Document Ref & Version No: CESAFE/PB/005 V1.2. Abstract: the present CE New Approach and directives did not give enough attention to batch

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1 Ref. Ares(2017) /02/2017 Document Ref & Version No: CESAFE/PB/005 V1.2 Abstract: the present CE New Approach and directives did not give enough attention to batch production compliance control. Actually this critical negligence causing lots of unfair market competition to EU local factory, higher sourcing quality control cost to EU retailer and serious product safety headache for EU consumers. Mr. Steven SHI submits this proposal to suggest having a system revision to present New Approach conformity assessment module from the perspective of batch production compliance. If the proposal could become true, He believe that the economic operators do not need to spend so much high compliance expense on useless, inefficient activities, EU local manufacturer may have a more fair competition environment and EU consumers could enjoy more safer product in future. Draft by: Mr. Hongwei SHI (Steven) Addess: Jiangmen city, Guangdong Province, China Date: July cesafe@qq.com Mobile: As we know, the sensible quality and price are the most important factors that affect the consumer purchase decision-making when all candidate products meet the same bottom line of product safety & reliability. Unfortunately the product safety & reliability is not a sensible quality, which normally should be evaluated by talented professionals with - 1 -

2 professional testing facilities, and will spend very long time and high expense. In order to protect consumers and ensure a fair competitive market, we set up the product safety legislation and harmonized technical standards. We hope that each product put on the market should be safe. That means any product we bought from the market should conform to the relevant legislation and technical standards. In order to provide a fair and safe market, we should try to make the product safety, a non-sensible quality, become sensible and traceable. If we could not achieve it, then the ordinary trader and consumer will have to make the purchasing decision in a very unfair commercial environment. The rogue factory and their non-compliant products will have strong competitiveness than those good EU factory and their compliant products. If we allow this unfair condition to continue, more and more good EU manufacturer have to quit the competition or follow the way of those rogue factory in order to survive in brutal competition. Finally, the EU consumers have to afford the health and safety damage day after day. Unfortunately, that condition is the present conditions in most countries, not just in China, also in EU and USA. Because it seems we did not find an efficient way to make the product safety, a non-sensible quality, become sensible and traceable. The bloom non-compliance behavior observed by Mr. Steven SHI Mr. Steven SHI has worked as factory auditor in China since He could audit 70~80 factories each year. During his year by year auditing, Mr. SHI always noticed some popular non-compliance problems occurred in Chinese factories, such as: - 2 -

3 All factories think product compliance just means get a certificate or test report, which appear their product model name and their factory name/address and show for clients. These paper mainly used for marketing and attracting potential client s order. It is no any relation with serial production. The prototype submitted for testing is not final version used for serial production. It is found that most of sample product was prepared with good materials and special designing only for passing test usage. Hidden factory: some supplier present a well-organized and high quality focused factory to EU buyer to get the order. But actually only 10~20% of the order will be produced in there. The rest will be manufactured clandestinely in other less-quality but cheaper operation cost factory. No any factory has product compliance management system, the technical version of the sample which pass the testing is not controlled and documented because no people care about execute it into serial production. Some factories do have Design / Engineering modification procedure existed and operated upon it, but the modification procedure is lack of evaluation from the perspective of compliance standards. Many factories have no control procedure to the technical version of their product. The materials, product construction, critical process and quality checking methods changed frequently upon the demands of cost down or stakeholder s interest. All of these changes has no any records left in their internal daily operation and could not be identified and tracked by internal or external people. The batch No. or serial No has no relation with internal production order and relevant production records and quality records. It s impossible to track serial production compliance details according the batch No. on the product. The factory has no internal organizational function to follow up and receive the latest information of harmonized standard and product safety legislation. Mr. SHI thinks the root reason cause above no control to production compliance phenomena becoming bloom is that there are no any legal requirements in the present New Approach conformity assessment module. The EU importer only concerns the testing report / certificate of prototype which is main part of technical documentation and declaration. Nobody care about production compliance because the absence of legislation item. But so much high expense on useless, inefficient quality-compliance control - 3 -

4 At the same time, the EU buyers often have serious quality anxiety and regulatory pressure when they make deal with the supplier from China. Some troubles are always occurred during their supply chain development and procurement, such like: Spend so much time and man power on visiting and inspection to the factory during sourcing and procurement The mass production is different from the golden sample confirmed by the buyer. The factory could not trace and clarify the technical version of sample which passed the type test and certified by notified body. It leads to the compliance just staying on the paper certificate, not execute into the mess production. The buyer s inspector found some non-conformity points during pre-shipment inspection, but have to accept on deviation as time limit. The product put into market was checked by local market surveillance authority and found it did not comply with legislation and standards, so have to withdraw from market Some of products may be sub-contracted and produced clandestinely in other factory with bad quality but cheap manufacturer cost. Until to now, the buyer s solutions to solve above problems is that invest many people and time on site-visiting, inspection and random checking. It was found that the buyer have to spend 8 10 man-days on quality compliance control at least for a successful procurement. If the travel time and cost have to be calculated, the total cost of quality is - 4 -

5 really very high. How about factory? Besides of ISO9001 system external auditing and many kinds of third party s certification surveillance annual auditing need to pay, actually the factory has to afford more than 10 times cost on responding to buyer s quality visiting. Some factory complained that there will be several different buyers quality control people based in factory in peak season. The factory has to establish many teams to prepare files, collect records, and answer similar questions again and again. Besides of these, the factories also need arranging pick-up service, meal etc. it s really a huge pressure but unessential cost for factory, we think also for buyer. Conclusion to present EU product compliance mechanism So, we can conclude that the present EU product compliance mechanism is very old, inefficient and far behind of globalization. The present New Approach conformity module is really need to update, otherwise EU manufacture, EU retailer and EU consumer have to continue affording this bad conditions. How to make a non-sensible quality become sensible and traceable? Normally all products, no matter its complexity, are mess produced in the factory. So, how to make the product conform the legislation and standards and labeled by a traceable way before they leave the factory is becoming a top challenge to us, because we could not perform full type test on each product against the standards. How to solve this problem? If we surrender to the challenge, we can just choose an Honor declaration without evidence like present CE declaration. But Mr. Steven SHI thinks this really should not be and stay on an honor declaration; it should be a technical verification and management output based on a complete evidence chain

6 First of all, we need to determine the right unit suitable for perform mess production compliance management, verification and labeling. We face some optional choice: It s obviously that the batch (lot) is the best unit for a compliance management. Because we know: The batch is the minimum production plan unit in the factory. The same batch, normally means the same quality control plan, same BOM (bill of material), same incoming material, same production process, same software, same on-process test and final test plan etc. The batch is solidly linked with its production records, it s easy to check, verify and track. Based on the technical document and records, it s easy to verify whether a batch conforms to the original technical design status or not. Of course, if we have already tested, evaluated and proved that the original technical design status of the product has conform to relevant legislation and harmonized standards, then we can conclude that the batch(lot) also conform to legislation and harmonized standards. Then we could label a batch number and a product safety mark on the product

7 If we use above list to check present CE New approach directives, we can found there are some critical error and gap existed: The New approach directives choose model as basic compliance control unit, the model will be produced in very different time and order with different material and process. It s impossible to use a model name to control and track its compliance with so many changing factors. The technical documentation only requires prototype testing & report plus some product construction descriptions, that lead to no precisely control to original technical design status. So more and more rogue manufacturer submit special designed prototype to pass the test but never produce it in mess production. Many conformity modules did not give production conformity methods to the manufacturer (such like module A, A1 and A2 which cover almost all toys and electrical consumer products). The manufacturer did not know how to do production conformity control then they don t do it any more. Even some of the present conformity modules (such like: D, D1, E, E1, H) do have some quality system requirements to production conformity control, but actually these requirements were taken from ISO9001 and has few effects to production conformity control. The notified body and the factory just regard it as a mini-iso9001 audit plus some routine test witness and never linked it with original technical design status and traceable production batch conformity - 7 -

8 records. There are no mess products conformity assessment / verification requirements in present CE new approach. But the mess products are the trader purchased and put on the market which will be bought by consumers. This is a very important legislation gap. The present CE declaration actually is an honor declaration based on product model by the manufacturer and has no any relation to batch production compliance control. And it s not a mess production compliance verification conclusion done in factory. So this lead to complex supply chain and many hidden factory which produced non-compliant products under the honor declaration of the manufacturer (brand and trade mark holder). The present New Approach did not ask manufacturer labeling the unique product identification No. and production batch (lot) No. when a non-compliant product found from the market, the market surveillance authority could not conduct effective survey and recall work. There are no enough interactive communication approach on the label to allow the consumer and any other people who found rogue factory s non-compliant behavior and would like to report it to a MSA to stop their behavior. That lead to those rogue factories non-compliant product still put on the market and has to wait the spot check of MSA to found, even some people already found their bad behavior. Why do the manufacturers must to consider implementing the batch production compliance management system? If we look the NLF 768/2008/EC, we can found that this fundamental legislation give the very clear requirements that: Products placed on the on the community market shall comply with all applicable legislation. That means the producers should give their products a technical judgment whether they comply with relevant EU legislations or not before the products leave their factory. This is a legal duty of the manufacturer; they could not evade this duty. But, how do the producers do made this compliance judgment to their batch product? Of course, they could not test their product one by one according to the full items of harmonized standards. Because that is impractical and other wise all products will be damaged and will spend high cost and long time. So, the manufacturer must to consider implement the batch production compliance management system in their production site, actually good manufacturer have operate it long time even the name of the system is different. They could test their original prototype - 8 -

9 sample comply with all applicable legislations / standards, and then they have a well conformity control to each batch/lot via the management system. Finally they could give a well technical compliance judgment to their batch products based on a complete evidence chain. The batch production compliance management system may not be mandatory to each manufacturer in each directive. But the duty of making a technical compliance judgment to each batch products should be mandatory to the manufacturers. In order to keep this judgment could be traceable and re-checkable; the manufacturer should declare their batch compliance judgment in a third party maintained website. As the manufacture has already operated many quality systems, the core requirements of this new system can be easily merged into their present management system. According to Mr. Steven SHI s daily auditing experience, the good factory is very welcome this new system, because this system has same vision with their quality objective and will give them a effective improvement to their operation management, cut their final quality cost. So, if the New Approach could be updated and focus on batch compliance control successfully, EU could develop a global harmonized compliance scheme, we just called it as Q-POSTO project, to improve product compliance level: The infrastructure of Q-POSTO includes two key parts: the first is the Management system requirements to factory on batch production compliance and traceability which will be an core part of conformity assessment of New Approach. all of these control requirements have to be built into the factory s daily operation. The second is the big data base for approved factory and third party, they can use it upload the technical and compliance info of sample product and batch compliance verification records of each lot. This is similar with the function of POST OFFICE. The people can send letter with standard envelope to any people if he has address. Based on the two key parts, the Q-POSTO could authorize qualified third parties to promote it to buyers and provide auditing service to the factory who have interest and demands to batch production compliance verification management system. The approved factory will be registered into Q-POSTO data base and under the regular surveillance of the third party. Those factories can upload and update their technical info and compliance info of the sample product, especially the sample the buyer interested, and the records of lot compliance verification which buyer highly concerned. The QR-Code also will be affixed on each product delivered to the buyer. Scanning QR-Code by a Smartphone will link to Q-POSTO database and show the detail of product technical version, picture, and standards conformed, batch No. and quantity of lot (the factory name will not be displayed). If any people have quality-compliance suspects to the product, his feedbacks will be transferred to third party directly by mobile internet. All information upload into database by the factory will be checked by a third party in factory within 3 months or maybe in a more - 9 -

10 shorter period time upon the request. Q-POSTO provides an innovative solution to calm down the buyer s headache: Quickly, easily and successfully sourcing all factories who can manufacture the mess products same as golden sample. Because the factories in the data base of Q-POSTO are definitely meet their requirements. Actually, Q-POSTO set up a uniform standard to factories on the aspect of technical status of sample and batch production compliance. As we know, the quality and compliance could not test into the products; it should be built into the process. Another part of Q-POSTO, the data base for sample registration, lot compliance verification records registration and QR-Code, intervened and integrated into the key point of factory operation procedure. It provide a simple but effective way of checking the compliance and traceability of any product to all stake holder in down steam of factory such like buyer, wholesaler, retailer, consumer and market surveillance authority. In future, with more and more product affixing QR-Code of Q-POSTO have been put on the market and be familiar with the public, it will get more and more trust and finally may replace the present product certification mark. With more and more factory and lot compliance records registered into the Q-POSTO data base, a clear picture of quality-compliance control capability for factories will appear to us. So the Q-POSTO not only just eliminates useless auditing for the factory, but also provides a precise sourcing tool for the buyer. They could use it verify good factory, and make right procurement decision more easily. So, the birth of Q-POSTO will make the trading process between buyer and factory simplified. In future, once the buyer confirm the sample s basic function and appearance, they can go to commercial negotiation directly and do not need to spend much of time and manpower on quality-compliance controlling any more. The relevant work has been taken by factory and the third party responsible for the surveillance. Their work outputs can be tracked and checked in Q-POSTO database at any time. So, Q-POSTO stand in the perspective of buyer and factory to re-organizes the present quality-compliance activities and provides a revolutionary solution to buyer and factory. At the end, the solution do enhances the quality / safety of products and takes great benefit to consumers and MSA. Let s see, How will it change the trading?

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15 So, we can summarize the great advantages of batch production compliance control which takes to EU: The EU manufacturer will have a more fair competitive commercial market, their invest on product safety and reliability will become sensible and traceable, so those rogue operator s non-compliant low price products will have no space in EU market. The EU retailer and importer will reduce more than 80% of sourcing and quality-compliance cost. They do not need to spend so much resources on CE compliance documentation because all of this can be accessed via scan QR-Code to get it from factory / notified body. The EU consumers will buy the safer consumer product and could submit their product safety suspect via QR-Code to Market surveillance authority quickly and MSA could conduct the survey immediately under the cooperation of third party. The EU Market Surveillance Authority will not need to invest more and more budget and resources on spot check,testing and CE document requiring, they just need to check whether the compliance QR-Code on product existed or not. The present RAPEX notification product can be traced well back to factory 100% and give enough penalty to those rogue operator. The EU regulator will find the good way to solve mutual recognition headache which caused by product compliance burden from different country / field authority

16 Why we need Batch production compliance PRESENTATION Lecture Ladies and Gentlemen, Good Afternoon By Hongwei SHI As you see, I m a factory inspector from China. Every year I inspect about 70 factories. Today, I m so pleased to share with you my research findings: Mandatory Product Compliance should mean Mandatory batch production compliance. Mandatory Batch production compliance is very critical! That is not my whim. Rather, it s the result of a step by step analysis I ve done, and is based on some important findings. Ladies and Gentleman, as a group, we ICPHSO attendees are engaged in the product safety world, so we are more sensitive to product compliance. When I m shopping, I sometimes will ask myself: is this product safe? Has it been tested and met compliance requirements under applicable standards? Who could tell me these things? How could I get a definite answer? But, typically, when I inspect a factory, I often find the product being manufactured has not been tested! This is my first finding. Why hasn t the factory tested it? Because in the standards, many tests are destructive tests, including abnormal tests, endurance tests, and extreme environment tests, among many others. All of these tests will damage the product. Question: if the product has not been tested, why does the manufacturer affix a CE mark on it, telling you it is compliant with relevant legislation or standards? That s something we called conformity assessment modules, And we ll discuss later. If you ask the shop staff, the retailer, the wholesaler, or the importer They ll tell you they have CE-declaration and test report--you can even find the model name on the report. The model name is the same, but they cannot know whether the prototype sample used for testing is same as the product you bought in the shop. They have no information about why this is. They may suggest you to ask the factory. Because the product was mass produced in factory, the factory should has enough information to give you answer. So, the 2nd finding is: no matter who designed the product, the final product put on the market must be mass-produced in the factory. So only the factory know the real compliance of the product

17 Then, let s go to the factory. As you know, I m an inspector and I inspect around 70 factories per year. Each time I am in factory and stand at the end of production line, I will take a product and ask their quality manager: can you tell me whether this product complies with the standard XXX? Normally he would be very puzzled and not understand what I mean. When I explain my requirements again, they typically answer something like: this is not our work, not our business, but we can show you the certificate and testing report for this model. When I ask: How could you prove the prototype sample used for type testing was produced with the same technical processes and materials as your present batch product? The answer: so sorry, nobody requires us to do that. Our normal quality control protocol does not include a batch product compliance program. In other words, the typical factory does not know the compliance status of the product they produced. So, my 3 rd. finding is: In a typical supply chain, from retailer, back to wholesaler, to importer, manufacturer, and back to the factory, there is no party knows the real compliance status of the product put on the market. You can see when it comes to final product compliance testing and assurance, the typical situation starts to sound a lot like Hans Christian Anderson s fairy tale: the emperor has no clothes! In some ways, that is correct. The present product compliance requirements operating in the EU, China, and many other countries, has a very critical gap in the conformity assessment module: these requirements just focus on prototype sample compliance, but ignore the actual compliance of products sold on the market. That led to so many non-compliant products from rogue factories can more easily enter the market, even though prototypes have earned compliance certificates and passed testing reports. You may ask: if conditions are as you say, then who in the supply chain is actually ensuring product compliance for us? The unsung heroes are the high quality importers. Good importers hire experienced quality engineers to find trustworthy, high-quality factories as suppliers. Good importers leave room for factories to make reasonable profits, reducing the risk of factories using non-conforming materials or production processes. But being a good importer comes at a price they suffer huge cost pressure compared to less scrupulous importers and factories. These good importers and good factories do their conscience business with a very old but expensive way, because there is no a global harmonized compliance scheme to recognize, declare and share their efforts, so they are always at competitive disadvantage. Another challenge we are facing is E-Commerce. As e-commerce further

18 dominates markets, more and more consumers are buying products from online stores. Online shopping cuts the intermediate links of traditional supply chains and reduces the final selling price; sometimes products can even be directly sold from factories to consumers. But as the intermediate control fails, so does its critical quality control function. When the on-line factory is under the brutal price competition but do not need to face the quality checks from intermediate importer or wholesaler, some of them will more likely to choose breaking the bottom line of compliance to get the price competiveness, so consumers are more likely to buy cheap but noncompliant products. This is where companies court disaster from noncompliant or unsafe products, and lose profits from counterfeit products. It is a frequent problem in E-Commerce business in China. In that way, E-Commerce amplifies the inherent defects of current product compliance schemes. This is interesting but the consumer needs real product compliance! Consumers do have the right to buy truly compliant products from the market, even in the condition of the factory has no quality control checks from downstream commercial links. That s the spirit and principle of the EU New Legislation Framework No. 768/2008/EC: Products placed on the Community market shall comply with all applicable legislation That means we need a compliance scheme could effectively applied at the original production site factory. That is batch production compliance! Why choose batch as the basic control unit, but not the single, or model, or order? It s obvious that the batch (lot) is the best unit for compliance management. : The batch is the minimum production plan unit in the factory. The same batch, normally means the same quality control plan, same bill of material, same incoming material, same production process, same software, same on-process testing and final testing. Normally, the batch linked with its own production records and quality records, it s easy to be checked, verified and tracked. Based on the technical document and records, it s easy to verify whether a batch conforms to the original technical design status or not. If the original technical design status has been tested and compliant proved, then we can conclude that a batch product is in compliance, even we never do the test to this batch. This mandatory scheme based on batch production compliance could include 3 parts: The 1 st part is a factory-level management system, with provisions for a qualified professional to make technical judgments about whether a batch of products is in compliance or not. The 2 nd part is documented registration of self-declared compliance. The factory

19 should self-declare the compliance status of prototype sample and each batch compliance verification record on a third party maintained data base. These registrations should be maintained under the surveillance of the third party. The 3 rd part is a QR-Code linked with the batch compliance records registration. This tracking mechanism should be affixed on the product. This would allow any consumer to use his Smartphone to scan the QR code and access true and accurate batch compliance records. The ideal system is bi-directional. If the consumer experiences a noncompliant product, if a competitor find a noncompliance, even if a factory worker find the noncompliance but he could not change, all of them can submit his non-compliance evidence to market surveillance authority through this link. The retailer, wholesaler, and importer would therefore be relieved of a large portion of their compliance documentation burden. Finally, this new scheme based on batch production compliance control could help solve the worldwide headache of mutual recognition of different mandatory compliance certifications. Just like products currently are mass produced in the factory, QR Code-based compliance schemes would allow different countries authorities to release technical requirements directly to manufacturers, who could self declare prototype compliance and batch production compliance on the public accessed database. All of these can be tracked and re-checked. Finally, we get to One world! One scheme!. All the consumers and their family, their children, no matter which country they live in, could enjoy the real complaint products to improve their life quality. This system could also be used for intellectual property protection, social responsibility monitoring, counterfeit goods tracking, environment and energy friendly legislation, labor regulation etc.. Because all of these issues of public concern are related to batch production at the factory. The trading will be changed more fairly, and our world will become better. Ladies and gentleman, the batch production compliance scheme is like the invention of microscope in 350 years ago, and the present prototype model compliance was like the old magnifier. We can only use the microscope to discover the bacteria to control the disease infecting the healthy of globalization, but the magnifier never could do it. Ladies and gentleman, it s the time of changing! We need to change! Thank you! END