This Clause deals with items supplied by Customers for use by your organisation.
In manufacturing the external customer may send "Free Issue" materials, (i.e. they provide materials for incorporation into products they ultimately buy back from your organisation.
The onus is on the Customer to send suitable materials, but this does not absolve your organisation from knowingly incorporating poor quality components into the finished product.
If you receive data or samples from your Customers, which you use to help to produce the goods or services that they buy from you, then this should be suitably controlled, so that you know what you have received and that you check it for suitability. The requirements for confidentiality of personal or commercial data will probably apply here.
In service situations (e.g. training courses), the "Customer-Suplied Product" would include the Customer!
In the case of computer systems, this would include the care of the Customers equipment and data whilst the software is being installed, including the means by which the software installer ensures that the disks being used are not infected with computer viruses, etc,
