Quality Management Agreement

Transcription

1 Quality Management Agreement (QMA) between the Johann Borgers GmbH Borgersstraße 2-10 D Bocholt including all affiliated companies as defined in 15 AktG (German Stock Corporation Act) - hereinafter called BORGERS - and «Lieferant» «Strasse» «Lkz»-«PLZ» «Stadt» including all affiliated companies as defined in 15 AktG (German Stock Corporation Act) - hereinafter called SUPPLIER -

2 Table of contents: 1. Objective of the QMA 1.1 Definition of the term "Customer" 1.2 Basis 2. General requirements 2.1 Requirements on the management system 2.2 Offer 2.3 Monitoring of sub-suppliers 2.4 Auditing 2.5 Project planning 2.6 Advance quality planning / APQP 2.7 Critical features 2.8 Process acceptance 2.9 Initial sampling 2.10 Product and process release 2.11 Hazardous substances 3. Series production 3.1 Product or process deviations 3.2 Process capability 3.3 Sampling of the changes and requalification 3.4 Complaints 3.5 Quality objectives 4. Supplier assessment 5. Commitment to supply spare parts 6. Term of the agreement 7. Severability clause, loopholes 8. Governing law, jurisdiction

3 1. Objective of the QMA The name Borgers stands for highest quality; correspondingly high are the expectations and demands of our customers regarding the quality of our products. In the interest of our customers as well as for the maintenance and advancement of our competitive position, we constantly strive to improve our products and processes. Our suppliers agree that quality and reliability of technical products and services must be improved constantly to meet high expectations and demands on the market. The objective and precondition shall be a "zero-defect quality" of all deliveries, which, however, we are only able to achieve and ensure in cooperation with our suppliers. The agreement on hand determines the minimum requirements on the supplier's quality and environmental management required to realise those objectives. The QMV shall apply to all raw, auxiliary materials and purchased parts as well as services provided to us. In addition to our terms of delivery, the QMA shall apply to our terms and conditions of purchase, and be part of the delivery contracts, unless otherwise provided therein. 1.1 Definition of the term "Customer" "Customer" shall be every customer supplied by Borgers directly or indirectly (via a supply chain). 1.2 Basis The supplier undertakes to permanently use a quality management system according to ISO/TS 16949, at least, however, according to DIN EN ISO 9001 or a comparable system meeting the contents of all requirements mentioned in VDA Volume 2. Other codes become part of this quality management agreement only inasmuch as they are explicitly cited below: VDA Publication Series, Volumes 1-19 QS-9000 ISO/TS The increasingly stricter environmental legislation on a national and EU level as well as a growing environmental awareness require the introduction of environmental management systems. Therefore, the supplier shall establish an environmental management system according to ISO or EMAS.

4 In addition, the supplier shall ensure compliance with the quality requirements of the respective final customer resulting especially from the drawings (including the standards, technical delivery conditions, data sheets, etc. included therein), agreed testing devices and test instructions, packing instructions, etc., to the extent these are provided to the suppliers. 2. General requirements 2.1 Requirements on the management system The supplier undertakes to establish (if not already done), maintain and constantly advance a quality management system according to Item 1.2, para. 1. The supplier shall verify the effectiveness of its quality management system by presenting a certificate issued by an accredited certification company. In addition, the supplier undertakes to set up (if not already done), maintain and constantly improve an environmental management system according to Item 1.2, para. 1. The supplier shall verify the effectiveness of its environmental management system by presenting a certificate issued by an accredited certification company. Unless respective certifications have been furnished, the supplier undertakes to arrange for the certification of its quality and environmental management system by an accredited certification company within 12 months following the execution of this agreement. Simultaneously, the supplier shall present a detailed schedule for the preparation of the certification within one month after the execution of this agreement. Continuous improvement processes must also be verifiably implemented and constantly advanced. 2.2 Offer With every offer, the supplier shall confirm to Borgers the manufacturability of the requested product (quality, capacity, scheduled dates) according to the specifications determined in the inquiry as well as the timely implementation in case the order is placed. Actions improving the manufacturability and quality can be introduced by the supplier, but they must be approved in writing by Borgers prior to the implementation. 2.3 Monitoring of sub-suppliers The supplier shall ensure that its sub-suppliers meet the requirements of this agreement as well. Upon request, the supplier shall provide Borgers with respective quality agreements with its sub-

5 suppliers as well as the quality planning documentation and the product and process releases at subsuppliers. The supplier shall be obligated to monitor its sub-suppliers regarding their compliance with the requirements of this quality agreement. The supplier shall document its monitoring activities and assess its sub-suppliers. 2.4 Auditing At any time, subject to a brief prior notice to the supplier, Borgers shall be entitled to satisfy itself locally of the effectiveness of the quality and environmental management system at the supplier's production sites as well as at the sub-suppliers, and perform an audit based on ISO/TS or DIN EN ISO Borgers shall be entitled to commission a third party, especially also the customer, with this. The audit can also be performed as a system, process or environmental audit (according to ISO or EMAS). The supplier shall be obligated to conclude respective agreements with its sub-suppliers ensuring that Borgers is also able to exercise the aforementioned rights with regard to the sub-suppliers and their sub-suppliers. If quality problems occur, the supplier must provide for an audit by Borgers at its own expense and if necessary, by the customer on its or its sub-suppliers premises. Should an audit be required at a sub-supplier, Borgers shall charge the related costs to the supplier (and not to the sub-supplier). For the audit, the supplier is obligated to pay Borgers a fixed expense allowance in the amount of 250 per day and per employee, plus travel expenses. The expense allowance shall not exclude an assertion of further claims, especially the assertion of exceeding damages or expenses. However, the fixed expense allowance shall be offset with exceeding claims. If the supplier is dependent on sub-suppliers to meet its contractual obligations concerning Borgers, it must integrate and appropriately evaluate their deliveries in its quality management system. This shall also apply to sub-suppliers designated by Borgers. Alternatively, Borgers shall be entitled to acknowledge audit results by third parties. The supplier shall support Borgers with regard to the implementation of the audit, without costs incurring to Borgers. The final audit report shall be discussed with all participants; to this end, action plans possibly resulting from the auditing shall be arranged between Borgers and the supplier. Borgers or a third party commissioned by Borgers (including the customer) shall be entitled to satisfy itself, even locally, of the implementation of defined actions.

6 For all product lines as well as upstream processes at sub-suppliers, the supplier shall annually perform a self-audit according to the VDA 6.3 standard. It shall notify Borgers immediately, if the result of the audit is worse than AB. On Borgers' request, the supplier shall present all audit results as well as the corresponding documentations and action plans. An audit performed or accompanied by Borgers or a third party shall not release the supplier from meeting its contractual obligations, especially the obligation to apply effective quality and environmental management systems. 2.5 Project planning The supplier undertakes to implement a project management system as early as during the planning stage according to Item 2.6 APQP or VDA 4.3 (Project planning). Borgers shall be entitled to audit this project documentation. The supplier shall prepare an emergency concept, an analysis of manufacturing feasibility as well as a capacity analysis and make these documents available to Borgers' Central purchasing. With every new project, the supplier shall transmit to Borgers a schedule, and update it biweekly or, on Borgers' request, in shorter intervals. 2.6 Advance quality planning / APQP By careful advance quality planning geared to prevent non-conformities during the product and process development it shall be ensured that only technically well-engineered products are manufactured within a qualified manufacturing process. All applicable items of the sampling process to be applied resulting from the scope of coordination (BAG = sampling coordination meeting (Bemusterungsabstimmungsgespräch)), must be observed and verified. In order to avoid risks already during the concept stage but also during the series monitoring later on, the prioritisation shall be shown according to the methods listed below. Design / process FMEA In order to analyse the risk and prevent non-conformities, the supplier shall prepare a design FMEA during the design stage (if responsible for the design) within the project work and a process FMEA within the process development. The FMEA shall be part of the initial sample documentation according to VDA Volume 2 and PPAP and must be made accessible to Borgers for

7 inspection at any time. The process FMEA shall be updated continuously with regard to errors occurring, newly detected risks, complaints, process changes, etc. Control plan The supplier shall develop a control plan (flowchart, quality management plan, test plan) for the following stages: prototype stage pilot production stage series production stage This plan specifies workflows and test procedures, the frequency of the tests, testing and measurement devices as well as the documentation. Special features described below under 2.7 (e.g. CC / SC / HIC) must be identified and taken into account consistently in the documentation. The supplier and possible sub-suppliers shall perform an APQP process concerning Borgers' final requirements. Borgers is entitled to verify the APQP process with its customer, but here, too, the supplier will always remain responsible. On Borgers' or the supplier's request, a joint product review shall be performed, which does not release the supplier from its responsibility. 2.7 Special features (SC, CC, HIC, etc.) The supplier must determine special features following the ISO/TS (see d) and include all special features in the control plan. Even special features, which Borgers or the customer regard as critical, shall be taken into account (e.g. parts, which are subject to documentation with D/TLD identification VW or L-identification BMW). The supplier shall ensure that these are available accordingly and consistently in all documents and always correspond to the valid specification. Documents controlling the production process, including drawings, FMEA, control plans and operating instructions must be identified with the symbol for special features. 2.8 Process acceptance Borgers reserves the right to perform a process acceptance at the supplier, which, if necessary, will also involve the customer. The process shall be accepted e.g. by Run & Rate or a 2-day production or a VDA 6.3 audit. The responsibility for the process shall always remain with the supplier. Also without request, an internal process acceptance by the supplier shall be an applicable obligation to provide proof with regard to every sampling stage.

8 2.9 Initial sampling The supplier must send Borgers the documents and samples of the scheduled dates stipulated in the project plan. Unless otherwise requested by Borgers, the sampling shall be performed according to VDA and contain all standards relevant to the parts. Should non-conformities regarding the specification occur and these cannot be eliminated despite all reasonable efforts, a written non-conformity permit must be obtained prior to the initial sampling and attached to the initial sampling. The initial sampling shall be performed in agreement with the following guidelines of the respective valid version: VDA Volume 2, Submission level 2 PPAP, Submission level 3 customer-specific parameters. The methods to be applied and the time of the resulting submittal shall be specified at the time of the purchase order. A sampling without reference (IMDS ID) in the International Material Data System shall always be rejected. Depending on the material, a REACH entry may also be required (see 2.11). If the initial sampling leads to the result "discharged," "rejected or "grade F," meaning a complete rejection of the sampling, the supplier shall bear the costs of the initial sampling, but at least an amount of 250. Further claims, especially claims for damages, remain unaffected Product and process release The production process and product release shall comprise the processes (product-specific scope of processes) subject to the process capability examination and/or process audit as well as the initial sample test of the products. Prior to the start of a series, the PPF process shall furnish proof that the quality requirements agreed in drawings and specifications are met. The completed PPF shall prove that the requirements have been understood and implemented correctly. After the release has been granted, no changes shall be performed to the product and/or process without prior approval by Borgers (see 3.1) All changes must be documented by the supplier and archived for a period of 15 years after the end of the series production (EOP), every change even as a planning status shall be presented to and approved by Borgers. Upon request, the supplier shall make this documentation available to Borgers free of charge.

9 2.11 Hazardous substances At Borgers, a large number of various raw and operating materials as well as consumables are used. Their selection and proper use affect the quality, environmental friendliness and safety of the products manufactured at Borgers, during production as well as during the entire service life of the product. Moreover, due to legal provisions and/or requirements of the customers, already existing specifications shall be taken into account with regard to the selection of substances and the flow of information and be met within the entire supply chain, i.e. from the raw material to the final product. Borgers' applicable negative substance list (its respective current and valid status can be downloaded from Borgers' homepage under or is available from the responsible employee of Borgers' Purchase Department), including the normative reference considered the company-specific implementation of legal standards and regulations on the protection of the environment and humans and binding upon the Borgers Group as well as its suppliers. Furthermore, the supplier shall ensure that all statutory specifications in particular by the EU, NAFTA and BRIC states, regarding the use of hazardous substances are met and that products manufactured by him do not contain illegal substances and those having to be declared, are identified as required. 3. Series production In order to protect the production processes, the supplier undertakes to apply monitoring methods (e.g. also statistical techniques) specified in the control plan. If required, Borgers may inspect the respective documents and records. Should the supplier find that the quality requirements have not been met, the persons responsible at Borgers - usually the quality manager(s) of the respective plant - must be notified immediately. Such products may only be delivered with a special /non-conformity permit on hand issued by Borgers.

10 The quality assurance actions based on the findings of the development stage serve to continuously improve the achieved quality level and provide the basis to achieve a "zero-defect quality". However, should any defective products be identified, the supplier shall be obligated to sort these parts out at his own cost, as well as any other parts which may also be defective. The traceability shall be documented accordingly, and the documentation made available to Borgers on request. If the supplier delivers defective products repeatedly, Borgers shall be entitled to commission an external service provider with incoming quality inspections (full checks) until a defect-free delivery is ensured. A defect-free delivers shall be deemed to be ensured when the supplier has provided defect-free deliveries consistently for a period of 10 working days following the commencement of incoming quality inspections. The supplier shall be obligated to bear the costs of these incoming quality inspections. With every new repeatedly defective delivery, Borgers shall be entitled to commission an external service provider with incoming quality inspections (full checks). The aforementioned regulations shall apply accordingly. The supplier shall ensure that damage to the goods due to improper and unreleased packaging during transit is excluded so that the infeed into the current production is not endangered. The type of transport and the packaging shall be chosen in consultation with Borgers. All deliveries shall be packed according to specifications. Unless other requirements have been advised, the packages shall be identified according to the current VDA recommendation so that the goods can be identified at any time. In case of changes, the first delivery after a change must always be clearly identified as such; if the goods are used at several sites of the Borgers Group, this requirement shall apply to each plant separately. After the changed goods have been delivered for the first time, a delivery of goods with the obsolete revision status shall no longer be admissible (FIFO). 3.1 Product or process deviations Product or process deviations with regard to the last release by Borgers shall be unacceptable, unless they have been announced in the form of a written request and with resampling. In case of non-conformities, the supplier shall submit a respective sample as well as the corresponding reports (e.g. measurement reports, material test reports) to Borgers in advance. These products may only be used in series deliveries after being released by Borgers. In the case of non-compliance, the supplier shall bear all costs possibly incurring to Borgers and the customer.

11 In all delivery stages concerning the project, series and spare parts, the supplier shall be obligated to notify Borgers in the following cases after becoming aware in advance, to perform a sampling and obtain a release from Borgers: changes to or modifications of material (also at the sub-supplier); change of the sub-supplier; changes to the production process; tool changes (also in case of a replacement); changes to the testing method or the testing device; relocation of the production. Every product or process change must be approval in writing by Borgers and documented in the product history (parts history). 3.2 Process capability The supplier shall ensure that during the series production all requirements on the product are met. The following capability indices must be reached (unless specified otherwise): temporary process capability Ppk 1.67 permanent process capability Cpk 1.33 For the analysis of the process capability, the features affecting the function or the quality of the component shall be determined jointly by the supplier and Borgers. Usually these are the special features described under 2.7. Test and measuring equipment on the premises of the supplier and possible sub-suppliers shall be subject to a controlled monitoring of measuring equipment. Admissible shall only be the use of capable test and measuring equipment. If the capability indices are not achieved, automatically a full check shall be performed by the supplier or an external company commissioned by it. The supplier undertakes to notify Borgers accordingly and immediately. The additional full check shall be performed apart from the normal production processes. The respective reports regarding the sorting costs shall be transferred to Borgers' quality department on a daily basis.

12 3.3 Sampling of the changes and requalification After each change of the product and/or process, the supplier shall perform a sampling of the changes to ensure that all requirements on the product are met, and to sample these changes for Borgers. Provided due to a lack of changes no sampling has been performed during the product's life-cycle, a requalification within the meaning of ISO/ TS ( ) and the valid customer-specific requirement shall be necessary to ensure compliance with all requirements on the product always one year after the last sampling. To this end, the supplier shall furnish proof that all dimensions are observed according to the last valid release, and the material complies with the specifications of the last sampling status. The method of implementation can be chosen by the supplier, unless specifications have been made by Borgers or the customer. As a minimum requirement, the requalification must be made available to Borgers on request by means of the cover sheet, including all sampling information. All requalifications shall be documented unrequested, archived for the period of 15 years upon the end of the series, and the documentation made available to Borgers on request - as mentioned above. 3.4 Complaint The supplier shall ensure that the products supplied by it correspond to the performance characteristics, dimensions, tolerances and surface finish according to drawings and samples with the respective valid processing status and other contractual bases. Borgers or the customer shall only perform an incoming-goods inspection with regard to the quantity, identity as well as externally visible defects and transport damage. A complaint by Borgers occurs on time for any non-conformity regarding the requirements mentioned in the first paragraph, if it is received by the supplier within a period of 10 days from the acceptance of the goods or in case of latent defects as of the discovery. In the event of a complaint, the supplier ensures an analysis to clarify the cause by means of the 8D method while dealing with the problem. An initial reaction in the form an 8D report shall be effected within 24 hours and include D3. For this purpose, Borgers provides the suppliers with a respective 8D format.

13 With an accumulation of defects, defective products lead to adverse effects within Borgers' production processes or to customer complaints, or in case of recurring defects, Borgers reserves the right to start a respective escalation process, which is organised identical to the following systematics. CSL 1 = full check of potential parts / components concerned under the responsibility of the supplier; CSL 2 = full check of potential parts / components concerned by an external service provider; CSL 3 = Deployment of a "resident engineer" on the premises of the supplier / sub-supplier; Supplier block for the placement of new scopes; Phasing-out scenario; Information to the certification body. All costs and damages occurring in this context shall be borne by the supplier. The supplier and, if necessary, its sub-suppliers shall be obligated to sort out and control defective parts immediately. It shall be obligated to perform appropriate inspections on time aiming at the elimination of the cause of the fault as well as the respective implementation of target-oriented actions. Borgers reserves the right to audit these actions at the supplier and, if necessary, its sub-suppliers (e.g. in the form of process/verification audits in adaptation to VDA 6.3). The respective costs shall be borne by the supplier. Borgers shall charge the supplier for each legitimate complaint the amount of for administrative and other expenses. The expense allowance shall not exclude an assertion of further claims, especially the assertion of exceeding damages or expenses. However, the fixed expense allowance shall be offset with exceeding claims. 3.5 Quality objectives The supplier shall be obligated to perform all actions required to achieve the zero-defect goal. Borgers reserves the right to object to each incident or each defective part and request an 8D report - as described under 3.4. In order to achieve the zero-defect goal, no separate ppm values shall be agreed. With regard to the supplier assessment, achieved ppm values shall be included in Borgers' systems. The supplier is requested to improve the processes continuously throughout the entire project.

14 4. Supplier assessment In order to check the efficiency of the supplier, Borgers shall perform a supplier assessment on a quarterly basis. Every year, the supplier shall receive an evaluation of the elapsed calendar year. The following criteria shall be evaluated: Quality (35%) Cooperation (35%) Logistics (30%) 5. Commitment to supply spare parts The supplier shall ensure that the parts purchased by Borgers and provided for the use within the customer's series production, can still be supplied after the end of the customer's series production (EOP) for a period of at least 15 years. During series production, the series prices shall apply to the supply of spare parts; for the supply following the end of the series, the prices and terms applicable during the year prior to the end of the series production shall apply, unless agreed otherwise. Irrespective of the property issue, the scrapping of component-specific tools or units and production tools shall require Borgers' approval. 6. Term of the agreement This agreement shall take effect with the execution by both parties and be valid for an unlimited period of time for the term of the contractual relationship between the parties. All changes and supplements, including the amendment or rescission of this provision, require the written form. 7. Severability clause, loopholes Should individual provisions of this agreement be or become ineffective or unenforceable in whole or in part, this shall not affect the effectiveness of the remaining provisions of this agreement. To the extent that this agreement contains loopholes or these arise due to the ineffectiveness of a provision, legally effective regulations shall be considered agreed to fill these loopholes, which the parties would have agreed economically as well as according to the meaning and purpose of this agreement, if they had been aware of the loophole.

15 8. Governing law, jurisdiction This agreement shall be governed by the law of the Federal Republic of Germany excluding the United Nations Convention of 11 April 1980 on Contracts for the International Sale of Goods (CISG) and the international private law (conflict of laws). Exclusive jurisdiction for all disputes arising from and in connection with this agreement is Bocholt/Germany, to the extent admissible by law. However, Borgers shall be at liberty to initiate legal proceedings at the principal place of the supplier's business. This agreement supersedes all quality management agreements currently existing between the parties. For Borgers: Place, date Purchase Manager Place, date Quality Management Officer / Central Quality Manager For the Supplier: Place, date General Manager Place, date Quality Management Officer / Quality Manager