1. Quality Improvement Level Up Program December 17, 2008

2. Level Up Program Barry Puskar Manager - Supplier Management Section (within the Purchasing Dept.)

3. Level Up Program Quality and Sales Commitment and Support Quality Level Up Level Up Quality Improvement Program ; Joint improvement program between Supplier Quality Assurance (SQA) & Purchasing for suppliers who are not meeting PPM targets. Program helps the supplier make the necessary corrections to improve their performance back to the “acceptable” levels.

4. Level Up Program Scope: To work with suppliers who’s PPM data is trending in the wrong direction To enhance the business relationship and daily communication between the supplier and the SQA engineer To insure full support from both Sales and Quality of the supplier Promote customer confidence and generate sales Improve the overall quality of our product

5. Level Up Program Purpose: Level up quality to further exceed current and future quality targets Strengthen our supplier base to promote high quality levels during development  Highest quality spikes occur during new model launch SOP

6. Level Up Program Keith Merrion Product Manager - Supplier Quality Assurance

7. Level Up Program History – Improvement Impact 1. Graph / Lessons Learned 2. Program Benefits

8. Level Up Program Lessons Learned from Past Improvement Activity INTERNAL COMMUNICATION When you go back to your plant, bring everyone together and discuss about the Level Up Program. Gain their support to achieve your Goals. Request everyone participate in the improvement. Lesson Learned: If this doesn’t happen, Improvement is not successful. EXTERNAL COMMUNICATION Always keep communication with SIA. Primarily your SQA Engineer. Lesson Learned: SIA can help you resolve an issue and prevent it from becoming a problem.

9. Level Up Program Lessons Learned from Past Improvement Activity STANDARDIZED WORK Are your Work Instructions adequate in defining each step the Associate must take to perform his task without creating mistakes? Do Associates follow the Work Instructions or is there any variation. If more than one Associate performs the same task, is it done the exact same way? Are Audits conducted to insure conformance to the Work Instructions? What Actions are taken when Associates do not follow Standardized Work? Lesson Learned: If the process is established correctly and the Work Instructions are adequate to prevent mistakes, it is a must that Associates follow Standardized Work. If not, defects will occur.

10. Level Up Program Lessons Learned from Past Improvement Activity ABNORMAL PROCESS When Processes are set-up correctly, and a problem occurs, this can create an Abnormal Process. Typical problems are: Equipment Failures, Tool Failures, Associates not following Standardized Work, Material Issues, Sub-Component Issues, Poke Yoke Problems, Work Area disruption, etc. These problems result in alternate ways to keep the Process running, resulting in ABNORMAL PROCESS. Lesson Learned: ABNORMAL PROCESSES create defects. Take appropriate actions when they occur. Add additional inspection, qualify backup equipment/tools, document problem and actions (with date and time), notify Supervisor/Manager, have a reaction procedure, etc.

11. Level Up Program Lessons Learned from Past Improvement Activity KNOW YOUR TARGETS Develop your own Targets internally to meet the SIA Target. Establish Targets for each Department (in your company). Plans and Time Lines are extremely important as a roadmap to reach your Targets. Understand what your established Targets are and progress to achieving them. Lesson Learned: If Targets are not set, its like taking a trip without understanding where you are going and when you are there. Remember Plans and Time Lines are the roadmap to guide you to your destination. This is key to improvement activity.

12. Level Up Program Program Benefits

13. Level Up Program Requirements 1. Target (Standard & VS Defined) 2. Form Review (with schedule) 3. Communication 4. Key Contacts 5. Quality and Sales Commitment and Support

14. Level Up Program Target (Standard & VS Defined) SIA Target PPM is 100 SIA TARGET - VITAL PARTS PPM IS 0 Establish your own Targets to Step Down PPM to achieve the SIA Target Establish your internal PPM’s for each Department, Push improvement to obtain Targets.

15. Level Up Program Form Review (with schedule) For the Level Up Program, you will be required to submit a monthly report to your SQA Engineer. Time Frame for reporting will be Jan 09 to Jun 09 (6 months). Reports are due the following month on the 10 th day. First report due Feb 10 th.

16. Level Up Program Required Monthly Report Format Change Update Add your information

17. Level Up Program Monthly Report – Data Sheet Add your information

18. Level Up Program Communication The Presentation / Monthly Report format is located on the SIA Web Page (www.subaru-sia.com select “Suppliers” then “Forms/Standards).www.subaru-sia.com It is up to you to contact SIA if you need any more information to aid in your Level Up Program.

19. Level Up Program Key Contacts at SIA

20. Level Up Program Quality and Sales Commitment and Support When presentations are over the SQA Engineers and Buyers will meet with you to review your company’s past performance. You are here representing you company, we need your commitment and support to carry this message back.

21. Level Up Program Sub-Performance Results

22. Level Up Program Next: Mark Haynes – Supplier Management Group Leader

23. Level Up Program SUB-PERFORMANCE ACTIVITY Mark Haynes Group Leader - Supplier Management Section (within the Purchasing Dept.)

24. Level Up Program Sales and Quality Commitment and Support During the supplier quality level up program, your progress will be evaluated on a monthly basis by the SQA engineer & Purchasing. If progress does not meet the requirements, an evaluation will be done and corrective action will be enforced.

25. Level Up Program Quality and Sales Commitment and Support Corrective Action Activity Warning Letter to Presidential Level will be issued by SQA Management Face to Face Meeting with Upper Management (at SIA) held by SQA with Purchasing ON Site Audit QIP/PRE-QIP Selection by Purchasing & SQA (Presidential Level Support Required for all QIP/Pre-QIP Activity)

26. Level Up Program Quality and Sales Commitment and Support What is QIP & Pre-QIP?

27. Level Up Program Quality and Sales Commitment and Support Pre-QIP Quality Improvement Program (P-QIP); Top Management corrective action process where the majority of chronic and recurring defect suppliers make the necessary corrections to improve their performance back to the “acceptable” levels.

28. Level Up Program Quality and Sales Commitment and Support Pre-QIP 6 month improvement program SIA Purchasing and SQA shall support all activity Supplier will provide detailed progress reports to SIA Top Management during the 2nd, 4th and 5th months Top Management Review Audits will be done during the 3rd and 6th month end If a supplier’s participation in PQIP is unsuccessful, the Supplier may be subject to QIP.

29. Level Up Program Quality and Sales Commitment and Support QIP Quality Improvement Program (QIP); Top Management Level corrective action process for those suppliers whose performance has not improved, or has gotten worse over a period of time. Once selected, the supplier will participate in a more formal and structured corrective action system as outlined within the Supplier Quality Manual. All meetings/audits will require Presidential support from the supplier.

30. Level Up Program Quality and Sales Commitment and Support QIP Suppliers will participate in a 6 month program with review meetings every month. Top Management Reviews will be done during the 4th and 6th month end. Monthly meetings will be face to face meetings to review the suppliers overall progress. SIA Purchasing and SQA shall support all audit activity (location shall be determined at the time of audit). Supplier’s performance will be evaluated at the 6 month meeting and QIP continued if needed. If a supplier’s participation in QIP is unsuccessful, the Supplier may be subject to additional QIP program participation until SIA requirements have been met. Parent Company participation and support is required

31. Level Up Program Larry Strauch Manager - Supplier Quality Assurance

32. Level Up Program C + C + C = Success

33. Level Up Program ELEMENTS FOR SUCCESS 1.) Communication * Maintain good communication with your SQA Engineer For critical items, don’t rely on e-mail Talk directly person to person to expedite corrective action…call SQA Engineer, Group Leader or Manager * Seek to clearly understand your defects and how they affect our customers * Be proactive with information and feedback quickly Tell us if you suspect defect outflow…don’t hesitate to call

34. Level Up Program ELEMENTS FOR SUCCESS 2.) Consistency * Establish and maintain effective QA Systems Are your procedures adequate to assure that every defect is identified and contained? Have you Incorporated Standardized Work into your system…is everyone doing the same thing every time? Are you effectively and consistently managing every abnormal process? Many of your PRC responses identify an “abnormal process” as the root cause for the defect.

35. Level Up Program ELEMENTS FOR SUCCESS 3.) Commitment * You must accept personal responsibility and ownership for the success of this program