1 Forming Relationships for the Future SUPPLIER RATING PROGRAM Space & Electronics TRW WORKING TOWARDS COMMON GOALS, AND FORMING RELATIONSHIPS FOR THE FUTURE...

2 Forming Relationships for the Future SUPPLY CHAIN MANAGEMENT VISION Space & Electronics TRW WORKING TOWARDS COMMON GOALS, AND FORMING RELATIONSHIPS FOR THE FUTURE... Forming Relationships with key members of our Supplier Base, and allowing TRW to provide products to their customers with a commitment towards the highest levels of quality, through technical excellence, at an affordable cost, with on-time delivery. 2

3 Forming Relationships for the Future Space & Electronics TRW WORKING TOWARDS COMMON GOALS, AND FORMING RELATIONSHIPS FOR THE FUTURE... Approved Manufacturers Directory Supplier Rating Program Evaluation of Quality Management Customer Satisfaction - Suppliers Report Card - Subcontracts Report Card Supplier Quality Performance Subcontract Quality Performance Supplier & Subcontracts Rating System Performance Level Summary Supplier Rating Program 3

4 Forming Relationships for the Future Approved Manufacturers Directory (AMD) Space & Electronics TRW WORKING TOWARDS COMMON GOALS, AND FORMING RELATIONSHIPS FOR THE FUTURE... Based on TRW’s ISO-9001 Registration, TRW is required to Evaluate, Select, and Control Suppliers or Subcontractors. TRW requires Suppliers or Subcontractors which will provide deliverable products / materials be approved and listed in TRW’s Approved Manufacturers Directory (AMD). The AMD is the result of a consolidation of our prior Manufacturers Evaluation & Control Board (MECB), and the Quality Assurance Supplier Directory (QASD) systems. The AMD process is intended to provide a single system for supplier evaluation, selection, and control. 4

5 Forming Relationships for the Future Supplier Rating Program Space & Electronics TRW WORKING TOWARDS COMMON GOALS, AND FORMING RELATIONSHIPS FOR THE FUTURE... TRW’s Supplier Rating Program will require Suppliers to participate with TRW in an on-going assessment of the Supplier’s Performance. The Suppliers will be evaluated in three areas: GoldSilverBronze Customer Satisfaction Quality Management Supplier Performance Schedule Financial Quality 5

6 Forming Relationships for the Future Evaluation of Quality Management Space & Electronics TRW WORKING TOWARDS COMMON GOALS, AND FORMING RELATIONSHIPS FOR THE FUTURE... The Rating Process will evaluate the Supplier and their Quality Management. This is accomplished using TRW’s QSA-9000, MIL-I, MIL-Q, or NHB Quality Systems Assessment Checklist. 6 Quality Management Criteria: - Must be currently certified to ISO 9001 or ISO 9002 by a third party Registrar, or achieve continuous (12 months) Gold level performance in Customer Satisfaction and Supplier Performance areas. -Must be certified to TRW’s QSA 9000 Quality Program, and meet the Silver Level performance criteria. - Currently certified to Mil-I-45208, Mil-Q-9858, or NHB , and meet the Bronze Level performance criteria. Definitions: Minor Nonconformance - Administrative in nature, one-time occurrence; easily correctable. Major Nonconformance - Directly affects product; systemic in nature. Gold Silver Bronze

7 Forming Relationships for the Future Evaluation of Quality Management (Cont.) Space & Electronics TRW WORKING TOWARDS COMMON GOALS, AND FORMING RELATIONSHIPS FOR THE FUTURE... 7 ISO-registered suppliers are rated Gold based on the successful completion of a 3rd Party ISO assessment. This Gold rating is maintained by the successful completion of continual 3rd Party Registrar evaluations. Unsuccessful 3rd Party re-evaluations require a QSA Quality Processes Assessment. (See below) Suppliers MIL-I, MIL-Q, NHB approved cannot obtain a rating greater than bronze. After correction of any documented nonconformance(s), rating improvement will be reflected in the following quarter. TRW QSA certified suppliers are rated using TRW’s QSA 9000 quality assessment checklist according to the above table. After correction of any documented nonconformance(s), rating improvement will be reflected in the following quarter. ISO Quality Management Assessment QSA Quality Management Assessment MIL-I, MIL-Q, NHB Quality Management Assessment

8 Forming Relationships for the Future Customer Satisfaction Space & Electronics TRW WORKING TOWARDS COMMON GOALS, AND FORMING RELATIONSHIPS FOR THE FUTURE... Our customers will be provided the opportunity to submit a Quarterly Report Card on the Suppliers/Subcontractors that they are currently doing business with. They will be assessing the following areas: - Management - Quality - Technical - Schedule - Financial These values will compose a Customer Satisfaction Index Rating (CSI), which will be used to assess the Supplier’s overall certification status. 8

9 Forming Relationships for the Future Customer Satisfaction Suppliers Report Card Space & Electronics TRW WORKING TOWARDS COMMON GOALS, AND FORMING RELATIONSHIPS FOR THE FUTURE... The Report Card will be used to evaluate elements for Customer Satisfaction. The evaluation is based on a scale of 1 to 5, and is used to assess the Customers view on the Suppliers commitment on Management, Quality, Technical, Schedule, and Financial. This evaluation will be used to address areas that are critical to our customers. 9

10 Forming Relationships for the Future WORKING TOWARDS COMMON GOALS, AND FORMING RELATIONSHIPS FOR THE FUTURE... The Report Card will be used to evaluate elements for Customer Satisfaction. The evaluation is based on a scale of 1 to 5, and is used to assess the Customers view on the Subcontracts commitment on Management, Quality, Technical, Schedule, and Financial. This evaluation will be used to address areas that are critical to our customers. 10 Customer Satisfaction Subcontracts Report Card Space & Electronics TRW

11 Forming Relationships for the Future Supplier Quality Performance Space & Electronics TRW WORKING TOWARDS COMMON GOALS, AND FORMING RELATIONSHIPS FOR THE FUTURE... Suppliers will be assessed based on their ability to meet or exceed thresholds that are established in Quality, Schedule and Financial. The defect prevention program that TRW is currently using, is a Six Sigma Defect prevention Program. The program will focus on “0” Rejects and 100% on time Delivery. TRW’s Supplier Rating & Incentive Improvement Program (SRIIP) will be used to assess Financial. 11

12 Forming Relationships for the Future Subcontracts Quality Performance Space & Electronics TRW WORKING TOWARDS COMMON GOALS, AND FORMING RELATIONSHIPS FOR THE FUTURE... Subcontractors will be assessed based on their long term ability to meet or exceed Quality, and Schedule goals. Customer Satisfaction Report Card(s) composite scores for the previous twelve (12) months, will be used to determine a Subcontractors’ Quality Performance. 12

13 Forming Relationships for the Future Supplier / Subcontracts Rating System Space & Electronics TRW WORKING TOWARDS COMMON GOALS, AND FORMING RELATIONSHIPS FOR THE FUTURE... Gold Silver Bronze Exceptional Supplier Performance, clearly exceeds expectations. Quality Management Score: 0 major, 0-4 minor nonconformances Quality: % acceptance for Suppliers, and Subcontractors 4.5 or above of 5 points Customer Satisfaction Quality Performance for 12 months. Schedule: % on time for Suppliers, and Subcontractors >4.5 or above of 5 points Customer Satisfaction Schedule Performance for 12 months. Financial (SRIIP Score): for Suppliers Customer Satisfaction Index: 4.5 or above of 5 total points. Excellent Supplier Performance, meets or exceeds expectations. Quality Management Score: 1-2 major, 5-9 minor nonconformances Quality: 97-94% acceptance for Suppliers and Subcontractors points Customer Satisfaction Quality Performance for 12 months. Schedule: 95-91% on time for Suppliers, and Subcontractors points Customer Satisfaction Schedule Performance for 12 months. Financial (SRIIP Score): for Suppliers Customer Satisfaction Index: 3.5 to 4.4, out of 5 total points. Satisfactory Supplier Performance,meeting expectations. Quality Management Score: 3-4 major, minor nonconformances Quality: 93-90% acceptance for Suppliers and Subcontractors points Customer Satisfaction Quality Performance for 12 months. Schedule: 90-85% on time for Suppliers and Subcontractors points Customer Satisfaction Schedule Performance for 12 months. Financial (SRIIP Score): for Suppliers Customer Satisfaction Index: 2.5 to 3.4, out of 5 total points. Performance is evaluated according to four color-coded standards. 13 Unsatisfactory Supplier Performance, clearly failing to meet expectations. Quality Management Score: > 4 major, > 15 minor nonconformances Quality: <90 % acceptance for Suppliers and Subcontractors <2.5 of 5 points Customer Satisfaction Quality Performance for 12 months. Schedule: <85% on time for Suppliers and Subcontractors <2.5 of 5 points Customer Satisfaction Schedule Performance for 12 months. Financial (SRIIP Score): <.885 for Suppliers Customer Satisfaction Index: Below 2.5 out of 5 total points. Red

14 Forming Relationships for the Future Performance Level Summary Space & Electronics TRW WORKING TOWARDS COMMON GOALS, AND FORMING RELATIONSHIPS FOR THE FUTURE Quality Mgmt. Customer Satisfaction Process Control Capabilities Suppliers/ Subcontracts Period Months Suppliers/ Subcontracts Period Month Management, Quality, Tech - nical, Schedule, Financia l Gold 0Maj, 0-4min /> /> >4.5 of 5 Silver 1-2M, 5-9m 97-94/> />3.512 >3.5 of 5 Bronze 3-4M, /> /> >2.5 of 5 Red >4M, >15m <90/<2.512 <85/<2.5 12<2.5 Only Suppliers < Supplier Rating & Incentive Improvement Program Cert Level QualityScheduleFinancial

15 Forming Relationships for the Future Space & Electronics TRW WORKING TOWARDS COMMON GOALS, AND FORMING RELATIONSHIPS FOR THE FUTURE... What could being a TRW Certified Supplier mean to your company? äEstablished Supplier Relationship with TRW äEstablished Strategic Agreement Alliance. äSupported by a TRW Commodity Team/Product Team äEmpowered to perform selected TRW’s Traditional Source Inspections (In-Process, Pre-Caps, Finals) äProduct Delivered Direct to Inventory. äDelete In-House Testing Requirements (as appropriate). äPreferred Supplier for Increased Business Opportunities. äListed in TRW’s Approved Manufacturers Directory (AMD) as a GOLD / Preferred Supplier. äCandidate for TRW’s GOLD Supplier of the Year Award. äCandidate for Supplier Relationship with TRW. äCandidate for Strategic Agreement Alliance. äCandidate for assistance from a TRW Commodity Team/Product Team äCandidate for TRW’s Skip Lot Sampling Program äCandidate for deletion of In-House Testing Requirements äListed in TRW’s Approved Manufacturers Directory (AMD) as a SILVER Supplier. äCandidate for TRW’s SILVER Supplier of the Year Award. äOpportunity to become a TRW GOLD Supplier. äCandidate for continued Supplier Relationship with TRW. äCandidate for Strategic Agreement Alliance. äCandidate for assistance from a TRW Commodity Team/Product Team äCandidate for TRW’s Bronze Supplier of the Year Award. äListed in TRW’s Approved Manufacturers Directory (AMD) as a Bronze Supplier. äOpportunity to become a TRW SILVER Supplier. äImmediate assessment and plan of action by Commodity Team/ Product Team äImmediate assessment of Active procurements by Management. äPlaced on AMD Hold äSupplier not eligible for future placement of procurements. äCandidate for being De-Activated as a TRW Approved Supplier. GOLD SILVER BRONZE RED 15

16 Forming Relationships for the Future Space & Electronics TRW WORKING TOWARDS COMMON GOALS, AND FORMING RELATIONSHIPS FOR THE FUTURE For additional information regarding the Supplier Rating Program, please contact one of the following individuals: Key Contacts Ivan Kudlacek (Supply Chain Quality) (310) Robert Jaco (Supply Chain Quality) (310) Gil George (Subcontracts) (310) Rev.11/15/01