Author: Parveen K Kohli

What is Critical?

API Spec Q1, Clause 5.5 (Purchasing) requires organizations to identify and categorize their suppliers based on the nature of the products, components, and activities they supply. These categories are essential to determine criteria for initial supplier evaluation and ongoing re-evaluations.

The key supplier categories defined in Clause 5.5 are:

  1. Critical: Deemed by the organization, product specification, or customer to be of significant importance and requiring specific action (as outlined in Clause 3.1.5).
  2. Customer-Specified: As specified by the customer for manufacturing their equipment or products.
  3. Proprietary Limited: This term refers to suppliers with unique methods, technologies, or practices exclusively developed or owned by them. Such proprietary processes are protected through legal agreements, such as non-disclosure agreements (NDAs), to safeguard them from external access or replication.
  4. Legal Limited: Refers to suppliers or entities whose access to sensitive areas, processes, or information is restricted by legal measures to ensure confidentiality, security, and regulatory compliance.
  5. Non-Critical: Suppliers of products, components, or activities that impact product realization or the final product, as specified in Clause 5.5.1.4.

Addressing Confusion: Critical vs. Non-Critical Suppliers

Since the introduction of “Critical” and “Non-Critical” supplier categorization in API Spec Q1 (9th Edition, Addendum 2, 2019), many organizations have struggled to differentiate between the two.

The key to resolving this confusion lies in identifying critical and non-critical products, components, and activities. Suppliers providing critical products or services automatically become “Critical Suppliers,” while those providing non-critical ones are categorized as “Non-Critical Suppliers.”

Common Misconception

The most common perception among industry personnel is that non-critical products or activities do not directly impact the final product’s quality, while critical ones do. However, upon examining Clause 5.5.1.4, it becomes evident that non-critical products, components, or activities also impact product realization or the final product.

Thus, all purchases—critical or non-critical—are important for the organizations. The distinction lies in the degree of importance and the specific actions required on them.

Understanding and Breaking Down the “Critical” Definition

API Spec Q1 defines “Critical” (Clause 3.1.5) as:

Deemed by the organization, product specification, or customer to be of significant importance and requiring specific action.

To better understand this concept, it is important to ask: Who decides what is critical?

Stakeholders Determining Criticality

  1. The Organization: Organizations must evaluate their processes, products, and services to identify elements critical to the quality, safety, and reliability of the final product. or
  2. The Product Specification: Product specifications often highlight critical parameters directly affecting performance or compliance. or
  3. The Customer: Customers may specify certain products, components, or activities as critical based on their unique needs and expectations.

Understanding Criticality

Critical purchases play a significant role in ensuring the quality, safety, and reliability of the final product and, therefore, demand specific actions and or additional measures during manufacturing, inspection, and testing.

Example: Identifying a Critical Supplier

For a valve manufacturing company, castings used in valve production can be classified as critical.

  • Significance: A casting failure during use could result in severe or catastrophic incidents.
  • Specific Actions: To ensure casting integrity, specific measures may include:
    • Use of specific steel melting processes and fully killed steel.
    • Implementation of Heat Treatment practices and maintaining proper grain structures and chemical and mechanical properties.
    • Conducting typical non-destructive testing (NDT).

The supplier providing such castings becomes a “Critical Supplier” due to the significant role their deliverables play in ensuring the final product’s quality and safety.

Final Thoughts

Understanding and applying the concept of criticality as defined in API Spec Q1 Clause 3.1.5 is essential for organizations aiming to streamline their supply chain and maintain high quality standards.

Although all purchases impact product realization, identifying what is critical ensures that additional focus and actions are required during their evaluation and re-evaluation.

By categorizing suppliers appropriately and implementing specific evaluation criteria for critical suppliers, organizations can mitigate risks, ensure compliance, and deliver reliable, high-quality products.

 

Disclaimer: This interpretation is provided solely for guidance and is based exclusively on the author’s learning experience within the API ecosystem. Before forming any judgments, readers are encouraged to rely on their own understanding in light of their organization’s requirements.

Note: API does not endorse this interpretation, either in part or as a whole.