Wednesday, February 6, 2013

Industrial PSI services review in multi-national trading contracts

By Mauricio Amezaga


This content provides you with information about pre-shipment inspection companies. These companies provide their services to the buyers, sellers, engineering companies, end users, etc.

The buyer invites the equipment manufacturer to offer for manufacturing certain equipment. The manufacturer will review the invitation and submits its proforma invoice that specifies its commercial quotation as well as equipment technical specification.

The purchaser will review the proforma invoice for two important subjects. First the equipment technical specification will be reviewed and in the second step the equipment price will be evaluated.

The purchaser makes review and when finalized its assessment, sends goods purchase order to the seller. The purchaser also is responsible to prepare and issue the inspection and test plan and submit to the seller (vendor).

Then the purchaser requires making contract with a PSI inspection service provider to execute inspection in the manufacturer place. One of the pioneer's regions is Europe for exporting of its industrial commodities to the Middle East countries.

Some states in the Middle East have made some rules for compulsory pre-shipment inspection. This regulation must be followed by these countries' traders. So based this regulation all goods must pass inspection and examination before shipment in the exporter countries.

The scope of inspection for these commodities depends to the purchasers in Middle Eastern countries or any other country that import these commodities. The scope of work might be only 1 day for pre-shipment inspection or several days in manufacturing process to witness some important tests.

In the pre-shipment inspection order, the inspection company makes visual quality check, quantity control, packing and marking inspection. Sometimes loading inspection is done by request of the client. If the loading is in the scope, then third party inspector will be dispatched to the vendor workshop and will witness the loading operation. The inspector will record containers seals' numbers. These numbers must be stated in the inspection visit report.

There are several types of inspection companies. Some are international companies with lots of branch offices, representative offices and joint ventures companies. Some others are local companies.

When the buyer and seller making transaction through letter of credit and there is mandatory inspection requirement in the LC, then commodity third party inspection company's name needs to be expressed in the LC.

Some purchasers hire the third party inspection companies for both of the vendor inspection and pre-shipment inspection. It means the inspection scope is more comprehensive. In this case the seller (manufacturer) must issue its quality control plan. The plan must meet all mandatory requirements of client's inspection and test plan.

The most of manufacturers in the Europe working for years and have very good quality control systems. As they received the specific inspection and test plan, they will prepare their own quality control plan and will provide to the purchasers and their designated inspection companies. These QC plans must go to the approval process and approved before implementation.

The quality control department of manufacturer will notify inspection company 7 days in advance to attend in the vendor shop to witness specified tests. Some purchasers request to attend in the important test in vendor shop. In this case the manufacturer will make all arrangement for visa or other regulatory things to organize for their trip to vendor country and witnessing the test. This almost happen in big purchases and in sophisticated commodities such as steam turbines, high voltage motors, etc.




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