Supplier Quality Requirements FSQ01

Supplier Quality Requirements FSQ01 1

Change Revision Level Date Introduced 0 25/06/2013 2

1. Scope 2. Code of Conduct 3. Acronyms and Definitions 4. Prohibited and Restricted Materials Policy 5. Quality System Requirements 6. Continual Improvement 7. Supplier Selection 8. Design Control 9. Advanced Product Quality Planning (APQP) 10. Production Part Approval Process (PPAP) 11. Non-Conforming Material 12. Maintenance and Improvement 3

1. Scope These Supplier Quality Requirements apply to all suppliers of direct material to Fozmula Ltd. 2. Supplier Code of Conduct Fozmula Ltd values its global supply partners who share the Company's commitment to quality and low cost, and who operate under a philosophy that focuses on integrity and "doing the right thing." To that end, Fozmula Ltd has this general code of conduct specifically for its global supply base, detailing the Company's expectations of compliance to certain business and ethical standards. The code is designed to ensure the Company's suppliers not only adhere to those standards but also to the laws of their countries and all other applicable laws, rules and regulations. The code applies to all businesses that produce goods or provide services for Fozmula Ltd and any of ts subsidiaries, joint ventures, divisions or affiliates. 1. Suppliers should provide equal employment opportunity and fair treatment of workers. 2. Suppliers should not use forced or child labour in any activity connected with supply. 3. Suppliers should adopt fair working, pay and conditions. 4. Suppliers should provide an environment which allows freedom of association. 5. Suppliers should not engage in any bribery/corrupt or other unethical activity. 6. Suppliers must protect the intellectual property of Fozmula Ltd at all times. 7. Suppliers must respond quickly to any reasonable request for action from any member of the team. 8. Suppliers must at all times accept a duty of care for the integrity of any data representing supply. 3. Acronyms and Definitions 1. AIAG - Automotive Industry Action Group is an industry organization that, among other responsibilities, provides administrative support to the Automotive, Truck and Heavy Equipment industries for supplier quality requirements, and distributes related manuals and publications. 2. APQP - Advanced Product Quality Planning is a structured process for producing a quality plan, which supports the development and production of a product that will satisfy the customer. Reference the AIAG manual (Advanced Product Quality Planning and Control Plan - APQP ) for a complete description. 3. 8D Problem Solving - A disciplined method for problem solving which emphasizes analysis for the true root cause and verification that the corrective action is effective in eliminating the root cause. The eight steps in the process are: 4. Classification of Characteristics (C of C) - The process of classifying product and process characteristics for the optimum utilization of engineering & manufacturing resources. a. Critical Characteristic - A dimension, material property, physical feature, etc. which, if not to specification could be a safety risk, or will certainly cause operational failure or a loss of performance. b. Major Characteristic - A dimension, material property, physical feature, etc. which if not to specification will probably cause operational failure, loss of performance, increased service cost or disruption to manufacturing. c. Minor Characteristic - A dimension, material property, physical feature, etc. which has not been classified as Key, Critical or Major. It exists only as a general class to describe characteristics that do not fit other classifications. Although not classified as Critical, Major, or Key the supplier is responsible for ensuring these characteristics meet the print specification. d. Key Characteristic - A dimension, material property, physical feature, process, etc. that has been identified as being key to subsequent manufacturing or assembly operations. Key characteristics may be identified by the SQIE Engineer. Key characteristics apply predominantly to minor characteristics. 4

5. In-plant Defect PPM - The number of parts with supplier-caused defects found within Fozmula Ltd versus the number of parts received from that supplier, reported as PPM (parts per million) a. NOTE: For suppliers with multiple producing locations, each producing location will be considered separately. 6. ISO9001:2008 - The ISO quality management system standard, and the minimum requirement for any direct material supplier to Fozmula Ltd. 7. ISO/TS 16949:2009 ISO Technical Specification for the Automotive Industry. 8. MSA - Measurement System Analysis a process to determine that measurement systems are capable of measuring to the desired accuracy and repeatability. Reference the AIAG manual (Measurement System Analysis - MSA) latest edition for a complete description. 9. DMR Defect Material Report 10. OEM Original Equipment Manufacturer 11. OEM Defect PPM-Supplier - The number of Supplier Caused OEM defects divided by the number of units shipped expressed in parts per million (PPM). a. NOTE: For suppliers with multiple producing locations, each producing location will be considered separately. 12. PPAP - The Production Part Approval Process is the process used to ensure new or changed components meets quality requirements. It is often used in conjunction with APQP. No new or changed parts can be shipped before a PPAP is approved by a Fozmula Ltd SQIE. Reference the AIAG manual (Production Part Approval Process PPAP ) for a complete description. 13. Quality System - Third Party Registration - Certification by an independent registrar which is qualified by a national accreditation body to perform audits to an accepted standard such as ISO/TS 16949:2009 and ISO9001:2008 and to register the audited facility for a given scope. 14. SCR Supplier Change Request process suppliers are required to use to request approval of a change to a product or process. This process may also be referred to as Product Change Notification (PCN) in some business units. 15. Six Sigma - Statistically based improvement process used throughout Cummins. Suppliers will be requested to participate where significant opportunities for improvements are identified. 16. SQIE - Supplier Quality Improvement Engineer is the person(s) at Fozmula Ltd responsible for the ensuring suppliers execute various elements of the SQIP such as APQP. PPAP, and DMR s. 17. SQIP - Supplier Quality Improvement Program is the Fozmula Ltd term for the process to be followed by SQIE s with suppliers of direct materials. 18. Supplier Scorecard - Purchasing system that rates the supplier in the categories of Price/Cost, Quality, Delivery, Technology, and Attitude/Administration. 4. Prohibited and Restricted Materials Requirements Consistent with its commitment to contribute to a cleaner, healthier, safer environment, Fozmula Ltd has identified substances that are restricted or prohibited from our products. Consequently, suppliers must be aware of and adhere to these standards for materials or components supplied us. Materials provided by suppliers may include partially or fully finished assemblies, components, packaging, chemicals and consumable processing materials. It is the responsibility of the supplier to verify that the substances listed are not in any products or materials supplied to Fozmula Ltd per the referenced threshold. The prohibited and restricted materials guidelines are available through your Purchasing contact. 5. Quality System Requirements 1. A quality system is an integral part of a successful quality program. It is not, however, a guarantee of quality products and processes. A quality system establishes disciplines. Only when the disciplines are in place and effectively executed will the benefits be derived. Functioning quality systems lead to sustained improvements within an organisation. 5

2. Supplier quality system requirement is: ISO9001:2008 ISO/TS16949:2009 NOTE 1: Fozmula Ltd expects that all suppliers are approved by a third party provider to ISO9000:2008. NOTE 2: The minimum acceptable quality system registration for a new supplier is ISO9000:2008, unless written approval of exception is given by the applicable SQIE and all documentation requirements are met (i.e.: are equal to or better than the minimum standard) NOTE 3: All suppliers who meet the AIAG applicability rules for becoming an ISO/TS16949 supplier shall pursue certification. In the meantime, as a minimum, these suppliers shall follow PPAP and APQP rules and all requirements listed in this manual. 3. The supplier shall maintain their Quality System Registration through their registrar s surveillance program and will notify the SQIE of any change in their registration status such as a new certificate number, suspension, revocation or switch to another registrar. The supplier must submit a copy of their registration to Fozmula Ltd. 4. Fozmula Ltd expects its Tier 1 suppliers to manage the quality of their supplier base. Fozmula Ltd understands that Tier 1 suppliers must occasionally use suppliers who are not ISO9001:2008 registered due to factors such as supplier size, volume, specialty products, etc.. Fozmula Ltd does not prohibit the use of these suppliers. 5. Fozmula Ltd requires that Tier 1 suppliers allow and facilitate visits and audits of Tier 2 suppliers. 6. Any change from one supplier to another (including change in supplier site) requires the change be approved through Fozmula Ltd SQIE in every case. 7. Where Fozmula Ltd purchases Off-The-Shelf items (e.g. items that are commercially available, purchased from a store, or catalogue, are not supplied based on a company print) no quality registration is required. 8. ISO/TS 16949 and ISO9001:2008 contain numerous clauses such as when required by the customer or where specified by the customer. FSQ01 is the repository for these requirements. All items in FSQ01 shall be considered "customer requirements" 9. It is impossible to cover every conceivable situation with a blanket statement or definition. If a situation occurs that is not covered by FSQ01, the SQIE is the main point of contact for getting questions answered and situations resolved. The SQIE has the authority to request data above & beyond the stated requirements if deemed necessary. 6. Continual Improvement 1. Fozmula Ltd expects suppliers to monitor the outputs of their quality system and continually improve in quality, service, and cost. This philosophy should be fully deployed throughout the supplier s organization. Continual improvement in product characteristics means optimizing at a target value and reducing variation around that value. This assumes that product characteristics currently meet specifications. Our customers have high expectations of the quality of our products In order to meet these expectations we are equally demanding of our supply base. 2. Suppliers are also expected to apply continual improvement techniques to non-product characteristics that impact quality, service, and cost such as machine downtime; floor space utilization; first-time PPAP approvals; testing methods; process flows etc. Lean manufacturing methods are a proven way of achieving these improvements and are encouraged. 3. Suppliers are encouraged to adopt current principles as a formal improvement process, particularly when aimed at improving quality or reducing costs, e.g. PDCA cycle approach (Fig 1). 6

Fig 1 4. Suppliers with high value, chronic or repeat quality issues need to participate in a Fozmula Ltd problem solving initiative. 5. Suppliers are expected to implement continuous improvement tools. 6. Suppliers shall use statistical tools for managing and improving processes as requested by the SQIE. Statistical tools may include but are not limited to Statistical Process Control. 7. Suppliers shall comply with continual improvement methods such as Annual Revalidation as requested by Fozmula Ltd or be adopted onto a SQIP. 8. For electronics components, supplier is expected to evaluate the manufacturing process for the application of Process Average Testing (PAT). This should be discussed with the SQIE for appropriate application of PAT. 7. Supplier Selection 1. For potential suppliers to Fozmula Ltd, the selection team will assess the supplier against specific requirements including: Quality, Total Cost of Ownership (TCO), Technical, Regulatory, Financial, Warranty Commitment, Target Cost and Future Cost Reductions etc. 2. As a supplier or potential supplier you will be asked for a copy of your ISO/TS 16949 or ISO9000:2008 Certificate which covers the producing plant location and product proposed for delivery to Fozmula Ltd. 3. Additionally, you will be asked to complete a Supplier Questionnaire as a prelude to a site visit by the selection team. During the site visit, qualified members of the selection team will perform a Supplier Audit and/or a Quality System Assessment. The selection team can be comprised of representatives of Engineering, Manufacturing, Purchasing, Quality and Finance. Supplier Audit looks at many of the supplier s systems in detail with the objective of determining which areas need to be improved prior to launching a product at that facility. The Quality System Assessment looks for the routine implementation of the system. 4. Process/Product audits of similar products being run on the process proposed may also be included as part of the Supplier Selection Process. 5. When the selection team completes their evaluation and a selection is made, the new supplier is formally 7

introduced to the SQIP Cycle. 6. Suppliers which sell into Fozmula Ltd from offshore shall support the import with a resident technical resource to handle sorting, screening, and issue resolution. Suppliers can use a third party for these activities at their own expense. 8. Design Control 1. Design control refers to the ownership of the design of the component being sourced. Fozmula Ltd the component is wholly designed, developed and specified by us. Suppliers are encouraged to participate in the design of these products to contribute their knowledge and expertise (e.g. process requirements, cost reduction opportunities etc.). If a component is under Fozmula Ltd design control, it is our responsibility to address quality issues arising from the design. 2. Supplier Design Control the component is wholly designed and developed by the supplier to meet a Fozmula Ltd specification, performance requirement, and technical profile. If a component is under the Supplier s design control, it is the supplier s responsibility to address quality, reliability, and durability issues arising from the design. Note 1 The supplier is responsible for completing Design Failure Mode Effects Analysis, Design Reviews, and specific product testing that demonstrates compliance to expected reliability and durability (life). 9. APQP 1. The requirement of APQP is crucial to the development of new products and processes, the revision of existing products and processes, and moving components from one supplier to another. Its single most important tenet is that quality just does not happen, it must be planned. Quality must be in the design of the product as well as in the development of the process that will produce the product. Three key outputs of APQP are the Process Failure Mode and Effects Analysis (PFMEA) the Control Plan and the Production Part Approval Process (PPAP). Suppliers are expected to be knowledgeable of and follow the APQP process. We have an Excel workbook which is helpful and available to all on request. 2. As a supplier to Fozmula Ltd you should be aware that at least two APQP processes happen in conjunction with one another: a. We initiate an APQP process internally in the development of new products; and, b. As a supplier of a component or assembly to the product, you shall initiate an APQP process of your own when engaged by us. Your level of involvement will vary depending on where the responsibility for design control resides for the component or assembly that you will be supplying by agreement with your Fozmula Ltd contact. 10. PPAP 1. PPAP (Production Part Approval Process) is a basic product cycle element. PPAP applies to both new and existing product and is intended to assure that the new or revised products are production ready. PPAP can be the end result of APQP or a process in its own right to manage smaller changes. This is a requirement of Fozmula and submissions must be approved before supply can begin. 2. Fozmula Ltd requires suppliers to follow the latest version of the AIAG PPAP manual. Suppliers must obtain written approval from us for product or manufacturing process changes before shipment of components. Unapproved changes cause serious issues often in spite of the best intentions of all. We must be notified so that we may assess whether a full, partial or no submission is required and it is the supplier s responsibility to ensure that we have approved the PPAP before any decisions are made on the impact of the 8

changes. Any parts that are shipped from a manufacturing location that has changed require a full submission. 11. Non-conforming Material 1. In the event that quality problems are experienced with a supplier, the corrective action process may escalate through several phases depending on the adequacy and timeliness of the supplier s response and the effectiveness of the actions taken. It may also be escalated immediately. Note 1: Reworked or repaired material is considered non-conforming unless prior approval of these processes was granted by us. 2. We will notify the supplier when a nonconformance has occurred. At the time of notification, the supplier will also be advised if a corrective action response is required. a. If requested, the supplier will complete the Fozmula 8D process. b. If a DMR is issued but a CAR is not, it is our expectation that the supplier takes immediate action to contain any additional defects and while no formal response is required in this case, the supplier is still expected to take appropriate corrective action to prevent additional defects from being produced or reaching our site. Fozmula Ltd SQIE's may check supplier s actions taken as part of our Process/Product audit process. c. The DMR gives the supplier the opportunity to document actions taken and it is suggested that the supplier document these actions. In some cases, we may request a response to a DMR. If response is requested, then the supplier is expected to comply. d. The supplier shall submit documented containment results within 24 hours of notification of non-conformity e. The supplier s containment process must cover all possible areas of potential defects including any stock at: f. Supplier s manufacturing location finished, raw material or part processed. g. All potential transportation links (e.g. supplier to ship, ship to warehouse, warehouse to Fozmula Ltd, up to and including our end user customer etc.) h. Root cause shall be identified and short term action in place within 48 hours of finding the defect. If a part is required to complete the root cause analysis, the 48 hours begins when the supplier receives the part. However, all attempts shall be made to complete the root cause analysis without having component physically in hand. Photographs, measurement data, and defect descriptions are usually sufficient for this purpose. i. Long term action plan submitted within 10 working days of receipt of CAR. j. Long term action plan in place within 30 days of finding the defect. Past Due CARs will be escalated to management for further review. k. Timeliness of suppliers responses to these due dates are measured and will be included in the Supplier Balanced Scorecard. 12. Maintenance and Improvement 1. Process/ Product Supplier Change Control a. The supplier shall notify the SQIE of any proposed process or product changes as described in the AIAG PPAP manual. Failure to adhere to PPAP notification rules have led to severe quality issues. b. The supplier shall obtain approval for all process and product change requests from their SQIE prior to implementing a change. Proposed changes shall be approved using the Supplier Change Process SCR). Informed decisions are then made on the impact of the changes and whether a full, partial or no submission is required. It is the supplier s responsibility to ensure that Fozmula Ltd has approved the PPAP before any parts are shipped to a manufacturing location. c. Changes to the suppliers direct material supply base require the supplier to submit a Supplier Change Request (SCR). Upon approval of the Supplier Change Request the supplier may be required to submit a PPAP by the SQIE. d. The supplier shall gain approval from Fozmula Ltd/ SQIE using the Supplier Change Request process when any alternate process is to be used. NOTE: An alternate process is one that is different than the process used during PPAP. 9

e. Products produced on alternate processes may be subject to increased inspection and test requirements as agreed with the SQIE. 2. Quality Data a. The supplier shall maintain routine quality data (e.g., quality indices updates, reliability test results, etc.) that are required by the Fozmula Ltd Engineering drawing, agreed to in the APQP/PPAP elements of the Cycle, or established as part of a corrective action plan. Such data shall be made available to Fozmula Ltd upon request and provided within 1 business day of any such request. b. The supplier shall maintain on-going capability data for all customer special characteristics. All characteristics identified as major or critical on the print, and any characteristic that has been deemed key by the SQIE falls under the category of a customer special characteristic. The supplier shall provide capability information available to Fozmula Ltd within 1 business day of request. In some cases, suppliers will be requested to provide capability on a routine basis (e.g. monthly). The supplier shall comply. c. Supplier shall attend an on-site Quality Review as and when required by the SQIE. The purpose of this is to track progress of problem solving activities and review evidence of the process in action. The outcome and progress within that process may lead to a Supplier Quality Improvement Programme, which can be agreed based on actions outstanding, or needs identified between the supplier and ourselves. d. APQP and PPAP continue to provide inputs as new products and processes are developed and existing products and processes are improved. Likewise, this provides input to future APQP and PPAP projects with information on supplier's performance history. e. The supplier shall maintain PPAP records for the life of the product plus one year. f. The supplier shall maintain inspection and test records for three years minimum. 10

PPAP Submission Levels Table 4.1 Level 1 Warrant only (and for designated appearance items, an Appearance Approval Report) submitted to the customer. Level 2 Warrant with product samples and limited supporting data submitted to the customer. Level 3 Warrant with product samples and complete supporting data submitted to the customer. Level 4 Warrant and other requirements as defined by the customer. Level 5 Warrant with product samples and complete supporting data reviewed at the organization's manufacturing location. See Retention/Submission Requirements Table 4.2 for exact retention/submission requirements for each submission level. The organisation shall use level 3 as the default level for all submissions unless otherwise specified by the authorised customer representative. The minimum submission requirement for bulk materials is the PSW and the Bulk Materials Checklist. For Bulk Material PPAP submissions, check "Other" in the Reason for Submission Section on the PSW form and specify "Bulk Material." This indicates that the "Bulk Material Requirements Checklist" was used to specify the PPAP requirements for the bulk material and shall be included in the submission packet. NOTE 1: The authorised customer representative may authorise a submission level, different from the default level that is to be used with each organisation, or organisation and customer part number combination. Different customer locations may assign different submission levels to the same organisation manufacturing location. NOTE 2: All of the forms referenced in this document may be replaced by computer-generated facsimiles. Acceptability of these facsimiles is to be confirmed with the authorised customer representative prior to the first submission. 11

PPAP Retention Requirements Submission level Table 4.2 Requirement Level 1 Level 2 Level 3 Level 4 Level 5 1 Design Record R S S * R..for proprietary components/details R R R * R..for all other component/details R S S * R 2 Engineering Change Documents, if any R S S * R 3 Customer Engineering Approval, if required R R S * R 4 Design FMEA R R S * R 5 Process Flow Diagrams R R S * R 6 Process FMEA R R S * R 7 Control Plan R R S * R 8 Measurement System Analysis R R S * R 9 Dimensional Results R S S * R 10 Material, Performance Test Results R S S * R 11 Initial Process Studies R R S * R 12 Qualified Laboratory Documentation R S S * R 13 Appearance Approval Report(AAR) if applicable S S S * R 14 Sample Product R S S * R 15 Master Sample R R R * R 16 Checking Aids R R R * R 17 Records of Compliance With Customer - Specific Requirements R R S * R 18 Part Submission Warrant S R R S R Bulk Material Checklist(see 4.1 above) S S S S R S = the organisation shall submit to the customer and retain a copy of records or documentation at appropriate locations. R = the organisation shall retain at appropriate locations and make available to the customer upon request. * = the organisation shall retain at appropriate locations and submit to the customer upon request. 12

Part Submission Warrant Part Name Part Number Safety and/or Engineering Drawing Government Regulation YES NO Change Level Dated: Additional Engineering Changes Dated: Shown on Drawing Number Purchase Order No Weight (kg): Checking Aid Number Engineering Change Level Dated: SUPPLIER MANUFACTURING INFORMATION SUBMISSION INFORMATION Dimensional Materials/Function Appearance Supplier Name Street Address City State Zip Customer Name/Division Buyer/Buyer Code Application REASON FOR SUBMISSION Initial submission Engineering Change(s) Tooling: Transfer, Replacement, Refurbishment or additional Correction of Discrepancy Other please specify Change to Optional Construction or Material Sub-Supplier or Material Source Change Change in Part Processing Parts Produced at Additional Location REQUESTED SUBMISSION LEVEL (Check one): Level 1 Warrant, Appearance Approval Report (for designated appearance items only) Level 2 Warrant, Parts, Drawings, Inspection Results, Laboratory and Functional Results, Appearance Approval Report Level 3 At Customer Location Warrant, Parts, Drawings, Inspection Results, Laboratory and Functional Results, Appearance Approval Report, Process Capability Results, Capability Study, Process Control Plan, gage Study, FMEA Level 4 Per Level 3, but without Parts Level 5 - At Supplier Location Warrant, Parts, Drawings, Inspection Results, Laboratory and Functional Results, Appearance Approval Report, Process Capability Results, Capability Study, Process Control Plan, gage Study, FMEA SUBMISSION RESULTS The results for dimensional measurements material and functional tests appearance criteria statistical process package These results meet all drawing and specification requirements YES NO (If NO Explanation Required) DECLARATION I affirm that the samples represented in this warrant are representative of our parts and have been made to the applicable customer drawings and specification and are made from specified materials on regular production tooling with no operations other than the regular production process. I have noted any deviations below: EXPLANATION/COMMENTS: Print Name: Title: Phone No. Supplier Authorized Signature Date: FOR CUSTOMER USE ONLY Part Disposition Approved Rejected Other Customer Name Customer Signature Date 13