ISO9001 System Document Package (22) | Control Procedure for Nonconforming Products (8.7)

1. Purpose

To standardize the identification, marking, isolation, review, disposition, and record management of nonconforming products within our company, ensuring effective control of nonconforming outputs throughout the product realization process and preventing their unintended use or delivery to customers. Through the statistical analysis and feedback of nonconforming product information, this procedure provides a basis for cause analysis, corrective actions, and continual improvement, thereby continuously enhancing product quality levels.

2. Scope

This procedure applies to the control of nonconforming products and outputs in the following areas:

• Purchased products (raw materials, purchased components, outsourced process results)
• Intermediate products (semi-finished goods) during production
• Final products
• Nonconforming outputs discovered after delivery (including delays, service errors, and data inaccuracies)
• Nonconforming items found in customer property

For this procedure, "nonconforming product" includes any product, process output, or service result that does not meet specified requirements.

3. Responsibilities

4. Work Procedures

4.1 Determination and Marking of Nonconforming Products

4.1.1 Nonconforming products can be identified through incoming quality control (IQC), in-process quality control (IPQC), final/outgoing quality control (OQC), customer complaints and returns, internal audits, monitoring and measurement, and customer property inspections. Any position that discovers a nonconforming product must immediately report it to the Quality Inspection Department and must not conceal or handle it without authorization.

4.1.2 The determination basis includes approved inspection procedures, acceptance standards, product drawings, process documents, and customer requirements. The determination conclusions are: conforming, nonconforming (minor/general/severe), or pending review (if unable to determine on-site).

4.1.3 Once a nonconforming product is determined, it must be marked immediately. Marking methods include: red "nonconforming" labels, nonconforming product stamps, area signboards, and "nonconforming" markings on work orders. The marking content should include: product name, specifications, batch/number, quantity, nonconforming items, determination person, and determination date. The marking should be clear, secure, and not easily removed, ensuring it remains identifiable throughout the flow process.

4.2 Isolation of Nonconforming Products

4.2.1 Nonconforming products should be stored in a designated "nonconforming product area" (red zone), strictly separated from conforming products and products awaiting inspection. When stored, they should be categorized and labeled with the batch and quantity.

4.2.2 For products that cannot be moved to the nonconforming product area (such as large equipment or in-line products), a red label should be hung on-site, and barriers/warning lines should be set up. A dedicated person should be assigned to monitor or lock the area to prevent misuse, misinstallation, or misshipment.

4.2.3 During the isolation period, no department should use nonconforming products without authorization. If sampling analysis or review is necessary, it must be approved by the Quality Inspection Department and a borrowing procedure must be followed, with the items returned to their original location afterward.

4.2.4 The warehouse should process temporary storage procedures for nonconforming products based on the Nonconforming Product Report. No entry, exit, or shipment should be processed without a disposition conclusion.

4.3 Reporting and Review of Nonconforming Products

4.3.1 The responsible department or inspector who discovers a nonconforming product should fill out the Nonconforming Product Report, noting the product information, nonconforming description, quantity, discovery stage, and discovery date, and submit the physical items to the Quality Inspection Department.

4.3.2 The Quality Inspection Department conducts a tiered review of nonconforming products:

• General Nonconformities (do not affect performance or safety, small quantity, can be dispositioned on-site): Reviewed by the head of the Quality Inspection Department or an authorized inspector, with the disposition method directly determined and recorded.
• Significant Nonconformities (affect usage performance, batch nonconformities, involve critical/significant characteristics, recurring nonconformities): Reviewed by a team led by the head of the Quality Inspection Department (with participation from technical and production departments, and sales if necessary), forming a review conclusion.
• Major Nonconformities (involve safety, regulatory compliance, significant customer complaints, batch scrap): The review team's conclusion must be approved by the Management Representative or General Manager. If customer requirements are involved, prior customer consent must be obtained and documented.

4.3.3 The review content includes: the nature and extent of the nonconformity, its impact on subsequent processes and final products, its impact on delivery and regulatory compliance, available disposition methods and their risks, responsible departments for disposition, and completion deadlines. The review conclusion should be recorded, and all participants should sign off on it.

4.4 Disposition of Nonconforming Products

4.4.1 The disposition methods for nonconforming products, as determined by the review, include:

• Rework: Measures taken to make nonconforming products meet specified requirements. After rework, the products must be re-inspected according to the original inspection criteria (or the criteria specified in the rework process) and released only if they are found to be conforming.
• Repair: Measures taken to make nonconforming products suitable for their intended use, though not necessarily fully conforming to the original requirements. After repair, the products must be re-verified according to the repair process criteria, and the customer must be informed if applicable.
• Concession: Permission to use or release products/services that do not meet specified requirements. Concessions must be approved by authorized personnel, and if customer requirements are involved, prior customer consent must be obtained and documented.
• Downgrade: Using nonconforming products for a lower-grade purpose as confirmed. Downgrading must be assessed by the Technical Department and the usage scope and limitations clearly defined.
• Scrap: Disposing of products that cannot be made conforming through rework or repair, or for which such actions are economically impractical, to prevent them from entering the usage phase.

4.4.2 The Technical Department develops the rework and repair plans (including process requirements and inspection criteria), which are implemented by the Production Department. The Quality Inspection Department re-inspects and records the reworked/repairs products. Reworked and repaired products should be re-marked (e.g., "reworked" or "repaired") and, if necessary, handled separately to avoid confusion with regular batches.

4.4.3 Concessions must be documented on the Concession Application/Approval Form, detailing the nonconformity, concession rationale, risk assessment, approver, customer consent evidence (if applicable), and the quantity and batch of the concessioned products. Concessioned products should maintain traceable markings and be separately registered in the Nonconforming Product Register. Nonconformities involving critical or safety characteristics and regulatory requirements must not be concessioned.

4.4.4 Scrap products are documented on the Scrap Application Form, confirmed by the Quality Inspection Department, and written off by the finance and warehouse departments. They should be disposed of according to environmental and regulatory requirements, and thoroughly destroyed or marked as "scrap" to prevent them from entering the market.

4.5 Handling Nonconformities Discovered After Delivery

4.5.1 If nonconformities are discovered after product delivery to the customer (including customer complaints, returns, and recalls), the Sales Department should fill out the Customer Complaint Handling Record and notify the Quality Inspection Department to organize a review.

4.5.2 The Quality Inspection Department, along with the Technical and Production Departments, should analyze the causes and impact scope of the nonconformities and determine the handling plan: replacement, return, repair, price reduction, or recall. If safety or regulatory issues are involved, the recall process should be initiated according to regulatory requirements, and relevant parties should be informed.

4.5.3 For nonconforming batches in transit, immediate notification to logistics for interception is required. For products already in use, their impact should be assessed, and remedial actions taken. All disposition results should be communicated to the customer, and communication records retained.

4.5.4 Nonconformities discovered after delivery should also be included in the Nonconforming Product Register and serve as important input for corrective actions (10.2).

4.6 Nonconformities in Customer Property

4.6.1 If nonconformities or abnormalities are found in customer property (including raw materials, drawings, molds, and packaging materials) during receipt, storage, or use, they should be marked, isolated, and immediately reported in writing to the customer for confirmation of disposition. No action should be taken without customer consent.

4.6.2 The inspection and handling process for customer property should be recorded, and evidence of communication with the customer retained.

4.7 Record Keeping and Statistical Analysis of Nonconformities

4.7.1 The Quality Inspection Department establishes the Nonconforming Product Register, registering each nonconforming product's name, batch, quantity, discovery stage, nonconforming items, cause classification (people/machinery/materials/methods/environment/measurement), disposition method, corrective action number, and closure status.

4.7.2 The Quality Inspection Department conducts monthly statistical analysis of nonconforming products, compiling the Nonconforming Product Statistical Analysis Report. The report should include: the number and batches of nonconformities, the trend of nonconformity rates, the main nonconforming items (arranged in a Pareto chart), the distribution of cause classifications, a list of recurring issues, and improvement suggestions. The report is submitted to management review as input.

4.7.3 For recurring or batch nonconformities, corrective actions should be initiated according to the Nonconformity and Corrective Action Procedure to prevent recurrence.

4.8 Interface with Corrective Actions

4.8.1 The disposition of nonconforming products (rework, repair, concession, scrap) addresses the issue of how to handle existing nonconformities. The analysis of nonconformity causes and the elimination measures are executed according to clause 10.2. For batch, recurring, or significant nonconformities, the responsible department should conduct a cause analysis and take corrective actions, with the Quality Inspection Department tracking and verifying their effectiveness.

4.8.2 For nonconformities in products provided by external suppliers, the Procurement and External Provision Control Procedure should be followed, taking actions such as returns, claims, meetings, suspension of supply, or disqualification of the supplier. If necessary, feedback should be provided to the supplier and corrective actions required.

4.9 Flowchart (Text Version)

Discover Nonconformity (Inspection/Complaint/Internal Audit/Monitoring and Measurement)
        │
        ▼
Determine and Mark (Red "Nonconforming" Mark, Note Batch and Items)
        │
        ▼
Isolate (Nonconforming Product Area/On-Site Isolation, Prevent Misuse)
        │
        ▼
Fill in Nonconforming Product Report → Quality Inspection Department Registers in Ledger
        │
        ▼
Tiered Review (General: Quality Inspection Department; Significant: Review Team; Major: Report to Management Representative/General Manager)
        │
        ├── Rework ──► Implement Plan ──► Re-inspection ──► Conforming ──► Release/Transfer
        │
        ├── Repair ──► Implement Plan ──► Re-verification ──► Inform Customer (if applicable) ──► Release
        │
        ├── Concession ──► Risk Assessment ──► Authorized Approval (Customer Consent Required if Applicable) ──► Mark and Register ──► Release
        │
        ├── Downgrade ──► Technical Assessment ──► Define Usage Restrictions ──► Mark and Register ──► Use
        │
        └── Scrap ──► Scrap Application ──► Approval ──► Destruction/Marking ──► Disposal
                    │
                    ▼
Monthly Statistical Analysis → Cause Analysis → Corrective Actions (10.2) → Verification and Closure

5. Related Records

6. Related Documents

1. Quality Manual
2. Product Release Control Procedure
3. Nonconformity and Corrective Action Procedure
4. Identification and Traceability Control Procedure
5. Product Protection Control Procedure
6. Customer Property Control Procedure
7. Procurement and External Provision Control Procedure
8. Customer-Related Processes Control Procedure
9. Document Control Procedure
10. Record Control Procedure

Usage Instructions

1. How to Adapt to Your Company's Actual Conditions

1. Review Tier Adaptation: Small companies can centralize the review authority to the quality inspection supervisor, eliminating the review team step, while retaining the requirement that major nonconformities be reported to the General Manager. Large companies can further细分—set up review teams by product line, or establish tiered thresholds based on the amount of nonconformity or batch size. It is recommended to quantify the tier standards (e.g., batches exceeding X units or involving critical characteristics are considered significant nonconformities) to reduce subjective judgment disputes.
2. Disposition Method Tailoring: Companies without a downgrade usage scenario (such as food or pharmaceutical industries) can remove this disposition method and clearly state that "nonconforming products must not be downgraded." Service companies can convert "rework/repair" to "re-providing service/correcting errors" and "scrap" to "terminating service and apologizing with compensation," and add service remediation time requirements (e.g., respond within 24 hours).
3. Industry-Specific Requirements: In addition to this procedure, the food, pharmaceutical, and medical device industries must comply with specific regulations regarding nonconforming products (such as recalls and destruction). It is recommended to add regulatory interface clauses in section 4.5 and specify the reporting scenarios and timelines to regulatory authorities.
4. Record Number Adjustment: Adjust the record numbers QR-22-XX according to your company's numbering rules and register them in the Record List. Replace the department names in the tables with your company's actual department settings.

2. Audit Focus Points (Mandatory for External Audits)

1. Effectiveness of Marking and Isolation: Auditors will check on-site whether the nonconforming product area is independently set, whether the markings are clear, and whether there is any mixing of conforming and nonconforming products. This is the most common on-site nonconformity under clause 8.7, so ensure that physical isolation is genuinely in place.
2. Closure of Disposition Records: Auditors will review Nonconforming Product Reports to ensure that all review records, disposition results, and re-inspection records are complete, confirming the full chain of "reporting—review—disposition—verification." Having only the report without disposition results is a typical nonconformity.
3. Authorization and Customer Agreement for Concessions: Auditors will verify whether concessions have been approved by authorized personnel and whether customer consent is documented in writing for customer-related requirements. Lack of records will result in nonconformities.
4. Re-verification After Rework and Repair: Auditors will check whether reworked or repaired products have been re-inspected according to regulations and whether records are retained. Verbal confirmation without records is nonconforming.
5. Interface with 10.2: Auditors will check whether corrective actions have been initiated for batch or recurring nonconformities, and whether cause analysis and effectiveness verification have been conducted. Only disposition without analysis will be judged as a lack of improvement loop in the system.
6. Reporting of Nonconformities in Customer Property: Auditors will check whether nonconformities in customer property are promptly reported to the customer and whether communication records are retained.

3. Common Errors

1. Emphasis on Disposition, Neglect of Marking: Disposition records are complete, but on-site markings are missing or casual, leading to the risk of misuse. Marking is the first line of defense in control and must be synchronized with the physical items.
2. Isolation as a Formality: The boundaries between the nonconforming product area, the inspection area, and the conforming product area are unclear, or the warehouse stores nonconforming and conforming products on the same shelf to save effort. The requirement that "nonconforming products must enter the red zone" should be written into warehouse work instructions and regularly inspected.
3. Abuse of Concessions: Treating concessions as a routine channel, frequently allowing the same issue, and even conceding on safety or regulatory-related characteristics. The conditions for concessions should be limited, and repeated concessions for the same nonconformity should automatically trigger corrective actions.
4. Rework and Repair Without a Plan: Rework is done based on experience without a process plan or re-inspection criteria, and whether the reworked product is conforming is determined by feel. The requirement "plan first, then implement, and finally verify" should be clearly defined.
5. Disconnection Between Register and Physical Items: Register entries are delayed, quantities do not match reality, and statistical analysis is inaccurate. Nonconforming product information should be registered on the same day, and a monthly inventory check should be conducted.
6. Disposition Without Improvement: Nonconforming products repeatedly occur without analyzing the causes or taking corrective actions, leaving the system in a "firefighting" state. Recurrence should be a mandatory trigger for initiating corrective actions.

Marking and isolation prevent misuse; review and disposition ensure full closure.

Knowledge Number: 2.3.1

Version: v20260809

Author: Quality Excellence Think Tank Quality Excellence Think Tank is dedicated to providing systematic professional knowledge, methodologies, and practical tools for quality management practitioners, helping companies continuously improve their quality capabilities.