Pre-shipment inspection: Difference between revisions
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'''Pre-shipment |
'''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. |
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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. |
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After ordering a number of articles, the buyer lets an third party control the ordered goods before they are dispatched to him. Normally an independent inspection company is assigned with the task of the PSI, as it is in the interest of the buyer that somebody not connected with the deal in any way verifies the amount and quality. This way the buyer makes sure, he gets the goods he paid for. |
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==Process== |
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Although increasing numbers of clients would like to collect suppliers' information from the [[Internet]], this contains high risks because it is not a face-to-face transaction, and Internet [[phishing]] and [[fraud]] can corrupt it. Pre-shipment inspection can greatly avoid this risk and ensure clients get quality products from suppliers. |
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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. |
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=== Random selection === |
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The pre-shipment inspection is normally agreed between a buyer, a supplier, and a bank, and it can be used to initiate payment for a [[letter of credit]]. A PSI can be performed at different stages: |
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* At the 80 percent completion point, random pieces are pulled. The goal is 8 and 2: for every ten products, two are allowed defects. If There are more, and the entire batch may be pulled. |
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* Checking the total amount of goods and packing |
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* ANSI / ASQC Z1.4 (ISO 2859-1) is the international standard for the inspection process.<ref>{{Cite web|title=ANSI/ASQ Z1.4 & Z1.9 Sampling Plan Standards for Quality Control {{!}} ASQ|url=https://asq.org/quality-resources/z14-z19|access-date=2021-06-04|website=asq.org}}</ref> The Acceptable Quality Limit, AQL, is previously determined by agreement of importer and manufacturer and is a necessary part of the contractual agreement. |
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* Controlling the quality and/or consistency of goods |
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* Verifying compliance with the standards of the destination country (e.g. [[ASME]] or [[CE]]) |
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=== Defects === |
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The first stage is often performed by the transport company, but for the latter two stages a proper inspection company is needed. Similarly, if between the buyer and seller money transfer via a [[letter of credit]] is agreed upon, it is necessary to assign a reputable inspection company. In case of the [[letter of credit]], after inspection of the goods, an inspection certificate is sent to the bank issuing the [[letter of credit]] and the buyer, initiating the money transfer. |
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There are three levels of defects in a pre-shipment inspection with each defect escalating into the next. |
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Inspection companies are classified in two classes: |
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* Small - Defects of this level will not affect functionality like small miscolorations. |
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- Free-market companies: These are privately owned companies, which sell their services to the market. Danger with these might be, especially if it is a smaller company, that they might be paid as well by the manufacturer, thus working in his interest. |
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* Major - The defects are problematic and must be resolved immediately. The manufacturer risks the entire batch in this case. |
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* Critical - The batch has serious issues and is refused. Products involving chemicals such as cosmetics, often require professional laboratories to complete the inspection. |
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=== Compliance === |
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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. |
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{{Vague|date=October 2009}} |
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{{Copyedit-section|date=October 2009}} |
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=== Functionality === |
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Some countries, like [[Botswana]], require PSIs for all goods entering the country; in these cases the PSI must be performed by the company designated by the country. |
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Does the product work in its intended manner, which is important for electronics, toys, and the like. |
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=== Safety === |
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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. |
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* {{cite web |url=http://www.jurisint.org/pub/06/en/doc/C04.pdf|title=Jurisdical side of PSI|accessdate=2009-08-21 |format= |work= }} |
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==Inspection companies== |
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==Pre-Shipment Inspectors== |
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There are two types of PSI companies: |
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* [http://www.bureauveritas.com BV] |
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*Free-market companies which are privately owned, selling their services to the market. Risks involved might be, especially if it is a smaller company, that the company is paid by the manufacturer and working in its interest. The two largest pre-inspection private and free market companies are SGS and Bivac.<ref>{{Cite web|title=Pre-Shipment Inspection – Keep Quality High And Customers Happy {{!}} Sourcing Nova|url=https://sourcingnova.com/blog/pre-shipment-inspection/|access-date=2021-06-04|language=en-US}}</ref> |
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* [http://www.china-inspection.org CIO] |
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* [http://www.intertek.com Intertek] |
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* [http://www.omicnet.com OMIC] |
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* [http://www.sgs.com SGS] |
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* [http://www.asiainspection.com AsiaInspection] |
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* [http://www.tuev-hessen.de/e27/e84/e8092/index_en.html TUEV Hessen] |
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==See also== |
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*[[Quality control]] |
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==Termination on the PSI requirement== |
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*[[Inspection]] |
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PSI increases burdens and costs in international trade and can be counter-productive for the country of importation and its traders. |
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*[[PSI]] |
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*[[Letter of credit]] |
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Several countries are considering termination on the use of inspection companies' service, following upon WTO Agreement on Trade Facilitation |
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Article 10.5 Pre-shipment Inspection : |
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5.1. Members shall not require the use of pre-shipment inspections in relation to tariff classification and customs valuation. |
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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."<ref>{{Cite web |title=Trade Facilitation Recommendations {{!}} UNECE |url=https://unece.org/trade/uncefact/tf_recommendations |access-date=2022-06-21 |website=unece.org}}</ref> |
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==References== |
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{{Reflist}} |
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* [https://slideplayer.com/slide/5301439/ "Customs use of inspection companies"]. World Customs Organization (2015). |
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==External links== |
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* {{cite web |url=http://www.tuev-hessen.de/dlFragments/e27/e1708/Aussenhandel_und_Binnenmarkt_ger.pdf |title=General description of PSI in German export journal |accessdate=2010-08-27 |format=PDF |work=tuev-hessen.de }}{{Dead link|date=May 2020 |bot=InternetArchiveBot |fix-attempted=yes }} |
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{{DEFAULTSORT:Pre-Shipment Inspection}} |
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[[Category:Procurement]] |
[[Category:Procurement]] |
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[[Category:Project management]] |
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[[Category:Production and manufacturing]] |
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[[Category:Supply chain management]] |
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[[Category:Quality management]] |
[[Category:Quality management]] |
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Latest revision as of 18:28, 2 February 2023
 | This article needs additional citations for verification. (September 2011) |
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.
Process
[edit]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.
Random selection
[edit]- At the 80 percent completion point, random pieces are pulled. The goal is 8 and 2: for every ten products, two are allowed defects. If There are more, and the entire batch may be pulled.
- ANSI / ASQC Z1.4 (ISO 2859-1) is the international standard for the inspection process.[1] The Acceptable Quality Limit, AQL, is previously determined by agreement of importer and manufacturer and is a necessary part of the contractual agreement.
Defects
[edit]There are three levels of defects in a pre-shipment inspection with each defect escalating into the next.
- Small - Defects of this level will not affect functionality like small miscolorations.
- Major - The defects are problematic and must be resolved immediately. The manufacturer risks the entire batch in this case.
- Critical - The batch has serious issues and is refused. Products involving chemicals such as cosmetics, often require professional laboratories to complete the inspection.
Compliance
[edit]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.
Functionality
[edit]Does the product work in its intended manner, which is important for electronics, toys, and the like.
Safety
[edit]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.
Inspection companies
[edit]There are two types of PSI companies:
- Free-market companies which are privately owned, selling their services to the market. Risks involved might be, especially if it is a smaller company, that the company is paid by the manufacturer and working in its interest. The two largest pre-inspection private and free market companies are SGS and Bivac.[2]
- State owned inspection companies:[where?] only very few companies operating on the market are state-owned or partly state-owned. The shareholding of governmental institutions guarantees independence and objectivity.
A higher form of the PSI is called expediting, in which the dates of delivery and the production are included in the control.
Termination on the PSI requirement
[edit]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]
References
[edit]- ^ "ANSI/ASQ Z1.4 & Z1.9 Sampling Plan Standards for Quality Control | ASQ". asq.org. Retrieved 2021-06-04.
- ^ "Pre-Shipment Inspection – Keep Quality High And Customers Happy | Sourcing Nova". Retrieved 2021-06-04.
- ^ "Trade Facilitation Recommendations | UNECE". unece.org. Retrieved 2022-06-21.
- "Customs use of inspection companies". World Customs Organization (2015).
External links
[edit]- "General description of PSI in German export journal" (PDF). tuev-hessen.de. Retrieved 2010-08-27.[permanent dead link]