The theme of this issue is to understand nonconforming products and foster a mindset of “prevention first, closed-loop management.”

I. The Importance of Nonconforming Product Management

Within a comprehensive quality management system, nonconforming product management is a critical link in the quality closed-loop. It serves not only as the “gatekeeper” of quality inspection but also as the “navigator” for continuous improvement.

Preventing Unintended Use: If nonconforming products are mixed with conforming products and flow into subsequent processes or to customers, it will directly result in a quality incident. Reduce quality loss: Timely identification, isolation, and disposition of nonconforming products can effectively reduce costs associated with rework, scrap, and customer complaints. Drive System Improvements: Behind every nonconforming item lies an opportunity for improvement in processes, standards, or execution.

II. A Review of the Concept of Quality: From “Conformity” to “Fitness for Purpose”

Before we can understand nonconforming products, we need to revisit the essence of quality: Conformity Quality: The degree to which a product conforms to technical standards (specifications). This serves as the fundamental basis for determining nonconforming products. Applicability Quality: The degree to which the product meets customer requirements during use. This serves as an important reference for handling nonconforming products (e.g., downgrading or accepting with concessions). The relationship between the two: Applicability determines conformity, and conformity enables the realization of applicability.

Nonconforming product management must both uphold the baseline of “conformity” and take into account the value of “fitness for purpose.”

III. Definition and Classification of Nonconforming Products

In accordance with the company’s “Nonconforming Product Management System,” we have established a unified understanding of nonconforming products:

(1) What is a “nonconforming product”?

Nonconforming products: Products or materials that do not meet product standards, process specifications, drawings, or contractual requirements. Scope of application covers: Procurement of raw and auxiliary materials, semi-finished products during production, finished products, and sold products (including customer feedback).

(2) Classification of Nonconforming Products

Based on the severity of nonconformity and the corresponding authority for disposition, they are classified into three categories:

Minor nonconforming items: These issues do not affect the product’s basic functions, safety performance, or customer use and can be repaired through simple procedures. For example, minor scratches on the exterior of the packaging drum or incomplete welds that can be re-welded are acceptable; similarly, slight damage to the outer packaging bag of chrome-plated metal products is permissible as long as the inner bag remains intact. General nonconforming products: This affects certain functional or performance parameters, but the product can be restored to acceptable standards through rework or repair, or may require downgrading. For example, if the impurity level of metallic chromium exceeds the specified limit and the product no longer meets its original grade, it may be downgraded to the next lower grade. Seriously Nonconforming Product ： When product safety performance or key functions are compromised, or when significant quality losses occur, and multiple consecutive batches of nonconforming semi-finished products cannot be economically repaired—particularly when the quantity is substantial—normal delivery schedules are adversely affected. For example, if a product fails to meet requirements and cannot be repaired, it must be returned to the raw-material stage; or if production consistently yields nonconforming output, delivery deadlines are severely impacted, resulting in substantial financial losses.

IV. Basic Principles of Nonconforming Product Management

The Nonconforming Product Management System sets forth four core principles: Prevention First—strengthen process control to minimize the occurrence of nonconforming products; Rapid Response—immediately identify and isolate any nonconforming items upon detection to prevent their mixed use; Closed-Loop Management—strictly implement the closed-loop process of “identification–review–disposition–verification–analysis–improvement”; and Data-Driven Decision-Making—conduct statistical analysis based on nonconforming product data to provide a basis for quality improvement.

V. The “Four-Step Procedure” for Nonconforming Product Management

Step 1: Identification and Labeling. Upon identifying a nonconforming product, the quality inspector, inspection personnel, or operator shall immediately affix a clear and conspicuous label to the physical item. The label shall include the product name, batch number, nonconforming characteristic(s), date of discovery, and name of the person who discovered it. Tip: Labels are not just “a quick sticker”—they must be designed so that anyone who follows can instantly recognize them and avoid misuse.

Step 2: Isolation. All nonconforming products identified shall be immediately moved to the designated “Nonconforming Products Area” for physical segregation. For large, immovable nonconforming items, fencing or warning signs shall be erected on site. Tip: Isolation is the only effective way to prevent “mixed use”; never cut corners.

Step 3: Record. Each production unit shall establish its own Nonconforming Product Management Ledger, which shall meticulously record daily information on nonconforming products. Tip: Management of nonconforming products without proper documentation is tantamount to “not having occurred.”

Step 4: Review and Handling. Based on the category of nonconforming products, initiate the corresponding level of review and handling procedures to determine the appropriate disposition method.

Our management of nonconforming products must shift from “disposal” to “improvement,” fostering a closed-loop mindset. The ultimate goal of nonconforming product management is not simply to “dispose of” these items, but to ensure that they no longer occur in the future.

Nonconforming product management serves as the “final safeguard” of an enterprise’s quality control system and the “first starting point” for continuous improvement. In 2026, let us take the “Nonconforming Product Management System” as our guiding framework and embrace “prevention-first, closed-loop management” as our core principle. By focusing on every batch of products and every operational detail, we will ensure that nonconforming product management is effectively implemented, thereby upholding every commitment through solid, results-oriented quality initiatives.