Approval: A Pleavin Head of Quality I Snary Supplier Quality Assurance Manager Supplier Detail: Revision Level: 3 Supplier Name: Print: Sign: Position: Date:
0.1 Copyright Notice The contents of this manual and all associated processes, systems and documentation are owned by Lotus Cars Limited and must be handled in strictest confidence by suppliers using this manual. 2013 Lotus Cars Limited Lotus Cars Limited all rights reserved owns the copyright for this manual and all content within. No part of this manual may be copied, transmitted or shared in any way without prior written permission of Lotus Cars Limited. Section 0 Page 2 of 26
0.2 Revision Record Rev Date Issued Details of Change 0 09 09 2013 First Issue Replaces Supplier Handbook 1 24 10 2013 Updated in line with A3 A 6.148 LPAP R1 Part Approval Section 3.0 Text updated to bring in line 2 02 05 2014 Corrections to document reference numbers. 3 7 08 2014 Corrections to document reference numbers. Important Note: This Supplier Quality Manual supersedes the Lotus Supplier Handbook which is now obsolete and should not be used for suppliers to Lotus Cars Limited. Section 0 Page 3 of 26
0.3 Table of Contents 0.1 Copyright Notice 2 0.2 Revision Record 3 0.3 Table of Contents 4 0.4 Standard Forms 5 1.0 Introduction 6 2.0 Supplier Assessment 7 2.1 Supplier Sourcing 7 2.2 Site Assessment 7 2.3 Surveillance Audit 8 3.0 Part Approval 9 3.1 Process Overview 9 3.2 Submission Requirements 11 3.3 Part Approval 12 4.0 Part Control 13 4.1 Key Characteristics 13 4.2 Batch Control and Traceability 14 4.3 Documentation 15 4.4 Supplier Request for Process Change (SRPC) 16 5.0 Non Conforming Product 17 5.1 Supplier Corrective Action Request 17 5.2 Stock Swap 19 5.3 Rejects 20 5.4 Supplier Request for Concession (SRC) 22 6.0 Materials Handling 23 7.0 Metrics and Reporting 24 7.1 Q Sheet 24 7.2 Visit Report 24 8.0 Glossary 25 Section 0 Page 4 of 26
0.4 Standard Forms Doc Ref A4 A 6512 A4 A 6592 A3 A 6148 A4 A 6148.17.1 A4 A 6441 A4 A 6444 A4 A 6361 A3 A 6.21 A4 A 6513 A4 A 6821 Description Supplier Waiver Supplier Audit Questionnaire Lotus Part Approval Process (LPAP) Final Part Approval Supplier Request for Concession Supplier Request for Process Change Supplier Corrective Action Request Logistics Vendor Packaging Method Q Sheet Visit Report Section 2: Supplier Assessment Page 5 of 26
1.0 Introduction Our objective is to procure the highest quality and cost effective components for assembly into our vehicles delivered consistently on time. This will be achieved through open, honest and clear communication with our suppliers and a philosophy of working in partnership to address problems quickly and robustly to protect the end consumer. The purpose of the Lotus Supplier Quality Manual is to document all of the requirements and associated processes for the development, approval and supply of production materials to Lotus Cars Limited. If the supplier or any of its sub suppliers require clarification on any of the content within this manual or anticipate problems achieving its requirements they should contact Supplier Quality Assurance for assistance. A copy of this manual will be issued to each manufacturing site supplying parts to Lotus Cars Limited. This copy shall then be controlled by the supplier s Quality Department and cascaded to ensure that all relevant business functions are trained and meet the requirements herein. The front cover sheet of this manual shall be completed by the receiving supplier and returned to Supplier Quality Assurance for our records to ensure that the manual has been received and cascaded within the supplier s site. Section 2: Supplier Assessment Page 6 of 26
2.0 Supplier Assessment 2.1 Supplier Sourcing Our supplier quality management philosophy is to select suppliers who are registered to the following recognised quality standards: ISO 9001:2008 TS16949: 2009 Where suppliers do not hold externally accredited quality management systems to these international standards a Supplier Waiver A4 A 6512 will need to be submitted and approved by Lotus Cars Limited prior to supply of production materials. 2.2 Site Assessment During the supplier sourcing process it may be necessary for Supplier Quality Assurance to visit the proposed manufacturing facility to conduct an audit (Supplier Audit Questionnaire A4 A 6592). Items covered as part of this audit include: Administration Manufacturing Inspection Delivery Follow up performance The overall score from the audit will be reviewed by Supplier Quality Assurance to define the supplier status. If concerns are raised from the output of the audit then an action plan will be agreed with the supplier in support of the sourcing process within 14 days from the original Site Section 2: Supplier Assessment Page 7 of 26
Assessment. Progress will be monitored against the plan and all corrective actions must be completed prior to start of production material supply into Lotus Cars Limited. Supplier Quality Assurance reserves the right to follow up the audit with additional site visits as required to confirm corrective actions are complete and meet our requirements. 2.3 Surveillance Audit Periodically Supplier Quality Assurance will either visit suppliers to undertake additional audits or request suppliers carry out their own self assessment (Supplier Audit Questionnaire A4 A 6592). Depending on the surveillance audit result the supplier may be requested to develop corrective action plans to resolve areas of concern. Supplier Quality Assurance reserves the right to follow up the audit or self assessment with a site visit if required to confirm corrective actions are complete and meet our requirements. Section 2: Supplier Assessment Page 8 of 26
3.0 Part Approval 3.1 Process Overview Lotus Cars Limited operates its own bespoke system for developing parts and processes within the supply chain to ensure that they consistently deliver our requirements: Lotus Part Approval Process (LPAP). The diagram below illustrates the generic timing of the 14 activities that make up the LPAP process aligned with the Lotus Product Development System (LPDS) milestones for new models: PS CI CD CA FA PPA PA SOP LA Activity Start Finish Lotus Lead Planning Phase CI CA SQA Supplier Visits CD SOP SQA LPAP Status Reporting CA SOP SQA Quality History Review CD FA NPQ Feasibility Review CD FA NPQ Design FMEA CD FA NPQ Process FMEA CA PPA SQA Part Quality Requirements CA PPA NPQ Tooling & Facilities CA SOP SQA Process Control Chart FA PA SQA Training Records FA PA SQA Checking Fixtures FA PA SQA Part Submission Sheet FA SOP NPQ Sub-Supplier Approval PA LA SQA Run @ Rate PA LA SQA Appearance Approval PA SOP NPQ Final Part Approval PA LA SQA EP VP PP 1 2 3 4 Fig 3.1.1: Lotus Parts Approval Process Section 3: Part Approval Page 9 of 26
The following flow chart gives an overview of the LPAP submission and approval process: Lotus Supplier Agree Supplier Category and Submission Requirements Complete LPAP activities as required Review Final Part Approval Email Complete Final Part Approval Parts OK Fit and Func? No Agree corrective actions with supplier Yes All Elements OK? No Raise Interim Approval Agree action plan to full approval Yes Raise Full Approval Fig 3.1.2: Process Flow for Part Approval All aspects of this process and associated activities are documented within the Lotus Part Approval Process (LPAP) Manual A3 A 6.148 which is available from Supplier Quality Assurance. Section 3: Part Approval Page 10 of 26
3.2 Submission Requirements The Lotus Part Approval Process applies to all external suppliers of bulk materials, production or service parts. The specific activities required for each supplied part to Lotus Cars Limited will depend upon change content and shall be agreed between the supplier and the Supplier Quality Assurance representative during the planning phase. In terms of submission data to support evidence of activity completion Lotus Cars Limited operates different submission levels as follows: Category A Category B Category X Lotus certification Supplier must submit all of the LPAP documentation for full review Self certification Final Part Approval, ELV/RRR Data Recording Sheet, Part Quality Requirements, Part Submission Sheets, Process Capacity Sheets and Appearance Approval Report (where appropriate) are required for submission Supplier uses alternative to LPAP Supplier may use an alternative approval process if agreed in advance with Supplier Quality Assurance. Final Part Approval, ELV/RRR Data Recording Sheet, Part Quality Requirements and Appearance Approval Report (where appropriate) are required for submission Suppliers will be advised by Supplier Quality Assurance which submission category they fall into based on part technology, complexity and previous quality performance. Section 3: Part Approval Page 11 of 26
3.3 Part Approval Once all LPAP activities have been completed the Final Part Approval (A4 A 6148.17.1) form should be completed and submitted together with required supporting documentation and sample part(s) for review. Supplier Quality Assurance will then review the data submission together with an assessment of sample part(s) for physical appearance and vehicle fit and function. If all elements of the assessment are passed then a Full Approval will be granted. The FPA form (A4 A 6148.17.1) will be signed and a copy will be sent back to the supplier for their records as authority to ship materials into Lotus Cars Limited. Important Note: ELV/RRR Data must be supplied for all parts as part of the submission paperwork to gain Full Approval. Where issues are found that do not directly affect part fit/function an Interim approval may be raised. The FPA form (A4 A 6148.17.1) will be signed and sent back to the supplier to allow shipment of materials into Lotus Cars Limited pending correction of open items. Where issues found do affect part fit and function or insufficient information has been provided to make an approval Supplier Quality Assurance will contact the supplier direct to agree corrective actions and timing to achieve Part Approval. In order to authorise shipment of this material into Lotus Cars Limited a Supplier Request for Concession (A4 A 6441) will be required documenting the agreed corrective action plan pending completion of the updated approval documentation refer to section 5.4. Section 3: Part Approval Page 12 of 26
4.0 Part Control 4.1 Key Characteristics Key Characteristics are identified on Drawings, Technical Specifications and Part Quality Requirements in line with the following: Symbol Definition Description Fit / Function Item likely to affect ability to build, performance or appearance which would lead to customer complaint. Regulatory Compliance Item which would affect vehicle ability to meet market specific legislation Safety Compliance Item which could affect safe vehicle operation or part assembly at Lotus For all key characteristics defined adequate controls must be in place within the part manufacturing process to ensure specifications are achieved. These requirements must be cascaded within all documentation to include: Drawings Specifications Part Quality Requirements Process FMEA Process Control Chart Operator Instructions / Training documents Section 4: Part Control Page 13 of 26
4.2 Batch Control and Traceability Parts with safety ( )or legislative ( ) key characteristics may be required for Batch Control with full Traceability required between delivered product back to raw material / manufacturing process and date at the supplier s site. Supplier Quality Assurance will advise Batch Control and Traceability requirements based on the following definitions during the LPAP process: Type A B C Definition Each individual part identified with unique traceable serial number Batch traceable and marked on part within agreed batch size / time period Batch traceable and marked on packaging / delivery note with agreed batch size/time period. To be used when not possible to mark parts. Where the supplier has an alternative method of batch control / traceability this may be used only if agreed in advanced with Supplier Quality Assurance. Section 4: Part Control Page 14 of 26
4.3 Documentation Documents and records pertaining to the design and manufacture of parts supplied should be controlled in line with the suppliers quality management system and ISO 9001:2008. Retention of all such documentation in the form of hard copy, electronic or other media shall be in line with the following table: Record Type Example Retention Period Transient / Live Documents Product Records Product Records Safety ISO Audits Corrective Action Reports Inspection / Test Results Non Conformance Reports Inspection / Test Results Created Date + 1 Year Product Life* + 1 Year Product Life* or Legislative related Non Conformance Reports + 15 Years Process Records Tooling and Fixtures Product Life* Process Controls * Product Life is defined as the manufacturing lifespan of the vehicle(s) into which the parts are fitted. Where the supplier has alternative document control procedures these may be used providing they exceed the Lotus requirements as detailed above and advanced approval from Supplier Quality Assurance has been granted. Section 4: Part Control Page 15 of 26
4.4 Supplier Request for Process Change (SRPC) When the supplier wishes to make a change to the process used for the manufacture of parts supplied an SRPC form (A4 A 6444) is required to gain approval for the proposed change in advance of its implementation. Changes requiring such approval include: Manufacturing Process Change New or relocation of Equipment / Facility Change of sub supplier / components within a supplied assembly Design changes (where supplier is design responsible) The process for SRPC submission and approval is as per the flow diagram below: Lotus Supplier Review SRPC A4 A 6144 Email Change to process is proposed Complete SRPC Form Change acceptable? Yes No REJECT change request. Confirm action plan with supplier APPROVE change request Email Implement Process Change Fig 4.4.1: Supplier Request for Process Change Section 4: Part Control Page 16 of 26
5.0 Non Conforming Product 5.1 Supplier Corrective Action Request A Supplier Corrective Action Request (SCAR) will be raised by Supplier Quality Assurance when a concern or quality issue is identified as supplier related and one or more of the following criteria apply: a) Concern investigation reveals risk of disruption to production b) Concern involves a repeat issue previously communicated to the supplier. c) Supplier has had similar concerns on other parts. SCAR responses from suppliers should be received within a 24 hour period & include any required containment actions. Closure plans for SCARs should be agreed with Supplier Quality Assurance within 2 working weeks of being raised. If a supplier requires additional time to collate permanent corrective actions, they should request a time extension through their Supplier Quality Assurance representative. Section 5: Non Conforming Product Page 17 of 26
The following process flow shows the process from concern identified at Lotus Cars Limited to issue resolved at supplier: Lotus Supplier A4 A 6361 SCAR Raised Review ICA ICA acceptable? No Email Contact Supplier to resolve Email Investigate Concern Implement Interim Containment Action (ICA) ICA required in 24 Hours PCA required in 14 Days Yes Review PCA Email Implement Permanent Corrective Action (PCA) PCA acceptable? No Contact Supplier to resolve Yes Close SCAR Fig 5.1.1: Supplier Corrective Action Request Process Section 5: Non Conforming Product Page 18 of 26
5.2 Stock Swap Where non conforming parts are identified a stock swap process is available whereby suppliers can replace this material with good parts within an agreed window with Supplier Quality Assurance. Such parts will not be considered as reject material and hence will not impact on a supplier s PPM (Parts per Million) score but will still require SCAR (Supplier Corrective Action Request) completion. The following process illustrates how stock swaps are handled: Lotus Supplier Non Conforming parts identified Email Raise Reject Note Email No Stock Swap? Yes Maximum 5 Days Review New Parts Supply New Parts Parts OK? Yes No Contact Supplier to resolve A4 A 6361 Raise SCAR Fig 5.2.1: Stock Swap Process Section 5: Non Conforming Product Page 19 of 26
5.3 Rejects When a reject note has been raised, details are emailed to the supplier, who then has 5 working days to investigate the details of the rejection and to either; accept, rework or query liability. At the end of this 5 day window, materials will be scrapped if they have not been requested for return by the supplier. If parts are being returned to the supplier transportation costs will be cross charged and debited from the supplier s account: Lotus Supplier Reject Note Raised Email Agree part collect / scrap Hold Parts 5 Days No Parts Collected? Scrap Parts Yes Reject Note Closed Supplier Account Debited (Incl Admin Fee) Fig 5.3. 1: Reject Part Process Section 5: Non Conforming Product Page 20 of 26
Important Note From October 2013 the following may be cross charged to suppliers: Administration charge for handling and processing reject notes Inspection charges for undertaking time consuming batch / part reviews Rework charges if non conforming parts are being reworked by Lotus Cars Limited personnel Consequential part costs if non conforming materials have been processed into assembly or parts fitted to vehicles which need to be replaced Warranty recovery costs may also be passed on to suppliers in some circumstances Where applied, these charges will be debited from the suppliers account in addition to the cost of the parts themselves. Section 5: Non Conforming Product Page 21 of 26
5.4 Supplier Request for Concession (SRC) Where a supplier wishes to make a temporary change to the parts supplied a Supplier Request for Concession (SRC) is required to gain approval for the proposed change in advance of its implementation. Changes requiring such approval include: a) Material specification change b) Cosmetic quality specification change c) Dimensional specification change The process for submission of the SRC form (A4 A 6441) and approval is as follows: Lotus Supplier Supplier requires change / deviation Review SRC Email Complete SRC Document A4 A 6441 Request OK? Yes No Contact supplier to resolve Approve SRC Email Implement Request Fig 5.4.1: Process for Supplier Request for Concession Section 5: Non Conforming Product Page 22 of 26
6.0 Materials Handling In order to maintain the quality of finished goods during transit and storage suppliers should refer to the Logistics Vendor Packaging Method (LVPM) policy (A3 A 6.21). This is used to agree, develop and sign off the packaging method for all parts supplied into Lotus Cars Limited. Copies of this policy and associated documentation for packaging approval can be obtained from the suppliers Lotus logistics contact. Section 6: Material Handling Page 23 of 26
7.0 Metrics and Reporting 7.1 Q Sheet Supplier Quality Assurance will issue quality feedback to its suppliers via the Q Sheet A4 A 6514 on a quarterly basis. This report contains key performance indicators (KPIs) covering the following items: Part Approval Status for parts supplied; LPAP Status for new models; SCARs quantity and ageing profile; PPM reject rates for parts supplied; Key issues and action items for both parties where appropriate; The purpose of this report is to provide data for cascade through the supplier s management and organisation. This will then be used to drive a continuous improvement approach and promote open and honest feedback between Lotus Cars Limited and the supplier. 7.2 Visit Report When Supplier Quality Assurance visit the supplier to investigate a concern or follow up on a previous activity a visit report (A4 A 60133) will be issued within 48 hours of the visit completion. This report will include full details of the supplier team members seen and all actions agreed from the meeting. Actions and status will be summarised with a RED AMBER GREEN status and follow up will be conducted by Supplier Quality Assurance until all items are completed and achieve a GREEN status. Section 7: Metrics and Reporting Page 24 of 26
8.0 Glossary Acronym Definition Description ELV/RRR End of Life / Reduce Reuse Recycle Material / Chemical data for all component parts used within Lotus products that is required for vehicle type approval. FPA Final Part Approval Form used to request approval at the end of LPAP process. LPAP Lotus Part Approval Process Method implemented 2013 to replace APQP/PPAP for new part maturation and approval. LPDS Lotus Product Development System Project management and delivery process for new models at Lotus Cars Limited. LVPM Logistics Vendor Packaging Method Packaging requirements for production parts. PPM Parts Per Million Measure of defects supplied against total quantity of supplied. PQR Part Quality Requirements Documented quality standards and checking method for production parts. PSS Part Submission Sheet Document for dimensional / functional measurement submission as part of LPAP. SCAR Supplier Corrective Action Request Report submitted to supplier for feedback regarding quality issues found with their parts. Section 8: Glossary Page 25 of 26
Acronym Definition Description SQA Supplier Quality Assurance Department responsible for managing supplier performance. Part of Quality Department. SQM Supplier Quality Manual Manual with all supplier related processes. SRC Supplier Request for Concession Form used to request deviation against technical specification / process / PQR. SRPC Supplier Request for Process Change Form used to request change to process for manufacture of parts. Section 8: Glossary Page 26 of 26