20131213 lieferantenhandbuch en

F0201360:21 Created: C. Dirr of 19 pages Version: 2013-08-23

SUPPLIER HANDBOOK General Requirements for MR suppliers


Table of contents 1 Introduction .............................................................................................................................................. 3

1.1 Introduction ...................................................................................................................................... 3

1.2 Collaboration ...................................................................................................................................... 3

1.3 Procurement phase model ................................................................................................................. 4

1.4 Scope of application ........................................................................................................................... 4

2 Supplier selection .................................................................................................................................... 5

2.1 Supplier selection ............................................................................................................................... 5

2.2 Purchase conditions ........................................................................................................................... 5

2.3 Supplier self-disclosure ...................................................................................................................... 5

2.4 Interfaces............................................................................................................................................ 5

2.5 Requirements for the supplier's management system ....................................................................... 5

2.6 REACH ............................................................................................................................................... 6

2.7 QAA – Quality assurance agreement ................................................................................................ 6

2.8 Feasibility evaluation .......................................................................................................................... 6

2.9 Potential analysis based on VDA 6.3 ................................................................................................. 6

3 Implementation of product and process ............................................................................................... 7

3.1 Product development via suppliers .................................................................................................... 7

3.2 Process development via suppliers ................................................................................................... 7

3.3 Advance quality planning ................................................................................................................... 7

3.4 Supplier audit ..................................................................................................................................... 8

3.5 Production process and product approval (PPF) ............................................................................... 9

4 Ensuring supplier dependability in series production ....................................................................... 11

4.1 Series delivery .................................................................................................................................. 11

4.2 Logistical requirements .................................................................................................................... 11

4.3 Supplied production and testing equipment ..................................................................................... 11

4.4 Design deviation/Special approval ................................................................................................... 12

4.5 Change management PCN (Product Change Notification) ............................................................. 12

4.6 Repair orders ................................................................................................................................... 13

4.7 Complaints due to quality issues ..................................................................................................... 13

5 Continuous improvement process (CIP) ............................................................................................. 16

5.1 Supplier evaluation ........................................................................................................................... 17

5.2 Business reviews ............................................................................................................................. 17

5.3 Target agreement and controlling .................................................................................................... 17

5.4 Q improvement projects ................................................................................................................... 18

6 Appendixes ............................................................................................................................................. 19

6.1 Abbreviations ................................................................................................................................... 19

6.2 MR links ............................................................................................................................................ 19

7 History of changes ................................................................................................................................. 19


1 Introduction 1.1 Introduction

As a manufacturer of high-performance tap changers and voltage regulators used throughout the world, our primary goal is to fully meet our customers' expectations, such as extremely long service life (> 30 years) and absolute reliability. MR—two letters known as a seal of quality among experts. We build things that last. Our employees apply their expert knowledge, high level of education and typical MR care to every detail to ensure this is true. For us, ensuring uncompromising quality starts with selecting suppliers. Anyone that manufactures for us needs to meet the highest standards right from the start. This is the same benchmark we use to measure ourselves. It goes without saying that our total quality management is certified in accordance with DIN ISO 9001. Our use of an environmental management system certified in accordance with DIN ISO 14001 and an occupational safety and health management system in accordance with OHRIS is also self-evident, as are our efforts to continue developing them. In order to be able to continue meeting or even surpass the incredibly high expectations of our clients well into the future, we rely on dependable, exceptionally quality-conscious suppliers as partners that support us in our efforts through:

Consistently pursuing a ZERO DEFECT strategy

Maximum dedication

Highest flexibility

100% on-time delivery

1.2 Collaboration

This handbook provides information on the general requirements of

Maschinenfabrik Reinhausen GmbH

and affiliated companies for suppliers and partners for the various phases of product development all the way to production phase-out. It serves as a basis for effective and successful collaboration. Mutual openness must permeate all phases of collaboration while still maintaining strict requirements for confidentiality (know-how protection, patents, etc.). As a supplier to Maschinenfabrik Reinhausen GmbH you must ensure that your deliveries comply with all agreements, drawings, standards and specifications in order for us to ensure compliance with our quality requirements reliably and at all times and to achieve agreed-upon quality targets.


1.3 Procurement phase model

Maschinenfabrik Reinhausen operates in accordance with the MR phase model in the supplier process. This process involves mapping all relevant processes at the interface to the supplier.

Fig. 1: Phases of collaboration

The details for individual process phases are shown later on.

1.4 Scope of application

This handbook applies to all production materials acquired by MR. The group of production material is divided into three subgroups (commodities):

Fig. 2: MR commodity structure

The requirements for supplier qualification and product qualification may differ for individual product groups (commodities). The exception for this handbook is the procurement of infrastructure materials.


2 Supplier selection

2.1 Supplier selection

Suppliers for production materials are selected by Purchasing in close coordination with Quality Management, Logistics, Development and Production. In addition to technical, economic and logistical standpoints, the quality capability of the supplier is the essential selection criterion.

2.2 Purchase conditions

The General Purchase Conditions of REINHAUSEN Group (in the respective current revision status) apply to purchasing agreements. If necessary, these can be requested from the responsible purchasing agent or downloaded from the Internet at http://www.reinhausen.com/.

2.3 Supplier self-disclosure In the supplier self-disclosure, the supplier summarizes the most important information about its company for the initial general assessment. Before an invitation to bid can be initiated, the fully completed "Supplier self-disclosure" form has to be presented to MR. It can be downloaded online under "Supplier questionnaire" or it is sent to the potential supplier during initial contact. The form must be filled out and returned to the purchasing agent in charge of the invitation.

2.4 Interfaces In order to facilitate the exchange of information, the supplier must disclose in writing the responsible contact persons (and their representatives) for all relevant areas of interest with the name, position, e-mail address and telephone number. The respective responsible strategic supplier managers, strategic purchasing agents and authorized agents act as contact persons for MR. Changes in responsibility at a supplier must be disclosed immediately.

2.5 Requirements for the supplier's management system

A management system provides the basis for collaboration with suppliers. The functionality of the system must be demonstrated by certification in accordance with one of the following standards and specifications.

Quality management system (QMS): ISO 9001 [alternatively, depending on the supplier's industry: VDA 6.1 or ISO/TS 16949 (automotive industry), DIN EN 9100 / AS 9100 (aerospace), ISO 13485 (medical products), TL 9000 (telecommunication), etc.] (in the respective applicable version). In addition, MR expects certifications regarding the environmental and occupational health and safety management system. Environmental management system (EMS): ISO 14001 [alternatively: EMAS, participation in the Ökoprofit program (http://www.oekoprofit.com/, http://de.wikipedia.org/wiki/Ökoprofit, http://www.cpc.at/oeko/oe_WasIst.htm), Responsible Care (ICCA initiative), etc.] (in the respective applicable version). Occupational safety and health management system (OSHMS): OHSAS 18001 [alternatively: OHRIS, SCC, ASCA, ILO OSH guideline, LASI guidelines or, alternatively, proof of an effective OSHMS via BGHM's "Sicher mit System" seal of quality, also see http://www.baua.de/de/Themen-von-A-Z/Arbeitsschutzmanagement/Toolbox/BGMS-Guetesiegel/BGMS-Guetesiegel.html] (in the respective applicable version).

http://de.wikipedia.org/wiki/Ökoprofit

http://www.cpc.at/oeko/oe_WasIst.htm


Copies of each current certificate must be submitted to MR. MR must be notified immediately in the event of changes to or revocations of certificates. In relation to the management system, MR shall be authorized to inspect the documents listed below: - Specifications and records as well as quality-related data regarding products purchased by MR. - Specifications and records and quality-related data in conjunction with the management system - Process descriptions, work instructions and operating instructions if they relate to planning and

implementing products purchased by MR. The supplier is solely responsible for the appropriateness, suitability, efficiency and reliability of the management systems, regardless of the fact that MR approves the products purchased by MR and the processes over the course of initial sample inspection. In particular, this applies to the organizational and technical measures of quality planning and control. The supplier must produce and inspect MR-related products according to the rules of the supplier's management system.

2.6 REACH The REACH regulation (EC) No. 1907/2006 is the European chemical handling regulation on registering, evaluating, authorizing and restricting chemicals. REACH is based on the principle of having manufacturers, importers and later users take responsibility for their chemicals. REACH: Regulation concerning the Registration, Evaluation, Authorisation and Restriction of CHemicals. The resulting obligations are to be implemented under the sole responsibility of the supplier.

2.7 QAA – Quality assurance agreement A QAA concluded between a supplier and MR has the goal of ensuring the quality required by MR starting in planning and development, having the interfaces between the supplier and MR defined as well as promoting smooth, in-depth collaboration. The QAA is used to create joint rules geared towards quality assurance measures across manufacturers and should not cause a disadvantage for one of the contractual partners. The supplier shall declare itself fundamentally prepared to conclude a quality assurance agreement with MR.

2.8 Feasibility evaluation MR has created a feasibility evaluation form with the most important key points for clarifying the feasibility of MR requirements. This form represents the minimum requirements. If required by MR, the supplier must fill out the form honestly for each product/part and confirm it in writing to MR. Being awarded a contract then absolutely requires a completed feasibility analysis.

2.9 Potential analysis based on VDA 6.3 Potential analysis is used for preparing the decision to award a contract to potential suppliers, particularly when awarding contracts for technically demanding or newly developed products. MR uses this to assess the quality capability of potential suppliers. The objective of the initial audit is to successfully introduce a new supplier or product or assess a new location. This means assessing the quality of the supplier in relation to the product and the process as well as establishing processes that meet stringent quality requirements.


3 Implementation of product and process

3.1 Product development via suppliers Suppliers involved in product development for MR must create a project plan that includes all applicable technical, scheduling, financial and qualitative aspects. The project plan includes all of the phases of product and process development, including assessment, verification and validation in the respective project phases. This project plan is oriented based on milestones; the supplier and MR must define these together in a binding manner. The plan can be changed only by mutual agreement. The supplier must provide APQP reporting to MR each month.

3.2 Process development via suppliers Quality and reliability are determined by a coordinated and carefully planned production process for a technical product in development. MR associates this with systematic processing in accordance with APQP or a similar product development process.

3.3 Advance quality planning Advance quality planning begins as early as the planning and development phases for a product. It has the goal of identifying all of the factors affecting product quality, reducing risks in the product and process, and demonstrating the scheduling of appropriate test steps to ensure the required quality of the products. This requires documentation of at least the process steps listed below. Exceptions must be submitted for approval by the responsible MR supplier manager, specifying a conclusive reason.

3.3.1 Test planning In addition to specification documents, test planning by the supplier must take into account documents

such as drawings, company standards, specifications and data sheets from MR, including the results of risk analysis (FMEA) and past production experience involving similar products. The most important areas in this respect are functional and safety-related measurements and product characteristics. The result of test planning must be added to the sample inspection documents in the form of a control plan.

3.3.2 Measuring system analysis The suitability of the measuring and testing equipment in use is to be demonstrated through measuring system analysis using statistical evidence if not agreed upon otherwise with the supplier manager. This measuring system analysis must be evidenced using DIN V ENV 13005 GUM or MSA1 methodology or, in the event of influence from the tester, also using MSA2 methodology based on the testing process.

The characteristic values to be achieved (cg, cgK, % R & R) are agreed upon between the supplier and

the responsible MR supplier manager in each case.

3.3.3 Testing scopes

If only sample testing is intended for testing quality characteristics after consultation with MR, then the sample tests should be oriented to the standardized sampling plans in accordance with - ISO 2859-1, sampling by attributes - ISO 3951-1, sampling by variables

3.3.4 Testing documentation

After successful initial sample inspection, the test results of the initial products/lots tested in accordance with the control plan have to be provided to MR together with the goods listed by part numbers/lot numbers. Material testing certificates always have to be created and (if requested by MR in the order text) provided separately for individual supplier lots.


3.3.5 Statistical process control (SPC) In series production, the supplier must demonstrate process capability using suitable methods of statistical process control (SPC) for the product characteristics defined in drawings or product discussions. This must be applied throughout the entire product lifecycle in order to allow quick responses to deteriorating conditions within the process. The supplier's selection of a suitable control card must be based on the character of the variables (quantitative or attributive), the extent of sampling and the number of parts produced per shift. The capability key values must at least meet the following limits:

Capability Index Requirement

Machine capability Cmk ≥ 2.00

Process capability Cpk ≥ 1.67

3.3.6 Quality documentation and retention periods Document types: The supplier must properly store and retain the availability of the following

specification documents and quality documents at a location provided for such purpose over the entire duration of the quality assurance measures: - Drawings and other specifications (including outdated versions) - FMEA (including outdated versions) - Documents for product and process approval (ISIR, production process plan, control plan, etc.) - Material analysis certificates - Series production test reports - Documentation for traceability

Archiving media: Originals in paper form or on data carriers in conjunction with fraud-resistant and tamper-proof document management systems.

Retention periods: At least 30 years if a period is not set longer by another authority or prescribed by law. After the retention periods have elapsed, the records/documents listed above are to be provided to MR for safe custody without the need for any special request from MR.

3.4 Supplier audit MR can request that an audit be passed before the approval of series production for a supplier or product. MR expects its suppliers and their subcontractors to be prepared to demonstrate the effectiveness of their QM systems to MR during an audit. To this end, MR shall be granted access to all operating sites and provided with a technically qualified employee who gives support. This also applies to MR's clients along with MR. Over the course of product development and as required, MR retains the right to carry out:

System audits based on DIN ISO 9001-2008 and/or

Process audits and/or process acceptance based on VDA 6.3 for the plant installations of the supplier and its subcontractors.

The supplier is informed accordingly before an audit or similar inspection is performed. Other agreements deviating from this general rule can be made in individual instances with mutual consent. If defects or problems are identified during such an audit, they must be demonstrably corrected by the supplier. This involves the supplier creating action plans and having them approved by MR. The actions contained in the plans must be processed on time and completion is reported back to MR together with proof of the actions' effectiveness.


3.5 Production process and product approval (PPF) 3.5.1 Purpose

Before parts or assemblies may be delivered in series production, the supplier must provide proof that the requirements agreed upon in drawings and specifications have been met and written approval from the responsible MR supplier manager is available for the product. This requires both proof of process-capable production using defined product characteristics, capacity analysis with sufficient reserves, the use of suitable and capable testing equipment as well as a complete initial sample inspection of one or more parts per nest (nest labeling required) from the initial series production run with all of the associated documents. MR provides appropriate forms for initial sample inspection reports and initial sample labels at its download site. The supplier is permitted to use its own forms as long as they match the MR template in terms of content.

3.5.2 Sample inspection standards As sample inspection standards, MR accepts standards based on VDA Volume 2 or, alternatively, PPAP. The standard in this case is submission level 2 in accordance with VDA Volume 2 or submission level 3 in accordance with PPAP. The scope of sample inspection can be adapted in consultation with the responsible supplier manager. Full sample inspection always requires a testing plan, process workflow plan and a stamped drawing with measured value assignment. Subsequent or basic sample inspection requires that a cover sheet with a corresponding notice be sent as a bare minimum. Written agreements must be made with the responsible supplier manager for details that require agreement between the supplier and MR, such as level of detail for tests, required documents, testing equipment capabilities and confirmation of compliance with legal requirements. If there are no written agreements, the submitted documents from the initial sample inspection shall apply as the recommendation for the scope of sample inspection. MR then decides whether these are appropriate and sufficient or if additional documents and evidence are required.

3.5.3 Initial sample inspection

Initial sample inspection is applied to new parts, technical modifications to products and for changes to production processes. MR checks the submitted initial sample parts in every respect in accordance with its own determination or accepts the supplier information without separate testing. In the event that the counter inspection is omitted, the supplier information in conjunction with the MR specification documents shall apply as the set starting point for any deviations that may be found later on. An initial sample inspection can also be necessary during series production for requalification tests for the process and product.

The process generally applies to material products (systems, modules, parts, components) used at MR as:

Production parts

Service or spare parts

Semi finished products/raw materials

Production materials and consumables that will be part of the product (e.g. paints, fluid sealants, glues, oils, brake fluid, etc.)

This does not apply to capital equipment, such as production systems, or process materials (lubricants, auxiliary equipment, consumables, etc.)


If not agreed upon otherwise between the supplier and MR, production process and product approval does not apply to standardized products (e.g. DIN parts, fluids in accordance with DIN or SAE). In these cases, a cover sheet sample inspection with confirmation that the products/parts meet the corresponding standards is sufficient. Increased requirements, such as special product features or maximum permissible deviation rates must be specified individually. Parts with modified or individualized specifications no longer fall under the term "standardized parts". Services and software can be taken into account as part of function testing within production process and product approval for products. A detailed procedure for design processes and projects for developing and accepting software-driven systems is outlined in VDA Volume 13.

3.5.4 Scope of approval Production process and product approval includes:

Products in accordance with initial sample inspection

Associated manufacturing processes documented in the initial sample documents and/or approved by audits.

Each instance of a change to the product or manufacturing process by the supplier must be coordinated with MR.

3.5.5 Representative sample inspection

A representative sample inspection is useful for parts families not based on molds (identical parts that only differ in details). The full scope of a sample of the most complex representation of this part family is inspected; the other articles of this part family are sampled using a cover sheet sample inspection, which must include a reference to the representative article. This procedure reduces the time and expense for the supplier as well as MR.

3.5.6 Approval statuses The inspection of initial samples may provide the following results:

Result of MR initial sample inspection

Implications

Acceptance The product deliveries are approved in accordance with the delivery schedule.

Acceptance with exception(s) Delivered parts are accepted with exception(s). Delivery of products that do not meet the full extent of sample inspection is permitted only for a limited time or in limited quantities (deviation permit). The requirements are shared with the supplier and must be met. A subsequent sample inspection (for the corrected deviations) is required.

Rejections The products are not permitted for delivery. A new sample inspection is required.

Details for subsequent or new sample inspections must be coordinated with the responsible supplier

manager from Quality Assurance.

3.5.7 Delivery of initial samples

Initial samples and initial sample inspection reports (ISIR) are to be submitted to the responsible Quality Assurance supplier manager of the client's plant that placed the order. Initial sample inspection reports must be uploaded to the supplier portal in electronic format (e.g. as a PDF) or sent to [email protected] as an e-mail.


In order to ensure proper assignment, the subject line must include the following information: MR material number – MR designation – Order number.

The responsible supplier manager concludes initial sample inspection by signing the approval on the

initial inspection cover sheet.

3.5.8 Packing initial samples Packaging for initial sample parts is defined and approved in coordination with the responsible supplier manager from Quality Assurance. Both the delivery note and the packaging of the parts are provided with the note "Initial Sample". Initial sample packaging units may only include initial samples of one article number and must be packaged separately. This excludes delivery in a container with series production parts. The delivery note must be attached to the outside of the package.

3.5.9 Labeling initial samples Packaging units with initial sample parts must be labeled with an initial sample label, which must contain the following information as a bare minimum:

Supplier name

Article number

Index state

Number of sample parts

Addressee (responsible Quality Assurance supplier manager) The measured or tested parts inside must be uniquely identified, on both sides if necessary (for larger or symmetrical parts), in order to prevent the parts from being mixed up with parts for installation trials. For multi-cavity molds, each nest has to be labeled.

4 Ensuring supplier dependability in series production

4.1 Series delivery

The supplier must ensure that a production process and product approval (PPF) has been obtained from MR. In addition, the supplier may not deliver defective products to MR under any circumstances. In order to enable assessment of quality performance in series production, the supplier must provide appropriate data, information and experiences relating to continuous product improvement and production optimization.

4.2 Logistical requirements

4.2.1 General packaging and shipping regulations The respective version of the specifications from General packaging and shipping regulation for suppliers applies.

4.3 Supplied production and testing equipment To the extent that MR provides the supplier with production and testing equipment as well as loading equipment and other resources and devices as part of acquiring deliveries, the supplier must integrate them into its management system just like the supplier's own production and testing equipment. For regularly circulating packages, the supplier performs accounting for empties. The accounting has to be coordinated with MR regularly.


4.4 Design deviation/Special approval

4.4.1 Faulty products suitable for the intended use as assessed by the supplier. If the supplier determines, before delivery of the parts to MR, that the manufactured product does not meet the requirements set forth in drawings/specifications but that it appears suitable for the intended use by MR as reasonably assessed by the supplier and the supplier intends to deliver such products to MR, a written design deviation request or special approval must be given to the responsible supplier manager using the respective form. After receiving a design deviation/special approval, MR checks whether deterioration in quality is to be expected from the manufacturing defects or deviation from the nominal quality and whether such a product can still be used. If this is the case as determined by MR, MR approves the goods for delivery via written declaration to the supplier. The supplier must mark the corresponding, reworked goods with the design deviation/special approval granted by MR for delivery. The design deviation request represents a temporary and quantity-limited exception and does not absolve the supplier of the obligation to analyze and correct the cause of the deviation. Each design deviation request/special approval placed must include an 8D report in writing where the supplier explains the solution for the problem and demonstrates that the causes have been corrected.

4.4.2 Faulty products that the supplier would like to rework before delivery

If, during a production process or during final inspection, the supplier discovers faulty products that can be brought to an OK state through rework based on the supplier's assessment, the supplier must disclose the rework to the responsible MR supplier manager via detailed specification of the type and extent of the rework process if the rework was not intended or qualified in the series process beforehand. This notification is to be provided in writing, also using the design deviation/special approval form. The affected products may be reworked only after receiving prior approval from the responsible MR supplier manager. The supplier must mark the corresponding, reworked goods with the design deviation request/special approval granted by MR for delivery.

4.5 Change management PCN (Product Change Notification)

4.5.1 Changes to parts Changes to parts by the supplier may have unintended consequences.

The particular application of purchased parts in high-voltage areas at MR means that features that are inconspicuous to non-specialists can result in voltage flashovers that pose a risk of severe injury or death. Change management at MR requires a particular degree of due diligence for this reason. As a result, MR has defined which changes to parts or processes have to be approved by MR.

Changes without a notification requirement

- Personnel changes - Changes to process parameters within a defined process window in accordance with process

approval - Changes to machine/pieces of equipment/product systems/testing equipment of the same

type, performance level, etc. with no effect on product quality - Changes required as part of maintenance (spare parts) - Additional quality inspections, e.g. process control (outgoing goods inspection) - Additional visual inspections due to new defects (defects not yet listed in the defect catalog)

Changes with a notification requirement

- Replacing machines with machines of a better or more powerful type without a foreseeable effect on product quality


Changes with an approval requirement

- Changes to machines/pieces of equipment/production systems/testing equipment/production locations with potential effects on product quality

- Changes to process parameters with potential effects on product quality - Changes to testing parameters and testing procedures - Changes in (raw) materials - Changes in material suppliers/service providers - Process workflow changes (process flow) including testing steps

Compliance with this requirement is required at all times. Due to the specific use of parts at MR, this is required for protection against claims for compensation which could also legally affect subcontractors.

4.5.2 Changes to parts due to supplier request There may be instances where changes to series production parts are required for technical or other

reasons. Such changes must always be approved by the persons responsible for the parts at MR before delivery to MR. MR has defined a change process for these situations that absolutely must be followed. The supplier must submit the change request in writing using the Product Change Notification (PCN) form prior to implementation. Only approved changes may be implemented by the supplier.

Approved changes to parts must be submitted to the responsible MR supplier manager by means of

subsequent sample inspection. Modified parts may be delivered only after approval.

4.5.3 Changes to parts due to MR request

The requirements of MR processes can also necessitate changes to parts. The request is usually accompanied by a modified part drawing. The supplier then has the opportunity to assess the change and submit an updated quotation. It may be necessary to implement changes immediately in urgent exceptional cases. Written approval from the persons responsible at MR Technology or MR Purchasing is then sufficient. The delivery of the modified parts absolutely must be labeled accordingly and announced to the MR supplier manager.

4.5.4 Product history In order to draw conclusions about product changes when problems occur, the supplier must provide a

list of all product and process-related changes related to the respective delivery of the parts. MR recommends using a product history form to do this.

4.6 Repair orders A repair by the supplier is considered in the event of a defect originating from MR's sphere of responsibility. A quotation is obtained before the supplier is commissioned with the repair. MR issues a repair order if the repair is economically feasible. The affected parts are sent to the supplier with the order. The repaired purchased parts may be returned to the client only if they are clearly marked and with the information given previously. MR checks that all requirements have been met in each case before a repaired part may be integrated into production.

4.7 Complaints due to quality issues 4.7.1 Complaint involving the presence of qualitative defects

In the event that qualitative defects are present in the delivered products, MR will notify the supplier of the matter immediately using a complaint form. MR shall indicate any costs incurred. MR expects suppliers to confirm receipt of a complaint immediately, but after two workdays at the latest, by providing the sender with receipt confirmation. Faulty parts are separated out of the production process to prevent them from being processed further. MR decides how to handle the issue going forward by taking into account the criticality of the defect, the affected quantity and the expected economic effects (e.g. impending production shutdown, damages for MR customers).


This could result in one of the following scenarios:

The defective parts are collected at MR and returned to the supplier in accordance with internal workflows.

The inventories at MR are returned to the supplier to sort out defective parts.

The supplier is required to check the inventories at MR in order to ensure a supply of parts free of defects. This can be accomplished by deploying employees belonging to the supplier or by commissioning service providers approved by MR (see 4.7.6).

In the event of an impending production shutdown, MR retains the right to sort defective parts itself or to rework the defect to avoid a production shutdown. The supplier will be notified as soon as possible.

The decision regarding the procedure is coordinated with the supplier. The priority at all times is supplying MR production and MR customers with parts that are free of defects. Each potential response is carefully weighed in terms of effort and resulting costs.

4.7.2 Return shipment of defective parts or parts for rework MR actively sends returns (parts for rework / samples / etc.) back within 2 workdays. An exception is made for suppliers with fixed delivery days. They have the parts issued at the next run.

Time-critical parts are actively shipped on a case-by-case basis.

Complaint samples (NOK parts for Q reporting) are not returned automatically unless valued at more than €50. If the supplier would like to have the parts returned for viewing purposes and defect analysis, the supplier must submit a request to the supplier manager. The supplier manager can also decide that the return shipment is necessary for analysis due to the fault pattern.

4.7.3 Processing of MR complaints by the supplier For suppliers of defective deliveries, MR demands a structured problem resolution process in the form of an 8D report. MR provides appropriate forms at its download site. Suppliers can also use their own forms as long as they match the MR template in terms of content. The following deadlines apply at MR for processing an 8D report depending on the priority ("High" or

"Standard") of the complaint:

Report Contents Response time

Priority High

Priority Standard

0 Receipt confirmation 24h 2d

3D Immediate measures 36h 3d

4D Cause analysis 48h* 5d

6D Proof of effectiveness for the corrective measures

10d 10d

8D Final report 14d 21d Response times in hours (h) or workdays (d), *Initial results The processing of complaints is evaluated in terms of content and ability to meet deadlines. This evaluation is part of the annual supplier evaluation. MR pursues the following goals by processing complaints using 8D reports:

Structured procedure for systematic analysis and correction of complaints as well as avoiding future complaints.

Repeat defects must be avoided through the long-term implementation of corrective and preventive measures.

The actual cause must be determined and documented.

MR must be informed of the processing status.

Traceable and analyzable documentation is to be created and archived regarding the defect process.


MR expects in-depth complaint processing by the supplier for long-term problem resolution if the complaint is the result of:

A notice of defect from an MR customer

A repeat defect

A problem affecting quality with damages amounting to more than €1,000 or demanded by MR supplier manager

4.7.4 Product labeling and traceability In the event a defect is detected, product labeling is used for enabling traceability such that the number of potentially affected products can be determined as efficiently as possible. To this end, the products themselves and the smallest packaging unit must be labeled by the supplier so that respective products or lots can be clearly traced in relation to their production time and place, process parameters, test results and testing certificates and the lots of used (raw) materials. The supplier must notify MR and provide the rationale in instances where labeling products does not appear technically feasible, suitable or economical with the associated costs. The labeling must be provided in a permanently legible manner. Moreover, the specifications from drawings and technical delivery conditions, if defined, apply with regard to labeling products.

In the event that defects are detected by MR or by the supplier itself, the supplier shall track which products have already been delivered or are still in transit for determining which ones have a high probability of suffering from similar or identical defects using appropriate logical considerations (e.g. same base material batch, same production lot) in order to support the risk-reducing measures of MR. The supplier shall provide this information to MR in an organized way. In the interest of the MR supplier, we recommend that the supplier define a corresponding traceability process to avoid unnecessary sorting and inspection costs.

4.7.5 Regulations relating to rework and sorting inspections If defects that can be corrected through rework or that can be screened to a significant extent are detected in parts at a later value creation process (part processing, assembly), the following rule applies: 1. MR notifies the supplier immediately after detecting the issue. The notification includes a list of

options which can ensure the parts supply for MR assembly. 2. Potential options that MR gives to its suppliers could include:

The supplier deploys employees to MR to ensure the supply of parts to assembly lines conforms to specifications by sorting affected inventories or using rework.

The supplier commissions a service provider who takes over the sorting or rework in place of the supplier in the supplier's name. The supplier commissions MR with carrying out the sorting or rework at supplier's expense. The supplier must confirm the assumption of the resulting costs in writing in this case.

MR carefully weighs the potential options. The priority in this context is supplying MR's assembly lines to keep claims for compensation to a minimum.

4.7.6 Approved service providers for rework and sorting inspections Approved external service providers include:

Redi-Control Formel D redi-Group GmbH-Büro Region Süd Formel D Group Münchner Strasse 14 Hunsrückstr. 1 D-85774 Unterföhring 53842 Troisdorf Phone: +49 89 / 36 03 606 Phone: +49 22 41 / 996-0 Fax: +49 89 / 36 03 60 80 Fax: (+49) 22 41 / 996-101 http://www.redi-group.com http://www.formeld.com


The supplier is responsible for commissioning external service providers. MR can act in a supportive role in this regard. However, this requires written confirmation of cost coverage by the supplier. The supplier is responsible for determining the extent of sorting or rework in any case. The supplier is also responsible for coordinating the necessary work with MR (normally using design deviation requests/special approvals). Other claims from MR due to the presence of defects in the delivered products remain unaffected.

4.7.7 Labeling checked or reworked parts If defective parts are returned to the supplier for rework or sorting, it is important to ensure that these parts are not mixed with other lots. These parts are to be clearly labeled as "on hold" and are to be kept in a storage area for on-hold stock until reworked. The rework has to be coordinated with MR (schedule, process, inspection, risk assessment, etc.). Reworked or sorted parts are to be labeled in consultation with MR. The marking can be applied via stamp, sticker or colored mark on each part depending on the assembly situation at MR, but is always applied to every delivery container. Reworked parts are to be kept separate from series production parts when they are delivered again. In addition, a log of the rework—a test log if applicable and agreed as such—must be included. The following information must be provided on the delivery note:

"Parts from rework for complaint No. xxxx. Please notify Mr./Ms. _____________________ MR CPQI."

The information must be easily legible to ensure it can be identified quickly and clearly.

4.7.8 Labeling the first delivery of parts free of defects

After processing a complaint, the supplier must label the individual containers for the first series production delivery of goods free of defects. This label must be easily recognizable by means of a sticker or tag. The label must include the following information at a bare minimum:

First series production delivery after complaint No. _____

Parts inspected and free of _______ (reason for complaint)

Date and signature of the inspector

5 Continuous improvement process (CIP)

IP

IDIC

IA

I Q-targets

I Samplings

I Series business

I Q-improvement

projects

I Supplier

evaluation

I Business

I Reviews

I Measures


5.1 Supplier evaluation

Objective key figures from the areas of logistics, procurement and quality management are determined in order to evaluate suppliers. This is accompanied by a subjective evaluation from the respective areas where collaboration with the respective contact partner is graded. All of the evaluations are combined together with different weightings to derive an overall grade. The objective evaluation of suppliers includes the following criteria:

Adherence to deadlines

Adherence to quantity stipulations

Quality rate (number of complaints / number of goods received)

ppm rate1

Process capability

Certification status of the quality, environmental, and occupational health and safety management

system

Existence of a signed QAA

Results from Q audits

Evaluation of 8D reports

5.2 Business reviews A coordination meeting is held once per year with select strategic suppliers at the management level.

The meeting aims to reflect on business relationships and supplier performance. This meeting results in a target agreement with measures, deadlines and responsible parties.

5.3 Target agreement and controlling

5.3.1 ppm quality goals Notwithstanding the supplier's duty to deliver parts free of defects, the supplier shall pursue a continuous improvement process (CIP) for systematically detecting and correcting sources of defects in order to achieve a zero defect target. As part of the CIP, the supplier will undertake the necessary measures to achieve a reduction in the ppm rate year by year. The ppm target values are agreed on in writing as needed between the supplier and MR or specified by MR as an all-inclusive value for each group of goods. The supplier can request the ppm target values that apply to it from the responsible MR supplier manager and adjust the specific initial situation through mutual consultation. The ppm goals should provide a challenge but also be realistically achievable.

5.3.2 ppm controlling The supplier is responsible for regular measurement of the actual quality situation (ppm rate, complaint rate) in comparison to the target values, independent of a measurement by MR. The supplier establishes a suitable monitoring system for this purpose. The supplier must define and implement appropriate measures if the ppm goals are not met. MR is entitled to view these measures and demand rework as necessary. MR can ask the supplier to review and evaluate quality performance and can require additional measures in the event of the following:

1 Ratio of defects in parts per million (ppm), i.e. 1,000,000 x (number of faulty parts) / (number of delivered parts).


a. Repeatedly exceeding agreed upon ppm target values b. Repeat defects with process interruptions at MR c. Disruptions with an effect on MR's customers, a high degree of economic significance or relevance

for safety d. Any other substantial deterioration in quality performance, especially if it affects MR's customers The supplier records these measures in writing in the form of an action plan and they must be processed in a timely manner. The supplier is responsible for adding additional measures to this action plan if necessary in order to meet the agreed upon goals.

5.4 Q improvement projects Continuous improvement must be part of each supplier's quality strategy. MR expects active supplier participation in the continuous improvement of workflows, processes and products with the goal of continuously improving the overall system. If a supplier fails to achieve quality goals, experiences reductions in quality or demonstrates repeat defects or high quality costs (problem costs), MR can demand the implementation of a quality improvement project (such as a lean manufacturing project or Six Sigma project).


6. Appendixes

6.1 Abbreviations MR Maschinenfabrik Reinhausen QMS Quality Management System VDA Verband der Automobilindustrie (German Association of the Automotive Industry) PPF Produktionsprozess- und Produktfreigabe (production process and product approval) ISIR Initial Sample Inspection Report PSW Part Submission Warrant; sample inspection in accordance with QS 9000, see Production part acceptance process QAA Quality Assurance Agreement SPC Statistical Process Control MCS Machine Capability Study PCS Process Capability Study PCN Product Change Notification PPAP Production Part Approval Process Cm/Cp Machine/process capability index (tolerance in relation to variance) Cmk/Cpk Critical machine/process capability index (tolerance in relation to variance based on

position) AQP Advance Quality Planning APQP Advanced Product Quality Planning; continuous project management for product and

quality planning FMEA Failure Mode and Effects Analysis IMDS International Material Data System DmbA Dokumente mit besonderer Archivierung (documents with special archiving) 5-Why 5-Why method; method of quality management for determining cause-effect relationships

Ishikawa The Cause-Effect diagram is a type of diagram that shows causality relationships. CIP Continuous Improvement Process AIAG Automotive Industry Action Group VDA 6.3 Verband der Automobilindustrie Volume 6 Part 3, Process audit

6.2 MR links

MR Download Center General Purchase Conditions of REINHAUSEN Group Supplier questionnaire Feasibility evaluation Initial sample inspection report Initial sample label Product change notification (PCN) Design deviation request/special approval

7 History of changes

Change Modified chapters

Description of the change Author

No. Date

1 2013-09-11 LHB newly created C. Dirr

2 2013-12-13 revised C. Dirr

20131213 lieferantenhandbuch en

Documents

supplier selection

supplier audit

process development

mr suppliers f02258

dirr page

suppliers management

pages version

production process