SUPPLIER REQUIREMENTS MANUAL
Stoneridge, Inc. “Total Commitment to Customer Satisfaction” For use with ISO/TS 16949:2009 and ISO 9001:2008
REV B:1-3-2011
Supplier Requirements Manual
TABLE OF CONTENTS 1. INTRODUCTION …………………………………………………...………………….……4 1.1 Purpose/Objective 1.2 Scope 1.3 Terms and Definitions 2. Stoneridge Specific Requirements Content Summary………………………………9 2.1 Quality Management Systems 2.1-1 General Requirements 2.1-2 Quality Record 2.1-3 Control of Records 2.2 Management Responsibility……………………………..………….....……...10 2.2-1 Management Review 2.2-2 Customer Representative 2.3 Resource Management…………………………………………………………10 2.3-1 Knowledge Transfer (Training) 2.3-2 Facility and Equipment/Tooling Planning 2.3-3 Contingency Plans 2.4 Product Realization………………………………………………………...…..10 2.4-1 Planning of Realization 2.4-2 Manufacturing Feasibility 2.4-3 Design and Development (Product and Process) 2.4-2.1 Special Characteristics 2.4-2.2 Change Control 2.4-4 Production Part Approval Process 2.5 Measurement, Analysis & Improvement……………………………..………14 2.5-1 Identification of Statistical Tools 2.5-2 Knowledge of Statistical Concepts 2.5-3 Customer Satisfaction 2.5-4 Monitoring and Measurement of Process 2.5-5 Monitoring and Measurement of Product
2
Supplier Requirements Manual 2.5-6 Control of Nonconforming Product 2.5-7 Continual Improvement 2.5-8 Corrective Action 2.5-9 Problem-Solving 2.5-10 Error-Proofing 2.6 Supplemental Requirements…………………………………..………….......16 2.6-1 Purchasing 2.6-2 Operations/Materials Management/Quality 2.6-3 Finance 2.6-4 Code of Conduct 3. Suppler Acknowledgement………………………………………...……...……………33
3
Supplier Requirements Manual 1. INTRODUCTION This Supplier Requirements Manual should be used as a supplement to ISO/TS 16949:2009, ISO 9001:2008 and ISO 14001:2004. The requirements outlined this manual are integral to and form a part of the Agreement with Stoneridge. Exceptions to any portion of these requirements will not modify the Agreement unless approved in writing by the appropriate Stoneridge purchasing contact. 1.1
Purpose/Objective: To communicate a co-operative agreement between Stoneridge and Supplier concerning the supply of products and services. The goals are to define Stoneridge‟s expectations regarding Supplier and develop a long-standing strategic relationship with Supplier with the implementation of a lean enterprise supply-chain.. Non-conformance with these standards set forth in this Supplier Requirements Manual may result in loss of business. This Supplier Requirements Manual establishes quality and other requirements for the purchase by Stoneridge and its affiliates of materials and services for Stoneridge‟s commercial vehicle and automotive vehicle programs. A purpose of this manual is to define supplier responsibilities for ensuring that purchased items conform to Stoneridge‟s specifications and other procurement requirements.
1.2
Scope: To document the requirements to suppliers (current and future) of Stoneridge (here in after “Supplier”). The requirements are applicable to all suppliers including, distributors, independent of product, volume or sales; provided, however service providers along with indirect supply-base are not governed by this Supplier Requirements Manual. Examples include: Logistics providers, tooling suppliers.
1.2.1
Reference Documentation (Supplier is responsible for adherence to latest revisions of the below documents which are incorporated by reference herein):
Production Part Approval Process (PPAP) Statistical Process Control (SPC) Potential Failure Mode and Effects Analysis (FMEA) Advanced Product Quality Planning and Control Plan (APQP) Measurement Systems and Analysis (MSA) IATF Guidance to ISO/TS 16949:2009 Automotive Certification Scheme for ISO/TS 16949:2009, Rules for Achieving IATF Technical Specification ISO/TS 16949:2009 Environmental Management Requirements ISO14001:2004 (“regionspecific”) SA 8000 or similar (“region-specific”)
4
Supplier Requirements Manual
European Regulation (EC) 1907/2006 concerning the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH)(“region-specific”) AS 9100 for Aerospace
Note: Copies of PPAP, APQP, FMEA, MSA, SPS, CQI-9, CQI-12, CQI-11, IATF Guidance, ISO/TS 16949:2009 Rules & ISO/TS 16949:2009. Recognition is available from the AIAG. ISO documentation is available from the American National Standards Institute (ANSI). 1.3
Terms and Definitions
1.3.1
AIAG: Automotive Industry Action Group
1.3.2
Approved Sources: Identified Suppliers Conforming to Stoneridge Supplier Requirements Manual Standards. Execution Includes (but not limited to) Quality Delivery Process Capability (including Capacity) o Manufacturing o Technology Cost Policy Financial Strength
1.3.3
APQP: Advanced Product Quality Planning. Developed by the Big Three (3) – General Motors, Ford and Chrysler. Defined within AIAG‟s APQP Manual. Framework of Procedures and Techniques used Within the Product Development Process. Focus: Common Path and Synchronization of the Activities stressing Up-Front Quality Planning and Communication. Five (5) Phases: Plan and Define Program Product Design and Development Process Design and Development Product and Process Validation
1.3.4
Launch, Feedback, Assessment and Corrective Action ASN: Advanced Shipment Notification. Data matching container label.
1.3.5
Capacity Verification: Methodology to demonstrate Supplier is capable to meet capacity planning volume requirements as defined in the Request for Quote (RFQ).
1.3.6
Cpk/Ppk: Process Capability Index. Statistical Measurement of Process Capability. Ability of the Production Process to Produce within Specification Limits.
5
Supplier Requirements Manual
1.3.7
DUNS Number: Nine (9)-digit number assigned and maintained by Dun & Bradstreet to identify unique business entities. Numbers are assigned worldwide and include US, Canadian and international organizations. Stoneridge will assign a unique number if Dun & Bradstreet is unable to assign a designate number.
1.3.8
EDI: Electronic Data Interchange
ANSI X12 DelFor(830)(866): Forecast ANSI X12 DelJit (862): Ship Authorization EDIFACT(DELFOR, ORDERS,ORDRSP, INVOIC) ODETTE (DELINS,AVIEXP)
1.3.9
External Direct Suppliers: Supply-base excluding Stoneridge owned divisions, subsidiaries or joint ventures that manufacture parts for production or service.
1.3.10
Family Parts: Group of parts that are processed on the identical production line/cell, using the same control plan, PFMEA and process equipment. The parts differ only in the end item value. PPAP for the „family‟ is approved by utilizing the extreme values of the „family‟ specification to define the „family‟ boundary.
1.3.11
FMEA: Failure Modes and Effects Analysis. Process within Product Development and Operations for Identification of Potential Failure Modes (Severity and Likelihood of Failure). Two (2) Types: Design and Process. Developed by US Military.
1.3.12
FTQ: First Time Quality is a measure of the number of pieces rejected in a manufacturing process versus the total number of pieces attempted. Can be measured at any step within the manufacturing process where parts are rejected. Reported in parts per million (PPM) defective.
1.3.13
Gate Chart: Matrix used to track and report warranty, customer returns, or first time quality claims. Documents problem resolution and monitors effectiveness of corrective actions over time.
1.3.14
Problem Case: Document to track Supplier performance issues that has direct impact to Supplier‟s Scorecard
1.3.15
PPAP: Production Part Approval Process. Process to Define Product Development Requirements and the Understanding within Manufacturing to Produce Products consistently.
6
Supplier Requirements Manual 1.3.16
PTA: Premium Transportation Authorization is a number provided by Stoneridge to authorize a premium shipment (abnormal) from a Supplier.
1.3.17
RFQ: Request for Quote.
1.3.18
RPN: Risk Priority Number. Risk Technique within Failure Mode and Effects Analysis (FMEA). Rating of Potential Problems according to Three Rating Scale: Severity Occurrence Detection
1.3.19
Run at Rate: The purpose is to verify actual manufacturing processes are capable of producing material meeting on-going quality requirements as stated in PPAP, at quoted tooling capacity for a specified period of time, and, verifies the manufacturing process conforms to the manufacturing and quality plan documented. During a Run At Rate, all production tooling is to be in place and running at full capacity, utilizing all regular production, direct and indirect, personnel and support systems.
1.3.20
Shall: The word “shall” indicates a mandatory requirement.
1.3.21
Should: The word “should” indicates a recommendation; request to be complied with.
1.3.22
Standard Pack Quantity: Unit of Measure of Agreed-upon Container Size (Ex. Pieces, Feet, Meters, Pounds).
1.3.23
Sub-Supplier: Supply-base which provide production materials, production or service parts, assemblies or other services such as welding, painting, plating, heat-treating to Supplier.
1.3.24
Supplier: Supply-base which provide production materials, production or service parts, assemblies or other services including but not limited to welding, painting, plating, heat-treating, and stamping directly to a Stoneridge facility or customer.
1.3.25
Upper Control Limit: During a Product/Program Continuous Cycle - The Supplier must have ability to manufacture the product at % above Current Forecasted Requirements.
1.3.26
Conforming Invoice: Such invoice or other documentation from Supplier prepared in conformity with all Stoneridge purchasing and accounting policies and procedures as designated by Stoneridge from time to time, duly presented and properly received in the applicable Stoneridge accounting
7
Supplier Requirements Manual systems, for items and/or services provided by Supplier in conformity with applicable purchase orders or releases from Stoneridge. 1.3.27
8D (8 Disciplines): A problem solving methodology similar to the DMAIC approach utilized by Six Sigma. The 8 steps are: Identify the problem Use a team approach/form and 8D team Describe the problem Interim containment Define the root cause(s) Develop solution(s) Implement the solution(s) Prevent recurrence Congratulate the team
8
Supplier Requirements Manual 2. Stoneridge Specific Requirements Content Summary ISO 16949 Requirement Summary: 2.1
Quality Management Systems
2.1.1
General Requirements: New selected suppliers (including suppliers defined as distributors) should have proven experience as a supplier to the automotive industry. Supplier shall have a valid quality certificate according to ISO/TS16949:2009. A supplier with ISO9001:2008 with a confirmed schedule for ISO/TS16949:2009 certification (schedule confirmed by third party certification bureau) may have a time limit approval as Special Designated Supplier, awaiting TS16949:2009 certification. Supplier shall provide Stoneridge with a copy of the certification. Only accredited certification entities shall be utilized for registration to ISO 9001:2008 or TS 16949:2009. Updates are required due to changes or revisions to Supplier‟s certification. An accredited certification body shall certify and perform scheduled audits of Supplier‟s quality system. Supplier, including manufacturers to a distributing supplier, shall accept that Stoneridge, on a regular basis, performs 2 nd party audits on Supplier‟s quality system, PPAP standard, manufacturing processes and technical standard. Certification to ISO14001:2004 is mandatory for all suppliers to Europe or Supplier must present a timetable acceptable to Stoneridge to accomplish the required certification. A social accountability system similar to SA8000 (latest edition) should be implemented for all suppliers to Europe. Suppliers defined as distributors shall have a valid quality certificate according to ISO9001:2008 and be well aware of the requirements of ISO/TS16949:2009.
2.1.2
Quality Record: All ISO/TS 16949:2009 requirements along with Stoneridge Supplier Requirements Manual should be integrated into Supplier‟s quality control systems.
2.1.3
Control of Records: All appropriate production part approval information, tooling records, and purchase orders shall be maintained for the length of time that a particular part or family of parts are active or production and/or service requirements. Internal quality audits along with appropriate management review information shall be retained for life of the program plus one year.
9
Supplier Requirements Manual 2.2
Management Responsibility
2.2.1
Management Review: Supplier‟s management is responsible to hold regularly scheduled Quality/Business performance meetings at planned/documented intervals to ensure capability and effectiveness. Subjects to be reviewed include performance trends with respect to quality, delivery and other customer-focused metrics.
2.2.2
Customer Representative: Supplier shall appoint a member of management who shall be responsible to ensure processes to comply with the requirements set forth in this Supplier Requirements Manual are implemented, validated and maintained.
2.3
Resource Management
2.3.1
Knowledge Transfer (Training): ISO/TS 16949:2009, ISO 14001:2004 requirements apply. Reference ISO/TS 16949:2009 and ISO 14001:2004 documentation.
2.3.2
Facility and Equipment/Tooling Planning: Suppliers should design/develop and implement a lean environment to improve material velocity and cost.
2.3.3
Contingency Plans: In the event of any production interruptions, Supplier shall document manufacturing make-up plans/policies. Immediate communication of such interruptions to Stoneridge is required. The nature of the problem along with a recovery plan is to be documented and provided upon request. Notification is required within a twenty four (24) hour window of discovery of the interruption, whether currently existing or expected in the future. Examples include but are not limited to: weather, equipment/ tooling/ manpower capacity constraints, political unrest, quality-related items, labor issues, and planned downtime.
2.4
Product Realization
2.4.1
Planning of Realization: Supplier shall plan, document and implement processes required through the Advanced Product Quality Planning (APQP) and Control Plan methodology. All Customer-specific technical specifications shall be required.
2.4.2
Manufacturing Feasibility: Supplier shall perform manufacturing capability reviews to ensure a consistent flow of parts to Stoneridge. Capacity analysis shall be required to verify equipment and tooling ability to previous quoted
10
Supplier Requirements Manual volumes. Identification of capacity constraints shall be documented and provided to Stoneridge. Information shall include: a) Available Daily Capacity b) Internal Facility/Work Center Operating Period (hours per day; days per week) The Percentage Flexibility (”Strength”) of the Supplier operating plan within Supplier must demonstrate the capability to produce the “Upper Control Limit” without any additional cost to Stoneridge. This is an evaluation of risks to the supply chain. The Capability/Capacity „Flex‟ is a continuous „monitoring function‟: - Data at Point of Sourcing is a “Best Early Estimate – Total Projected Usage” - Data during Product Life Cycle – “Continuous – Time Period Usage” - The Capability/Capacity Function (“Initial Install versus Improved/Flex Requirements”) shall include: o Manpower Requirements o Equipment & Tooling Requirements
Suppliers must be able to provide products or services, as applicable, at a volume level at least 15% above the quoted/forecasted volume/usage. For certain equipment/tooling related commodities, Supplier shall sign Stoneridge specific conditions related to possible product commodity specifications and/or technology (equipment/tooling) requirements as defined per region and will be distributed separately (contact designated sourcing buyer).
11
Supplier Requirements Manual 2.4.3
Design and Development (Product and Process): Supplier shall document and use a multi-disciplinary process to validate all design specifications and document conformance with all specifications. All special characteristics must be monitored and complied. All appropriate product/process documentation including FMEAs and control plans are to be up-to-date including action plans to minimize or eliminate potential risks. Designs for Manufacturing (DFM) and Manufacturing System Design (MSD) reviews are to be held with appropriate personnel. Identified problems and proposed action plans are to be documented and maintained.
2.4.3.1
Special Characteristics: Supplier shall comply with any documented/defined Stoneridge specific indicators or symbols. These characteristics are to be placed within the control plans, product drawings, FMEAs‟, and operator standardized work instructions. Any appropriate Supplier notation (or equivalent symbol) shall be placed in appropriate documentation. If Stoneridge has not denoted a specific indicator Supplier shall define a symbol for critical characteristics. NOTE: IMDS (International Material Data System): Supplier will be responsible to enter its information into the IMDS (International Material Data System) IMDS is available through http://www.mdsystem.com.
2.4.3.2
Change Control: Supplier shall document and use a process to comply with Stoneridge design revision requests. The retention period shall be for the product life cycle. Suppliers shall notify Stoneridge of any changes prior to actual use within Stoneridge. All proposed changes include (but not limited to) the following categories: Product and Process Design Specifications Product Containerization/Packaging (Standard Pack Quantity) Product Labeling (related to Containerization/Packaging) Manufacturing Locations (related to facility/site; lead times) The goal is to validate the fit, form, function, finish and durability of all Supplier‟s products or services prior to implementation at Stoneridge.
2.4.4
Production Part Approval Process: Supplier shall comply with the current edition of the Automotive Industry Action Group (“AIAG”) Production Part Approval Process (PPAP) documentation. The Stoneridge default level for PPAP submission is level III. Submissions are to follow the PPAP instructions. Exceptions must be approved in writing by Stoneridge. Exceptions can include, but are not limited to: Catalog Items Off-the-Shelf Items Packaging
12
Supplier Requirements Manual The PPAP submission shall include all required documentation along with production-approved (that is production environment – equipment/tooling) samples. Full Approval is required. Supplier shall submit at least two (2) samples in package and shall be tagged and correspond with the dimensional results submission. (More samples may be requested by Stoneridge purchasing, as needed.) Once parts are verified Stoneridge at its sole discretion may use them as production parts or scrap them. It is responsibility of Supplier to retain master samples. Any Interim Approval requests are to be submitted for approval to Stoneridge Purchasing prior to shipment. Documentation must include all requirements of PPAP including appropriate reasons and corresponding (expected) Full PPAP submission. Notification of PPAP approval is NOT an authorization to ship material to a Stoneridge facility; Supplier shall follow Stoneridge ship authorizations only. Suppliers shall perform the Run at Rate as a method to verify manufacturing capability with respect to production capacity and quality verification. Suppliers shall develop and implement a First Time Quality (FTQ) process during APQP and PPAP processes. This zero-defect quality policy measures multiple system reliability. First Time Quality: Measure of pieces (or other unit of measure) rejected through the manufacturing operations (all feeder and final processes) versus the total number of pieces (or other unit of measure) attempted Formula:
Note: Pieces (or other unit of measure) rejected include all parts scrapped or reworked prior to usage by the next operation Total pieces (or other unit of measure) attempted include all conforming material produced plus all rejected Example: Multi-Feeder Process (Manufacturing Depth)
13
Supplier Requirements Manual 2.5
Measurement, Analysis & Improvement
2.5.1
Identification of Statistical Tools: Supplier shall use the latest documented AIAG Statistical Process Control (SPC) information for manufacturing process controls and the latest edition for AIAG Measurement Systems Analysis (MSA) information for measurement system equipment management.
2.5.2
Knowledge of Statistical Concepts: Supplier shall use proper methodologies to analyze characteristics (significant, critical or supply-base identified) of product specifications.
2.5.3
Customer Satisfaction: Supplier performance is monitored through a continuous evaluation process. Indicators included (but not limited to) within the assessment process are quality and delivery performance metrics. Suppliers are responsible to review and document action plans for nonconformances and communicate the issues to Stoneridge.
2.5.4
Monitoring and Measurement of Process: Supplier shall follow all appropriate Stoneridge Engineering Specification (ES) Test Performance Requirements. Supplier shall develop a plan to meet these requirements and maintain manufacturing process capability. The plan shall be submitted as part of the PPAP package. Control Plans along with process flow diagrams must be documented and implemented to include: measurement techniques, sampling plans, acceptance plans along with Cpk/Ppk.
2.5.5
Monitoring and Measurement of Product: Supplier shall comply with all specifications of the product design including raw material. Records are to be maintained denoting conformity to specifications.
2.5.6
Control of Nonconforming Product: Supplier shall have an internal documented process to manage product that has not met design specifications. The defined process must prevent the shipment of the nonconforming material to any Stoneridge facility. The containment process shall include: a) Proper segmentation (Designated Storage; Labeling) b) Proper disposal c) Instructions to rework process d) Inspection, labeling (Identification) e) Stoneridge drawings need to be referenced for requirements of specific rework instructions or potential of a given product not allowing rework to be performed on it. f) Traceability g) Lot size or size of run by given measurement for example hour, day, week, etc. h) Measurements, analysis & improvement
14
Supplier Requirements Manual
2.5.7
Continual Improvement: Supplier shall have a documented continuous improvement process to include methodologies such as (but not limited to): Lean Enterprise, 6-Sigma. The process should focus on quality, delivery and flexibility. The focus of the improvement process shall be on “prevention” not “detection.”
2.5.8
Corrective Action: Supplier shall have a documented process to monitor and respond to all issues of non-conformances reported by Stoneridge. Root Cause Analysis and documented problem-solving techniques are to be used to address the non-conformances. Non-conformances can be classified as product or service related. Supplier‟s initial response shall be required within 24 hours after the initial notification, with containment occurring with-in 48 hours. The final response is required with detailed action plans within the ten working days after the initial notification.
2.5.9
Handling of rejected Products: In case defective Products are found, Stoneridge will issue an inspection report (IR) and Products will be rejected to Supplier. All reporting shall be within the 8D format. Supplier shall respond within 24 hours after receiving IR report and the defective Products and shall issue the first part of the 8D with item D1 (Form a problem solving team), D2 (Problem description) and D3 (Immediate containment actions) completed and submitted to Stoneridge. The remaining part of the 8D report (D4: Root cause analysis, D5: Possible permanent corrective actions, D6: Permanent corrective actions, D7: Preventive actions and D8: Final discussion/comments) shall be completed and submitted within ten working days after receiving the inspection report and the defective Products. If sorting of faulty components becomes necessary, Supplier is liable for the arrangement and the cost for sorting and any related transport cost. Sorting and handling performed by Stoneridge will be charged at a reasonable and agreed cost. Supplier or Supplier‟s representative is obliged to be present within 24 hours in order to solve any Supplier related problems that may cause line stoppage at Stoneridge or Stoneridge‟s customer or that may cause severe field problems (including call back).
2.5.10
Problem-Solving: Supplier shall have a documented problem-solving process to assist in the corrective actions required by this manual. Root cause identification and elimination is the goal. Tools utilized should include a completed Five-Why Analysis.
15
Supplier Requirements Manual
2.5.11
Error-Proofing: Supplier shall have a documented error-proofing process within its manufacturing and service related functions. This defined process will assist in the corrective action section of this document. Error proofing methods implemented at Supplier must be documented per cell or station of the manufacturing process. Control Plans must define the number of successive end-of-line tester failures prior to end-of-line lock-up (at EOL station).
2.6
Supplemental Requirements
2.6.1
Purchasing
2.6.1.1
Logistics (Transportation): Stoneridge will provide the following information (but not limited to) to Suppliers: Routing Instructions (for “Paid” freight terms) Mode Logistics Carrier Supplier Delivery Window (Day and Time) Stoneridge Receiving Window (Day and Time) Delivery Location Suppliers are to use normal mode at the appropriate timeframe (per predefined window) using the authorized carrier. In the event of past due delivery/schedule position or in-house rejected material, Supplier will be responsible for all premium transportation costs (expedited mode). The proper use of pre-defined or authorized carriers is required. Any unauthorized use or incorrect carriers or modes will result in a debit charge from Supplier‟s account and a root cause analysis will be required. Terms and Agreements: For delivery Supplier shall follow the international standardized incoterms. The specific incoterm is agreed with each supplier depending on commodity, region and Stoneridge ship to location. Any specific detailed information required shall be agreed and documented with each Supplier.
16
Supplier Requirements Manual 2.6.1.2
Pricing: Suppliers shall provide Stoneridge during quotation process a piece price breakdown to include product cost and packaging/containerization (expendable/returnable packaging). Supplier shall be responsible to understand the specific product specifications required by Stoneridge. Information related to material, quality standards, equipment/tooling and personnel (but not limited to) are examples of these requirements. Stoneridge specified/directed Approved Sources do not relieve Supplier of ensuring conformance to the standards within this document.
2.6.1.3
Equipment/Tooling: Suppliers shall have a documented Productive Maintenance process. Refer to ISO 9001:2008 or ISO/TS 16949:2009. Below is a summary example: Process design documentation shall include (but not be limited to) specifications, drawings, layouts, PFMEAs, control plans, standardized work instructions. Changeover (Set-Up) verification process steps must be developed and documented for all manual tooling exchanges. Operator Standardized Work documentation is required. Standardized work must be visual. Supplier shall (upon request) provide for any tooling design revisions pending. Official prints shall be available within six weeks after PPAP approval or at start of regular production (whichever comes first). Gauge and Testing Tooling/Equipment: Supplier shall follow the AIAG Measurement System Analysis (MSA) requirements. Supplier shall document and maintain proper calibration methodology. Data shall include the last calibration data and expiration date. Gage Repeatability and Reproducibility (GRR) Studies of less than or equal to 10% error are acceptable. If a non-conformance exists – action plans are required. For certain equipment/tooling related commodities, Supplier shall sign Stoneridge specific conditions related to possible product commodity specifications and/or technology (equipment/tooling) requirements as defined per region and will be distributed separately (contact designated sourcing personnel).
2.6.1.6
Sourcing: All Suppliers shall agree to Stoneridge‟s Operating System Assessment process. This assessment involves access to Supplier‟s facility
17
Supplier Requirements Manual or sub-tier facility. All pertinent documentation will be reviewed. Assessments will be scheduled and notification of a pending audit will be given at least two weeks in advance of the planned on-site date. New Suppliers may experience larger advance notification time periods due to program launches, lead times etc. Instantaneous or urgent audits may be scheduled with no prior notification due to current (poor and high risk) performance. Suppliers shall participate in and meet APQP requirements for all new parts. These requirements are detailed in the AIAG APQP manual. The following are examples of these requirements:
Participation in Design Reviews Participation in Program Reviews Participation in Lessons Learned Document and Maintain Timing Charts Document and Maintain DFMEA (Design FMEA) o If applicable (design responsible) Document and Maintain Process Flow, PFMEA AND process Control Plan(s) Document and Maintain Measurement System Analysis/Gage Reviews Document and Maintain Early Production Containment and pre-Launch Control Plan Document Part Certification (PPAP) o Perform and Complete a Run at Rate or equivalent o Process Sign Off(PSO) Define PSO and maybe example of checklist, etc.
2.6.1.7
De-Sourcing: Stoneridge reserves the right to de-source for any noncompliance to these standards. The following is a summary (not limited to) of reasons for termination of a contractual agreement: Consolidation of Suppliers (both Goods and Services) Product Design Revisions or Requirements Material Revisions or requirements Quality Delivery Pricing Serviceability Labeling/Packaging
2.6.1.8
Cost Recovery (Charge-backs): Stoneridge reserves the right, in addition to other remedies available to Stoneridge in the Agreement (e.g. to claim damages), to charge a fee related to non-conformance to the standards within
18
Supplier Requirements Manual this manual. Stoneridge will recover costs associated with the following (but not limited to):
2.6.1.9
Late Product Deliveries Suspect or Non-conforming Product (Quality)
If sorting of defective Products becomes necessary, Supplier is liable for the arrangement and the cost of sorting and any related transport cost. If sorting and handling is performed by Stoneridge, Supplier shall be liable to remunerate Stoneridge‟s reasonable costs for such work. Supplier is liable for the additional administrative cost related to each accepted IR (Inspection Report) issued by Stoneridge.
2.6.1.10 Purchasing:
Scrap of Supplier non-conforming material o Supplier Approval Required for disposition of material(Scrap in place or return) o Supplier will be charged back through a debit memo
Stoneridge External Customer-base Cost Recovery o Supplier is responsible for associated charges due to Late Deliveries, Shutdowns, Rework/Inspection or Scrap.
Stoneridge will communicate to Supplier of liability claims and attempt to resolve the cost settlement prior to official debit transaction. 2.6.2
Operations/Materials Management/Quality
2.6.2.1
Communication: Electronic Data Interchange (EDI): International markets and increasing complexity of the supply chain result in an increased need for automated data exchange between Stoneridge and Suppliers. Through the implementation of EDI Stoneridge and Suppliers should experience improved quality and decreased cost. The introduction of EDI defines the business data exchange between computer systems of two or more companies and brings following benefits:
19
Supplier Requirements Manual
minimum manual data input required reduction of input and verification cost fewer errors and incorrect shipments significantly reduced processing times
The exchange messages are standardized and can be handled by all participants automatically. The result is a continuous free exchange of business data where all participants interpret the information in a standardized way. Therefore all participants must agree on the same structure of EDI messages during the development of the process. Stoneridge aims at transmitting all order/ shipment/ invoice relevant data and documents electronically. Stoneridge encourages its Suppliers to provide all order/ shipment/ invoice relevant data and documents electronically. Supplier shall have capability to receive electronic instructions for forecasting and ship authorizations. The capability also extends to sending Advanced Shipping Notices (ASNs) to the appropriate Stoneridge facility (EDI). Supplier must provide in a timely manner - maximum of 30minutes after shipper/logistic provider has left Supplier‟s dock a valid and accurate ASN (with all appropriate information). Non-conformance may be subject to a cost recovery claim. Certification of Origin North America: Suppliers shall submit the current version of the Certificate of origin and Manufacturer‟s Affidavit by facility location and individual part number. NAFTA (North American Free Trade Agreement) Certificates of origin are renewed annually and apply to the United States, Canada and Mexico. NAFTA Certificate of Origin Form CF434 is available at the Customs and Border Patrol (CBP) website. Certification of Origin Europe: Suppliers shall submit a certificate of origin by part number when using any of the free trade agreements using the EUR.1, EUR-MED or EUR-MED invoice declaration certificates. Certificate of Compliance: Supplier shall submit annual Certificate of Compliance letter, or with initial shipment of given part or unless specified by the individual Stoneridge Division. 2.6.2.2
Packaging/Containerization: Supplier must ensure that the Products are packed in a suitable manner in order to prevent damage to the Products and to ensure safe handling. Suppliers must communicate to Stoneridge any deviations to original packaging specifications. Changes to packaging/containerization must be documented with root cause and
20
Supplier Requirements Manual compliance time. Supplier shall, if available at a reasonable cost, use returnable and recyclable packaging material. With respect to use of returnable shipping containers – Suppliers shall be responsible for tracking and maintenance. Maintenance will include repairing and cleaning of the containers. Supplier shall work towards reducing handling and packaging cost. Supplier shall label all product packages with Stoneridge‟s part number, Purchase Order number and the quantity of delivered Products. 2.6.2.3
Shipping: Supplier must have capability to comply with Stoneridge delivery frequency and window time. Suppliers must ship the exact quantity as specified (and timeframe – due date) on the material release (Purchase Order) in-accordance to the agreed upon standard pack quantity (Commercial Agreement). No “under” or “over” delivery quantities are allowed, unless separate agreement exists. Compliance to dates and time specified on the shipping instruction documentation is mandatory. Over-shipments will be returned to Supplier at its expense. “Early” or “late” shipments are not accepted. Supplier must have shipping capability to match the Stoneridge normal operating period (receiving). “Freedom of the Week” delivery is a non-conformance event. Supplier must allow the delivery driver to verify the pick-up quantity. Supplier is required to immediately communicate with the appropriate Stoneridge personnel any notification of shipping authorizations that are late, under-ship or undeliverable. The communication must be prior to pre-defined ship window (as early as possible – timeframe of Supplier acknowledgement). Stoneridge and Supplier will reconcile the non-conformance. Supplier is responsible for all costs associated with the expedited premium transportation required to meet the original receiving window (at Stoneridge). If production is interrupted at Stoneridge and/or Stoneridge‟s Customer-base – Supplier is responsible for all related costs incurred and root cause analysis. Resulting contingency plans will be documented and reviewed. Supplier shall measure delivery performance. Information on delivery performance shall be delivered to Stoneridge each quarter. In the event that delivery performance is not one hundred (100) per cent Supplier shall present Stoneridge with an action plan describing the corrective measures being taken.
21
Supplier Requirements Manual 2.6.2.4
Order Lead Time: Supplier lead times are to be quoted/documented in calendar days. The lead times must be communicated in the form of the following:
2.6.2.4.1 Start-Up Lead Time: Time period of the initial order for material. This requirement is the first placement or notification of use at Stoneridge. 2.6.2.4.2 Steady-State (or Continuous) Lead Time: Execution time period for preparation of a shipping requirement. This timeframe is from the receipt of an order to the ship availability or arrival at Stoneridge. The Start-Up Lead Time is satisfied on a “continuous basis” with Stoneridge facility‟s weekly generation of forecasted requirements. Suppliers will be provided the most accurate ship authorizations and future (long range) forecasts as possible. By providing visibility – Supplier will be able to produce product in the mix required. Both of Supplier‟s Order Lead Times must be documented within the Frame Agreement. Note: Supplier must notify Stoneridge in writing of any Lead Time revision proposed by Supplier. Stoneridge requires that the notification must be in advance of the change and the length of notification be equal to the difference between the current and new lead time. Notification must be for example: Current Lead Time: 10 Weeks New/Proposed/Communication Lead Time: 15 Weeks Notification must be at least 5 Weeks in advance to allow Stoneridge time to adjust information flow internally and externally (to Supplier).
2.6.2.5
Stoneridge Liability Agreements
2.6.2.5.1 Raw Material Authorization: Stoneridge agreement with Supplier to be obligated for the material costs, based on the authorized time period, in the event that the product released is not purchased. 2.6.2.5.2 Fabrication Authorization: Stoneridge agreement with Supplier to be obligated for finished goods, based on the authorized time period, in the event that the product released is not purchased. Note: The Raw Material Authorization and Fabrication Authorization guidelines stated above do not apply to standard products from suppliers which are sold to multiple customers (“off the shelf” items).
22
Supplier Requirements Manual Note: Fabrication Authorization terms will, unless otherwise agreed, be two (2) weeks and Material Authorization will be two (2) additional weeks for a total of four (4) weeks. Information beyond the four (4) week time period is for planning purposes only.
2.6.2.5.3 Variation Allowances: In-line with the stated Raw Material and Fabrication Authorizations, Stoneridge will be responsible for the following: Week Number: 1 and 2 Week Number: 3 and 4
15% 15%
Basis: Successive/Sequenced Forecast Requirements generated and communicated by Stoneridge Liability Agreements must be documented within the purchasing agreement. 2.6.2.6
Location: Packing Slip: Suppliers shall affix a legible packing slip next to any required master label (skid/pallet loads) and next to the individual container label (single loads). The information required includes (but not limited to): part number, revision level, quality shipped, purchase order, supplier address, customer address.
2.6.2.7
Labeling: AIAG B-10 Standard: Specifications found in the national standard including FACT/ANSI or ODETTE data identifiers. Supplier shall have capability to identify material (parts) via AIAG B-10/ODETTE Standards. A sample of the label should be provided with the PPAP information. All shipping containers shall include the appropriate “Country of Origin” designation.
23
Supplier Requirements Manual
These can be found at http://www.AIAG.org and http://www.odette.org
2.6.2.8
Monitoring and Reporting: Quality Certification Compliance: ISO 9001:2008, or ISO/TS 16949:2009 or AS 9100 Supplier shall have latest valid and complete certification with appropriate information such as: Name Location (Address)
24
Supplier Requirements Manual
Stoneridge Scorecard: Stoneridge uses an assessment methodology to monitor a Supplier‟s conformance to both quality of product or service and delivery of product or service. Performance measurements include (but are not limited to):
Quality Containment Communication Performance Protection Delivery
2.6.2.10 Product Quality: Supplier shall be responsible for the conformance to specifications for all product produced at Supplier facility/location along with any tiered or sub-suppliers (including subcontracted). Supplier shall determine all required processes to maintain Stoneridge‟s expectation of Zero Defects. Supplier shall have a Quality System. The requirements include but are not limited to:
Quality Policy Quality Objectives Quality Manual Quality Procedures and Records (International Standard)
Supplier shall retain approved changes to product or manufacturing processes (including design, raw material, packaging, site changes, subsupplier changes) for the life of the material. All proposed changes shall be submitted to Stoneridge for approval. Concurrence to design revisions shall be prior to implementation. FMEA‟s: Supplier shall document FMEA‟s utilizing the AIAG Potential Failure Mode and Effects Analysis Manual. Requirements include the following:
Design FMEA: Applicable if Supplier responsible for design Process FMEA: Required for all part numbers or families where common tooling/equipment is utilized within the manufacturing process All part numbers must be listed for family designations o Complete Internal Value Stream must be documented Receiving of raw material through manufacturing and eventual shipping of finished goods Inspection; Repair included
25
Supplier Requirements Manual All documentation shall have revision level (change history) designating the correct product design engineering level and process changes.
The RPN index rating should be used as outlined in the AIAG FMEA Manual in setting priorities on where corrective actions and continuous improvement activities should take place, including pass through special characteristics
Special Containment: North America Level I:
Supplier shall perform specific product and process verification actions at its manufacturing facility/location based upon failure modes found and documented by Stoneridge o Documented Action Items must be provided Supplier shall label each shipping container with a “Level I Containment” tag or marker. Supplier “ship to stock” status is removed and subject to internal inspection status at Stoneridge Release or Change from Level I will occur at Stoneridge discretion using the following guidelines: o Thirty consecutive days or minimum of six consecutive production shipments (or a plan developed and agreed to between Stoneridge and Supplier) that is defect-free along with the acceptance of a completed corrective action documentation/process.
Level II:
Supplier shall perform specific product verification actions at the Stoneridge facility/location (on-site). Trained Supplier personnel will perform for these activities. Supplier “ship to stock” status is removed and subject to internal inspection status at Stoneridge Release or Change from Level II will occur at Stoneridge discretion using the following guidelines: o Thirty consecutive days after on-site verification process (or a plan developed and agreed to between Stoneridge and Supplier) o Results: defect-free along with the acceptance of a completed corrective action documentation and process. o Minimum of six consecutive production shipments (or a plan developed and agreed to between Stoneridge and Supplier) o Results: defect-free along with the acceptance of a completed corrective action documentation and process.
26
Supplier Requirements Manual
Corrective action documentation to be personally presented and reviewed with appropriate Stoneridge personnel
2.6.3 Finance 2.6.3.1
Logistics Processes: Stoneridge aims to optimize all processes in the entire supply chain from Supplier to Stoneridge and from Stoneridge to Stoneridge‟s customers. To make purchasing and/ or supply processes smoother and to minimize the liaison required, the purchasing and/or supply process may have to be redesigned in order to optimize the logistics chain between Stoneridge and Supplier. Stoneridge requires active support and contribution from Supplier to any change in the logistics processes proposed by Stoneridge.
2.6.3.2
Shipment Documents: Correct shipping documents allow for a quick identification of Products and a smooth further processing which help avoid delays in processing and additional costs. Supplier must hand over all shipping documents (shipping note, bill of lading, customs declaration, etc.) for a shipment to the carrier along with the Products being shipped. In the case of packages delivered by postal or parcel services, shipping documents may be attached to the outside of the package. Any deviations from these requirements shall be set forth in a mutual agreement between Stoneridge and Supplier. Any additional costs incurred by Stoneridge as a result of Supplier not meeting the requirements shall be charged to Supplier. Each Shipment document is required to provide the following:
2.6.3.3
Supplier Manufacturing Plant Stoneridge Purchasing Location Stoneridge Receiving Branch Shipment date Freight Carrier Trailer Number Total number of Pallets/Skids Total number of Cartons Net Weight Gross Weight Stoneridge Purchase Order Supplier Invoice Number
Customs: Supplier must adhere to all required forms and documentation required by the Customs Authorities of the country of the Stoneridge receiving location. Declarations must follow all governmental regulations. Supplier is responsible to contact the appropriate Customs authorities or Chamber of
27
Supplier Requirements Manual Commerce for any clarifications that may be required. Supplier shall be liable for any non-conformances that result in additional costs incurred by Stoneridge. Delays in any declaration, failure to submit a binding declaration, any error in a declaration or failure to obtain a preferred declaration will be root causes resulting in reimbursement to Stoneridge. 2.6.3.4
Conforming Invoices: All Conforming Invoices and/or shipping notices for Items shipped from or by Supplier for each line item must reference:
Purchase Order number, amendment or release number Stoneridge Part number Supplier‟s part number (where applicable) Quantity of pieces in shipment Number of cartons or containers Supplier‟s name Bill of lading number
These requirements must be met before any payment will be made for Products by Stoneridge. Stoneridge reserves the right to return all invoices or related documents submitted incorrectly, and payment terms will be determined as of the date of the latest correct conforming invoice, or other document required by Stoneridge, is received. Conforming Invoices for tooling may be submitted only after Supplier has received written approval from Stoneridge for the associated component(s). Unless prior arrangements with Stoneridge‟s Purchasing Department have been made, tooling invoice(s) will not be honored unless Stoneridge has issued an approval, and the obligations as identified in the purchase order have been met. 2.6.3.6
Payment Obligation: Stoneridge will have no obligation to make any payment of a Supplier Payable for Products and/or services provided to Stoneridge (and irrespective of whether such Products and/or services have been accepted by Stoneridge), whether pursuant to Standard Payment Terms or any other legal or equitable basis for a recovery against Stoneridge, and whether such Items and/or Services were provided pursuant to a request for quote, a purchase order, release, or any other document or agreement from Stoneridge, unless and until Stoneridge is in receipt of a Conforming Invoice with respect to the Items and/or Services in issue. Payment for all component, tooling, and molds purchase orders are dependent on Supplier receiving Stoneridge and its customers‟ full production approval of Supplier sample submissions.
28
Supplier Requirements Manual It is Supplier‟s responsibility to highlight in writing any conforming invoice, which has been submitted and remains unpaid after 90 days. Failure to comply could result in the invoice claim being declared null and void. 2.6.3.7
Over shipments & Under shipments: Stoneridge shall not be liable for payment of products delivered to Stoneridge that exceed the quantities specified in the Purchase Order/ call-off order. Over shipments of any products shall be returned to Supplier at Supplier's expense. Stoneridge reserves the right to reject products. In case of under shipments of any products, Supplier shall, if so requested by Stoneridge, immediately at its cost ship the additional Products needed to fully complete the order to the destination and by the time designated by Stoneridge.
2.6.3.8
Business Continuity: Supplier must have a business continuity plan which would allow for the safeguarding, storage and recovery of engineering drawings, electronic media, and production tooling in the event of damage or loss. This plan should also contain contingency plans to satisfy Stoneridge requirements in the event of significant utility interruptions, labor shortages, equipment failure and field returns.
2.6.3.9
Review of Financial Condition and Related Matters: In order to ensure continuous supply to Stoneridge‟s customers, it may be necessary for Stoneridge to review the financial condition of its Suppliers. Stoneridge, or a third party designated by and acting on behalf of Stoneridge, may at any time review the overall financial condition of Seller and its affiliates, and Supplier shall fully cooperate in such review and shall make its financial managers and information available for discussions during reasonable business hours. Stoneridge and any such third party shall keep confidential any non-public information about Supplier and its affiliates obtained in such financial review and shall use such information only for purposes of a financial review.
2.6.4
Code of Conduct: Supplier shall ensure operations are being performed in a manner that is appropriate, as it applies to their ethical, legal, environmental, and social responsibilities. Below is a listing of the basic requirements, please consult your purchasing agent for additional regional requirements:
Compliance with Local Laws and Regulations: Supplier must adhere to the laws and regulations in the locality in which they reside. This includes all local, state, and federal laws/regulations in the country of origin.
Compliance with Environmental, Health, and Safety Laws: Supplier must maintain and operate its manufacturing/production facilities and processes in accordance with local, state, and federal laws/regulations in the country of origin. At no time shall any Stoneridge person be
29
Supplier Requirements Manual exposed to hazardous materials or unsafe conditions as a result of Supplier shipments to a Stoneridge location, or while visiting a Supplier‟s location. For items with inherent hazards, safety notices must be clearly visible. As applicable, documented safety handling and protection information must be provided.
Non-Discrimination: Supplier shall not discriminate against race, color, sex, religion, age, physical disability, political affiliation, or other defining characteristics as prohibited by local, state, and federal laws/regulations in the country of origin.
Labor: o Child Labor – Supplier shall employ workers of minimum legal age in accordance with local, state, and federal laws/regulations in the country of origin. Child labor laws must be followed. o Forced/Indentured Labor – Supplier shall not practice the use of forced or indentured labor. o Work Hours/Days – Supplier shall not exceed the daily and weekly working hours as permitted by local, state, and federal laws/regulations in the country of origin. o Wages and Benefits – Supplier shall compensate workers in accordance with local, state, and federal laws/regulations in the country of origin. This includes minimum legal wage, overtime wages, and benefits (required by law).
Ethics: Evidence of corruption, bribes, improper advantage, or any other form of illegal practice by Supplier or associated operations will terminate all relations with Stoneridge. Supplier will conduct their business in a manner that meets the „Code of Business Conduct and Ethics‟ policy of Stoneridge which may be obtained from a Stoneridge Buyer or at www.Stoneridge.com.
Code of Business Conduct and Ethics Policy Enforcement: This policy applies to Supplier and its sub-tier sources. It is the responsibility of Supplier to verify and monitor compliance of this code at their operations and sub-tier source operations.
Confidentiality: Supplier shall ensure the confidentiality of Stoneridge contracted products and projects under development, and related product information, as well as intellectual property shared as a result of the working relationship.
30
Supplier Requirements Manual
Gifts, Entertainment & Gratuities: Both as a matter of sound procurement practice and basic business integrity, Stoneridge makes its purchase decisions solely on the basis of which suppliers offer the best value for the goods and services we need. We avoid doing anything that suggests that our purchase decision may be influenced by any irrelevant or improper consideration whether illegal, such as a kickback or bribe, or technically legal, such as personal friendship, favors, and gifts or free entertainment. Business with Supplier and Stoneridge should always be conducted in an atmosphere of mutual respect and in keeping with irreproachable standards of business and professional ethics. The giving and/or receipt of gifts (including the use of property) may raise questions of propriety concerning the relationship between the giver and receiver of the gift. Accordingly, and excepting only non-cash gifts of insignificant value (under $50.00 USD or equivalent local currency), no employee or member of the employee's family may accept a gift from any Supplier of goods or services to Stoneridge or from any customer of Stoneridge. Notwithstanding the disclosure requirement, no employee or family members may receive a cash equivalent from any Supplier or customer. Employees should in no way benefit financially due to transactions between Stoneridge and any third party. Entertainment provided or funded by Stoneridge suppliers or customers for Stoneridge employees or members of their families must be reasonably related to the business at hand and must not be so lavish as to give rise to even the impression that special influence is being sought. All offers of unreasonable lavish entertainment, and all questions relating to the propriety of entertainment, should be directed to the appropriate management. Inevitably, there will be gray areas that Stoneridge employees will address using their common sense and good judgment. This gift policy is based upon the NAPM (National Association of Purchasing Management) "Principles & Standards of Purchasing Practice" guidelines.
31
Supplier Requirements Manual Supplier Requirements Manual Summary In support of Stoneridge‟s commitment to exceeding our customer‟s expectations – Supplier shall also have the commitment of planning, execution, communication, quality and delivery of parts and service. This philosophy will allow for a healthy, long-term business relationship. Stoneridge is committed to consistent delivery of quality parts to our customer-base. The following Lean Principles are part of the foundation of our Lean Enterprise Operating System. “Built in Quality” “Right Part, Right Time, Right Quantity‟” “Short Lead Time” The Stoneridge Supplier Requirements Manual defines best practices that its Supplybase is required to adapt. Supplier shall be expected to develop, document, implement and verify processes and procedures to comply with these standards denoted in this document. This document is a structured as a companion document to ISO/TS 16949:2009 and ISO14001:2004. Conformance to these standards shall be maintained at Supplier using qualified internal audit processes and personnel. Internal auditors shall be trained in applying the Process Approach of Auditing – ISO/TS 16949:2009 Section 0.2, Process Approach 8.2.2.1 – 8.2.2.5. Additional knowledge concerning ISO 14001:2004 PPAP and related manuals shall also be required. Conformance to these standards will also be likely verified personally by a representative of Stoneridge. On-site reviews will be requested (timeframe – quarterly) for non-conformance activities from Supplier perspective. Suppliers shall comply with any request from Stoneridge Functional specialists along with detailed action plans will be reviewed. Unacceptable performance subjects may include the following (but not limited to): Quality Delivery Pricing Product Design Service Labeling/Packaging Suppliers shall exhibit a philosophy of Customer Satisfaction and commit to actions leading to execution (quality, delivery, communication, documentation). Stoneridge Supplier Requirements Manual is to be treated as Confidential and not to be disclosed to any third party without prior consent of Stoneridge.
32
Supplier Requirements Manual 3. Suppler Acknowledgement As a Supplier of Products and/or services to Stoneridge On behalf of the Supplier, I acknowledge the following: 3.1 Supplier has received or downloaded a copy of the Stoneridge Supplier Requirements Manual. 3.2 I am authorized to sign this Supplier Acknowledgement on behalf of Supplier. 3.3 Supplier agrees to abide by the Supplier Requirements Manual. 3.4 I agree to ensure that the Supplier Requirements Manual is deployed throughout all functional areas of Supplier.
______________________ Signature
_____________________ Name (Printed)
______________________ Company Name
_____________________ Title
_______ Date
Please send this completed acknowledgement to your designated sourcing buyer in Stoneridge.
Stoneridge may in its own sole discretion, providing Supplier notice thereof, make changes to this Supplier Requirements Manual.
33
