Presentation of the QIP V2.0 Manufacturing Performance Assessment May 2013

1 ? 2 3 4 5 Contents INTRODUCTION EVALUATION PROCESS EVALUATION WORKSHEET & SCORING MATRIX 4 REQUIREMENTS OVERVIEW 5 EXAMPLES OF SCORING 2

1 ? INTRODUCTION 3

Assessment tools – Present Situation SOP Serial Phase Indus Phase Tool Kick Off Design Phase Selection Phase F2, F3 Audits QIP One Single Common Referential QSB Sourcing Approval Matrix. (PSA / PCPA / …) PCPA Process Specific Audits QIP V2.0 Enterprise Performance Checklist & Process audit

Main Specifications (1/2) The key principles One single assessment referential  3 differents tools Certification QSB+ Structural audit 76 / 92 Requirements QIP V2.0 NSA new supplier ass. 59 / 92 Requirements 92 Requirements PCPA process audit 49 / 92 Requirements

Main Specifications (2/2) Common characteristics Versatile tools which can be used on every manufacturing site & every process Evaluation covers the entire manufacturing scope (quality / logistics / Industrial efficiency) Quality Logistics What is the difference between ISO/TS and QIP V2.0 ? ISO/TS is the high level review performed by an independent 3rd party. QIP V2.0 is a much closer look performed by the Customer. GM & PSA check on the shop floor how systems are being used whereas ISO/TS checks that there are Quality Systems in place. Efficiency

QSB+ structural audit The new tool to replace the QIP V1.0 Assessment 76 / 92 Requirements Certification The new tool to replace the QIP V1.0 Assessment Certification associated with an impact on Supplier Scoring (BIDLIST) Scope: A complete supplier plant Purpose: Evaluate the overall robustness of processes on site: Manufacturing System requirements are fully met and work effectively Drive the continous improvement (identification of weak points & axes of improvement) Operational Requirements Maximum duration of the evaluation on site: 2 days Self-assessment can be done by supplier himself Updated continously to integrate the impact of the events in the relationship Project Manufacturing System 0 / 7 76 / 76 Part & Process 0 / 9 Nb of Requirements

NSA new supplier ass. The new tool to replace the Diagnostic audit 59 / 92 Requirements Project Part & Process Manufacturing System The new tool to replace the Diagnostic audit Scope: A complete supplier plant Purpose: Evaluate the manufacturing maturity of a new supplier: Basics are in place At the beginning of a project, evaluate the effectiveness of operational launch organization on supplier site Operational Requirements Maximum duration of the evaluation on site: 1,5  2 days Self-assessment by supplier before evaluation: Optional 7 / 7 48 / 76 4 / 9 Nb of Requirements

PCPA process audit Scope: A complete process in a supplier plant 49 / 92 Requirements Project Part & Process Manufacturing System Scope: A complete process in a supplier plant Purpose: At the end of a project, Confirm the qualification status of the process: Parts & Process controls are in place to ensure final product quality During mass production phase after major issues, Diagnostic tool to identify weak points Operational Requirements Maximum duration of the evaluation on site: 1 days Self-assessment by supplier before evaluation: Optional 0 / 7 40 / 76 9 / 9 Nb of Requirements

Bidlist (supplier plant scoring) One Single assessment referential Bidlist (supplier plant scoring) Certification NSA Project Manufacturing System PCPA 76 7 QSB+ 48 40 Part & Process 4 9 Same questionnaire (same requirements) used for all the 3 types of audit Continous assessment of supplier’s manufacturing system via audits All the audit results affect to Bidlist performance (supplier plant scoring)

BIDLIST Vision (Supplier Plant Scoring) Details of impacts (implemented in 2014) Points deduction Certified (QIP v2.0 Green: Score > 85%) Waiver and Not Applicable 0 pts Not Certified (QIP v2.0 Yellow: Score 75% - 85%)  90 days Forecast: Supplier Self-assessment available & audit planned  6 months Temporary 0 pts -10 pts Not Certified (not evaluated or QIP v2.0 Red: Score < 75%) Certification expired (after 3 years)

QIP V2.0 Life Cycle continuous Assessment with the same Questionnnaire NSA new supplier ass. PCPA process audit QSB+ Structural audit Verification after Major issue First self assessment Annual Update by supplier Diagnosis of the supplier plant Confirmation of the qualification status Certification Audit Selection Phase Design Phase Indus Phase Mass Production Phase Tool Kick Off SOP BIDLIST (Supplier Plant Scoring)

QIP V2.0 Production Site Assessment Structure of the questionnaire Key Elements QSB + NSA PCPA 1 Fast Response 6 4 3 2 Control of Non-conforming Product 7 5 Verification Station & Error proof Verification Standardized Work Training Layered Process Audit Risk Reduction 8 Contamination Control 9 Supply Chain Management 10 Managing Change 11 Maintenance 12 Material Flow Management 13 External Logistic 14 Strategy & Project management   15 Part & Process Control 76 59 49 15 Key Elements 92 Requirements The referential is « self-understandable » For each Requirement, a list of criteria describes precisely customer expectations These criteria are used for the scoring

2 QSB+ CERTIFICATION PROCESS 14

Complete self-assessment Evaluation of self-assessment QSB+ Structural audit The main Steps – QSB+ life cycle Complete self-assessment Evaluation of self-assessment Training if needed Complete action plan Certification audit Annual update Revoke certification Process Certification granted for 3 years Major issue Monitor performance / PCPA Supplier Customer PSA-GM Responsibility 15 days 10 days 1 month max. 6 months 1.5 – 2 days yearly Leadtime

QSB+ Structural audit – The Main Steps Supplier Self-Assessment Intent Supplier awareness of requirements Gap analysis between requirements and supplier current system Get status about readiness before customer on-site assessment In case of revocation: identify why system fails Process New Audit presentation (live conversation) Send « audit package » 15 working days for complete self assessment Hint Highlight that is a gap analysis: red result has no any negative affect but help to identify weak points Obtain a full scoring with all necessary comments (explanations of the supplier are as important as the scoring)

QSB+ Structural audit – The Main Steps Evaluation of Supplier Self-Assessment Intent Calibrate Supplier’s evaluation criteria Identify items where training is needed Identify where action plans must be requested Process (2 possibilities) « Theoretical » calibration: self-assessment reviews (meetings or conf-call) On-site Assessment Complete audit resulting customer scoring Crosscheck requirements to validate supplier evaluation Important: Supplier can be certified at this step if: Self-certification has been verified on site by customer Final score > 85% with no red key element Note: Self-assessment can be refused if the scoring is not robust (important gap between customer evaluation & supplier self-ass.)

QSB+ Structural audit – The Main Steps Training & Action plan Intent Understand Audit Requirements & expectations Review & implement examples to supplier system Process Supplier self-training based on QIP V2.0 material package Service provider training (approved 3rd party)  Available in 2014 Complete Action Plan Cover Gap between supplier current system & QIP V2.0 requirements. Base for close follow up of implementation Prepare supplier for Certification audit Maximum leadtime for full implementation is 6 months In due dates it needs to be considered that system has to operate, not only implemented Hint Verify action plan after receiving (actions definition, due dates are realistic) Organize regular calls for checking completion of action plan and guide supplier to right direction

QSB+ Structural audit – The Main Steps Certification Audit Intent On-site customer assessment to verify that all the Requirements are met Result in Certified status for next 3 years Process It can be done only by customer auditor (no exception even for strategic suppliers) Maximum 1.5 - 2 days assessment Result is reported out in the Audit Sheet

QSB+ Structural audit – The Main Steps Supplier Annual Update Intent To ensure that QIP v2.0 system works after audit To ensure awareness of QIP v2.0 requirement in case of new staff Process Supplier need to send self-assessment with associated action plan Every 12 months after initial certification, 60 days after any key management change (Plant manager, Quality Manager or Operation Manager) or repeat Quality issue. If self-assessment is missed to submit, certification can be revoked If PCPA meanwhile performed, not necessarily need to submit self-assessment

QSB+ Strcutural audit – The Main Steps Revoke Certification Intent To complete all certification process to ensure that QIP V2.0 system is operating and work effectively again Process In case of major issue, repetitive failed PCPA or degradation of supplier performance, SD site initiate revoke process with agreement of management According to vision, audit result will have on-line link with Bidlist

3 EVALUATION WORKSHEET & SCORING MATRIX 22

QIP V2.0 Production Site Assessment QIP Evaluation Worksheets Instructions Description of usage of QIP questionnaire. QSB+ process Special instruction for QSB+ evaluation. Glossary Complete list of abbreviations used in audit list. Header Input of basic information and selection of audit scope. Summary Result of audit/self assessment calculated automatically. Audit Common questionnaire list. Action plan Supplier action plan to close gaps identified during self assessment or audit. Change request Proposal for changes/suggestions to be considered for next review

QIP V2.0 Production Site Assessment An example of requirement Item Requirement Criteria of Requirement Look for Fast Response   FR1 Daily leadership meeting held with cross-functional, multilevel attendees to address significant external and internal concerns. 1) There is a daily Fast Response (FR) meeting with cross-functional attendees and led by manufacturing. 2) The FR meeting is a communication meeting and a precise timing is respected. 3) All the significant external and internal issues are addressed. 4) Natural owners are assigned to problems, next report out date is assigned. 5) Take into account the production forecast and the quantity produced. 6) Safety and near miss accident issues are reported out. Attend FR meeting. Observe: - lead by manufacturing with cross -functional attendees, - how leader controls the FR meeting (keep timing max 10-20 minutes, focus on subject, not going to the details...), - environment is suitable (everyone can hear and see the meeting), - how issues reported out. - Problem Solving report format is used for report out and document the status of the issue. General Definition Summary of the intent of requirement Detailed deployment of 'Requirement' in bullet points Supplier has to operate a system to meet listed expectations Auditor hints and techniques how and what need to be checked besides 'Criteria of Requirement’ Two types of Criteria of the Requirement are identified: basic criteria are identified with Bold type, cover basic key requirements (must have) additional criteria are identified with unbold type, cover additional requirements (recommended best practice). Furthermore it is used for collecting evidences and setting up scoring

QIP V2.0 Production Site Assessment The Scoring Principles Axiom #1: Standardize all your activities & Strictly apply your standards Axiom #2: Measure your real effectiveness to achieve customer expectations & improve it

QIP V2.0 Production Site Assessment Scoring Definition Quality manuals Procedures Work Instructions Guides flowchart Principles Criteria Main processes Organization Operational Standards Requirements QIP supplier Implementation scoring Effectiveness scoring Deployment Customer Satisfaction Process Metrics Result To evaluate standardization and implementation of requirement To evaluate real effectiveness to achieve customer expectation and continous improvement

QIP V2.0 Production Site Assessment Scoring Structure & application Key Element #1 Implementation scoring of each individual requirement Effectiveness scoring at the end of each key element Key Element #2

IMPLEMENTATION SCORiNG For Each Requirement Principles Criteria Main processes Organization Operational Standards Implementation scoring Deployment Customer Satisfaction Each Requirement is scored from 0 to 4 according to the following scoring matrix: Pts Element Scoring No criteria are in place. 1 Several basic criteria are not in place. 2 A majority of basic criteria are in place and followed. At least one basic criteria is not followed. Or basic criteria are not in place or followed at all areas of company. 3 All basic criteria are in place and followed. Some additional criteria are not in place. Or basic criteria are not followed at each job or all the time. 4 All criteria are in place and followed and most additional criteria are followed at each job or all the time. NR Not Reviewed: Requirement not audited at this time (Not part of audit scope, Training Required, Follow-Up Required). Plan to review in future. Give future review date in Comment box. NA Not Applicable: Question does not apply and not calculated to overall result. Note to explain why question is not applicable is needed in Comment box. Audit Failed

EFFECTIVENESS SCORING Introduction Is system working well when ? Fast Response fully implemented, but there are several long lasting customer complaints, Non-conforming materials are controlled, but operating with high scrap rate without any improvement activities, LPA is performed in all level according to schedule , concerns documented and action defined, but there are lots of repetitive finding on LPA  System is in place, but not working effectively!

eFFEctIvENESS SCORING for a complete section Principles Criteria Main processes Organization Operational Standards Deployment Customer Satisfaction the Key notions The customer (internal or external) The measurement of satisfaction Metrics shared with customer (target & management) Effectiveness is evaluated through a specific requirement at the end of each section A list of relevant metrics related to the evaluated process Effectiveness scoring Example of requirement Pts Effectiveness Scoring No metrics are in place to evaluate topic effectiveness 1 Some metrics are in place but basic metrics are not defined 2 Basic metrics are in place and followed with targets however deviations from targets are not managed 3 Basic Metrics are followed and deviations are managed by action plans but most additional metrics are not defined 4 Continuous improvement for key metrics are in place or majority of additional metrics are managed. LPA effectiveness are continuously monitored and analysed via LPA results 1) Tracking of audit results with visualization to share status on affected area (nb of non conformances per LPA, pareto of non conformances, repetitive findings, nb of customer issues caused by non respect of standardized work - it should have been found by LPA). 2) Tracking of keeping audit schedule & effectiveness of action plan implementation(average time to treat deviations/effectiveness). 30

SCORING Thresholds for result calculation Red / Yellow / Green visualization applied Thresholds are defined on 2 levels On each Requirement: score < 2 => Overall result goes Red On each Key Element: score < 75% => Overall result goes Red Conditions to be certified No Red item (Key Element or Requirement) Overall result ≥ 85%

SCORING Equivalencies QIP V2.0  QIP V1.0 QIP V2.0 Requirements  QIP V1.0 Requirements QIP V1.0 Requirements  QIP V2.0 Requirements Old Scoring  New Scoring

4 REQUIREMENTS OVERVIEW 33

QIP V2.0 Production Site Assessment 15 Key Elements Nb Of Requirements 1 FR Fast Response 6 2 CNC Control of Non-conforming Product 7 3 VS & EP Verification Station & Error proof Verification 4 SW Standardized Work 5 TR Training LPA Layered Process Audit RR Risk Reduction 8 CC Contamination Control 9 SCM Supply Chain Management 10 MC Managing Change 11 MAI Maintenance 12 MMFM Manufacturing & Material Flow Management 13 ELG External Logistic 14 SPM Strategy & Project management 15 PPC Part & Process Control 9  92

QIP V2.0 Production Site Assessment Detailed Content #1: Fast Response (FR) Detection & Tracking of the internal/external major issues Daily production meeting Fast response Board Problem solving standardize methodology Used for all type of concerns 6 steps: define, contain, root cause id, correction, validation, institutionalization System to manage lessons learned Organization Procedure / forms

QIP V2.0 Production Site Assessment Detailed Content #2: Control of Non-conforming Product (CNC) Traceability Compliance to specific customer requirements Equipments & Organization associated FIFO Management Identification mode of the non-conforming or suspect material Alert issue Upstream: Tier N Downstream: Customer Containment process Rework process Management of the deviations (customer “derogations”)

QIP V2.0 Production Site Assessment Detailed Content #3: Verification Station & Error Proof Verification (VS) Final Checking Organization Standards Alarm system Thresholds definition Escalation process Error proofing systems Management of the EPS Management of the malfunctionning / failures

QIP V2.0 Production Site Assessment Detailed Content #4: Standardized Work (SW) Workplace organization Standardize Layout 5S management Ergonomics & Painfulness concerns Rules related to ergonomics Assessment of the workstation Operator involvement Working instructions (production process operations & logistics) Standards Procedure to validate start of production Visual & appearance items (boundary samples) Procedure Management of the boundary samples Control devices – Calibration & Capability Management of the devices (identification) Capability & Calibration

QIP V2.0 Production Site Assessment Detailed Content #5: Training (TR) Training organization Needs identification / Organization Infrastructures & skills for training activity Training material Safety Policy Safety handbook Training on safety Employees Qualification / Flexibility Chart Qualification process / follow up qualification status Calibration process for the quality control activity Training refreshment Motivation of Staff Process of motivation Individual interviews

QIP V2.0 Production Site Assessment Detailed Content #6: Layered Process Audit (LPA) Generic layered process audit Procedure and working standards Auditors training LPA on operational activities (under manufacturing dep. responsability) Master planning Complete coverage with relevant frequency Involvement of the different level of management LPA results follow-up Deviations record Action plans associated Countermeasures sheet Continuous improvement

QIP V2.0 Production Site Assessment Detailed Content #7: Risk Reduction (RR) PFMEA management Periodical reviews Cross-functional approach Management of the highest risk items Identification & analysis Action plans follow-up Reverse PFMEA Real and effective risks verification at the workstation Findings taken into account to improve process General Risks management to guarantee manufacturing activity Natural risks (floods, fire,…) “Supply chain” risks (loss of energy, loss of supply)

QIP V2.0 Production Site Assessment Detailed Content #8: Contamination Control (CC) Main topic: cleanliness of the process Risk analysis on the complete shopfloor Compliance to customer specifications when needed Management of the sensible areas (clean rooms, paintshop,…) Management of the foreign material in parts Management of the dirts in parts or paint

QIP V2.0 Production Site Assessment Detailed Content #9: Supply Chain Management (SCM) Management of the Tier N suppliers Procedures to evaluate & select supplier Cascading of the customer requirements to the Tier N CSE tranfer Traceability requirements Product change management Escalation process Management of the single issues Audit policy Target definition and performance review Bidlist and business hold Incoming inspection process Components Control plan Sampling rules records

QIP V2.0 Production Site Assessment Detailed Content #10: Managing Changes (MC) All type of changes (planned & unexpected) Procedure for monitoring product/process changes Project management Communication with the customer Management of the deliverables (documents…) Risk analysis before any change Production Trial Run (PTR) process Banking process Planning Stock build-up Management of the long term storage Alternative processes / Bypass processes Identified alternative processes Authorizing process Specific countermeasures

QIP V2.0 Production Site Assessment Detailed Content #11: Maintenance (MAI) Maintenance organization & strategy Perimeter covered Available ressources & facilities Communication with manufacturing dep. TPM strategy & implementation / Standardization Policy Maintenance activities (planning & tracking) Preventive maintenance master planning / Corrective maintenance activities Working standards & technical documentation Maintenance records (equipments diary) L1 Maintenance management Definition of L1 maintenance operations Planning & follow-up Spare parts management Critical spare parts Stock management & storage conditions Management of the customer specific tools Tools identification Diary sheet and operation records Storage & handling conditions

QIP V2.0 Production Site Assessment Detailed Content #12: Manufacturing & Material Flow Management (MMFM) Manufacturing scheduling Business Planning (=> fix the capacity) Master production schedule (MPS => manage the ressources) Daily manufacturing program Constraints management (Bottlenecks) Identification updated in real time Equipment level of load permanently followed Product Packaging Storage areas & handling conditions Supply of workstations Supply organization Improvement Process

QIP V2.0 Production Site Assessment Detailed Content #13: External Logistic (ELG) Supply process Master schedule of deliveries Logistic protocol with TIER N Service rate of the TIER N Supplier Securization of the supplies Identification of the risky supplies Securing plans Safety Stocks management Shipping process Shipping planning Preparation process Bogus truck EDI & logistic Electronic Protocol

QIP V2.0 Production Site Assessment Detailed Content #14: Strategy / Project Management (SPM) => NSA Used only for new supplier or for a new project Industrial Strategy & Vision (=> 5 yrs) Site organization & human ressources management Site Involvment during project Quality organization Job desciptions New equipments validation process Qualification process Project milestones Deliverables management Spare parts production Specific process “End of life” management PR storage Packaging design

QIP V2.0 Production Site Assessment Detailed Content #15: Part & Process Control (PPC) => NSA & PCPA Management of the documents Identification of the KPC (CSE) Process flow diagram and link with PFMEA Process control plan SPC and records management Product audits Customer contractual Safety Stocks (Optional requirement)

5 ! EXAMPLES OF SCORING 50

Example Of Scoring Implementation 1/2 – LPA1 0 - No LPA Procedure / No check sheet defined. 1 - Generic check sheet defined but not covering items related to safety, manufacturing or quality 2 - Generic check sheet established but there’s no auditor training or some key items for safety, quality and manufacturing are not covered 3 - Few auditors are not trained or check sheet not defined for supporting areas 4 – Check sheet covering all items. Evidence that all auditors were trained. Check sheet defined for supporting areas

Example Of Scoring Implementation 2/2 – LPA2 0 - No LPA scheduled and performed 1 - LPA not performed but scheduled according to action plan or audits performed occasionally but no shcedule available 2 - LPA conducted in all shifts but no scheduled for all levels following an established frequency 3 - LPA missed for few workstations. Minor concerns related to documentation (e.g.: readability, dates, issues fix immediately are not documented…) 4 - LPA conducted according to schedule by all level (all shifts/workstations) and documented properly

Effectiveness 1/2 – LPA Key Element Example Of Scoring Effectiveness 1/2 – LPA Key Element 0: No metric in place. Supplier has no global vision of the LPA implementation and LPA results (Eg: number of late LPA,…) 1: Supplier is tracking LPA planning. He is able to know if he is late or not. There are no metric to track results (Eg: mean nb of deviation by LPA, pareto of deviations,…) 2: Supplier is tracking LPA planning and LPA results. Some metrics are not correctly managed (no target, heterogeneous situation from a line to another,…). Team leader is free to do or not

Effectiveness 2/2 – LPA Key Element Example Of Scoring Effectiveness 2/2 – LPA Key Element 3: Supplier is tracking LPA planning and LPA results. Metrics are well managed (target defined, metrics standardized, action plan to reach the target…). Target not reached on some line & several road blocks (customer issues, repetitive deviation, late action plans,…) 4: Same situation Cross check activites on the different metrics (Eg: Gap analysis between product line, between hierarchical level,…) Stabilize Metrics & No open issue.