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2 0.0 Introduction and overview The QFS system document (Tier I) includes both corporate and business unit/facility requirements. This Tier II document, SEQ80.01, outlines the facility specific requirements of the QFS and provides associates at the business unit and facility level with additional detail for compliance with the quality system requirements. In some cases, such as with the quality performance metrics below, a menu or list of choices are provided as examples which would satisfy the requirements 1.0 Quality performance metrics Each business unit and/or facility management is responsible for determining and establishing relevant and measurable quality performance metrics. These quality metrics must be consistent with and promote the overall objectives of the Snap-on Quality Forward System. Moreover, metric data must be collected and reported in a consistent manner across similar facilities within the business unit. This information is used to establish specific facility quality goals and action plans addressed in section 2.0 of this standard. Using data provided monthly by each facility, the Business Unit SEQ Coordinator is responsible for monitoring, collecting and analyzing business unit metric data. Quarterly, the Business Unit SEQ Coordinator must summarize and submit metrics data to the Corporate SEQ Group. This information is used in the annual quality system senior management review and to monitor overall system performance. Business units or facilities can choose from, but are not limited to, the following list of metrics: Customer Defect Rate (Number of Customer Defects (As defined by business unit) x 1,000,000) / (Number of Items Produced). Customer defects can include but are not limited to; items on back order or quality hold, warranty returns, customer complaints, etc. Percent Complete and On Time Delivery shipping exactly what the customer wants (Complete requirement) at specified customer delivery request date (On Time). Quality Leverage Ratio (QLR) Revenue / Cost of Quality (See SEQ 80.30G Snap-on Incorporated Guidance on Cost of Quality) Percent scrap and rework of shipment cost what percentage of shipment cost was spent in scrapping out or reworking nonconforming product. Defects Per Million Opportunities (DPMO) = (Number of Defects x 1,000,000) / ((Opportunities/Part) x Number of Parts). A defect is defined as 1) parts scrapped (each), 2) parts reworked (each), and 3) parts released under a deviation procedure. First Year Rate of Failure As determined by business unit. Repeat Repair, Delayed Repair Applicable to and as defined by repair centers. Inventory Accuracy, Quality Audits of Outbound Accuracy, Z22 Dealer Credits, Strikeout Performance Applicable to and as defined by distribution centers. 2.0 Goals and action plans SEQ80.01.doc Page 2 of 15 Rev. 05/01/05

3 Annually, each facility s management is responsible for setting measurable improvement goals (see flowchart). These goals should be selected and based upon the relevant metrics established by the respective business unit or facility. For each goal established, a documented action plan (see flowchart) must be developed to outline how the goal will be met. An action plan is a detailed outline of how a goal will be met, and must include: a) Current and year end goal levels b) Estimate of resources required c) Time frame for attainment, including any intermediate milestones d) Individual(s) responsible for meeting goal e) Activities to be performed to meet goal 2.1 Guidelines for goals a) Goals must consist of measurable objectives for improving financial performance, based on the above metrics, and to improve service to both internal and external customers. b) A recommended number of annual goals is three to seven; the number of goals should be set to address the most critical issues while having a manageable number of goals in progress. Goals should be set and prioritized based on the greatest potential benefit for the improvement investment. c) Goals should be stretch goals they should be set so that they are both realistic and attainable, but will take effort to reach. d) Goals must include: 1) current level, 2) year end goal level, 3) time frame for attainment, and 4) the individual(s) responsible for action. To the extent possible, facility quality improvement goals should be tied in with individual goals as part of the Performance Management System. e) An action plan is required for each goal, with additional detail on how the goal is to be met. 2.2 Guidelines for action plans a) Action plans must look at determining and addressing the root cause of issues using tools or processes such FMEA as defined in SEQ 80.10G or an equivalent system. b) Facilities are encouraged to use a team approach for implementation of action plans. To the extent that it is appropriate, teams should be cross-functional and include both hourly and salaried personnel. c) Where appropriate, individuals assigned to carrying out action plans should have this activity included as part of their individual Performance Management Goals. SEQ80.01.doc Page 3 of 15 Rev. 05/01/05

4 d) Action plans must focus on permanent correction of existing problems, prevention of future problems, and emphasize control of the process rather than inspection after the operation or product is complete. e) Utilize current facility resources and available shared services as much as possible to implement action plans. SEQ80.01.doc Page 4 of 15 Rev. 05/01/05

5 FlowChart 1. Establish metric baselines (such as QLR, DPMO, % Scrap / rework, Warranty cost, Others) Initiate New Cycle Measure results to verify if goals were achieved 2. Define year Goals (3 to 7) (see Section 1) 2) What Actions Will be Pursued? 3. Define Action Plans per Goal established (see Section 2) 3 PROBLEM AREAS SOLUTIONS People Training 4. If unknown and when applicable, measure the Process Capability (Cp, Cpk, Pp, PpK ) 4 Methods Machines/Materials Procedures changes PM, Tooling, Fixtures, Suppliers 5. Initiate FMEA or equivalent problem solving process. 5 Design Process Capability Design FMEA Cp, Cpk 6. Prioritize specific concerns by the higher RPN s and impact (cost /production) 6 SEQ80.01.doc Page 5 of 15 Rev. 05/01/05

6 3.0 Statistical Process Control (SPC) requirements Processes critical-to-product quality should ideally be controlled by the individual performing the operation, at the time the operation is being performed. Statistical Process Control (SPC) is the preferred method for real-time process control and adjustment. 3.1 Guidelines for SPC (production facilities) a) SEQ 80.20G Snap-on Incorporated Guidance on Statistical Process Control Tools, contains specific information regarding types and development of control charts. b) SPC control charts should be implemented in order to actively monitor and, as needed, adjust the process. Charts should be implemented for critical-to-quality processes. Charts should be actively used, preferably by the individual(s) running the process, and not put in place merely for the sake of having control charts. c) Either attributes charting (p, np, c, u) or variables charting (X-bar/R) should be utilized as much as possible. The charting method will depend on whether the characteristic to be controlled is a go/no go type characteristic (e.g. visual or assembly characteristics), or numerical (e.g. print specification with a nominal value and tolerances). In cases where a process is just being started and there is not sufficient data to develop statistically based control limits, techniques such as Pre-control may be useful until control limits can be developed. In cases where the characteristic can be controlled by SPC, but due to cost or time constraints, SPC is not feasible, go/no go gaging is an alternative method that may be used. The facility, with support from SEQ as requested, should develop and use the process control methods best suited to its situation. d) Where variables charting is applicable, process variability should be determined, through calculation of process capability (Cp) and capability index (Cpk) for the characteristic. A process is considered capable with normal control if Cpk is 1.33 or greater, which is the ideal situation. If Cpk is between 1.0 and 1.33, the process is capable with tight control. If the process is found to not be consistently capable of meeting print specifications (Cp less than 1.0), either the process variability must be reduced or the specifications changed, as determined between the manufacturing facility and Engineering. If the process is capable but not centered (Cp is equal to or greater than 1.0, Cpk is less than 1.0), the facility must determine why the process is not centered and take appropriate action. e) Control limits and triggers for notification of an out-of-control situation should be based on process factors. For example, appearance requirements may necessitate use of modified control limits instead of traditional limits, or an upward or downward trend may be normal to the process. The facility should determine control limits and out-of-control triggers, based on the process. f) Electronic charts are preferable to paper charts, due to ease of use for the operator, and the ability for management to monitor charts on a real-time basis. g) SPC training for facility management and individuals involved in using process control is defined in Section 8.0 (Minimum Training Requirements). SEQ80.01.doc Page 6 of 15 Rev. 05/01/05

7 h) Action is required when 1) product is found to be out of print specification, or 2) product is found to be out of statistical control as indicated on the control chart. Under no circumstances should product be run out of print specification without adjustment of the process and/or an approved deviation. In cases where the process is out of statistical control, the process must be adjusted to the extent feasible, given factors such as tool wear or appearance requirements. Unnecessary process adjustment, in cases where product from the process is within both print specification and statistical control, should be discouraged, to avoid adding variation to the process. It is the responsibility of facility management to ensure that process control methods are being used correctly. 3.2 Guidelines for SPC (distribution facilities) a) Distribution processes critical-to-product quality should ideally be controlled by the individual performing the operation, at the time the operation is being performed. Statistical Process Control (SPC) is the preferred method for real-time process control and adjustment, to the extent they are applicable in a distribution operation. (See SEQ80.20G) b) Normally, statistical methods would be used as part of the product audit process. Product (services in this case) audits must be performed based upon a valid sampling plan and statistical methods applied to the result as may be appropriate. c) In the DC setting product is defined as shipment of correct product and in proper quantity. 3.3 Guidelines for SPC (repair facilities) a) Repair processes critical to product quality must be controlled by the individual performing the operation, at the time the operation is being performed. Control techniques that assure a consistent quality output of the operation performed should be used. If Statistical Process Control (SPC) is appropriate refer to SEQ 80 20G. b) Note: Normally, statistical methods would be used as part of the product audit process. Product (services in this case) audits must be performed based upon a valid sampling plan and statistical methods applied to the result as may be appropriate. c) In the repair center setting the technician inspects (tests) each tool before returning to the customer. Additionally, each center performs product audits randomly to qualify each technician s work. 4.0 Treatment of nonconforming product When product is found to be out of specification, either from a supplier or during processing, a method must be in place to ensure that it is segregated from conforming product until disposition is made, and that such an event triggers corrective action. 4.1 Guidelines for treatment of nonconforming product a) The facility must have a method in place to segregate nonconforming product from good product, and prevent its use until disposition is made. Product should be sorted as required, and may be segregated and identified in a designated area, or through means such as Hold or Stop Tickets. Regardless of the method used, nonconforming product must be clearly identified as such, and prevented from being reintroduced into the process stream until disposition is made. SEQ80.01.doc Page 7 of 15 Rev. 05/01/05

8 b) Unless approved by deviation, nonconforming material from a supplier should either be returned to the supplier, scrapped at supplier expense, or reworked at supplier expense. If feasible, internal nonconforming product must be reworked to bring it back into compliance. Depending on the rework cost, it may be more cost-effective to scrap small quantities. Deviations must be requested only if product appears to be usable and cannot be reworked, or the cost of rework or scrap is prohibitive. c) When rework is performed, instructions for processing must be clear, and some means of verifying that the product is conforming after rework must be in place. d) A means must exist to prevent scrapped nonconforming product from being reintroduced into the process stream. e) If a deviation is requested, nonconforming product must not be processed further until the deviation is approved. If the deviation is denied, product must be scrapped or reworked to bring into compliance. f) Depending on the quantity of product affected, corrective action must be initiated either immediately, or as part of addressing scrap/rework cost for that particular product family, department or cause. If a large quantity of product is affected (i.e. an entire order), immediate corrective action is recommended. 5.0 Corrective and preventive action Corrective and preventive actions may be triggered by the level of one or more quality performance metrics or other relevant triggers (See Paragraph 3 of this Section). 5.1 Guidelines for corrective and preventive action a) Investigation should focus on determining and eliminating the root cause of a problem. b) Actions to be pursued must be documented using the Corporate Corrective and Preventive Action Procedure (CS ) or an equivalent procedure. These actions may include changes in equipment, procedures, training, specifications, etc. c) Additional corrective/preventive action triggers may include, but not be limited to: i. Corrective action needed within a facility that affects more than one person or department and therefore requires a formal process to make all needed corrections in a coordinated manner. ii. Customer complaint (in a manner acceptable to both customer and Snap-on facility; may be done on either customer or Snap-on form). iii. Action requested due to a poor result on a product audit (internal inspection). iv. To accommodate a finding or required action mandated by the Corporate SEQ department. v. To accommodate a finding or required action mandated by a system audit (internal, registrar or customer). d) Corrective Action - For processing general corrective actions, the facility must have a written work instruction to: SEQ80.01.doc Page 8 of 15 Rev. 05/01/05

9 i. Review nonconformities ii. Determine the root cause of the nonconformity iii. Determine the required corrective action(s) as appropriate to the problem. iv. Implement these actions. v. Record the result(s) of the actions taken. vi. Ensuring the actions taken continue as intended and as needed to permanently correct the problem. vii. Reviewing the action(s) to ensure effectiveness. e) Preventive Action - For preventive actions, the facility must have a written work instruction to: i. Determine potential nonconformities. ii. Determine the potential root cause of the nonconformity. iii. Determine the need for a preventive action(s) as appropriate to the potential problem. iv. Determine what action(s) can be taken. v. Implement these actions. vi. Record the result(s) of the actions taken. vii. Ensuring the actions taken continue as intended and as needed to prevent the problem. viii. Reviewing the action(s) to ensure effectiveness and continued suitability. 6.0 Work instructions on critical to quality processes (Section 8.1 of the Quality Management System) Each facility must prepare documented work instructions that are appropriate for the nature and scope of their operations. These documents are needed for all Critical to Quality processes. Many of these processes can be identified using the production routing cards or, in the case of repair centers, repair manuals. 6.1 Guidelines for Work Instructions a) Procedures are to be kept as simple as possible. b) Procedures are to be operator-oriented. These should specify: i. What characteristics are to be checked control charts, go/no go gaging, visual checks, etc. This should also include a definition of what the operations characteristics are (i.e. reference to print specifications, control limits, visual benchmarks). SEQ80.01.doc Page 9 of 15 Rev. 05/01/05

10 ii. How these checks are to be done include number of pieces to check, intervals, and method of check (i.e. type of gage, visual, etc.). iii. Individual(s) responsible for performing the checks. iv. How results will be documented. v. What will be done if actual results do not meet requirements. c) Emphasis should be on proactive actions, such process control/spc and operator checks while the operation is being performed, rather than on inspection after the operation is complete. 7.0 Gaging and calibration Each facility must have a documented calibration system for measuring and monitoring equipment (gages), and for maintaining records of the calibration and verification of that equipment. This system must include, but is not limited to, the following. a) Determination of what measuring equipment needs to be included in the calibration system. Each device must be uniquely identifiable. b) Processes must be established to ensure that calibration activities can be carried out in a manner consistent with monitoring and measurement requirements. Calibration equipment capabilities, calibration methods and conditions, and acceptance criteria must be established to meet operating unit requirements. c) Measuring equipment must be calibrated or verified at specified intervals, or prior to use, against measurement standards traceable to international or national measurement standards (e.g. NIST). Where no such standards exist, the basis for the calibration or verification must be recorded. d) Measuring equipment must be adjusted or re-adjusted as necessary to ensure valid results. e) Repeatability and reproducibility must be verified for new gages (gage R&R) before being placed into service. Reconditioned gages must be reverified before being placed back into service. Appendix 1 of the Snap-on Guidance Document SEQ80.20G Statistical Process Control Tools provides a gage error section which shows how to perform and interpret a gage R&R study. f) Measuring equipment must be identified in such a way that calibration status can be determined. g) Measuring equipment must be safeguarded from unintended or unauthorized adjustments that would invalidate the measurement result. h) Measuring equipment must be protected from damage and deterioration during handling, maintenance and storage. i) The facility must establish and document who is responsible for determining and documenting what action is to be taken when equipment is found to not conform to requirements. This includes action on both the measuring equipment and any product affected, up to and including product recall if needed. Actions taken must be documented. The following are guidelines to help in the decision: Dimension or Characteristic Gage error will likely contribute to personal injury to user, lead to product liability claim, or in the case distribution facilities, freight cost error or incorrect part or quantity shipment Response When Gage Out of Calibration Recall affected product or take action appropriate to correct problem SEQ80.01.doc Page 10 of 15 Rev. 05/01/05

11 Dimension or Characteristic Significant deviation from gage specification (facility to define) Minor deviation from gage specification (facility to define) Response When Gage Out of Calibration Replace product at customer request No action required i. Records of calibration and verification results must be maintained as defined in sections and of the QFS Manual of Practice. ii. Where computer software is used in the monitoring and measurement of specified requirements (i.e. automated checks), the ability of the software to satisfy the intended application must be confirmed prior to initial use. iii. The ability of computer software, as defined above, to satisfy the intended application must be reconfirmed as necessary. iv. Information requirements to vendors of calibration service must conform to SEQ v. For facilities performing calibration services for external customers must conform to the ISO17025 standard on calibration laboratories (to the extent practical). vi. Nonconforming devices must be identified as such and be properly segregated or disposed of in accordance with documented work instructions. 8.0 Minimum training requirements Each facility must establish minimum training and competency requirements, especially for employees performing critical to quality operations. These minimum standards must be documented, typically in a job description or equivalent. Records must also exist to document employee education, experience, skills and training levels. 8.1 Guidelines for training requirements Training and competency requirements must include, but are not limited to: a) Competency/qualifications required for position (i.e. education, training, skills, experience). b) Duties and responsibilities. c) If appropriate, time needed for a new employee to become fully competent in position (i.e. probationary or break-in period). d) Ongoing training requirements, if necessary. e) Safety and ergonomic requirements, if appropriate. In addition, following are minimum training requirements for Statistical Process Control (SPC): Quality Coordinators: Control Charts: type, use, development of and interpretation of control charts, actions to take on out-of-control conditions. Process Capability: Definition, calculation and interpretation of Cp and Cpk. Facility Managers, Supervisors and Operators: Control Charts: Use and interpretation of specific control charts used in process, actions to take on out-of-control conditions. NOTE: Training for these individuals required only when they are to use or take action on SPC charts. SEQ80.01.doc Page 11 of 15 Rev. 05/01/05

12 Distribution and Repair Facilities: Statistical methods training as may be appropriate. Each facility must also ensure that all employees are aware of the relevance and importance of their activities and how they contribute to the achievement of the facility s quality objectives. Competency or the effectiveness of training must also be assessed. This is determined by continuous improvement of the SEQ metrics from the baseline measurements (see section 1.0 for example list of metrics). Facilities may in addition assess competence by such practices as preand/or post training testing, internal product audits, monitoring of process performance, etc., as each facility deems necessary. The facility must maintain appropriate records of education, experience, skills, training, and qualifications. Training records must contain at a minimum the course name or the content / agenda of the training, the name of the trainer, names of persons trained, and the dates of training. 9.0 Requirements for product audits For production facilities product audits are performed on product undergoing processing and/or on product ready to ship, in order to verify both product conformance and compliance with system requirements. For distribution facilities product audits are performed on product undergoing processing and shipments for accuracy of content and quantity. For repair facilities product audits are performed on repaired product ready to ship or on field service to verify both product conformance and compliance with system requirements. Auditing is not to be treated as inspection, but rather as a verification method that process control is functioning as required. 9.1 Guidelines for product audits a) Audits must be conducted by personnel independent of the product being audited. b) Audits must be performed on a regular basis, with the frequency determined by the facility and per a valid sampling plan. c) Samples to be audited must be selected at random from the order quantity available to audit. The number of samples to be pulled must be based on a statistically valid sample plan (e.g. ANSI/ASQC Z1.4). d) Documentation of product audits may include the following elements, as determined by the facility: i. Part number ii. Order number iii. Operation being performed iv. Operator v. Supervisor SEQ80.01.doc Page 12 of 15 Rev. 05/01/05

13 vi. Auditor vii. Audit date viii. Order quantity ix. Sample quantity x. Number samples accepted / number samples rejected xi. Verification of product conformance to print specification(s) and any other applicable requirements (i.e. visual) for the operation being performed xii. Verification of set-up approval, if applicable xiii. Verification of operator checks (i.e. SPC, visual, go/no gage) xiv. Verification of any other required checks (i.e. if supervisors are required to check product on a regular basis) e) Product found to be out of compliance during an audit is to be handled per section 4.0 of this document Purchased product Where appropriate, each facility must have a process in place to ensure purchased product conforms to requirements, including how purchased product requirements are specified and communicated to suppliers, and how purchased product affecting end product quality is verified upon receipt Guidelines for purchased product a) For specific information regarding purchasing practices, see procedure SEQ80.40 (Snap-on Incorporated Standard on Purchasing). b) In order for the Supplier Quality Assurance function to maintain performance data on suppliers, each facility must have a means of verifying that purchased product affecting end product quality meets specifications. A documented procedure must exist indicating how the facility will verify such purchased product, document verification results, and how nonconformity of purchased product is to be handled. Verification activities may include, but are not limited to: 1) incoming inspection, 2) review of material certification (i.e. steel, chemicals), 3) review of supplier-provided inspection data, 4) testing by an independent facility, 5) certification of suppliers for shipping of received product directly to stock or use. Each facility must use the verification method(s) that are the most appropriate for their operation Validation of processes When new equipment is purchased, or for processes where product cannot be directly verified without destructive testing (i.e. heat treat, welding, plating adhesion, paint wear performance, etc), it is necessary to validate that the process can produce product that meets requirements. SEQ80.01.doc Page 13 of 15 Rev. 05/01/05

14 11.1 Guidelines for process validation a) For production facilities process validation methods may include, but are not limited to: capability studies (Cp and Cpk) of product characteristics or process parameters, performance testing on a statistically valid sample, calibration of process controls, independent laboratory testing, etc. Each facility must determine the best validation method(s) for its operation. Records of these validation results must be maintained. For distribution facilities process validation normally occurs through the product audit process based upon a valid statistical sample size. For repair facilities when new equipment is purchased for repair purposes the process involving this equipment is to be validated by the supplier or in-house to verify that it is capable of performing the intended process in a consistently controlled fashion. Generally the repair or field service process is validated through the product audit program. b) Validation of existing equipment must be done on a regular basis. Intervals are to be determined by each facility as needed. c) New equipment must be validated prior to both being placed into product use, and prior to final invoice payment. Discrepancies must be resolved with the supplier prior to use. j) Any discrepancies found during existing process validation must be resolved through the corrective action process as needed. d) If product requires software to function, the facility performing the software design and release must have a system in place to verify that the software performs as required, prior to initial release and for subsequent upgrades. Test results (either actual data or pass/fail results) and software release approval must be documented. SEQ80.01.doc Page 14 of 15 Rev. 05/01/05

15 REVISION LOG Date Revision Statement 05/01/05 Initial Issue (Consolidation of Sector Specific Requirements formerly found in A1 A8. SEQ80.01.doc Page 15 of 15 Rev. 05/01/05