A Nonconformance Report communicates quality issues, defects, or deviations discovered in received products or services. Suppliers, manufacturers, or quality inspectors send this transaction to their customers, procurement teams, or quality management departments to formally document and communicate problems that do not meet specified requirements. The transaction set is typically sent in response to receiving nonconforming materials or after conducting inspections that reveal quality failures. The BNR (Beginning Segment for Nonconformance Report) initiates the report with basic identifiers and dates, the NCD (Nonconformance Description) segment details the specific quality issues discovered, and the QTY (Quantity) segment specifies how many units are affected by the nonconformance.

Acme Manufacturing receives a shipment of 500 metal fasteners from Premier Fasteners Co. During incoming inspection, Acme’s quality team discovers that 47 fasteners have incorrect threading that makes them unusable. Acme generates an X12 842 Nonconformance Report identifying the batch lot number, describing the threading defect, specifying the quantity of nonconforming units, and indicating the date the issue was discovered. Premier Fasteners receives the report, reviews the nonconformance details and measurements, and uses the information to investigate root causes in their manufacturing process and determine corrective actions to prevent similar issues in future shipments.