Guidance Concerning Batch and Lot Splitting (US, EU, and Canada)

I was recently asked about guidance for batch and lot splitting.  I thought it might be useful to have an online resource for that sort of guidance.

Batch and lot splitting is typically necessary when you receive a large batch of articles, but you want to sell or transfer only a smaller subset of that batch.  For example, you might receive a lot of 10,000 fasteners; but your customers typically purchase them in lots of 100.  That means you expect to sell them in 100 lots of 100 units each.  You have one document that confirms their compliance to a standard, but says it applies to a shipment of 10,000 units.

The normal way to handle this is by making copies of the original document, keeping records and controlling the lot to ensure that (A) you only issue copies of the document for parts you sell from that lot, and (B) your count verifies that only the parts received (by number as well as identity) are associated with that document.

Generally, the questions I get about batch and lot splitting center on the legality of making copies of the authorized release certificate or other documents associated with the entire shipment.  Distributors often want to know whether they can make copies of the document to provide with the smaller (split) shipments.  Here is some guidance from three aviation authorities.

United States

First of all, remember that the FAA does not directly regulate distributors.  Thus, the FAA is not in a position to directly regulate batch or lot splitting by distributors.

The FAA has no regulations that would directly prohibit the copying of documents like 8130-3 tags.  Under the Paperwork Reduction Act, the FAA is not permitted to bring an enforcement action for “failing to comply with a collection of information” unless there is an OMB control number associated with the collection – and this limits the FAA”s enforcement options related to 8130-3 tags (especially since export airworthiness of parts was removed from the OMB control documents).  The FAA has no regulations directly limiting one’s ability to copy and circulate an 8130-3 tag once it is created.

This doesn’t mean that you can do anything you want with no consequences!  Fraud concerning aircraft parts is a federal crime.  Misleading statements about aircraft parts can get you into trouble with the FAA.  So it is always best practice to ensure that anything you pass along is neither fraudulent nor misleading.

The FAA does have recommendations for distributors with respect to splitting of bulk shipments, and the associated copying of 8130-3 tags.  Under FAA Order 8130.21H, the FAA has published guidance on issuing new 8130-3 tags for split lots, as well as how to control copies of the old 8130-3 when it is copied (so no new 8130-3 tag is issued).  The guidance explicitly says that distributors are authorized to split bulk shipments, and provides a three-step process for controlling the copies of the 8130-3 tag:

“(1) Make a copy of the FAA Form 8130-3 received with the original shipment of products or articles that identifies the bulk shipment.

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(2) Include the following written statement (an example) or similar statement: “(Company name) certifies this/the attached document is a copy of FAA Form 8130-3. The prior FAA Form 8130-3 received by our facility is maintained on file pursuant to our document retention standards. That prior FAA form tracking number is [ ACE-549]. The new tracking number for this portion of the split bulk shipment is [S1-054321]. The number of products or articles being shipped under this approval is [500]. Signed [quality control/assurance manager or authorized representative] Dated [ month day year]” (Refer to appendix A, figure A-7b, to this order for an example.) A quality control/assurance manager or authorized representative from that facility must sign and date the written statement. You can include this statement by attaching a separate sheet of paper to the copy of the FAA Form 8130-3.

(3) Maintain the prior FAA Form 8130-3 and a copy of the written statement on file”

I helped write the original form of that guidance, so I am pretty happy to endorse this approach.

For those distributors that are accredited to FAA AC 00-56B, that guidance requires accredited distributors to have a the following element in its quality system:

“When documentation is required to be duplicated to meet commercial requirements, a process for controlling the copies so as to prevent the misuse, or unintended use, of a copy. Examples of appropriate documentation include lot control, batch control, and remaining inventory control and verification.”

 

European Union

There is not currently guidance in EASA materials concerning the splitting of bulk shipment.  This was intended to be addressed in the supplier evaluation and control GM (with a recommendation that suppliers have “Procedures for batch splitting or redistribution of lots and handling of the related documents”).  That GM was originally drafted to support the supplier control regulations proposed in EASA Opinion 12/2013.

The supplier control language was finally implemented last summer in Commission Regulation (EU) 2018/1142 (section 145.A.42(b)(i)).  The AMCs and GMs have not yet been updated to reflect the 2018 regulation, so there is, as yet, nothing in the EASA guidance about batch splitting or redistribution of lots and handling of the related documents.

We should expect further guidance to be forthcoming.

 

Canada

Canada just issued new guidance for 2019 that discusses splitting of bulk shipments.  It is found in CAN AC 571-024.  In section 4.2, which applies to “Parts sourced from a Canadian Approved Manufacturer or Distributor,” the advisory circular includes a note that explains a person can reproduce the authorized release certificate in the form of a certified true copy when splitting a bulk shipment:

“Note: Splitting of bulk shipments for new parts (excluding standard and commercial parts) which are certified by an approved manufacturer with an ARC is acceptable under the CARs. A single ARC may be reproduced in the form of certified true copies and utilized for the shipment of multiple items.”

Section 4.3 of that same guidance applies to “Parts sourced from a FAA Approved Manufacturer or United States (US) Distributor,” and it clarifies that it is acceptable to get a certified true copy of an FAA Form 8130-3 or a Statement of Conformity from the distributor.

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Do You Have to Issue a New 8130-3 When You Split a Bulk Shipment?

When you split a bulk shipment, do you need a new 8130-3 or can you simply rely on a copy of the 8130-3 tag associated with the bulk shipment?

WHAT IS SPLITTING A BULK SHIPMENT ALL ABOUT?

It frequently happens in the industry that a shipment of multiple units is shipped against a single 8130-3 tag.  For example, a lot of 1000 fasteners might have a single 8130-3 tag.  It would not make commercial sense for each fastener in the lot to have its own 8130-3 tag.

When a lot of parts is received by a distributor, though, distributors frequently sell the parts from such a lot in much smaller quantities.

For example, the manufacturer might sell the fasteners in lots of 1000 (and in fact might generally refuse to sell them in smaller lots).  An air carrier may only wish to purchase 10 units.  The air carrier cannot purchase them from the manufacturer (because the manufacturer sells the fasteners in lots of 1000, and expects distributors to sell the parts in smaller lots).  But a distributor might buy 1000 of the units and then sell them to air carriers in the lot size desired by the air carrier.

SO WHAT IS THE PROBLEM?

FAA Order 8130.21H suggests in paragraph 2-7(a)(1) that a “new 8130-3” is issued during lot splitting, when in fact typical lot splitting performed by post-production distribution would use a copy of the original form (rather than a newly issued form).

WHERE DID THIS COME FROM?

This is a carry-over issue from the fact that earlier revision levels had taken two different concepts related to lot splitting:

  • lot splitting by using a designee to issue a new 8130-3, which was re-characterized as a supplemental 8130-3 in the 2004 “D” revision; and,
  • lot splitting by providing a quality-assurance-controlled duplicate of the original 8130-3 tag according to FAA instructions (which replaced the designee-issuance in 2004);

Recent revision levels had merged these two into a single set of instructions.  As a consequence, section 2-7 did not read correctly, because it merged instructions for both forms of “lot-splitting” activities.

DISCUSSION OF THE ISSUE

Section 2-7 described a mechanism for splitting such bulk (or lot) shipments.  It required the party to follow procedures designed to protect the integrity of the lot and to permit auditors to be able to verify that the integrity of the lot remains intact (e.g., only the parts from the original lot are associated with the 8130-3 tag, and no other parts are sold in association with that 8130-3 tag).  It is based upon a protocol in which a distributor would make a true copy of the original 8130-3 tag, and issue a written certifying statement concerning the copy and the number of parts associated with the copy (retaining file copies for auditor review).

This mechanism represents a norm within the industry (and the FAA has successfully increased the industry’s standards by promoting certifying statements and lot-traceability paperwork).

This mechanism for splitting bulk shipments is distinguished from the situation where a FAA designee splits a lot by issuing one or more new 8130-3 tags.  This sort of procedure was described under section 10 of the “C” revision of 8130.21.  Part of the confusion might be caused by the fact that this process (issuing new 8130-3 tags) was described as “splitting bulk shipments” in that revision level.

Beginning with the “D” revision, Order 8130.21 used the term “splitting of bulk shipments” to mean the splitting by a non-designee, and used the term “supplemental Form 8130-3” to describe new 8130-3 tags issued for any purpose (including designee-splitting of bulk shipments, replacement of lost forms, etc.).

The root problem is that starting in the “G” revision level, subparagraph 2-7(a)(1) suggests that splitting of bulk shipments happens when a new FAA Form 8130-3 is issued to split the shipment.  The new tag would be a supplemental tag.  This is one way to split bulk shipments, but it is not the way that distributors split bulk shipments (due to the fact that they are unable to issue supplemental 8130-3 tags).  Instead, they follow the protocol found in 2-7(c), which was originally written for distributors.

CONCLUSION

The current language of subparagraph 2-7(a)(1) suggests that a new 8130-3 tag is issued when a distributor splits a lot.  This is not the case.  Instead, the distributor makes a copy of the original under controlled circumstances and affixes a statement about the limits of the copy.  The process is clearly described in subparagraph 2-7(c).

In order to continue to provide good guidance, we have requested that the FAA correct the language to remove any implication that a distributor must issue a new 8130-3 tag when splitting a bulk shipment.  The easiest way to do this may be to simply change 2-7(a)(1) to read as follows:

After an FAA Form 8130-3 is issued for a bulk shipment, a new FAA Form 8130-3 may be used to split bulk shipments of previously shipped new products or articles under the same procedures as found in 1-11 or a the shipment may be split under the provisions of this paragraph without issuing a new FAA Form 8130-3.

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