Consumer Goods Requirements Introduction & Explanation
1. INTRODUCTION: At Woolworths we are committed to working closely with our suppliers, to provide our customers with a fantastic range of products they can trust to be safe and have consistent quality for them and their family. In the development of this Supplier Excellence Program, we have listened to the feedback we have received from our suppliers and endeavoured to develop a program that: reduces audit time whilst ensuring more focus on factory practices; reduces duplication in system and procedure development; provides greater benefit focus and value in product safety and quality outcomes; is more specific to your business and the products you provide us with; focuses on preventing customer complaints, withdrawals and recalls; rewards high performing suppliers with fewer audits; and provides and delights our customers with safe and consistent quality product every day. We will continue to build and improve our program based on emerging issues, audit outcomes and feedback from our supply base. Scope: Consumer Goods refers to all general merchandise, packaging products, health, beauty, household, non food grocery, formulated non food products, and where applicable non-trade products. 2. SUPPLIER EXCELLENCE PROGRAM & STANDARD STRUCTURE: Suppliers will need to maintain each level of the Supplier Excellence Program, and be audited to: For General Merchandise & Non-Trade Suppliers: Page 2 of 7
For Formulated Non-Food (FNF) Suppliers: Please refer to the Standards matrix in Appendix A which outlines the Standards and Codes of Practice (COP s) that your business may be audited against. (Appendix A: Product Matrix - Which requirements and COP s for which product categories) The Supplier Excellence Program includes the development of a number of Codes of Practice (COP) for specific areas or issues that require focus and specific controls. These can be found on www.wowlink.com.au, to ensure the consistent supply of safe, quality and legally compliant product. You may already have some procedures, records and levels of control in place for the areas covered by the COP s. However, it is important that these are reviewed by your business, and your systems updated & incorporated accordingly. These COPs are auditable and we will continue to revise these requirements to meet best practice and legal requirements. If you are still unsure whether these Codes of Practice apply to your products and business, please consult your Woolworths Quality Specialist. 3. AUDIT FREQUENCY: Your audit frequency will be based on the risk of your product, audit performance, and overall quality performance. The minimum frequency of announced audits for all factories will be annually. Where Woolworths determines that the supplier or the product is very high risk, they will require the factory to be audited on a 6 monthly basis. If the last audit was RED rated, the factory will be subjected to an unannounced audit within the next 6 months. This unannounced audit will be scheduled within a 30-90 day window per advised by Woolworths. Woolworths wants to reward suppliers/factories who have good quality culture with reduced audit frequency. After your first Supplier Excellence audit your Woolworths Quality Specialist will assess your performance and advise you of the ongoing audit frequency. Your audit frequency will be detailed in PLMS and available for the supplier and the certification body to access. Page 3 of 7
The duration of the audit will be calculated by the certification body based on size of the facility, complexity of systems, and processes. 4. GLOSSARY We will develop a Glossary of Terms used throughout the Supplier Excellence Program. These state specific terms we use, and their meaning, to aid in the understanding and comprehension of the program. 5. AUDIT NON-CONFORMANCE CORRECTIVE ACTION REQUEST (CAR): Corrective Action Requests (CAR s) from Supplier Excellence audits are defined as follows: CRITICAL Where there is a failure to comply with a product safety or legal standard and where this failure puts the customer and/ or Woolworths brand integrity at risk. The auditor is required to contact the Woolworths team during the audit to confirm the CRITICAL non conformance details. Critical Nonconformances will result in immediate suspension of business until the CAR/CAP s are satisfactorily actioned in conjunction with Woolworths and the certification body. MAJOR A failure or deficiency to a clause of the Supplier Excellence Standard General Requirements or the Codes of Practice which requires immediate attention to prevent a potential product safety failure or legal issue from arising, this failure may potentially put customers or the Woolworths brand integrity at risk. All major CAR s must be closed out within 30 days. The auditor may need to return to the site to close our Major CAR s. Where the factory is unable to close out the Major CAR within the 30 day period they should consult with their Woolworths Quality Specialist. Where a Major CAR is not closed within the time period, Woolworths may advise the certification body to reclassify the CAR to Critical and this may result in suspension of trade. MINOR A deficiency which requires attention to improve Manufacturing Practice Standards, Due Diligence documentation (providing ability to defend a legal challenge) or to achieve compliance with Woolworths requirements and standards. 60 day close out period is in place for Minor CARs. Where Minor CAR is not closed within the time period the certification body must upgrade the status to Major. (Note: building changes not currently posing a risk to product discuss with your Quality Specialist). 6. OBSERVATIONS OF AREAS FOR IMPROVEMENT Areas where an auditor observes potential for system or process improvements that are non confidential they can make recommendations for improvement. Observations can be pointed out by the auditor as areas being in compliance but very close to becoming a non-conformance if not attended to. Observations cannot be issued if auditor finds it compromising product safety or quality and/or risk - these will be classified under non conformances as per the severity of the issue. Page 4 of 7
7. SUPPLIER EXCELLENCE PROGRAM AUDIT RATINGS: Green - Satisfactory Amber - Improvement needed Red - at risk and Unsatisfactory < 6 minor CAR's Does not fall in either red or green - all other outcomes. That is the site has Major and Minor CAR s requiring actions - 1 or more critical CAR's NOTE: When there is a red audit outcome this will result in cease of trade. An immediate discussion (within 24hrs) is required by the supplier with your Quality Specialist/Manager to understand the product risk and next steps. We want to drive continuous improvement and see our suppliers achieve Green standard on a consistent basis. Underperformance (Amber) Where there are three successive Amber audit results you may be subjected to: A Special Audit (to be completed by an Approved Woolworths auditor or Quality Specialist); Intensive Care Program ( Woolworths will closely monitor performance); or Where considered necessary based on risk, the supplier will be rated as Red, resulting in cease of trade. Recurrent audit fails (red), will result in suspension of trade, or the supplier entering the Intensive Care Program as discussed with Woolworths. 8. SUSPENSION OR DE REGISTRATION: The Supplier may be suspended or de registered when: A Quality Management System which meets the requirements of the Supplier Excellence Program has not been developed, implemented and maintained. The results of an audit indicate non compliance with the requirements of the Supplier Excellence Program. Where a Critical non conformance is issued by an auditor during an audit of the Supplier Excellence Program. Where Major non conformances are not closed out within 30 days of being issued to the Supplier. Supplier Excellence Audits indicate that there is a low level of confidence in the Supplier's ability to produce safe product or meet regulatory requirements. The Supplier is not showing commitment to meeting all requirements of the Supplier Excellence Program. Page 5 of 7
The Supplier has not proceeded to full certification within the specified time limit. Non compliance to required audit frequency (unless agreed by Woolworths in writing) for all products and processes supplied to Woolworths. Any fraudulent behaviours, test reports and/ or records are identified. E.g. fake test reports. 9. SUPPLIER EXCELLENCE APPROVAL: Audits must be scheduled as per Woolworths agreed frequency and it is the responsibility of the supplier to ensure that audit scheduling with the approved nominated Certification Body meets this requirement. Certification shall be maintained and is conditional on ensuring that where major non conformances are raised, that these be closed out in a timely manner in accordance with the 30 day timeframe. The Supplier may proceed to Certification when, as a result of the audit process, the auditor considers that all requirements of the Supplier Excellence Program have been met, including payment to the Certification Body and no Critical or Major non conformances are outstanding. 10. SPECIAL AND/OR UNANNOUNCED AUDITS: We ask that our Suppliers agree in advance as part of trading terms and conditions that if at any time Woolworths has concerns that their Supplier Excellence Program or Quality Management System does not comply with Woolworths requirements, Woolworths acting reasonably, may direct a Certification Body to carry out a Special Audit. The scope of the Special Audit will be at the discretion of Woolworths and the cost will be borne by the Supplier. The Special Audit will be unannounced or announced at Woolworth s discretion and may be conducted by any Certification Body nominated by Woolworths. 11. INTENSIVE CARE PROGRAM: Occasionally incidents or issues occur due to product, process or system failures that mean we may need to work more closely with a supplier on a number of initiatives to ensure the safety, legality, or quality of the product is being consistently met. This may include increased monitoring of regular key performance measures, increased site visits and so on. These potential issues may include: A serious quality, legal, reputational or product safety incident A Product Withdrawal (or more than one) A Product Recall Or ongoing quality, legality or safety issues/ problems that have not been adequately addressed The Intensive Care program will include a combination of any or all of the following (all the criteria below will be considered and will vary dependent on the specific circumstances): Clearly defined and documented targets for Intensive Care (dependent on the specific issue/ incident): e.g. Complaint per million unit (CPMU), withdrawals, foreign object trending, pest monitoring. Consequences will be clearly detailed of further noncompliance vs KPI s set, these may include reduced business, no further NPD Page 6 of 7
opportunities, increased audits and/or unannounced audits. For Increased audits/supplier visits: the requirements such as, quarterly audits, monthly QA visits will be set by the Woolworths QS in conjunction with the Category Business Team. Regular (e.g. weekly, monthly or quarterly) meetings to review performance. 12. CERTIFICATION BODIES: Woolworths has nominated an approved list of Certification Bodies based on our ability to administer accreditation checks and maintenance. Suppliers are able to select their preferred Certification Body from the list of Woolworths approved bodies. The Certification Body will not unreasonably refuse certification to a qualifying Supplier, but qualification includes payment to the Certification Body within their agreed terms. Please be aware that loss or withdrawal of certification means cessation of business with Woolworths. 13. CRITERIA FOR NEW TO WOOLWORTHS FACTORIES: New factories must meet the Supplier Excellence general requirements and the relevant Codes of Practice to be able to supply Woolworths own branded and non trade products. Audits and approval must take place before any products are ordered by or manufactured for Woolworths. 14. NEW FACTORY BUILDS OR EXTENSIONS: The approval processed for new factory builds, extensions or the build of new manufacturing processes must be discussed with your Quality Specialist to determine the scope and timing of the audit required prior to first orders and production runs. Page 7 of 7