Quality management regulations for production material

Quality management regulations for production material

1 Introduction...3 2 Purpose...3 3 Scope of validity...3 4 Quality aim...3 5 Documentation/admission/previous suppliers...3 6 Changes...4 7 Demands on the supplier's quality and environmental management system...5 8 Supplier approval...5 9 Supplier evaluation...6 10 Process audit...6 11 Advanced product quality planning (APQP)...6 12 Proof of process capability...6 12.1 Initial samples...7 12.2 Series...7 13 Sampling...8 13.1 Initial samples...9 13.2 Other samples...9 14 Parts with specific requirement for verification (D)...10 15 Component parts (directed parts)...11 16 Packing and identification...11 17 Quantity assurance concept...12 18 Incoming inspection...12 19 Complaints...12 20 Escalation process...13 21 Deviation permission (AWE)...13 22 Miscellaneous...14 23 International standards...14 Index: 103 Page: 2/14 Save/changed:

1 Introduction The perfect quality for customer satisfaction is heavily influenced by our suppliers' purchase parts. This means that the supplier's ability to supply quality and the reliability of their products is an important decision criteria for the allocation of orders. The contract partners (supplier and Brose) agree that high quality and the reliability of technical products with the best possible competitiveness can only be achieved when cooperation between the partners improves, the quality management system is consistently applied and continual improvements are carried out. 2 Purpose These quality assurance terms contain definitions for Brose suppliers with respect to quality management system requirements and to achieving the zero error aim. 3 Scope of validity The definitions apply to the Brose Group and are part of all contracts for the production and supply of production materials (subject of contracts). 4 Quality aim Brose demands a "zero error aim" from its suppliers. In order to pursue this zero error aim, consequential advance quality planning, implementation in production, effective serial monitoring, requalification and permanent improvements (CIP) are indispensable. The focus must be on preventing errors rather than identifying errors. The supplier will produce and test the subject of the contract according to the rules of the quality management system (refer to point 7) and according to the latest status of technology. "Zero errors" means: no failures (complaints) and no defective parts. This is also considered in our supplier evaluation (refer to section 9). 5 Documentation/admission/previous suppliers The supplier will produce detailed records of the implementation of his quality management measures, including initial sample documents, qualification/re-qualification proof and the corresponding samples and will retain them for at least 15 years after expiry of spare parts. If requested, the supplier will grant Brose access to the documentation and will hand over the requested samples. He will also support Brose with the analysis of documentation and samples. Index: 103 Page: 3/14 Save/changed:

The documentation must be provided immediately at the request of Brose, but within 24 hours at the latest. This particularly applies to product features for which running or punctual proof of statistical capacity is required and assured. If the order placed with the supplier includes development work, the requirements will be specified in writing by the contract partners, e.g. in the form of a specification book. The supplier is obliged to operate functional project management in the planning phase of products, processes and other comprehensive tasks. This must be documented in the quality management plans (production creation process) and coordinated with Brose. If the development service also includes software components for the product, project processing according to the minimum requirements of Automotive SPICE Level 2. Should the end customer demand higher requirements, these must be fulfilled according to the corresponding specification book. The supplier will grant the persons commissioned by Brose and its customers, if arrangements are made, access to the company premises and facilities if required for checking the existence and function of the quality management system and the supplier's resources (audit). Brose will announce the visit of commissioners in good time but the right to short-notice visits is reserved in the case of unexpected errors and failures (within a few hours). If the supplier procures pre-supplies for production or quality assurance of the subject of the contract (preparatory materials, software, services, production or testing equipment) from third parties (sub-suppliers), the supplier either guarantees the quality of such pre-supplies with his own means or by incorporating the sub-supplier contractually in the supplier's quality management system. At the request of Brose, the supplier will provide information on which sub-suppliers are commissioned. Brose reserves the right to visit these sub-suppliers if required for checking the existence and function of the quality management system and the sub-supplier's resources. Brose will announce the visit of commissioners in good time but the right to short-notice visits is reserved in the case of unexpected errors and failures (within a few hours). 6 Changes Brose will inform the supplier punctually in writing if the requirements of the subject of the contract change. The supplier is obliged to notify Brose of any changes to products and processes. This information must be provided in full and punctually so that Brose has the opportunity to check and object before the respective change is applied to the subject of the contract. Furthermore, the supplier must provide sufficient notice to make arrangements with Brose so that all necessary actions (sample installation, Brose samples, Brose samples for the OEMs, validation, long-term testing and OEM authorization) can be processed. If changes are made to the parts, the general requirement is that the first three deliveries to each assembling Brose factory are clearly marked with the reason for the change and the part's service life updated. The data of deployment and Index: 103 Page: 4/14 Save/changed:

markings must be notified within sufficient time and coordinated with the respective Brose factory. If the supplier discovers deviations to the properties or reliability with respect to the agreed requirements when checking the subjects of the contract, he will immediately notify Brose (voluntary declaration) and must include corrective measures, such as the improvement of production processes, materials, parts, testing procedures and testing facilities etc. Up until these corrective measures take effect, Brose can request special measures (e.g. higher level of testing, 100% tests, additional working/process steps) for an appropriate period. The additional incurred costs will be charged to the supplier. 7 Demands on the supplier's quality and environmental management system Suppliers must generally permanently prove the existence of a functioning quality management system according to ISO/TS 16949, using the certification through an accredited certification company or up date an arranged date. The supplier must develop the QM systems of his sub-suppliers with the aim of ensuring that the sub-suppliers fulfil the requirements of the ISO/TS 16949 (refer to ISO/TS chapter 7.4.1.2) Certification in accordance with DIN EN ISO 14001 or validation according to EMAS is required of companies involved with surface technology (galvanics and coating systems). The requirements according to CQI (AIAG) must be documented and presented in a suitable form by companies with special thermal treatment, galvanic surface treatment and surface coating processes. Brose requests the corresponding proof as required, but at least once per year. The supplier must be able to prove that all relevant environmental regulations are established, their impacts on the organization are known and the environmental regulations are permanently complied with. The supplier must send new or extended certificates to the central quality and environmental department in Coburg to quality@brose.com without being prompted. 8 Supplier approval New suppliers or new supplier production sites will only be approved after successful completion of a technology audit by Brose. This is required before manufacturing can be carried out for Brose on these production sites. Index: 103 Page: 5/14 Save/changed:

9 Supplier evaluation All deliveries will be recorded and used for a supplier evaluation according to an internal Brose system. Quality, project management, logistics performance, audit results, missing certificates, escalation levels and purchasing assessment are incorporated in the supplier assessment. If the A-status is not achieved in the monthly supplier assessment, the supplier must take suitable measures to promptly achieve the "A" assessment status once again. An extensive explanation of the supplier assessment (in the supplier management manual) can be found at www.brose.com in the Purchasing/Download-Center category. 10 Process audit Brose reserves the right to carry out process audits in accordance with VDA 6.3 on the supplier's premises or on the sub-supplier's premises in coordination with the supplier, after announcement at short-notice or at regular intervals if necessary. The supplier is obliged to implement the measures specified and coordinated within the scope of a process audit. 11 Advanced product quality planning (APQP) Advance quality planning will be carried out by Brose based on the VDA degree of maturity. The supplier will receive information on this from the respective responsible Brose quality planner. The supplier is obliged to actively support the requirements of advance quality planning. Specific customer requirements will be communicated to the supplier by the respective Brose specialist department and must be considered and adhered to by the supplier. These stipulations will be documented in the APQP in writing. Advance quality planning must be carried out according to the specifications of the currently valid ISO/TS 16949. 12 Proof of process capability In order to obtain information on the capability of processes, process capability analyses must be carried out in all phases of a project by the supplier. Information on the implementation of process capability analyses in general is provided in the VDA Bd. 2 document "Assuring the quality of deliveries" and VDA Bd. 4 "Process capability examination" from the "Quality management in the automobile industry" series. If other regulations are to be applied, Brose will notify the supplier punctually in a suitable form. Index: 103 Page: 6/14 Save/changed:

12.1 Initial samples Proof of the provisional capability (Ppk) for critical safety and important features must be included with the initial sample report and forms the basis for successful initial sampling. Process capability must be proven for these "special features" in a suitable form. This proof can be provided with process capability indicators, 100% testing, Poka-Yoke, initial parts and final parts testing for tool-related sizes or SPC etc. This will be agreed in detail between the supplier and Brose within the scope of the APQP (manufacturing capability analysis). For variable/measurable features, this can take place by achieving the provisional process capability indicators PPK according to the following table. This PPK value must be proven separately for each molding tool or each cavity. Feature Ppk value Critical safety features (D) according 2.00 to Brose drawing Important features ( ) 1.67 In order to carry out this examination, at least 25 random samples, each with at least 4 parts, are taken at even intervals. In order to increase the significance of this examination, it is recommended that more than 25 random samples, each with 5 parts, are used (source: VDA 4, chapter 7 process capability). During the withdrawal process, no readjustments to the machines, changes to the parameters or other interference is permitted. If fundamental faults occur, the process must be restarted and the test begun again. 12.2 Series The supplier must check and record compliance with the required values for critical safety and/or important features during the course of series production. For "special features", process capability, such as within the scope of the QVP, must be proven. For variable/measurable features, this can take place by achieving the process capability indicators CPK according to the following table. Feature Cpk value Critical safety features (D) according 1.67 to Brose drawing Important features ( ) 1.33 Index: 103 Page: 7/14 Save/changed:

If the required process capability is not achieved, the supplier is obliged to promptly optimize the production process at his own cost. Up until this point, defective deliveries must be ruled out by taking other suitable measures (100% testing, Poka-Yoke). If conventional proof is not possible (e.g. material batch) another suitable measure must be taken to provide proof which rules out a defective delivery (100% testing, Poka-Yoke, factory test certificate DIN EN 10204-3.1). For all processes with multiple molds in the tools, proof of the capability for each tool mold must generally take place separately. In the case of tool adaptations or tool maintenance, internal sampling must be carried out to determine the influence the component could have. The supplier provides proof of compliance with the required values by granting access to the documentation on-site or by sending the respective documentation to Brose at the request of Brose at any time. 13 Sampling Depending on the internally selected sampling stages, the supplier receives information on the initial sampling from Brose in writing. Sampling stage 2 of the PPF procedure is the standard for the extent of sampling and the necessary documents. Different requirements will be commissioned in writing by Brose in the course of the first sample order. The currently valid sampling stages (VDA or PPAP) must principally be applied. Outdated stages will be rejected by Brose. Another component of sampling is: IMDS (international electronic material data system) on the contents of purchase parts The supplier must have entered the corresponding information on the contents of purchase parts in the IMDS, and in the corresponding Chinese material data system CAMDS (Chinese Automotive Material Data System) if required, before the delivery date of the initial sample. If required, coordination with the central Brose materials laboratory in Coburg must be carried out. In the initial sample report, the ID number previously accepted by Brose must be provided. Further information (IMDS-Guidelines for supplier) can be found at www.brose.com in the Purchasing/Download category. The supplier is obliged to provide notification, in accordance with points 6 and 8, of any planned changes to materials, sub-suppliers and tools (including replacement parts), production technology and production sites. Brose decides on the advance quality planning and requirement scope of initial sampling. The type of sample is differentiated according to: Index: 103 Page: 8/14 Save/changed:

13.1 Initial samples Initial samples are products and materials which have been fully produced with series resources and under series conditions. They should be taken as random tests from a representative production quantity under series conditions. The batch size should be selected under consideration of the product type but can also be specified by Brose. The following points must be considered: Design of initial samples in line with drawings If design in accordance with the drawings is not achieved, the samples may only be delivered if a written deviation authorization for the deviations has been enclosed by Brose with the initial sample report. These parts must be marked in accordance with the specification (refer to chapter 16). Expenses incurred by additional sampling work due to deviations from the drawings will be charged to the supplier. The completed cover sheet (with signature!) for the initial sample test report must be enclosed with the shipment of initial samples. The full report including the necessary capability proof must be sent to the responsible Brose quality planner by e-mail (preferably in PDF format). Incomplete initial sample documents will not be accepted. For tools with several molds, the full quantity of molds must be entered on the initial sample report and samples must be provided for each mold. The parts must be allocated to the respective test report. The same also applies to sampling multiple punching tools and facilities. The initial sampling shipment must be clearly marked with "initial samples" on the packaging and delivery documents. If requested in the initial samples order, the serial packaging including serial labels must also be sampled. The initial samples order must be supplied in full according to the specified quantity. Retention/reference samples for initial sample parts must be stored (refer to VDA volume 2) correspondingly by the supplier during the documentation period (refer to chapter 5). The supplier must make the corresponding suggestions to Brose for products with a shelf life. 13.2 Other samples Other samples are products and materials which are not, or not fully, produced under serial conditions (including prototype parts). The issue of a measurement report is also necessary for these samples, possibly using forms specified Brose's end customers. The scope of the measurements and report must be coordinated between the supplier and party placing the order. Clear identification on the packaging and delivery documents must be provided with the remark "SAMPLE" and the Brose recipient. Re-qualification tests As required in ISO/TS 16949, all products according to the production guidance plans must be subject to full measurement and function testing, under consideration of the applicable customer specifications for material and function. The results must be available for the customer assessments. Index: 103 Page: 9/14 Save/changed:

The customer-specific requirements of the valid ISO/TS 16949 also apply. For new parts, the supplier must coordinate the scope of testing with Brose in the advance quality planning phase and must consider the requirements of Brose customers if necessary. The supplier must ensure the requirements of re-qualification testing and must submit them to Brose upon request within a maximum of 24 hours. 14 Parts with specific requirement for verification (D) In order to fulfil the high legal and authoritative requirements (e.g. with respect to product liability) as well as the permanently increasing customer demands, special care is necessary with specification and implementation as well as the verification obligation of special features. Failure to comply with the specified or arranged requirements could lead to considerable consequences such as recall, service campaigns, exchange, selling bans or the loss of reputation or orders. It is necessary that this is avoided. According to the Brose norm 586437 "Definition and identification of critical safety, important and indicating characteristics", critical safety features, that are marked in the drawings and other documents with a "D", are particularly important. For all features marked with a "D", consequential documentation of all data, measurement values and delivery documents is required for full verification of certain controlled production processes, performed tests etc. The documentation must provide clear verification of the: - Establishment of manufacturing specifications - Implementation of specified tests - Documentation of all setting data or test values - Documentation of test equipment monitoring - Clear delivery batch allocation, individual tracking using serial numbers if required, test documentation, production data and material batches (taken from production materials requiring documentation only after approval test certificate DIN EN 10204-3.1). - Type and specification of re-tracking to be arranged within the scope of the advanced quality planning. - Any quality deviations including measures, limitation and error prevention programs The retention of all documents subject to these requirements must take place appropriately in accordance with the legal regulations and sets of rules (microfilming permitted), whereby the archiving period must be a minimum of 15 years after the period of use (according to VDA volume Index: 103 Page: 10/14 Save/changed:

1, documentation and archiving - guidelines on documentation and archiving of quality requirements and quality records - with particular reference to critical features). In the case of company liquidation or concourse, Brose has the right to obtain all paperwork for documentation of Brose products, as long as the specified archiving period has not expired. The supplier grants Brose the right to check compliance with correct documentation at any time and take a look at all relevant documents. All deliveries of materials and parts with critical safety features must be clearly marked by the supplier. Each container or unit (mesh pallet, pallet or box etc) must be marked with a "D" in addition to the standard markings (minimum size 8 x 8 mm -refer to VDA recommendation 4902: field 8 or 16) and the respective batch number. Furthermore, each delivery note is marked with a clear delivery note number showing the batch number. A mixture of batches is not permitted in a single packing unit. When delivering 2 different batches in 1 delivery, a separate delivery note must be enclosed for each batch. Any sub-suppliers must be approved and obliged to carry out the same procedures with respect to documentation. 15 Component parts (directed parts) If a supplier manufactures subassemblies and has to use parts specified by Brose from a specific sub-supplier, we use the term component parts (directed parts). In this case, quality is still the responsibility of the supplier. This means that he must ensure compliance with the quality requirements of these parts by taking acknowledged and appropriate measures. 16 Packing and identification Storage of the products by the supplier must take place so that they are sufficiently secured against loss/theft as well as so that damages or changes to the material properties are ruled out due to environmental influences. Unless otherwise specified by Brose, the supplier must ensure the necessary packaging and identification in accordance with the regulations of the Brose handbook on procurement logistics (www.brose.com / Purchasing/Download-center) Damage to the goods during transport or dispatch must also be ruled out. The supplier must mark the goods accordingly so that the product status and testing status can be clearly identified at any time, from goods-in through to dispatch. The type of identification specified by Brose must be used in dispatch. To identify changed parts, reworked parts or parts with a valid deviation permit, the template "Information on parts status" (www.brose.com / Purchasing / Download-Center) must be used by the supplier and the shipment clearly marked. Furthermore, the supplier will provide appropriate markings (e.g. manufacturer mark, date of manufacture, production site, subject of contract) or ensure in another way so that it is immediately possible to identify which contract items are affected by the error or could be affected. The supplier will inform Brose immediately about the system and notify Brose of any changes before use. Index: 103 Page: 11/14 Save/changed:

17 Quantity assurance concept In the case of tool damages and/or machine disturbances, the supplier must ensure that the availability of products for the client is guaranteed by taking appropriate measures (e.g. fast, contractually protected access to toolmakers or machine maintenance by the respective manufacturers and backup stock levels for materials). In order to avoid process disturbances, the supplier maintains preventative servicing/maintenance. The necessary capacities must be established within the scope of studying the contract and provision must be ensured at all times. Necessary redundancies must be kept available by the supplier. In the case of use of special machines/facilities, an emergency strategy must be developed and submitted to Brose within the scope of the initial sampling phase without being prompted. 18 Incoming inspection In accordance with the sense of the quality management system and the quality status strived towards, the incoming inspection at Brose should be reduced to avoid complete double checks. Brose will undertake an identity and quantity test immediately after receipt of the goods and will check the delivery for any obvious transport damages. If Brose discovers a defect, Brose will notify the supplier immediately. Any undiscovered defects will be notified to the supplier by Brose within an appropriate period as soon as they are established according to the circumstances of normal business proceedings. The supplier therefore waivers the objection to subsequent defect complaints. The above regulations of point 18 only apply if the Brose Global Terms and Conditions of Purchase (GTCP) agreed between the parties do not regulate any other conditions. 19 Complaints The supplier must react promptly to complaints by Brose. He must immediately confirm the receipt of a complaint in writing and issue the first report within 24 hours (8D report or statement, as required) with immediate measures and must promptly (within 24 hours at the latest if no other arrangements are made) supply a replacement in perfect condition. The follow-up deliveries must be clearly marked. Documents such as measurement reports, material certificates etc must be handed over directly to Brose within 24 hours upon request. In order to avoid production line stoppages, Brose reserves the right to commission subsequent work/sorting themselves or to third parties at the cost of the supplier. The cause of problems and corrective measures must be promptly submitted, within 5 calendar days at the latest. If sufficient information is not provided by the supplier within the specified period or a statement is not made on the errors and corrective measures, this has a negative impact on the supplier assessment. If the results of the findings with causes and corrective measures are not provided within 5 calendar days, the supplier's parts will be deemed to be defective. Index: 103 Page: 12/14 Save/changed:

A final 8-D report with verified measures must be submitted within 10 calendar days. 8D procedure When solving the problem, special importance is attached to the systematic procedures using the 8D method. The "5x why method" and the cause-effect diagram (Ishikawa) must continue to be applied. Technical solutions should be aimed for. The complete documentation of the problem solution process must be provided immediately with the 8D report at the request of Brose. Brose provides a template for this: www.brose.com in the Purchasing/Download-center category "8D problem solution procedure". These are basic requirements for full and systematic problem processing which prevents problems reoccurring in the same or a similar way (zero error strategy). Furthermore, preventative methods and tools such as FMEAs or lessons learned for preventative quality management must be used and transferred to other products and processes. For the above reasons, problem processing by the supplier is part of the supplier assessment. Damaged parts analysis on field parts At the request of Brose, damaged parts analysis must take place according to the current, valid VDA volume "marketing and customer care - damaged parts analysis field" Brose expects from its suppliers that the same procedure is used by sub-suppliers in the whole supply chain. 20 Escalation process Brose will use the escalation procedure for problem accumulations. The CSL process (Controlled Shipping Level) and TOP-Q meetings are particularly applied in these cases. An extensive explanation of the escalation procedure including the CSL process and TOP-Q discussions can be found in the supplier management manual at www.brose.com in the Purchasing/Download-Center category. 21 Deviation permission (AWE) If the supplier recognizes that the subject of the contract deviates from the requirements to be fulfilled, he must notify Brose immediately. The contact persons for serial parts are the quality employees for purchase parts in the respective factory and the respective quality planned up until the PPAP is approved. A delivery may only be made after an AWE is issued by Brose. The supplier must describe the deviation with precise details of the defect. A measures plan to address the defect with the fastest possible time and handling must also be submitted. Clear marking of the delivery must be provided (document: "Information on parts status at www.brose.com / Purchasing / Download-Center). Index: 103 Page: 13/14 Save/changed:

22 Miscellaneous Verbal side arrangements, amendments and supplements must be made in writing, including the waiver of this requirement of the written form. The current version of the specified documents apply to references to further documents/literature. 23 International standards The supplier must inform himself about all national/international standards with respect to his contract products. We refer to the following homepages as examples: www.vda.de VDA Information (German/English) www.ts16949.com ISO/TS 16949 Information (English) www.vda-qmc.de Informationen zum VDA und zur IATF (German) www.aiag.org ISO/TS 16949 Information (English) www.fiev.fr FIEV Information (French automobile manufacturer) (French) www.anfia.it ANFIA Information (Italian automobile manufacturer) (Ital ian/english) www.smmt.co.uk SMMT Information (Great Britain) (English) www.jedec.com Semiconductor Industry (English) www.ipc.org Electronics Industries (English) www.mdsystem.com International Material Data System (German/English) www.emas-logo.de Eco-Management and Audit Scheme (German) http://europa.eu.int/comm/environment/emas/index_en.htm European commission official EMS site (English) Index: 103 Page: 14/14 Save/changed: