Supplier Quality Manual December 2013 6th Edition 1 Damiler Trucks North America is a subsidiary of Daimler. All rights reserved TOS Quality Policy Freightliner LLC is committed to continually improve the performance of its brands in all aspects of our customers’ expectations and experiences with our products, services, and people, while maintaining our commitment to the environment and safety. Environmental Policy Thomas Built Buses is committed to manufacturing our vehicles in an environmentally responsible manner. We will do this through: ”THOMAS” Total compliance with all environmental laws; Heightened understanding of the views and needs of our internal and external stakeholders; Optimize focus on environmentally advanced product and process design; Maintain continuous improvement of environmental performance; Achieve reducing our impacts on the environment through pollution prevention; Setting and achieving environmental goals Operation Mission Statement: Through the PROUD commitment of exceptional employees and continuous improvement, TBB will lead the school bus industry by building and delivering quality products, on time, at the lowest possible cost, for the safe transportation of children. Thomas Built Buses Incorporated All rights reserved. Unless otherwise specified, no part of this publication ma be reproduced or utilized in any form or by any mean, electronic or mechanical, including photocopying and microfilm, without permission in writing from Thomas Built Buses. Thomas Built Buses 1408 Courtesy Road PO Box 2450 High Point, NC 27260 2 Damiler Trucks North America is a subsidiary of Daimler. All rights reserved Contents Preface ............................................................................................................................................... 4 Quality System ................................................................................................................................... 5 Safety Relevant Systems …………………………………………………………………………………..5 Quality Planning Advanced Product Quality Planning ........................................................................................ 6 Continuous Improvement ......................................................................................................... 6 Design Documents and Drawings ...................................................................................................... 7 Production Part Approval Process ..................................................................................................... 8 Material Performance Test Data ........................................................................................................ 8 Coated Metal Components Testing ................................................................................................... 9 Quality Practices Statistical Methods .................................................................................................................... 9 Lot Control and Traceability ...................................................................................................... 9 Gaging ..................................................................................................................................... 10 Control Plans ........................................................................................................................... 10 Process Flow Charts - PFMEA .............................................................................................. 11 Material Rejection and Corrective Actions .............................................................................. 12 Documentation and Record Retention .................................................................................... 14 Change Approval .................................................................................................................... 14 Delivery .................................................................................................................................. 15 Packaging and Shipping ......................................................................................................... 15 Preventative Maintenance ...................................................................................................... 15 Process Controls ................................................................................................................................ 16 Dated Materials…………………………………………………………………………...…………16 TOS (Truck Operating System) Supplier Requirements……………………………………………….17 Standard Work……………………………………………………………………………………….18 Team Boards…………………………………………………………………………………………19 Huddle Meetings……………………………………………………………………………………..20 5-S…………………………………………………………………………………………………….21 Employee Suggestions……………………………………………………………………………...21 Supplier Report Card ....................................................................................................................... 23 Third Party Sorting and Rework ....................................................................................................... 24 Skip – Lot Inspection……………………………………………………………………………………….24 Warranty ........................................................................................................................................... 25 Confidentiality ................................................................................................................................... 25 Appendix A – Supplier Report Card Appendix B – Supplier Corrective Action Request – A3 Appendix C – Freightliner Warranty Agreement Appendix D – Supplier Change Request Form Appendix E – Confidentiality Agreement Appendix F – Packaging and Shipping Guidelines Appendix G – Supply Agreement 3 Damiler Trucks North America is a subsidiary of Daimler. All rights reserved Preface Thomas Built Buses, a subsidiary of Daimler Trucks North America, is committed to working with suppliers to ensure customer satisfaction through total conformance to quality requirements. This manual is to assist our suppliers in understanding the quality-related standards, requirements and procedures that should be in place to assure the shipment of defect free, on time parts to Thomas Built Buses. Thomas Built feels you are not just a supplier, but also a key asset. A strong positive working relationship with our suppliers is necessary to provide high quality products to our customers. This manual also contains reference material that the supplier is encouraged to use to achieve the level of quality desired. Thomas Built Bus continually strives to improve the quality of products we supply to our customers. To do this, our suppliers must also strive for continuous improvement. Good communication between suppliers and customers is essential in today’s competitive environment. Concerns must be addressed as early in the development stage as possible and problems must be resolved quickly. Thomas Built Bus will assist our suppliers whenever possible to meet our requirements. The responsibility for quality and on-time delivery, however, remains with the supplier. Sincerely, Chris Moore Quality Manager Thomas Built Buses 4 Damiler Trucks North America is a subsidiary of Daimler. All rights reserved Quality System Thomas Built Bus facilities currently maintain certification to the following standards: ISO 9001:2008 and ISO 14001:2004. As such, we require any new suppliers to be certified to ISO 9001:2008 or TS 16949:2009. Certification must be maintained and any loss of certification for whatever reason must be reported immediately to Thomas Built Bus. Thomas Built Bus reserves the right to perform Quality System Assessments for new suppliers prior to awarding Business. Poor Supplier performance as indicated on Thomas Built Bus Supplier Score Card could trigger a Quality System Process audit by Thomas Built Bus’s Supplier Quality Assurance (SQA) department or designated representative. This type of assessment is tailored after the standard that the supplier is certified to and Thomas Built Bus’s specific requirements. The core tools reference manuals required to support efforts toward compliance to ISO9001:2008 or TS16949:2009 can be obtained through the Automotive Industry Action Group. Thomas Built Bus requires the methods and requirements in these manuals unless specifically expressed otherwise. The manuals include the current versions of: PPAP (Production Part Approval Process) SPC (Statistical Process Control) MSA (Measurement System Analysis) FMEA (Failure Mode & Effects Analysis) APQP & Control Plan (Advanced Product Quality Planning) If you have any issues concerning the use of these core-tools manuals, contact your Thomas Built Bus SQA representative. Safety Relevant Systems A Safety Relevant System is a system whose malfunction, either direct or indirect, has the potential to compromise vehicle safety which can pose immediate danger to the life and limb of road users. Safety Relevant Systems require certain levels of control to ensure they meet the intended design and performance specification during the intended life cycle. The DTNA Vehicle Safety Committee (VSC) Safety Relevant Systems List determines which component categories are Safety Relevant. A Matrix Functional Analysis is completed to determine which parts or assemblies are Safety Relevant. Matrix Functional Analyses for non-TBB designs are the responsibility of the supplier and must be approved by TBB Supplier Quality and Design Engineering. All parts and assemblies determined to be Safety Relevant require a DFMEA. DFMEAs for non-TBB designs are the responsibility of the supplier and must be approved by TBB Supplier Quality and Design Engineering. Safety Relevant features will be noted on TBB drawings using the Safety Relevant symbol “DS” in an upside down double triangle. Drawings with Safety Relevant features will also have a standard note to alert the user that Safety Relevant features or requirements are present. All Safety Relevant features default to 100% inspection. The supplier must confirm that a 100% validation process is in place and the process must be approved by TBB Supplier Quality and Design Engineering. All suppliers of Safety Relevant Systems must be TS 16949 compliant. If not, ISO certification must be documented as an “exception” with limited duration until the supplier can complete the TS 16949 certification. 5 Damiler Trucks North America is a subsidiary of Daimler. All rights reserved Quality Planning Advanced Product Quality Planning Sufficient quality planning must be done before mass production to minimize problems encountered during launch. This planning involves the use and/or creation of: Design documents Equipment, tooling and facility requirements Material sourcing and testing Process Flow Charts PFMEA & DFMEA (if available) Control Plans Initial Process Studies using quality indices such as Ppk or Cpk for important variable characteristics. MSA Gauge Studies PPAP Submission Process Work Instructions Process Control condition or set-up sheets Training and Qualification of Team Members Pilot production runs and analysis A Project Management approach to planning and implementation is recommended utilizing a multifunctional team in which Quality, Production, Engineering and Thomas Built Buses are team members. Task timing with assigned responsibility shall be utilized in project planning. All Safety or special characteristics identified by Thomas Built Buses shall be maintained in statistical control and monitored. Special characteristics are defined as those having a significant affect on fit, function or performance. Priority for continuous improvement shall apply to the reduction in variation around a target value for special characteristics. Safety characteristics shall be controlled with SPC control charts (when applicable) and made available to Thomas Built Buses upon request. Guidelines for quality planning activities should follow AIAG Advanced Product Quality Planning reference manual. Note: Thomas Buses utilizes the Freightliner Development System (FDS) and suppliers may be required to participate in this process. Continuous Improvement Continuous improvement is a process for continuously finding improvements in our current standards through systematic analysis and development of creative solutions to implement and strengthen the production system. As the transportation industry continues to become a more competitive global market, those companies that survive will be the companies that continually improve. Therefore it is essential that continuous improvement become a part of the culture in order to be the premier transportation company in the world. Continuous improvement offers a fundamental approach to staying competitive and fostering a learning organization flexible enough to adapt to changing customer demands. Every individual at every level of the organization has a role in continuous improvement. C.I. must be integrated and systematic in order to be sustained. This means that everyone has ownership and responsibility for continuous improvement. Thomas Bus recommends use of Six Sigma to achieve continuous improvement, as this provides the systematic approach needed. Continuous improvement is the quality philosophy of TBB and a fundamental principle of ISO 9004. Process improvement, product quality and cost savings. Additionally, all suppliers should proactively improve safety. Documentation of continuous improvements team activities should be posted within your facility and made available to Thomas Built Buses when such improvements occur or upon request. 6 Damiler Trucks North America is a subsidiary of Daimler. All rights reserved Design Documents and Drawings Where suppliers are design responsible, the supplier shall make drawings for the saleable product available to TBB. In all cases, the official design record is the top-level drawing relating to the part / component under consideration along with any other drawings, specifications, or electronic files referenced therein. If the supplier does not have a top-level drawing for the part under consideration, TBB must have approved the drawing to be used. Where the design record is in electronic format, a hard copy 2D drawing should be included to allow a quality check of the part to the print. Any supplier designed part must have a supplier provided drawing on the supplier’s title block that includes the supplier’s part number, revision level and revision date. Thomas Built Buses will in turn release the supplier drawing on a TBB title block that includes the TBB part number, revision level and revision date. The supplier drawing should either be dimensioned in English units (inches) or dual-dimensioned (mm/inches) and include an itemized bill of material. The supplier drawing should identify all parts that are serviceable and intended for replacement, as well as any installation notes including torque, orientation, etc. If the part is expected to meet specific FMVSS regulations, the supplier drawing must explicitly state which FMVSS regulations the product meets. TBB has the capability to incorporate supplier provided 3D CAD models into our design and documentation process. TBB expects suppliers to create 3D geometry for TBB proprietary parts using the STEP format and would prefer CAD data for non-proprietary parts be in STEP also. However, since this is not always possible, TBB will accept 3D models and assemblies saved in the JT format. If 3D model data is not available, DXF should be used to transmit final dimensioned drawings. TBB uses the SWANweb data exchange system for exchanging data between suppliers and TBB. Please work with your representative in engineering to get a SWAN account created for sending STEP files. Please note that the supplier score card rating may be impacted by lack of cooperation with this request. All products supplied to TBB are to be top-coated and must follow the Finish requirements on the TBB drawings regarding meeting the applicable Freightliner 49-00023 specification or the TBB 68001618 specification for FMVSS 221 adhesive joint compatibility. All parts supplied to TBB are intended to be used in school bus bodies, and must comply with the standard automotive FMVSS regulations, as well as the FMVSS regulations specific to school buses. The supplier should be able to provide proof of compliance upon request. In the event of a recall, the supplier must notify TBB Compliance, Engineering, Purchasing and Quality immediately. The supplier will not make product changes or deviations that affect the part’s fit/form/function without prior written authorization from Thomas Built Buses Engineering Department Management. A Supplier Request For Change form is located in Appendix D. The supplier should provide an organizational chart showing where engineering activities are located within the organization, and indicating the key contact personnel for Product Engineering activities and problem resolution. The Supplier is responsible for the timely review of all Thomas Built Buses engineering requests. Timely review should be as soon as possible, and shall not exceed three (3) business days. Lack of responsiveness could result in the initiation of an escalation process, up to and including recommendation for re-sourcing. The escalation process is to be as follows: Step 1 – Supplier Management Review Step 2 – Poor Supplier Score Card Rating Step 3 – Supplier Corrective Action Request (SCAR) Step 4 – Recommendation for Re-Sourcing 7 Damiler Trucks North America is a subsidiary of Daimler. All rights reserved Production Part Approval Process As a supplier to Thomas Built Buses you are required to comply with the applicable PPAP submittal procedure and Thomas Built Buses PPAP approval documented on a PSW is required prior to shipping production parts. Thomas Built Buses will provide assistance in any way possible. Contact your Thomas Built Buses SQA representative for the PPAP procedure and guidance. The conditions requiring a PPAP submission are listed below along with a brief description of the process and documentation involved. When any of the following conditions occur, contact your Thomas Built Buses SQA for guidance as to what Thomas Built Buses expects in a PPAP package. Once an understanding has been reached on what is required for the PPAP submittal, it must be submitted in a timely manner and approved prior to shipment of parts produced for mass production. New part New supplier for new or existing parts Engineering Change Change in material Change in manufacturing location including major layout changes Change in manufacturing process including: Addition of new tools, equipment, dies, molds or cavities Major repair of equipment or tooling Other circumstances as dictated by Thomas Built Buses If the change is initiated within your organization, you must notify your Thomas Built Buses SQA representative so that necessary approval can be received prior to implementing the change in production. Parts evaluated for PPAP must be produced on production ready tooling and equipment. Thomas Built Buses requires a Level III on all PPAPs unless otherwise requested by the Thomas Built Buses SQA. The PPAP package usually consists of the following documents, however depending on the reason for submission and/or customer requirements, some documents may or may not be required. Part Submission Warrant Appearance Approval Report Dimensional Results / Inspection Results Materials / Performance Test Results Gauge R & R - Attribute or Variable Process Capability Studies Process Flow Diagram Process Control Plan Process Failure Mode & Effects Analysis Sample parts (see specific Thomas Built Buses PPAP submittal procedure). When authorized to submit a level 1 or 2 PPAP, it is expected that all required Level 3 documents be retained at the supplier’s location and be made available upon request. Thomas Built Buses requires PPAP submissions to be made through the SQA Department. Material / Performance Test Data The supplier is responsible for conducting and submitting all material and performance testing as specified on the print with the PPAP package. If the supplier is not capable of performing all tests, they can contract the service with a qualified source such as the sub-supplier or a third-party laboratory or test facility. The contracted source must be an accredited facility (ISO 17025). The supplier is responsible for maintaining and submitting certificates of analysis and updated test results electronically via E-Mail to the designated Thomas Built Buses Quality Assurance individual, when requested, prior to each shipment. 8 Damiler Trucks North America is a subsidiary of Daimler. All rights reserved Coated Metal Components Testing Process Parameter Tracking Effective on all coated parts the following process parameters are to be recorded at a minimum once for each lot or batch of TBB components run: Line speed Cleaning stage free / total alkalinity or free / total acid Cleaning stage and rinse stage(s) temperature Cleaning and pretreatment stage delivery parameters (Eg. psi) Rinse stage(s) total dissolved solids Rinse stage(s) temperature Pretreatment stage PH Pretreatment stage chemical concentration Curing oven temperature Film Thickness These parameters will serve as a minimum and all chemical and coating supplier recommendations for process parameters should be followed and recorded. Batch Testing Due to the nature of the product we build, additional quality control measures will also be implemented. In order to remain in good standing, monthly data shall be available upon request for all TBB coated parts to include: Lot or batch information including o Lot or batch ID o Date/shift o Part #’s and quantity produced o Significant lot or batch events (significant maintenance event, tank dump, temp drop, power loss, etc…) o Any out of tolerance conditions to process parameters Lot or batch testing for each lot including o Solvent Wipe Test – ASTM D5402 or Coating Supplier Recommendation o Pencil Hardness Test – ASTM 3363 o Cross Hatch Adhesion Test – ASTM 3359 All lot or batch information shall be recorded on an appropriate data sheet and retained for a minimum of 7 years at the supplier. Coated Parts in FMVSS 221 Joints Components whose final state resides in an FMVSS joint will also require tensile test samples for each lot or batch. These will include: 4 Tensile Test Coupon Samples – as per TBB drawing 162273 Sample sets should be run during the production run of the coated parts they represent with no special preparation. Samples are to be assembled & tested by the supplier. Test results, for each batch shipped, will be maintained by the supplier. Product cannot be shipped if test results do not pass the required test. Results must be available to Thomas Built Buses upon request. 9 Damiler Trucks North America is a subsidiary of Daimler. All rights reserved Quality Practices Statistical Methods Suppliers are expected to utilize appropriate statistical methods for process control, process improvement, evaluation of process capability and other applications. Such statistical methods should include: Pareto Analysis SPC charts Process Capability studies (CP, CPK, PPK) Trend Charts The supplier may be asked to provide statistical data to verify process control and capability. This request will come from a Thomas Built Buses SQA representative. All Safety and critical characteristics must be controlled by SPC data and submitted to a Thomas Built Buses SQA representative on request. A minimum Cpk value of 1.33 must be achieved as well as a Ppk value of 1.67 must be maintained unless otherwise stated in the Standard Specification. All statistical data is subject to be requested at any time. (Per shipment, Monthly, or Quarterly) Use of statistical methods mentioned above is fully explained in the AIAG Statistical Process Control (SPC) manual. Note: Critical characteristics are identified on drawings using a triangle. Lot Control and Traceability Suppliers are expected to have controls in place to provide product traceability through their process, from raw materials to the finished end product at the OEM. A seven digit date code sticker or equivalent must be attached to the back of each individual part in an area that does not affect appearance, form, fit or function. This requirement may be waived for certain or smaller parts. The TBB PPAP Coordinator must grant permission for waiver. The seven-digit date code must include, Month, Day, Year and shift of manufacturing (Example: 0210061). Each shipment to Thomas Built Buses must be identified with a lot number that will reference the traceability system. Lot traceability data must be kept on hand and be available to Thomas Built Buses upon request. Gaging Suppliers are expected to establish and maintain a gaging system that will provide adequate, accurate data to demonstrate the conformance of the product to the specified requirements. The system should provide inspection, measuring and test equipment necessary throughout the process. The measuring equipment must be controlled, calibrated at scheduled intervals, properly used and maintained. Gage capability analysis must be performed on gages identified in the Control Plan. Analysis methods are explained in the AIAG Measurement System Analysis reference manual. Attribute gaging should be included in the calibration and analysis system. When gage repeatability and reproducibility studies are used, the acceptance criteria are as follows: Under 20% - Considered acceptable 20% to 30% - An Improvement Plan must be established to bring it to 20% or less Over 30% - Unacceptable (Remove from service until an acceptable GR&R is achieved). Control Plans An essential element of the advanced quality planning process is the development of a part and process control plan. The control plan is the key document for defining the type of controls, gages, sample sizes, frequencies, documentation and reaction plans to be used for controlling each step of the process, from receiving to finished goods storage and shipping. Suppliers are expected to develop control plans for each product shipped to Thomas Built Buses. The control plans are to be submitted with the PPAP package to the Thomas Built Buses SQA representative for review and approval. Control plans are to be maintained and updated to reflect any changes made and must be available to 10 Damiler Trucks North America is a subsidiary of Daimler. All rights reserved Thomas Built Buses upon request. Control Plans are developed for the prototype, pre-launch and production phases of the process. The development, use and application of the control plan are explained in the AIAG Advanced Product Quality Planning manual. The control plan focuses on the identification of process and product characteristics as they appear throughout the manufacturing process and defines the degree of control established for them. All critical and safety related characteristics must be addressed on the control plan. Because the control plan is dependant on the process flow chart and the PFMEA, these two documents must be developed prior to establishing the control plan. Process Flow Charts - PFMEA Suppliers are to begin the advanced quality planning process by establishing the process flowchart listing all process steps beginning with receipt of raw material to packaging and shipment to the customer. The process flowchart can be used to analyze sources of variation of machines, material, methods and manpower used in the manufacturing process. To provide strong linkage between the process flowchart, FMEA and Control Plan, each process step called out on the flowchart is given operation number. This number should be carried over to the PFMEA and Control Plan to identify the process steps. Once the flow chart is established, a PFMEA must be developed following the method and format as defined in the AIAG FMEA manual. Each process step that is numbered and defined in the process flowchart should be addressed in the PFMEA. Defect modes and the resulting potential effects on the manufacturing or application of the finished product are established for each process step. For every defect mode, an RPN number is established that is the multiple of the ranking numbers for the severity of the defect, the likelihood of occurrence of the defect and the potential for defect detection. It is a Thomas Built Buses recommendation that any Risk Priority Number (RPN) over 90 must drive corrective action that will result in a lower occurrence or detection number, which will in turn reduce the RPN below 90. It is encouraged for the supplier to set internal goals less than 90 over time in the spirit of continuous improvement. Defect modes with a severity of “8” or higher must have the occurrence and detection numbers minimized regardless of the RPN. Note: It is critical that the RPN numbers be accurate, regardless of the 90 RPN listed target above. The expectation is that suppliers will continue to drive down their top 3 RPN numbers. In addition, Thomas Bus will recognize any action taken to reduce RPNs over 90 as Corrective Action. TBB will recognize actions taken to reduce RPNs below 90 as Preventive Action. When developed properly, the process flow chart and PFMEA are very effective tools for identifying potential failure modes in the process and preventing them from happening. Material Rejection and Corrective Actions If the supplier ships nonconforming products to Thomas Built Buses, the SQA department will place the material on hold and notify the supplier immediately. The initial contact will be by phone and E-mail containing a Supplier Corrective Action Request (SCAR) to the designated supplier contact person via supplier portal. Thomas Built Buses has simplified the Supplier Cost of Quality (SCOQ) system for defective supplier materials and products. It is Thomas Built Buses’ goal to present a consistent approach across the Supplier base and our various facilities. This consistent approach to SCOQ will include the following elements contained in the Supplier Corrective Action Request. SCAR processing fee of $250/Occurrence. 11 Damiler Trucks North America is a subsidiary of Daimler. All rights reserved Sorting, rework, and/or handling fees of $75/man-hr for actual time associated with defective components or assemblies. Reimbursement of initial shipping and replacement expedite fees. Customer assigned charges relating directly to Poor Quality, Line Stoppage, and Part Replacement. Internal assembly line loss of Productivity, overtime, and/or changeover relating directly to poor quality or late delivery at $75/man-hr. All SCARs that are not closed within 30 calendar days will result in a $250.00 late fee. The SCAR processing fee and associated charges will be applied to any bulk reject. If containment activity at Thomas Built Buses or Thomas Built Buses’ customer lasts more than 30 days for an individual issue, additional processing fees will be assessed for each 30-day containment period thereafter. The labor rate will apply to all labor used by TBB to manage, contain and control supplier poor quality components. Thomas Built Buses reserves the right to validate any SCAR activities at the supplier’s facility. Note: As of April 1, 2009 all sorting of nonconforming product will be done by the third party on-site representative. Suppliers will not be allowed to come in and do their own Skip Lot inspections. Supplier Support Requirements will be addressed in 24 hrs or less response time to address the following items: On-Site Sort and/or Rework with supervision Formal Corrective Action Response Return Goods Authorization Certified Replacement Stock The primary intent of the SCAR is to heighten the awareness of repeatable quality issues and to help drive the implementation of permanent countermeasures. As always, Thomas Built Buses will support the efforts your company is making towards these countermeasures. It is expected that a supplier will issue a Quality Alert whenever a SCAR is received. Within 48 hours of SCAR issue, the Quality Alert must be forwarded to TBB along with training records as evidence of containment activity. Note: SCARs issued for late delivery or Supplier Performance Scorecards are not subject to this containment evidence requirement. 12 Damiler Trucks North America is a subsidiary of Daimler. All rights reserved A Supplier Corrective Action Request form, with instructions, can be found in appendix B. The response required in the supplier portal must also be completed to close the SCAR in our system, as this is where the 30 day time limit is measured. In the event the supplier is not in agreement with the SCAR, there are rebuttal steps available. These are time sensitive and should be able to be supported by evidence: 1st Rebuttal: Contact the issuer as listed on the SCAR within 48 hours. If you do not receive a response within 48 hours or are unsatisfied with the response received, proceed to 2 nd Rebuttal. 2nd Rebuttal: Contact the SQA Team Leader within 7 calendar days. If you do not receive a response within 7 calendar days or are unsatisfied with the response received, proceed to 3rd Rebuttal. 3rd Rebuttal: Contact the SQA Manager within 14 calendar days. If you do not receive a response within 14 calendar days or are unsatisfied with the response received, proceed to 4 th Rebuttal. 4th Rebuttal: Schedule to present evidence at the bi-monthly SMC meeting. Contact your SQA representative to be worked into the agenda at the first available opportunity. The response received at this level is final. Thomas Built Buses Supplier Quality Assurance will not receive any materials or issue “paybacks” pertaining to Return Goods Authorizations (RGA). Suppliers are required to use disciplined problem-solving methods to investigate and eliminate the root causes of defective product. Corrective Actions are reactive in nature and deal with actions that keep a reported problem from happening again and dealing with extending the fix to similar products or processes. Thomas Built Buses requires the use of the Thomas Built Buses Supplier Corrective Action Report format initiated at the time of SCAR notification. The supplier response must include the following: Implementation of Containment Actions Implementation of Temporary Countermeasures Determination of Root Cause Implementation of Permanent Corrective Actions Verification of the effectiveness of actions taken For all Thomas Built Buses facilities, Suppliers are required to initiate containment activities within 24 hours or less upon SCAR notification. 13 Damiler Trucks North America is a subsidiary of Daimler. All rights reserved Documentation and Record Retention Sufficient documentation must be developed and kept to verify performance of all quality inspections, test, studies, plans and procedures. The data and related documentation should be distributed and used by the people responsible for or who may have input to the process. The following quality related data, records and procedures must be retained and kept for the life of the program (including service) plus 1 year except for those records relating to safety characteristics which must be retained for the life of the program + 15 years: Statistical Quality Data Inspection and Test Results Data All Initial Sample Data Corrective Action reports Receiving Inspection Information Control Plans / PFMEA / Flowcharts Quality Procedures and System Descriptions Written Inspection, Test and Lab Instructions Test Procedures These documents must be retained in such a manner that they can be made available to Thomas Built Buses within 24 hours of request. Change Approval Often, engineering changes or deviations are needed during production to meet customer requirements, improve quality or reduce cost. When this situation occurs, Thomas Built Buses suppliers must be prepared to secure necessary approvals prior to implementing the change in production. These include PPAP and Engineering approvals. The supplier will not make product changes or deviations, without prior written authorization from Thomas Built Buses Engineering Department Management. The supplier will be held liable for all direct or indirect problems from any unauthorized change. A Supplier Request For Change form can be found in appendix D. Any request for drawing change, process change or part deviation must be communicated in writing to the appropriate Thomas Built Buses buyer. The request should explain in detail, the requested change, the reason, the cost / savings and benefits. Requests may include, but are not limited to changes in: Manufacturing Location Material Processing Quality Control Techniques Sub-Suppliers Fixtures Gages Dies Tooling The request should include a qualification plan. The plan should include the reasons for the change so that Thomas Built Bus can understand the background scope, benefits [Quality, Cost, Delivery etc.] and implications of the change. This must include the additional special activities required to maintain quality and capacity / supply during and after the change period. The change documents shall also be used to confirm that the supplier has successfully implemented the change. 14 Damiler Trucks North America is a subsidiary of Daimler. All rights reserved Delivery Suppliers are required to achieve 100% on-time delivery (defined as required delivery date at Thomas Built Bus), in the open quantity (lot size) specified per Purchase Order requirements. Suppliers delivering less than 100% on time may be required to submit a corrective action plan to improve and meet the requirement. Suppliers will be responsible for all costs incurred by Thomas Built Bus as a result of late shipments. This could include a minimum charge of $250 for every unit where the part(s) is not available at the point of installation. If the supplier is unable to ship product as scheduled, a late shipment notification via E-mail & Phone communication must be sent to the suppliers’ designated TBB expediter / planner indicating the reason for the delay and the target date for supplying the product. Packaging and Shipping Guidelines Compliance to the Packaging and Shipping Guidelines is mandatory and will be continuously monitored. Noncompliance is subject to rejection by our receiving locations with charges for repackaging, or return shipment billed back to the shipping location. Recurring violations will be referred to the Thomas Built Buses Quality Assurance Departments for corrective action. Violations of this guideline will be deemed to be a non-compliance. Exceptions to the guidelines may be permitted in limited situations with prior written request to the receiving location. Revisions to current packaging must be tested and evaluated in cooperation with Materials Management. Supplier initiated packaging or cost improvement is encouraged, but must be reviewed and approved by the appropriate Thomas Built Buses Buyer and Materials Management. Although suppliers are required to ship parts in approved packaging only, there may be special circumstances where approved packaging is not available and alternate temporary packaging is required to meet order requirements. In these cases, Thomas Built Bus requires the suppliers to communicate via E-Mail and Phone all information on Non-Compliance 24 hours prior to shipment. This information should include: 1. Supplier Information a. Supplier Name b. Supplier Contact c. Contact Information 2. Part Information a. Part Number b. Part Description c. Purchase Order Number that the non-compliance packaging is to be shipped against 3. Reason for Non-Compliance This information should be remitted via E-Mail to the TBB planner. A complete packaging and shipping guideline can be found in the appendix. Preventative Maintenance Suppliers should identify key process equipment and tooling and develop an effective documented preventive maintenance system including: A set of documented preventive maintenance instructions or all inclusive procedure A Preventive Maintenance schedule Tracking and recall ability for scheduled PM events Availability of replacement parts for key process equipment. 15 Damiler Trucks North America is a subsidiary of Daimler. All rights reserved Process Controls The supplier is expected to establish, control and document production methods that will result in products that meet all Thomas Built Bus requirements. Controls should include documented procedures for inspection and testing activities to verify product conformance to specified requirements. These should be detailed in a quality plan or procedures and should include controls at receiving, in process and at final inspection. At receiving, controls should be in place to ensure that incoming product is not used or processed until it has been verified as conforming to specified requirements. In-process controls should be directed toward defect prevention methods such as Fool - Proofing (Poka Yoke), Statistical Process Control, limit samples and Process/set up verification. Related quality records should clearly show whether the product has passed or failed the required inspections and/or tests and should identify the inspection authority responsible for release of the product. Production methods should be documented using process flow charts and operator instructions. Thomas Built Bus reserves the right to request this documentation at any time. Dated Materials In order for Thomas Built Buses to provide the best quality product to our customers, guidelines have been established for all dated materials. We will not accept any material that has more than 50 % of its shelf life expired. The expiration date is required on all packing lists by part number. Provide the oldest expiration date by part if shipping material with multiple expiration dates. The expiration date must also be noted/labeled on the material’s container (each cartridge, drum, pail etc). We will not accept manufactured date only. 16 Damiler Trucks North America is a subsidiary of Daimler. All rights reserved TOS Thomas Built Bus has achieved many successes in recent years through the implementation of the TOS (Truck Operating System) tools. These tools help Thomas pursue and achieve our lean manufacturing objectives. Suppliers are being required to begin use of these tools, where they are not already doing so. It is important to note that suppliers are being encouraged to use their own lean processes, not necessarily duplicate those presented here. However, benchmarking of the TOS tools is encouraged where such processes are not currently in use. Whether in the TOS format or a supplier-driven format, there are six basic lean tools that are being required as of this time. Suppliers will be subjected to audit of these tools after a one year implementation period. The six basic lean tools presented here are as follows: Standard Work 5-S Team Boards Huddle Meetings Employee Suggestions As we continue to update the Supplier Quality Manual, we will add lean tools to the list for supplier implementation. In addition, we will be adding implementation of these processes to the Supplier Performance Scorecards. In time, we will be providing opportunities for suppliers to submit their own success stories for consideration to receive supplier TOS awards. On the following pages, very brief descriptions of the tools are presented. However, we encourage suppliers to contact TBB, visit our facilities, and receive hands-on training, implementation ideas and recommendations. Contact your SQA representative for more information, electronic copies of documents, and to arrange TOSrelated visits. 17 Damiler Trucks North America is a subsidiary of Daimler. All rights reserved Standard Work Definition Why important? When/where used? Responsibility End state vision Standard Work comprises a set of documents that define the current best working sequence for a process to insure operator safety, product quality, and process efficiency. This working sequence is centered around human movement in a manner that provides for high quality and continuous improvement through the elimination of waste. The three basic elements of Standard Work are 1)Takt Time/Cycle Time, 2) Sequence of steps, and 3)Standard Work In Process (SWIP). •Helps identify wasteful motion and effort. •Identifies potential hazards that may require special safety steps. •Controls quality at the point of installation. •Work processes become more predictable, repeatable and controllable. •Prevents over-production (see tool 5.1.2 –7 wastes) •It is the baseline for continuous improvement. •It is an important training tool for new team members. It can be used in any work area, work station, or process where the steps are definable and repeatable. It is updated whenever process improvements are made. Entire plant All Job tasks are documented as defined in Standard Work Documents. Tasks are balanced and Standard Work is regularly maintained by the team. 18 Damiler Trucks North America is a subsidiary of Daimler. All rights reserved Team Boards Definition A Team Board is a visual representation of all critical team-related information. It helps increase transparency on team issues and activities and provides an easy way to display team results. The Team Board is comprised of two parts: A team huddle board, which includes SQDCME performance metrics, and a team problem-solving board, where teams actively work on solving problems, devising action plans and developing solutions. Why important? A Team board provides a visual representation of team performance to targets and allows improvements and problem solving when targets are not achieved. It allows benchmarking and target-setting for teams. It increases the transparency of goals and goal achievement from corporate down to the team level—answering the question, “what does it mean to me?” When/where used? Team Boards should be used whenever a visual control is helpful in measuring team performance. (This includes both shop-floor assembly teams as well as functional support teams.) Responsibility End state vision Team members, team leaders, supervisors and managers Teams frequently update the information on their Team Boards and they feel a sense of pride in displaying their accomplishments and results on the board. They use their team board as a primary gathering place for discussing important issues, solving problems, making decisions, planning needed changes, communicating important information and measuring their performance. 19 Damiler Trucks North America is a subsidiary of Daimler. All rights reserved Huddle meetings Definition Why important? When/where used? To provide a standardized system for regular communication of events which occur between individuals, teams, OU/SU units and plant level. To clearly communicate information about the company, operating unit topics, and performance to agreed targets and goals. Meetings are structured and Documented. Employees to be provided with information about current company and departmental topics on a regular basis. Provides for regular communication both vertically and horizontally across the company, to provide transparency and critical data regarding KPIs. Improves the employees Identification with the company, encourages employees to play a key role in problem solving, thereby promoting continuous improvement. Develops an awareness of problems and strengthens the role of individual employees Elements of this tool are used daily, weekly, monthly, quarterly and annually Regular communication documents should be made available in the area and supplied in some format to absent employees Responsibility All participants in the production environment, including OU/SU, Direct and Indirect areas of the facility End state vision To ensure transparent communication between all groups at the manufacturing facility by use of recorded documents posted in a common location for all to access. 20 Damiler Trucks North America is a subsidiary of Daimler. All rights reserved 5-S Definition Why important? When/where used? Responsibility End state vision • The 5S Method is a foundation for safety and standardization that promotes repeatability and predictability by defining tasks that ensure an area is safe, clean, orderly and efficient. • All employees and management must be trained on the levels of 5S. Training must ensure 5S housekeeping audit scores reflect housekeeping in the plant • The five tools are Sort, Set in Order, Shine, Standardize and Sustain. • It promotes individual commitment and responsibility to a well organized work environment. • It enhances morale and safety. • It makes quality problems visible, reduces defects and raises quality. • It reduces waste and improves productivity. • Maintained daily on each shift • Verified at the start/end of each shift • Other regularly scheduled events • All DTNA personnel will use the tool. • Management, team leaders and team members will be responsible for the application of 5S within their workspaces. • A safe, clean, orderly and efficient environment, where everything has a place, will be sustained in all areas of the plant through the application of 5S principals. 21 Damiler Trucks North America is a subsidiary of Daimler. All rights reserved Employee Suggestions Definition The employee suggestion system is a method by which all employees are able to submit their work place improvement ideas and take action to implement the idea. It includes a process for considering the merits of each idea and its implications for implementation, and it provides employees with timely feedback on ideas submitted. This facilitates clearer communication between team members and management. Why important? It is an essential tool for tapping into the valuable knowledge and expertise of employees and teams. It provides team members an avenue for improving their jobs, work environment, and the company in general. Employee input, proper and timely feedback, and recognition are essential for building morale and pride. When/where used? The suggestion program is used throughout the year by team members who have ideas for improving a process, their job, their work environment, and safety. Suggestions can be derived at random or through the use of various TOS tools such as 7 Wastes, Problem Solving, Team Carried CI, to counter a negative performing team metric, etc. Responsibility End state vision Entire plant. The majority of suggestions are self/team implemented. Each team should have a suggestion board in their area so tracking and ownership become part of the team’s daily activities. The escalation of ideas through the process should be visual in order to bring attention the bottlenecks during implementation. Lead time from submission to implementation is minimal because suggestions are owned and implemented by the shop floor teams, minimizing delays due to unwarranted levels of approval. 22 Damiler Trucks North America is a subsidiary of Daimler. All rights reserved Supplier Report Card TBB will utilize a supplier Report Card to rate a select number of suppliers. The Supplier Report Card is a comprehensive, cross-functional, evaluation of a supplier’s quality performance. This rating is used to develop the supply base and improve the quality of a supplier’s product. It is also used to determine future business opportunities with a supplier. Note: Any yellow or red supplier is prohibited from quoting on new business until their score has reached an acceptable level. The supplier quality performance rating will be generated quarterly by Thomas Built Bus SMC (a cross-functional evaluation group) and forwarded to the supplier. Any supplier that is repeatedly on the Thomas Built Bus Top Ten Worst Suppliers List can expect to be notified by Thomas Built Bus SQA department to schedule a Quality System process audit. The following areas measure suppliers: Engineering Scheduling and Logistics Purchasing Quality Warranty An example of the Supplier Report Card can be found in Appendix A. In the event that a supplier does not agree with the scoring results, there is a rebuttal process available. This rebuttal should be supported with evidence: 1st Rebuttal: Contact the scorer for the functional area in question. If an agreement is reached that would result in score change, the scorer will contact SQA and have the score changed and the scorecard reissued. If you are unsatisfied with the response received, proceed to 2nd Rebuttal. 2nd Rebuttal: Schedule to present evidence at the bi-monthly SMC meeting. Contact your SQA representative to be worked into the agenda at the first available opportunity. The response received at this level is final. 23 Damiler Trucks North America is a subsidiary of Daimler. All rights reserved Third Part Sorting and Rework Thomas Built Bus understands that at times, the supplier may elect or be required to use a third party sort/rework service company to support Thomas Built Bus production. Expense incurred for third party services are the responsibility of the supplier. Contact your Thomas Built Bus SQA representative for a list of Thomas Built Bus approved certified third party sort/rework companies. A copy of the work instructions used during the sort or rework project will need to be maintained with the SQA representative as an official record. Skip A Lot Inspection Suppliers whose products are rejected in the Thomas Built Bus manufacturing process are subject to entering our Skip-A-Lot Inspection process. In this event, the supplier must contract with the selected Thomas Built Bus 3 rd party sorting organization to have their product inspected at Receiving Inspection per work instruction PWI-B 7.4.3-01. This heightened inspection must remain in place until the supplier has delivered five (5) consecutive defect-free shipments. The supplier will remain financially responsible for the quality of the products delivered to Thomas Built Bus. Failure to contact and issue a purchase order to the selected 3 rd party sorting organization within 24 hours will result in a flat rate of $500 per shipment charge to pay for heightened inspection until product is removed from Skip-A-Lot. Results of 3rd party inspection will be made available to the supplier. Note: All Suppliers in the top 100 are required to have an open purchase order on file with the third party sorting company (JA King) for a minimum of $1,000.00. As of October 2010, SCARs will be issued to those suppliers who choose not to observe this requirement. 24 Damiler Trucks North America is a subsidiary of Daimler. All rights reserved Warranty The supplied product is expected to perform free of defects for the life of the Thomas Built Buses standard warranty period. Suppliers are expected to sign a binding warranty agreement outlining the re-imbursement terms for warranty claims. A copy of the standard DTNA/TBB warranty agreement can be found in Appendix C. Thomas Built Buses processes warranty claims that come in from the dealerships. Each dealer is paid upfront and the parts are requested back if the supplier requires them. Thomas then debits the supplier for the claim and sends the parts to the Supplier. Suppliers with a signed warranty agreement have 45 days to respond and return parts to TBB with their findings. Suppliers without a signed warranty agreement have 30 days to respond and return parts to TBB with their findings. If the Supplier has tested the part and states that the part is not defective they must send Thomas the testing results and send the non-defective part back to Thomas Bus within 30/45 days depending on if they have an agreement or not. If a Supplier states a part is not defective Thomas Built Buses charges the dealer back for the claim. If a Supplier states a part is not defective and the dealer does not agree with the findings they have the option to appeal the chargeback. If Thomas receives an appeal from a dealer for a supplier chargeback Thomas will contact the Supplier and possibly request testing procedures from the Supplier. If there are still uncertainties the Supplier may be asked to come into Thomas and demonstrate their testing procedures. *Note Parts MUST be tested in a manner that duplicates it’s application on a school bus in use. Confidentiality All information shared with suppliers is considered confidential. Disclosure of any Thomas Built Buses confidential material, outside Thomas Built Buses, will be considered grounds for immediate supplier dismissal. Suppliers are expected to sign a binding confidentiality agreement. A copy of the Freightliner confidentiality agreement can be found in Appendix G. 25 Damiler Trucks North America is a subsidiary of Daimler. All rights reserved Appendix A – Supplier Report Card 26 Damiler Trucks North America is a subsidiary of Daimler. All rights reserved Top Performance (> = 95%) Acceptable Performance (90% - 94%) Caution - Watch (80% – 89%) Unacceptable Monthly Performance (< = 79%) Development Plan Required SUPPLIER PERFORMANCE REPORT SUPPLIER:______________________ MONTH: MONTHLY SCORE__________ ENGINEERING: 500 TECHNICAL SUPPORT AND PERSONNEL 150 TIMELY SUPPLY PRODUCTION REPRESENTATIVE PARTS/SYSTEMS 100 VALUE ADD / VALUE ENGINEERING 150 ABILITY TO PROVIDE CAD FILES, DRAWINGS, AND INSTALLATION INSTRUCTIONS 100 SCHEDULING AND LOGISTICS ON TIME DELIVERY WITH FLEXIBILITY TO MEET FLUCTUATING DEMAND PROACTIVE COMMUNICATION REGARDING ANY ISSUES OR CIRCUMSTANCES AFFECTING THE SUPPLY OF MATERIALS TO TBB PACKAGING AND SHIPMENT GUIDELINES 500 300 100 100 PURCHASING DEPARTMENT TIMELY RESPONSE AND PROGRAM MANAGEMENT FINANCIAL VISABILITY PRICE CHANGE ACTIVITIES CONTRACT MANAGEMENT 500 100 QUALITY ASSURANCE DEPARTMENT PPM LEVEL SUPPLIER CORRECTIVE ACTION REQUESTS PROACTIVE / ATTENDANCE / ISO 500 100 100 300 WARRANTY DEPARTMENT SUPPLIER SUPPORT ACKNOWLEDGEMENT AGREEMENT PART RETURN PERCENTAGE: REQUIRES PART RETURN FOR CORRECTIVE ACTION ONLY OF NON-CORE PARTS FOR FAILURE ANALYSIS, UNLESS FAILURE REPRESENTS SAFETY OR PRODUCT RELIABILITY QUALITY OF CLAIM RESPONSE SUPPLIER PRODUCT AND CUSTOMER SUPPORT RESPONDS TO CLAIMS WITHIN TIME GUIDELINES 500 150 20 100 40 50 150 100 50 26 Damiler Trucks North America is a subsidiary of Daimler. All rights reserved -------------------------------------------------------------------------ENGINEERING DEPARTMENT --------------------------------------------------------------------------Criteria Weight ------------------------------------------------------------------------------------------------------------------------------------------TECHNICAL SUPPORT AND PERSONNEL 150 Technical representative(s) are available when requested Responds to inquires in a timely manner Notifies TBB Engineering prior to making changes, in fit, form, function, or appearance TIMELY SUPPLY OF PRODUCTION REPRESENTATIVE PARTS/SYSTEMS Prototype parts for test are supplied in a timely manner Prototype parts are production representative in fit, form & function Durability tests or certifications are conducted prior to, or, coincidentally with TBB tests VALUE ADD / VALUE ENGINEERING 50 50 50 100 33 33 34 150 Involves TBB Engineering when developing new programs that affect or may affect TBB 50 Supplier offers support to enhance the value and/or reduce the cost of our products 50 Supplier offers support to reduce warranty conditions experienced by TBB products in 50 the first 36 months of service. ABILITY TO PROVIDE CAD FILES, DRAWINGS, AND INSTALLATION INSTRUCTIONS (answer only 1) 100 100 100 Provides 3D (STEP,IGES) and 2D (DXF) CAD data for supplied items. No 3D or 2D CAD communications are required of this supplier. 27 Damiler Trucks North America is a subsidiary of Daimler. All rights reserved --------------------------------------------------------------SCHEDULING AND LOGISTICS ---------------------------------------------------------------Criteria Weight ----------------------------------------------------------------------------------------------------------------------------- -------------ON TIME DELIVERY WITH FLEXIBILITY TO MEET FLUCTUATING DEMAND 10 Consistently meets our order due dates 0-100 Consistently delivers to our order quantities 0-50 Responds to all expedite requests (including short lead-time expedites) within 24 hour period 0-50 Quickly reacts to short lead time situations 0-50 Supplier agrees to pay expedited freight charges for past due orders 0-50 PROACTIVE COMMUNICATION REGARDING ANY ISSUES OR CIRCUMSTANCES AFFECTING THE SUPPLY OF MATERIALS TO THOMAS BUILT BUS Initiates notification to Thomas Built Buses of system changes, relocation, material shortages, supplier problems and capacity issues One informed contact person at each FOB point with emails and 1 backup person, which includes personnel changes that relate to piece part delivery. PACKAGING AND SHIPMENT GUIDELINES Shipments contain proper and accurate documents and packing slips with Information such as purchase order number, part number, line number of purchase order and quantity Responds to receiving issues within a 24 hour period Parts properly packaged to prevent damage or improper loading/handling Supplier complies with the Thomas Built Buses identification (barcode) and labeling requirements Supplier complies with Thomas Built Buses Returnable Packaging guidelines 10 0-50 0-50 5 0-20 0-20 0-20 0-20 0-20 28 Damiler Trucks North America is a subsidiary of Daimler. All rights reserved --------------------------------------------------------------------------PURCHASING DEPARTMENT --------------------------------------------------------------------------Criteria Weight ------------------------------------------------------------------------------------------------------------------------------------------PROVIDES TIMELY RESPONSE AND EXCELLENT SUPPORT 120 Administrative response ( RFQ’s, Price Files, Revision Changes, etc.) within the defined time 60 Supplier provides complete and consistent tool tracking sheets 20 Satisfies changeover process with accurate management of programs 20 Supplier gives TBB adequate notice of product change 20 FINANCIAL VIABILITY Maintains an open book policy (corporate financials, etc) Provides detailed price breakdowns and cost matrix as requested Provides accurate Raw Material Analysis, as requested 100 40 20 40 PRICE CHANGE ACTIVITIES TBB Backlog consideration before pricing implementation Pricing issues / changes communicated in writing to the buyer Pricing issues resolved diplomatically without supply chain interruption 100 40 20 40 CONTRACT MANAGEMENT LTA or Multi-year pricing agreement on record Participation in annual price down program 180 80 100 29 Damiler Trucks North America is a subsidiary of Daimler. All rights reserved --------------------------------------------------------------------------QUALITY ASSURANCE DEPARTMENT --------------------------------------------------------------------------Criteria Weight ----------------------------------------------------------------------------------------------------------------------------- -------------PPM LEVEL <100 100 101 – 500 75 501 - 1000 50 1001 – 2000 25 > 2000 0 SUPPLIER CORRECTIVE ACTION REQUESTS No SCARs issued All SCARs resolved within the defined time All SCARs resolved, not timely (2nd notice) Unresolved SCAR’s or repeat issues PROACTIVE / ATTENDANCE / ISO Quarterly visit or phone call to SQA ISO / TS certified Open PO on file with TBB’s Third Party Sorting Company Complete 1 Continuous Improvement activity per quarter and supply supporting documentation Copy of PFMEAs and Control Plans on file by part number PPAP or Updated PPAP’s on file by Part Numbers (1 per quarter as requested from TBB) 100 75 50 0 50 50 50 50 50 50 30 Damiler Trucks North America is a subsidiary of Daimler. All rights reserved --------------------------------------------------------------------------WARRANTY DEPARTMENT --------------------------------------------------------------------------Criteria Weight ----------------------------------------------------------------------------------------------------------------- -------------------------SUPPLIER SUPPORT ACKNOWLEDGEMENT AGREEMENT 150 Signed warranty agreement, no exceptions or exceptions that are approved 150 No signed warranty agreement 0 PART RETURN PERCENTAGE: REQUIRES PART RETURN FOR CORRECTIVE ACTION ONLY OF NONCORE PARTS FOR FAILURE ANALYSIS, UNLESS FAILURE REPRESENTS SAFETY OR PRODUCT RELIABILITY 50 No parts returned 50 Require parts to be returned 0 QUALITY OF CLAIM RESPONSE Provide diagnostic reports and evaluation of denials Denials are valid and give specific reasons for rejection 150 75 75 SUPPLIER PRODUCT AND CUSTOMER SUPPORT Does supplier support failure of their products and work with TBB Manufacturing, Engineering and Dealers/Fleets? Does Supplier visit TBB regularly to present corrective actions for denials? 100 100 RESPONDS TO CLAIMS WITHIN TIME GUIDELINES Supplier processes claims within 30 days from submit date for scrap or hold claims and 45 days from ship date with parts returned 50 50 31 Damiler Trucks North America is a subsidiary of Daimler. All rights reserved Appendix B – Supplier Corrective Action Request 32 Damiler Trucks North America is a subsidiary of Daimler. All rights reserved Date Reference # SW Updated No Point of cause Serial/Part# Activity in place 1st Who Attach copy of SW When Activity confirmed Training Matrix Updated 2nd 3rd Status Other Activity Effective Man Team Leader Why: Because: Why: Because: Because: Why: Why: Because: Why: Because: Machine Does the countermeasure include poke yoke? How? Supervisor Environment Material 5 Why investigation Who Root cause Serial # Step 8 Standardize and Share Success Sharing of information (Yokoten): Learning points and how shared with other areas? Step 7 Check both Results and Processes (Did I satisfy my customer?) Steps 5 & 6 - Identify and Implement Countermeasures Direct cause Cause investigation Direct cause X Potential direct cause Ok - Not related to this problem Items from C&E Brainstorming (above) Result Item How Checked Method Step 4: Cause & Effect (Brainstorming) & Root Cause Investigation Cause & effect (Brainstorming) A3 Practical Problem Solving Report Initial problem perception Team Members Step 1: Problem Identification (Size and Scope) Standard: Containment No Progress Activity identified Step 2: Divide and Process (confirm facts by observing the process) Status Key Yes Shifts Retrained 2nd 3rd Other Step 3: Goal Setting (set target(s) to take care of prioritized problem at POC) 1st Manager When Effect Status Damiler Trucks North America is a subsidiary of Daimler. All rights reserved 33 Appendix C – Warranty Agreement 34 Damiler Trucks North America is a subsidiary of Daimler. All rights reserved 35 Damiler Trucks North America is a subsidiary of Daimler. All rights reserved 36 Damiler Trucks North America is a subsidiary of Daimler. All rights reserved 37 Damiler Trucks North America is a subsidiary of Daimler. All rights reserved 38 Damiler Trucks North America is a subsidiary of Daimler. All rights reserved Appendix D – Supplier Change Request Form 39 Damiler Trucks North America is a subsidiary of Daimler. All rights reserved Supplier Request For Change Or Deviation Date Supplier TBB Part Number TBB Drawing Number Revision Submission Date Submitter Phone Number Name of Submitter Please Check All That Apply Request For Temporary Deviation Request For Engineering Change Detailed Description Of Request (Attach Marked Drawings / Photos As Necessary) Rationale Impact To Tooling, Fixtures, Processes or Cost (Supplier and TBB) Supplier Representative Signature TBB Purchasing Signature Notes 1. All entries and signatures are required. TBB Engineering Signature 2. Supplier should remit to TBB buyer for circulation. 3. Description and Rationale field should fully describe the change and the reason why the change is required TBB Quality Signature 4. Impact field should fully outline consequences of the change. 5. Upon completion of signatures the deviation TBB Manufacturing Eng. Signature and/or ECR process will be initiated. QSF-E 7.3.0-17 Revision Date 9/15/10 Rev. 0 40 Damiler Trucks North America is a subsidiary of Daimler. All rights reserved Appendix E – Confidentiality Agreement 1 CONFIDENTIALITY AND NON-DISCLOSURE AGREEMENT FOR PROPRIETARY INFORMATION THIS AGREEMENT is made and entered into between DAIMLER TRUCKS NORTH AMERICA LLC, including its subsidiaries, and __________________________. Recitals A. Each party has developed or may develop certain information which it considers proprietary and which may or may not constitute the basis of a patentable invention. B. For the mutual benefit of both parties, one party may wish to disclose such information to the other. Agreement Accordingly, the parties agree as follows: 1. For the purpose of this Agreement, "Proprietary Information" shall be defined as information, confidential phone numbers, access codes, passwords, drawings, specifications, financial information, data, graphs, letters, samples or other documents or materials which relate to that certain project or subject matter (Project) described on Attachment A attached hereto and incorporated by this reference and which either a) is in written form marked as proprietary or confidential by a stamp or other obvious written identification by the disclosing party prior to transfer, or b) is communicated in verbal or visual form and is designated as proprietary at the time of disclosure followed by a subsequent reduction to documentary form marked proprietary or confidential and submitted to the recipient within sixty (60) days of initial disclosure. 2. A party receiving Proprietary Information agrees to keep the same in confidence and not disclose it to any person or entity not a party to this Agreement, or to any employees or associates who do not have a "need to know" in connection with the Project, except that the Proprietary Information may be disclosed by a party to its affiliated companies, provided that such affiliated companies agree in writing to be bound by this Agreement. “Affiliated companies” shall mean any company directly or indirectly owning or controlling any party, or any company under the same direct or indirect ownership or control as any party, or any company directly or indirectly owned or controlled by any party. A party receiving Proprietary Information shall take reasonable precautions to ensure that the Proprietary Information is safeguarded against disclosure to unauthorized employees or third parties, and agrees not to use the Proprietary Information for any purpose, at any time, other than solely in connection with the Project. Page 1 - CONFIDENTIALITY AGREEMENT Mutual Confidentiality Agreement Version 2.1, Feb 05, 2008 2 3. It is agreed, however, that a party shall not be liable for disclosure of Proprietary Information if the same: a) b) c) d) e) f) g) is in the public domain through no fault of the receiving party; or is known to the receiving party at the time of the transfer; or is disclosed without restriction with express prior written approval of the disclosing party; or becomes known to the receiving party from an independent source having the apparent right to convey it; or is developed by the receiving party wholly independent of any Proprietary Information received hereunder; or is required to be disclosed pursuant to governmental or judicial process, provided that notice of such process is promptly provided to the other party in order that it may, in its discretion, intercede in such process to contest such requirement; or is disclosed by the receiving party after a period of five (5) years from the date on which the Proprietary Information is received by the receiving party. 4. The transfer of Proprietary Information hereunder shall not be construed as granting a license under any patent or patent application, or any right of ownership in the Proprietary Information. This Agreement shall not be construed in any manner to be either an indication of intent to or an obligation to enter into a future contract, agreement, subcontract, teaming agreement, or joint venture, or to result in any claim whatsoever by one party against the other party for reimbursement of cost for any effort expended. 5. The disclosing party may at any time request the receiving party, in writing, to promptly return to the disclosing party, or to promptly destroy, any or all documents or other materials containing Proprietary Information, and the receiving party shall immediately comply with any such request. 6. In the event of any dispute or breach under this Agreement, the prevailing party shall be entitled, whether or not any action or arbitration is instituted, to recover from the other party its reasonable costs, disbursements and attorney fees, including without limitation at trial, on appeal, on denial of any petition for review, and in connection with enforcement of any judgment. The parties acknowledge that the unauthorized disclosure of any Proprietary Information will diminish the value of the proprietary interests of the other party and cause irreparable harm. Accordingly, it is agreed that if either party breaches its obligations hereunder, the other party shall be entitled to equitable relief to protect its interests including, but not limited to, immediate injunctive relief, as well as monetary damages. Page 2 - CONFIDENTIALITY AGREEMENT 3 Mutual Confidentiality Agreement Version 2.1, Feb 05, 2008 7. This Agreement shall be governed by and construed in accordance with the laws of the state of Oregon. 8. This Agreement contains the entire understanding between the parties with respect to safeguarding of the Proprietary Information and supersedes all prior communications and understandings with respect thereto. This Agreement shall apply in lieu of and notwithstanding any specific legend or statement associated with any Proprietary Information transferred. IN WITNESS WHEREOF, the parties have caused this Agreement to be signed below by their duly authorized representatives. DAIMLER TRUCKS NORTH AMERICA LLC SUPPLIER By:_______________________________ By:_____________________________ Title:___Purchasing Agent____________ Title:__________________________ Date:_____________________________ Date:___________________________ By:______________________________ Title:_PUR Manager_________________ Date:_____________________________ Page 3 - CONFIDENTIALITY AGREEMENT Mutual Confidentiality Agreement 4 Version 2.1, Feb 05, 2008 5 Attachment A Description of Project: ________________________________________ ___________________________________________________________________ ___________________________________________________________________ ___________________________________________________________________ ___________________________________________________________________ ___________________________________________________________________ ___________________________________________________________________ Page 4 - CONFIDENTIALITY AGREEMENT Mutual Confidentiality Agreement Version 2.1, Feb 05, 2008 6 Appendix F – Packaging and Shipping Guidelines 7 PACKAGING & SHIPPING GUIDELINES 8 TABLE OF CONTENTS SECTION PAGE INTRODUCTION .............................................................................................. 2 1.1. Compliance ............................................................................................ 2 1.2. AIAG Guidelines ................................................................................... 2 2. PRIMARY CONTAINER REQUIREMENTS ............................................ 2 2.1. Selection of a Primary Container .......................................................... 3 2.2. Container Selection ............................................................................... 3 2.3. Container Sizes ...................................................................................... 3 3. INTERNAL PART PROTECTION REQUIREMENTS ............................. 4 4. PALLET REQUIREMENTS........................................................................ 4 5. UNITIZATION AND PALLETIZATION REQUIREMENTS ................... 4 5.1. Containment ......................................................................................... 5 5.2. Labeling and Stretch Film ..................................................................... 5 6. IDENTIFICATION AND LABELING REQUIREMENTS ........................ 5 6.1 Label Certification Process 6.2Barcode Symbology................................................................................. 5 6.3Label Size and Materials ......................................................................... 5 6.4Label Location ......................................................................................... 5 6.5Master Label ............................................................................................ 6 6.6Mixed Load Label.................................................................................... 7 6.7 Odd Size Shipping 7. TRAILER LOADING & TRANSPORTATION REQUIREMENTS ......... 7 7.1. Packing Slips and Bills of Lading ......................................................... 8 7.1a. Direct Shipments 7.1b. Consolidated Shipments 7.1c. Packing Slips 7.2. Trailer Loading and Line Sequence 7.3.Hazardous Materials ............................................................................... 9 7.4.International Shipments .......................................................................... 9 8. RETURNABLE CONTAINER PROGRAMS ............................................. 9 8.1. Expendable Packaging Backup ............................................................. 9 8.2. Combination Returnable and Expendable Packaging 8.3. Returnable Container Repair and Maintenance ..................................... 9 8.4. Segregation and Control of Returnable Containers ............................... 9 8.5. Returnable Container Stenciling Requirements ………………………10 9 1. INTRODUCTION The following packaging and shipping guidelines are required for all production materials entering a Thomas Built Buses facility. This revision becomes effective September 29, 2010. Developed in conjunction with AIAG standards, the packaging guidelines detailed below, are specific to Thomas Built Buses and may be directly applied to the AIAG standards. 1.1. Compliance Compliance to these guidelines is mandatory and will be continuously monitored. Noncompliance is subject to rejection by our receiving locations with charges for repackaging, or return shipment billed back to the shipping location. Recurring violations will be referred to the Thomas Built Buses Quality Assurance Department for corrective action. Violations of this guideline will be deemed to be non-compliance. Exceptions to the guidelines may be permitted in limited situations with prior written request to the receiving location. Revisions to current packaging must be tested and evaluated in cooperation with Materials Management. Supplier initiated packaging or cost improvement is encouraged, but must be reviewed and approved by the appropriate Thomas Built Buses Buyer and Materials Management. 1.2. AIAG Guidelines Thomas Built Buses supports compliance to the following Automotive Industry Action Group (AIAG) packaging standards for all production parts to Thomas manufacturing locations. Copies of these publications may be obtained by contacting the Automotive Industry Action Group (AIAG) at (248) 358-3570 or through their website: http://www.aiag.org. RC-8: Single and Multi-Use Container System Guidelines, 9/95. B-10: Trading Partners Labels Implementation Guideline, 3/00. 2. PRIMARY CONTAINER REQUIREMENTS The primary container will carry the part from shipping to assembly where it is presented to the operator. It must maintain part quality through transit and multiple handling. The package design is the supplier’s responsibility, and the supplier must ensure that the parts and all packaging shipments are received in acceptable (damage free) condition. The compression strength of the container(s) must support contents triple stacked up to 100” in height for maximum trailer density and storage. No ‘Top Load Only’ containers. Container(s) must be modular to the Thomas Built Buses standard 48”x 40” pallet footprint. No fill to overflowing, and not more than 2” less than pallet footprint on any side. A regulated quantity per bin (if defined by Thomas Built Buses) has to be observed. The unsupported bottom of the manually handled container must hold the weight of its contents. Large, mechanically handled bulk containers should be used for large, heavy parts with typically high release quantities. The container must be designed with sidewalls and a top cover that provides adequate compression strength to prevent sidewall bulging. 10 2.1. Selection of a Primary Container The appropriate size, strength and type of primary container must be chosen to support the mode of transportation, government and carrier regulations, part protection, transfer points and distance of travel. The determination must be made to pack the parts in a small, manually handled tote or a large, mechanically handled bulk container. Factors to consider in determining the primary container size include piece part weight, shipping/release quantities and presentation to the operator. 2.2. Container Selection Apply the finished piece part weight (lbs.) and the estimated shipping/release quantity to the matrix to determine classification into manually handled tote or a mechanically handled bulk container. Small, manually handled totes must not exceed 40 lbs. and should contain at least 10 parts. (Do not use this matrix for determining packaging for fasteners.) Piece Part Weight Estimated Shipping/Release Quantity 0 to 250 parts 250 to 500 parts 500+ parts <2 lb. Tote Tote Tote/Bulk 2 to 4 lb. Tote Tote/Bulk* Bulk >4 lb. Bulk Bulk Bulk *Part characteristics (size, volume, handling, etc.) to dictate container. 2.3. Container Sizes Acceptable primary container sizes will be modular to the standard 48”x 40” pallet footprint. The 48” x 45” footprint can be used due to part size and volume but must be coordinated through Thomas Built Buses. If it is necessary to deviate from the given primary container sizes, please contact Materials Management for approval. In general, the following matrix can be used to determine an appropriate primary container size for quotation. Length Width Height 48" x 40" x 10", 15", or 30" 24" x 10" or 20" x 10" or 15" 12" x 10", 20", or 40" x 10" 11 3. INTERNAL PART PROTECTION REQUIREMENTS Parts must be secured and protected in the primary container and be free of damage upon delivery. Internal dunnage must not restrict part presentation to the operator. Whenever possible, packaging should be such that dunnage is minimized and where necessary, paper-based dunnage must be used, . Complex logistics and/or economics may require the use of expendable internal dunnage. The supplier is responsible for the design, testing and replacement of the expendable internal dunnage. For part surfaces requiring plastic packaging materials, the material must be designed for recyclability and ease of segregation. All plastic packaging must be identified by resin type according to the symbology established by the Society of Plastics Industry (SPI). 4. PALLET REQUIREMENTS The pallet design is a critical element to assure overall package system performance and part quality. The Thomas Built Buses standard pallet is a 48”x 40”, wood pallet. If a unique size pallet is required, the pallet length should be sized to accommodate the part length while maintaining the 48” pallet dimension for proper trailer utilization. Pallets should be stamped on at least one side with the pallet’s overall footprint dimension. Pallets must not be smaller in length and width than the load it carries. All pallets must be of 4-way entry, double face, non-reversible, wood construction with a minimum of 3 ½” openings for forklift blades. All pallets must be able to support a 2800lb. load while triple stacked. Pallets must be new. The use of corrugated, salvage, and other pallet alternatives are prohibited unless investigated in cooperation with TBB Materials Management. 5. UNITIZATION AND PALLETIZATION REQUIREMENTS Pallet load containment must provide damage protection and optimum load performance with minimal environmental impact. Part damage and load shifts due to packaging failures are subject to rejection upon receipt at all Thomas Built Buses locations. Any and all expenses incurred, to include warehousing, storing, handling, reworking, repairing, and sorting of received damaged goods, as a result of load shifts due to packaging failures, will be expensed and charged back to the supplier. Unitization and palletization is required for all parts and should be designed to stabilize and complement the primary containers to prevent movement throughout the handling cycle. The unit load must be modular to the pallet and remain stable for material handling and storage after initial part access and removal. All containers must be properly palletized and secured to the pallet. Palletized cartons should be uniform in size to maintain load stability. Containers must be palletized in individual level layers on the pallet. No ‘pyramid’ unit loads. If material release quantities do not permit shipment of individual level layers of containers, alternative methods of containerization may be explored. Palletize by like part number. Mixed unit loads will be permitted for warehousing purposes but will not be allowed in the manufacturing facilities. Shipments must be marked as Package # of # (i.e.: 1 of 3, 2 of 3, 3 of 3). Multiple parts should not be mixed in the same box (only 1 part number per box); nor should different purchase orders be mixed within the same box of like parts. All packing lists should be together in one envelope attached to box/pallet #1. 12 5.1. Containment The preferred method of containment is either plastic, heat-sealed strapping of green polyester or stretch film. Plastic strapping and stretch film should secure the entire palletized load including the pallet. The use of unitizing adhesives for individual cartons is encouraged. Metal and nonmetallic bands with corrugated supports can be used as long as adequate support and stability of the load/shipment during transit is provided. Proper tension is allowed but not as to crush the container. 5.2. Labeling and Stretch Film When a unit load is stretch wrapped, a Master Label or a Mixed Load Label shall be adhered to the outside of the stretch film, visible to operators and readable for barcode scanning. This label is required for all stretch wrapped unit loads of single or multiple packs. This label may be removed with the stretch film making individual container labeling necessary as described in Label Size and Materials. 6. IDENTIFICATION AND LABELING REQUIREMENTS The Thomas Built Buses labeling process is based on the Automotive Industry Action Group’s AIAG Trading Partners Labels Implementation Guideline (B-10). The labeling instructions apply for proper addressing of parts and materials shipped or delivered to Thomas Built Buses locations. Suppliers must insure that all parts and material are correctly labeled and that the labels are properly attached. 6.1 Label Certification Process Each supplier will submit a label for approval. It will be sent to the TBB Planner for certification. The label will be reviewed and tested for compliance. It must receive a grade of “c” or better on a verifier. If any corrections are needed, the supplier will be notified of a problem and required to resubmit a revised label. Once the label passes all reviews and tests, the supplier will be notified of their compliance. No special characters should be permitted such as (/, $, +, %). 6.2. Barcode Symbology Bar codes shall be the Code 128 symbology and .5” high or better. 6.3. Label Size and Materials The required label size is 4 inches high by 6 inches wide,with bold black ink. The label paper shall be white with bold, black printing, no colored labels or colored inks will be allowed. Adhesive labels can be pressure sensitive or dry gummed as long as adherence to the container is assured, application is wrinkle free, and only used for expendable packaging. 6.4. Label Location Identical labels should be located on two opposing sides of each container. The upper edge of the label should be as high as possible on the container. For multiple containers on a pallet, a Master Label or a Mixed Load Label should be visible on opposing sides of the pallet. For multiple containers of different part numbers on a pallet (Mixed Load): A Mixed Load Label should be visible on opposing sides of the pallet. A Master Label (totaling the quantities of each part number) should be visible on the pallet. Identical labels should be located on two opposing sides of each container on the pallet. Labels for mixed loads should be visible for proper presentation to the operators. For drum and pail labeling, labels should be visible on the side and top of the containers. 13 65.5 Master Label A Master Label shall be used to identify the total contents of a multiple single pack load of the same part number. The label shall be placed on the unit load in such a manner that when the unit load is broken apart the label is discarded (ex. Attach to outside of stretch wrap). See AIAG-B for further information. THOMAS BUILT BUSES, INC. Part Number Block Title = PART # CUST (P) Data = The Part Number as designated by Thomas Built Buses. Data Identifier (DI) = P Maximum Length = 19 (1 character DI + 18 alphanumeric characters) No hyphens, No spaces. Packaging and Shipping Label Detailed Outline QTY (Q) (K) Block Title = PO # Data = Purchase order # for the part, assigned by Thomas Built B. Data Identifier (DI) = K Maximum Length = 8 (1 DI character + 1 Space + 7 alphanumeric characters) 48 PART NUMBER DESCRIPT ION B 44226 MFG DATE KB 4 4 2 2 6 LOT / SERIAL # OR SERIAL # RANGE (T) 716283 T7 1 6 2 8 3 EXPIR AT ION DATE 02/18/02 12/09/03 SHIP FROM ACME PARTS SUPPLIER 12345 Street City, State ZIP (888)555-1212 SHIP TO TBB DOCK # SUPLR ID CUST ASGN (V) Manufacture Date Expiration Date Block Title = MFG DATE Data = Date the Part(s) were Manufactured by the Supplier. Text Height = Minimum 2 LPB Max.Length = 8 characters. Block Title = EXPIRATION DATE Data = Latest Date the Part(s) can be Effectively Used. If Part(s) are not date sensitive, put N/A in this field. Text Height = Minimum 2 LPB Maximum Length = 8 characters. 56 4 K5 6 W1686 V W1 6 8 6 2 Part Traceability Block Title = LOT/SERIAL # OR SERIAL # RANGE (T) Data = Supplier assigned unique Production Batch or Lot Number. Data Identifier (DI) = T Maximum Length = 12 (1 character DI + 11 alphanumeric characters) LINE# (4K) TBB Dock Destination Block Title = SHIP TO TBB DOCK # Data = TBB Dock # where parts are to be delivered. Label Color = Paper shall be white with bold black printing. Label Location = Attached to two adjacent sides of shipping box. Label Size = Height 4” by Width 6”. Barcodes = Must be 128 Symbology. No check digits allowed. Part Revision Level Block Title = TBB REV. LEVEL Data = Thomas Built Buses Engineering Drawing Revision Level to which these parts were manufactured. Text Height = Minimum 2 LPB *Charact ers in bold print should be human readable text. Part Number Description LIGHT-TURN SIGNAL AMBER ARROW LENS Q4 8 PO# (K) Purchase Order Number B P2 2 0 2 1 3 7 2 Quantity of Pieces Block Title = QTY (Q) Data = The number of pieces in this shipping box. Data Identifier (DI) = Q Maximum Length = 7 (1 character DI + 6 characters) Note: Unit of measure assumed as EACH. Any other unit of measure must be readable next to barcode. TBB REV. LEVEL 22021372 PART # CUST (P) Labeling Instructions Supplier Information Block Title = SHIP FROM Data = Name, address and telephone number of supplier to be used for problems or questions. Text Height = Minimum 5 LPB Maximum Length = Maximum 5 lines of text, no more than 25 characters per line. Block Title = PART NUMBER DESCRIPTION Data = Part description as defined by Thomas Built Buses. Text Height = Minimum 3 LPB Maximum Length = Maximum 2 lines of text, no more than 20 characters per line. Line Number Block Title = LINE# (4K) Data = The line number of the part on the Purchase Order assigned by Thomas Built Buses. Data Identifier (DI) = 4K Maximum Length = 5 (2 characters DI + 3 characters) Supplier Identification Block Title = SUPLR ID CUST ASGN (V) Data = The Supplier Code assigned your company by Thomas Built Bus. Data Identifier (DI) = V Maximum Length = 8 (1 character DI + 7 alphanumeric characters) NOTE: Not to scale. For correct measurements and additional informatio n, see the AIAG B-10 Guideline. April 24, 2002 14 6.6. Mixed Load Label Mixing of part numbers on a pallet is discouraged but may be unavoidable due to low order quantities and/or shipping/handling expense. In these limited circumstances, a Mixed Load Label shall be used to identify a load of multiple single packs of different part numbers. Note: Mixed loads are required to have a Master Label of each individual part number on the unit load. The label shall be placed on the unit load in such a manner that when the unit load is broken apart the label is discarded (ex. Attach to outside of stretch wrap). See AIAG-B for further information. In a mixed load situation, individual box labels should be visible to the operator without disbanding the unit load. Thomas Built Buses, Inc. Supplier Label Example (2/20/02) 6” 4” MIXED LOAD Label to be applied to (2) sides of any container / pallet of material that contains more than (1) part number. 6.7 Odd Size Shipping Shipments of other kinds may require different forms of labeling or hang tags with adhesive labels. -Drums, barrels or cylinder containers- Identical Package labels shall be located on the top and near the center of the side. -Rack or Open Metal Bin– Place Label on label plate provided. -Single Coil or Roll – Attach Package label with wire metal hang tag on both inside and outside of coil. -Tubing and Bars/Bundles – Attach Packaging label with wire metal hang tag on each end. 7. TRAILER LOADING AND TRANSPORTATION REQUIREMENTS The Thomas Built Buses Traffic Department will designate the most economical mode of transportation consistent with the nature and the volume of the parts. Supplier specific Routing Instructions must be obtained from the Thomas Built Buses Traffic Department. The transportation mode may influence the type and size of the packaging selected. It is the supplier’s responsibility to efficiently and economically pack the material for the method of transportation and type of handling planned for the final destination and its intended point of use. The supplier is responsible to insure that: Unit loads are properly loaded, blocked, and braced for shipment. Void space is filled to prevent load shifting in transit. 15 7.1 Packing Slips and Bills of Lading Packing slips and bills of lading, whether direct shipment or shipments through a consolidation point, must be submitted with every shipment. 7.1a Direct Shipments Direct shipments moving from a shipping point to a destination plant must include packing slips prepared in duplicate. One copy of the packing slip is to be firmly attached to the outside of one of the containers in shipment. The second copy should be tendered to the carrier along with two copies of the bill of lading, 7.1b Consolidated Shipments Partial loads moving from a shipping point through a consolidation point for delivery to a destination plant must include packing slips prepared in sets of four. One copy of the packing slip should be firmly attached to the outside of the containers in shipment, The other three copies should be tendered to the carrier along with two copies of the bill of lading. The bill of lading should indicate that the packing slips are to be delivered to the consolidator at the time of delivery. 7.2 Packing Slips All packing slips must include the following information; Supplier Information 1. Supplier Name and Address (Ship point not billing office) 2. Vendor Code/ID 3. Packing Slip Number 4. Date Shipped Shipping Information 1. Ship to: TBB Plant, TBB location code and address 2. Bill to: TBB Plant, TBB location code and address 3. Gross, tare and net (material) weight 4. Shipped Via (routing as instructed by TBB Traffic Dept). 5. Bill of lading number 6. Freight terms (F.O.B. point, collect prepaid) 7.LTL shipments include PRO Number. 8. AIR shipments include AirWay Bill Number 9. Full Truck Load or Intermodal shipments include Trailer Number or Container Number and Carrier 10. Shipment identification(SID) Number (SID# - same that is sent on the Advanced Shipping Notice and Invoice) Packaging Information 1. Number of unit loads: pallets, containers, cartons, etc. 2. Pieces per unit load 3. Unit of measure (if other than pieces per unit load) Item Information 1. Purchase Order (PO) Number 2. PO Line Number 3. TBB Part Number 4. Ship Quantity (Unit of measure if other than each – ie, ft, lbs, etc.) Note: The SID number should be clearly marked as “SID Number”. The part numbers are to be listed in Alpha/Numeric order. Each unique part number should only be listed once, with total quantity, 16 7.3. Trailer Loading – Line Sequences Supplier must load the materials with the highest Bus Body number start date at the front or nose of the trailer whereas the materials with the lowest Bus Body number shall be loaded at the rear of the trailer adjunct to the trailer doors. Pallets with more than one Customer Order and Bus Body number should be loaded with the highest Bus Body number on the bottom and the lowest Bus Body number on the top. This method will facilitate the material being unloaded, as it is required on a Just-in-Sequence basis to support the manufacturing operations and minimize the material handling. 7.4. Hazardous Materials The packaging of hazardous materials must follow relevant regulations of the U.S. and Canadian Departments of Transportation, which prescribe the proper method of classification, packaging, marking and labeling of each shipment. Furthermore, where other federal, state, provincial or local standards and/or regulations are in effect, the packaging and labeling must comply. 7.5. International Shipments Shipments from international suppliers will be directed through the Thomas Built Buses approved custom brokerage facilities. The supplier is required to supply all regulatory documentation. 8. RETURNABLE CONTAINER PROGRAMS Thomas Built Buses uses containers to support a lean manufacturing system. The use of returnable containers for shipping parts to Thomas Built Buses locations must be negotiated as part of the agreement to supply parts to Thomas Built Buses. Returnable container overages or shortages must be brought to the attention of Thomas Built Buses Materials Management for resolution as well as any anticipated changes in volume that may impact an existing returnable container pool. 8.1. Expendable Packaging Backup Suppliers involved in a returnable container program must maintain a sufficient supply of suitable expendable packaging to be used for expedited shipments, production pilot programs, returnable container shortages, and/or plants not participating in returnable container programs for that part. The backup expendable packaging should be identical in dimension and density to the returnable container. 8.2 Combination Returnable and Expendable Packaging Complex logistics and/or economics may require the use of a returnable container with expendable internal dunnage. TBB will supply the returnable containers for the program, the supplier is responsible for the design, testing and replacement of the expendable internal dunnage. 8.3. Returnable Container Repair and Maintenance Suppliers are responsible to ensure that all returnable containers are in good working order and repaired when required. Contact Thomas Built Buses Materials Management for the proper procedure for repair and maintenance. It is the supplier’s responsibility to inspect all returnable containers prior to loading to ensure that damaged equipment is not used. The cost of damaged parts resulting for a supplier’s inability to properly secure parts in returnable containers for shipping will be charged back to the supplier. Report any signs of repetitive ‘abuse’ to the Thomas Built Buses Quality Assurance Department. 43. Segregation and Control of Returnable Containers Thomas Built Buses owned containers must be segregated from other containers and must be used for Thomas 17 parts only. Thomas Built Buses owned containers are supplied for containerization and shipping of specific, finished parts to Thomas locations. Transport, storage, or shipment of non-finished parts is strictly prohibited and may result in container loss or shortage. 8.5 Returnable Container Stenciling Requirements: Thomas Built Buses owned containers must be identified as follows; 1. Stencil onto each rack, “Property of Thomas Built Buses”. 2. Thomas Built Buses will specify the rack identification numbering scheme. 18 Appendix G – LTA (Long Term Agreement) 19 LONG TERM AGREEMENT THIS SUPPLY AGREEMENT (“Agreement”) is made and entered into effective as of ___________________, by and between Thomas Built Buses, Inc. (“TBB”) and _________________________________ (“Supplier”). 1. Purchase and Sale of Products 1.1 During the term of this Agreement, Supplier agrees to sell to TBB and TBB agrees to purchase from Supplier the products as more particularly described on Exhibit A attached hereto and by this reference incorporated herein (the “Products”) as ordered from time to time by TBB. 1.2 Supplier shall allocate sufficient production capacity to assure that all of the orders of TBB as submitted from time to time are met and shall give TBB priority over all other customers of Supplier to fulfill one hundred percent (100%) of TBB’s orders in the event of a supply allocation. 1.3 The provisions of this Agreement are supplemental to, and not in lieu of, the specifications, prices, and terms and conditions of the standard TBB purchase contract which shall be issued each year and include the then current TBB standard terms and conditions of purchase, in substantially the same form as is attached hereto as Exhibit B. All prices and terms and conditions of such documents and agreements, including related drawings and specifications, are fully incorporated by reference in this Agreement and, except as specifically supplemented or altered by this Agreement, shall fully apply to all purchases. In the event of a conflict between the terms and conditions of this Agreement and any such document or agreement then in effect, the terms and conditions of this Agreement shall control. 1.4 Supplier shall not have the right to demand that a certain quantity of Products be purchased. In particular, no such right shall be derived from the forecast quantities notified to Supplier by TBB. 2. Term of Agreement This Agreement shall remain in effect for a period commencing on the effective date hereof and ending on _____________________, unless it is terminated earlier as provided herein. 3. Pricing 3.1 Supplier’s prices for the Products shall be as set forth in Exhibit A. 3.2 The contracting parties shall enter into negotiations about a suitable adjustment of the prices if the parties develop potential cost reduction opportunities. If Supplier shifts its production to a lowercost production site, it shall comply with the initial sample report procedure (PPAP). 20 4. Competitive Requirements Supplier will remain competitive with respect to the Products in terms of quality, technology, price and delivery with any supplier of the same or similar goods during the term of this Agreement. Should another supplier demonstrate technology which yields similar goods of equal or better quality, performance or lower price to TBB during the course of this Agreement, TBB may notify Supplier in writing of such technology and request that Supplier replicate such technology to the advantage of TBB, provided that such replication would not violate any proprietary rights of any other party. Written notification to Supplier shall be accompanied by whatever information is available to TBB regarding such technology which is not proprietary to TBB or any other party and which TBB is not prohibited from disclosing so that Supplier may evaluate the viability of the proposal. Supplier shall have sixty (60) days after receipt of notice to make the Products competitive and available for delivery. If Supplier is unable to make the Products competitive within such period without violating the proprietary rights of any other party, TBB may immediately terminate this Agreement for cause as set forth below, such period having constituted the applicable cure period. 5. Financial Information Supplier shall provide TBB annually with its audited financial statements immediately after they become available to Supplier. Upon written request Supplier shall also provide to TBB such interim, internal financial statements that would be made available to any other customer of similar magnitude. TBB shall have the right to receive upon request copies of Supplier’s records related to the costs associated with manufacturing the Products or to review such records at Supplier’s offices or manufacturing locations at any time during normal business hours. TBB has the right to terminate this Agreement should the Supplier’s financial condition deteriorate to a level adding unnecessary risk to the Supplier’s ability to perform in accordance with this Agreement. 6. Aftermarket and Service Requirements Products currently in production or placed into production during the period of this agreement and sold by Supplier for the repair or replacement market shall be priced at the level specified in this Agreement for production parts plus any incremental costs associated with packaging. Supplier shall maintain availability of the Products for repair or replacement market requirements for a minimum of 20 years (25 years if the part is used for fire truck and apparatus or school bus chassis) following cessation of production use of each Product. Products shall be priced for the repair or replacement market at the original production price level for a period of not less than three (3) years after the date of last use in production. This Section shall survive termination of this Agreement for any reason. 7. Notices All notices required or permitted to be given under this Agreement shall be in writing and shall be deemed given upon personal delivery, by facsimile with confirmation of receipt, by overnight carrier with confirmation of delivery, or upon the expiration of the second day after the date of deposit in the United States mail as registered or certified mail, return receipt requested, postage prepaid, addressed to the parties as follows or their then current address if notice of such change of address has been given pursuant to this Section: 21 If to TBB: Purchasing Manager 1408 Courtesy Rd. High Point, NC 27260 If to : With Copy To: Daimler Trucks North America LLC General Counsel 4747 N. Channel Ave. Portland, Oregon 97217 FAX NO: 503-745-5999 8. Counterparts This Agreement may be executed in one or more counterparts, each of which may be deemed to be an original instrument, but all of which together shall constitute but one instrument, and only one set of rights, duties and obligations shall arise therefrom. 9. Final Agreement; Modification; Savings Clause This Agreement is the final and entire agreement of the parties with respect to the subject matter and supersedes all prior or contemporaneous oral or written communications or agreements between the parties. It shall not be modified in any way except in a writing signed by the parties which expressly states that it is an amendment to this Agreement. If any provision of this Agreement shall become less than fully operative, the remaining portion thereof and all other provisions of this Agreement shall, nevertheless, remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have caused their duly authorized representatives to execute this Agreement as of the date first above written. ___________________________ Thomas Built Buses, Inc. By: ________________________ By: ________________________ Name: _____________________ Name: ______________________ Title: ______________________ Title: _______________________ By: _________________________ Name: ______________________ Title: _______________________ 22 EXHIBITS Exhibit A: Exhibit B: Products and Purchase Price Terms and Conditions of Purchase 23 1. PURPOSE This guide outlines the safety and environmental procedures governing the administration of contracting work to be done on Thomas Built Buses (TBB) facilities. This guide does not apply to routine maintenance of telephones, office equipment, temporary office help, cafeteria operations, or other similar services. If any contract employee is working on TBB property without meeting the conditions of this program, the contract employee will immediately be removed from the worksite and will not be permitted to re-enter the worksite until the conditions of this program have been satisfied. 2. SCOPE This guideline applies to contract personnel working at TBB facilities. 3. DEFINITIONS 3.11 TBB Representative: The designated representative is responsible for managing and coordinating the project with the contractor. (Typically this is Maintenance, Facilities Engineers, Manufacturing Engineers, Industrial Engineers, etc.) 3.12 Contractor Entry Form: This form should be completed by the TBB representative and forwarded to the Safety Manager. 3.13 TBB C/V/S Environmental Orientation & Acknowledgment Sheet. This form is a part of the Contractor, Safety, Health and Environmental Program document. It must be filled out by Contractor with all relevant information as specified on the form. This form is to be sent to the Safety Manager along with the signed Contractor Safety Training Acknowledgment Form. 3.14 Asbestos Notification: This letter must be signed by the contractor representative after receiving the Positive Asbestos Containing Building Material Matrix. Forward the signed form to the Safety Manager. 4.0 RESPONSIBILITY 4.1 TBB Representative 4.11 Review the TBB Contractor Safety, Health, and Environmental Program guidelines with the contract representative prior to the commencement of work. 4.12 Receive the Training Acknowledgement Form signed by all contract employees working on site and forward to the Safety Manager. 4.13 The TBB representative is responsible for completing a Contractor Entry Form. 4.14 The contractor must provide a roster of employees working on the project and a list of all major equipment (i.e., forklift, scissors lift, welder) the contractor will bring onto TBB property. Attach the personnel roster and the list of equipment to the Contractor Entry Form and forward it to the Safety Manager upon completion. 4.15 Receive Material Safety Data Sheet (MSDS) for each chemical the contractor will use or bring on company premises. Forward these MSDS’s to the Safety Manager prior to the commencement of work. 4.16 The TBB representative is responsible for having the contractor representative sign the TBB Asbestos Notification Form and issuing a copy of the Positive Asbestos Containing Building Materials Matrix. This signed form is to be forwarded to the Safety Manager. 24 4.2 4.21 4.3 Contract Employees Prior to the commencement of work, the TBB representative will issue a copy of the TBB Contractor Safety, Health and Environmental Guidelines to the contractor. The contractor is responsible for reviewing these guidelines with all employees who are listed on the roster of personnel. Each contract employee must sign the Training Acknowledgement Form that is located at the end of this training document. This form should be returned to the TBB representative and forwarded to the Safety Manager. Environmental Department 4.31 Retain the MSDS for each chemical the contractor uses on the premises. 4.32 4.4 4.41 Inspect the work being performed to ensure compliance with both state and federal regulations and appropriate TBB environmental standards. Safety Department Inspect the work being performed to ensure compliance with OSHA regulations. Review hot work permits, lockout procedures, and review confined space entry permits in accordance with TBB safety guidelines. 25 TBB Contractor Safety, Health, and Environmental Program Guidelines Purpose To provide general Safety, Health and Environmental guidelines for contractors and vendors. Scope This guideline applies to all personnel working on TBB’s property General Environmental, Safety and Health Rules 1. Safety glasses with side shields (ANSI Z87.1) shall be worn at all times in the manufacturing facilities. 2. Hearing protection shall be worn at all times in designated areas. 3. If you discover an “at-risk” condition such as a fire, chemical release, hazardous waste spill, immediately contact the switchboard by entering “0” on any facility phone. Explain the situation and ensure that the following individuals are contacted: your TBB representative, Facilities Manager, Safety Manager, Environmental Manager, and Plant Nurse. 4. Under no circumstances are contractors allowed to enter any confined spaces without approval of the safety department. 5. If contract employees experience occupational exposure to human blood or other body fluids they must report the incident immediately to their TBB contact, Safety Manger, or Plant Nurse. 6. Material Safety Data Sheets (MSDS) must be submitted to the TBB contact for each chemical being brought on site by the contractor. 7. Contract employees performing maintenance or service work on machinery or equipment must follow OSHA 1910.147 for the control of energy. TBB will use the lockout and tagout portion of the standard. 8. All hot work permits are issued through the Maintenance supervisor for Plant #1, 5, 6, 7, 10, the LLC, and C2. The Supervisor for department #29 is responsible for issuing hot work permits at Plant 2. The General Foreman is responsible issuing hot work permits for Plant # 9. Hot work is defined as any welding, cutting, sawing, and grinder or other spark or heat producing operation. (Contractor, Vendor, Supplier Copy) 9. Asbestos warning signs are posted in each custodial closet and maintenance areas. Contractors are required to sign and acknowledgment letter that they have received a copy of the TBB asbestos notification. This notification outlines the presence, location, and quantity of asbestos. 10. The contractor is responsible for ensuring full compliance with both state and federal regulations and appropriate TBB safety and environmental standards. 11. Each contractor must provide properly designated and maintained equipment meeting applicable standards, codes, and regulations. 12. Only properly trained and authorized employees shall be permitted to operate and or use equipment. For example, all forklift drivers must have current forklift license for the model they are operating. 13. When working in an aerial lift, all individual in the basket must wear body harness and be properly tied off. 14. Makeshift equipment such as a chair or box instead of a ladder is prohibited. 15. Climbing on storage racks is prohibited. 16. Only authorized personnel shall work on electrical equipment such as electrical panels or other similar equipment. 17. Do not store or eat food where there is the presence of hazardous materials. 18. Guarding proved with machinery shall always be properly adjusted and used while machinery is in operation. 19. There shall be “NO SMOKING” in any building. 20. Compressed air shall not be used to clean off clothing or any part of the body. 21. All container of hazardous material shall be properly identified and labeled. If there are any questions on how to handle or where to store hazardous waste that is general, call the Environmental Manager to x-6507. 22. Aisle and exits shall be kept clear at all times. 23. Any safety and environmental violations must be reported to the TBB representative, Safety Manager, and Environmental Manager. 24. Any TBB representative will stop work if a safety hazard is observed. Work may resume after the hazard has been eliminated. If work is stopped for safety reasons, the safety manager shall be notified. 25. TBB reserves the right to remove and forbid any person from reentering company premises whom may be considered a safety risk. (Contractor, Vendor, Supplier Copy) 26. If, for any reason, it becomes necessary for a contract employee to be removed from TBB premises, the Contractor must notify the TBB representative, Safety Manager, and Environmental Engineer. 27. All accidents involving injury/death of contract personnel must be investigated immediately. The contractor is responsible for conducting the investigation, assisted by the TBB representative, and Safety Manager. 28. No open-toed shoes or sandals are permitted in the manufacturing facilities. 29. No shorts, crop pants, capris pants, or ankle pants are permitted in the manufacturing facilities. Pants, uniforms, coveralls, etc. must be ankle- length. (Contractor, Vendor, Supplier Copy) TRAINING ACKNOWLEDGEMENT FORM Contractor Safety, Health and Environmental Guidelines Company Name: ______________________ Name of Employee Employee Signature 1. 1. 2. 2. 3. 3. 4. 4. 5. 5. 6. 6. 7. 7. 8. 8. 9. 9. 10. 10. 11. 11. 12. 12. 13. 13. 14. 14. 15. 15. 16. 16. 17. 17. 18. 18. 19. 19. 20. 20. (Forward This Form to Safety Manager) CONTRACTOR ENTRY FORM Date: ______________________________________________________ Company Name: ______________________________________________ Company Contact: _____________________________________________ Phone Number: ________________________________________________ Work to be Completed:__________________________________________________________________________________________ ___________________________________________________________________________________________________ __________________________________________________________________________________ Start Date: _______________________________ Completion Date: _________________________ TBB Representative: ____________________________________________ Phone Number: ________________________________________________ TBB representative has reviewed the TBB safety guidelines with contractor representative: ______ YES ______ NO Attached Training Acknowledgement Form for all employees listed on the contractor list of employees: ______ YES ______ NO Attached roster of personnel: ______ YES ______ NO Attached list of major equipment: ______ YES ______ NO Attached Full Disclosure MSDS’s: ______YES ______ NO (Forward this Form to Safety Manager) THOMAS BUILT BUSES CONTRACTOR/SUPPLIER/VENDOR ENVIRONMENTAL ORIENTATION & ACKNOWLEDGEMENT SHEET Thomas Built Buses has instituted an Environmental Management System (EMS) that complies with ISO 14001. Part of that process involves telling you about our Environmental Policy and your part in helping us to conform to our policy and the ISO standard. Environmental Performance involves EVERYONE internal and external to the plant! CONTRACTOR/SUPPLIER/VENDOR ENVIRONMENTAL REQUIREMENTS Identify, Understand, and Comply with the Environmental Requirements of Your Activities Environmental Policy Thomas Built Buses is committed to manufacturing our vehicles in an environmental responsible manner. We will do this through: Total Compliance with all environmental laws; Heightened understanding of the views and needs of our internal and external stakeholders; Optimize on environmentally advanced product and process design; Maintain continuous improvement of environmental performance; Achieve reducing our impact on the environment through pollution prevention; Setting and achieving environmental goals Material and Waste Management When working at Thomas Built Buses, you are responsible for the care, control, and management of your materials and wastes - including the prompt off-site disposal of your wastes in accordance with applicable legal requirements. Do not put any liquid product or waste onto the ground or in a drain, sump, or trench. Label all containers. Containers not labeled cannot be used on site. Keep containers of liquid product or waste materials closed or covered at all times when not in use. Properly segregate wastes from other materials. Provide secondary containment for fuel tanks and any other tanks holding liquids. Training Each contractor, supplier, vendor that attends our C/S/V training must be able to show that its on-site employees (including subcontractors at all levels) have the appropriate training (including EMS awareness) and licenses/permits (if required) for the work to be done. Spills, Leaks, or Other Emergencies In the event of an emergency, tell your supervisor or call switch board IMMEDIATELY at “0” if using on-site phone OR if using an outside line 336-889-4871. If in doubt about any environmental matter, get the right answer by asking your plant contact, or by calling the plant’s Environmental Manager, at 336-881-6507. ACKOWLEDGEMENT of TRAINING Name: _______________________________ Contractor Signature: ____________________ Company: ___________________________ Date: ___________________________________ Street Address : __________________________ TBB Project Leader : _____________________ City, State, Zip: Please return completed and signed sheet (mail, email, or fax) to: Safety Manager Human Resources Department (Dwight.bradshaw@daimler.com) Thomas Built Buses P.O. Box 2450 High Point, NC 27261