Supplier Quality Assurance Manual

4th Issue – January 2013

This Manual is an official GKN Driveline publication, GKN Driveline Suppliers are authorised to print this document for internal use only

GKN Driveline Headquarters PO Box 4128, Ipsley House Ipsley Church Lane Redditch, Worcestershire B98 OAJ, England Tel +44 (0) 1527 533 600 Fax +44 (0) 1527 533 633

June 19, 2011 Re: Quality Standards – Unauthorized Process Change Dear Sirs

The vision for GKN Driveline is to be the number one supplier of choice for Driveline components and systems by operating its business to the highest standards of quality, integrity and performance. Consequently, GKN Driveline and its suppliers shall be required to jointly strive, with a spirit of cooperation and coordination to obtain operational and quality excellence throughout their respective businesses in a climate of trust, openness and mutual dependence. As a general observation regarding the Automotive Industry, we have recently noted some critical and far reaching quality issues in the industry due to the lack of validation of and control over changes to the product specification and/or in manufacturing quality processes. This letter serves as a reminder of the contractual requirement for GKN suppliers to comply with GKN quality standards, including that there shall be no unauthorized process changes implemented without the prior written approval of GKN. Any GKN supplier seeking GKN’s prior written approval for any change shall present documentation for GKN’s approval (including (without limitation) documented established control systems) to show that there shall not be any negative impact to the product design, quality requirements, or production volume resulting from changes to the supply chain or manufacturing process. Any GKN approved change shall be implemented with adequate internal controls to enable a full understanding for the management of all potential risks associated with the GKN approved changes. The quality standards regarding process changes are clearly defined in the following: GKN Driveline Supplier Quality Assurance Manual – Standard Nº 003054 Section 3.4.8 - Change Notification - Supplier change notification andISO/TS16949 Manual Section 7.1.4 Change control andPPAP fourth edition Manual Section 3.1 – Customer notification. It is the GKN supplier’s responsibility to submit any change requests to your usual GKN Driveline Purchasing contact and gain written approval from GKN Driveline IN ADVANCE of implementing any change. We would like to reiterate that any GKN supplier that undertakes any unauthorised change shall be liable for all costs, losses or damages suffered or incurred by GKN and it’s customer from production disruption, quality issues, and corrective action. Further, in such case, notification to the GKN supplier’s quality accreditation body that the GKN supplier is failing to meet the requisite quality standards may be required to be under consideration by GKN. We trust that you shall manage any change requests accordingly to secure the utmost quality of product supply and we should appreciate your ongoing cooperation in this matter Yours faithfully

Ralph Van Aken Jr Dir, GKN Driveline SQA & REACh

GKN Automotive Limited is registered in England No 34104 Registered Office: PO Box 4128, Ipsley House, Ipsley Church Lane Redditch, Worcestershire B98 OWR England

Philippe Roman Executive Dir, GKN Driveline Purchasing

TABLE OF CONTENTS INTRODUCTION ......................................................................................................................................... 1 1 SUPPLIER APPROVAL ......................................................................................................................... 2 1.1 Initial Contact by Purchasing ........................................................................................................... 2 1.2 Supplier Audit .................................................................................................................................. 2 1.3 Risk of Business Interruption........................................................................................................... 3 1.4 Electronic Data Interchange ............................................................................................................ 3 1.5 Partnership ...................................................................................................................................... 3 1.6 Packaging ........................................................................................................................................ 3 1.7 Shipping ........................................................................................................................................... 3 1.8 Final Approval.................................................................................................................................. 4 2 PRE-PRODUCTION ............................................................................................................................... 4 2.1 Production Part Approval Process .................................................................................................. 4 2.2 Pre Delivery ..................................................................................................................................... 5 2.3 Safe Launch Inspection Process ..................................................................................................... 5 2.4 Advance Quality Planning ............................................................................................................... 6 3 SERIES PRODUCTION ......................................................................................................................... 6 3.1 Supplier Interaction ......................................................................................................................... 6 3.1.1 GKN Standards ........................................................................................................................ 6 3.2 Product Supply Authorisation .......................................................................................................... 7 3.3 Initial Production Delivery ................................................................................................................ 7 3.4 Normal Production Delivery............................................................................................................. 7 3.4.1 Product/Process Audit.............................................................................................................. 7 3.4.2 Product/Material Conformity..................................................................................................... 8 3.4.3 Environmental Considerations ................................................................................................. 8 3.4.4 End of Life Vehicle Directive and IMDS ................................................................................... 8 3.4.5 New European Union (EU) Regulation on Chemicals (REACH) ............................................. 9 3.4.6 Methods for Supplier Measurement ......................................................................................... 9 3.4.7 Incoming Inspection ................................................................................................................. 9 3.4.8 Change Notification (Programme Management Stage Section D ) ......................................... 9 3.4.9 Reaction to changing Conditions (Quality Concerns) ............................................................ 10 3.4.10 Sub-Supplier Assurance System ........................................................................................... 11 3.4.11 Continuous Improvement ....................................................................................................... 11 3.4.12 Change of Quality Registration Status ................................................................................... 11 3.5 Related Costs ................................................................................................................................ 12 3.6 Supply of Service Parts ................................................................................................................. 12 3.7 Delivery Problems ......................................................................................................................... 12 4 RECORD RETENTION ........................................................................................................................ 12

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-INTRODUCTIONPURPOSE OF THE MANUAL

The primary objectives of the Supplier Assurance System Manual, is to achieve a good relationship with those companies supplying GKN Driveline, and to support the key objectives of our business policy. GKN Driveline intention is to progressively introduce new concepts in an evolutionary manner. The first of these steps was taken with the SAS Manual, which developed the philosophy of Total Quality, emphasising three important parameters: Commercial Conditions, Quality Assurance and Delivery Assurance. This version of the Manual is designed to simplify the requirements, recognizing that our suppliers quality systems will, as a minimum, conform to ISO 9001 requirements. GKN requires its Suppliers to have a quality system that is compliant with ISO/TS16949 and GKN Driveline’s customer specific requirements for use with ISO/TS16949.

Copyright GKN plc. This Standard is confidential and is supplied on condition that it must only be used for the purpose for which it has been supplied and must not be copied, exhibited nor communicated to third parties without the consent of GKN plc whose property it remains. Standard Owner Date Released by Date

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SUPPLIER APPROVAL

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It is expected at this stage the Suppliers will have completed a Supplier Survey Std 003020. Presentation of GKN Driveline to the Supplier • Corporate Structure • Company Policy • Quality Strategy • Sustainable Development Policy Presentation by the Supplier to GKN Driveline • Corporate Structure • Company Strategy • Quality Strategy and certificates • Customer Awards/Approvals • Financial Stability • Supplier contact details During the initial contact and review by Purchasing, GKN Driveline will decide if a Supplier Quality Assurance Audit is necessary. 1.2

Supplier Audit This audit is performed by a GKN Driveline audit team according to a programme sent to the Supplier before the audit. GKN Driveline require our Suppliers to prepare for this audit to: • Understand the GKN Driveline questionnaire • Minimize time in documentation/proof search during the audit • Provide time for feedback of the audit results to the Supplier The audit will require participation from all management responsible for each function. An audit is not the sole responsibility of the Quality function; GKN Driveline expects input from management and staff of all relevant functions. As a result of the audit Corrective Action Plans (CAP) may be required from the Supplier. The GKN Driveline auditor will require regular progress reporting against any such activity. ISO 9001 Accredited Suppliers are required to conduct internal audits that comply with the requirements of ISO/TS 16949. The GAP audit should be submitted to your GKN SQA contact and will be held on file in our Supplier Directory. The supplier must complete yearly internal audits for special processes where applicable utilising: CQI-9 Special Process: Heat Treat System Assessment published by the AIAG. CQI-11 Special Process: Plating System Assessment published by the AIAG. CQI-12 Special Process: Coating System Assessment published by the AIAG. CQI-15 Special Process: Welding System Assessment published by the AIAG. CQI-17 Special Process: Soldering System Assessment published by the AIAG. Evaluation of implementation effectiveness shall be based on evidence that will include identified internal auditors, audit schedule adherence, progress monitoring, corrective actions,

Copyright GKN plc. This Standard is confidential and is supplied on condition that it must only be used for the purpose for which it has been supplied and must not be copied, exhibited nor communicated to third parties without the consent of GKN plc whose property it remains. Standard Owner Date Released by Date

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and record keeping. The self-assessment shall be retained on site and made available for review by GKN Driveline or the certification body upon request.

1.3

Risk of Business Interruption The Supplier must prove that his facilities are well protected against risk of business interruption (e.g. fire, arson, environmental pollution). Special emphasis is placed on housekeeping in potentially hazardous areas. Third Party Audit results and certificates from insurance companies are acceptable. In addition to overall capacity, emphasis is placed on the flexibility necessary to react to changing demands. For this reason, the Supplier is expected to continually reduce machine set-up times and other parameters to reduce overall system cost to GKN Driveline and its Customers. Change Management rules should be followed before changes to the process parameters are implemented (see section 3.4.8). GKN Driveline encourages suppliers to adopt Total Productive Maintenance (TPM).

1.4

Electronic Data Interchange GKN Driveline considers that the electronic interchange of orders, schedules, delivery notes, etc. (as defined by standards like ODETTE and VDA) provides an efficient and safe way to communicate delivery data between Customer and Supplier. It is a requirement of GKN Driveline that Suppliers, where possible, support EDI and web based communications.

1.5

Partnership GKN Driveline encourages our Suppliers to arrange visits for their employees to GKN Driveline locations, please contact your local Purchasing representative.

1.6

Packaging Packaging must guarantee protection against any quality problem that might occur between the Suppliers production and end usage by the Customer (e.g. rust and physical damage). Normally a formal "packaging instruction" will be agreed between the Supplier and the receiving GKN Driveline location, taking full account of the transportation route and should protect against environmental exposure. Wherever possible reusable packaging shall be used.

1.7

Shipping Detailed shipping instructions are part of the contract. Where the Supplier arranges delivery, transport between Supplier site and the GKN Driveline location shall be agreed with GKN Driveline location Logistics function.

Copyright GKN plc. This Standard is confidential and is supplied on condition that it must only be used for the purpose for which it has been supplied and must not be copied, exhibited nor communicated to third parties without the consent of GKN plc whose property it remains. Standard Owner Date Released by Date

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Final Approval Approval of the Suppliers' systems with respect to the above mentioned items forms part of the overall approval of the Suppliers total system and must be finalized prior to series production. On completion of the above steps, GKN Driveline will confirm acceptance of the Supplier or present specific reasons why non-acceptance has been decided. Final approval will be communicated by the relevant Purchase function. The result of the Supplier Approval by GKN Driveline will apply to all GKN Driveline locations for the Suppliers' facilities and processes audited.

2

PRE-PRODUCTION

2.1

Production Part Approval Process The requirement to approve individual products will be in agreement with the receiving GKN Driveline location and shall be carried out in accordance with standard Production Part Approval Process (PPAP) Level 3 unless otherwise specified due to GKN Customer requirements. The PPAP Manual can be obtained from the following addresses: Europe: USA: Carwin Continuous Ltd. Automotive Industry Action Group (AIAG) Unit 1 Trade Link, 26200 Lahser Road, Western Avenue, Suite 200 West Thurrock, Southfield, MI 48034 Grays, Tel: (248) 358-3570 Essex, Tel: (248) 358-3003 ENGLAND Fax: (248) 358-3253 Tel: 44 (01708) 861333 Fax: 44 (01708) 867941 http://www.aiag.org https://www.carwin.co.uk/qs/ A separate purchase order may be issued for PPAP Samples. Initial samples shall be produced from production processes and should be delivered in the manner intended for series quantities. Where feasible, GKN Driveline expects the parts to arrive in the agreed packaging, with the formal series documentation and delivered by the agreed freight company. Initial sample parts should be clearly labelled as such. The following documents are designed to help achieve Right First Time PPAP submissions to GKN Driveline. STD 003054_2: GKN Driveline Guidelines for obtaining 'Right First Time' PPAP STD 003054_3: PPAP (Fourth Edition) Checklist STD 003054_4: Component Supply Chain Chart

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Pre Delivery Before delivery starts, EDI connections (manual schedules if EDI is not available) should be verified and finally agreed. If required by the GKN Driveline location, the Supplier and GKN Driveline will sign a written agreement on the terms of delivery and interpretation of exchanged data. GKN Driveline will supply detailed information for: • • • • • •

Total volume per period (estimated) Frequency of delivery Packaging instructions Freight company (in case "ex-works" agreed) Documentation (ie. delivery note, invoice etc.) Parts and container documentation

In some cases final approval of the packaging will be notified after the first two or three deliveries, as the small quantity of initial samples may be insufficient to assess all aspects of the packaging. 2.3

Safe Launch Inspection Process GKN Driveline is using Safe Launch, where appropriate to ensure processes are generating defect free product as a further step towards achieving its goal of zero ppm.

Safe Launch is an additional off-line inspection of specified characteristics for a defined period immediately after Start of Production or as requested by GKN following a complaint or process change. Rules and requirements for safe launch The SQA representative shall ensure that the Safe Launch requirements are communicated to the Suppliers at the local level, preferably through a face-to-face meeting. The details of the Safe launch communications to the supplier may include but are not limited to: • • • • • • • •

Features to be inspected Method of inspection Time scale for safe launch. Frequency of reporting results Method of identification of Part/Packaging Dedicated area off line Non-conformance & Problem solving Arrangements for ending Safe Launch

Features to be considered for safe launch • • • • • •

Significant and/or critical characteristics, GKN fitment and function characteristic Features with recent complaints to GKN Driveline Supplier process significant features Visual appearance items Potential ‘pass through’ characteristics

Copyright GKN plc. This Standard is confidential and is supplied on condition that it must only be used for the purpose for which it has been supplied and must not be copied, exhibited nor communicated to third parties without the consent of GKN plc whose property it remains. Standard Owner Date Released by Date

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Detailed inspection instruction must be available for all items covered during safe launch. The use of limit samples or photographs to determine acceptance criteria of visual inspection maybe required. The results from the safe launch activities shall be reported back to GKN Driveline SQA using the Safe Launch Report (or equivalent) at specific times during the activity. When the Safe Launch activity is satisfactorily completed the Supplier shall send a communication to the GKN Driveline Location, signed by the Quality representative, clearly stating that Safe Launch is completed and removed, based on the analysis of the Safe Launch data. Safe Launch requirements are defined in GKN standards: STD 052013: Safe Launch STD 052013_1: Safe Launch Report 2.4

Advance Quality Planning Suppliers are required to initiate, support and manage all new product or program development through a formal AQP process for design, manufacturing and sub supplier processes. The goal shall be to develop processes and product that meet GKN Supplier requirements for Quality and logistics.

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SERIES PRODUCTION

3.1

Supplier Interaction Interaction between the Supplier and GKN Driveline is the responsibility of the Purchasing function. However, certain technical and quality issues may be addressed by other functions. All amendments to the purchase contract, e.g. Technical, Design, Material specifications etc. must be authorised by the Purchase function before implementation.

3.1.1

GKN Driveline Supplier Portal In pursuit of enhanced supplier relationships GKN Driveline has launched the Supplier Portal. This is a web based interactive application enabling an effective interface with suppliers for quality and providing valuable news information and non-confidential standards, resulting in closer partnerships and improved communications. Contact [email protected] to obtain your User Account Suppliers are expected to update their quality certification and key contact details within the portal.

3.1.2

GKN Standards GKN maintains a Supplier Standards Website where current Driveline Standards can be obtained: this can also be accessed via the GKN Driveline Supplier Portal: https://portal1.gkndriveline.com/was/wps/myportal/supplier/ News of updated standards is posted on this website, it is important that you visit this website on a regular basis in order to keep up to date. Access to GKN Standards website is available at http://supplier.gkndriveline.com

Copyright GKN plc. This Standard is confidential and is supplied on condition that it must only be used for the purpose for which it has been supplied and must not be copied, exhibited nor communicated to third parties without the consent of GKN plc whose property it remains. Standard Owner Date Released by Date

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Default login is: gknsupplier Password is: standards Please contact your local GKN Purchasing representative for further information if required. 3.2

Product Supply Authorisation After Supplier approval, GKN Driveline Purchasing are the only function authorised to release a product for series production, following: • • • •

Commercial Assessment Part Submission Warrant Issue of Purchase Order and Conditions Test results (if required)

The series production authorisation enables the release of GKN Driveline material schedules. After a product and costs have been approved for series production by one GKN Driveline location, that same product and costs may be applied to other GKN Driveline locations. PPAP documentation for other GKN locations may require to be repackaged with the appropriate local part number and/or customer requirements. For each critical and/or significant characteristic and for each production run, the Supplier measures all the data defined in the control plan. This data is to be made available on request. 3.3

Initial Production Delivery This concerns the first series production after acceptance of the initial samples by GKN Driveline. The duration of this step depends on the quantities and frequencies of delivery. Special requirements such as Safe launch may be required during initial supply. Upon request by the GKN Driveline location and with the first production shipment that has to be duly identified and marked, the Supplier must provide certification of conformance to GKN Driveline specifications. The certification must be clearly marked with the part number, engineering level and date of manufacture.

3.4

Normal Production Delivery Assurance of Product and/or Process Quality is the sole responsibility of the Supplier. GKN Driveline objective is for all Suppliers to ship direct to stock.

3.4.1

Product/Process Audit GKN Driveline may require that the Supplier conduct a product/process audit at the request of, and possibly in the presence of, a GKN Driveline Purchasing/Quality representative; Additionally, a GKN Driveline Audit team may conduct an audit at any reasonable time or in response to a process change request or quality problem. The results are to be provided to GKN Driveline, together with all documents such as: FMEA, Control Plans, also documents on statistical data - quality material certificates - operational capability of test and inspection equipment, etc. GKN Driveline will provide advice to Suppliers regarding Quality Assurance if required.

Copyright GKN plc. This Standard is confidential and is supplied on condition that it must only be used for the purpose for which it has been supplied and must not be copied, exhibited nor communicated to third parties without the consent of GKN plc whose property it remains. Standard Owner Date Released by Date

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GKN Driveline will inspect any documentation, which the Supplier considers to be confidential, at the Supplier’s premises if required. 3.4.2

Product/Material Conformity All products or materials used in products shall conform to applicable regulatory requirements. A change in cast code or heat lot frequently requires process parameters to be modified by GKN Driveline before processing in our facilities. GKN Driveline requires its Suppliers to produce components from high volume heat lots and to deliver these parts in a continuous process, maintaining traceability. Each delivery of such components must be produced from a single cast code or heat lot. Systems must be in place at the Supplier to assure that these parts are correctly identified, without risk of mixing. Suppliers can seek prior approval to ship partial shipments as an addendum to the last regular shipment of the particular cast code or heat batch. For each new cast code or heat lot, the Supplier has to alert the GKN Driveline location before first delivery.

3.4.3

Environmental Considerations Suppliers must conform to all local and customer requirements regarding Environmental, Health and Safety. The primary reference list of declarable substances - to be used in connection with IMDS is the Global Automotive Declarable Substance List (GADSL) this is available at www.gadsl.org.

3.4.4

End of Life Vehicle Directive and IMDS According to European legislation 2000/53/EC, ELV (End of Life Vehicle) Directive and certain Customer requirements, automotive suppliers must report the chemical composition of parts supplied to the final vehicle and, when required, submission of this data should be made through the IMDS (International Material Data System). All new part references must be submitted into IMDS as an addition to the PPAP requirements. The use of lead, mercury, hexavalent chromium and cadmium is prohibited. All necessary measures must be taken by the supplier to ensure that radioactive substances do not contaminate steel, or steel parts, supplied to GKN. In all cases the maximum contamination of steel, or steel parts, by radioactive material must not exceed 0.4Bq/g. GKN Driveline encourages the implementation of ISO14001 and OHSAS18001 or equivalent. http://www.mdsystem.com/ Suppliers should submit the material breakdown into GKN Driveline IMDS Account Number 5929 or an account specifically to the supplier by GKN. The Supplier must be able to demonstrate, upon request by GKN or GKN's Customer, evidence that the information entered into the IMDS system is accurate and conforms to legal and/or customer requirements.

Copyright GKN plc. This Standard is confidential and is supplied on condition that it must only be used for the purpose for which it has been supplied and must not be copied, exhibited nor communicated to third parties without the consent of GKN plc whose property it remains. Standard Owner Date Released by Date

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European Union (EU) Regulation on Chemicals (REACH) As of June 2007, the European Regulation (EC) 1907/2006 concerning the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) entered into force. REACH affects all industries, including the Automotive Industry (AI). As the AI is made up of vehicle manufacturers and many tiers of the supply chain, it has several roles and obligations under REACH. Action is required from the OEMs and suppliers, some immediately and some over the coming 11 years and beyond. One of the requirements of REACH is that manufacturers and importers have a duty to register, for each legal entity, substances on their own, or in preparations that they produce or import in quantities over 1 tonne per year (per manufacturer/importer), unless the substance is exempt from registration. Registration requirements also apply to substance(s) intentionally released from articles under certain conditions, in which case the article producer/importer is responsible for the registration Please consider that: • Companies that do not comply with REACH will have no market. REACH poses a threat to any company doing business in the EU (and businesses with customers who do business in the EU). • Business continuity can be adversely impacted by REACH and supply chains can be disrupted • Companies that understand the business implications and impacts of REACH and develop strategic action plans will gain competitive edge over those that do not

3.4.6

Methods for Supplier Measurement GKN Driveline monitors the quality of deliveries from Suppliers in order to continuously improve their processes and procedures and reduce cost. Methods for Supplier measurement are defined in the following standards. STD 003021: Supplier Certification Requirements STD 003053: Supplier Classification STD 003052: Reasons for Rejection and Deviation STD 003051: Cost of Poor Quality

3.4.7

Incoming Inspection GKN Driveline reserves the right to perform a receiving inspection on all incoming material utilising a "Zero Defect" sampling plan based on statistical analysis.

3.4.8

Change Notification (Programme Management Stage Section D ) Changes shall not be made without prior approval. Supplier change notification GKN Driveline must be notified in writing and before change implementation, of all design and process changes. i.e. raw material source, manufacturing, process, change location and packaging etc. To implement changes, the Supplier is requested to use GKN Driveline engineering change notification form. A new PPAP and/or presentation, product testing or documentation may be required to approve the change.

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GKN Driveline change notification GKN Driveline informs the Supplier of the design/process changes that may occur to enable him to adapt his process and to ensure correct traceability. New PPAP will be ordered if required. 3.4.9

Reaction to changing Conditions (Quality Concerns) This section defines GKN Driveline expectations regarding a Supplier’s ability to respond to changing conditions with an appropriate degree of urgency. Delivery expectations It is recognised that conditions can change due to circumstances beyond the control of either GKN Driveline or the Supplier. When these conditions arise, it is expected that GKN Driveline Suppliers join us in expending every effort to meet the needs of GKN Driveline Customers. Problem solving When problems concerning non-conforming materials are encountered, the Supplier is expected to take immediate action to contain all questionable material and replace it with certified material that conforms to specification (Containment). Containment actions shall be implemented immediately and reported within 24 hours of notification. Ongoing inspection may be required for a period of time until confidence is restored. The containment action is then followed with a sufficiently detailed investigation into the root cause of the problem and appropriate long-term corrective action. A full report of the investigation, and implementation of corrective action is to be provided to GKN Driveline within the following timescale: Initial investigation and report shall be completed within 5 to 10 working days and verification of effectiveness of implementation of corrective action shall be complete within around 90 to 100 working days, unless otherwise agreed. A safe launch inspection may be requested as part of the corrective action verification process. Detection at the Supplier When a problem is detected at the Supplier and containment has been completed, the primary objective is for the Supplier to deliver material in line with GKN Driveline specification. If this cannot be accomplished in time to meet scheduled deliveries, the relevant GKN Driveline Purchasing must be contacted and informed of the nature of the problem. In exceptional circumstances a short-term deviation (for a specified period of time or a defined number of parts) can be requested. When a deviation is approved, the deviation number must be added to the shipment label on all containers of the deviated material. This material must not be mixed in containers with nondeviated material and must be delivered before further supplies of conforming parts.

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Detection at GKN Driveline When a problem is detected at GKN Driveline, the preferred action is to alert the Supplier and to return the non-conforming material to the Supplier. If it is not possible to return the non-conforming material, the Supplier is expected to immediately send a representative to the GKN Driveline location to manage and co-ordinate the sort of the material and to take actions in order to avoid interruption of GKN Driveline production. When GKN Driveline production is at risk, GKN Driveline will either sort the material or authorise a third party to perform the sort. In either case, the Supplier will be charged for the expenses incurred. If a deviation is required (see above), it is the Suppliers responsibility to request the deviation through the responsible Purchasing Function. In addition, GKN Driveline expects the Supplier to make every effort to replace any missing quantity in accordance with GKN Driveline schedule. All additional cost that may result from replacement of missing quantities (e.g. premium freight) will be the responsibility of the Supplier. 3.4.10 Sub-Supplier Assurance System GKN Driveline Suppliers have to develop a Quality Assurance System with their own suppliers, which is equivalent to that described in this manual. All sub-suppliers within the supply chain shall be ISO:9001 certified as a minimum and full level 3 PPAP documentation shall be required and approved from the sub-suppliers. 3.4.11 Continuous Improvement GKN follows the principles of Lean Manufacturing in all of its operations and continuous improvement is central to delivering Lean operations. A continuous improvement philosophy shall be deployed throughout the Suppliers organisation. GKN Driveline requires its Suppliers to continuously improve in all areas of Quality, Cost and Delivery activity including delivery. GKN focuses on eliminating waste along entire value streams, instead of at isolated points, this creates processes that need less human effort, less space, less capital, and less time to make products and services at far less costs and with much fewer defects, compared with traditional business systems. GKN is then able to respond to changing demands with high quality, low cost, and with very fast throughput times. GKN expects its suppliers to adopt the same behaviour.

3.4.12 Change of Quality Registration Status A Supplier is required to notify GKN in writing if any change to the Supplier’s registration scope or suspension of the company’s registration takes place.

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Related Costs GKN Driveline and its Suppliers are part of the supply chain of automotive manufacturers and are obliged to deliver according to strict detailed schedules. Arrears in our delivery to the Customer could cause production problems or even line stoppages and hence cause enormous cost (consequential losses, financial penalties). If the cause of such a problem is traced to our Supplier, GKN Driveline reserves the right to charge the Supplier with these costs. See Driveline STD 003051 Cost of Poor Quality GKN Driveline is committed to assuring the highest quality standards to its Customers. As part of contingency planning GKN Driveline requires its Suppliers to have cover against: • • •

Public and products liability Recall and rectification liability Warranty liability

Suppliers must confirm that they are capable of meeting these liabilities and produce to GKN Driveline satisfactory evidence of appropriate insurances or other cover. 3.6

Supply of Service Parts GKN Driveline requires its Suppliers to maintain tooling for the length of time that the part is active for production and agreed upon service requirements.

3.7

Delivery Problems The Supplier must make every effort to avoid arrears against the agreed schedules. If a delivery problem occurs or is foreseen by the Supplier, the Supplier must alert the GKN Driveline location immediately. GKN Driveline reserves the right to check the delivered total quantity and the quantity per bin. Non-conformance with quantities declared in paperwork is a severe fault and will lead automatically to the issue of a concern report.

4

RECORD RETENTION Record retention periods depend on GKN Driveline's and its Customers' requirements. The requirements of the law may also differ from country to country. For details please refer to the GKN Driveline Record Retention Standard. STD 600466: Record Retention. As a fundamental element of GKN Driveline’s philosophy of never-ending improvement, your comments and suggestions regarding this document would be valuable. You are invited to submit any proposals for future improvements to the local Purchasing Department or head Purchasing Office at: GKN Driveline PO BOX 4128 Ipsley House, Ipsley Church Lane Redditch, Worcestershire B98 0WR UK In case of any problem, please contact your local GKN Manufacturing Location.

Copyright GKN plc. This Standard is confidential and is supplied on condition that it must only be used for the purpose for which it has been supplied and must not be copied, exhibited nor communicated to third parties without the consent of GKN plc whose property it remains. Standard Owner Date Released by Date

C Flint

16-Jan-13

C Flint

R Van Aken

16-Jan-13