Rev: 0 12/31/10. Reviewed by ISO Management Representative Approved by ISO Management Representative Signature/Date:

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1 IsoQual, Inc. (insert your logo here) 1 of 9 Reviewed by ISO Management Representative Approved by ISO Management Representative Signature/Date: Signature/Date: 1. Purpose and Scope The purpose of this procedure is to define the system for continually improving the effectiveness of our Quality Management System (QMS). This procedure applies to all IsoQual functions and operations and encompasses all product, process and customer-related information available that may be useful in identifying the need for corrective/preventive action and opportunities for improvement. 2. Reference Documents. The following internal documents are referenced in this procedure to define their interaction with the management action system. Hereafter, these are only referred to by their document number. The latest edition of the document referred to applies. OP contains procedures governing the control of these and other QMS documents. (list all documents referenced in this procedure). DFC 4.1 Overall QMS Process Sequence and Interaction OP Control of Documents OP 5.6 Management Review OP Customer Satisfaction OP Internal Audit OP 8.3 Control of Nonconforming Product Form Process Assessment Worksheet (PAW) Sample Format Form Turtle Diagram (blank) WI Turtle Diagram Guide DFC 8.5 Management Action System PAW 8.5 Management Action System Assessment Worksheet Form Management Action Request (MAR) Form ( 8D ) Problem Solving Worksheet Form MAR Log Form Continual Improvement Form (CIF) Distribution: CEO COO CFO ISO Management Rep. Production Manager Sales Manager HRO Maintenance Manager Engineering Manager Employee Benefits Mgr. Quality Manager Materials Manager Training Manager Safety Manager Information Systems Mgr.

2 2 of 9 3. Terms and Definitions. Our QMS uses the same internationally recognized terms, vocabulary and definitions given in ISO 9000:2005 as supplemented by terms defined in ISO/TS 16949:2009, Section 3.1. Acronyms, terms, vocabulary and definitions unique to our management action system include (list all unique terms and definitions contained in this procedure): Deployment Flow Charting: a technique employed at IsoQual, Inc. to visually depict responsibilities for and the sequence and interaction of one or more related processes. Resultant deployment flow charts (DFCs) may be used to supplement or replace verbiage that would otherwise be needed in an OP or other QMS document, but are most often used by responsible managers (or internal auditors) to determine and document key process events, interfaces, decision points, and relevant process outputs/records as a basis for process development, monitoring and/or improvement. Process Assessment: a technique employed at IsoQual, Inc. to summarize key process inputs, outputs, control, measures of effectiveness/efficiency and other process data; resultant Process Assessment Worksheets (PAWs), Form 8.4-1, and associated Turtle Diagrams, Form 8.4-2, are most often used by responsible managers (or internal auditors) to determine and document relevant process metrics as a basis for process development, monitoring and/or improvement. Process owners/responsible managers also monitor and track performance against all established objectives on a Continual Improvement Form (CIF), Form Related guidance is contained in our Process Management Guide. 4. Control and Maintenance. The ISO Management Representative (?) has overall responsibility for the management action system, including the issuance and maintenance of this procedure. All proposed changes and other suggestions for improvement of this procedure should be submitted to the ISO Management Representative (?) in accordance with OP The ISO Management Representative (?) reviews all proposed changes as they are submitted and otherwise reviews this document annually for compliance with ISO/TS 16949:2009 requirements and consistency with established policy, objectives and other QMS processes/systems. The Information Systems Manager (?) maintains a master copy of this document and controls its electronic and hard copy distribution as well as any forms and/or record formats required by the provisions of this Operating Procedure (OP) and any associated Deployment Flow Charts (DFCs) and Process Assessment Worksheets (PAWs).

3 3 of 9 5. Management Action System. NOTE: DFC 8.5 can be used in conjunction with this procedure to document the management action system defined in this procedure; PAW 8.5 can be used by the ISO Management Representative, as process owner, to manage processes/sub-processes associated with the management action system, including the processing of corrective and preventive actions as well as continual improvement activities, and can be used by internal auditors to assess the overall effectiveness of these processes per paragraph following. 5.1 Objective. The primary objective of the management action system defined in this procedure is to systematically identify, evaluate, and implement effective and timely improvement actions. 5.2 Process Summary. Management responsibilities for collecting and analyzing data to identify opportunities for improvement are defined throughout our QMS and depicted in our quality manual as DFC 4.1. Our quality policy and improvement objectives are continually reviewed utilizing a Continual Improvement Form (CIF), Form 8.5-6, and evaluated for effectiveness and needed change through our management review process defined in OP 5.6. Corrective actions are initiated when desired results are not achieved and preventive actions are initiated to prevent the occurrence of problems or to implement other improvement actions. The ISO Management Representative (?) assesses the effectiveness/efficiency of the management action system through internal audits conducted per OP 8.2.2, initiates appropriate corrective/preventive actions per provisions of this procedure if/as required, and provides trend data and related recommendations to top management for review and action per OP Process Owner: The ISO Management Representative is the overall process owner of the management action system. - Key Process Inputs: Any input that identifies actual or potential problems and/or opportunity for improvement; quality inputs define the extent of the actual or potential problem, risks associated with potential problems, actual or potential impacts, and cost/benefits associated with improvement actions proposed. - Key Process Outputs: Management action plans and actual/planned resources required to carry them out. - Key Process Controls: Proven problem solving techniques and a closed loop system that ensures follow ups are conducted to ensure actions are implemented and effective. - Process Measurables: Actions accomplish desired results.

4 4 of 9 6. Management Action System Procedures and Responsibilities. 6.1 General Procedure. We have chosen to define all aspects of our management action system in a single procedure as all three kinds of management actions (corrective, preventive and improvement actions) will utilize a single Management Action Request (MAR) form, Form and tracking system or MAR Log, Form However, the processes associated with each kind of management action needed are clearly different and clearly differentiated throughout this procedure (and our associated deployment flow chart, DFC 8.5). These differences are summarized below to help clarify process intent and criteria Criteria for Initiating Management Actions Corrective actions (are always required when a problem is identified and ) and involve an analysis of the actual problem and it s impact on operations to determine actions needed to correct the problem and prevent it from recurring if the problem is systemic Preventive actions may be required based on an analysis of the potential problem, it s potential impact on the organization and an analysis of the risk of its occurrence to determine if/when actions are needed to prevent the problem from occurring Improvement actions may be required based on a couple of criteria poor performance against established goals/objectives, as tracked and reported (through the Management Review process, OP 5.6) on a Continual Improvement Form (CIF), Form 8.5-6; and/or an analysis of the costs/benefits associated with any new/improved process Criteria for Assessing Effectiveness of Management Actions Taken. Note, criteria for effectiveness should be documented on the CIF and/or MAR to provide a clear (and objective) basis for assessing effectiveness of the action through subsequent follow ups (see Section 6.10) Corrective actions are considered effective if they eliminated or significantly reduced recurrence of a problem (as reported on an MAR, Form 8.5-1) Preventive actions are considered effective if they eliminated the cause(s) of a potential problem and/or reduced the risk of a potential problem from occurring (as reported on an MAR, Form 8.5-1) Improvement actions are considered effective if they resulted in improved performance against a goal/objective (as reported on a CIF, Form 8.5-6) and/or achieved benefits within planned costs (as reported on an MAR, Form 8.5-1).

5 5 of Continual Improvement Continual Improvement Strategy. Our quality policy and improvement objectives are continually reviewed and evaluated for effectiveness and needed change through our management review process defined in OP 5.6 utilizing a CIF, Form (one per corporate level objective established) Cost of Poor Quality. We also utilize the management review process (OP 5.6) to establish and track key measures of the cost of poor quality because we expect that quantifiable improvement will be pursued in these areas even if there is currently no perceived problem. Analysis of this data leads to the establishment and implementation of appropriate improvement initiatives during management reviews; such initiatives are usually defined in the form of Team Charts, which define scope and expectations for the effort and resources needed to achieve objectives or other desired results. Examples of key measures that we track and monitor for improvement are: unscheduled machine downtime machine set-up, die change and machine changeover times excessive cycle time scrap, rework & repair non value-added use of floor space less than 100% first run capability test requirements not justified by results waste of labor & materials excessive cost of non-conforming product difficult assembly or installation of the product excessive handling and storage new target values to optimize customer processes marginal measurement system capability Continual Improvement Coordinator. The ISO Management Representative (?) has overall responsibility for coordinating activities associated with our continual improvement program. In addition to managing the corrective and preventive action process define below, the Continual Improvement Coordinator helps Top Management identify and prioritize improvement actions (as documented on an MAR, Form 8.5-1) based on significance and impact (as documented on a CIF, Form 8.5-6). The impact of failures/problems is used to prioritize needed corrective actions; risks are evaluated to identify and prioritize needed preventive actions; and cost/benefit analyses are performed to identify and prioritize needed improvement actions are documented on an MAR, Form 8.5-1).

6 6 of Continual Improvement Process. IsoQual, Inc. s continual improvement process involves two key steps (or phases): Step 1: Planning. The management review process (see OP 5.6) guides the continual improvement process as follows; Top Management: Reviews our vision and quality policy and goals for suitability and compatibility with goals and objectives contained in our business plan. Establishes a coordinated system of business and quality improvement objectives utilizing a Continual Improvement Form (CIF), Form and specific management actions needed to achieve each objective; each action is documented on a Management Action Request (MAR), Form Step 2: Monitoring and Measurement of Progress. Mangers assigned overall responsibility for monitoring and measuring progress towards achievement of business and quality objectives (in Step 1), monitor and report progress as follows: Ensure the specific actions (MARs) needed to achieve the overall objectives are taken in a timely manner; Ensure additional actions are initiated if/as needed to achieve the overall objective Reports progress periodically to top management through the management review process (see OP 5.6) along with related recommendations for additional actions and/or revised targets utilizing a CIF, Form Documentation. The Management Action Request (MAR), Form 8.5-1, is used to initiate and record results of specific improvement actions, any request for corrective or preventive action, and any other opportunity for improvement. All MARs are submitted to the ISO Management Representative (?) for entry into our MAR Log, Form 8.5-5, and assignment to the responsible manager for review and action. Where appropriate, or required by the customer, a disciplined problem solving approach will be utilized and results documented on an ( 8D ) Problem Solving Worksheet, Form A Continual Improvement Form (CIF), Form is used to monitor, track and report progress against all established corporate level objectives.

7 7 of Corrective Action Identification. If a problem occurs anywhere in our QMS, action is taken to ensure the problem is corrected and that it does not recur. Problems identified throughout our QMS are corrected to the degree possible as they occur per the applicable QMS procedure/documented process. As warranted, an MAR, Form 8.5-1, (and/or 8D Form, Form 8.5-4) are initiated as warranted to eliminate the cause of failure and prevent its recurrence; corrective actions may result from a variety of sources including but not limited to: customer complaints or returns poor supplier or subcontractor performance nonconforming products internal and external audit findings management reviews and failures to meet established quality objectives facilities, equipment and production process failures and inefficiencies documentation control problems employee suggestions 6.5 Preventive Action Identification. Potential problems and their risks are identified by responsible managers through continual monitoring and measurement of their processes and assessing process or product performance against established improvement objectives. Additional data regarding the need for preventive action and opportunities for improvement may be provided by employee suggestions and/or employee input or other data collected during internal audits conducted per OP Preventive actions are handled in the same manner as corrective actions: i.e. an MAR, Form 8.5-1, (and/or 8D Problem Solving Worksheet, Form 8.5-4) is initiated as warranted to eliminate the potential cause of failure and prevent its occurrence; preventive actions or opportunities for improvement may result from a variety of sources including but not limited to: changes to operational or strategic plans new/changed customer requirements adverse trends in employee performance or competency levels (high turnover, skill loss) customer feedback and downturns in satisfaction trends adverse trends in scrap, rework or warranty work internal and external audit observations and employee input management reviews and downturns in performance against established objectives downturns in facilities, equipment and production process effectiveness and efficiency new or changed information management systems and/or capabilities employee suggestions

8 8 of Management Action Reporting. The initiator (?) of an MAR, Form 8.5-1, describes the nonconformance, risk or opportunity for improvement and any suggested solution in the first section of the MAR and forwards it to the ISO Management Representative (?) for processing. 6.7 Tracking and Assignment. The ISO Management Representative (?) assigns an MAR number, determines the responsible manager to investigate and develop a proposed action, establishes a reply due date, and records all related information on the MAR and in the MAR Log, Form The MAR Log is monitored to ensure MARs are responded to and acted on in a timely manner. Where required by the customer and/or as otherwise deemed appropriate by the ISO Management Representative (?), the responsible manager will be advised that an ( 8D ) Problem Solving Form, Form 8.5-4, is required and must be completed. 6.8 Root Cause Analysis and Action Taken/Planned. The manager assigned responsibility for evaluating the MAR determines the root cause of the actual or potential problem or evaluates the potential benefit of any opportunities for improvement and recommends an appropriate course of action and planned completion date (or records actions already taken and the actual completion date), and records all related information on the MAR, Form 8.5-1, (and/or 8D Form, Form 8.5-4) Problem Solving. Where indicated on the MAR, Form 8.5-1, (or other document, such as a Customer Complaint Form (CCF), Form per OP 8.2.1, a Material Deficiency Report (MDR), Form per OP 8.3, or a customer Defective Material Report (DMR), the ( 8D ) Problem Solving Worksheet, Form 8.5-4, will be completed and attached to the originating document along with other supporting documents Error-Proofing. We also use error-proofing methods in the corrective action process Corrective Action Impact. We apply corrective action and implemented controls to other similar processes and products to eliminate the cause of the nonconformity Rejected Product Test/Analysis. Rejections are reported to IsoQual, Inc. on a Discrepant Material Report (DMR) (or equivalent form); when an 8D Form is requested for a DMR by the customer, the responsible manager (?) will complete an 8D Form, Form 8.5-4, in accordance with procedures detailed in OP 8.3.

9 9 of Approval. The MAR, Form 8.5-1, and supporting documents (including the 8D Form where applicable) are forwarded to the responsible member of Top Management for review and approval of the action taken or recommended action. If the approval authority rejects the recommended action or stipulates any limitations, appropriate comments are recorded on the MAR and returned to the responsible manager for comment or additional action and return. The approval authority forwards approved MARs to the ISO Management Representative (?) for tracking system update and follow-up. MARs not resulting in an approved action will also be returned to the ISO Management Representative (?) for close out and feedback to the initiator Follow-up. As soon as practical after approved MARs have been implemented, the ISO Management Representative (?) will schedule a follow-up to assess effectiveness of the action taken. Most follow-ups will be conducted in the course of a regularly scheduled internal audit conducted per OP If the evidence collected during the follow-up assessment indicates that the action was not effective, the MAR is returned to the responsible manager for additional action and the MAR remains open. If there is sufficient objective evidence to demonstrate that the action taken was effective, relevant data is entered on the MAR and it is closed out Analysis of Results. The ISO Management Representative (?) periodically reviews MAR data, internal/external audit results conducted per OP and other relevant data to determine the effectiveness/efficiency of the management action system and initiates corrective/preventive action per provisions in this procedure if/as required; and identifies and reports trends and related recommendations to top management for review and action during management reviews per OP 5.6. PAW 8.5 can be used by the ISO Management Representative and/or internal auditors to assess the effectiveness/efficiency of the management action system and identify opportunities for improvement.