October 23, 2020

Beginner’s guide to important procurement and service terms

IPL Packaging has offices and manufacturing facilities around the world and we deliver customized packaging solutions to many of the world’s leading premium brands. Our customers want their bespoke packaging delivered consistently and to acceptable quality standards. Some of our customers are very experienced in procurement and understand the many important elements involved in the design and delivery of finished packs. 

However, for those that find some of these a bit daunting, here is a list of important supply chain and service terms that might be useful:

Supplier management services

Internal Vendor Qualification Audit – This is an in-depth audit of potential suppliers to check if they are reliable, efficient and are able to meet our high standards for packaging production. This audit is conducted before signing contracts and approving of a vendor’s services and generally covers a wide range of categories of technical proficiencies, as well as human resources and environmental policies.

Sedex SMETA audit – The Sedex Members Ethical Trade Audit (SMETA) is one of the most popular formats for ethical audits. This methodology is designed to investigate all aspects of responsible business practice, including labour standards, health and safety, environment and business ethics. It is conducted by an independent quality inspectorate to provide a compilation of best practice ethical audit techniques.

ISO 9001 and 14001 – The International Standards Organisation (ISO) has numerous certifications that can be awarded to businesses that instill certain procedures and standards. ISO 9001 is for quality management services that help a business to meet customer needs and other regulatory requirements. ISO 14001 is a certification for environmental management that helps businesses to minimise their environmental impact and comply with international sustainability laws.

SA8000 – The Social Accountability International (SAI) developed the SA8000 certification to encourage organisations to develop, maintain and apply socially acceptable practices in the work environment. This certification shows that a company is dedicated to the fair treatment of their employees.

BSCI – The Business Social Compliance Initiative (BSCI) is a broad-based business-driven movement that aims to monitor workplace standards across the global supply chain. This is a type of auditing methodology that ensures that all suppliers treat their employees fairly and ethically.

EcoVadis – This is a rating system that is used to measure and drive improvements in social compliance, business ethics and sustainability. It uses a percentile score (0 to 100) to assess the quality of a company’s sustainability management system.

FSC – The Forest Stewardship Council (FSC)  is an international non-profit organisation that promotes responsible management of the world’s forests. It is a market-based certification program that allows businesses and consumers to identify, purchase and use wood or paper materials from well-managed forests or recycled sources.

Quality control and procedures

Quality parameters – Quality control professionals typically classify quality defects into three main categories: minor, major and critical. The nature and severity of a defect determine to which of the three categories it belongs. The quality parameters agreed with customers ensure that they receive products that meet their expectations.

AQLs – The acceptable quality limit (AQL) is the worst tolerable process average that is considered to be acceptable to clients. Any products below the AQL can be discarded, so this limit can tell a business how many defective components are produced in a random sampling inspection.

Military standards – This is a form of statistical analysis, developed by the United States Department of Defence, that determines the quality of products and services. MIL-STD-105E is used for matching the correct sample size according to the chosen AQL.

DUPRO – A during-production (DUPRO) inspection to improve processes and optimise the quality of the product. DUPRO is effective for large quantity shipments and product lines with strict requirements. The DUPRO inspection is conducted on-site once 20% to 80% of the production is completed and packed for shipping.

Third-party verification – Independent, third-party evaluators are used to verify the quality and standards of a company’s offerings. This provides an unbiased overview of the quality of products. It also helps to ensure that customers receive quality products that meet their expectations. 

Corrective Action Procedure – If any faults are noted during the production or delivery stages of the supply chain, a corrective action procedure document will be used to fix the issue efficiently and effectively. This document outlines the procedures to be followed in order to rectify any problems. 

Sampling and prototyping

Render – This is a core design component that provides the customer with a detailed look at what their product will look like. It is a digital representation of the final product or packaging component that is shown to the client before they begin the production phase.

White sample – This is a basic production of the form and shape of a product before any colour, branding or details are added. It allows the customer to see the basic shape of their product before further elements are added.

3D modelling – A three-dimensional render is created to give the client a better glimpse of their product of packaging before they go into production. A 3D model shows how the product works and how packaging can be affected by different light sources. Once the client is happy with their 3D render, the product is approved for pre-production sampling.

Pre-pro sample – A pre-production sample is a real prototype that is to-scale and offers tangible insight into the final look and feel of a product or pack. This sample is essentially a final version before the mass production phase begins and would be signed off by the customer.

Client services

Project management – Project management is the process of leading a team to achieve the goals of a given project within a specified time frame. 

Logistics and delivery services

Lead time – The lead time is the period between the initiation and completion of a service or production process. This is an important time frame as it will determine other deadlines and project timelines. A production lead time is normally the time from an order receipt to the time the final products are delivered.  

Mode of transport – This is simply the method of transportation used to deliver products. This can be done by land (road and rail), sea or air. Each mode of transport will have benefits and drawbacks, such as cost and time to deliver. Modes of transport can be categorised as sea freight, less than container sea freight, bulk air freight, regular airfreight, as well as trucking and rail.

DAP – Delivered At Place (DAP) is a service whereby products are delivered to the customer’s location and the transport costs are covered by the supplier or seller. The seller bears all risks involved in bringing the goods to the delivery location.

DDP – Delivered Duty Paid (DDP) is a service whereby the costs of customs clearances and duty are paid by the supplier or seller. The seller bears all the costs and risks involved in bringing the goods to the destination and has an obligation to clear the goods, not only for export but also for import. The seller also pays any duties for both export and import and carries out all customs formalities.

FOB – Free On Board (FOB) is a service whereby the liability and ownership of products are transferred to the client once the goods are loaded onto the shipping vessel at the origin port. The risk of loss of or damage to the goods passes when the goods are on-board the vessel and the buyer bears all costs from that moment onwards. The seller is responsible for export customs costs.

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IPL Packaging is a global luxury packaging supplier with offices in the USA, Europe, Mexico, Asia and Africa. Approved manufacturing is available in several Asian countries, as well as sites in Eastern Europe. We create bespoke, tailored and exclusive packaging for any premium or luxury brand and manage the entire process, from conceptualisation and design to production and delivery.

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