Supplier Management. hago Automotive Corp.

Transcription

1 Supplier Management of hago Automotive Corp. Change 24/11/2016 L. Bendel 24/11/2016 J. Blumenstock 9999/ / 00 1 of 13

2 Table of Contents Table of Contents... 2 Table of Figures... 3 Abbreviations Introduction Escalation Procedure Escalation Steps Escalation Step E Escalation Step E Escalation Step E Escalation Step E Escalation Step E Controlled Shipping Level (CSL) Program CSL CSL Q Discussions Supplier Assessment Supplier Assessment of Coil, ZKTL, and LB Purpose, Method, and Assessment Criteria Assessment Ability Quality Performance Reactions on Complaint Reports or Objections Delivery Reliability Customer Satisfaction Deductions Based on Escalation Steps Rating and Measures Supplier Assessment of Logistic Providers Purpose, Method, and Assessment Criteria Change 24/11/2016 L. Bendel 24/11/2016 J. Blumenstock 9999/ / 00 2 of 13

3 4.2.2 Assessment Ability Quality Performance Reaction on Complaint Reports or Objections Invoice Reports Customer Satisfaction Deductions Based on Escalation Steps Rating Table of Figures Figure 1: 3-Points Program... 4 Figure 2: Escalation Procedure... 5 Abbreviations Coil CSL FPM LB PPM ZKTL Coil and sheet metal Controlled shipping level Freights per million Subcontracting (German: Lohnbearbeitung) Parts per million Purchased parts (German: Zukaufteile) Change 24/11/2016 L. Bendel 24/11/2016 J. Blumenstock 9999/ / 00 3 of 13

4 Supplier Management 1 Introduction As a TS16949-certified certified company and supplier for the automotive industry, hago holds hold its suppliers to the highest standards. Hago strives to meet the requirements of its global customers. Ass a result, all hago suppliers must know, fulfill, and continuously work on furthering furt all automotive industry processes. The 3-Points Points Program of our Supplier Management helps to meet individual customer requirements, supports consistent verification, and encourages continuous improvement. Figure 1: 3-Points Program The individual points are discussed in more detail as follows follows. 2 Escalation Procedure Whenever a supplier-caused problem occurs, hago reacts by employing a uniform method that ensures that appropriate actions are taken within defined due dates. dat All scheduled actions are documented during the Q discussions held at the respective escalation level levels. Escalation steps can also be assigned to a supplier following a negative supplier assessment assessment. Depending on the severity of the problem, hago reserves the right to skip entire escalation steps. steps For example, a serious problem can be directly categorized as an E2 escalation step. In return, the introduction of suitable actions can lead to the direct downgrading from step E2 to E0. All support measures performed by hago or hago appoinappoi tees, which are part of the escalation scalation procedure, procedure will be invoiced to the supplier. Should a supplier reach the E2 escalation scalation step, step hago reserves the right to notify the certification agency in charge of the supplier s certification. The following escalation process applies to all process suppliers (raw materials, purchased parts parts, shippers, subcontractors, etc.). on (dd.mm.yy) by (Name) 24/11/2016 L. Bendel on (dd.mm.yy) by (Name) 24/11/2016 J. Blumenstock on (dd.mm.yy) by (Name) Change 9999/ / 00 4 of 13

5 Supplier Escalation Steps hago Management Escalation Step E4 Escalation Step E3 Discontinuation Control Change of Supplier Action Catalog New Business On Hold Q Discussions Purchasing Management, Purchasing, and Quality Manager Management Escalation Step E2 Supplier Development Program CSL 2 Purchasing and Quality Manager Quality Manager Quality Management Employee Escalation Step E1 Escalation Step E0 Action and Development Plan Q Discussions Action Plan CSL 1 Q Discussions Action Plan Quality Management Employee and Purchasing Quality Management Employee Figure 2: Escalation Procedure 2.1 Escalation Steps Escalation Step E0 Escalation step E0 means that the supplier has a problem, which must be resolved with an action plan. For example, a problem is recognized during an inspection of the incoming goods. As a result, hago s respective quality department will specify special inspections which must be performed on the shipments of the supplier. These inspections must be documented in inspection reports. The processing and remediation of the problem must be documented in an 8-D report. This report must be submitted to hago within a specified period. This standard procedure applies to every supplier. Change 24/11/2016 L. Bendel 24/11/2016 J. Blumenstock 9999/ / 00 5 of 13

6 2.1.2 Escalation Step E1 Escalation step E1 is assigned if the supplier-caused issues increase in frequency or if the action plans from escalation step E0 are only implemented effectively in part or not at all within the specified period. In this case, hago may prescribe the CSL 1 Program (see 2.2.1) by notifying the supplier s quality officer in writing. If shipping dates and/or shipping quantities are frequently no met, hago will impose the E1 escalation step on the respective supplier. If the supplier-implemented actions are effective, and if there are no further quality or delivery complaints within a predefined period, the supplier is downgraded in writing from step E1 to E Escalation Step E2 An E2 escalation step is assigned if the supplier continues to experience quality and/or shipping problems while categorized as an E1. Hago can impose the CSL 2 Program (see 2.2.2) on the supplier by notifying the supplier s management in writing. As part of the supplier development, hago and the supplier will draw up an action catalog. Should the agreed action plans prove effective, and if there are no further quality and/or delivery reliability complaints, the supplier is downgraded in writing from E2 to E Escalation Step E3 Ongoing quality and/or shipment issues, as well as a poor forecast based on an extended duration within the E2 escalation step, can lead to an E3 escalation. The supplier s management is alerted in writing of the imposed New Business on Hold status (SAP status E3, blocked for inquiries). The supplier s management must submit a binding and signed action catalog within one week illustrating possible actions for returning to step E2. New orders are also on hold if the QM system certificate has expired or become invalid. In this case, the supplier will not be informed in writing. Should the supplier not yet be in possession of a new certificate, he can provide a letter by the certification agency confirming the positive recertification outcome in substitution. The supplier can also be blocked from new orders if there is no evident active and cooperative problem-solving behavior from the supplier or if the supply guarantee is strongly at risk. A blocked status can only be canceled after hago reviews the effectiveness of the defined actions and notifies the supplier s management accordingly in writing Escalation Step E4 If the entire escalation process does not lead to an improvement of the delivery quality and/or schedule/quantity reliability, the blocked status remains and hago will initiate a supplier change. 2.2 Controlled Shipping Level (CSL) Program In line with the escalation steps, the CSL Program is employed to control the quality of the delivered goods over a specified period and/or quantity. The following CSL levels are possible CSL 1 In addition to the regular inspections, before shipping, the supplier must perform at his expense a 100% inspection pertaining to the material numbers and characteristics. Type and expense of the inspections must be coordinated with hago. The inspected shipments must be marked. The type of marking and documentation (characteristic and quantity of separated parts) must be coordinated with hago. Change 24/11/2016 L. Bendel 24/11/2016 J. Blumenstock 9999/ / 00 6 of 13

7 2.2.2 CSL 2 In addition to the regular inspections, prior to shipping, the supplier must order at his expense an external service provider to perform a 100% inspection pertaining to the material numbers and characteristics. The supplier must issue appropriate inspection/sorting instructions for the external service provider. These instructions must be in advance by hago. The inspected shipments must be marked. The type of marking and documentation (characteristic and quantity of separated parts) must be coordinated with hago. 3 Q Discussions Q discussions with the supplier can be held/scheduled at any time. They not only assist in coordinating and documenting the escalation process, but also serve to document the operative business. Q discussions may involve rolling meetings to improve cooperation, for pricing, etc. 4 Supplier Assessment Hago defines three types of supplier assessments: Assessments for steel suppliers (COIL), for purchased parts (ZKTL) and subcontractors (LB), and for shippers. PPM is only calculated for ZKTL/LB parts, but not for COIL materials. 4.1 Supplier Assessment of Coil, ZKTL, and LB Purpose, Method, and Assessment Criteria This method evaluates the ongoing ability, performance, and readiness of the supplier for continuous improvement. The following assessment forms the basis for continuing the cooperation. Criteria Weighting 2.1 Ability (valid management system) 10 % 2.2 Quality (number of complaints) 40 % 2.3 Reactions to complaints 20 % 2.4 Delivery reliability (quantity and adherence to delivery schedules) 25 % 2.5 Customer satisfaction (service, reaction in daily business) 5 % Change 24/11/2016 L. Bendel 24/11/2016 J. Blumenstock 9999/ / 00 7 of 13

8 4.1.2 Assessment Ability The proof of the ability of an implemented management system is significant for the supplier s evaluation. A maximum of 100% is possible. Management System* Maximum 100 % ISO 9001 or VDA 75 % TS % Hago/customer audits (ISO or TS16949 not implemented) A=90% B=80% C=70 % ISO in addition 5 % Signed Service Level Agreement in addition 10 % * Proof must be provided in the form of a certificate by a DAkks, EA, IAF or ELAC-registered certifier. If a valid certificate is not submitted, the supplier is assigned a E3 status (blocked for inquiries) Quality Performance Quality performance is based on the quantity of non-conformances found during incoming goods inspection or in production. Non-conformances are communicated to the supplier in form of a complaint report, and the PPM figure is calculated accordingly. The number of complaints is also reflected in the assessment. PPM is not calculated for COIL suppliers. COIL supplier assessments reflect only the quantity of complaints. Quantity rejected PPM: x 1 Mio. Quantity shipped Assessment of the PPM figure: Actual PPM 100 = Value => = x %(whereas a max. of 100% is possible) Target PPM Value The target PPM must be coordinated with Feinwerktechnik hago s purchasing department at the beginning of a year. If the supplier fails to do so, hago will prescribe the supplier s annual target PPM as part of the annual assessment. Number of Complaints: Number of Complaints Assessment 0 complaints 100 % 1 complaint 90 % 2-3 complaints 80 % 4-5 complaints (Q discussions when indicated) 60 % > 5 complaints (Q discussions and Business on Hold status) 0 % Change 24/11/2016 L. Bendel 24/11/2016 J. Blumenstock 9999/ / 00 8 of 13

9 The quality performance is based on the PPM evaluation and the number of complaints. Both are incorporated in equal parts into the assessment. PPM assessment + assessment of number of complaints = x % = quality performance Reactions on Complaint Reports or Objections The reaction of a supplier following a complaint (8D report) is essential for damage analysis and the definition of actions so that future errors can be eliminated. The assessment is performed as follows: Reaction (8D-Report) Maximum 100 % None or not within the defined due date 0 % Completed in full within the defined due date 100 % Delivery Reliability Delivery reliability involves the deviation of specified or confirmed delivery dates/quantities compared to the actual delivery dates/quantities. It is automatically calculated by the SAP system in equally weighted parts. Adherence to delivery schedules: +/-10% +/-15% +/-20% +/-30% +/-40% +/-50% +/-75% +/-99,9% 100% 95% 90% 80% 60% 40% 20% 1% Example: A delivery date deviation between 20% and 30 % results in a score of 80%. Adherence to quantity stipulated: +/-10% +/-15% +/-20% +/-30% +/-40% +/-50% +/-60% +/-70% +/-80% +/-99,9% 100% 90% 80% 60% 50% 40% 30% 20% 10% 1% Example: A quantity deviation between 20% and 30 % results in a score of 60% Customer Satisfaction Customer satisfaction evaluates the reaction of the supplier in daily business. Flexibility, reaction time, quotation behavior, communication behavior and feedback, etc. are all important factors. Supplier Behavior Maximum 100 % Spontaneous, flexible, and strongly proactive % Less spontaneous, yet still proactive % Reactive behavior, supplier must frequently be reminded or cautioned % Little or no reaction, supplier must be continuously cautioned or admonished 0 % Change 24/11/2016 L. Bendel 24/11/2016 J. Blumenstock 9999/ / 00 9 of 13

10 4.1.3 Deductions Based on Escalation Steps If the supplier is entered into the escalation process and has an assigned E1 to E4 status, the following percentage points will be deducted from the total of the supplier s assessment result: E0 = 0 percentage points deducted E1 = 11 percentage points deducted E2 = 21 percentage points deducted E3 = 31 percentage points deducted E4 = No further assessment => Discontinuation Rating and Measures The supplier is rated based on the assessment of the above-mentioned criteria. The following divisions apply: in % Step Measures A B < 80 C If one criterion is < 90%, the supplier must take actions. The supplier is not required to notify hago of actions taken. However, hago can inquire about actions during an audit. The supplier must develop and implement a concrete action plan within 4 weeks and advise Hago accordingly. If the action plan is not received on time, the supplier is blocked for new orders until the action plan is submitted. As part of the assessment, the supplier will be invited to a Q discussion in the near future. This Q discussion is intended to define a concrete action plan as a requirement for requalification. During the meeting, it is decided if the supplier is blocked for new orders and whether hago must perform an audit as a further requirement for the approval process. The audit must have an outcome of 90 points. If an audit is not required, the supplier can be temporarily until the next quarterly assessment. The temporary approval must be justified in the Q discussion protocol. 4.2 Supplier Assessment of Logistic Providers Purpose, Method, and Assessment Criteria This method evaluates the ongoing ability, performance, and readiness of the supplier for continuous improvement. The following assessment forms the basis for continuing the cooperation. Criteria Weighting 2.1 Ability (valid management system) 10 % 2.2 Quality (freight per million (FPM), number of complaints) 50 % 2.3 Reactions to complaints 20 % 2.4 Invoice reports 10 % 2.5 Customer satisfaction (service, reactions in daily business) 10 % Change 24/11/2016 L. Bendel 24/11/2016 J. Blumenstock 9999/ / of 13

11 4.2.2 Assessment Ability The ability proof of an implemented management system is essential for the assessment of the supplier. A maximum of 100% is possible. Management System* Maximum 100 % ISO 9001 or VDA 85 % Hago/customer audits (ISO or TS16949 not implemented) A=90% B=80% C=70 % ISO in addition 5 % Signed Service Level Agreement in addition 10 % * Proof must be provided in the form of a certificate by a DAkks, EA, IAF or ELAC-registered certifier. If a valid certificate is not submitted, the supplier is assigned a E3 status (blocked for inquiries) Quality Performance Quality performance is based on technical, logistical, or administrative errors involving the movement of goods. These are communicated to the supplier in the form of a complaint report, and the FPM figure is calculated accordingly. The number of complaints is also reflected in the assessment. Shipments objected FPM: x 1 Mio. Total of shipments Assessment of the FPM figure: Actual FPM 100 = Value => = x %(whereas a max. of 100% is possible) Target FPM Value The target FPM must be coordinated with Feinwerktechnik hago s purchasing department at the beginning of a year. If the supplier fails to do so, hago will prescribe the supplier s annual target FPM as part of the annual assessment. Number of complaints: Number complaints Assessment 0 complaints 100 % 1 complaint 90 % 2-3 complaints 80 % 4-5 complaints (Q discussions when indicated) 60 % > 5 complaints (Q discussions and Business on Hold status) 0 % Change 24/11/2016 L. Bendel 24/11/2016 J. Blumenstock 9999/ / of 13

12 The quality performance is based on the FPM evaluation and the number of complaints. Both are incorporated in equal parts in the assessment. FPM assessment + assessment of number of complaints = x % = quality performance Reaction on Complaint Reports or Objections The reaction of a supplier following a complaint (8D report) is essential for damage analysis and the definition of actions so that future errors can be eliminated. The assessment is performed as follows: Reaction (8D-Report) Maximum 100 % None or not within the defined due date 0 % Completed in full within the defined due date 100 % Invoice Reports The value of the invoice reports is determined by their quantity with the following grading: Number of Invoice Reports Assessment 0 invoice reports 100 % 1 invoice report 90 % 2 invoice reports 80 % > 2 invoice reports 60 % Customer Satisfaction Customer satisfaction evaluates the reaction of the supplier in daily business. Flexibility, reaction time, quotation behavior, communication behavior and feedback, etc. are all important factors. Supplier Behavior Maximum 100 % Spontaneous, flexible, and strongly proactive % Less spontaneous, yet still proactive % Reactive behavior, supplier must frequently be reminded or cautioned % Little or no reaction, supplier must be continuously cautioned or admonished 0 % Deductions Based on Escalation Steps If the supplier is entered into the escalation process and has an assigned E1 to E4 status, the following percentage points will be deducted from the total of the supplier s assessment result: E0 = 0 percentage points deducted E1 = 11 percentage points deducted E2 = 21 percentage points deducted E3 = 31 percentage points deducted E4 = No further assessment => Discontinuation Change 24/11/2016 L. Bendel 24/11/2016 J. Blumenstock 9999/ / of 13

13 4.2.4 Rating The supplier is rated based on the assessment of the above-mentioned criteria. The following divisions apply: in % Step Measures 90 A If one criterion is < 90%, the supplier must take actions. The supplier is not required to notify hago of actions taken. However, hago can inquire about actions during an audit. 80 B < 80 C The supplier must develop and implement a concrete action plan within 4 weeks and advise Hago accordingly. If the action plan is not received on time, the supplier is blocked for new orders until the action plan is submitted. As part of the assessment, the supplier will be invited to a Q discussion in the near future. This Q discussion is intended to define a concrete action plan as a requirement for requalification. During the meeting, it is decided if the supplier is blocked for new orders and whether hago must perform an audit as a further requirement for the approval process. The audit must have an outcome of 90 points. If an audit is not required, the supplier can be temporarily until the next quarterly assessment. The temporary approval must be justified in the Q discussion protocol. Change 24/11/2016 L. Bendel 24/11/2016 J. Blumenstock 9999/ / of 13