In a PCN (Product Change Notification) agreement, the following types of changes—if not properly notified or approved—can typically result in penalties, fines, or claims from the customer. This is especially true in industries with strict quality and compliance requirements, such as automotive, medical, electronics, and semiconductors.
1. Material Changes (BOM Changes)
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Replacement or substitution of key raw materials or components
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Changes in suppliers without prior approval
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Component upgrades or replacements due to EOL
Risk: Product performance deviation, batch quality issues, rejection by customer.
2. Manufacturing Process Changes
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Process flow adjustments, addition/removal of steps
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Changes in soldering, coating, or assembly methods
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Switching between manual and automated processes
Risk: Decreased consistency, fluctuating defect rates, revalidation may be required.
3. Production Site Relocation
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Factory relocation or adding new production lines
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Change of outsourced factories (e.g., EMS providers)
Risk: Inconsistent quality systems, PPAP or revalidation often required.
4. Critical Equipment Changes
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Replacement of molds, jigs, or key production equipment
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Updates to software or testing equipment
Risk: Affects dimensional accuracy or testing consistency; may require new sample approval.
5. Packaging or Labeling Changes
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Changes to packaging materials, structure, or label content
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Barcode format or batch number modifications
Risk: Logistics issues, scanning failures at the customer’s warehouse, product returns.
6. Product Design Changes
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Modifications to product structure, functionality, or interface
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Software/firmware version updates
Risk: Re-certification required, and unapproved changes may violate contract terms.
7. Product Discontinuation (EOL Notification)
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Failure to notify customers within the agreed lead time (e.g., 12 months)
Risk: Customers may claim compensation for supply disruptions or redesign costs.
8. Changes in Delivery Conditions
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Lead time extensions, minimum order quantity (MOQ) changes, price adjustments
Risk: Breach of framework agreements; customers may impose penalties or file claims.