fundamental (e.g., data falsification, loss of certification)
+- **Actions:**
+  - Formal removal from Approved Supplier List
+  - Final shipment received and inspected under 100% inspection
+  - All supplier-owned tooling at our facility: disposition per contract terms
+  - Our tooling at supplier's facility: retrieve per contract terms
+  - Close all open SCARs as "supplier removed"
+  - Retain supplier quality file for minimum 7 years (regulatory record retention)
+  - Update OASIS (aerospace) or relevant industry databases
+- **Re-entry:** If supplier applies for re-qualification, treat as a new supplier with full qualification process; require evidence that systemic issues were addressed
+
+### 6.2 Escalation Decision Quick Reference
+
+| Situation | Start at Level | Rationale |
+|---|---|---|
+| First minor NC from good supplier | Handle via NCR, no escalation | Single event doesn't warrant formal escalation |
+| First significant NC from good supplier | Level 1 (SCAR) | Significant impact requires formal root cause |
+| Third minor NC in 90 days from same supplier/part | Level 1 (SCAR) | Pattern indicates systemic issue |
+| SCAR response inadequate or late | Level 2 (Watch) | Non-responsiveness is itself a quality system failure |
+| NC reaches customer | Level 2 minimum; Level 3 if safety-related | Customer impact demands immediate escalation |
+| Falsified documentation discovered | Level 4 minimum; Level 5 if confirmed | Trust is broken; containment scope is unknown |
+| Sole-source supplier with quality problems | Level 1 with parallel Level 4 actions (qualify alternate) | Business continuity requires measured response; don't threaten what you can't execute |
+
+---
+
+## 7. Cost of Quality Calculation Models
+
+### 7.1 COQ Category Definitions and Tracking
+
+**Prevention Costs (invest to prevent defects):**
+
+| Cost Element | How to Measure | Typical Range (% of revenue) |
+|---|---|---|
+| Quality planning | Hours × labor rate for quality planning activities | 0.2–0.5% |
+| Process validation/qualification | Labor + equipment + materials for IQ/OQ/PQ | 0.3–0.8% |
+| Supplier qualification | Audit travel + labor + first article costs | 0.1–0.3% |
+| Training (quality-related) | Hours × labor rate + training materials | 0.1–0.3% |
+| SPC implementation/maintenance | Software licenses + labor for chart maintenance | 0.1–0.2% |
+| Design reviews / FMEA | Hours × labor rate for cross-functional reviews | 0.2–0.5% |
+| Poka-yoke development | Design + fabrication + validation of error-proofing | 0.2–0.5% |
+
+**Appraisal Costs (cost of verifying conformance):**
+
+| Cost Element | How to Measure | Typical Range (% of revenue) |
+|---|---|---|
+| Incoming inspection | Hours × labor rate + gauge costs | 0.3–0.8% |
+| In-process inspection | Hours × labor rate (including production wait time) | 0.5–1.5% |
+| Final inspection / testing | Hours × labor rate + test equipment depreciation | 0.3–1.0% |
+| Calibration program | Service contracts + labor + standards | 0.1–0.3% |
+| Audit program (internal + external) | Labor + travel + registration fees | 0.1–0.3% |
+| Laboratory testing | Internal lab costs or external lab fees | 0.2–0.5% |
+
+**Internal Failure Costs (defects caught before shipment):**
+
+| Cost Element | How to Measure | Typical Range (% of revenue) |
+|---|---|---|
+| Scrap | Scrapped material value + processing labor wasted | 1.0–3.0% |
+| Rework | Labor + materials for rework operations | 0.5–2.0% |
+| Re-inspection | Hours × labor rate for re-inspection after rework | 0.1–0.5% |
+| MRB processing | Hours × labor rate for disposition activities | 0.1–0.3% |
+| Root cause investigation | Hours × labor rate for RCA team activities | 0.2–0.5% |
+| Production delays | Lost production time due to quarantine, investigation | 0.5–2.0% |
+| Supplier sort/containment | Third-party sort labor or internal sort labor for supplier-caused NC | 0.1–0.5% |
+
+**External Failure Costs (defects that reach the customer):**
+
+| Cost Element | How to Measure | Typical Range (% of revenue) |
+|---|---|---|
+| Customer returns / credits | Credit memos + return shipping + restocking labor | 0.5–2.0% |
+| Warranty claims | Claim value + processing labor | 0.5–3.0% |
+| Field service / repair | Service labor + travel + parts | 0.3–1.5% |
+| Customer complaint processing | Hours × labor rate for investigation + response | 0.2–0.5% |
+| Recall / field correction | Product replacement + notification + shipping + regulatory | 0.0–5.0% (highly variable) |
+| Regulatory action costs | Fines, consent decree compliance, increased inspections | 0.0–10.0% (catastrophic when triggered) |
+| Reputation / lost business | Lost revenue from customer defection (estimate) | Difficult to measure; typically 2-10x direct costs |
+
+### 7.2 COQ Business Case Model
+
+**Calculating ROI for Quality Investment:**
+
+```
+ROI = (Failure Cost Reduction - Investment Cost) / Investment Cost × 100%
+
+Where:
+  Failure Cost Reduction = (Current internal + external failure costs)
+                          - (Projected failure costs after investment)
+  Investment Cost = Prevention cost increase + appraisal cost change
+```
+
+**Rule of Thumb Multipliers:**
+
+| Investment Type | Expected ROI | Payback Period |
+|---|---|---|
+| Poka-yoke (error-proofing) | 5:1 to 20:1 | 3–6 months |
+| SPC implementation | 3:1 to 10:1 | 6–12 months |
+| Supplier development program | 2:1 to 8:1 | 12–24 months |
+| Process validation improvement | 4:1 to 15:1 | 6–18 months |
+| Training program upgrade | 1:1 to 3:1 | 12–24 months |
+
+### 7.3 MRB Decision Process — Economic Model
+
+When disposition is not dictated by safety or regulatory requirements, use economic analysis:
+
+**Rework vs. Scrap Decision:**
+
+```
+Rework if: C_rework + C_reinspect < C_replacement × (1 + premium)
+
+Where:
+  C_rework = Direct rework labor + materials + machine time
+  C_reinspect = Re-inspection labor + any additional testing
+  C_replacement = Purchase price or manufacturing cost of replacement unit
+  premium = Schedule urgency factor (0% if no urgency, 10-50% if production impact,
+            100%+ if customer delivery at risk)
+```
+
+**Sort vs. Return Decision (for supplier-caused lots):**
+
+```
+Sort if: (C_sort < C_return_freight + C_production_delay) AND (expected yield > 70%)
+
+Where:
+  C_sort = Sort labor hours × rate (typically $25-50/hr for manual sort,
+           $50-100/hr for dimensional sort)
+  C_return_freight = Shipping cost + handling + administrative
+  C_production_delay = (Days of delay × daily production value at risk)
+  expected yield = Estimated % of lot that will pass sort
+                   (use sample data to estimate)
+```
+
+**Use-As-Is vs. Sort/Rework Decision (non-safety, non-regulatory):**
+
+```
+Use-as-is if: Risk_functional ≤ Acceptable_risk
+              AND C_use_as_is < C_sort_or_rework
+              AND engineering provides documented justification
+
+Where:
+  Risk_functional = P(failure in use) × Impact(failure)
+  C_use_as_is = Warranty risk increase (estimated) + documentation cost
+  C_sort_or_rework = Direct sort/rework costs + production delay costs
+```
+
+---
+
+## 8. MRB Decision Process — Detailed Workflow
+
+### 8.1 MRB Meeting Structure
+
+**Frequency:** Scheduled weekly; ad hoc for urgent dispositions (safety-critical, production-blocking)
+
+**Required Attendees:**
+- Quality Engineering (chair, facilitates and documents)
+- Design/Product Engineering (functional impact assessment)
+- Manufacturing Engineering (reworkability assessment)
+- Production/Operations (schedule impact)
+- Procurement (supplier-related dispositions, commercial impact)
+- Optional: Regulatory Affairs (if regulatory implications), Customer Quality (if customer notification required)
+
+**Standard Agenda:**
+1. Review of new NCRs pending disposition (by priority: safety first, then production-blocking, then age)
+2. Presentation of data package per NCR (measurements, photographs, process data)
+3. Engineering assessment of functional impact
+4. Disposition decision with documented rationale
+5. Review of aging NCRs (> 15 days without disposition)
+6. Review of MRB metrics (volume, cycle time, cost)
+
+### 8.2 MRB Documentation Requirements
+
+Each MRB disposition must include:
+
+| Element | Purpose | Who Provides |
+|---|---|---|
+| NCR number and description | Identification and traceability | Quality Engineering |
+| Part number, revision, quantity | Scope of disposition | Quality Engineering |
+| Specification violated (clause, dimension, requirement) | Clarity on what's nonconforming | Quality Engineering |
+| Measurement data (actuals vs. tolerances) | Evidence base for disposition | Quality Engineering / Inspection |
+| Photographs (if applicable) | Visual evidence | Quality Engineering / Inspection |
+| Engineering justification (for use-as-is or repair) | Technical rationale for accepting deviation | Design/Product Engineering |
+| Risk assessment (for safety-related items) | Formal risk evaluation | Design/Product Engineering + Quality |
+| Customer approval reference (if required) | Compliance with contract/standard | Quality Engineering |
+| Disposition decision | The decision itself | MRB consensus |
+| Signatures of all MRB members | Accountability and traceability | All attendees |
+| Cost impact | Financial tracking for COQ | Quality Engineering + Finance |
+| CAPA reference (if initiated) | Link to systemic corrective action | Quality Engineering |