Supplier Management Agreement September 2009

Transcription

1 Supplier Management Agreement September 2009 Page 1 of 33

2 Introduction 1. Edition - Nov Edition, revised version - May Edition, revised version - March Edition, revised version September 2009 Issuer: SHW Automotive Ltd Hydraulic Pump Operational Division 11 Enzisholzweg Bad Schussenried Page 2 of 33

3 Introduction Introduction The SHW Supplier Management Agreement comprises agreements with suppliers, to ensure the smooth execution of processes between SHW and its supply partners. It is also subject to standard requirements of ISO/TS 16949, VDA, DIN EN ISO 9001 and DIN EN ISO as amended. The current, German version is valid. By signing the purchase agreement, the supplier confirms that they have taken complete notice of the requirements as described in the supplier management agreement and recognise this as the legal basis for collaboration between the parties. Future collaboration between SHW and suppliers must increasingly lead to more consistent prevention of causes of design and process-technical defects in the early stages of the product development phase. In this context, it is especially necessary to invest in common precautionary quality planning activities. The Swabia iron works factory Automotive Ltd., operational division of hydraulic pumps, expect continuous and consistent implementation of all procedures and methods described in the supply chain management agreement from their suppliers, in addition to complete fulfilment of all defined requirements. Bad Schussenried, September 2009 Page 3 of 33

4 Content 1. General Requirements 1.1 Prerequisite 1.2 Requirements 1.3. Contract review 1.4 Order Acceptance 1.5 Data Exchange 1.6 Documentation 1.7 Criteria for Receipt of Goods 1.8 Complaints 1.9 Reworking and Sorting procedures 1.10 Missed Deadline 1.11 Supply of Spare Parts 1.12 Confidential Agreement 2. Supplier Qualification 2.1 System Requirements 2.2 Supplier Evaluation 3. Quality Planning 3.1 Failure Mode and Effects Analysis 3.2 Test Planning 3.3 Process Flow Chart 3.4 Process Requirements 3.5 Technical Cleanliness 3.6 Packaging Planning 3.7 Contingency Management 3.8 Environmental Protection/ Hazardous Substances/ Recycling/ Ecology 3.9 Audit Page 4 of 33

5 Content 4. Initial Sampling 4.1 Specimen Documentation 4.2 Specimen Evaluation 4.3 Specimen Dispatch Day Market for the Product 4.5 Specification of Material Composites 5 Series Production 5.1 Securing Production and Delivery Capacity 5.2 Material List, Labelling and Traceability 5.3 Non-compliant Products 5.4 Deviation Request 5.5 Items purchased from Sub-contractor 5.6 Product-related Failure Costs 5.7 Liability 6. Resources 6.1 Title 6.2 Labelling 6.3 Securing Title 6.4 Usage of Ownership by Suppliers 6.5 Maintenance 6.6 Liability 6.7 Delivery of Tools 6.8 Final Clause 7 Severability Clauses 8 Other applicable Documents Page 5 of 33

6 General Requirements 1. General Requirements 1.1 Prerequisite The supplier is full responsible vis-à-vis SHW for the quality for the product and/or service delivered. The supplier shall ensure that each individual product delivered corresponds to agreed requirements in all criteria, comprises sustainable materials, is manufactured in an environmentally sound manner and can be recycled at the end of its serviceable life. In this context, there are particular requirements of the product, statutory and official regulations to be considered. These must be able to be proven at any time by SHW. 1.2 Requirements The supplier shall ensure that only appropriate, qualified staff be generally delegated with the manufacture of SHW products and/ or with SHW proceedings. Prerequisite to a faithful collaboration between SHW and their suppliers is the mutual appointment of quality and environmental officers. The quality manager appointed shall be familiar with all drawings, specifications, regulations, etc. valid for SHW suppliers. Furthermore, he shall be are responsible for the development and implementation of Quality and Environmental Enhancement programmes. Page 6 of 33

7 General Requirements SHW officers shall be allowed to inspect all technical documentation relating to SHW products. The supplier shall ensure that their subcontractors are of a high quality and can continually provide and improve required quality and environmental performance. Additional requirements of VDA Volume 6.4 apply to suppliers of devices, tools and other production equipment as amended. SHW distinguishes between purchased-part suppliers and process suppliers (extended workbench). Process suppliers are firms who complete manufacturing operations as exactly described and directed by SHW. The principle in this case is to treat this process as if it were a SHW manufacturing step. 1.3 Contract Review Before a tender is submitted, the supplier conducts a contract review, comprising the following: Technical feasibility Commercial feasibility Capacitive feasibility Risk assessment Page 7 of 33

8 General Requirements 1.4 Order Acceptance SHW expects suppliers to conduct a verifiable review of documents received from SHW, before acceptance of the offer. If the supplier considers such documents insufficient, he shall request further information from SHW. Orders are only considered placed when the Order Confirmation form enclosed with the order is completed. SHW expects order confirmations to be returned within two weeks. Likewise, further applicable documents listed in the order must be confirmed as present. SHW terms and conditions of purchase, as amended shall apply. 1.5 Data Exchange The supplier must arrange the exchange of data (CAD-data, measurement data, other product details, logistics data, etc.) with SHW early in the agreement. All data at the supplier s disposal and such resulting from a business relationship is to be treated confidentially. 1.6 Documentation Basically, all documentation is to be stored as per the relevant retention period. Page 8 of 33

9 General Requirements Documentation must be provided so that in the case of liability, due care and dilligence can be proven. Directions and records shall be provided for inspection to SHW officers or appropriate authorities, upon SHW s request. 1.7 Criteria for Receipt of Goods All dates and deadlines are binding for all deliveries. Delivery may only consist of items which match the requested batch with the corresponding order code. It is prerequisite that delivered items correspond to the detailed specification. All series items must have previously been approved by a SHW specimen inspection. Without this specimen clearance, the supplier is not permitted to tender production delivery. Prototype and pilot production deliveries are exempt from this. These must be identified as such. Certificates of inspection are included in the delivery, unless otherwise specified, under DIN EN Goods are only accepted during normal opening hours: Monday Thursday Friday 7 am 4:30 pm 7 am 3 pm Page 9 of 33

10 General Requirements 1.8 Complaints Initial complaint statements must be made to SHW quality officers within 24 hours of the complaint being acknowledged. Handling of the complaint is dealt with through an 8-Dreport. Deadlines: Immediate procedure Preliminary report including analysis results Long-term measures < 1 working day < 5 working days < 10 working days Legal regulations regarding concealed defects remain unaffected. Incidental handling costs of complaints for SHW are chargeable to the supplier. 1.9 Reworking and sorting procedures Suppliers will be informed of defects detected by SHW on items purchased. Suitable qualified personnel are allocated to implement the action for reworking and sorting procedures within 24 hours. If this deadline cannot be adhered to by suppliers, action will be taken by SHW personnel or SHW officers personnel at their cost. In order to avoid belt stoppages, installation of defective parts, costs of production interruption, etc. SHW can begin an immediate reworking and sorting action, without adherence to the 24 hour deadline, chargeable to the supplier. Page 10 of 33

11 General Requirements 1.10 Missed Deadline Relevant dispatchers must be informed in writing upon a delay being detected, should items not be delivered on schedule, including: The reason for the delivery delay, The measures initiated to adhere to the agreed deadline, The setting of a new delivery date and The introduction of measures to adhere to future delivery obligations and their control. Statutory regulations on delays shall apply to missed deadline due to the fault of the supplier Supply of Spare Parts Fundamentally, the supplier undertakes to ensure the supply of spare parts for at least 15 years after the series cut-off date, providing nothing else is agreed with SHW Confidentiality Agreement For the smooth execution of processes between SHW and its suppliers, information, data, documentation and, where required, specimens in which SHW have a strong nondisclosure interest, are transferred. Therefore, the following agreement applies between SHW and its supplier: Page 11 of 33

12 General Requirements a. The supplier undertakes to confidentially handle information and findings of a technical, commercial or other nature, put at its disposal by SHW, established through process of negotiation or acquired within the framework of collaboration and to make such information, also in extracts, non-accessible to third parties, particularly competitors and other contracting parties and to use such information in the course of collaboration with SHW, and not for any other purpose. This particularly applies to information and findings discussed in general discussions and documentation exchanged, on areas worth protecting like construction, development, trials, distribution, as well as corporate and market data. b. SHW reserves the right to unconditionally use findings and experiences developed. The supplier has no rights through disclosure in or from such findings or experiences, in particular any right to application for intellectual property rights, unless contract parties conclude in writing an agreement stating otherwise. c. The supplier will only make the obligatorily non-disclosed information, data, documentation and specimens accessible to those parties forming collaborations, and who must be acquainted with this information and documentation. These collaborators are obligated within the framework of the statutory possibilities according to this agreement, where non-disclosure is not guaranteed through a general non-disclosure clause in the collaborator s employment contract. The non-disclosure obligation of this collaborator also applies for the time following the retirement of the collaborator from supplier s services. Page 12 of 33

13 General Requirements d. The supplier will keep all obligatorily non-disclosed information and data, as well as descriptions (in writing or illustrations thereof) and specimens transferred by SHW, or resulting from a business connection secure. Furthermore, the supplier undertakes to return this documentation in each case without request from SHW, and to retain no copies or transcripts of these documents. e. The aforementioned obligations do not apply to such information, data, documents and specimens, for which the supplier can prove that these... are already public knowledge at the point of their transfer by SHW or are state of the art. are already known at the point of their transfer by SHW. become known after the point of transfer by SHW, through no fault of the supplier. are made known after the point of transfer by SHW to the supplier by legal third parties and without restriction regarding non-disclosure or application. This agreement is accepted as a component of contract documents according to offer, order and order processing and initially has a validity of 5 years. Obligations resulting from this must observe a further duration of at least 3 years upon termination of the supplier relationship. Page 13 of 33

14 Supplier Qualifications 2. Supplier Qualifications 2.1 System Requirements The supplier maintains a certified QM System according to: ISO TS or minimum, DIN EN ISO 9001 Suppliers without certification will not be considered by SHW. Certification according to DIN EN ISO is desirable. Proof of requirement must be provided with a valid certificate. SHW expects a consistent and responsible implementation of procedures and methods, as described in the supplier management agreement, from its suppliers. 2.2 Supplier Appraisal Manufacturers who already deliver to SHW are subjected to a delivery quality appraisal, which covers the following criteria: QB Quality appraisal based on incoming goods inspections. Assessment percentage: 70% Page 14 of 33

15 Supplier Qualifications DV Adherence to schedules, punctual and complete deliveries Assessment percentage: 25% EK Purchase Assessment Assessment Percentage: 5% These results are converted using the following assessment key: This is: A Supplier = Points B Supplier = Points C Supplier = 79 0 Points Delivery information regarding assessment will be made annually, or upon written request by the supplier development department. Suppliers who receive the C-Supplier assessment are informed that they must get in touch with SHW to organise a meeting and present an action plan. Page 15 of 33

16 Quality Strategy 3. Quality Strategy 3.1 FMEA (Failure Mode and Effects Analysis) SHW expects implementation and presentation of process and design FMEAs for each process and product manufactured for SHW. Crucial criteria specified by SHW (P and K criteria) must be apparent and included in the FMEA. Design FMEAs are only required from suppliers responsible for design. SHW expects a quick, verifiable presentation of FMEA results. 3.2 Test Strategy Test strategies must be created from existing quality requirements, which lead to an inspection plan. The manufacturer delivers the process capability verification during initial inspection, at the latest, for design criteria marked with P (process capability criteria*). These are certified by the manufacturer on control charts, inspection charts or on other valid quality management documents. Design criteria marked with K (control**) are classed as critical by SHW and are therefore controlled tightly. The supplier also has the task of subjecting these criteria to higher inspection accuracy and documenting it, and of verifying the capacities of the initial inspection. Translators note: * in German: Prozessfähigkeitsmerkmal ** in German: Kontrolle Page 16 of 33

17 Quality Strategy Scope of inspections and procedures required in the technical documentation are binding. 3.3 Process flow chart The supplier describes his manufacturing processes in process flow charts. These identify influencing variables and are, for this reason, an important resource in quality strategy. Relevant documentation and machines must be referred to in individual procedures. 3.4 Process Requirements The following requirements concerning process performance are placed on SHW suppliers: Requirements for P and K criteria: Measuring capacity: Cg / Cgk > 1.33 Machine capacity: Cm / Cmk > 1.67 Process capability: Pp / Ppk > 1.67 (provisional process capability) Cp /Cpk > 1.33 The supplier must control criteria corresponding to 100% stability, with process capacities of Cpk < 1.33, and identify corresponding containers as acceptable. Records of 100% inspection are enclosed with corresponding deliveries. 100% control of parts must also be noted on the shipping order. Page 17 of 33

18 Quality Strategy Maximum error rate in parts per million (ppm): SHW follows a zero defect strategy. This must also be followed by suppliers. The highest permissible ppm value per delivery is 0. The ppm value can be otherwise agreed with SHW. 3.5 Technical Cleanliness Inspection of technical cleanliness must be carried out according to ISO and VDA Volume 19. Verification of compliance must be presented in each case in statistical form. 3.6 Packaging Strategy The supplier must duly issue a packaging strategy before starting series production in collaboration with SHW logistics, which meets the product specific requirements. The supplier is responsible for the provision of undamaged and clean parts. Basic criteria are: Cost effectiveness Protection from contamination, damage and damp Basic handling Recyclability (returnable container) Compliance with regulations regarding prevention of packaging waste. Page 18 of 33

19 Quality Strategy Availability Stability and stackability Securing of suitable storage spaces or interim storage Responsibility for cleanliness or cleansing of packaging and maintenance. Initial sample parts are strictly to be delivered separately from prototype parts and parts in pilot production. Initial sample parts must be identifiable as such externally upon delivery. 3.7 Contingency Management A contingency strategy (contingency plan) for all processes, which could result in an interruption in delivery capacity must be drafted 3.8 Environmental Protection/ Hazardous Substances/ Recycling/ Ecology Manufactured products and implemented processes are subject to inspection, regarding their environmental sustainability and their repercussions on health. This involves regular inspection of all possibilities in order: to develop, supply or even manufacture environmentally sustainable products. to plan and implement environmentally relevant, state of the art manufacturing processes. to guarantee the environmental sustainability of delivery materials. to ensure the prevention of problematic materials recycling of production and product resources (e.g. cooling agents, lubrication solvents, cleaning agents). Page 19 of 33

20 Quality Strategy To restrict and further minimise the use of water, air, raw materials, energy and earth. To use environmentally friendly packaging. To introduce or improve environmentally friendly transport and logistics concepts (e.g. return logistics). The supplier must make himself familiar with country and industry-specific regulations, and observe these. GADSL and REACH requirements are also to be observed. To reduce the employment of resources, contingencies and procedures are to enable: further use of products/materials after their shelf life expiration the reuse of recycled materials, manufacturing equipment and production resources. 3.9 Audit The supplier permits SHW, if necessary, in collaboration with their clients, to determine through audits whether the quality capacity required by suppliers can be provided. Potentially, this may also include audits on subcontractors. This can take the form of system, process or product audits, based on previously arranged schedules. The supplier declares that he is willing to draw up an action plan from the audit report, and to implement this in due course. Page 20 of 33

21 Initial Sampling 4. Initial Sampling Initial samples are manufactured under production terms and conditions (machines, equipment, resources and inspection equipment, processing conditions...) prior to production delivery and submitted as such to SHW with a full sample inspection report. Upon request of the supplier, and by means of a deviation request, the range of sampling prior to delivery can be restricted. Any deviation from full range of sampling, however, requires written consent from SHW (QM-PE department). The supplier is obligated to carry out an enhanced sampling range deviating from this supplier management agreement upon request from a customer of SHW,. All criteria contained in the design must be sampled. Additional sampling according to 3- D record model is also valid for cast parts, based on a grid agreed beforehand. The supplier must ensure that the delivered products correspond to all the specifications given in the design. SHW waives a crosscheck on initial samples. Initial samples are assessed fundamentally on the basis of supplier documentation. SHW, however, reserves the right to conduct a dimensional crosscheck. Suppliers will be invoiced for deviations determined in such crosschecks, in addition to sampling costs of measuring expenditure. Page 21 of 33

22 Initial Sampling Samples are to be physically detached from prototype parts and parts in pilot production when delivered. The supplier is obligated to store at least one retained sample from each initial sample. Suppliers must be able to present it upon SHW s request. 4.1 Initial Sampling Documentation The range of sampling is determined by the QM-PE department, by means of a quality development file. This also contains forms required for sampling. Usually the sample inspection report consists of a fully completed cover sheet and following test result sheets: Size check Material check (Certificate of compliance 3.1) according to EN IMDS-Entry Visual inspection Attributive inspection (trial installation, if applicable) Performance check, reliability check Technical cleanliness inspection Process flow chart Control plan (listing of all checks from receipt of goods to dispatch) Analyses of measurement equipment capacity, machine capacity and process capability including value patterns and histograms Capacity checks Fully completed P and K criteria lists Design and process FMEA (at least cover sheets) Audit report from the supplier on the 2-day production Cover sheets and capacity analyses of subcontractors Page 22 of 33

23 Initial Sampling The range of sampling is limited to the IMDS-entry for DIN and standard parts. The complete sample inspection report must be made available to SHW in advance as an archive file in electronic form (.zip or.rar). The cover sheet and inspection results sheets are contained therein as single PDF-documents. 4.2 Sample Assessment Sample clearance is given by SHW, pending approval of the final customer. If the sample is defective or incomplete, a re-sampling of the rejected criteria takes place. The cost of sampling is borne by the supplier. Deviations from specification detected by the supplier must be presented in advance to the relevant SHW product manager by means of a deviation request (F ). The SHW-approved deviation request must be enclosed with the sample inspection report and parts. No serial production can take place before a sample clearance is given by SHW. Deviation from technical guidelines which were first determined after initial sampling can be retrospectively objected to by SHW. 4.3 Sample Dispatch Each sample part is identifiable by a sequence number. Measurement and inspection results are assigned to this number. Page 23 of 33

24 Initial Sampling The type of packaging and the packaging means must be chosen to allow for: Safe and damage-free transport Optimum usage of space The use of recyclable materials. Each container must be marked with an INITIAL SAMPLE PART sticker. Page 24 of 33

25 Erstbemusterung day production A 2-day production (2TP) must be completed by suppliers prior to the beginning of serial production. The aim of this audit is to determine if the processes are capable from receipt of goods to dispatch to the customer. Capacity audit and, if applicable, capacities mentioned in chapter 3.5 are determined within the scope of 2TP. SHW reserves the right to assist in or carry out the 2TP. The supplier is obliged to inform SHW of the projected date of 2TP. If the 2TP is not carried out by SHW, the supplier is obliged to forward the cover sheet of the audit and the action plan (at least one informal confirmation of the efficiency of measures) with the initial sampling documentation. The number of parts which is produced during 2TP, is agreed between SHW and the supplier. Page 25 of 33

26 Initial Sampling 4.5 Specification of Material Composites The exact chemical composition of substances used and all contents must be documented Details regarding this are provided via the International Material Data System IMDS online ( Data is updated in the data bank no later than upon part sampling, with the SHW Ident number as part/article code number. Otherwise, no sample clearance is given. Material data sheets sent to SHW must not contain any error or alarm messages. Series Production 5 Series Production 5.1 Securing Production and Delivery Capacity The supplier determines appropriate measures, so that the agreed scope of 100% is guaranteed. Acts of God are excluded here. Proof of this shall be provided in an extensive contingency plan. 5.2 Material List, Labelling and Traceability The supplier must use a system to ensure that mistakes in materials required in the process are excluded. Page 26 of 33

27 A certificate must be issued on request, in which the supplier confirms that the delivery has been inspected and approved. Appropriate identification methods and data are set by the supplier for traceability, and corresponding records are made. 5.3 Non-compliant Products SHW expects immediate briefing on problems with suppliers whose outcome may affect SHW or the final customer. Appropriate records of the type of error, cause of error and the remedial action taken must be kept. Page 27 of 33

28 Series Production SHW is to be immediately informed should it subsequently become apparent that defective parts have been being delivered to SHW. This also applies in the case where delivery has since been accepted by SHW. 5.4 Deviation Request The supplier must deliver products that conform to design and specification. Deviations can only be approved if the performance, safety, machinability and stability of products concerned are not affected. Deviation approvals are always required in written form and are subject to approval from SHW. Deviation parts can not be offered until written approval from SHW is given 5.5 Items purchased from Sub-contractors The supplier is responsible for the quality of his purchases, in addition to compliance with guidelines of this supplier management agreement even vis-à-vis the sub-contractor. This includes the disclosure of technical as well as quality assured requirements from SHW to sub-contractors, the receipt of goods as well as documentation of results, immediate notification to subcontractors of varying inspection results, if required, technical support, Page 28 of 33

29 Series Production Labelling and traceability, Sampling of purchased items, Monitoring of subcontractors Verification that the purchased products comply with requirements. 5.6 Product-Related Failure Costs The supplier is obligated to implement a product-specific cost recording system to record error costs: Sorting and reworking costs Alteration costs Special transport costs Guarantee costs Particular costs incurred as a result of errors. In terms of the general optimisation of costs, data is disclosed to SHW upon request. 5.7 Liability The agreement on quality objectives and measures, in addition to intervention limits (incidents, ppm objectives in terms of a statistical dimension) do not exempt suppliers from liability of guarantee and damage claims on the part of SHW for defects in deliveries. Page 29 of 33

30 Resources 6. Resources Regulation on the surrender of use of tools to suppliers. The following terms regulate the rights and duties of suppliers concerning SHW s surrender of ownership of machinery, tools, devices and measuring devices stated hereinafter called tools to suppliers, for the purpose of the manufacture of items for SHW. 6.1 Title Unlimited title to the tools passes to SHW upon payment. Thus, delivery is superseded by the gratis retention of tools for SHW. For the duration of retention of tools by suppliers, tools are subject to protection against general risk, like loss and damage. SHW is entitled to carry out, or have carried out, a tool inventory with the prior agreement of the supplier. 6.2 Labelling The supplier must identify the tools as SHW s property. For this purpose, both the main part and any parts detachable from the tools will be marked with SHW and an inventory number given by SHW will be permanently attached to them. SHW will be informed of the inventory number. Page 30 of 33

31 Resources 6.3 Securing Title The supplier will immediately inform SHW of third party access, through compulsory enforcement measures in particular though seizure, confiscation and insolvency proceedings, as well as any other restrictions on the title of the tools. The supplier must compensate SHW for all damages and costs incurred as a result of a violation of these obligations and interventions required at third parties as a result. 6.4 Usage of Ownership through Suppliers The supplier is entitled and obliged to the use of tools in the framework of the supply contract agreed with SHW regarding manufacture of parts with aforementioned tools. The supplier is prohibited from using the tools in any other way, in particular for the production of parts for supply to third parties or for the transfer of use to third parties. 6.5 Maintenance The supplier bears the costs of ongoing maintenance as well as the necessary repair of tools. Costs for replacement parts resulting from wear and tear also fall to the supplier. To ensure unlimited supply, the supplier is responsible for the timely provision of replacement tools. The supplier will carry out the maintenance and repairs timely, so that defects in parts to be manufactured or delays in production can be avoided. Page 31 of 33

32 Resources 6.6 Liability The supplier bears the responsibility of ensuring that the tools comply with legislative regulations regarding equipment safety and other safety precautions. 6.7 Handover of Tools The supplier surrenders tools upon delivery, at the request of SHW, and in the proper condition that is required as an obligation of the supplier in this agreement. Liens and rights of retention of the supplier to tools of any kind are excluded. 6.8 Final Clause While these conditions for equipment do not contain any explicit regulation, the general purchase conditions of SHW also apply, which are referred to reference in the SHW order for the particular tool. Data on equipment issued by the supplier is taken by SHW and the supplier as an essential component of the contractual documents as per offer, order and order confirmation. Modifications and additions to this supplier management agreement are required in writing. Page 32 of 33

33 Severability Clause 7 Severability Clauses This supplier management agreement remains valid in the event that some individual provisions become invalid. Therefore, the relative condition is to display that the initial economic and legislative aims are reached, as far as possible. The particular provision must be interpreted or supplemented so that the intended financial and legal purpose is achieved as far as possible. Other Applicable Documents 8 Other Relevant Documents DIN EN DIN EN ISO Request list form Deviation request/ concession form Supplementary request for cast part form Conditions of purchase form Feasibility study and evaluation form Action plan form Contingency management form Quality development form ISO / TS ISO VDA Volume 19 VDA Volume 2 VDA Volume 6 Page 33 of 33