Foreword 3 Purpose 4 Priority / application field 4 ... · 6.3.12.2 Goods with limited shelf life...

MGP R103D07 AD.023 Page 1 of 22

This document is addressed equally to Ladies and gentlemen. Solely for linguistic efficiency only one form is utilised in the text, either male or female.

M-Manual Part 4 – Company Organisation

Revision status: 04 - 01.01.2007 Document No: AD.023 Handbuch Lieferantenanforderungen.doc

General Document AD.023 Manual of Supplier Requirements of the

MöllerTech (Suppliers Manual) (MöllerTech GmbH, MöllerTech Engineering GmbH,

MöllerTech International GmbH, MöllerTech Thüringen GmbH)

List of contents:

0 Foreword 3

1 Purpose 4

2 Priority / application field 4

3 General 4

4 Responsibility of the AN 5

4.1 Quality of deliveries and services; statutory regul ations / standards 5 4.2 Technical requirements and documents; clarification of open questions 5 4.3 Quality management system 5 4.4 Supplier qualification; approval of the AN 5 4.5 Statutory regulations, standards, customer-specific standards 5 4.6 Principles of the UN and OECD; social and ethical r esponsibility 6

5 Requirements imposed on the QM system of the AN 6

5.1 Quality system requirements, verifications, auditin g 6 5.2 Subcontracting 6 5.3 Inclusion of customers of the AG 7

6 Requirements 7

6.1 Requirements before contract signing 7 6.1.1 Inquiry / offer / prices / minimum quantities 7 6.1.2 Framework contract / individual contract / order 7 6.2 Requirements before serial production 8 6.2.1 Quality planning 8 6.2.2 Sampling and initial sample release 8 6.2.2.1 Pilot series sampling 8 6.2.2.2 Production process and product release / initial sampling 8 6.2.2.3 Ingredients 9 6.2.2.4 Production test run 9 6.2.2.5 Designation of manual specimens, pilot series parts and prototypes 10 6.2.3 Technical modifications 10 6.2.4 Ordering of tools and type-specific operating means; ownership 10 6.2.5 Tool and operating means provisions by the AG / insurance / return or disposal 10 6.3 Requirements during serial production 11 6.3.1 Quality assurance 11


Revision status: 04 Document No.: AD.023 Handbuch Lieferantenanforderungen.doc





This document is addressed equally to ladies and Gentlemen. Solely for linguistic efficiency only one form is utilised in the text, either male or female.

6.3.1.1 Monitoring of the serial production / deviations 11 6.3.1.2 Quality recordings 11 6.3.2 Designation 11 6.3.2.1 Designation of parts 11 6.3.2.2 Delivery designation 12 6.3.2.3 Designation of modified parts 12 6.3.3 NAFTA marking instructions 12 6.3.4 US-TREAD ACT 12 6.3.5 Device and product safety statutes / guideline 13 6.3.6 Packing 13 6.3.7 Delivery schedules; orders 13 6.3.8 Advance notification of dispatch 13 6.3.9 Electronic data exchange 13 6.3.10 General requirements imposed on the delivery of plastic raw materials, paints and painting systems 13 6.3.11 Investigations and testing obligations 14 6.3.12 Special goods acceptance conditions 14 6.3.12.1 Paints 14 6.3.12.2 Goods with limited shelf life 14 6.3.13 Complaints, defects, corrective measures, regress 15 6.3.14 Product liability obligation and motor vehicle recall costs insurance 15 6.3.15 Credit notes, invoices 15 6.4 General requirements 16 6.4.1 Supplier assessment system 16 6.4.2 Development of suppliers 16 6.4.3 Information obligations of the AN 17 6.4.3.1 Product-related modifications 17 6.4.3.2 Information regarding risks, labour disputes, other disturbances and emergency plans 6.4.4 Costs reduction programme 17 6.4.5 Replacement parts procurement, requirements after the serial production 17 6.4.6 Support for production conversion/relocation 17 6.4.7 Recycling; RC directive for old vehicles 17 6.4.8 Resolving unclear points and settlement of disputes 17 6.4.9 Confidentiality 18 6.4.10 Gifts and gratifications 19 6.4.11 Product liability/product responsibility 19 7 Co-operation 19 7.1 Co-operation of the AN with customers of the AG 19 7.2 Co-operation of the AN with insurance companies of the AG 19

8 Quality assurance agreement 20

9 List of abbreviations 22








0 Foreword

A good PURCHASE is prerequisite for a good SALE. For good purchasing we must enlist GOOD SUPPLIERS. We cordially welcome you as supplier! We as CUSTOMER (designated as AG in this manual) consider our CONTRACTORS (SUPPLIERS) (also designated as AN in this manual) as partners. Therefore we explain our purchasing organisation to you and show you brochures, drawings and specimens of our products. We value your open word as constructive criticism, because we are aware that only equal rights lead to a partnership. We gladly respond to your impulses and suggestions for improvement in the sense of continual processes improvements (KVP). Please also consider the following: With the acceptance of an order you pledge, among other agreements, to comply with the agreed delivery deadlines. Please honour your delivery pledge! Undesired partial deliveries and early deliveries entail financial losses for us. Late deliveries can entail considerable damage for us and our customers. The quality of the product determines the quality of the supplier. Avoid complaints! In our philosophy the care of good suppliers has the same importance as the care of good customers. The purpose of this manual is to answer, as far as possible, the numerous questions that have cropped up in the past with regard to our co-operation. Please read this QM manual attentively. Find out for yourself where action is still needed on your part and please initiate the necessary measures to fulfil, or perhaps surpass, our requirements and those of our customers. Your contact partner in the purchasing department of the AG will be pleased to answer any questions you may have with regard to this manual. Furthermore, if you require assistance for fulfilling individual requirements, we will be pleased to help you.








1 Purpose

Achieving and sustaining customer satisfaction is one of the most important goals of the AG. Effective and dependable work in co-operation with our AN is thereby an important prerequisite. The quality of the products of the AG is essentially determined by the quality of the delivered input products. Therefore quality capability of the AN and his control of all processes in the delivery chain are important criteria for the contract award decision. This manual lays down the fundamental expectations imposed on the quality system of the AN for deliveries and services, including the preceding development processes. The AG therewith intends to ensure that the AN is capable of fulfilling the quality stipulations of the AG and those of the customers of the AG, and he intends to commit himself to satisfying his customers by continual improvement of procedures and quality.

2 Priority / application field

This manual is an essential part of the purchasing conditions of the AG. The requirements set forth in this manual apply in addition to the stipulations in the further contractual agreements (framework delivery contracts, general purchasing conditions, co-operation agreements, delivery plans, delivery schedules and their modifications, delivery calls, orders, special agreements, etc.) and technical documents (specifications, drawings, performance specifications, data records, etc.) and must be observed in addition to further requirements and instructions. If contradictions arise between the requirements of the contractual agreements and technical documents, and this manual, the contractual agreements and technical documents have priority. This manual is binding for all deliveries and services that the AN renders for the AG, even if no explicit reference thereto is made in the individual case. This manual is valid in particular for deliveries of products, as well as complex assemblies, production material (raw materials, auxiliary and operating substances, materials, load carriers, special operating materials and type-bound devices that were developed by the AG and his customers, by the AN or by third parties (referred to below as DELIVERIES. It is also valid for development, constructional and planning services as well as for test, laboratory and other works and services (referred to below as SERVICES).

3 General

The basic quality systems and procedures that are to be applied to deliveries and services rendered for the AG are defined below.








4 Responsibility of the AN

4.1 Quality of deliveries and services; statutory r egulations / standards The AN carries the full responsibility for the quality of his deliveries and services. The AN should not rely on just a goods arrival check or initial specimen release by the AG. Quality is the totality of features of a considered unit with regard to its suitability for meeting predetermined and expected requirements. For us QUALITY means complete implementation of the zero fault philosophy (ZERO faults as binding goal) as well deliveries and rendered services in correct quantity on time. Such QUALITY is demanded of all AN. 4.2 Technical requirements and documents; clarifica tion of open questions The AN is responsible for providing the technical documents (in particular drawings, CAD data, specification sheets) and complying with other technical stipulations. He is furthermore responsible for ensuring confidential treatment of all communicated information (see the section 'Confidentiality'). For clarifying all questions, the AN should contact the competent staff member of the purchasing department of the AG, who will when required also consult the affected specialist departments of the AG. It is expected that the AN checks the demands of the AG with regard to their economic and technical feasibility and that he ensures clarification of all open questions already in the planning phase, synchronously with respect to the development process. The AN will make use of his experience and knowledge, and where appropriate he will suggest appropriate alternatives and improvements. 4.3 Quality management system It is the duty of the AN to make deliveries and render services that are free from defects. An essential prerequisite for this is an effective approved quality management system. Thereby fault prevention must always have priority over fault tracing. This approach also increases productivity and leads to permanent quality improvement. The AN and the AG both profit therefrom. 4.4 Supplier qualification; approval of the AN Only AN who fully comply with the requirements of this manual, making deliveries and rendering services punctually and with constant high quality for competitive prices, will be approved as suppliers and included in the procedure for inviting tenders for current and new projects. However, no claim for contract award can be derived therefrom.

4.5 Statutory regulations, standards, customer-spec ific standards The AN is obliged as minimum requirements to comply each time with the current statutory regulations and applicable standards (VDA, DIN, etc.) as well as the current customer-specific standards (e.g. DaimlerChrysler - Special Terms, BMW – BMWN, VW – Formula Q-concrete, TL, GS), even when no explicit mention thereof is made in the individual case. This applies in particular to prohibitions of the utilisation of certain ingredients, to recycling capability as well as to the regulations for designation and declaration.








4.6 Principles of the UN and OECD; social and ethic al responsibility For the AG it is essential that the AN and his sub-suppliers/subcontractors behave in a socially and ethically responsible manner. The United Nations (UN) have defined the chief principles for this in the UN GLOBAL COMPACT (www.unglobalcompact.org). Furthermore, the OECD has formulated guidelines for multi-national undertakings (www.oecd.org). The AN must inform himself of the respectively current status and must comply with the principles of the UN and the OECD as minimum standard. In particular, the AN shall not enlist forced or child labour, and he must eliminate discriminations, in particular racial, gender or religious discriminations. The AN must strive for the development and propagation of environmentally friendly technologies, and he must show responsibility with respect to the environment; the AN must continually reduce negative environmental influences on the production and processes. The AN shall demand corresponding responsibility on the part of business partners, in particular from sub-suppliers/subcontractors.

5 Requirements imposed on the QM system of the AN

5.1 Quality system requirements, verifications, aud iting The AG expects of his AN the application of an approved quality management system (- also called QM system in the following text -) that fulfils the requirements of the ISO/TS 16949:2002 (temporarily also VDA 6.1 or DIN EN ISO 9001:2000). It is expected that suppliers certified according to DIN EN ISO 9001:2000 will further develop their QM systems in the direction of ISO/TS 16949:2002. External testing laboratories must be accredited according to DIN EN ISO/IEC 17025:2000. In addition thereto the AG reserves the right to carry out his own quality audits in the production facilities of the AN (system, process and product audits), or also to carry out a PTC. A quality audit is made after prior notification. If deviations are found in a quality audit, the AN pledges to apply suitable corrective measures.

5.2 Subcontracting Award of delivery and service scopes by the AN to sub-suppliers/subcontractors is permitted only with prior written consent of the purchasing department of the AG. The consent of the AG is subject in every case to the condition that sub-suppliers/subcontractors have a suitable quality management system and that they comply with the delivery requirements of the AG. The AN must oblige his sub-suppliers/subcontractors in suitable manner to utilise this manual, and he must ensure that deliveries and services obtained from sub-suppliers and subcontractors are free from defects. The AG can demand documented verification from the AN that the latter has convinced himself of the effectiveness of the quality management system of his sub-suppliers/subcontractors. If it is necessary to check the quality management system or the production processes of sub-suppliers/subcontractors, the AN shall co-ordinate such a quality audit. The change of or to a sub-supplier/subcontractor requires in each case a new first sample assessment and a new process capability verification. The AN must have a procedure for solving quality problems encountered with his sub-suppliers/subcontractors. This procedure must comprise at least the handling of defective material, corrective measures, monitoring of the corrective measures, assessment of financial consequences and assessment of the suppliers.








5.3 Inclusion of customers of the AG When required the AG is permitted , with his own personnel as well as with customer personnel, at any time during production times of the AN after prior agreement of a date, to inspect the production facilities of the AN and thereby to check for compliance with contract-specific criteria. This also applies correspondingly to the production and working facilities of sub-suppliers/subcontractors. The AN shall oblige his sub-suppliers/subcontractors accordingly.

6 Requirements

6.1 Requirements before contract signing

6.1.1 Inquiry / offer / prices / minimum quantities Offers must be submitted on request by the AG and they must, in particular, fulfil the following prerequisites: The offer must correspond exactly to the inquired performance scope and must be made for the inquired quantities and for the inquired delivery period. Before submitting an offer, the AN must make sure that all required information is available for him and that the general feasibility of implementation is given, in particular with regard to technology, logistics and capacity. The "cost break down" (CBD) form of the AG must be filled out for the offer. Furthermore, the logistic book of the AG must be complemented. The pricing of the offer must be according to DDP [specified utilisation location] Incoterms 2000. The offered prices must be valid for the running time of the series and for the duration of the replacement parts service. The offer must contain all costs for production and delivery of the inquired product according to the delivery and quality requirements of the AG and the stipulations contained in this guideline. For parts bound to tools the offer must contain a break down of the costs for tools and operating means as well as the specifications of the tool manufacturers. Minimum order quantities or minimum delivery quantities and periods, minimum dispatch quantities not conforming to standard package sizes and any surcharges related thereto, will not be accepted. Only complete and punctually received offers can be considered. All offers must be complete and must be submitted in text form (letter, telefax, E-mail). 6.1.2 Framework contract / individual contract / or der The delivery conditions agreed between the AG and the AN will be laid down in a framework delivery contract, in delivery plans, in delivery schedules and/or in orders made by the AG. The negotiation result, in particular the part numbers, the part description, the price, the modification index, the technical information and further relevant information and regulations, are documented therein. A framework delivery contract or a delivery schedule alone is not a clearance for delivering parts. The AN will receive for this purpose in each case a separate delivery schedule and/or order from the factory requiring the delivery. All orders of prototypes, pilot series and finished parts must be sampled to the agreed extent (usually VDA EMPB) before commencing deliveries. All costs entailed by the sampling and release procedure must be








carried by the AN. Invoices from the AN that are not based on a delivery schedule or order from the purchasing department of the AG cannot be accepted. The AN must immediately check and countersign the framework delivery contract sent by the AG and then return it to the AG. Any desired amendments must be negotiated with the AG. At the latest 10 workdays after receiving the framework delivery contract, the latter counts as accepted by the AN, if the AN has not submitted any desired amendments in writing. Orders and delivery schedules count as accepted and are binding, if the AN has not objected to them in writing within 5 workdays after receiving them. The AG has the right to modify delivery schedules; the most recent version sent to the AN is always the valid version. 6.2 Requirements before serial production

6.2.1 Quality planning When planning new products or technical modifications, in every case a quality planning must be carried out by the AN under his own responsibility, in order to ensure the demanded quality of the delivery object and of the production processes. Special procedures of the respective automobile customers/OEM must thereby be taken into consideration (VDA Volume 4 ff., APQP from DIN EN ISO 9001:2000 and similar sources). The AN must grant the AG access at any time for inspecting the planning documents. The elements FMEA, test planning, testing facilities planning, definition of important features and the packing planning must be co-ordinated with the AG.

6.2.2 Sampling and initial sample release

6.2.2.1 Pilot series sampling For progress control, a detailed deadline date schedule containing all planning elements must be submitted to the purchasing department of the AG without separate request, at the latest 2 weeks after sending the framework delivery contract or order to the AN. Compliance with the deadline date schedule and the planning content must be documented in agreement with the purchasing department of the AG by means of regular status reports. 6.2.2.2 Production process and product release / in itial sampling Before first time delivery, in the case of technical modifications to products or modifications of the production processes, in every case a first sample assessment must be made by the AN, thereby taking into consideration the methods of the respective automobile customers/OEM (the standard is thereby the PPM procedure according to VDA Volume 2, alternatively PPAP according to DIN EN ISO 9001:2000 or similar standard specification). At the time of the initial sampling date products must be available that fulfil the stipulated requirements in all respects. It is therefore necessary to plan and execute sample taking, optimising measures and matching tasks in such good time that the initial sampling date can be met in any case. The form and scope of the production process and product release procedure will be defined by the AG in the task list and/or specifications and by agreement with the competent quality planning office of the AG. If nothing different is agreed, the currently valid VDA regulations apply. Automobile customers/OEM-specific approval procedures will be co-ordinated with the AN, if required, within the scope of the quality planning.








For checking and approval, the complete sampling documents together with a number of sample parts to be agreed must be submitted with separate delivery notes and presented to the competent quality planner of the AG. All product features from the technical documents must be mentioned in the sampling reports of the AN, stating the nominal values, tolerance and determined actual values. Serial production deliveries are permitted only after positive sample assessment and release of the sampling report in writing by the AG (EMPB-release). The AG must notify the AN accordingly. All deliveries made before EMPB release require a quantity and time dependent exception release by the competent quality planner of the AG. In the case of restricted or refused EMPB releases the AN must immediately initiate corrective measures for achieving the EMPB release capability. In this respect the sampling must be repeated within the agreed deadline date schedule. The AN must keep a released specimen and the test result that he determined, at least until the end of the production time (also after the end of serial production), or until modification of the part. Invoices for tools, operating materials or testing devices are due only after an EMPB release. The AG reserves the right to withhold complete payment until a release-capable quality status can be verified. If initial samples or sampling documents are not delivered on time or if they are delivered incomplete, or if sampling repetitions are necessary, additional costs can arise that will be invoiced to the AN. 6.2.2.3 Ingredients Cancerogenic, poisonous or genetically damaging ingredients, in particular such ingredients in the sense of the EC old vehicle directive 2000/53/EC and the respective implementations in national statutes, in particular § 8 Section 2 of the German AltfahrzeugVO, or ingredients for which there are substantiated reasons to suspect that they could be such harmful materials, are strictly forbidden and must not be utilised under any conditions whatsoever for deliveries and services or be contained therein. A health danger must be ruled out in every case. For materials or products that contain dangerous substances, a safety data sheet according to 91/155/EEC must be submitted. For all other materials a statement of the ingredients must be submitted according to the VDA directives and the VW standard VW 011 55 "VW safety data acquisition“. In as far as production materials flow into products of customers of the AG, that are covered by the international material data system (IMDS), the AN must enter and maintain the required data in the IMDS database . The data maintenance must be mentioned in the initial sampling reports. 6.2.2.4 Production test run For selected products the AG reserves the right, after initial sampling assessment, to carry out a production trial run (PTR) on the premises of the AN. This measure will usually be carried out before delivery of the first serial production parts, and will be agreed in good time with the AN regarding the date. No additional costs will be invoiced to the AN for the PTR. A value of CpK > 1.67 is expected as short term capability index.








6.2.2.5 Designation of manual specimens, pilot seri es parts and prototypes All deliveries of manual specimens, prototypes and pilot series parts must be legibly marked by the AN as specimen parts. The designation on the delivery notes and on the packing units must include the current revision status of the drawings and constructions. Further detail are specified in the logistic directive AD.026 of the AG.

6.2.3 Technical modifications All modifications of technical stipulations require prior written consent by the purchasing department of the AG. The AG has the right to demand technical modifications of the delivery and services scope at any time. For seeking technical modifications, the AG will send an enquiry to the AN together with the necessary technical documents (e.g. drawings, CAD data, marked part, etc.). The AN must then determine the feasibility, the resulting costs and the modification implementation duration and submit a detailed offer within 5 workdays to the purchasing department of the AG. This offer must include a deadline date schedule including the sampling date and a statement of how many residual parts of the former version still exist, if any. If the modification requires a change of the item price, this will be agreed between the purchasing department of the AG and the AN. No modifications are permitted without explicit release in writing by the purchasing department of the AG. No costs will be reimbursed for all modifications made without prior written consent of the purchasing department of the AG. 6.2.4 Ordering of tools and type-specific operating means; ownership Tools (moulds) and other type-related operating means / special operating means become the property of the AG when manufactured and must be marked as such. Tools (moulds) and other type-bound operating means/special operating means must be designed by the AN under his own responsibility in compliance with the construction regulations, specifications and other technical documents of the AG, such that the demanded service life and minimum yield are achieved. All modifications of tools (moulds) and other type-bound operating means / special operating means require prior written consent by the purchasing department of the AG. For all modifications of tools (moulds) and other type-bound operating means / special operating means without explicit prior written consent by the purchasing department of the AG, no costs will be reimbursed.

6.2.5 Tool and operating means provisions by the AG / ins urance / return or disposal The AG and/or his customers are the owners of the provided tools (moulds) and operating means. These must be marked unambiguously as the property of the AG or – on request by the AG – as customer property. The AN must not use these items for manufacturing parts for other customers or for himself, unless he has obtained permission from the purchasing department of the AG to do so. The AN must insure the tools and operating means of the AG or of customers of the AG in his possession or in the possession of his sub-suppliers/subcontractors against damage and loss. The AN must always maintain the tools and operating means in perfect and utilisable condition suitable for serial production. For








this purpose the AN must carry out the necessary repairs of these tools and operating means, as well as measures for preventive maintenance and servicing, at his own expense, and on request he must provide verification of having done this. If the AN intends to no longer utilise provided tools or operating means, he must inform the purchasing department of the AG thereof explicitly in writing and await the decision from there. According to the choice made by the purchasing department of the AG, such tools and operating means must be returned to the AG or disposed of at the expense of the AN by the AN. A disposal thereof is permitted only after explicit prior written consent by the purchasing department of the AG. The AN is not entitled to claim retention or rights of lien for tools and/or operating means, unless the claims on account of which the AN wishes to assert the right of retention or lien are uncontested, recognised by the AG or determined in legally binding manner. Further details of the relinquishment will be agreed between the AG and the AN in a tool or operating means relinquishing contract. 6.3 Requirements during serial production

6.3.1 Quality assurance

6.3.1.1 Monitoring of the serial production / devia tions The AN must equip himself with testing and measuring equipment such that all agreed features can be tested according to the technical documents. The AN must ensure that production and testing is carried out according to the latest valid technical documents. No deviation from the technical documents is permitted without the written consent of the AG. Suitable methods must be adopted for monitoring the quality and for initiating corrective measures in good time in the case of quality deviations. This must include statistical process control. If no further agreements are made, the AG expects a process capability factor of CpK > 1.33. 6.3.1.2 Quality recordings Quality recordings are of elementary importance for the AN and the AG, in particular to be able to contest unjustified product liability claims. The results of the quality-related activity of the AN must therefore be recorded comprehensively by the AN. The AN must allow the AG to inspect all quality records relating to all deliveries and services as well as the process. He must also provide the AG with copies thereof on request. In particular for technical documents and critical/significant features specially designated by separate agreement, the AN must record in separate documents when, in what manner and by whom the products were tested with respect to these features. The test results must be archived for at least 15 years after the last delivery of the parts and must be made available at any time, when required also as original documents. 6.3.2 Designation

6.3.2.1 Designation of parts The parts must be marked according to the stipulations in the technical documents, in particular according to the drawings, CAD data, task lists and specifications. In addition thereto, each part must be marked indelibly with a LOS identification to ensure back traceability. For this purpose each part must be designated in agreed manner with the date of manufacture. Batch-related products must be designated with the batch number on the delivery notes and individual packing units. Deviations from these rules require prior co-ordination with the AG.








6.3.2.2 Delivery designation The delivery designation is given by the Logistic directive AD.026 . The following regulations apply in the other respects: Every packing unit must be designated for identification with a goods identification attachment or label and a test verification mark. The label contents must comprise at least the following information:

• LOS number, batch number • Production date (for goods with limited storage life, the expiry date (see also 6.3.10.2) • Item number of the AG • Article designation (agreeing with the ordering text of the AG) • Delivering factory • Delivery note number and dispatch date

Each delivery must be accompanied by a delivery note additionally stating the order number and the supplier number. The label must be designed according to the VDA recommendation 4902, Version 4 (bar code compatible). When small load carriers are utilised, the VDA recommendation 4500 must be taken into consideration. 6.3.2.3 Designation of modified parts After implementing a modification affecting the delivery, the first three deliveries for each delivery address of the AG must be clearly marked with the designation "modified" and with statement of the associated modification index, on the packing as well as on the delivery note. Every modification of a released process must be reported to the AG in good time in advance and documented.

6.3.3 NAFTA marking instructions Applies only to deliveries intended for the USA, Canada and Mexico. According to the North American Free Trade Agreement (NAFTA), automobile manufacturers are obliged to provide detailed verification documentation of the components contained in vehicles exported to a NAFTA country. In order to fulfil these requirements, the AN must compile a detailed verification of origin according to the NAFTA rules for all articles that will be imported into the NAFTA territory. He is obliged to demand this also from his sub-suppliers/subcontractors. 6.3.4 US-TREAD ACT The obligations and security requirements of the US Transportation Recall Enhancement Accountability and Documentation Act (US TREAD ACT) have been further extended by the US-American legislator, so that they now affect automobile and automotive component manufacturers world wide. The AN as well as the AG are affected thereby. The reporting obligations of the USTREAD ACT are tied to very short response times of, in some cases, only a few workdays. The AN must continually inform himself of the latest version of this legislation and the resulting implementation and obligations resulting therefrom for him.








The AN must fulfil his obligations with respect to the deliveries and services autonomously. He must thereby restrict the information submitted to the competent government authority to the necessary scope and co-ordinate himself in this respect with the AG in advance, so that the AG can also co-ordinate himself with his customers. The AN must assist the AG to the best possible extent in complying with his reporting duties.

6.3.5 Device and product safety statutes / guidelin e The EC product safety directive (2001/95/EC) was revised in 2001 and supplemented with further requirements. These affect the AN as well as the AG. The AN must familiarise himself with the obligations resulting from the product safety directive and the respective implementations in the national statutory standards, in particular the German equipment and product safety legislation (GPSG). He must continually inform himself in this respect of the latest state of the statutory situation and his obligations resulting therefrom. In particular, the AN must be aware of the information and designation obligations currently in force, and the obligation for testing random samples after placing certain kinds of products on the market. The AN must fulfil his obligations with regard to deliveries and services autonomously. Thereby he must restrict the information submission to the competent government authorities to the necessary scope and co-ordinate himself in advance with the AG in this respect, so that the AG can co-ordinate himself also with his customers and fulfil his own obligations. The AN must assist the AG as best as possible for complying with his reporting obligations.

6.3.6 Packing The requirements imposed on the packing are derived from the logistic directive AD.026 . The following rules apply in the other respects: The packing of the deliveries must be carried out according to the agreed specifications. In every case the AN must ensure that the deliveries are protected against damage and dirt. The packing must be designed such that it fulfils the requirements of economic efficiency, space utilisation, transport, handling and recycling as best as possible. Before making the first delivery, the AN must provide a packing data sheet complying with VDA 4931. 6.3.7 Delivery schedules; orders The requirements within the scope of delivery plans (non-binding preview for securing capacity), delivery schedules (binding call-ups on the basis of delivery plans) and provisions are defined in the logistic directive AD.026 . The following regulations apply in the other respects: Production material is normally ordered on the basis of delivery plans with a planning horizon of normally 12 weeks for raw material and 4 weeks for parts. The most recently provided delivery plan is valid. Delivery plans, delivery schedules and orders are issued according to the VDA recommendations 4905 (call up), 4915 or 4916 (fine call up). 6.3.8 Advance notification of dispatch The AG can demand an electronic Advance Shipping Notification, ASN, conforming to the VDA recommendation VDA 4913 (remote data transmission of delivery notes and transport data)








6.3.9 Electronic data exchange The AG can demand electronic data exchange. Details are contained in the logistic specifications AD.026. 6.3.10 General requirements imposed on the delivery of plastic raw materials, paints and painting systems The material and technical requirements imposed on paints and painting systems always relate to the respective finished part or to the applied painting systems. For this purpose the plastics, paints and painting systems must be made in standard processes and they must be capable of further processing. Deviations are permitted only with prior written consent of the AG. A factory test certificate according to DIN EN 10204 – 3.1 must be included with each delivery. This certificate must state the nominal values and tolerances in addition to the actual values. As far as necessary, paints must be adapted by the AN to the processing conditions in the respective painting plant. This must not entail any additional costs for the AG. 6.3.11 Investigations and testing obligations The AN must carry out the necessary tests of all his deliveries and services in order to achieve the zero defect goal. He must define a testing concept under his own responsibility and, when required, co-ordinate this concept with the AG. Meticulous execution of the output tests by the AN is an elementary prerequisite to avoid delivery of production material that does not fulfil the requirements. To verify the conformity with important features, the AG can demand the inclusion of certificates in the form of factory test certificates according to DIN EN 10204 – 3.1 with the deliveries. The testing of deliveries and services must be performed by the AN on his premises. Test laboratories commissioned by the AN must be accredited according to DIN EN ISO/IEC 17025:2000 or a comparable national standard. The AG checks the deliveries on arrival only with respect to identity, evident damage and quantity deviations. As far as this is compatible with proper business procedure, the AG will test the deliveries either before the start of further processing, or he will subject the parts produced using the deliveries to a test. The AG is not obliged to make any further investigations. The AG will notify the AN immediately regarding any defects found, in accordance with proper business procedure. To this extent the AN waives the objection of late defect complaint. If no other procedure has been agreed, defective parts will be returned to the AN at the expense of the AN for analysis. The additional effort entailed for the AG due to defects in the deliveries, omitted or incomplete sampling procedures and missing or incomplete certificates will be invoiced to the AN. 6.3.12 Special goods acceptance conditions 6.3.12.1 Paints Paint deliveries will be accepted by the AG only when a positive preliminary release of the respective batch by the AG exists. Preliminary specimens must be delivered with quality test certificates. A period of 3 months must not be exceeded between the provisional release of the batch and the first delivery.








6.3.12.2 Goods with limited shelf life Goods with limited shelf life will be accepted only when the following prerequisites are fulfilled: a) For solvents, solvent paints, solvent adhesives, isocyanate hardeners and other deliveries with limited

shelf life: ● Specification of the expiry date on the packages and delivery note ● Remaining shelf life of at least 6 months ● Existing provisional release of the paints b) For aqueous paints and adhesives: ● Specification of the expiry date on the packages and delivery note ● Remaining shelf life of at least 3 months ● Existing provisional release of the paints 6.3.13 Complaints, defects, corrective measures, r egress The AG is responsible to his customers for defective deliveries and services of the AN, whereby the requirements frequently considerably exceed the statutory regulations. The quality assurance measures and output checks to be made by the AN serve the purpose of preventing defective deliveries and services with respect to the AG and his customers. If defective deliveries and services nevertheless take place that are the responsibility of the AN, the AN must reimburse the AG for the resulting additional costs and damages. The AN will be informed of defect complaints by test report. The costs of the test report will be invoiced to the AN. The AG expects immediate appropriate response of the AN to each complaint. The AG attaches greatest importance to sustained effect of the initiated measures and that a repetition of the complaint can be ruled out. As documentation and information regarding the procedure, the AN must submit to the AG a written 8-D report of the immediate measures within one workday, for preliminary measures within 3 workdays and for the final report within 4 weeks, Complaints and quarantines do not relieve the AN of his delivery obligation. 6.3.14 Product liability obligation and motor vehi cle recall costs insurance The AN is obliged to conclude and sustain a product liability obligation insurance and a motor vehicle recall costs insurance for all deliveries and services, with world wide validity and adequate coverage of at least 5 000 000 EORO in each case. The AG has the right to demand corresponding verification. The AN must sustain the insurance at least for the duration of the statutory product liability obligation. 6.3.15 Credit notes, invoices If nothing different has been agreed, the AN will be paid by credit note procedure. If invoicing has been agreed, the invoice must contain the following information items: ● Supplier number of the AN ● Full name of the AN with designation of the legal form and complete postal address ● Trade register number and register court of the AN ● Turnover tax number ● Turnover tax identification number ● Order number/delivery plan number ● Release number








● Date of the invoice ● Sequential invoice number of the AN ● Dispatch date ● Unloading place ● Article number of the AG ● Parts names ● Delivered quantity ● Price each ● Total price ● Discounts (percentage and absolute) ● Depreciation fractions (if relevant) ● Turnover tax rate and turnover tax amount ● Total amount ● Bank account of the AN

6.4 General requirements 6.4.1 Supplier assessment system The AG expects 100% deliveries and services on time in the agreed quality and quantity. The AG assesses the AN in particular with regard to the following criteria:

● Certification status ● Quality performance (quality) ● Delivery and service fidelity (quantity, deadline date)

The AG will inform the AN in the case of determined deviations from the requirements mentioned above and request a statement from the AN to be submitted in writing including corrective measures by the deadline date specified by the AG. The AG reserves the right to check the implementation of the corrective measures at the AN. Positive supplier assessments are the basis for awarding contracts. 6.4.2 Development of suppliers The development of suppliers is intended to fulfil the prerequisites for enabling the suppliers to fulfil the imposed requirements and achieve as well as sustain a positive supplier assessment. The success of the measures for supplier development depends on the dedicated co-operation of the AN, whereby these measures are carried out only in agreement between the AN and the AG. The incentives for a further development can be:

● Introduction and/or take over of new products or processes for the AG ● Frequent complaints or deviations in the stipulated process ● Ineffective or unsatisfactory problem handling by the AN ● Delivery problems or technical problems at the AN ● Economic problems of the AN

Assistance provided by the AG can cover:








● Assistance for the introduction and further development of the quality management system of the AN

● Help for the selection and quality assessment of (sub-)suppliers ● Help for process optimisations ● Implementation of process and action sequence improvements ● Implementation of projects for costs optimisation ● Assistance and execution of 6 sigma projects

The AG reserves the right to charge for his efforts if they are not trivial, or if the previously agreed development goal cannot be achieved because of insufficient co-operation by the AN. The details will be agreed between the AN and the AG. 6.4.3 Information obligations of the AN 6.4.3.1 Product-related modifications The AN must inform the AG in the following cases before implementing the planned measures in each case, and he must await the prior written consent of the AG:

● In the case of planned relocation of productions (production site) ● In the case of planned changes of supply sources for input products ● In the case of planned modifications of products, recipes, raw materials or the composition

of raw materials In these cases a new sampling and release procedure is necessary and must be co-ordinated with the competent quality assurance department of the AG. If the AN makes modifications without the written consent of the AG, the AN is obliged to reimburse the direct and indirect damage caused thereby. If the modification entails additional costs for the AG, e.g. through additional tests and release procedures, the AN must reimburse these costs to the AG. 6.4.3.2 Information regarding risks, labour dispute s, other disturbances and emergency plans To avoid damage it is necessary that the AG is immediately informed of risks that could endanger fulfilment of the contractual obligations by the AN, in particular regarding: - threatened labour disputes - anticipated or already happened disturbances - technical defects - capacity bottlenecks - quality problems that could hinder the AN in rendering the deliveries and services scheduled for the AG. The AN must create, in good time in advance, effective and efficient emergency plans to meet predictable disturbances, and he must submit these plans to the AG.








6.4.4 Costs reduction programme The AN pledges to submit value-analytical proposals for reducing the costs of the parts to be delivered during the term of the contract. The AG expects from all AN that the latter set annual cost reduction targets and implement them. The target can be defined together with the purchasing department of the AG. The AN must report regularly to the AG in writing regarding the progress of this cost reduction programme. 6.4.5 Replacement parts procurement; requirements a fter the serial production The AN must fulfil the replacement parts requirements of the AG for serial production prices. The replacement parts requirements of the AG including the associated documentation must be fulfilled for a period of at least 15 years after the end of serial production. For modules and assemblies the AN must also make available the individual components that are part of the assembly. 6.4.6 Support for production conversion/relocation In the case of production conversions and/or relocations the AN must assist the AG to an appropriate extent in order to ensure trouble-free conversion and/or relocation and to avoid production stoppages. 6.4.7 Recycling; EC directive for old vehicles The deliveries must fulfil at least the requirements of the EC directive for old vehicles 2000/53 EC and the respective implementations in national legislation. At any rate the requirements of the German old vehicles regulations must be fulfilled. The AN must fulfil all obligations resulting from these regulations in relation to all deliveries at his own expense. In particular the AN must thereby fulfil the recycling requirements, the requirements for avoiding waste, for marking deliveries and for providing dismantling information. The AN must continually inform himself of modifications and supplements to the regulations mentioned above and must always comply with the regulations in the currently valid version and take into consideration the environmental protection aspects for the product, in the process, as well as for packing and transportation. The goal is maximum protection of the environment and resources. The AN must assist the AG in fulfilling his duties arising from the regulations mentioned above. 6.4.8 Resolving unclear points and settlement of di sputes In the case of unclear points between the AG and the AN, the competent staff member of the purchasing department of the AG must be contacted. If this does not establish clarification, the manager of the purchasing department of the AG is additionally available as contact partner. The AN and the AG will make serious efforts to resolve unclear points and settle any arising disputes in mutual agreement.








6.4.9 Confidentiality The AN must treat documents, construction data as well as other information and knowledge that he has received from the AG, or otherwise in the context of the mutual business relationship, in particular for making tools (moulds) and other type-bound operating means/special operating means, in strictly confidential manner and exclusively for production within the scope of the commissioning. Furthermore, the AN is responsible for confidential treatment of all communicated information and must keep the latter secret with respect to third parties with due care. This applies in particular to, but not limited to, confidential and secret information as well as company secrets. The obligation for confidential treatment persists also after the termination of the business relationship and after provision of the last confidential information. The AN must oblige his personnel and sub-suppliers/subcontractors to the same extent, in as far as this is legally admissible. For regulating the further details, the AN and the AG will conclude an agreement for confidential treatment. 6.4.10 Gifts and gratifications High ethical principles are in the interests of the AG and his AN. They constitute the basis for a sound business relationship. Therefore personnel of the AG is not allowed to accept presents, monetary gifts, cost-free services, lodgings or entertainment from their AN. Please do not make any such offers! 6.4.11 Product liability/product responsibility The AN bears the product responsibility for his deliveries and services. He is obliged to take all necessary measures to ensure product safety and prevent danger for persons and property. The AN must inform the AG immediately when the AN becomes aware of risks or considers hazards to be possible. The AN and the AG will together determine, if necessary also with consultation of the final customer or government authorities, how the risks are to be counteracted and what concrete measures must be taken. The AG has the right, also to take appropriate measures on his own to fend off hazards. The AG is entitled to demand reimbursement of the costs arising for him because he has to take measures to fend off hazards. If the AG is liable himself on product liability obligation because of defective, i.e. dangerous deliveries and services rendered by the AN, the AN must set the AG free from this liability. If a claim for damages is made against the AG with the assertion that an injury of person(s) or property damage was caused by a product defect related to the deliveries and services of he AN, the AG can, according to his choice, also claim indemnification and complete or partial regress against the AN at the court where the product liability claim is made. The material law of the respective court location also applies to this claim. 7 Co-operation 7.1 Co-operation of the AN with customers of the AG The AN must assist the co-operation between the AG and customers of the AG as best as possible. The contact of the AN to customers of the AG is permitted only after prior agreement with the AG.








7.2 Co-operation of the AN with insurance companie s of the AG In the case of an insurance claim the AN must assist the co-operation between the AG and the insurance companies of the AG as best as possible. In particular, the AN must provide the insurance company of the AG with all required information, after agreement with the AG. Submission of information to the insurance company without prior explicit written consent of the AG is not permitted.

8 Quality assurance agreement

AG and the AN will immediately make a quality assurance agreement for each part or assembly according to the following checklist, which can be supplemented or modified on the basis of special requirements of the final customers.








Quality assurance agreement : Valid for (serial) Article No.: ……………………………. Subject Instructions, references Comments:

Agreements, responsibilities, references to existing documents

Certificate ISO/TS 16949:2002 exists: planned by:

Environmental Protection Certificate 14001 exists: planned by:

Responsibilities / product development interfaces, communication regulations

Responsibilities / process development interfaces, communication regulations

Responsibilities / quality planning i9nterfaces, communication regulations

FMEA Risk analysis Feasibility analysis

Capacity variation processes Verification of raw materials and purchased parts availability

Sub-suppliers assessment and approval Audition of suppliers Audition of sub-suppliers Acceptance criteria Specifications, test methods,

counterchecks

Process acceptance, product test run Features, method to be utilised, defined key parameters

Traceability How? Period, definition of the term "batch"

Quality recordings Features, method, designation (e.g. DmbA), archiving time

Sampling / release procedure for new and modified products

PPF (VDA 2 submission level 3 is standard), PPAP, others

Complaints handling Reply times Immediate action, 8 D report Escalation stages Reworking possibilities Processing costs

Handling of warranty and field failures Method, responsibility, costs (surcharges abroad)

Ppm goals Ppm agreements, method of ppm determination

Improvement projects supplier (AN), customer (AG)

Initiation, start, goal definition, check

Ratio target agreements Magnitude, duration, economic influences

Delivery certificates Type, contents, frequency Delivery cycles, delivery fidelity Product, batch, package designation Instructions for installation, utilisability, storage and handling

Product life Confidentiality agreements








9 List of abbreviations

AG Customer (ordering person);

AN Contractor (supplier);

ASN Advance Shipping Notification DA 4913

AVSQ Association of the Italian Autmobile Industry

CAD Computer Aided Manufacturing

CBD Cost break down

Cpk Process Capability (corrected): The process capability index takes into consideration, apart from the scatter of the production process, also the position of the frequency distribution with respect to the specification limits

DIN German Industrial Standard

EN European Community Standardisation

ISO International Standardisation Organisation

DIN EN ISO En EC-wide binding and internationally harmonised set of regulations for quality management and quality assurance systems

DDP Delivered Duty Paid (delivery clause according to Incoterms 2000)

EAQF Association of the French Automobile Industry

EMPB Initial specimen test report

FMEA Fault possibilities and influence analysis

GPSG German equipment and production safety statutes

INCOTERMS Incoterms 2000 of the International Chamber of Commerce (ICC) Paris

ISO/ TS 16949:2002 International Standardisation Organisation / Technical Specification 16949:2002;

LM Solvent

KANBAN System based on the consumption of complete transport containers or packing units

KVP Continuous improvement process

NAFTA North-American Free Trade Agreement

OEM Original Equipment Manufacturer (Automobile manufacturer / customer of the AG)

PPAP Production acceptance test procedure according to QS-9000. Basic requirements for the production specimen acceptance test of all production and replacement parts

PPF Production process and product release procedure

PTR Production Trial Run

QM-System Quality management system

US-TREAD ACT United States Transportation Recall Enhancement, Accountability and Documentation Act

VDA Association of the automobile industry

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