Supplier Quality Requirements Manual

Transcription

1 Supplier Quality Requirements Manual Revision 1.9 Issued by: Director of Corporate Quality Director of Supplier Quality VP Of Global Supply Chain

2 Document Title File Name / Location Effective Date Revision Owner / Prepared by Reviewed by Table of Contents About 3 Introduction 3 Supplier Code of Conduct 4 Conflict Minerals 5 1. Quality System Requirements Quality Manual 7 2. Supplier Approval Process Supplier Assessment 7 3. General Requirements Compliance to Contractual Requirements Control of Sub-tiers Business Continuity Electronic Data Interchange (EDI) Requirement 8 4. Pre-Production and New Product Launch Requirements (APQP) 8 5. Product Qualification Production Part Approval Process Annual Revalidation Process Control Special Characteristics Error-Proofing Work Instructions Control of Monitoring and Measuring Devices Statistical Process Control Preventative Maintenance Change Control Change Control Process Supplier Change Requests Control of Non-Conforming Material and Corrective Action Process Control of Non-Conforming Material Corrective Action Response Accountability and Cost of Quality Supplier Performance Rating Packaging Handling, Storage Preservation, Delivery and Record Retention Packaging and Handling Record Retention 18 Applicable Documents 18 Forms and Exhibits 18 2 of 18

3 About Pacific Insight Electronics Corp (TSX: PIH) is a global solutions provider offering design, development, manufacturing and delivery of electronic products and full service solutions to the automotive and commercial vehicle markets. We provide OEMs as well as Tier 1 and Tier 2 customers with a range of cost competitive products including LED lighting systems, electronic control modules and wire harnesses. pacificinsight.com. Our Vision The world-class leader of innovative lighting and electronic solutions driven by passionate people. Our Mission We are innovators. We thrive on delivering insightful solutions to our customer challenges. Our Values Integrity, Accountability, Respect, Excellence and Innovation. Introduction Our Suppliers Pacific Insight Electronics Company recognizes the very important role our suppliers have in the value we offer our customers. We rely on our suppliers to provide material, products, and services which meet all of the requirements of Pacific Insight Electronics outlined in this manual. Purpose The purpose of this manual is to inform Pacific Insight Suppliers of the expectations we have regarding the Suppliers quality management systems, design requirements, and manufacturing process controls required for the purpose of doing business with Pacific Insight. This manual describes what Pacific Insight expects its Suppliers to do to ensure that all Pacific Insight requirements and expectations are met. Adherence to these standards will help ensure successful partnership between Pacific Insight and our suppliers. Scope This manual applies to all Suppliers providing Pacific Insight with materials, products, processing, and related services, including intra-company Suppliers. The general requirements outlined in this manual do not supersede conflicting requirements in the 3 of 18

4 Pacific Insight contract, or drawing, including applicable engineering specifications and process specifications, or applicable long term agreement(s). Requirements In this manual, the terms "shall" and "must" mean that the described action is mandatory; "should" means that the described action is necessary and expected with some flexibility allowed in the method of compliance; and may means that the described action is permissible or discretionary. Questions Questions concerning this manual should be directed to your respective Pacific Insight Supplier Development representative. Supplier Code of Conduct Suppliers shall ensure operations are being performed in a manner that is appropriate, as it applies to the ethical, legal, environmental, and social responsibilities. Below is a listing of the basic requirements: Compliance with Local Laws and Regulations Suppliers must adhere to the laws and regulations in the locality in which they reside. This includes all local, state, and federal laws/regulations in the country of origin. Environmental. recognizes that we have a responsibility towards the environment and an obligation to minimize the environmental impact of the company s activities. Pacific Insight Electronics is committed to: Reducing losses due to the production of scrap material Reducing pollution through the reduction of landfill disposal Complying with all environmental regulatory legislation, consents and codes Year over year improvement in environmental performance Pacific Insight Electronics will achieve the above by: Establishing an Environmental Management System based on the requirements of ISO Integrating environmental management into our business and decision making processes regularly measuring our performance, and practicing continual improvement. Providing a training program to ensure employees and suppliers are aware of the environmental policies objectives and programs of the company Carrying out regular audits of the site to review progress towards objectives and targets 4 of 18

5 Requiring its suppliers to comply with the environmental regulatory and government entities of the country where business is conducted. Pacific Insight encourages all suppliers to be ISO certified or equivalent Pacific Insight is required to comply with customer environmental material reporting objectives and standards. In order to comply with these, Pacific Insight requires suppliers provide MSDS (Material Safety Data Sheets) product data sheets, and IMDS (International Material Data System) submissions upon request. Also, Pacific Insight Suppliers must maintain and operate its manufacturing/production facilities and processes in accordance with local, state, and federal laws/regulations in the country of origin. Non-Discrimination Suppliers shall not discriminate against race, color, sex, religion, age, physical disability, political affiliation, or other defining characteristics as prohibited by local, state, and federal laws/regulations in the country of origin. Labor o o o o Child Labor Suppliers shall employ workers of minimum legal age in accordance with local, state, and federal laws/regulations in the country of origin. Child labor laws must be followed. Forced/Indentured Labor Suppliers shall not practice the use of forced or indentured labor. Work Hours/Days Suppliers shall not exceed the daily and weekly working hours as permitted by local, state, and federal laws/regulations in the country of origin Wages and Benefits Suppliers shall compensate workers in accordance with local, state, and federal laws/regulations in the country of origin. This includes minimum legal wage, overtime wages, and benefits (required by law). Gifts and Gratuity It is Pacific Insight s policy that no Pacific Insight employee accepts any gifts (other than items with small intrinsic value) or other gratuity from any supplier to Pacific Insight or bidder for Pacific Insight s business. This policy applies to all employees whether or not they are directly involved in the purchasing activity. Ethics Evidence of corruption, bribes, improper advantage, or any other form of illegal practice by the Supplier or associated operations will terminate all relations with Pacific Insight. Suppliers will conduct their business in a manner that meets the policy of the Pacific Insight Electronics Corporation. Conflict Minerals is compliant with all industry standards for quality and environmental management, including TS-16949, ISO 9001 and ISO certification and we are committed to working with our customers and suppliers to ensure a socially and environmentally responsible supply chain. 5 of 18

6 In July 2010 the United States Congress enacted legislation that requires certain public companies to provide disclosures about the use of specified conflict minerals and their derivative metals such as gold, tin, tungsten and tantalum emanating from the Democratic Republic of the Congo (DRC) and nine adjoining countries. Section 1502 of the Dodd-Frank Act is intended to make transparent the financial interests that support armed groups in the DRC area. By requiring companies using conflict minerals in their products to disclose the source of such minerals, the law is aimed at dissuading companies from continuing to engage in trade that supports regional conflicts. Although is not directly subject to the Dodd-Frank conflict minerals reporting requirements, many of our customers are. To support our customers in their compliance requirements, Pacific Insight actively works with our global supply chain to collect conflict minerals information. is committed to due diligence for a responsible supply chain. In order to support reporting requirements and assurance to our end customers, suppliers to are directed to: Determine whether its manufactured products contain one or more of the identified conflict minerals or their derivatives Conduct a reasonable country of origin inquiry regarding these conflict minerals Undertake due diligence with sub-suppliers to identify the smelters used in the supply chain to process the raw materials (or validate the origin of materials as recycled/scrap.) Complete and return the Conflict Minerals Reporting Template annually or as requested Suppliers that are non-compliant with these requirements will be reviewed by our Supplier Development team. 1. Quality System Requirements Suppliers shall maintain a Quality Management System (QMS) that promotes defect free product through prevention, monitoring and continuous improvement. The Quality Management System shall be suitable to the products and services provided to Pacific Insight and shall be certified by an accredited third-party certification body to the latest version of one or more of the following, as applicable: + ISO Quality Management System Requirements1 ISO/TS Quality System Requirements (Automotive, Truck & Heavy Equipment)2 See the following sources for a listing of accredited certification bodies: 1 The U.S. accreditation body for management systems can be found at ANSI-ASQ National Accreditation Board, For a list of Accreditation Boards from other countries, refer to the International Accreditation Forum at 2 For ISO/TS 16949, see International Automotive Oversight Bureau at 6 of 18

7 In the absence of third-party certification, depending on the product, its application, value, and criticality, the Pacific Insight Supplier Development and quality representative may authorize the acceptance of other evidence of compliance. This may include second-party (Pacific Insight) audit or first-party (self) assessment to the applicable criteria above, or to a set of alternative basic quality requirements (such as those described in a Pacific Insight Supplier Quality Assessment checklist). 1.1 Quality Manual Upon request, the Supplier shall furnish Pacific Insight with a copy of the Supplier s Quality Management System Manual, which is to be current and approved by the supplier's management. The quality management system documentation shall include supplier s statements of a quality policy and quality objectives. Top management shall define quality objectives and measurements which should address customer expectations and be achievable within a defined period of time. The supplier shall promptly notify the Pacific Insight Supplier Development representative of any substantive changes to the supplier s quality management system or personnel. 2. Supplier Approval Process Pacific Insight requires all suppliers to be approved prior to the issuance of contracts. All suppliers must be approved by Pacific Insight Electronics regardless of approvals by customers or other entities. 2.1 Supplier Assessment The Supplier Approval Process may include the following: a. Supplier Initial Assessment: Pacific Insight may request the Supplier to provide a copy of its quality management system certificate and/or complete a self-assessment of its business and quality management system and capabilities (i.e., quality, delivery, technology, cost, and continual improvement objectives). b. Documentation Audit: In those cases where a Supplier s quality management system has not been certified by an accredited certification body, Pacific Insight Electronics may request a copy of the Supplier s Quality Manual and supporting procedures (and perhaps internal audit reports) to determine if the Supplier s quality management system meets Pacific Insight Electronics requirements. 3. General Requirements 3.1 Compliance to Contractual Requirements After accepting Pacific Insight s contract the supplier is responsible to meet all requirements included in the contract (drawings, specifications, notes, Purchase Orders etc.). Pacific 7 of 18

8 Insight or customer audits do not relieve the supplier of the responsibility of providing acceptable products and services that meet all customer requirements 3.2 Control of Sub-tiers The Supplier, as the recipient of the contract, is responsible for meeting all requirements, including work performed by the Supplier's sub-tier Suppliers (also known as Sub-Suppliers or subcontract (Suppliers). When the Supplier uses sub-tier sources to perform work on products and/or services scheduled for delivery to Pacific Insight, the Supplier shall include (flow-down) on contracts, to its sub-tier sources, all of the applicable technical and quality requirements contained in the Pacific Insight contract, including quality system requirements, regulatory requirements, the use of Pacific Insight designated sources, and the requirement to document and control 'key characteristics' and/or 'key processes,' and to furnish certifications and test reports as required. Pacific Insight and its customers reserve the right of- entry to sub-tier facilities, subject to proprietary considerations. 3.3 Business Continuity The Supplier should have a business continuity plan which would allow for the safeguarding, storage and recovery of engineering drawings, electronic media, and production tooling in the event of damage or loss. This plan should also contain contingency plans to satisfy Pacific Insight requirements in the event of significant utility interruptions, labor shortages, equipment failure and field returns. 3.4 Electronic Data Interchange (EDI) Requirements All external suppliers supplying production parts, assemblies, components and production materials to Pacific Insight plants are required to have EDI capabilities. 4. Pre-Production and New Product Launch Requirements (APQP) All approved production suppliers involved in pre-production and new product launches are required to formulate advanced quality plans to support the development of new products and/or services in accordance with the guidelines in the Advanced Product Quality Planning (APQP) manual published by the Automotive Industry Action Group (AIAG). 5. Product Qualification 5.1 Production Part Approval Process All Suppliers shall submit to Pacific Insight a Production Part Approval Process (PPAP) 8 of 18

9 qualification package, unless exempted by contract. The Supplier is responsible obtaining the latest revision of the applicable AIAG reference manuals and forms. The AIAG Manuals are: for Advanced Product Quality Planning (APQP) and Control Plan Production Part Approval Process (PPAP) Potential Failure Mode and Effects Analysis (FMEA) Measurement Systems Analysis (MSA) Statistical Process Control (SPC) When PPAP is specified on the Pacific Insight contract, the Supplier shall submit a Level 3 PPAP package to the Pacific Insight Supplier Quality Representative, unless otherwise directed. For all industry standard parts the supplier may submit level 1 PPAP, however all documentation shall be available upon request. See AIAG PPAP Manual, Table 4.2, for complete list of submission requirements for each level of PPAP. Also, see AIAG APQP Manual for related guidance on associated product and process design and development methodology and techniques. Below are the requirements on some specific PPAP Elements. A. Design Record, Change Documents, and Customer Approval The Supplier shall have the design record for the saleable product/part and components; any authorized engineering change documents for those changes not yet recorded in the design record but incorporated in the product, part or tooling; and evidence of Pacific Insight engineering approval. See AIAG PPAP Manual. B. Dimensional Results Supplier shall document the dimensional results of five parts per cavity or process stream. The dimensional results shall include all notes and specifications on the drawing. The drawing shall be ballooned with the corresponding numbers from the dimensional result document. C. Process Flow Diagram The Supplier shall have a visual diagram of the proposed or current process. This diagram shall clearly describe the production process steps and sequence, and meet the specified Pacific Insight needs, requirements and expectations. See AIAG PPAP Manual. D. Failure Mode and Effects Analysis Suppliers with product design responsibility shall develop a Design FMEA in accordance with, and compliant to, Pacific Insight-specified requirements. A single Design FMEA may be applied to a family of similar parts or materials. Suppliers shall develop a Process FMEA in accordance with, and compliant to, Pacific Insight-specified requirements. A single Process FMEA may be applied to a process manufacturing a family of similar parts or materials if reviewed for commonality by the Supplier. See AIAG FMEA Manual. E. Measurement Systems Analysis The Supplier must develop or obtain gages and standards to control their processes and to 9 of 18

10 determine product conformance to specifications. Variable gages and measurements are preferred. Alternative methods, gages or standards may be used at Pacific Insight to verify the Supplier s inspection results. Pacific Insight may request the Supplier to participate in a correlation study to compare Supplier measurement results against results obtained by Pacific Insight gages and methods. The Supplier shall perform Measurement Systems Analysis (MSA) studies, e.g., gage repeatability & reproducibility, bias, linearity, stability, for all new or modified gages, measurement, and test equipment. See AIAG MSA Manual. F. Control Plan The Supplier shall have a Control Plan that takes into account the output from the FMEA and defines all methods used for process monitoring and control of special product/process characteristics. The control plan covers three distinct phases: prototype, pre-launch, and production. A single control plan may apply to a group or family of products that are produced by the same process at the same source. See AIAG APQP Manual. G. Process Capability Study Process Capability Index (Cpk) is a comparison of the inherent variability of a process output to specification limits under statistically stable conditions. Most methods for estimating capability require that the characteristic being evaluated is approximately normally distributed, and in statistical control. The distribution should be determined prior to estimating capability. If the process is not in statistical control, all assignable causes must first be identified and removed. Special techniques are available for calculating capability when inherent assignable causes, such as tool wear, are present. Definitions and calculations for Cpk and Ppk indices are found in AIAG PPAP and SPC Manuals. Unless otherwise approved by Pacific Insight, the Supplier shall use the following as acceptance criteria for evaluating initial process study results of special characteristics for processes that appear stable: Results Interpretation Index > 1.67 The process currently meets acceptance criteria Index 1.67 The process is marginally acceptable. Index < 1.33 The process is not acceptable. If the process is not capable the supplier shall use 100% inspection for the special characteristic and have a plan to improve process capability with index greater than H. Certification and Test Reports The Supplier shall provide evidence that all required test results and material certifications comply with the design record. The following verifications required by the design record have been completed and that results indicate compliance with specified requirements: 10 of 18

11 Material and Performance Test Results for all parts and product materials with chemical, physical, metallurgical, and functional performance requirements. Qualified Laboratory Documentation documentation showing laboratory results of the qualifications for the type of measurements or tests conducted and the standards used. Sample Product actual samples as required by the applicable specification or Pacific Insight contract. Master Sample retain a master sample, and make available upon request. See AIAG PPAP Manual for applicable forms and instructions. I. IMDS (International Material Data Sheet) Submission Prior to PPAP submission the supplier shall submit IMDS requirements through the IMDS system online J. Packaging The supplier shall verify internal and external packaging and provide a completed packaging form with all requirements including testing to assure the quality of their parts during transportation. K. Part Submission Warrant Upon completion of all PPAP requirements, the Supplier shall complete the Part Submission Warrant (PSW). A separate PSW shall be completed for each Pacific Insight part number unless otherwise specified 5.2 Annual Revalidation Unless otherwise specified, a complete annual layout inspection, including all subcomponents, is required for all parts. All suppliers shall annually revalidate their respective production components, and be able to provide the results to Pacific Insight upon request. At a minimum the revalidation shall include a PSW, a valid material certification report(s) not more than 12 months old, a full dimensional report, and a capability study for all print designated special characteristics. 6. Process Control This section defines the basic necessities for Suppliers to control their manufacturing processes. 11 of 18

12 6.1 Special Characteristics The Supplier shall demonstrate conformity to those special characteristics designated by Pacific Insight through means of documentation and appropriate control methods. In addition to any special characteristics identified by Pacific Insight, the Supplier shall also review, identify, document, and control other product and process characteristics that are key to achieving quality. 6.2 Error-Proofing The Supplier should use error-proofing devices and techniques as a form of process control; especially for repetitive functions, difficult tasks prone to mistakes, or where the cost of error is high. 6.3 Work Instructions The Supplier shall prepare documented work instructions, as necessary, for all employees having responsibilities for the operation of processes that impact product quality. These instructions shall be maintained current and accessible for use at the work station. 6.4 Control of Monitoring and Measuring Devices The Supplier shall determine the monitoring and measurement to be undertaken and the monitoring and measuring devices needed to provide evidence of conformity of product to determined requirements. As a minimum, where necessary to ensure valid results, measuring equipment shall: a. be calibrated or verified at specified intervals, or prior to use, against measurement standards traceable to international or national measurement standards; where no such standards exist, the basis used for calibration or verification shall be recorded; and b. be identified to enable the calibration status to be determined. 6.5 Statistical Process Control Where specified in the Control Plan, the Supplier is required to apply effective statistical process controls. Suppliers should consult the Statistical Process Control (SPC) manual published by AIAG for guidance, methods, examples, and related reference information. 6.6 Preventative Maintenance The Supplier should identify key process equipment and provide resources for machine/equipment maintenance activities and develop an effective planned total preventive maintenance system 12 of 18

13 7. Change Control The Supplier is responsible for controlling changes and notifying the Pacific Insight Supplier Development representative of all changes to the approved part design, manufacturing process, or site. 7.1 Change Control Process The Supplier shall have a process to ensure that relevant versions of applicable documents furnished by Pacific Insight (as well as those specified of external origin) are available at points of use. The Supplier is responsible for the timely review, distribution and implementation of all Pacific Insight Engineering standards/specifications and changes in accordance with the schedule required by Pacific Insight. The Supplier shall maintain a record of the date on which each change is implemented in production. Implementation shall include updated documents. 7.2 Supplier Change Requests Suppliers shall not make changes to their processes, location, facilities, equipment, material, product design (or any change which may affect product design or function) without written approval from Pacific Insight for: Correction of a discrepancy on a previously submitted part; Product modified by an engineering change to design records, specifications, or materials; or Any planned changes by the Supplier to the design, process, or manufacturing location, such as: a) Use of other material than was used in previously approved part or product b) Production from new, additional, replacement or modified tools, dies, molds, patterns, etc. c) Production following upgrade or rearrangement of existing tooling or equipment d) Production from tooling and equipment transferred to a different plant site or from an additional plant e) Change of sub-tier Supplier for parts, non-equivalent materials, or services (e.g. heat treating, plating, etc.) f) Product produced after tooling has been inactive for production for 12 months or more g) Change to test/inspection method new technique (no effect on acceptance criteria) h) For bulk materials: new source of raw material from new or existing Supplier, or change in product appearance attributes, etc. Before submitting to Pacific Insight a request for a permanent change to a Suppliercontrolled design, the Supplier shall review the FMEA and Control Plan, as applicable, to ensure that all process-related issues have been addressed and resolved. Pacific Insight 13 of 18

14 may require the Supplier to submit an updated FMEA and Control Plan prior to approval of such permanent changes. Pacific Insight may also require other portions, or all, of the related qualification process to be repeated. In some cases, Pacific Insight may elect to review Supplier proposed permanent changes at the Supplier s facility. To request a permanent engineering change, the Supplier shall use the Part/Process Change Notification form or other equivalent form of notification acceptable to the Pacific Insight. To request a one-time or temporary deviation, Suppliers shall use Pacific Insight s Supplier Deviation Request, or other equivalent form acceptable to the Pacific Insight Supplier Development Representative. 8. Control of Non-Conforming Material and Corrective Action Process 8.1 Control of Non-Conforming Material Suppliers are responsible for the quality of their product at all times throughout the Pacific Insight manufacturing process, installation at the final customer and through the end customer s use. Suppliers must have procedures/processes in place to prevent nonconforming products from escaping their process resulting in shipment to Pacific Insight. When non-conforming product/material that does not meet requirement is identified at Pacific Insight a supplier non-conformance report is written. The NC report will be forwarded to the supplier with samples (when applicable) exhibiting the non-conformances. The supplier shall enact immediate activities to ensure availability of good material to Pacific Insight whether by means of correcting the process that caused the non-conformance or by sorting and reworking the discrepant material. 8.2 Corrective Action Response The supplier corrective action response must address the root cause and prevent reoccurrence of the non-conformance. Pacific Insight may require the supplier to submit the response in an 8-D format. Following is the definition of all 8 sections of a formal 8-D problem solving process. D1 Establish Team Establish Champion Select team members (cross-functional) D2 Describe the Problem What the object or part concern Where The place this occurred 14 of 18

15 Hen When first discovered the problem, when else was seen, when did it occur in the process How Big How many parts/lots are affected, how big is the problem D3 Containment Contain symptom immediately to protect the customer Purge and Sot immediately at the customer, in transit and in house Identify Action Verify Actions stop defects certify material to achieve customer satisfaction Validate action taken is fully effective. D4 Identify Root Cause Use 5-Why methodology Why did the defect occur Why did the defect escape the supplier process and arrived at the customer Why did the system allowed the defect to occur Verify root cause by turning the problem on and off, (replicating the defect) D5 Choose and Verify Corrective Action Analyze best corrective action, focus on impact and risk Verify Corrective action eliminates root cause Choose Corrective action that eliminates the defect escaping to the customer D6 Implement Corrective Action Follow the Engineering Change Process Implement Corrective Action plan Assess removal of containment plan D7 Prevention Identify the system, practices, procedures and/or specifications that allowed the problem to occur (use 5-why methodology) Identify and implement actions to fix the identified deficiencies Look across all products and assure the defect is not present and action have been taken to prevent occurrence D8 Congratulate Team Determine appropriate recognition Recognize team members 9. Accountability and Cost of Quality Suppliers are selected on their ability to provide cost effective, superior defect free products, their expert knowledge of their product and manufacturing processes, and their ability to provide responsive and proactive support. With these expectations, suppliers shall be held accountable and responsible for all costs incurred due to defective product identified during Pacific Insight inspection, manufacturing installation, end customer use the product. Below is a list (not limited to) the cost of poor quality recovery items Administrative fee of $100 to process the non-conformance 15 of 18

16 Cost due to an automotive recall 3rd Part Sorting or Reworking costs Labor for sorting or reworking of raw stock labor for sorting or reworking in-process and/or finish goods labor for sorting or reworking finished goods at the end customer Scrapping or reworking finish goods Shipping fees related to return of defective product Fees and taxes related to scrapping of material outside Canada Warehouse/storage fee accumulated through disposition of suspect product Tooling gauges or third party testing required for defective material Freight charges Production downtime and/or production overtime at Pacific Insight manufacturing facility Production downtime at customer plant Cost of follow up actions and assessments Any other fees associated with the defective product. All costs are calculated based on Canadian or US currency depending on the Pacific Insight manufacturing location, using standard labor rates established by Pacific Insight. Appropriate debits are issued to the supplier through the accounting department in cooperation with purchasing. 10. Supplier Performance Rating Our supplier scorecard captures and reports on the supplier s OTD, PPM, Quality Systems accreditation levels, and a quantitative assessment of supplier performance by the Pacific Insight Purchasing team. The system will provide you with more clarity on what Pacific Insight expects from its suppliers strengthen communication and help foster lasting partnerships and drive continuous improvement. The following is the weighting we have assigned to each element. 35% Quality DPPM 35% On-Time Delivery (OTD) (% of shipments late, early or wrong quantity) 20% Purchasing team assessment ( Points) 10% Quality System Credentials (0 points for none, 100 points for ISO9001 or TS16949) The Performance data is then translated into a rating that will be issued to each supplier A = Premiere - Meets expectations set by Pacific Insight B = Preferred - Satisfactory no action required C = Marginal Corrective action maybe required 16 of 18

17 D = Unacceptable Systemic corrective action is required, Supplier maybe required to meet with Pacific Insight management E. <50 Unacceptable - Probation and resourcing plan Pacific Insight Requires 100% quality and 100% delivery from all suppliers Pacific Insight will be providing Supplier scorecards to selected suppliers on a monthly basis and will require corrective action reports in the event that supplier s performance does not meet the minimum requirements. Sometime a formal meeting maybe required to review supplier performance and supplier maybe placed on probation until corrective actions are agreed upon and executed. Suppliers with Quality and/or Delivery less than 100%, regardless of the overall score, must have an improvement plan in place and available for review upon request. 11. Packaging Handling, Storage Preservation, Delivery and Record Retention 11.1 Packaging and Handling All product shall be packed, packaged, marked and otherwise prepared for a shipment in a manner which is in accordance with good commercial practice (unless otherwise specified), acceptable to common carriers for shipment at the lowest rate and adequate to ensure safe arrival of the material. In accordance with Pacific Insight s environmental policy, packaging materials must be recyclable preference is given to corrugated cardboard and paper products over plastic packaging of any kind. Packaging must be tested to assure product quality during transportation. Wood Pallets must meet the phyto-sanitary requirements of ISPM15. As of Feb. 1, 2006, shipments entering Canada from countries other than the USA which do not comply with this regulation will be rejected. Quarantine expenses will be billed to the suppliers. All shipments must be accompanied with an itemized packing slip. Parts with special handling instructions such as ESD sensitivity, RoHS, MSD moisture sensitivity, WHMIS, and UL must be marked appropriately by the supplier. Identification requirements may include any or all of the following as specified by Pacific Insight: Bar Code labels must be human readable. a. Part Identification b. Name of the Manufacturer c. Lot number and/or Date code d. Pacific Insight Purchase Order number e. Quantity of parts in the container Suppliers shall identify items of shelf life material with the manufacture date and expiration date. 17 of 18

18 11.2 Record Retention The Supplier shall retain quality records for a time period specified by the Pacific Insight contract or related referenced documents. Upon request, the Supplier shall be capable of retrieving and delivering required records to Pacific Insight within forty-eight hours from time of request by Pacific Insight. Applicable Documents Forms and Exhibits If a form is needed the supplier must contact the Supplier Quality Department at Pacific Insight or refer to the current Production Part Approval Process (PPAP) Manual 1.0 Initial release Revision History February 24, Update to OTD requirements CA# 6047 October 12, Update to Sections 3, 5, and 7 EC # 9015 January 16, Multiple updates, Red font June 22, Conflict Material Update November 27, Multiple Updates TOC, page numbers July 15, Annual Revalidation, IMDS, ISO 14001, Ratings, Signatures January 19, Removed Graphics June 3, Added EDI Requirements and revised PPAP Requirements May 15, Corrected footer, added requirement for OTD <100% March 28, of 18