QUALITY INSPECTION POLICY - ORDER

            CHECKING

This policy identifies the various quality inspection attributes that will be deployed with regard to order processing and the receipt of goods.  This will identify what causes or triggers the inspection, what will be inspected and when the inspection will be conducted and in what frequency they will occur.  For example, you may start out inspecting all outbound shipments for a specified period of time and then move to a random process.  You may also elect to always inspect certain outbound customer orders or inbound receipts for a specific vendor based on historical trends.

STOCK ITEM POLICY

This policy explains the qualifications around how to determine whether to stock an item in your facility.  This will address manufacturers, product classes and volume or item demand requirements.  There may be certain requirements that a vendor might need to meet such as competing product lines or certain performance commitments.  Also, products may be brought into stock or removed from stock based on historical demand.  Items might need to pre-authorized for return to vendor if the vendor asks you to stock items based on projected sales that may never materialize.

BACKORDER EXPEDITING POLICY

This policy will address how long a back order might age before being cleared, when ISC will expedite [proactive and reactive] open backorders and all allocation rules.  The policy will also identify all override situations to "normal" back order clearing along with authorization levels.  It will also address products that are on manufacturer backorder identifying any manufacturing allocation rules that have been enacted and the impact that may have on product availability.  This policy will determine product substitution options [lists] and any associated authorization or pre-approved lists that may be required.

BACKORDER/PURCHASE ORDER CANCELLATION POLICY

This policy will identify when a cancellation to an open backorder and/or purchase order is authorized.  This will include any requirements on the customer if the cancellation results in inventory that may already have been ordered and shipped by suppliers, any credit opportunity and returns and associated transportation expenses that may be incurred.

PHYSICAL INVENTORY POLICY

This policy will identify ISC's physical inventory taking requirements based on accounting principles and existing Sutter policies.  It will be based on inventory investment, IT systems and inventory management practices.

INVENTORY CLASSIFICATION POLICY

This policy addresses ISC's inventory stratification rationale to include rate of movement, inventory value and historical demand.  It will identify all classification categories and the criteria necessary to meet them, how often they are reviewed and the communication protocol for resolution.

INVENTORY ADJUSTMENTS POLICY

This policy will identify the situations that warrant inventory adjustments, the associated criteria and reason codes, reporting mechanism, authority levels along with when inventory adjustments may be made.  This policy will identify the communication steps needed to make adjustments and all associated accounting adjustments needed from a book to physical perspective.

INVENTORY ALLOCATION POLICY

This policy will identify stock inventory allocation rules based on limited available product [demand exceeds supply].  It will address who is authorized to break the policy as well as the reasons behind them along with communication protocols.