Global Supplier Manual Revision 01

Transcription

1 Global Supplier Manual

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3 Introduction General The KAUTEX Global Supplier Manual informs suppliers and potential suppliers of the terms on which KAUTEX conducts business. By nature it is a general document not intended to cover every aspect of every situation. KAUTEX may issue other documents and communications, which will refine the details of the terms on which KAUTEX proposes to do business with any particular supplier on any particular program. These additional documents may be purchase orders, supplements to purchase orders, frame agreements, letters and the like. Documentation of Business Relationship with KAUTEX. Suppliers will be required to review and sign a variety of documents in order to do business with KAUTEX. These documents may include standard confidentiality agreements, comprehensive terms and conditions, intellectual property agreements, consignment agreements etc. The particular nature of the relationship and the program involved will govern what documents must be executed to document the relationship. A listing of documents is included in Section 14. Suppliers are expected to read and understand these documents before signing them, because by signing them the Suppliers advises KAUTEX that KAUTEX may rely on the terms contained therein. Any questions concerning required documents should be presented to the relevant KAUTEX Supply Chain representative for clarification. Precedence of Documents KAUTEX makes every effort to insure that all documents issued to its suppliers are consistent and may be read as an integrated whole. Nevertheless conflicts between documents may occur. As a general rule the more specific document will take precedent over the more general. For instance a particular Purchase Order will take precedence over this Supplier manual in the case of a conflict and a release under a Purchase Order will take precedence over the Purchase Order. Suppliers who have questions about the precedence of documents should always contact the relevant KAUTEX Supply Chain representative for clarification. Current Documents. The printed version of this Supplier Manual is an uncontrolled document and may not accurately reflect KAUTEX current Supplier Manual. The current version may be obtained from KAUTEX or found on the KAUTEX web site located at: Legal Entities KAUTEX s global operations are conducted through a number of different affiliated companies and joint ventures. Each company is a separate limited liability. Terms and Conditions on which KAUTEX and its suppliers do business may be modified to conform to local legal requirements. Governing Law. Kautex operates in a number of countries each with its own unique legal system. The law governing the relationship between KAUTEX and its suppliers will be identified in the applicable documentation. It is KAUTEX firm intention to always comply with applicable governing law. Consequently anything in this manual or other relevant documents that are in conflict with governing law shall be deemed null and void to the extent necessary to avoid such conflict with applicable law. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. iii ity

4 KAUTEX - Basic Supplier Standards 1. All suppliers shall comply with the Quality System Requirements of TS-16949, ISO-90 and ISO-140 at their latest revisions. 2. All suppliers have to understand Kautex Comet Approach and to support if required 3. Supplier quality performance shall be consistent with KAUTEX customer requirements, attaining zero PPM with sorting activities avoided at all times. 4. Supplier delivery performance shall be 100% on time. For KTNA supplier: The routing shall be consistent with KAUTEX North America requirements ( 5. Suppliers shall assume responsibility for engineering and design as directed by KAUTEX and shall co-locate if required. 6. Suppliers shall be responsible for their proportionate share of systems Engineering & Design expenses as required. 7. Suppliers shall provide support to the KAUTEX Program Management Roadmap (PMR) from concept phase through to post-launch phase (via the Advanced Product Quality Planning APQP Process) and through the production phase, for the lifetime of the product. Suppliers have to develop and maintain a system to address emergency situations 8. Target price consistent with KAUTEX and customer agreements. 9. Yearly cost reductions consistent with KAUTEX requirements. 10. Audit acceptance consistent with KAUTEX requirements. 11. Aggressive VA/VE process/participation in active cost reduction activities. 12. Aggressive risk/warranty sharing program. 13. Culture of continuous improvement and Lean thinking. 14. Error proofing in design and mistake-proofing in manufacturing processes. 15. Requests for corrective action require an initial response within 48 hours and a final response (including root cause analysis and irreversible corrective action) within 10 days. 16. Open financial records for audit of tooling and piece price. 17. All tooling suppliers with responsibility to verify the part dimensionally and all component suppliers shall be capable of providing data in accordance with KAUTEX or customer requirements. 18. Suppliers shall accept and support e-business activities. 19. Suppliers shall have any cost-relevant design change approved by the KAUTEX central purchasing department prior to implementation (ECMS / Cost Tracking). 20. Suppliers shall agree to KAUTEX then current Pay on Production regulations (POP). 21. Suppliers shall agree to KAUTEX s then current Supplier owned Tooling or Amortization regulations for prototype and/or series tooling. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. iv ity

5 KAUTEX - Basic Supplier Standards (continued) 22. Suppliers shall support KAUTEX and the OEM by providing extended warranty protection on emission control items so as to permit the OEM customer to satisfy applicable emission control regulations such as for Lev II and PZEV. 23. Suppliers shall provide KAUTEX with material data stipulated in the IMDS (International Material Data System) in electronic format or obtain such information from their suppliers. Suppliers of assembled components are also responsible for the on-time provision of all IMDS-relevant material data for their products. Additional customer requirements (e.g. Honda environmental data base) shall be binding if required by the OEM. 24. Develop and maintain service/warranty and spare parts systems with the ability to deliver mass production components up to 15 years after series termination. 25. Suppliers will respond accurately and timely to various KAUTEX and OEM initiated surveys including the KAUTEX Supply Chain Organizational Survey, which includes the following forms; Supplier Acknowledgement, Supplier Profile, Supplier Plant Contact, NAFTA and forwarding copies of appropriate Quality System, Environmental and Minority/Diversity Certifications. 26. Supplier shall provide access, at reasonable times and upon reasonable prior notice, Kautex and its representatives or our customers and their representatives to the Supplier's facility to examine raw materials, work in process, finished goods, tooling and production machinery used in the manufacture of the Product and relevant records such as quality records. 27. Supplier will comply with all applicable laws and governmental regulations in the conduct of its business with Kautex. 28. Suppliers will not use forced labor, employ and person below the age of 15, unless in a government approved job training program, apprenticeship or similar program, or engage in physically abusive disciplinary practices. If the Supplier retains sub suppliers to perform work the Supplier will only use subcontractors that adhere to these requirements. For KAUTEX Inc. North America Suppliers For Suppliers to KAUTEX in the North American market it is particularly important to maintain a minimum of 10% of diversity content in the products sold to KAUTEX (North American suppliers only excluding Mexico) This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. v ity

6 ORGANIZATIONAL SURVEY Current and accurate information on its suppliers is important to KAUTEX. Suppliers are responsible for completing the following forms and providing them to KAUTEX. In the event of any change in the information contained on the form, the forms are to be resubmitted to KAUTEX within 1 week of implementation of the change. At a minimum supplier shall provide an update at least once a year in December. Complete and return within 10 days of receipt via fax or by mail/ to requestor. KAUTEX Europe Kautexstrasse 52 D Bonn Germany Attn: or KAUTEX North America 750 Stephenson Highway Troy, Michigan United States of America Attn: The Following Documents Are To Be Returned: Supplier Acknowledgement Form page vii Supplier Profile (3 pages) Please refer to the KAUTEX web-site Supplier Plant Contact Form Please refer to the KAUTEX web-site Copy of Supplier 3 rd part Quality System Assessments as applicable Copy of Supplier Minority/Diversity Certification as applicable NAFTA (North America Free Trade Agreement) Certificate of Origin Form as applicable (KNA) Long Term Supplier Declaration Form as applicable (KAUTEX Europe) Please refer to the KAUTEX website This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. vi ity

7 SUPPLIER ACKNOWLEDGEMENT FORM I/We have received the Supplier Requirements & Guidelines Manual from KAUTEX Inc. I/We understand and agree to all contents and conditions specified therein. Supplier Code #: Supplier Name President/ General Manager Controller Materials/Purchasing Manager Quality Manager (Required) Operations Manager Other (please specify) Print Name Contact Numbers Signature Ph: Fax: Mobile: Pager: Ph: Fax: Mobile: Pager: Ph: Fax: Mobile: Pager: Ph: Fax: Mobile: Pager: Ph: Fax: Mobile: Pager: Ph: Fax: Mobile: Pager: Dated: Please sign and return to KAUTEX. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. vii ity

8 TABLE OF CONTENTS GENERAL...III PRECEDENCE OF DOCUMENTS...III CURRENT DOCUMENTS...III LEGAL ENTITIES...III FOR KAUTEX INC. NORTH AMERICA SUPPLIERS...V 1.1 SCOPE EXCEPTIONS SUPERSEDED DOCUMENTS DISTRIBUTION AND REVISION CONTROL Distribution KAUTEX GUIDING PRINCIPLES COMET QUALITY POLICY KAUTEX PMR THE ADVANCED PRODUCT QUALITY PLANNING PROCESS (APQP) INTELLECTUAL PROPERTY SUPPLIER WARRANTY COST REDUCTION PROGRAM KAUTEX WARRANTY REQUIREMENTS ACCOUNTING PRACTICES / PAYMENT TERMS Standard Payment Terms Table Payment Disputes DIVERSITY SUPPLIER DEVELOPMENT (APPLIES TO KAUTEX NORTH AMERICA SUPPLIERS IN USA AND CANADA ONLY) E-BUSINESS ARIBA SUPPLIER PROFILE/QUALITY SYSTEM/REGISTRATION PROCESS SUPPLIER SURVEY/ASSESSMENT Maintaining Position on the Supplier List GENERAL MANAGEMENT RESPONSIBILITY ENVIRONMENTAL MANAGEMENT RESOURCE MANAGEMENT PRODUCT REALIZATION CONTRACT REVIEW EVALUATION OF SUBCONTRACTORS PRODUCTION AND SERVICE PROVISION - IDENTIFICATION AND TRACEABILITY PREVENTIVE AND PREDICTIVE MAINTENANCE CONTROL OF MONITORING AND MEASURING DEVICES INTERNATIONAL MATERIAL DATA SYSTEM (IMDS) CONTROL OF CUSTOMER SUPPLIED PRODUCT CORRECTIVE AND PREVENTIVE ACTION CHEMICALS/PAINTS (FOR NORTH AMERICA) PLASTIC COMPONENTS Regrind Processing Aids...19 This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 1

9 5.3 RESINS AND OTHER RAW MATERIAL OVERVIEW DESIGN AND DEVELOPMENT CAPABILITIES Design Schedule Review and Involvement Suppliers Capability COMPUTER AIDED DESIGN AND ENGINEERING RESOURCES Computer Aided Design (CAD) DIMENSIONAL AND MANAGEMENT RESOURCES Dimensional Management Graphical Documentation Capabilities GRAPHICAL DATA MANAGEMENT DCS-GDM-3D (OR EQUIVALENT FOR EUROPE) ERROR-PROOFING ENGINEERING CHANGE MANAGEMENT SYSTEM (ECMS) DESIGN FMEA SC&CC (SIGNIFICANT AND CRITICAL CHARACTERISTICS) DESIGN SCORECARD PROCESS FMEA THE VERIFICATION BUILD PROCESS EARLY PRODUCTION CONTAINMENT EXIT CRITERIA LAUNCH SUPPORT PRODUCTION PART APPROVAL PROCESS PPAP Rejected PPAP Re-Submission Interim Approval PRODUCT, PROCESS AND MATERIAL CHANGES RUN-AT-RATE /PROCESS SIGN OFF (PSO) AND PPAP SUPPLIER REQUEST FOR CHANGE YEARLY RE-CERTIFICATION PART SUBMISSION IDENTIFICATION PACKING SLIPS AND MASTER BILLS OF LADING: Direct Shipments Shipments Moving Through a Consolidation Point (Applies to KAUTEX North America only) Packing Slips Master Bill of Lading Supplier s Responsibility PACKAGING AND IDENTIFICATION LABELS Packaging & Labeling Mistake-Proofing Determination of Packaging Types Selection of a Method Hand Handled Packages: Mechanically Handled Loads Internal Expendable / Returnable Dunnage Packaging Closure Returnable Containers Supplier Responsibilities...36 This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 2

10 Packaging Specification Submission and Approval Requirements Returnable Container Maintenance Inspection for Damage Repair Storage Packaging and environment / materials recycling APPLIES TO KAUTEX NORTH AMERICA ONLY: ELECTRONIC DATA INTERCHANGE EDI Supplier Electronic Communication Requirements DELFOR Planning Release Schedule DESADV Advanced Ship Notice TRANSPORTATION Receiving Hours Communication Applies to KAUTEX North America only: Completion of Supplier Claims APPLIES TO NORTH AMERICA ONLY : NAFTA REGULATORY CONTENT REPORTING NAFTA Terminology Basic Steps In Issuing A Certificate of Origin LONG-TERM SUPPLIER DECLARATION Process Monitoring and Operator Instructions Maintaining Process Control Process Changes Process Verification / Audit Statistical Qualification MONITORING AND MEASUREMENT OF PRODUCTS Receiving Inspection and Testing In-process Inspection and Testing Material Certification Verification and Testing Final Inspection and Testing SERVICE PARTS REQUIREMENT OBSOLESCENCE COST REDUCTION Economics Value Analysis/Value Engineering or Effective Cost Reduction Programs Tier III Cost Reductions SUPPLIER PERFORMANCE MEASUREMENT The Overall Supplier Performance Rating PART QUALITY PERFORMANCE (PPM) RATING...50 The part quality performance rating is worth 55% of the overall rating DELIVERY PERFORMANCE RATING ASSESSMENT AND REGISTRATION RATING THE SUPPLIER SCORECARD SUPPLIER QUALITY SYSTEMS ASSESSMENT DATA CORRECTION SUPPLIER DEVELOPMENT PARTS, SERVICES AND MATERIAL DELIVERY CORRECTIVE ACTION...54 This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 3

11 10.4 SUPPLIER QUALITY IMPROVEMENT PROCESS STANDARD SUPPLIER CHARGE-BACK GUIDELINES CONTROLLED SHIPPING Step 1 CS1 [Controlled Shipping Level 1] Step 2 CS2 [Controlled Shipping Level 2] SCOPE OF VALIDITY Suppliers Responsibility MISTAKE / ERROR PROOFING (MEP) DEVIATIONS SPECIFICATIONS WORK SAFETY/ MACHINERY SAFETY LAYOUT OF TOOLING AND EQUIPMENT, GENERAL INDICATIONS MARKING OF OPERATING EQUIPMENT PRE-ACCEPTANCE, STARTUP AND PRODUCTION ACCEPTANCE Pre-Acceptance at the Supplier s Plant Assembly and Start-up in the Production Plant Trial Run Production Acceptance Repetition of Acceptance Test Failed Acceptance Acceptance with Reservations Permission as Part of the Acceptance DOCUMENTATION Installation / Setup Layouts Maintenance Instructions List of Wear and Spare Parts Setup Values WARRANTY DURATION MAINTENANCE / SERVICE CONFIDENTIALITY GENERAL IN THEIR LATEST REVISION KAUTEX SPECIFIC: KAUTEX KT North America...73 This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 4

12 1. Section General Information 1.1 Scope The intent of this manual is to broaden and refine the scope of Industry Standards and their Quality Systems to include additional requirements of KAUTEX. It is essential that every internal and external supplier that manufactures and/or ships production or service parts and materials to KAUTEX plants or to KAUTEX customers plants, shall embrace the standards and business practices described in this manual. 1.2 Exceptions KAUTEX recognizes that there are instances where a particular situation may dictate different or additional terms. In those situations KAUTEX may waive conformance with the requirements described in this manual. Typically this will be communication through the relevant purchase order. Nevertheless any such waiver of provision contained in this writing and signed by the appropriate member of KAUTEX. 1.3 Superseded Documents This manual supercedes the Global Supplier Manual Rev. 00, TEXTRON Automotive Supplier Requirements Manual, issued October 20, 1997; the Supplier Productivity Program, issued February 12, 1997; the Supplier Guidelines Manual, 3 rd Edition, issued September 30, This manual also supercedes KNA Supplier Requirements Manual, issued January 24, 1997; KNA Supplier Requirements Manual, issued June 1, 2000; KNA Supplier Requirements and Guidelines Manual Third Edition, issued March 15, 2002; and all other supplier quality manuals issued by TEXTRON Automotive Company or KAUTEX plants; KAUTEX Europe Supplier Manual Level 10/ Distribution and Control Distribution This manual is written under the lead of the KAUTEX department and will be maintained in an electronic media. The manual is currently held within KAUTEX s network and will be posted on KAUTEX Web-site when it becomes available. In the interim electronic copies will be made available to suppliers Changes to this manual will be made as needed and this manual will be reviewed approximately every two years under direction of KAUTEX. These changes will be communicated to suppliers via KAUTEX web site. Suppliers are responsible for checking the KAUTEX web site for the current version of this manual. Hard copies are not controlled and may be outdated. Suppliers are required to inform their employees and their own suppliers of these changes and to ensure hard copies are updated and obsolete documents are promptly removed from all points of issue or otherwise assured against unintended use. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 5

13 2 Section KAUTEX Guiding Principles 2.1 KAUTEX Guiding Principles These guiding principles are designed to align the Vision and Actions of all members of the extended KAUTEX Team, in our ongoing quest to delight our customers and provide acceptable returns to our shareholders, while providing our employees with rewarding careers and our suppliers with rewarding long term relationships. 1. World-class companies achieve integration of the extended enterprise. All suppliers will be integrated seamlessly into KAUTEX s product development, business and manufacturing processes. 2. New products, systems and processes will be revolutionized through technology and innovation. 3. Lean principles will be practiced in all areas of the company including administration, manufacturing and non-manufacturing. 4. Through the use of APQP, Error-Proofing and Mistake-Proofing practices, Zero Defects will be the desired outcome in all facets of our business. 5. There will be a relentless focus on elimination of waste and non-value added activities throughout KAUTEX. 6. All employees and suppliers will have the information and tools needed to manage and improve their day-to-day business. 7. Total focus on asset management and growth to improve Return on Invested Capital (ROIC) and increase Shareholder value. 8. KAUTEX will increase its competitive advantage by investing in the development of all employees and rewarding them for making our success possible. We are committed to providing an environment for our employees suppliers and contractors that insures a safe work place. 2.2 Comet In order to counteract quality and performance problems, Kautex is introducing a proven quality system: The Toyota Production System (TPS). This system has been developed at Toyota and implemented extremely successfully. But even the best quality system is of no use if the attitude of the employees is not correct. Therefore Kautex has decided to support the introduction of the quality system with a uniform corporate culture. Therefore, the COMET project has been started in Our strategy behind Comet: We consequently rethink the way we do business to be able to work together for the common goal understand the jobs and needs of our internal/external customers use the full potential of all our employees continuously improve our strategies, processes and products promote innovation Our vision of a new corporate culture at Kautex: People know and understand each other People learn from each other This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 6

14 People trust each other People take responsibility for their actions This is valid for all our business relationships including internal & external customers, suppliers, stakeholders, Shareholders and competitors. 2.3 Quality Policy COMET represents our Quality Policy, in summary Customer: Customer first Orientation: Consistent and sustained leadership Manpower: Qualified and engaged employees Excellence: World-class processes Team: Partnership/Collaboration 2.4 Kautex Project Management Roadmap (PMR) Production is one issue and development another. However, both main business processes cannot be viewed in isolation of one another. Value is added along the entire chain starting with the OEM-inquiry and ending when our product is delivered to the OEM, on time and according to specification. To go the distance, we need to successfully co-ordinate hundreds of individual activities and to integrate a number of resources, consisting to a significant extent, of our suppliers. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 7

15 In the past, Kautex in partnership with its suppliers, enjoyed many successful product launches. Some of this success can be ascribed to our current PMR system. We must all be conscious though, that the competition has grown immensely, and with it the requirements to our programs. Currently there is potential, and in future there may be even more potential to work more effectively in our programs. This will only be possible through a combined effort with our suppliers. The new Kautex Program Roadmap has the goal, to reduce unnecessary waste such as idle time, redundant information, double work, etc. Six sigma tools and lean principles contribute significantly to this goal. We expect that our suppliers not only acquaint themselves with these tools, but actively use them. Project work of the future will demand a stronger team consciousness, and as a result require more supplier participation in our team meetings. 2.5 The Advanced Product Quality Planning Process (APQP) KAUTEX understands the whole APQP process not only as a quality tool but as an overall approach for the development process. All business areas involved in the Program Team are also participating in APQP. An evaluation is performed at the planning stage of each new program to estimate the level of impact on the success of the program associated with each supplier. The evaluation is based on each supplier s past quality and delivery performance and the supplier s familiarity with the technology, process and product. When the risk level in any of these areas is higher than normally expected in a new program, the supplier may be categorized as a Key Supplier. Key Suppliers are expected to participate as active members of the KAUTEX PMR. Furthermore, in the absence of a sound, internal APQP system, it is recommended that suppliers employ the KAUTEX APQP process. KAUTEX will work with Key Suppliers to develop APQP, quality and delivery systems. KAUTEX will visit the suppliers to monitor APQP progress, perform launch readiness assessment prior to each build and approve PSO or Run-at-Rate. All Key Suppliers are requested to report APQP status to KAUTEX PMR as required. 2.6 Intellectual Property A major factor in KAUTEX s success is its long history of technical innovation. KAUTEX regards its intellectual property as some of its most important business assets and protects them accordingly. KAUTEX s intellectual property includes without limitation its patents, copyrights, trademarks, business processes, systems, manufacturing processes, technical and marketing information and strategic planning. In the ordinary course of business, suppliers may need to have access to KAUTEX s intellectual property. KAUTEX expects its suppliers to protect KAUTEX s intellectual property in the same manner as KAUTEX would. 2.7 Supplier Warranty Cost Reduction Program KAUTEX selects suppliers mostly based on the quality and reliability of their products and services. Consequently KAUTEX expects that suppliers stand behind their products. KAUTEX s customers, the OEM (original equipment manufacturers), are demanding greater warranty protection from suppliers like KAUTEX and it is appropriate that KAUTEX s suppliers accept their share of this increasing warranty requirement. Suppliers shall warrant their products and services, for the longer of the period provided by applicable law or the warranty period provided by KAUTEX to the OEM. In situations where the suppliers warranty has been breached, the supplier shall indemnify and hold KAUTEX harmless from any damage or loss on expense attributable to such breach. Supplier shall comply in all respects with: applicable specifications drawings This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 8

16 samples and descriptions furnished to be merchantable and of good material and workmanship and are free of defects and fit for the intended purpose. Suppliers are required to develop an aggressive warranty reduction program. Activities typically included in such a program are as follows: Assignment of a warranty champion to act as a single point of contact for warranty issues. Analysis of warranty issues. Timely implementation of corrective action or process improvements to lower warranty costs. Use of lessons learned to ensure warranty issues are eliminated in the design phase of future programs. Periodic reports and reviews. Suppliers of targeted products and/or by customer (OEM) must participate in a KAUTEX, warranty-sharing program. 2.8 KAUTEX Warranty Requirements KAUTEX requires that it suppliers provide the following warranty with respect to the goods and services provided KAUTEX. The warranty shall be for as long as required by applicable law or the period of warranty protection, which KAUTEX has given its customer with respect to the supplier s product or service, which ever is longer. A. The seller warrants/guarantees that the goods provided to KAUTEX will conform to the specifications, drawings, samples or descriptions furnished to or by KAUTEX and will be merchantable, of good material and workmanship and free from defect. In addition, the seller acknowledges that he knows of KAUTEX s intended use and guarantees that all goods delivered have been selected, designed, manufactured or assembled by the seller based upon KAUTEX s stated use, will be fit and sufficient for the particular purposes intended by KAUTEX. The warranty period shall be that provided by applicable law, except that if KAUTEX offers a longer warranty to its customers for Goods installed on vehicles, such longer period shall apply. B. KAUTEX may, at its option, either (i) return defective or non-conforming Goods for credit or refund (without Seller having any right to furnish conforming Goods); (ii) require prompt replacement or correction of the defective or non-conforming Goods, or (iii) have the defective item corrected or replaced at Seller's expense and deduct the cost thereof from any monies due Seller. Such Goods will be held for Seller's instructions and at its risk, or at KAUTEX's option, will be returned at Seller's risk. The return to Seller of any defective or non-conforming Goods and delivery to KAUTEX of any corrected or replaced Goods shall be at Seller's expense. KAUTEX's packing sheet, which accompanies Goods returned, will indicate whether Goods are to be corrected, replaced or credited to KAUTEX. No Goods thus returned will be replaced or corrected by Seller without KAUTEX's written instructions. Goods, which have been rejected or required correction, shall not thereafter be tendered for acceptance unless the former rejection or correction requirement is disclosed in writing. C. Any services that do not conform to the requirements of an Order shall, at the option of KAUTEX be (a) replaced forthwith with substitute services, which do conform, or (b) terminated. If necessary, KAUTEX may replace such services from a provider other than Seller and Seller shall pay or credit to KAUTEX on demand all amounts paid by or charged to KAUTEX for such non-conforming services, all KAUTEX s cost of such replacement services and all costs and expenses suffered or incurred by KAUTEX on account of Seller s failure to provide services conforming to the requirements of the Order. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 9

17 D. In addition to any other remedies available to KAUTEX for breach of this warranty and notwithstanding any other provision of any Order to the contrary, KAUTEX shall have the right, but not the obligation and is hereby granted a non-exclusive, royalty-free license, to make or have made by a third party service provider such modifications to the Goods provided by Seller hereunder as may be necessary to rectify any failure of such programs to comply with this warranty. 2.9 Accounting Practices / Payment Terms The terms listed below are guidelines only. For actual payment terms, refer to the KAUTEX Purchase Order or the actual contract. Some KAUTEX facilities utilize an automated receipt system, which allows KAUTEX to pay its production suppliers without requiring a supplier invoice for production items. This is accomplished through the use of systems, which electronically creates the proper records for payment based on KAUTEX Purchase Order terms and actual receipt date. Other KAUTEX Operations require invoices. Contact the individual plants for instructions on invoicing. KAUTEX payment terms are as specified on the KAUTEX Purchase Order or actual contract. All material, parts and/or tooling must be received through our KAUTEX Receiving Department and must have a proper packing slip firmly attached to the outside of one of the containers as described in Materials Packing Slips and Master Bill of Lading section of this manual. The packing slip must reference the appropriate KAUTEX Purchase Order number and Part/Tool number and have the appropriate signature(s) from our KAUTEX Receiving Department to serve as proof of delivery to ensure payment. Paper invoices are required at all KAUTEX Operations for all tooling, testing, development/process samples and all non-production items. All invoices supporting these items shall have the appropriate approval documentation attached to expedite approvals i.e., ISIR, PPAP or Gage R&R documentation). Supplier invoice number shall be the same number as the packing slip number. Each invoice must reference KAUTEX part/tool number and purchase order number exactly, or the invoices will be returned to the appropriate supplier further delaying payment. The assigned KAUTEX part number / item number / non-production material number must be shown on your invoice exactly as it appears on the purchase order. (Including all alphas and numeric). Tool Invoices: only one (1) tooling purchase order number per invoice. KAUTEX Payment Terms for new tooling net are specified on the KAUTEX Purchase Order or actual contract. Tooling invoices and non-production invoices must remain separate. All tooling and non-production invoices referencing a price other than that stated on the KAUTEX Purchase Order will be returned to the appropriate supplier further delaying payment. Partial payments against a purchase order line with a quantity of 1 cannot be processed. KAUTEX payment terms for new capital equipment are specified on the KAUTEX Purchase Order or actual contract. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 10

18 2.9.1 Standard Payment Terms Table Production Material (KAUTEX Europe Excluding UK) Production Material (UK) Production Material (KAUTEX North America) Production Tooling (KAUTEX Europe) Production Tooling (KAUTEX North America) Prototype Tooling (KAUTEX Europe) Prototype Tooling (KAUTEX North America) Prototype Pull Ahead Production Tooling (KAUTEX North America) Spare Parts (KAUTEX Europe) Capital Equipment (KAUTEX Europe) Capital Equipment (KAUTEX North America) Building and Equipment Leases Standard MRO Material (KAUTEX Europe) Standard MRO Material (KAUTEX North America) Terms of Payment 14 days after receipt of invoice, 3 %, 90 days net. Net Monthly Account MNS-2. Material received during a month will be paid on following second day of second month established by KNA Multilateral Netting System. / POP 30 Days 90 days after the last day of the month, in which KAUTEX receives customer approval on the entire series part/assembly + percentage of payment negotiated with the customer (if applicable) 90 days Prox from PPAP submission date (Month-Date- Year). 90 days after the last day of the month, in which KAUTEX receives customer approval on the entire prototype part/assembly + percentage of payment negotiated with the customer (if applicable) 90 days Prox after Prototype Part Approval. 90 days Prox after Prototype Part Approval with percentage of payment to be negotiated with KAUTEX customer. 14 days after receipt of invoice, 3 %, 90 days net 14 days after receipt of invoice, 3 %, 90 days net 30 days after commissioning and KAUTEX approval. In accordance with the payment terms of the negotiated agreement 14 days after receipt of invoice, 3 %, 90 days net 30 days Prox Payment Disputes KAUTEX has a ninety (90) day dispute policy regarding issues of problems/past due invoices or short payments. Notification is required within 90 days of the issue in question. All notifications shall be in writing and followed-up by a telephone call within seven (7) days of submission to our KAUTEX plant accounts payable department. Any and all payment issues brought to our attention after the ninety (90) day dispute period may not be honored Diversity Supplier Development (Applies to KAUTEX North America Suppliers in USA and Canada only) KAUTEX is committed to expand its relationship with the diversity business community in order to meet both its customer s and its internal requirements. KAUTEX provides equal procurement opportunity (on all new business) to all suppliers regardless of the ownership s gender or ethnic background. The final business award is given to suppliers best able to meet our basic requirements and contribute to our goals, objectives This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 11

19 and guiding principles. Each Supplier is asked to forward Minority information to Kautex NA.In order to meet these objectives, KAUTEX will, as part of our business practice: Maintain open communication with the diversity business community by participating in diversity council and other applicable events. Encourage growth of the diversity business community by including diversity owned suppliers in the quoting process. Award business to the diversity owned suppliers who are capable of meeting our basic requirements. Develop those suppliers that demonstrate the highest level of capability and potential in order to sustain long-term mutually beneficial relationships. Communicate these objectives internally in order to increase company wide awareness and level of commitment to the program e-business The change from paper-based processes to electronic process can improve the process cycle time and will reduce the effort for our suppliers as well as for KAUTEX business. The benefit of this future-oriented modification step will result in a better process quality for all our companies. Within the scope of this ongoing optimization process we expect a basic open-mindedness for this new technology from our suppliers. All KAUTEX suppliers shall; Participate in our electronic request for quotation, offering and negotiation activities (e- RFQ/e-Auction) as well as in the training activities. Improvement of supplier IT-systems ( , CAD, CAQ, Windows Office, Internet Browser, etc.) in order to meet KAUTEX and market standards. Accompaniment of software pilot projects in the range from engineering, purchasing, quality assurance to logistics until the full introduction 2.12 Ariba Ariba software will be used to send tooling purchase orders. Suppliers will need the capability to receive purchase orders electronically either by or by signing up with Ariba Services Network. The supplier will be contacted prior to the setup of this process. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 12

20 3 Section - KAUTEX Supplier Selection & Evaluation KAUTEX evaluates and selects suppliers on their ability to meet its requirements. This selection process takes place in a cross-functional team environment led by the KAUTEX. KAUTEX maintains an Supplier List. The following are the principal criteria used to determine the suitability for inclusion on this list: Position in Industry Technology Capacity Competitiveness Responsible for Engineering, Development and testing Warranty Commitment Full Service Capabilities (Program management and design capable) Participation in Cost Reduction Programs Progressive Culture with Continuous Improvement Philosophy Service and Support Responsiveness to requests for quotes, technical assistance and e-business Effective Problem Resolution Proactive Approach to Defect Prevention and Continuous Improvement Location Participation in Local Warehouse Programs Logistics in Relation to KAUTEX Plants and KAUTEX Routing Guides Global Presence Geographic Positioning for Future 3.1 Supplier Profile/Quality System/Registration Process Suppliers shall complete the KAUTEX Supply Chain Requirements Survey every December. The Survey includes the following; Acknowledgement Form (included in the manual) Non Disclosure Agreement Supplier Profile Form Supplier Plant Contact Form Submit copies of 3 rd party certifications (Quality Systems, Minority/Diversity) as applicable NAFTA Certificate of Origin Form for every part supplied and KAUTEX Plant Location as applicable Long Term Supplier Declaration Form as applicable The completed forms, agreements and certificates shall be submitted to the KAUTEX group on an annual basis in December. For those suppliers not certified to the appropriate standard, KAUTEX requires timing for certification. All KAUTEX plants are ISO/TS certified. False or misleading responses to the Survey will lead to exclusion of this supplier. Suppliers are responsible for updating the Survey within 14 business days whenever a significant change occurs during the year. Suppliers not registered according to TS or ISO 90 (in their latest revision) are not allowed to deliver to KAUTEX without official customer approval. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 13

21 3.2 Supplier Survey/Assessment All new suppliers are required to complete a supplier survey before being approved. Surveys shall be completed using the requirements of the applicable Quality System and this manual. At the discretion of KAUTEX, the initial survey may be waived based on one of the following: Suppliers who are registered to the applicable KAUTEX Quality System (TS recommended) ISO 90 (latest revision) Directed by KAUTEX s customer Successfully having been surveyed/audited by KAUTEX s customer Successfully having been surveyed/audited by KAUTEX s manufacturing plant personnel Successfully having been surveyed/audited by another major customer With the conclusion of the survey process the new supplier shall receive a written report, which summarizes the findings and describes the areas where corrective action is required. The KAUTEX lead auditor will distribute an audit report to the new supplier. Suppliers not achieving the minimum required for the approval will be provided assistance towards that goal and may be re-evaluated periodically to monitor progress. Suppliers achieving less than survey scores will not be recommended or placed on Quote Hold status until a satisfactory rating is attained. KAUTEX may not audit suppliers who have successfully completed a third party audit (or an audit from a KAUTEX OEM customer) Maintaining Position on the Supplier List Suppliers currently on the Supplier List remain in good standing by providing a high level of service in the areas of quality and delivery performance, cost reduction, error-proofing/technology, diversity content, Quality System and registration. Suppliers not meeting expectations may be asked to submit a corrective action plan detailing steps to be taken to improve performance and may be placed on Containment status. Continued failure to meet the above expectations could result in removal from the Supplier List. As an alternative to Kautex remove a supplier form the approved list, a supplier may be placed on Quote Hold status. Quote Hold status may be viewed as an interim step toward removal from the Supplier List. It is a means to remove the supplier from new business consideration on a temporary basis until the supplier takes satisfactory corrective action. When the supplier on Quote Hold status has implemented satisfactory corrective action, the supplier s Quote Hold status may be withdrawn. In all cases, KAUTEX will communicate a change in status to suppliers and to KAUTEX manufacturing plants. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 14

22 4 Section Additional KAUTEX Quality System Requirements 4.1 General TS and ISO 90 in their latest revision define the fundamental quality system expectations of KAUTEX, KAUTEX s customers and other subscribing companies for suppliers of production, service parts and materials. The goal for TS is the development of quality systems that provide for continuous improvement, emphasizing defect prevention, cost reduction and waste reduction in the supply chain. KAUTEX requires that all suppliers of production materials and services implement effective quality systems based on TS including adequate documentation. Additional KAUTEX requirements are noted below. KAUTEX reserves the right to add requirements and may, at its discretion, waive all or part of this requirement. Any waivers must be documented in purchase orders, contracts, or other written documents. 4.2 Management Responsibility In addition to the requirements of TS-16949, each supplier shall maintain an chart for its personnel that shows who is responsible for each element of the TS based quality system and their lines of authority and responsibility. This document, the Quality Policy and other relevant documents and aspects of the Supplier s quality system shall be available for KAUTEX review. 4.3 Environmental Management KAUTEX expects all companies in its supply chain to respect the environment and accept appropriate responsibility for protecting it. Each supplier shall create and maintain an environmental management system approved by KAUTEX. The elements of the European Union (EU) ecological audit directive (EMAS) and/or ISO 140 and/or OHSAS 180 should be reflected and taken into account. The review of environmentally relevant elements may be part of a quality systems survey/audit. The EU Directive 2000/53/EC (est. October 21 st, 2000) specifies that as of July 1 st, 2003 the use of cadmium is prohibited and the use of lead, mercury and chromium VI is restricted. Suppliers must ensure that this directive is followed and that none of these materials are being used in products offered. Should KAUTEX s product drawings indicate the utilization of such materials, Suppliers must inform KAUTEX of such oversight immediately and submit an offer based on alternative materials. 4.4 Resource Management In addition to full compliance with TS Suppliers shall: Include in the safety program an emergency plan covering accidents, spills, fire and/or explosion. Identify a representative who has authority to coordinate safety activities and to investigate and resolve safety problems. Conduct routine safety inspections of the facility on predetermined basis. 4.5 Product Realization In the absence of a viable APQP system, suppliers are encouraged to adopt the KAUTEX APQP Process. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 15

23 4.6 Contract Review KAUTEX reserves the right to review contracts and audit by changes in either the part warrants or the business relationship. The supplier s Quality Manual (policies and procedures) shall be available for KAUTEX review. 4.7 Evaluation of Subcontractors Suppliers shall obtain authorization in writing from KAUTEX prior to changing subcontractors. Suppliers shall insure that their sub suppliers will permit KAUTEX to: Review the sub supplier s documentation required by the KAUTEX Supplier Requirements and Guidelines Manual and other KAUTEX or applicable Quality System requirements Have access to the subcontractor s premises, or working area, so the supplier and KAUTEX can verify that the sub-supplier is conforming to specified requirements 4.8 Production and Service Provision - Identification and Traceability In addition to the requirements of TS-16949, suppliers shall comply with the following: Where traceability is required by KAUTEX, by our customers, or national regulations, the individual parts or products shall have a unique identification. This identification shall provide traceability through retained documentation to the specific lot or batch of each raw material used in its manufacture. Whenever inspection is performed, a raw material lot is changed or production of a new lot or batch of product/parts is started, the raw materials used and the lot numbers shall be recorded in appropriate in-process documentation. For all components, the manufacturing date and shift shall be recorded of each part. This shall be done in such a manner that this identification is clearly visible after total assembly of all sub-components and before installation into the vehicle. 4.9 Preventive and Predictive Maintenance The following requirements shall be reiterated. The supplier shall maintain a record for each tool, fixture or piece of equipment indicating the following: The maintenance schedule Description of the equipment Identification number of the equipment Location of the equipment Maintenance procedures Acceptance criteria Action taken when results are unsatisfactory Re-qualification of repaired equipment to manufacturer s recommended frequencies The supplier shall maintain objective evidence that regularly scheduled maintenance has been performed and shall maintain this evidence as required by KAUTEX and its customers after completion of the program or transfer of tooling. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 16

24 4.10 Control of Monitoring and Measuring Devices No gage exhibiting a GR&R exceeding 10% of tolerance may be used without the expressed written consent of the appropriate KAUTEX contact International Material Data System (IMDS) All suppliers must provide material data stipulated in the IMDS (International Material Data System) in electronic format or obtain such information from their suppliers. Suppliers of assembled components are also responsible of the on-time provision of all IMDS-relevant material data for their products. 1. IMDS data is part of KAUTEX release procedure. 2. Missing IMDS data results in ISR/PPAP rejection. 3. Supplier shall inform KAUTEX the IMDS-Ident-No. a. KAUTEX-Ident-No. and OEM/Customer-No. must be defined in Part/Item-No. according to drawing. b. Part description must be identical to ISR/PPAP/PSW. The next sections will describe how IMDS is handled at Kautex and what the supplier has to do in order to comply with the standards set by Kautex. Compulsory entry of the IMDS data and responsibility for the contents The submission of the IMDS entry for a supplied part is mandatory and should occur latest with the submission of the PSW documents. Each PSW should have a comment about the IMDS ID of the supplied part. The supplier is responsible for the contents and the structure of the entry. Failure to comply with the submission of the IMDS entry will cause a rejected PSW. Because of, additional requirements of the OEMs it might be necessary that the IMDS entry has to be available during the prototype phase. If this is the case, the supplier will be informed with the RFQ and the entry during the prototype phase is mandatory. Requirements of the IMDS entry The IMDS entry of the supplier has a least to match the requirements of the ruling IMDS recommendations (0-022). In addition they should also comply with the requirements of the OEMs. To accommodate this the supplier has to follow the KT requirements of the IMDS entry. A guideline about the requirements is available on request. Use of prohibited material Any material which is or will be prohibited (see Annex II of ELV directive) has to be highlighted separately by the supplier. The supplier should be able to name alternative material to replace the critical one. Compulsory requirement to match the latest IMDS version The entry has to meet the requirements of the latest IMDS version. Old entries don t need to be updated until they are used with a new submission which has to comply with the current IMDS version. Please find below the IMDS ID-numbers for each KAUTEX plant to be used as address in the IMDS. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 17

25 Kautex Plant (City) Company-ID Zip Code Kautex Plastic Technology Co. Ltd. (Guangzhou) CN Kautex Plastics Technology Co. Ltd. (Shanghai) CN Kautex Lanbao (Changchun) Plastics Products Company CN Kautex Japan Corp. (Hiroshima) JP Kautex Textron India Pvt. Ltd. (Chennai) IN Kautex (UK) Ltd. (Liversedge) 6317 GB - WF15 6QA Kautex Unipart Ltd. (Coventry) GB - CV5 6UD Kautex CVS Ltd. (Hengoed) GB - CF82 7RJ Kautex Benelux (Tessenderloo) BE Kautex Bohemia spol. s.r.o. (Knezmost) 5662 CZ Kautex Ibérica S.L. (Barcelona) ES Kautex Portugal Produtos Plasticos Lda. (Palmela) PT Kautex Italia srl (Piedimonte S.Germano) IT Kautex Textron GmbH & Co. KG (Bonn-Duisdorf) DE Kautex Textron GmbH & Co. KG (Leer) 8731 DE Kautex Textron GmbH & Co. KG (Mallersdorf) DE Kautex Textron GmbH & Co. KG (Wissen) 8726 DE Kautex Inc. (Avilla) US Kautex Inc. (Wilmington) US Kautex Corp. (Windsor) US - N8W 5B1 Kautex of Georgia Inc. (Lavonia) US Kautex de Mexico S.A. (Puebla) MX Kautex do Brasil LTDA. (Guararema, Sao Paulo) BR IMDS submissions for part(s) which have to be supplied to multiple plants If a part is supplied to multiple plants or projects please use the ID code 411. Additional customer requirements (e.g. Honda environmental data base) shall be obliged if required by the OEM Control of Customer Supplied Product Suppliers shall take appropriate care of all KAUTEX and OEM supplied tooling, drawings and other items. Suppliers shall assume risk of loss for it and provide commercially reasonable insurance on such items while in Suppliers custody. Costs of tooling maintenance in order to meet industry standards is the financial responsibility of the supplier All items and information supplied to suppliers by KAUTEX or the OEMs shall be treated as confidential business information and access to such items and information shall be limited to an as needed basis. Suppliers shall first obtain KAUTEX written permission before allowing access to such equipment or disclosing such information to third parties especially competitors or potential competitors of KAUTEX or the relevant OEMs Corrective and Preventive Action Corrective Action Reports by suppliers shall include statistical verification of effectiveness and appropriate revisions of the FMEA s, Control Plans and operator instructions. Additional clarifications are outlined in Section 9 Supplier Performance Measurement This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 18

26 5 Section Specific Requirements by Commodity 5.1 Chemicals/Paints (For North America) Chemical vendor s for new programs should coordinate with KAUTEX and the KAUTEX Product Development Team for the program. For existing programs, the supplier s representative should coordinate with KAUTEX and Technical Management at the relevant manufacturing facility. Refer to the KAUTEX Web-Site for additional requirements per OEM. 5.2 Plastic Components Regrind Suppliers are encouraged to investigate the highest percentage of regrind material that can be used in the process. The percentage of regrind shall be verified by appropriate validation testing and approved with PPAP. The supplier shall document a policy/procedure outlining the method of control of regrind used in the product. Documentation of all blending, by lot, shall be filed for KAUTEX review and approval when requested Processing Aids There shall be no oil, lubricant, mold release or other contaminants in products shipped to KAUTEX plants, unless KAUTEX or its customer specifies the presence of such material in engineering drawings, specifications, etc. In such cases the supplier shall obtain approval in writing prior to product shipment. Prior KAUTEX approval is also required in the following situations: If the material is required by the supplier s manufacturing process and cannot be removed entirely prior to shipment of the product. If the material is indirectly required in order to meet KAUTEX s, or its customers requirements (for example, salt spray resistance) 5.3 Resins and Other Raw Material The supplier shall receive and evaluate raw material certifications showing current test results prior to use of each batch of material. If a subcontractor performs material blending (glass, etc.), the certifications for all virgin materials shall be maintained on file by the supplier for KAUTEX s review. Where there is a customer approved subcontractor list, the supplier shall provide documentation for compliance. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 19

27 6 Section - Product Development / Engineering and Design 6.1 Overview This section presents KAUTEX s expectations and requirements in the area of product development (Engineering and Design). These are in addition to the expectations and requirements presented elsewhere in this manual. In keeping with its commitment to continuous improvement of technology, KAUTEX expects its suppliers to provide world class technical expertise. KAUTEX s suppliers and their technological capabilities in product development are critical to achieving continuous improvement in the global marketplace. This section describes the expectations and requirements in 15 major areas: Program Management Design and development capabilities Computer-aided design and engineering resources Dimensional management resources Graphical Data Management DCS-GDM-3D (or equivalent for Europe) Error-proofing Engineering Change Management Design FMEA Process FMEA SC/CC s Design- / Process Scorecard Verification Build Early Production Containment Launch Support Exit Criteria 6.2 Design and Development Capabilities Suppliers are expected to have the technical and personnel resources to support all phases of design, development and engineering. Suppliers shall design and manufacture their products and issue periodic progress reports in accordance with the KAUTEX APQP requirements. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 20

28 6.2.1 Design Schedule Review and Involvement Suppliers must demonstrate the ability to participate in design activities, from concept through prototype to production. They need to be able to provide the necessary information and data via the KAUTEX APQP, unless otherwise specified. Design schedule review and approval data, including provisions for written KAUTEX s approval, shall be planned in conjunction with KAUTEX Suppliers Capability Suppliers shall dedicate appropriate resources and facilities to support the design and development processes. Suppliers should be capable of conducting or participating in: Quality Function Deployment (QFD), Design of Experiments (DOE), Design Failure Mode & Effects Analysis (DFMEA) and industrial ergonomics; Identification and documentation of key characteristics based on product function, design intent and other factors such as product safety requirements, governmental regulations or other requirements. Utilization of such studies as Quality Function Deployment (QFD), Design of Experiments (DOE), Design Failure Mode & Effects Analysis (DFMEA) and industrial ergonomics; Performance/cost/risk trade-off studies. 6.3 Computer Aided Design and Engineering Resources Suppliers are expected to have CAD/CAE capability, experienced personnel and appropriate facilities to perform design and engineering analyses. If CAD/CAE is subcontracted, the supplier shall provide project leadership and direction (e.g. engineering, monitoring key events and scheduling) Computer Aided Design (CAD) Unless otherwise specified, the following items apply to all programs / projects: CAD (math) data shall be provided to KAUTEX in the OEM s CAD Native form. (e.g. CATIA, SDRC, Unigraphics) Design responsible suppliers shall work in the latest CAD version utilized by KAUTEX s OEM. In addition, all release data shall follow KAUTEX s OEM s technical specifications and standards unless otherwise specified by KAUTEX. AFX, DDX capable per Autoweb Supplier to Supplier mailbox (KAUTEX North America). KAUTEX will not provide CAD data translations (IGES, STEP, etc.). 6.4 Dimensional and Management Resources Suppliers are expected to have the dimensional management and graphical documentation (via CAD) capabilities to support the KAUTEX dimensional management process in accordance with the KAUTEX APQP. Suppliers shall be able to demonstrate the following: This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 21

29 6.4.1 Dimensional Management Suppliers shall demonstrate the ability to participate in early dimensional management activities, from concept through prototype to production. Suppliers are expected to document key events and timing on a Dimensional Management Plan (DMP). In addition, suppliers should be capable of conducting or participating in the following dimensional management activities: Identify and direct the establishment of customer fit objectives (Fit & Finish: gap / flush nominal & tolerances, Key features of the product(s), etc.) Direct and optimize the Geometric Dimensioning and Tolerances (GD&T) (establishing Datum, Geometric Characteristics and Tolerances, etc.) to achieve Fit Objectives Perform complex Statistical Analyses (Worst-Case Stacks, RMS Calculations, etc.) and graphical Variation Simulation Analysis (VSA) to prove-out / validate Objectives and/or GD&T. Identify and direct the development of dimensional verification points on components, sub-assemblies and/or systems. Review Check fixture design & builds, GR and GR&R results for conformance to Fit Objectives Graphical Documentation Capabilities Suppliers shall demonstrate the ability to graphically document (via CAD) the following dimensional management activities throughout the product development cycle: Fit Objectives & Variations Datum schemes (components & sub-assemblies) Geometric Characteristics and Tolerances Dimensional Verification Points 6.5 Graphical Data Management DCS-GDM-3D (or equivalent for Europe) KAUTEX s standard dimensional management system is the GDM-3D software package offered by Dimensional Control Systems, Inc. (DCS). All tooling suppliers with part, dimensional verification responsibility and component suppliers are required to be DCS / GDM-3D capable to ensure compatible and consistent dimensional control management. KAUTEX has negotiated a special purchase arrangement for its suppliers. Please contact your KAUTEX Commodity Buyer for details. 6.6 Error-Proofing Suppliers who have design responsibility or are participating with KAUTEX in developing new products are expected to demonstrate the use of error-proofing methods and actions for making improvements and to minimize the total cost of producing the product. The suppliers participating in KAUTEX Product Development Teams (PDT) will have input into an evaluation that is done prior to each APQP Gate review. Error-Proofing is defined as the use of techniques during the design phase of a product to ensure the product will function as intended throughout the lifetime of the product. In addition, the product has to be manufactured or assembled according to the design intend with the least risk for an error to occur. The Error Proofing Concept also extends over the useful life of the product. This relates to environment and life testing designed to ensure the product would perform over time. Useful life is critical for warranty and the associated costs, as our customers continue to put more emphasis and financial responsibility on KAUTEX in this area. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 22

30 A second part of the Error-Proofing concept relates to the actual design and how it will be processed or manufactured. For example, the most simplistic view of Error Proofing of an assembly is to design it, so that parts cannot be assembled in a wrong way. Another key goal is to minimize the number of parts and processes. Additional assistance and training in this area should be obtained through the KAUTEX PDT or through the KAUTEX group. 6.7 Engineering Change Management System (ECMS) The Engineering Change Management System has been established to provide KAUTEX Operations Program cost control and tracking. It is imperative to the ECM system that suppliers to KAUTEX understand and support this critical system. 6.8 Design FMEA Suppliers with design responsibility or those participating in KAUTEX new product developments are required to have the capability to apply Error & Mistake proofing methods to attain improvements and minimize the overall cost of product manufacturing. A system FMEA for the entire delivery scope (design responsibility) must always be generated. The system must be analyzed through a functional approach. These FMEA system functions are to be derived via suitable methods (e.g. functional tree analysis) from system requirements (Book of requirements, drawings manufacturing process requirements...) and must be described in measurable/verifiable values. Proposed FMEA function are derived by KAUTEX utilizing the KT-System-FMEA and a functional tree analysis for the overall KT system and are then provided to the suppliers (function matrix). Subsystem/component FMEAs are to be generated if practical or explicitly required by KAUTEX. If additional levels are reviewed beyond the system FMEA, the relevant interfaces are to be evaluated in separate interface FMEAs. For each FMEA generated by a supplier, the supplier must also provide a block diagram. This block structure diagram must contain all system impacts, sub-systems/components/interfaces and their interactions and define them clearly. It may also contain information on the flow of energy, information, power and results. Critical and significant product attributes must be derived from the FMEA based on comprehensive criteria and must be marked accordingly in the FMEA. A cross-functional team of experts must generate each FMEA. The standards of QS 9000 / VDA 4.2 are the basic requirements for the FMEA form (sheet) and FMEA system. The KAUTEX DFMEA checklist must also be taken into account. The FMEA is to be generated and maintained with software support and must be protected against data loss. A schedule/status report must be compiled and maintained, which must include crucial benchmark dates, completion steps and the degree of completion in percent. The supplier is to send this schedule/status report to KAUTEX once a month together with the APQP status report without further notice. The status green/yellow/red is to be reflected in the APQP status report. In the event of a yellow or red status, adequate measures must be initiated and documented in the CCAreport (APQP status report). KAUTEX and KAUTEX s customers must be granted access to the FMEA at all times. This will occur at regular intervals, which are to be stipulated by KAUTEX. The degree of completion in percent showing in the FMEA of each individual supplier is established based on the KT-FMEA-Checklist at the FMEA Review Meeting and is distributed as a report. If applicable, relevant measures are initiated. Upon request, KAUTEX will provide suppliers with relevant checklists. SC&CC s have to be specified in the D-FMEA. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 23

31 6.9 SC&CC (Significant and Critical Characteristics) Critical Characteristic CC: Critical Characteristics are special items, which influences legal regulations or the product-/ vehicle safety accordingly. Significant Characteristics SC: Significant Characteristics are special items, which influences the functionality of the product and/or the customer satisfaction. All SC&CC require special controls during production. All related documentation (measurement reports, control plans, etc.) shall be stored in archives for a time period according to project specific or legal regulations. The process-capabilities have to be proofed for each build level (prototypes, Pre-series, Mass-production) and have to be submitted to the related Plant- or Product Quality contact: Short term capability > 1.67 (Ppk) Long term capability > 1.33 (Cpk) SC&CC have to be defined with the Product Quality Group directly after nomination of the supplier. The supplier is obliged to mark these characteristics in all technical documents (FMEA, control plans, etc.) Design Scorecard To create a stabile design for the purchased parts, Kautex will request specific measurement results for significant and critical criteria. The PQ will contact the supplier during the beginning of the design phase in order to agree the required measurements for the prototype part. The agreement will contain: Significant & Critical Criteria The method of measurement The amount of measured parts After each development step the supplier will contact Kautex to check if one or more criteria has to be measured again. The supplier will commit himself to carry out the measurements and the statistical evaluation before he transmits the data to Kautex. He will also commit himself to perform this service free of charge Process FMEA The general requirements pursuant to AIAG, ANFIA, FIEV or VDA apply. SC&CC s have to be specified in the P-FMEA The Verification Build Process Verification Build is a process that brings together resources, parts and data under an organized procedure intended to provide early confirmation of design and processing. All suppliers involved in prototype or similar phases of a program are required to support KAUTEX s Verification Build events. The process involves the simultaneous efforts of a multi-tier (OEM, KAUTEX and suppliers), cross-functional team prepared to identify This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 24

32 issues, make decisions on corrective actions and verify the effectiveness of the fixes during a deliberate and disciplined assembly build review for prototype or similar phases Early Production Containment Early Production Containment requires a Pre-Launch Control Plan, a significant enhancement (more details) to the supplier s production control plan. It will raise the confidence level to ensure from inception that all products shipped will meet KAUTEX expectations. The pre-launch control plan will also serve to validate the production control plan. The Pre-Launch Control Plan should take into consideration all known critical conditions of the part, as well as potential areas of concern identified during early build events, past PPM history and the Production Part Approval Process. The Supplier is responsible for: A. Establishing a containment process that contains the following elements: i. Identification of the person responsible for the containment process. ii. Development of a Pre-Launch Control Plan consisting of additional controls, inspection audits and testing to identify non-conformances during the production process. Depending on the dominant factor in the production process (set-up, machinery, fixtures, tooling, operator, material/components, preventative maintenance and climate) additional controls could include: Increased frequency/sample size of receiving, process and/or shipping inspections Mandated sub-supplier containment and/or sub-supplier support/audits Addition of inspection/control items Increased verification of label accuracy Enhancement of process controls, such as error proofing Error proofing validation by introduction of known defects Increased involvement and visibility of top management iii. Train personnel relative to the standardized work performed at the containment stations iv. Prompt implementation of containment/correction when non-conformances are discovered v. Identification of the measurement equipment and data collection devices/activities to be used, where applicable vi. Implement a layer audit process of the containment plan to ensure performance vii. Ensuring compliance with the early containment requirements with all sub tier suppliers B. Documenting the Pre-Launch Control Plan, including functional testing and error / mistake proofing, using the Control Plan format referenced in the AIAG Advanced Product Quality Planning and Control Plan Reference Manual. The development and documentation of the Pre-Launch Control Plan is expected to occur during the Advanced Product Quality Planning process. The Pre-Launch Control Plan is not a substitute for the Production Control Plan, but is in addition to the Production Control plan and is used to validate it. C. Utilizing the Early Production Containment Plan for all pre-production requirements (e.g. pilot, lead unit build) and for the production shipment quantity or duration specified by the procuring division s product quality representative or until the Production Control Plan is validated, whichever occurs later. Typically, the specified production quantity or duration is intended to reflect KAUTEX s acceleration plan to full production rate. If not specified, the production ship quantity is a minimum of 3000 pieces, in addition to any pre-production quantities required. D. Indicating compliance with this requirement, by attaching to each shipping label an identifier label approved by the KAUTEX receiving plant and signed by a designated senior management representative, typically the highest level manager at the supplier production facility. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 25

33 E. In case of additional customer requirements, which will exceed KAUTEX s demands (e.g. General Motors GP 12), the customer standard will be applied. Detailed information can be found in the customers specific requirements Exit Criteria A Supplier shall be eligible to exit Early Production Containment on his own accord after meeting the criteria listed below. If the supplier is unable to meet the exit criteria, or the supplier s plan continues to identify nonconformances, the supplier is expected to continue the necessary containment measures to protect the KAUTEX plant up to the time, when the supplier s Production Control Plan is validated, and when the quality concerns have been resolved to the satisfaction of both the supplier and KAUTEX. A. Having shipped the number of days and quantity or for the duration specified with no discrepancies or KAUTEX DMNs, the supplier can self exit from the Early Production Containment Process B. If supplier does not meet self-exit criteria, then, to exit, all DMN s must be closed by KAUTEX Plant Supplier Quality. C. In the event the self exit criteria has been met, but the plan continues to identify non-conformances, the plan must be kept in place until process controls and capabilities have proven effective and the Production Control Plan is validated. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 26

34 6.15 Launch Support Suppliers presence may be requested to support a new product launch. The main focus will be communicating to the suppliers manufacturing facility build issues, daily inventory, product improvements and any nonconforming activity, if necessary. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 27

35 7 Section Release Procedure and Final Contracts 7.1 Production Part Approval Process PPAP All suppliers of raw materials and components used in manufacturing of KAUTEX s products are required to submit PPAP packages and receive PPAP approval prior to mass production shipments. With the exception of chemical suppliers, suppliers shall comply with QS-9000 Section I (Product Approval Process) and the current version of the Production Part Approval Process Manual published by AIAG, or VDA standard VDA2. The Product Development Team or other designated KAUTEX representative may modify these requirements. The default level for all submissions is Level 3 for QS-9000 and Level 2 for VDA. KAUTEX must approve any change to this standard. All items that do not meet specification shall be clearly identified on the PSW and a KAUTEX, pre-approved action plan for each discrepancy shall accompany the submission. For formal sign-off and approval, all PPAP submissions shall be forwarded to the assigned Product/Quality Assurance Engineer at the KAUTEX manufacturing plant receiving the material. All PPAP`s must contain the IMDS ID number as per the requirements outlined in paragraph Rejected PPAP If the Supplier s PPAP submission is rejected, KAUTEX Plant Supplier Quality will submit the KAUTEX Supplier PPAP Form to the supplier stating the reason for rejection. It will be the responsibility of the supplier to begin all corrective actions necessary to achieve full approval. KAUTEX Plant Supplier Quality must track corrective action and expiry date Re-Submission A re-submission due to a reject or an Interim Approval must contain a corrective action plan and the required data or information to correct the discrepancies. Parts may or may not be necessary depending upon discrepancies. Re-submissions due to an engineering change, including changes that generate a new part number, must contain all data pertinent to that change and any other requirement that may be affected by the change. It is the supplier s responsibility to resubmit all data impacted by a change to the part, the process, material, material source or manufacturing location Interim Approval If a part is not production approved, the Interim Approval will authorize shipments to KAUTEX. The status Interim Approval indicates KAUTEX s decision to use the part prior to full approval. This status will be shown on the Part Submission Warrant. All Interim Approvals require a corrective action plan. The Interim Approval Worksheet, which has been developed for this purpose, is to be completed with the supplier. If an extension is required, the Interim Worksheet must be re-issued and the date changed. KAUTEX Plant Supplier Quality must track expiry dates. Charge backs will occur if submission is not received by the expiry date. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 28

36 7.2 Product, Process and Material Changes A Product is approved for a specific part number, engineering change level, manufacturing location (including specific manufacturing line within a given site), raw material (including subcontractor s manufacturing location), production-process and production-process environment. All changes require approval by the KAUTEX plant. Changes may require notifying the customer, resubmission and re-approval with PPAP submission. 7.3 Run-at-Rate /Process Sign Off (PSO) and PPAP Suppliers shall perform a Process Sign Off for all components supplied to Kautex. This is to be notified in advance. The PSO shall be conducted to - verify production capacity and component quality - determine capability of process, machines and agreed SC/CC - prove the process to be fail-safe (verification of error proving). For PSO, all sub-components shall have full PSW / Note1, the supplier shall be off tool/process. Any deviation is to be agreed up front. The PSO shall be performed acc. to VDA; QS9000, ISO/TS standards (all in their latest version) or any other Kautex or OEM requirement and shall be attended by Kautex (and the OEM), a Supplier Monitored PSO is possible, when agreed with Kautex. An action plan shall be established for all issues identified during the PSO, these are be resolved in a timely manner, as ISIR/EMPB approval depends on PSO approval. Quantities to be produced during the PSO shall be agreed with Kautex. All parts ordered by Kautex for PSO shall not be used for PV testing and shall not be shipped at a later point in time. Should a supplier fail PSO, all costs for the re-run shall be covered by the supplier. 7.4 Supplier Request for Change Suppliers must request a dimensional change. In order for the change request to be approved, it must receive at a minimum signatures/approval from the KAUTEX Product Engineer, KAUTEX Plant Supplier Quality Engineer and KAUTEX Purchasing (). 7.5 Yearly Re-Certification At the direction of KAUTEX suppliers are responsible for an annual re-submission of all dimensional- and test results. Data must be current and reflect current engineering levels and processing methods. A copy of the Warrant and data must be retained and submitted to KAUTEX Plant Supplier Quality on request. The Warrant is the Part Submission Warrant sheet for a PPAP submission. It can be specified as a PSW or Submission Warrant. Kautex reserves the right to review the recertification documentation onsite. 7.6 Part Submission Identification Initial sample deliveries shall be clearly labeled as non-production material. Each box is to be identified with the proper bar code labels (per AIAG Standard) as well as any additional KAUTEX s plant requirements. An Initial Production Part (IPP) identification tag shall be affixed to the first shipment of components. The IPP tag may be obtained from the Kautex Plant SQE. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 29

37 Shipments that are made without the correct labeling may not be accepted and charges may result. To obtain the labels please contact your KAUTEX Purchasing Representative or KAUTEX Plant Materials Manager or KAUTEX Plant Supplier Quality. All prototype samples must be identified per KAUTEX requirements. The supplier has to implement the KAUTEX requirements derived from component scorecard and SC/CC identification into each level of the control plan. These special characteristics have to be reflected in the prototype sample report which has to be submitted with each delivery of samples. Furthermore a submission warrant and material certification must be sent with samples. Any deviations from these specified requirements need an approval by the responsible KAUTEX supplier quality contact prior to delivery. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 30

38 8 Section Manufacturing/Materials Management 8.1 Packing Slips and Master Bills of Lading: Packing slips and master bills of lading, whether for direct shipments or shipment moving through a consolidation point, shall be submitted with every shipment Direct Shipments Direct shipments move directly from a shipping plant to a destination plant. Packing slips shall be prepared in duplicate. One copy of the packing slip is to be firmly attached to the outside of one of the containers in the shipment. The second copy of the packing slip should be given to the carrier Shipments Moving Through a Consolidation Point (Applies to KAUTEX North America only) Shipments moving through a consolidation point are considered partial loads that are sent through a consolidation point for delivery to the destination plant. Packing slips shall be prepared in sets of four. One copy of the packing slip should be firmly attached to the outside of one of the containers in the shipment. The other three copies of the packing slip shall be given to the carrier Packing Slips The packing slip format shall allow for multiple part numbers, quantity information and show the KAUTEX assigned part number. The packing slip numbering scheme shall also be the supplier s invoice number. The following information shall be included on all packing slips. Supplier Information: Shipping Information: Supplier name and address. (Ship point, not billing office) Supplier Code (I.D.) number (DUNS, if available) Packing slip number Date shipped Carrier name Ship To: KAUTEX plant address Bill To: KAUTEX plant address Gross, tare and net (material) weight. Shipped via (routing as instructed by KAUTEX Plant Releasing Department Freight terms (FOB point, collect/prepaid). For KAUTEX North America A.E.T.C. (Authorized Excess Transportation Charge): to be included whenever movement of material deviates in any way from the normal supplier s routing instructions. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 31

39 Packaging Information: Part or Material Information: Number of unit loads: pallets containers cartons, etc. Pieces per unit load. Unit of measure if other than pieces per unit load. KAUTEX Purchase Order Number. Quantity Shipped KAUTEX part number (listed in sequential order) KAUTEX part description Invoice number shall be referenced If product is shipped to an individual, include the name(s) on an attention line Master Bill of Lading When routing instructions direct you to make a shipment for multiple plants or docks into a single facility, a Master Bill of Lading is required to combine shipments. The master will be consigned to the distribution center. An individual shipper identification number shall identify each ultimate destination shipment included in the master Supplier s Responsibility Reconciliation of accumulative year-to-date quantity shipped from the supplier for each part number. Suppliers are expected to verify every CYTD shipped quantity with each new weekly 830-release transaction set. Packing slip format shall allow for multiple part numbers, shipped quantities and show the KAUTEX assigned part number. One packing slip for each load shipped. Packing slip number schemes shall also be the supplier s invoice number. Provide a Master Label for each shipment to each KAUTEX plant, for samples please refer to the KAUTEX web-site. 8.2 Packaging and Identification Labels Suppliers shall maintain a sufficient inventory of suitable and expendable packaging that may be used for premium shipments, production pilot programs, service orders or to avoid container shortages Packaging & Labeling Mistake-Proofing Labeling shall be in compliance with the Automotive Industry Action Group (AIAG) Shipping/Parts Identification Label Standard and any other KAUTEX s plant requirements. Returnable containers require two Kennedy label holders or Teflon-impregnated labels permanently affixed, for ease in the removal of bar code labels upon product consumption. The affected KAUTEX Plant must approve, on an individual basis, the use of any pockets or holders which deviate from the standard. Mixed Load labels shall be on all mixed pallet loads and clearly identified. Master Labels are to accompany each shipment identifying shipment with Packing Slips, for samples please refer to the KAUTEX web-site. Assistance or clarification of this guideline should be addressed through KAUTEX Plant Supplier Quality. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 32

40 Bar Code labels must be clearly visible on two adjoining surfaces of the container. Bar Code labels must contain the date of manufacture for traceability purposes Determination of Packaging Types Suppliers of production parts and materials are to be held responsible for packaging their products in preapproved packaging and in accordance with the instructions contained herein. All pack size; packaging, container or pallet dimensions and/or type shall be pre-approved by the appropriate KAUTEX facility. It should be noted that burlap or cloth bags, barrels, drums, kegs, cans or pails are not acceptable as shipping containers for other than granular or liquid materials. In general, they are inefficient and difficult to handle and do not conform to the integrated handling systems employed at the KAUTEX facility Selection of a Method In general, the selection of the method of packaging will depend upon the specific part or material, the method of transportation and the method of handling required by the receiver. However, certain basic factors deserve consideration: Packages, which are to be hand handled, are subject to rougher handling than those handled mechanically. Package size, strength and type shall be selected to provide protection and to fit the mode of transportation, applicable carrier regulations and distance of transit. KAUTEX expects that Suppliers inform themselves of all relevant considerations and determine packaging accordingly. In finalizing the packaging design, the expectation is that the following cost factors will be considered: Handling Labor Material handling equipment Transportation cost (optimum cube utilization) Floor space availability Direct Labor Recyclability, Disposal or Return Design shall follow best practice criteria KAUTEX reserves the right to review all supplier-packaging designs and rejecting those designs, which are not compatible or adequate to KAUTEX s systems. In addition, suppliers are to review their packaging on an on-going basis in order to improve deliverable part quality, part presentation and continual minimization of costs. The specific method used should be chosen to best fulfill the requisites of good packaging practice for any given commodity. It is mandatory when a supplier ships in sufficient volume to warrant palletization, that the parts or materials are loaded on a pallet or packaged as a unit load. There may not be more than one part number packaged in any container unless specifically directed by the KAUTEX receiving operation. All expendable containers should be loaded to cubic capacity to maintain load density, package integrity and obtain optimum freight rates. Expendable containeds must be shipped on expendable skids and returnable containers must be shipped on returnable skids no mixing allowed. All containers should have a manufacturer s certificate with bursting or puncture test visible on the assembled container. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 33

41 KAUTEX should approve the standard pack density per pack and unit load quantities. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 34

42 8.2.4 Hand Handled Packages: To permit efficient handling and ergonomically safe containers, the following conditions will apply: These packages shall not exceed 40 lbs. / kg gross weight and should be shaped so that one person can handle them easily. The recommended three main pallet footprints are 8*120 cm (Euro size) or a four-way, 48 x 45, 36 x 32 and 32 x 30 footprint for KAUTEX North America. All containers shall be modular to these three footprints and shall not have overhang. Use unique pallets only when product characteristics dictate. Furthermore, plant specific, material storage systems may dictate the use of one particular footprint. Applies to KAUTEX North America only: The minimum burst strength shall be designated to adequately withstand the conditions of warehousing and transportation. Less than 275 pounds per square inch will require authorization from the Product Development s Team Packaging Support. Whenever possible and as volume permits, hand handled packages may be utilized so they can be handled mechanically as a single load by forklift trucks. One full level layer of cartons on a pallet is sufficient volume to require that parts be palletized Mechanically Handled Loads To ensure that mechanically handled expendable loads will allow proper handling by available equipment and will be shipped without damage and in a manner which will permit efficient unloading from the carrier, the following conditions will apply: All mechanically handled loads shall have four-way entry with flush cut top and bottom boards. Applies to KAUTEX North America only: Minimum of 3 ½-inches fork clearance and 28- inches lateral clearance shall be maintained, where possible. Gross weight shall not exceed 4,000 pounds without prior approval by KAUTEX. All loads shall be firmly secured to the pallet. Securement can be by non-metallic strapping (at least two bands lengthwise and two bands widthwise) or by stretch wrap or shrink-wrap to maintain the integrity of the load. Applies to KAUTEX North America only: When stretch wrap or shrink-wrap is used, a single wing style pallet is mandatory. A minimum ¾-inch wing is mandatory on all four sides. All drums shall be palletized and firmly secured. All stretch wrapped loads shall be wrapped at least four times at the bottom and top of the load and two wraps in the middle. The bottom wrap shall start below the wings on a wing style pallet. This will secure the container to the pallet. Stretch wrap shall be clear and conducive to the ability of bar code reading equipment to properly scan pertinent information. Preferred stretch films are: LLDPE (linear low-density polyethylene) LDPE (low-density polyethylene) EVA (Ethyl vinyl acetate 12 % min.) All packages shall be strong enough to permit stacking a minimum of eight feet high in transit through point of use. The container shall be designed to withstand the constant handling required by our Just- In-Time operation. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 35

43 8.2.6 Internal Expendable / Returnable Dunnage All material/dunnage used in shipping containers shall have a minimum burst test strength and wall thickness to adequately withstand the demands of transport from the point of manufacture to the receiving location without failure. When applicable and appropriate, dunnage should be permanently affixed to primary container. Returnable dunnage shall follow the same cleanliness procedure outlined for primary containers Packaging Closure The acceptable closure for packages is adhesive carton sealing tape or fiber reinforced paper tape. Staples and glue are not acceptable as a method of container closure Returnable Containers This method of packaging is intended for multiple shipments. The containers are to be controlled and returned to the supplier for reuse. RETURNABLE pertains to either supplier owned or KAUTEX owned containers such as plastic or metal bins, racks, pallets, trays, separators and/or loose components. All returnable containers and internal dunnage shall be pre-approved by KAUTEX. These packages shall not exceed 40 lbs. / kg. gross weight and should be shaped so that one person can easily handle them. Use Euro pallets (80cm X 120cm). Applies to KAUTEX North America: Packaging shall fit on either a 36 x 32 or a 45 x 48 four-way entry pallet. The packaging cannot exceed 32 or 40 high respectively, including the pallet. The container shall be designed to withstand the constant handling required by KAUTEX s Just-In-Time operation. Consideration shall be given to the wide range of temperatures the container will be exposed to. Whenever possible and as volume permits, hand handled returnable packages shall be utilized so they can be handled mechanically as a single load by forklift trucks. One full level layer of returnable items on a pallet is sufficient volume to require that parts be palletized Supplier Responsibilities Suppliers shall maintain a sufficient inventory of suitable expendable packaging that may be used for premium shipments, production pilot programs, alleviating container shortages and service orders. Suppliers, who ship to KAUTEX in returnable containers, shall identify the contents with an adhesive AIAG or VDA shipping parts identification label, that can be removed easily, yet remain affixed during inbound transit move and handling in our plant. Two container labels shall be clearly visible on adjoining surfaces of a returnable container. In order to avoid confusion, ensure that the container is clean of old labels. During the life of the program for which the returnable containers were designed, it is the supplier s responsibility to ensure that each container is maintained and ready for re-use. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 36

44 Inspect all containers prior to loading and segregate damaged equipment. If a damaged container is received that is not usable the container shall be removed from circulation and replaced. All returnable containers shall be visibly labeled with the KAUTEX plant address Packaging Specification Submission and Approval Requirements All suppliers are required to complete the enclosed Packaging Specifications form for review to the KAUTEX PDT or the appropriate plant designated packaging support personnel. If the paper data is approved, the supplier(s) will be contacted for the submission of the sample package for review. Applies to KAUTEX North America only: Upon internal approval, the Packaging Specifications form will have all of the necessary internal approval signatures and a copy of this same for will be forwarded to our supply base as the official sign off and authorization to proceed. All packaging, whether new or changed, shall have written approval from the designated plant packaging support personnel previous to shipment of parts Returnable Container Maintenance The use of clean, damage-free containers perpetuates a commitment to quality. When returnable containers are selected, all suppliers are responsible for container maintenance including, but not limited to, the following: Removal of Exterior Identification When empty containers are returned, the supplier shall remove all obsolete labels to avoid possible confusion. Removal of Interior Dunnage/Trash As part of the cleaning process, dunnage and trash shall be removed from the container(s). It is recommended that dunnage/trash removal should occur as soon as practical after the removal of exterior identification bar code labels. This will help avoid damage during collapsing/nesting. Collapsing or nesting empty containers as early as possible will prevent the accumulation of trash and optimize floor space availability. Container Washing Under certain conditions it may be necessary to wash the containers to remove any residue of the former contents. The type of wash will vary by the contents and desired results. A high-pressure soap and water spray may produce the desired results in some cases while a chemical bath may be needed in others. Drying Part damage caused by moisture can be avoided by allowing for proper drying after washing Inspection for Damage During the overall cleaning process, each container should be inspected for damage. The inspection should check both appearance and functionality. A damaged container will not perform at the desired level required nor provide proper part protection during transport, use and storage. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 37

45 Repair Damaged containers shall be repaired before they are re-introduced into the system. The use of faulty containers can lead to further damage to the container or its contents or may represent a safety hazard Storage After containers have been cleaned and are ready to be returned into the system, storage space for empty containers is to be provided. This space should be where the clean containers can be protected from contaminants, e.g. dirt or weather Packaging and environment / materials recycling In keeping with its commitment to protect the environment, KAUTEX makes every effort to keep the use of disposable packaging to a minimum by utilizing re-usable packaging. When the packaging type is being selected, KAUTEX takes the following factors into account: avoidance reduction re-use recycling disposal of packaging materials. In future, recycling and disposal will increase in importance. A key aspect therefore will be the accurate labeling of the packaging materials and the utilization of only one type of material which enhances recycling. Therefore, all packaging materials must be labeled as follows: All packaging materials made of corrugated cardboard must be labeled with the RESY symbol. All packaging materials made of solid board must be labeled with the symbol "Recycling Packaging Material Solid Board". All plastic materials utilized must be recyclable or re-usable. They shall be labeled with the appropriate symbol and the name of the material 8.3 Applies to KAUTEX North America only: Electronic Data Interchange EDI KAUTEX participates in many Extended Enterprises initiatives with our customers. Therefore, our suppliers must also become part of the Extended Enterprise team. The fastest most accurate form of communication for EDI information throughout the supply chain is Auto Chain Online. KAUTEX transmits EDIFACT version 96A to all suppliers with over $10,000 annual sales. Our VAN is GEIS. If suppliers are not EDI capable they are required to contract with a third party service bureau. Suppliers under $10,000 in sales will be requested to connect through Supply Web, when it becomes available. Until Supply Web is available, these suppliers will receive releases faxed from KAUTEX. For any questions regarding EDI or EDI specification call KAUTEX EDI qualifier code and the identifier codes are plant specific as follows: KAUTEX North America Plant ID Code Qualifier KAUTEX-Avilla KAUTEX-Wilmington KAUTEX-Windsor KAUTEX-Lavonia KAUTEX-Puebla This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 38

46 8.3.1 Supplier Electronic Communication Requirements All KAUTEX suppliers are required to have the ability to transmit and receive, as the case may be, ASNs, material releases and other such information, as KAUTEX may deem appropriate. The supply partner shall transmit an accurate and timely ASN. Each ASN requires the specific time and date of shipment clearly noted. Transmit ASN immediately upon carrier departure Report the actual truck departure time on ASN. Report the correct time zone qualifier on ASN. Arrange for a backup ASN system. The backup system can either be an entirely separate system within the supplier s own company or through a service bureau. Pre-assigned ASNs are prohibited All KAUTEX suppliers are required to sign up for AIAG s AutoChain Online. Information on registering can be found at: DELFOR Planning Release Schedule KAUTEX electronically pulls in our customer s release data and processes the information. After internal inventory levels are considered, our system then generates material requirements for our supply base based on the results. All suppliers are required to verify cumulative totals upon receipt of each release to assure correct shipment of product. Suppliers are required to reconcile any and all CYTD discrepancies with each new DELFOR release transaction set. Shipments per a NEW release schedule are required 24 hours after receipt of release. All daily and weekly shipments are due in-house on the release schedule date, unless specified by the KAUTEX Plant Releasing Department. KAUTEX is a Just-In-Time (JIT) supplier and is required to maintain production and shipping capabilities whenever our customers require it. In turn, KAUTEX s supply base is required to maintain production and shipping capabilities whenever required which includes weekends and holidays without exception. Suppliers are responsible for the accurate and timely shipment of required products, supported with accurate billing information per established routing and window times as directed by KAUTEX. Supplier schedules shall be maintained to support KAUTEX s schedules and requirements, unless other arrangements have been previously made with our releasing department. All rejected material is expected to be replaced and available at KAUTEX within 24 hours of detection. Suppliers will ensure that material is shipped to schedule during their downtime. All suppliers are required to maintain an appropriate amount of all supplied finished products at their facility to avoid any potential shortages due to release fluctuations and/or rejected material. Excess transportation charges are the supplier s responsibility when past due. All milk run windows shall be adhered to and maintained without exception. Over-shipments are not acceptable and all suppliers will be held responsible for any return freight carrier charges and/or other plant costs as a result of an over-shipment. Any shortages, problems or concerns shall be communicated to your plant releasing contact immediately and no later than 12:00 p.m. of each scheduled ship date. It is the responsibility of each supplier to ensure that all shipments are in pre-determined standard pack quantities at all times. The only exception to this requirement will be when making the last shipment on a discontinued product. Discontinued material will be shipped to the piece on the last shipment. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 39

47 Capacity problems and any other extenuating circumstances requiring extended downtime that will prohibit the supplier to ship to schedule shall be reported to KAUTEX immediately DESADV Advanced Ship Notice KAUTEX requires DESADV be to be sent from all suppliers via EDI immediately after carrier departure. An incorrect ASN will cause a receiving discrepancy charge to be issued. Suppliers shall have AIAG standard labels on all material sent to KAUTEX for scanning the material to the ASN unless specified by individual plants. DESADV is required to be in EDIFACT version 96A. Any supplier not capable of transmitting the DESADV in Version 96A should contract with an outside service bureau for this purpose. 8.4 Transportation All Suppliers shall use specified transportation methods and specified carriers in compliance with shipping instruction(s) provided by KAUTEX. Milk run window times shall be adhered to and maintained without exception. All Suppliers shall have the material available for shipment at the designated pickup time. All suppliers will take all necessary actions to avoid premium transportation shipments. All excess transportation charges are the supplier s responsibility, when in a past due status. A.E.T.C. (Authorized Excess Transportation Charge) number shall be obtained from KAUTEX plant-releasing department whenever movement of material is by other than the normal mode of transportation and routing (KAUTEX North America). Premium disputes shall be submitted in writing to the specific plant releasing contact within 30 days or they will not be honored (KAUTEX North America) Receiving Hours Contact KAUTEX for local receiving hours. Off-hour deliveries shall be coordinated with the KAUTEX plant releasing contact. Any changes to the above schedule will be communicated in a letter issued by our Communication Effective and productive communication regarding any and all information that may affect the timely delivery of material(s) to support our daily production builds is mandatory. Suppliers shall immediately communicate any unexpected downtime that adversely affects your ability to support schedule requirements to the appropriate Release Specialist. Suppliers should have an emergency concept and be able to provide to KAUTEX. The supplier shall properly communicate internally between shifts and among departments regarding the following information: Engineering changes Production and Service parts schedule and volume changes. Quality problems/rejected rates. Build problems Critical material shipments. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 40

48 All suppliers are responsible for providing and updating a list that includes the name, title, address, phone number, pager number, fax number and address of contact people who are knowledgeable and qualified in the areas of: Material follow-up, including systems, shipping and traffic JIT schedules Engineering changes Purchase orders Quality Assurance KAUTEX Plants require not only daytime contact names and phone numbers but also after hour emergency contact names and phone number. Any changes within your shall be communicated immediately with a replacement name and phone number. KAUTEX will provide a monthly forecast to all suppliers. This forecast is not a binding commitment to purchase, but rather a tool to assist the suppliers planning process. KAUTEX will provide a holiday calendar to all suppliers. All suppliers are responsible to report delays or errors in both transmitting and receiving electronic communications immediately and initiate corrective action. Releases will be transmitted weekly to all suppliers and it is their responsibility to notify their KAUTEX plant receiving contact when a release is not received. All suppliers are responsible to immediately notify the specified KAUTEX Releasing Specialist contact and the routed carrier when the scheduled and/or required shipment cannot be made. All suppliers will provide the following information to the specified KAUTEX Releasing Specialist contact in the event of a missed shipment: When the supplier can ship and what quantity. What caused the missed shipment? What is being done to correct the problem (action plan)? What is being done to ensure the problem does not occur again (irreversible corrective action). Confirmation that the supplier is prepared to put the action plan in writing, if requested. Instructions for Completing the Statement of Charges Resulting from Cancellation/Change: Before issuing the supplier claim, please ensure that it meets the following criteria: All claims shall be submitted within fourteen (14) calendar days, unless specified otherwise, from the last day of shipment to file your claim. If your claim is not submitted within this window, it will not be honored. Any claim submitted for less than five hundred dollars ($500.00) will not be honored. All suppliers will ship the scheduled quantity to the nearest standard pack until the last shipment(s) are made. Non-carryover, end of the model year and interim engineering change material will be shipped to the piece based on the current schedule. Material shipped over and above authorized schedule requirements will become the supplier s financial responsibility. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 41

49 8.4.3 Applies to KAUTEX North America only: Completion of Supplier Claims Any amount of material claimed in excess of KAUTEX s high release commitment (as reflected in the material shipping and fabrication release) will be deducted from the supplier claim. Exception to this will be granted only, if the claim is accompanied by written correspondence from KAUTEX s releasing department, KAUTEX agent or designated KAUTEX representative. Third party buys for material above authorization will not be honored. The claim shall reference the release program number used as the authorization for your last material purchase. Keep in mind that this figure can not exceed KAUTEX s high commitment. The claim shall reference all PCN numbers that affect the part and caused the change or cancellation. The suppliers will be responsible for providing end of model material requirements for service parts on non-carryover items. OEMs require all suppliers to make parts for Service and Warranty for an extended period of time. KAUTEX also requires its suppliers to remain in compliance per the OEMs requirements. More than one canceled part may be submitted on a single claim form provided they are canceled for the same reason and were shipped to the same KAUTEX plant. If your claim submission includes in-process material, please provide an estimated cost for completion. This should be on a per piece basis and will be used by our releasing department as well as our Customer s Service Operations in the evaluation process. All claim submissions will require proof of all costs as well as physical verification of all material(s) upon request. Material termination claim forms will be submitted as stated within fourteen (14) days from the effective date of termination in accordance with KAUTEX s instructions. Only completely cancelled parts will be reported on a material termination claim. The supplier will hold all claim item(s) until final disposition authorization is obtained from KAUTEX s customer(s). All claim items shall be stored to preserve the production condition. 8.5 Applies to North America only : NAFTA Regulatory Content Reporting NOTE: The following information regarding NAFTA and Certificates of Origin is intended only as general information. It is the responsibility of the supplier to determine its legal obligations in connection with the manufacture and supply of its goods. KAUTEX provides no warranty of the accuracy of this information. Providing NAFTA information in a timely manner to KAUTEX is extremely important. This information is required to reduce the duties the OEM pays to move material and vehicles throughout North America. Your support is critical. NAFTA Certificate of Origin information is required to be updated yearly in December along with KAUTEX Supply Chain Requirements. The Certificate of Origin is the document used for certifying that a shipment of goods or goods produced over a time frame is originating under the Rules of Origin. Our Customers will be requesting Certificates of Origin so preferential NAFTA tariff treatment can be claimed and also so that they can establish that your good is originating when they apply the Rules of Origin to there own good. At the beginning of each New Year, we are required to update our files and resubmit Certificate(s) of Origin on all of our products produced. In order for KAUTEX to issue Certificate(s) of Origin we need to obtain the Certificate of Origin from each of our suppliers by the end of December yearly. If new product(s) are introduced after the original submission at the beginning of each year, each supplier is required to submit a Certificate of Origin during this time. Please do not wait until the end of the year to re-submit. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 42

50 While the NAFTA Rules of Origin are complicated, the secret to applying them is to focus only on those rules that relate to your goods. You shall also be familiar with basic NAFTA terminology to work with the Rules of Origin. We will attempt to provide you with some basic Strategies to direct you to the rules that apply to your situation and setting out the background information that you need to apply the rules NAFTA Terminology Light and Heavy Duty Vehicles Originating and Non-Originating Goods and Materials Harmonized System (HS Codes) A light-duty vehicle is a car, a light truck (G.V.W. not exceeding 5 metric tons) or a vehicle for transporting 15 or fewer passengers. A heavy-duty vehicle is a tractor, a heavy truck (G.V.W. exceeding 5 metric tons), a vehicle for transporting 16 or more passengers or a specialty vehicle. The way that the Rules of Origin are applied largely depends on whether your good is intended for use in a light-duty vehicle or a heavy-duty vehicle. A good or a material is originating if it is produced in a NAFTA country and it satisfies any one of the four preference criteria. It if fails to satisfy any of the criteria or it if is imported from a non-nafta country, it is non-originating. However, as described in light-duty vehicle tracing some materials used can be considered originating even though they do to meet any of the four preference criteria or are imported. As a simple rule of thumb, something you sell is a good and something you buy is a material. An international numerical system for classifying goods for customs and statistical purposes. Goods are broken down into broad groupings called Chapters. Each chapter into Headings and Sub-headings. The first six-digit classification includes exactly the same goods in all countries using the Harmonized System. These individual codes are called tariff items in Canada. HTS Tariff Codes in the US and fractions in Mexico Basic Steps In Issuing A Certificate of Origin Identify the HS Code of your good. If you are exporting, use the tariff schedule of the NAFTA country to which you are exporting. Otherwise, use the tariff schedule of the NAFTA country where you are located. If your good does NOT contain ANYTHING IMPORTED from outside Canada, the United States or Mexico by ANYBODY, your good originates under Preference Criterion A - Goods Wholly Obtained or Produced in the territory of one or more of the NAFTA countries. If this applies, you may issue a Certificate of Origin and you do not have to go further. If this does not apply or if YOU ARE NOT SURE, go to the next step. Is each and every material incorporated into your good originating and do you have a Certificate of Origin from each of your suppliers? If YES, your good originates under Preference Criterion C - The good is produced entirely in the territory of one or more of This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 43

51 the NAFTA countries exclusively from originating materials. Under this criterion, one or more of their materials may not fall within the definition of wholly obtained or produced. If this applies, you may issue a Certificate of Origin and you do not have to go further. Issuing a Certificate of Origin carries legal consequences and shall be done with care. If you need additional help and/or information, you can contact the Automotive Industry Action Group (AIAG) at Phone: to request information on Supplier Content Reporting or one of the following NAFTA Help Telephone Numbers: Type of Help Type of Information Available Phone #/Availability AIAG Content Questions concerning AIAG +0 (248) or Reporting Helpline Workbook / Hours of Operation +0 (248) M-F 8:00 a.m. - 5:00 p.m. Eastern Time U.S. Customs NAFTA FACTS Line Recorded menu selections of hard copies Document copies available by fax +0 (972) or +0 (972) hours a day 7 days a week Mexico Customs Spanish speaking only or M-F 10:00a.m. - 4:00 p.m. Eastern Time All All Internet Addresses: Long-term Supplier Declaration KAUTEX requires the Long-term Supplier Declaration for all deliveries from the European Union. With this declaration, KAUTEX has to prove that the products specified in the declaration really do conform to the preference regulations in intrastate trade between the European Union and certain countries. It is the duty of every supplier of goods from the countries belonging to the European Union to submit this declaration without being prompted for it at the time of proposal submission. The sample (see KAUTEX web-site) of the Long-term Supplier Declaration is intended to clarify data that is required for KAUTEX: Please provide the information corresponding to the fields below: Item description Item number KAUTEX Ident-No. Customs tariff number according to the Directory of Goods for Foreign Trade Statistics, latest version Specification of the country of manufacture Countries to which the duty concession applies. Please strike out the countries to which this does not apply. Date of start of applicability Date of end of applicability. Caution: the period of validity is one year maximum. Please always renew the declaration as and when required. Please send the declaration, together with the address, date and the original signature to KAUTEX. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 44

52 8.6.1 Process Monitoring and Operator Instructions In addition to the requirements of QS-9000 section 4.9.1, the supplier shall include or reference the following in the appropriate documentation (e.g. instruction sheets, route sheets, SPC procedures): Sequence of operations Special working environments Work methods Characteristics and tolerances to be met At a minimum, process procedures shall include detailed instructions of process functions that can be clearly understood by the operator. Any engineering change level shall be identified on the procedure. Each process procedure/instruction shall be dated and signed by the issuing person. All process procedures/instructions shall be compiled into a single document particular to that process and/or product (Master set of procedures). Procedures shall be updated to reflect changes in process, equipment and customer requirements. These updates shall be dated, shall indicate the revision level and shall show approval from appropriate KAUTEX and supplier personnel. Suppliers shall develop, implement and maintain policies and procedures for all rework, repair and the use of re-processed material Maintaining Process Control The supplier is responsible to provide annual re-validation as required by KAUTEX Plant Quality, which requires approval by KAUTEX Plant Quality. Statistical process control (SPC) is mandatory for critical and significant characteristics. Unless directed otherwise by KAUTEX, Critical/Safety characteristics shall have a minimum 2.00 Pp and Ppk at PPAP and 1.67 Cp and Cpk in production. Significant characteristics shall have minimum 1.67 Pp and Ppk at PPAP and 1.33 Cp and Cpk in production. If any variation to this value is observed, the Quality Department of KAUTEX s manufacturing plant receiving the material requires an action plan within ten (10) days Process Changes All changes in part number, engineering change level, manufacturing location, material, material source, or process conditions shall be communicated to the KAUTEX locations affected, which will determine if submission is required Process Verification / Audit The supplier shall identify those processes and workmanship standards that have significant differences from proven processes. The supplier shall arrange for their review by personnel other than those who perform the work, including personnel from other applicable functions. This review will serve to ensure the products or services can be produced, inspected and tested to specified requirements. Signatures or stamps shall indicate evidence of such reviews and approvals This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 45

53 8.6.5 Statistical Qualification All jigs, fixtures, tooling masters, templates, patterns, etc., shall be statistically qualified (tool proved) before release to production. Periodically and when changes occur, such items shall be re-qualified to ensure the capability of producing the required results. The extent and frequency of re-qualification shall be defined. 8.7 Monitoring and Measurement of Products Receiving Inspection and Testing The supplier shall identify and segregate non-conforming materials to prevent unauthorized use. When non-conforming products are received, the supplier shall initiate corrective actions with the sub-contractor. The supplier shall insure purchased materials are labeled for use in a first in, first out FIFO manner. The supplier shall clearly identify Certified Material (100% inspection/certification) per specific defect, change and/or part number In-process Inspection and Testing The supplier shall insure that work in process is labeled for use in FIFO" manner. First piece approval and last piece off will be clearly identified and used in the quality system to ensure each batch has been accepted Material Certification Verification and Testing Such testing shall be performed by an accredited test laboratory at a frequency specified in the Control Plan. In the absence of a written agreement this testing shall be performed every year. Test results shall be maintained on file for KAUTEX review Final Inspection and Testing Suppliers shall provide a certificate of analysis or compliance, as required by KAUTEX each time that a specified product or service is delivered. To ensure continuing conformance to all KAUTEX requirements, a complete annual production validation on all products is required at request of KAUTEX. The supplier shall initiate corrective action when data shows non-conformances. Exceptions to these requirements shall have written concurrence from the appropriate KAUTEX Plant SQA representative. Suppliers shall ensure that engineering specifications are correct and acceptance limits are identified in advance. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 46

54 8.8 Service Parts Requirement All suppliers are responsible for the supply of original equipment service parts to KAUTEX. This obligation remains in effect at the production supplier of record for fifteen (15) years after cancellation of the part unless a source change is approved. Service parts are to be produced from production tooling. Regular preventative and predictive maintenance activities are required to maintain production capability. Pricing of service part component orders remain at production levels for a minimum of five (5) years or for the length of time that any claim of obsolete inventory exists, whichever is later. Set-up charges for service parts should be at or below the industry norm and are not to be used to capture the suppliers inefficiencies in producing the component parts. The dealer direct supply items are to be supplied within twenty-four (24) hours of release to the supplier. Depot supply items will be released on the weekly releases according to normal supplier demand communication methods. The plant for all service parts will issue a request for quote. Suppliers will be requested to include pricing while inventory exists as well as after depletion and lead-time information. If no separate provisions are agreed upon, the production price shall apply. 8.9 Obsolescence An offer for compensation will be extended to Automotive Part Suppliers for all material produced to the limit of fabrication and material authorizations extended but not consumed as of the completion of the original equipment assembly build schedule. This guarantee applies only to all discontinued materials. Under build conditions of carry over components will be consumed during the following model year. All claims for obsolescence compensation must be submitted to KAUTEX, within ten (10) days of part discontinuation. Claims must be submitted per format identified by KAUTEX. Contact your KAUTEX buyer for forms and procedure. Claims are defined as one part number supplied to KAUTEX and have a minimum value of USD $ A copy of the release schedule, which establishes your high points and verification build of your final accumulated shipped into KAUTEX must accompany each claim. All claims received after the established due date will be returned and KAUTEX will not accept responsibility for the claimed amount. Ensure disposition of obsolete components after engineering changes are implemented. All claim material will be audited and must be held in storage until a representative verifies its existence and the claim is settled. Claim settlement monies are paid once KAUTEX receives the funds from their customer. Claims for raw and work in process material must include: The usage per part sold to KAUTEX Supporting documentation for the price per unit claimed All costs that would be associated to complete the assembly. All claims should be sent to the plant s Material Manager. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 47

55 8.10 Cost Reduction KAUTEX s annual cost reduction requirements are 6% or more per year incremental. Cost reductions are to be captured and reported in two ways: Economics It is imperative that suppliers achieve internal economic cost reductions and reduce their selling price by a minimum of 3% annually, effective January 1st of each year Value Analysis/Value Engineering or Effective Cost Reduction Programs Suppliers are to submit VA/VE cost reductions relative to any part of their supply that will directly or indirectly reduce their cost or the cost of their supply chain by 3% or more annually. Suppliers of direct production material and components are required to have a system to identify, record and monitor costs on a regular basis for all products manufactured and/or purchased as well as for all services provided and/or purchased. This system shall include, but not be limited to: Manufacturing costs Quality costs Delivery costs Purchasing costs Overhead costs Engineering and design These costs shall be reported using a standard scorecard jointly developed by KAUTEX VA/VE Supply Chain Management and supplier(s). Suppliers must be capable of documenting purchasing, manufacturing and overhead costs as well as markup percentages in KAUTEX s standard format per the RFQ Piece Price Worksheet for components. Implemented cost reduction proposals that are quantified to be in excess of 3% of annual supply may be applicable to future year VA/VE requirements or scored as extra credit in the cost reduction portion of the Supplier Performance Measurement and Recognition section of the Supplier Guidelines Manual. Suppliers may receive (soft) or additional VA/VE credit by incorporating these production opportunities: Payment Terms Weight Reduction Volume Efficiency Freight/FOB changes Complexity Reduction Manpower effect (KAUTEX Plants) This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 48

56 Tier III Cost Reductions In determining quality costs, suppliers must quantify internal and external failure costs. Suppliers should address each of these individually in cost reduction plans. Suppliers must conform their cost reductions programs to KAUTEX s annual targets which are set with reference to the OEMs annual targets. Refer to the Basic Supplier Requirements section for the current target. KAUTEX will work with its supply base to support and drive cost reduction implementation, but it remains the responsibility of suppliers to take the initiative in establishing projects that will generate savings. Suppliers are required to incorporate Continuous Improvement Techniques i.e. Kaizen, Lean Manufacturing techniques, Value Stream and TCM workshops. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 49

57 9 Section - Supplier Performance Measurement 9.1 Supplier Performance Measurement The Overall Supplier Performance Rating The Supplier Performance Calculation is divided into three categories. : Part-quality performance rating Delivery performance rating Assessment rating consisting of: a. Quality certification b. Environmental certification c. Acknowledgement form/supplier manual d. PPAP fulfillments e. Audit results f. Profile form/plant contact form Suppliers acquire scores in each category. The Rating leads to an A-, B- or C-ranking. and is calculated monthly and summarized on supplier scorecards (see 9.5). Theses scorecards will be available on Kautex internet based supplier portal. 9.2 Part Quality Performance (ppm) Rating The part quality performance rating is worth 55% of the overall rating. 9.3 Delivery Performance Rating The delivery performance rating is worth 30%. It consists of a. delivery quantity performance (15%) and b. adherence to delivery rates (15%) 9.4 Assessment and registration rating The assessment and registration rating is worth 15%. It consists of: a) Quality certification Quality certification is mandatory. ISO/TS certification leads to full score, ISO is the minimum requirement. No certification leads to an immediate overall C-rating. b) Environmental certification ISO 140 certification just leads to full score. c) Acknowledgement form/supplier manual Supplier shall obtain full score if Kautex supplier manual has been signed. d) PPAP fulfillment Percentage of PPAPs completed in the individual month will be evaluated. If no PPAP is open or all PPAPs to be submitted are approved supplier shall gain full score. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 50

58 e) Audit results If the supplier is evaluated with a C-rating during a Kautex Audit, he becomes C-supplier automatically unless correction audit has taken place. f) Profile / plant contact form Completed form shall be renewed and submitted unsolicited annually in December and when a significant change occurs. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 51

59 Measurement Table MEASUREMENT TARGET RATING WEIGHT Part quality performance 10 ppm 55% (ppm) Delivery performance 30% Quantity performance = 100% right quantity 15% (Right quantity) adherence to delivery rates = 100% on time 15% Assessment and registration 15% rating Quality Certification acc. To ISO 90 Applicable standard acc. To ISO/TS Environmental certification Applicable standard acc to ISO 140 Acknowledgement form/supplier Signed on yearly basis Manual PPAP fulfillment = 100% on time approval (percent on time PPAP acceptance Audit results Profile / plant contact form = 100% in profile form = all contact persons at supplier s plant KAUTEX may publish new goals for each measurement annually. Feedback will be provided on performance of the specific measurable tracked. Suppliers demonstrating the ability to consistently meet and exceed these goals will be recommended for preferred supplier status. Preferred suppliers will be given preference for long-term, KAUTEX-wide contracts. KAUTEX s policy is to help suppliers reach acceptable performance levels (Targets are listed in Measurement Table listed above). However, KAUTEX may decide to communicate a supplier s continued poor performance to their registrar when the supplier fails to provide corrective action in a timely manner. See section 10.5, Supplier Quality Improvement Process, for more information. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 52

60 9.5 The Supplier Scorecard Monthly supplier performance scorecards will be reviewed by KAUTEX. Scorecards display supplier performance measurements and ratings for each month Supplier is expected to access scorecard information on the KAUTEX supplier portal. 9.6 Supplier Quality Systems Assessment All new suppliers are required to complete a supplier survey successfully before being approved. Suppliers who are registered to the applicable Quality System (refer to KAUTEX - Basic Supplier Standards) or who have been audited by a KAUTEX OEM may, at the discretion of KAUTEX, have the initial survey waived. If an OEM, a customer approved second party or an accredited third party registrar, has audited the suppliers facility within one year of the annual update, KAUTEX SD may forgo the regularly scheduled audits. The Quality System certificate shall be presented to KAUTEX SD and/or KAUTEX manufacturing plants (on request only) on an annual basis in December. Quality registrations that are not updated on time will lead to a C-Ranking. Surveys of current suppliers are conducted at a frequency determined by the SQA department. KAUTEX may not audit suppliers who have successfully completed a third party audit (or an audit from a KAUTEX OEM customer). 9.7 Data Correction Suppliers are requested to review performance data for accuracy. Where discrepancies are found and correction is required, a written request detailing the required data correction shall be sent to the receiving KAUTEX Plant SQA and KAUTEX. Requests for data correction will not be honored if made later than thirty (30) days after receipt of the original data. 9.8 Supplier Development Kautex has built up a Supplier Development Organization (SD) with 3 regional SD Managers (Europe, Asia and North America). The plant SQAs report to the them. They are as well the plant SQS s escalation level as well for the suppliers. Its aim is to improve supplier s quality continuously by making use of tools like: Shingo Assessment, Process Stream Mapping, Drill Deep and Wide workshops. All suppliers are expected to support SD activities making use of Quality Management. tools. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 53

61 10.1 Parts, Services and Material 10 Section Supplier Problem Communication In the event of non-conformance of a supplied part, service or material, KAUTEX will issue a notice and/or report of non-conformance into the Kautex supplier portal irrespective if the problem is discovered at a KAUTEX facility or KAUTEX s customer s facilities or else where. KAUTEX will normally endeavor to request authorization to sort, scrap, rework, repair, or to return such nonconformity parts (at the supplier s expense) prior to undertaking these activities. This authorization number/code will be listed on the notice/report. However, KAUTEX reserves the right to proceed at supplier s expense without prior authorization in order to protect customer build, due to lack of storage space or otherwise. The issuing KAUTEX representative shall make the notice/report available to the supplier on the Kautex supplier portal. The supplier shall comply with the following actions: Inspect all suspect material produced to ensure that no additional products will be shipped with the discrepancies present. This may include inspection of product in route, at the KAUTEX plant or at the customer location Post copies of the notice/report at the appropriate in-plant locations Implement corrective actions to eliminate the discrepancy and avert a recurrence of the error. Supplier may be charged for sort, rework/repair, scrap, freight, customer charges, KAUTEX administrative charges, etc., or all-conformance If sort and/or rework of non-conforming product is required at a KAUTEX or customer facility, the supplier may choose to subcontract the work if the commercial situation permits. In such an event the subcontractor contracted to do the work must be approved by the KAUTEX manufacturing plant, or the KAUTEX Liaison at the customer s plant, prior to the commencement of work. Suppliers are responsible for their performance data. If data needs to be corrected, please contact KAUTEX Plant Quality or Materials department for correction. Correction requests must be made within 30 days of notice/report availability on the supplier portal Delivery The non-conformance of delivery notice/report is used to communicate supplier performance data for delivery issues. This function of the notice/report is used daily in the shipping area as inspections are performed. A non-conformance of delivery can be updated to reflect each shipment/receipt of a release. Suppliers are responsible for their performance data. If data needs to be corrected, please contact KAUTEX Plant Quality or Materials department for the correction. Correction requests must be made within 30 days of notice/report availability on the supplier portal Corrective Action Corrective Actions are to be reported in Kautex supplier portal. The supplier shall complete the Corrective Action as follows: Develop immediate fix for the production operation: record short-term corrective and containment actions such as sorting, re-working, reprocessing, temporary countermeasures, etc. (To be reported on the supplier portal within 48 hours). This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 54

62 Establish root cause: In-depth analysis of the reported problem shall be conducted to determine the true underlying cause(s) and/or reason for the discrepancy. Irreversible corrective action: long term action taken to ensure that the problem will not recur. Methods that may be used are mistake proofing systems; training; process changes, or tool changes. Verification: objective evidence that the problem has been solved, including statistical capability studies where applicable. Supplier s representative who feeds the supplier portal is authorized to attest all statements given. A complete corrective action report is due in the supplier portal within 10 days of notice. If the report cannot be completed in 10 days, the supplier shall submit the incomplete report and include a timing plan for the submission of the completed report. Note: Incomplete reports will be accepted only when the duration of necessary testing and/or inspections exceeds the 10 days. When requested, the supplier shall provide on-site support personnel at KAUTEX and/or its customers facilities Supplier Quality Improvement Process Suppliers are required to develop a plan for continual improvement that defines improvement goals. Implementation dates and responsible personnel. All references to pertinent quality systems are to be taken into account Standard Supplier Charge-back Guidelines Errors in workmanship or discrepancies in delivery may result in a charge-back to the supplier. The actual charge to the supplier is determined by the costs incurred by KAUTEX resulting from the discrepancy. Charge-backs are typically transacted as a debit against open invoices. The following is a summary of the charges typically accessed: A $/ administration, cost recovery charge may be issued in the event of the following receiving discrepancies: Packing slip discrepancies or no packing slip submitted with the shipment AIAG bar code label errors or no bar code label affixed to shipping container(s) Incorrectly labeled containers label vs. actual container content Incorrect or no ASN Material shipped in a matter other than FIFO Date of delivery different from release/order Quantity of delivery different from release/order More deliveries than requested (to high delivery frequency) A $/ administration, cost recovery charge may be issued in the event of all notifications issued for non-conforming purchased product(s). Administration fee will be doubled for any reoccurrence of a quality issue previously addressed. Additional charges may be accessed based on actual cost incurred on behalf of the supplied product. A $/ administration cost recovery charge may be issued in the failure of initial response (within 48 hours) to a non-conformance in product or a non-conformance to delivery. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 55

63 A $/ charge for all incomplete, incorrect, late or otherwise discrepant PPAP submissions. In addition to the $/ and the $/ administrative charges, the charges listed below may also apply. Any and all KAUTEX customer charges incurred as a result of our suppliers nonconforming product or delivery. Controlled Shipping status for 3 rd party inspection services. Up to $/ per man-hour charge on behalf of KAUTEX for any time KAUTEX spent on suppliers issues. Any and all line stoppages based on man-hour idle time and recovery cost. (Charges will be determined through our KAUTEX Accounting Department). Debits for charges incurred will be made in the currency specified on the KAUTEX Purchase Order and shall equal the above amounts in EURs or USD (American Dollars). Any discussions regarding supplier charge backs (discrepancy charges) shall be done within 30 days of issuance otherwise KAUTEX s plants will not review Controlled Shipping In case of supply disruptions due to quality defects received at Kautex or the end customer, Controlled Shipping can be instituted with your to contain the supply disruptions. Controlled Shipping is a short-term stepped process to eliminate supply disruptions Step 1 CS1 [Controlled Shipping Level 1] CS1 is instituted for any defect supplied to Kautex that causes supply disruption. Implement CS1 containment at your facility. CS1 is defined as additional offline 100% certification for the defect(s) identified by Kautex. Implement and pay the costs of Kautex defined containment activities over and above your current process controls and containment activities. The Kautex-defined Controlled Shipping-Level 1 Process activities are in addition to any existing controls and containment activities. The supplier must setup and define containment process within 24 hours. Return the attached Controlled Shipping-Level 1 Confirmation Reply within 24 hours of the receipt of this letter. Track sorting quantity and results on an I chart for agreed to amount of certified product per part number. The counting of agreed upon certified product to be released from CS1 will start once irreversible corrective action is implemented. Provide separate I-charts for suspect product at the customer, in transit and at your facility. Clearly identify the qualified shipments to indicate that the authorized Controlled Shipping Provider has completed the containment process. Provide work instructions identifying what is to be checked and the method/identification for releasing product with 24hours. This must include definition of good and bad samples; traceability of sorted product and good/bad product is identified and contained. Kautex requires that your Irreversible Corrective Action plan(s) for CS1 issues be submitted to Kautex through the Corrective Action Process. 5 Why, 8-d, 7-Step or 5-Phase is accepted as a Corrective Action Plan. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 56

64 Step 2 CS2 [Controlled Shipping Level 2] CS2 is instituted for any defect supplied to Kautex that violates CS1 containment actions or is during 90days of production launch or 90 days after an implemented irreversible corrective action. Implement CS2 containment and pay the costs of the approved third-party CS2 Containment and Assessment Provider. CS2 is defined as additional offline 100% certification for the defect(s) identified by Kautex. Kautex defined Controlled Shipping-Level 2 Process activities are in addition to any existing controls and containment activities. The list of Kautex-approved containment and assessment providers is attached. Deviation from this list must be approved by Kautex. Controlled Shipping-Level 1 containment must remain in effect. If Controlled Shipping-Level 1 is not in place, consider this CS2 Entry letter as formal notification to immediately implement CS1 for the specified defect(s) in accordance with Kautex CS1 procedures. Pay the costs of the KAUTEX-approved CS2 Provider assessments, plus any additional prevention activities as required and follow up activities associated with any defect action items. Follow up activities will continue and will be monitored until supplier compliance to CS2 is validated. Implement and pay the costs of Kautex defined containment activities over and above your current process controls and containment activities. The supplier must enter into a contract with a Kautexapproved CS2 Provider within 24 hours. The CS2 Provider must establish the CS2 containment and conduct a CS2 Kickoff Meeting within 24 hours of receiving a Purchase Order. The first assessment shall be initiated within 3 business days and submitted to KAUTEX within 5 business days after receiving the Purchase Order. Follow up assessments shall be conducted on the 15th working day, and every 30 working days thereafter, until a passing assessment is achieved. The required documentation includes the CS2 Assessment, I-Chart, Corrective Action Plan and 5Y Analysis USING THE DRILL DEEP AND WIDE WORKSHEET. Return the attached Controlled Shipping Confirmation Reply within 24 hours of the receipt of this letter. Clearly identify the qualified shipments to indicate that the authorized Controlled Shipping Provider has completed the containment process. Kautex requires that your Irreversible Corrective Action plans for CS2 issues be submitted to Kautex and CS2 Provider representatives for review. Submit your Irreversible Corrective Action plans to your QS 9000/TS16949 registrar for review and/or assessment. Please authorize your registrar to submit the review and/or assessment findings to Kautex. Step 3 CS3 [Controlled Shipping Level 3] CS3 can be instituted for any defect supplied to Kautex that violates CS2 containment actions. The CS3 actions are the same as CS2, but requires further discussions with your to ensure quality of components supplied. CS3 is typically instituted when supply disruptions are out of control. All CS3 costs are incurred by the supplier. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 57

65 11 Section - Tooling and Equipment 11.1 Scope of ity This Section provides general information for the suppliers of tooling and equipment. For each project the supplier must request Kautex Specifications ( KSpec )and Specific Statement of Work ( SSOW ) and customer requirements. These pages and specifications describe the basic guidelines for machines, devices, machinery, tooling and installations, as well as the equipment of machines for finishing under special consideration of the manufacturing of Kautex Products. In addition to these specifications, part and product requirements, as well as possible specific site requirements, will be defined by the customer in Special Specifications. When in doubt, the supplier shall consult Kautex Suppliers Responsibility The suppliers are responsible for the correct functioning of the delivered machine and/or device, as well as for the compliance of the following documents, valid at the date of the contract:: EC Machine Guidelines Relevant legal requirements such as the German Law on Technical Work Equipment (Equipment Safety Law) Accident prevention provisions in force Generally accepted technical rules, such as: - VDE Provisions - VDI Guidelines - DIN Standards The suppliers are furthermore responsible for achieving minimum evaluation of the respectively relevant check list for Mistake / Error Proofing (see 11.2). Machining: Check list Manufacture Welding: Check list Continuous Processes Apart from general project management, the machine manufacturer assigned with construction, delivery and start-up is in particular responsible for realization of development and time & cost control. In case of extension and/or modification of existing equipment, the supplier will be responsible for total functioning. This applies in particular to software modifications and related optimization tasks. The suppliers are responsible for gathering of expert opinions, prototype tests and other certificates and will also bear the costs for these procedures Mistake / Error Proofing (MEP) For each project the required Mistake Proofing Documents have to be provided by the supplier. Definition of the process goals will be made by the responsible project planner at KAUTEX in coordination with representatives of the production plant and the supplier. Mistake /Error proofing must be part of the suppliers proposal form the very beginning. Contracts will only be assigned, if suppliers proof achieving the required degree of compliance This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 58

66 A second evaluation shall be completed prior to design acceptance. This allows for incorporating any modification needed in the design prior to manufacturing. Pre-acceptance is a necessary condition for delivery approval. This acceptance will be carried out at the supplier s plant. Devices shall not be delivered to the production plants, if they do not comply 100 % with the MEP requirements KAUTEX reserve the right to revise or amend the evaluation process and update the results at any time. When manufacturing identical products at different sites, uniform processes shall be used Deviations Deviations from these specifications and any questions must be clarified with KAUTEX in writing. In case of deviations from the specifications technical justifications must be indicated. Deviations are only valid in connection with the order and must be documented in writing. Additional deviations which are detected during acceptance and whose compliance would have been possible must be corrected at supplier s cost Specifications For each project KAUTEX will provide a Specific Statement of Work in addition to the Kautex Specification for tooling and equipment Work Safety/ Machinery Safety Please refer to the General Specification Vers. : HS Layout of Tooling and Equipment, General Indications Tooling and Equipment is described in the specifications and has to be developed in accordance with the KAUTEX s requirements, described in the general specifications of CPCP Marking of Operating Equipment All operating equipment must be provided with a nameplate. The following indications must be given on the nameplate clearly readable in the production mounted position, legible and in a durable fashion: Manufacturer, supplier, or importer Type, model year or manufacturer s part number KAUTEX Identification number Characteristics which are indispensable for safe operation, for example: Admissible pressure Admissible RPM Weight External dimensions Bearing capacity, also for transport aids This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 59

67 Electrical connection data the nameplate provided by KAUTEX must be used (see below). Nameplates or typefaces of the equipment manufacturer are not admissible. The nameplate must be affixed to the base frame (operator side). This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 60

68 11.8 Pre-Acceptance, Startup and Production Acceptance KAUTEX shall write purchase orders to include DDP KAUTEX plant floor. If not otherwise agreed, startup at KAUTEX facility is part of the supply contract. Ownership takes place at the conclusion of successful PPAP approval process Pre-Acceptance at the Supplier s Plant Prior to delivery of the equipment a pre-acceptance will be performed in the manufacturer s plant. The date will be coordinated between supplier and Kautex in a timely fashion. Based on a trial run during pre-acceptance it will be determined by the customer s representative if the device may be delivered Criteria for this decision are the following: Integrity of the device or machine Safety Functionality Machine capacity Markings (nameplate, CE symbol etc.) Pre-acceptance will be documented in a record signed by all participants. In case of failure of the preacceptance, a new date in the near future will be agreed upon. The costs, such as additional trip expenses for KAUTEX employees, will be charged to the supplier Assembly and Start-up in the Production Plant If not otherwise agreed upon, the supplier will bear the costs for packing, freight and installation of the equipment in the customer s production plant. Coordination of dates for startup is between the customer and the responsible persons of the production plant. Startup concludes with the proof of machine capacity, verified by Quality Assurance personnel of the production plant and introduction of operating personnel Trial Run The successful startup is followed by a trial run. If KAUTEX s operating personnel cause damage to the device, KAUTEX will bear the respective costs. If KAUTEX can show evidence that the operating personnel have acted in accordance with the published and explained operating instructions, the vendor shall bear responsibility. Neither risk transfer, acceptance, nor the beginning of warranty time is connected to the start of the trial run or any events during the trial run Production Acceptance This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 61

69 As soon as stationary operating conditions exist, but at the latest 6 months after startup, insofar as the supplier cannot be charged with the delay, the process capacity of the delivered equipment must be evidenced by acceptance. Acceptance criteria: For all critical and significant process and production characteristics a continuous process capacity of cpk > 1.33 over an uninterrupted production period of 24 hours = 3 shifts must be established. Proof must be given according to the generally accepted rules for statistical methods. All requirements of the General and Special Specifications must be fulfilled. The acceptance date will be established by common agreement. The supplier will propose appropriate dates for this purpose. Measuring instruments necessary for proof of capacity, as well as their assembly and disassembly, are part of the supplier s delivery volume. Supplier and KAUTEX will each bear the corresponding personnel costs for acceptance. When the supplier can prove that the stipulated performance and warranty data can be achieved, acceptance will be confirmed in an acceptance record Repetition of Acceptance Test If the acceptance test shows that the device has not been built according to contract, the supplier must ask for a repetition of the acceptance date within 3 months. All costs caused by this repetition will be charged to the supplier Failed Acceptance If a repetition trial of acceptance is required and the contractual services are not fulfilled again, especially if the promised and guaranteed performance data are not demonstrated, the contract will be deemed unfulfilled. In this case the customer may grant an additional period of time, giving the supplier the opportunity for repairs, or else the customer hires a third and independent contractor (a different firm) to carry out these repairs. The corresponding costs are charged to the supplier Acceptance with Reservations If defects are detected which do not affect the function of the device, acceptance may be performed with the reservation of immediate elimination of these defects. An adequate amount of the remaining payments will be withheld until the defects have been eliminated. Otherwise it lies within KAUTEX s discretion to take the results of the trial run into account for the acceptance Permission as Part of the Acceptance If the device or equipment may only be operated with the permission of technical inspection services, industrial inspection boards, professional associations etc., then this permission is a part of the acceptance that has to be fulfilled. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 62

70 If this permission is not given or if it is delayed, the supplier will bear all costs derived from this Documentation Documentation must be prepared in the KAUTEX s plant country s language, if not specified other. Each electronic operating unit needing explanations (instrument, functional group, construction component) must be described in data sheets or in the Service Manual. All necessary information, such as for instance type denomination, equipment and function description, switching symbols, connection layout, parameterization, input values, output values, transfer ratio and dissipation must be included Installation / Setup Layouts Installation layouts / setup layouts must be coordinated with the customer regarding cable and line conduit, their laying and other local conditions Maintenance Instructions Maintenance instructions shall contain the following: Schedule for preventive maintenance Instructions for maintenance work, including indications for the acquisition of spare parts Instructions for adjustments Recommendations indicating intervals or quantity, according to which certain wear parts should be replaced. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 63

71 List of Wear and Spare Parts This list must contain parts whose storage is normally recommended. Wear and spare parts, which the supplier buys as acquisition parts must be listed here with ordering data as well as the manufacturer s name and address. Names and addresses may also be listed separately. Delivery times of wear and spare parts must also be listed. For wear and spare parts that are manufactured parts or modified acquisition parts, dimensional drawings must be provided with all indications necessary for manufacture Setup Values For control technology equipment, e.g. drives and temperature control devices; the determined basic adjustment values must be listed on the startup checklist. All important parameters for systems engineering as well as the limit values for their monitoring must be documented. Records must be delivered together with the equipment Warranty Duration The warranty required of Tooling and Equipment Suppliers is contained in Section 2.8. The duration of such warranty shall be 24 months unless KAUTEX and the Supplier negotiate a longer period Maintenance / Service Together with the documentation, the customer will receive maintenance instructions, which contain the daily, weekly, monthly, quarterly and annual maintenance intervals. During the warranty period, the supplier is responsible for the performance of these jobs. Supplier personnel must be present during start-up and first production. Assistance and service during the first 2 years should be made available. A contact person for the customer must be named Confidentiality The supplier commits himself to keep in strict confidence all documents, drawings, procedures, technical know-how and experiences, as well as other facts he will come to know by way of cooperation in the framework of contracts and to use them exclusively for the purposes of the contracts. The supplier must commit his employees, even for the time after their separation, in the framework of all legal provisions to the same confidentiality. The supplier ensures to impose this obligation on all external persons and companies that advise or support him in the fulfillment of customer contracts. In case of violation of the above-mentioned provisions, KAUTEX has the right to enforce, in deviation from other contractual regulations, all claims of indemnity derived from this infringement in unlimited form. This confidentiality obligation is also valid in case a business relationship is not accomplished or is not achieved in the intended extent. It is valid in unrestricted and unlimited form even after the conclusion of the business relation. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 64

72 The following definitions apply: 12 Section Glossary and Acronyms AETC (Authorized Excess Transportation Change Number): A number assigned by KAUTEX to assign responsibility for premium shipping charges when a shipment deviates from the National Routing Instructions. AIAG (Automotive Industry Action Group): Organization of component suppliers and automotive manufactures, which looks at ways to standardize processes/procedures between the groups. ASN (Advanced Shipping Notice): An EDI transaction (856) that contains various information regarding the shipment of parts/materials. APQP (Advanced Product Quality Planning): A quality tool for project planning and control Bar Code: A series of alternating bars and spaces printed or stamped on parts, containers, labels, or other media, representing encoded information that can be read by electronic readers. A barcode is used to facilitate timely and accurate input of data to a computer system. Bar Coding: A method of encoding data using bar code for fast and accurate readability. Batch (volume or lot): An identifiable collection of products, or quantity of material, of a single type, grade, class, size or composition produced in the same facility under continuous controlled conditions for a period not to exceed 8 continuous hours. BOL (Bill of Lading): A document, which indicates content of shipment and ownership of material. Balance Out: This term is applied to the termination of the use of a part, or the production of vehicles (primarily at the end of a model year). Behind Schedule: A quantity of material, which has not been shipped by the supplier in accordance with the specified timing as authorized by the current or prior Material Releases. Blanket Order: A purchase order issued for a period of time (Example: one year with an automatic one year extension) allowing periodic releases of the item(s) specified. The purchase order does not designate the number of Parts to be released, but rather the percent of business the supplier is entitled to supply. BOM (Bill Of Material): A itemized list of components/material that create a finished good. Calibration: Comparing two instruments, measuring devices or standards, one of which is of known accuracy. To detect, correlate, report or eliminate by adjustment any variation in accuracy of the instrument or measuring device of unknown accuracy. Campaign: To schedule production of compatible chemicals in a manner so that vessel cleaning is not required and residual chemicals in the vessel do not affect performance of the chemical being produced. Carry-over: Any material that is currently being used and that is planned to be used for the next model year also, a period of downtime between model years production required to make necessary facility and tooling changes as well as material relocations to facilitate the new model program. Change-over: A period of downtime between model years of production required to make necessary facility and tooling changes as well as material relocations to facilitate the new model program. Characteristic: Any distinct property or attribute of a product, process or service that can be described or measured to determine conformance and non-conformance to specified requirements. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 65

73 C1 Pilots: C1 Pilot Vehicles are complete running vehicles built by manufacturing at the assembly plants (when feasible) to verify Customer and supplier production tooling, equipment and processes and to confirm successful resolution of any CN s written to correct problems found in the PO Pilot Build or testing. Parts used will have completed Process Sign-Off and have received PPAP approvals. Claim Material: Unsold fabricated and/or raw materials authorized by KAUTEX Operations that remain unshipped at the Suppliers location. CN (Change Notice): System used to control the activity of processing changes to parts. Common Item Pack: A pack, which contains all like items, i.e., same part/item numbers. CUM (Cumulative quantity) Cumulative Discrepancy: Difference in the Suppliers submitted cum and KAUTEX calculated cum. Delivery Schedule: The required or agreed time or rate of delivery of good or services purchased for a future period. DELFOR: The DELFOR message corresponds to the ASC X Planning Schedule with Release Capability Transaction Set. It is related to the scheduling and delivery functions of the manufacturing enterprise. DESADV: EDIFACT standard Message name for a Dispatch Advice and corresponds to the ASC X Advance Ship Notice. This document is transmitted by the shipper and it allows the recipient to know when the material has been dispatched or will be ready for dispatch. It would also include precise details of the consignment that will assist in the process of receiving and invoicing. Dispose: An engineering change stock disposition; when a part is unfit for use and rework is impossible or not Desired. ) Note: Suppliers shall contact their KAUTEX Operations Obsolescence coordinator for specific disposal instructions). Disposition: An action to determine how a non-conformance is to be resolved. Diversity Supplier: Diversity Supplier is used to refer to diversity owned business. A diversity-owned business is a company that is at least fifty-one percent owned, managed and controlled by one or more diversity persons. For the purposes of this definition, a diversity person is a Black American, Hispanic American, Native American or Asian American. The term Native American includes American Indians, American Eskimos, American Aleuts and Native Hawaiians. The term Asian Pacific American includes United States citizens whose origins are from Japan, China, the Philippines, Vietnam, Korea, Samoa, Guam, the U.S. Trust territories of the Pacific, Northern Marianas, Laos, Cambodia and Taiwan. The term Asian Indian American includes United States citizens whose origins are in India, Pakistan and Bangladesh. DM (Damaged Material): Material received from the supplier, damaged due to packaging problems, in transit damage, or being shipped from the supplier already damaged. DMN (Defective Material Notice): A report identifying product s non-fulfillment of a specified requirement and the documentation required managing the correction and containment of product. DPR (Delivery Performance Notice): A report identifying delivery/shipping non-fulfillment of a specified requirement and the documentation required managing the correction and containment of product. DVP&R (Design Verification, Plan & Report): Documents testing activities during each phase of the product development process, including: Engineering Development (ED) testing, Design Verification (DV) testing, Production ation (PV) testing and Continuing Conformance (CC) testing. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 66

74 ECL (Engineering Change Level): A revision to a blueprint or design released by engineering to modify or correct a part. ECN (Engineering Change Notice): System used to control the activity of processing changes to parts. EDI (Electronic Data Interchange): Method of communicating information by using computers to transmit coded data. EDIFACT: Electronic Data Interchange for Administration, Commerce and Transport. These EDI standards published by the United Nations are widely used for the exchange of business documents internationally. End Item: Any part or assembly purchased and shipped to Assembly Plants for production use. Error: An error is a condition or state that is wrong or omitted from what we intended to do. The product design has allowed for a condition to exist that may prohibit successful processing. Error-Proofing: Error-Proofing is the use of techniques during the design phase of a product to ensure the product will function as intended for the useful life of the product and that the product can only be assembled or manufactured per design intent with the least risk for an error to occur during processing. Evaluation: An appraisal to determine if production processes and quality assurance programs are capable of producing a quality product or providing a quality service and generating evidence that supports decisions of acceptance. Excess Material: The material, at any given point in time, which by the use of agreed upon parameters and is over the normal inventory requirements at any specific location. Expendable Containers: All shipping devices such as drums, skids, pallets, reels, boxes, racks, bags, etc., not requested to be returned. FI Vehicles: F1 Program Vehicles are built to provide verification that the production design intent and manufacturing process intent for components, systems and vehicle meet objectives with acceptable risk. Production Design intent means that all components have successfully completed design verification testing. F.O.B. (Free On Board): The abbreviation implies loading on a conveyance at the designated point. After these letters, it is usually designated where title and control of the good pass to the buyer. GEIS (General Electric Information Services): GEIS is an example of a VAN. Currently, the preferred VAN for Kautex in communicating with suppliers is via GEIS. Inspection: The examination, measurement and testing of characteristics of processes, products or services to determine acceptability and the recording of resulting data. Initial Sample: A single quantity of parts or material made from production tooling, equipment and set-up submitted for Quality approval prior to production shipment of the parts or material by the supplier. Item: A single part or material purchased, manufactured and/or distributed. JIT (Just in Time): A philosophy of manufacturing based on planned elimination of all waste and continuous improvement of productivity. The primary elements of Just-In-Time are to have only the required inventory when needed; to improve quality to zero defects; to reduce lead times by reducing setup times, queue lengths and lot sizes; to incrementally revise the operations themselves. Job #1: Refers to the first vehicle built at each of the assembly plants at the start of a new model year. The term is also used for the first vehicle built to incorporate added models and options introduced during the model year. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 67

75 Kaizen: The Japanese term for improvement. Continues improvement involving both, managers and workers. In manufacturing, kaizen relates to finding and eliminating waste in machinery, labor or production methods Label: A card, strip of paper, etc. marked and attached to an object to convey information. LTL (Less Than Truckload): A description for shipping, defining a partially filled trailer. Machine/Tool Potential Study: A preliminary assessment of the ability of a machine and its tooling (only) to produce parts to specifications consistently. Manufacturing Lead-Time: Defined as the elapsed time from receiving a material requirement to having the specified material and quantity available for shipment. Master Label: A label used to identify and summarize the contents of a multiple pack of common items. Mistake: A mistake is a product manufactured or assembled outside defined process requirements. Mistake-Proofing: Mistake-Proofing is the use of 100% effective techniques, methods and devices that prevents mistakes (primary) or detects mistakes (secondary) at the source or as near to the source as feasible and prevents the movement of products with mistakes to the next steps in the process. Mix Change: A change in daily rates for body types at a plant Mixed Load Label: A label used to designate mixed item-shipping packs. MRO: Maintenance Repair and Operations Multiple Pack: A pack containing smaller packages (sub-packs) or items Non-Conformance: A deficiency in characteristic, documentation or procedure, which renders the quality of a product or service unacceptable or indeterminate. Examples of non-conformances are: physical defects, test failures, inadequate documentation and deviations from prescribed processing or from any other part of the program. No Carry Over: Term describing any part that is currently being used but is not planned to be used for the next model year. Normal Carrier: A carrier designed or approved by KAUTEX receiving facility to be used for all regularly scheduled shipments under that transportation mode. Normal Mode: Method of transportation designated by KAUTEX receiving facility to be used for all regularly scheduled shipments under that transportation mode. P0 Vehicles: P0 Pilot Vehicles are complete running vehicles built to plant scroll with parts provided from hard tooling. Pilot vehicles are used to confirm production design, validate parts, prove-out components and assembly processes and provide earlier identification and resolution or production functions and fit issues prior to C1 Pilot Build. Pack or Load: A unit that provides protection and containment of items plus ease of handling by manual or mechanical means. Examples of containers or packs that normally are disposable include bags, units that provide protection and containment of items plus ease of handling by manual or mechanical means. Examples of containers or packs that normally are disposable include bags, cartons and cartons on pallets and pallet boxes. Examples of containers or packs, which are returnable/reusable, include bins (with mesh or solid sides and ends), racks (plain or with special dunnage). Past Due: The portion of the schedule that the supplier failed to ship on time to meet plant requirements. PPAP: Production Part Approval Process This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 68

76 Pilot: A program that is intended to build saleable vehicles on line to validate assembly tooling, assembly processes, training, process documentation, material systems and information systems with sampleapproved parts. PMR: Program Management Roadmap Premium Disputes: Disagreement between the supplier and KAUTEX over which party is responsible for the excess transportation costs involved in a premium shipment. Procedure: A document that specifies, as applicable, the purpose and scope of an activity, what shall be done and by whom, when, where and how it shall be done, what materials, equipment and documentation shall be used and how it shall be controlled. Product Development Team (PDT): A cross-functional team charged with bringing a new program from award of business to volume production. PSO (Process Sign Off) PVP (Pre-Volume Production Vehicles): Begins the build of complete sellable production vehicles. PVP vehicles are built in the designated Assembly Plant to verify the production process and plant readiness and ensure that satisfactory progress has been made to meet all customer requirements and objectives. In some Assembly Plants, the build of PVP vehicles is not distinguished differently from Launch (V1). RDR (Receiving Discrepancy Report): Document used to report back to supplier that material received did not match packing slip either in terms of part number or quantity received. Shipping/Parts Identification Label: A label used to identify the contents of a shipping pack. SNCR (Supplier Non-conformance Report): A product s non-fulfillment of a specified requirement(s) and the documentation required managing the correction and containment of product. SPC (Statistical Process Control): A group of analytical tools and methods that can be used to understand, improve, predict and control process behavior. SPC is the quality tool that most directly addresses the study and control or process variation. Standard Pack: The smallest full container with a constant quantity and size in which parts are packed for shipment. STO (System Tryout Vehicles): Are the framing of the first pilot body-in-white (BIW) of a new model built with parts approved off production tooling. Surveillance: The continuing evaluation, analysis and verification of a supplier s records, methods, procedures, products and services to assure that requirements are met. Tag: A label that is hung from an object. Termination Claim: Procedure in which Suppliers with claim material request reimbursement for cost of claimed material. Unit Loads: The number of pieces in the primary container multiplied by the number of primary containers in/on the secondary container. VA/VE (Value Analysis/Value Engineering) VAN (Value Added Network): An EDI service provider offering a communication link between companies to enable the exchange of electronic documents. These providers offer additional services such as message validation and document traffic reports. V1 Vehicles: Launch is the start of volume/mass production and assembly of vehicles. V1 shall result in quality vehicles. V1 shall result in quality vehicles that meet all customer requirements and objectives. All regulatory requirements and approvals shall have been obtained. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 69

77 Verification: Independently reviewing, inspecting, examining, measuring, testing, checking, witnessing, monitoring or otherwise establishing and documenting that products, processes, services and documents conform to specified requirements. Weights: Gross Weight: Net Weight: Tare Weight: Total weight of parts and tare weight (net + tare). Weight of parts only Includes the weight of primary and secondary containers, dunnage, bandage and plastic and excludes weight of parts (gross net). Window: A determined pickup and/or delivery time period during which shipment shall be released from the supplier or arrive at the receiving location. This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 70

78 13 Section - History Section Rev # Effective Date All Initial release /28/02 All First revision This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 71

79 14 Section - Applicable Documents 14.1 General in their latest revision TS ISO 90 ISO 140 AIAG QS-9000, 3rd Edition QSA, 2nd Edition APQP & Control Plan, 1st Edition PPAP, 4 th Edition FMEA, 2nd Edition MSA, 2nd Edition Fundamental SPC, 1st Edition VDA VDA 1 Nachweisführung (Verification) VDA 2 Sicherung der Qualität von Lieferungen (Shipment Quality Assurance) VDA 3 Zuverlässigkeitssicherung bei Automobilherstellern und Lieferanten (Automotive Manufacturer and Supplier Dependability Assurance) VDA 4, Teil 1 Sicherung der Qualität vor Serieneinsatz Partnerschaftliche Zusammenarbeit, Abläufe, Methoden (Quality Assurance Prior to Series Implementation, Partnership Cooperation, Processes, Methods) VDA 4, Teil 2 Sicherung der Qualität vor Serieneinsatz, System FMEA (Quality Assurance Prior to Series Implementation, System FMEA) VDA 4, Teil 3 Sicherung der Qualität vor Serieneinsatz, Projektplanung (Quality Assurance Prior to Series Implementation, Project Planning) VDA 6 Grundlagen für Qualitätsaudits, Auditierung und Zertifizierung (Quality Auditing, Auditing and Certification Basics) VDA 6, Teil 1 QM-Systemaudit (QM System Audit) VDA 6, Teil 2 QM-Systemaudit, Dienstleistungen (QM System Audit, Services) VDA 6, Teil 3 Prozeßaudit (Process Audit) VDA 6, Teil 4 QM-Systemaudit, Maschinen und Einrichtungen (QM System Audit, Machines and Devices) VDA 6, Teil 5 Produktaudit (Product Audit) VDA 6, Teil 6 Produktaudit, Dienstleistungen (Product Audit, Services) VDA 7 Grundlagen zum Austausch von Qualitätsdaten (Quality Data Exchange Basics) VDA 9 Emissionen und Verbrauch (Emissions and Consumption) Other requirements, such as ANFIA or FIEV and French Automotive Manufacturers may apply 14.2 KAUTEX specific: KAUTEX Non disclosure agreement Business Conduct Guideline KT-Terms and Conditions KT-Spec Generation and Exchange of CAD Data KT-Spec Packaging Guidelines This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 72

80 KT-Spec Transport Guideline KT-Spec Identification of Tools KT-Production Process Approval Checklist (PPA) General Specification for Machinery Safety Version KT North America KNA Terms and Conditions (Supplier Profile) refer to KAUTEX web-site Supplier Plant Contact Form refer to KAUTEX web-site This hard copy is not a controlled document. Contact KAUTEX for latest version or access KAUTEX web-site. Page 73