Q1 2nd Edition

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  • Ford Confidential UNCONTROLLED COPY

    April 24, 2003

    SETTITHE STAN

    2nd E NG

    DARD

    dition

  • Q1 2nd Edition Ford

    Insert Photo of Tony Brown

    Q1 was built upon previous guidelines and has incorporated the lessons learned fromquality experience. Now, one-year later, we have enhanced Q1 based upon supplier feedback to drive continuous improvement and customer satisfaction. Q1 has been raddress the needs of supplier partners and customers in our pursuit of quality excelle The relationship we hold with our suppliers is of key importance as we work togetheproduce quality vehicles and drive customer satisfaction. Q1 lets our suppliers undeexactly where they stand and helps lead the way to achieve continuous improvementreward for improving quality and maintaining Q1 status is the recognition that the sufacility is the best in the business. The symbol of this excellence is the Q1 flag that iproudly over the best supplier facilities in the world. Our Q1 suppliers are valued partners, an integral part of our business fabric. Only byin partnership will we be able to provide the high quality products our customers exp The Q1 journey, like the quest for excellence itself, never ends. We appreciate that ycontinued the journey with us. Tony Brown Ford Motor Company, Vice President, Global Purchasing May 2003

    April 24, 2003 Confidential

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  • Q1 2nd Edition F ential

    C O N T E N T S

    Introduction

    2nd Edition Summary of Changes

    Q1 Requirements

    Q1 Score

    Consequences

    Benefits of Q1

    Applying for Q1

    Appendix A Capable Systems

    Appendix B Ongoing Performance

    Appendix C Manufacturing Site Assessment

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    16 Page 1 of 18 April 24, 2003 Uncontrolled Copy

  • Q1 2nd Edition Ford ial

    INTRODUCTION Q1 was launched in February 2002 and is delivering results. By recognizing qualitat the manufacturing site level, and by applying consistent, understandable metricsquality, Q1 has become the quality trustmark worldwide for each brand name. But in today's dynamic marketplace, companies that don't improve get left behind. expectations and requirements in Q1 have been refined to more accurately reflect sperformance in relation to the total Ford enterprise. What Is Q1?: It is a set of fundamental quality and manufacturing disciplines wfollowed, ensure a supplier's success and drive a supplier's continuous improvemenare expected to attain a certain mark, put the tools in place to maintain excellence, with each passing year. Suppliers aren't expected to achieve Q1 independently it is a relationship. Ford sto offer suppliers its expertise and assistance throughout the Q1 quality journey. Q1 puts the discipline in place to achieve consistent excellence and guides coopbetween Ford and its suppliers for superior quality execution. Approach: Q1 applies a few vital metrics to determine which suppliers qualify same measurements will be used to establish who will keep Q1 status. The 2nd Edirefined the manufacturing site assessment as a key tool in driving continuous improThe revised site assessment places greater emphasis on the site QOS, including waperformance, launch performance, quality reject trends and process variability to pframework to achieve continuous improvement. Summary of Changes: The 2nd Edition Q1 requirements are effective June 1A summary of the content changes is provided in the next section. Confidenty achievement to drive high

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    , 2003. April 24, 2003 Uncontrolled Copy Page 2 of 18

  • SUMMARY of CHANGES

    What's Changed 1. Commodity PPM Performance (production and service) The threshold for commodity PPM performance has been revised: A) The industry commodity PPM has been revised to a 12-month

    fixed PPM from today's floating monthly industry commodity PPM. The industry commodity PPM will be fixed at the beginning of each calendar year.

    B) The process for deducting points from suppliers for poor performance to the industry commodity PPM has changed.

    Sites whose commodity PPM exceeds twice the industry PPM will lose 150 points vs. 250 points today. If the site commodity PPM exceeds the industry commodity PPM in any month for any commodity during the next five months, the site will lose 250 points and Q1 status (the PPM maximum threshold rule does not apply, refer to 1C below).

    C) The overall site PPM maximum threshold has been reduced to 110 PPM (from 120). Suppliers will receive negative points based on the scoring table when the commodity PPM exceeds 110. Sites with commodity PPM lower than 110 will not receive negative points but may receive positive points for commodity PPM.

    2. Six-month Site PPM (production only) Sites will no longer receive negative points when 6-month PPM exceeds 100.

    3. Low-volume site PPM (production only) If a site ships fewer than 40,000 total pieces in the mature six-

    month reporting Responds to supplier concerns period, it is considered under the low-volume rule. The site will not receive that the PPM calculation was negative points for PPM performance if it ships fewer than six rejected pieces in the six-month period. Low volume sites are eligible to receive positive points for good PPM performance.

    4. Stop Shipment Waiver (production only)

    The stop shipment waiver criteria have been revised to clarify. Suppliers who assist Ford by alerting the Ford Plant to a potential issue before part utilization and replace suspect parts with certified stock will be considered for the waiver.

    5. Site Assessment (production and service)

    The partial site assessment addressing focus elements has been eliminated for all suppliers. Site self-assessment frequency is based on Quality segmentation. Full site assessments are required as follows:

    Segment 1 and 2 sites every 6 months Segment 3 and 4 sites every 12 months

    The site assessment scoring impact on Q1 has also been revised and now supported by a two-step process at the discretion of the Ford site engineer.

    Rationale Provide suppliers with a stable target for PPM performance. Allow suppliers to react to a significant PPM event without losing Q1 for a single event. Designed to respond to the demands of the marketplace by requiring year-over-year improvement in key performance metrics. Addresses supplier's concerns. Responds to supplier's concerns that the PPM calculation was overly sensitive for low-volume sites.

    Recognize sites who proactively communicate potential concerns to the Ford plant and STA prior to plant disruption. Provide Ford and suppliers more flexibility in responding to issues.

    Q1 2nd Edition Ford Confidential

    Page 3 of 18 April 24, 2003

    Uncontrolled Copy

  • Q1 2nd Edition Ford Confidential

    Summary of Change (continued)

    What's Changed

    5. Site Assessment (continued) The process will be triggered by:

    Site assessment is late to the required 6 or 12 month frequency

    Corrective action plan is not submitted to the Ford STA site engineer within 30 days of the site assessment

    Site action plan is ineffective in its execution The first STA action will result in 150 points, the second STA action will result in 250 points and loss of Q1 status.

    6. Violation of Trust (production and service) Due to the importance of trust in Ford and supplier relationship, any violation of that trust could result in revocation of Q1 status. Violation of trust is discussed in more detail in Appendix B.

    7. Plant Endorsement (production only) If a Ford plant rescinds its customer endorsement from a supplier site for Q1 criteria violations or 6-month QR trend performance, the supplier is required to submit a corrective action plan to its STA site engineer.

    8. Service Ford of Europe Add service PPM and delivery for product to FCSD Ford of Europe receiving locations.

    9. Warranty Performance (production only 3rd quarter 2003) Specifics for site warranty are being finalized around annual improvement in the percent of warranty claims per parts shipped. Suppliers are expected to demonstrate knowledge of the warranty impact of their parts on Ford vehicles.

    10. Launch Performance (production only) Launch performance is included in the site assessment. Sites are required to meet program launch requirements, including responsiveness and closure of any launch readiness issues, in a agreed upon timely manner. Failure to meet launch requirements can result in loss of 250 points and Q1 status.

    Rationale Trust is the foundatisupplier relationshipthe integrity of the Q Reinforce importancendorsements and sperformance to Ford

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    Page 4 of 18 Uncontrolled Copy

  • Q1 2nd Edition Ford C

    Q1 REQUIREMENTS Any external supplier manufacturing facility which currently supplies production or seproduct to Ford is eligible for Q1 consideration. Subcontractors are not eligible for Q1 Q1 means that the supplier facility achieves excellence in these key areas: capable systongoing performance, site action plan, customer endorsement and continuous improve Capable Systems What are the capabilities of a supplier's underlying systems?

    Q1 evaluates this aspect of business by your registrar third-party 'in good standing' cto QS-9000 or TS 16949 quality standards, and the ISO 14001 environmental standaSuppliers must also pass a MS 9000, MMOG, or Odette materials management systassessment. Compliance to these standards are required to get and keep Q1 status andiscussed in more detail in Appendix A.

    Ongoing Performance What is the supplier's performance history with Ford? Q1 uses five key performance metrics in determining a supplier's Q1 score:

    Field Service Action: Has Ford had to take action to intervene because of a supfailure? Stop Shipments: Is vehicle rework, modification or reinspection necessary duepoor product availability or quality? PPM Performance: Does a supplier deliver consistently high-quality products? Delivery Performance: Do products arrive on time, at the correct location, in thproper quantity and with the correct information? Violation of Trust: Does a supplier properly notify Supplier Technical Assistan(STA) of changes in manufacturing process, equipment, material and sub-suppchanges?

    Q1 reports these metrics as part of the Supplier Improvement Metrics (SIM) system. Scan look up their Q1 status (updated daily) and their overall score (updated monthly), iSIM summary report. The Q1 performance metrics are discussed in more detail in Ap Q1 suppliers are responsible for the total quality of the goods and services they prto Ford. This means that Q1 suppliers are responsible not just for their own sitesthe quality of any product which a subcontractor manufactures.

    April 24, 2003 Uncontrolled Copy onfidential

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  • Q1 2nd Edition Ford C Manufacturing Site Assessment How do things measure up on-site? The Manufacturing Site Assessment evaluates whether the supplier is performing up toexpectations. Q1 suppliers will perform a site assessment as follows:

    Quality Segment I and II every six-months Refer to the site summary pa

    Quality Segment III and IV every 12 months

    The Site Assessment determines if the site satisfies Q1 requirements and will identify aopportunity for improvement. Are systems and processes still operating at the same higwhen the supplier achieved Q1 status? Have performance or manufacturing process caadvanced in order to meet or exceed new market expectations? The Q1 site assessment addresses:

    Planning and Demonstration of Manufacturing Process Capability: What is a given capable of ? Have they planned to best leverage its manufacturing and quality poten Variability Improvements (Consumer Driven 6 Sigma): Does the manufacturing prodemonstrate ongoing variability reduction on current business? Does a supplier planintroduction of variability reduction techniques for new programs?

    Manufacturing Efficiencies: Does the supplier exhibit a systematic approach to leanmanufacturing for current parts? Are surrogate data, First Time Through (FTT) andEquipment Effectiveness (OEE) used to improve new programs? Has the supplier alean manufacturing improvements on current business? Customer Satisfaction: Has the supplier achieve customer satisfaction improvementbusiness and are these improvements documented in robust Quality Operating Syste

    On a case-by-case basis Ford STA may also conduct formal re-evaluation of a supplierThis review is influenced by historical quality performance, recent product launch conpotential impact on overall customer satisfaction. A detailed discussion of the ManufaAssessment is provided in Appendix C.

    April 24, 2003 Uncontrolled Copy onfidential

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    Page 6 of 18

  • Q1 2nd Edition Ford Co

    Customer Endorsement Are the supplier's customers satisfied with the service and quality they receive?

    Each supplier must obtain customer endorsements proving it consistently meets the neFord customers. Each Ford plant that receives a supplier's products, as well as Materia& Logistics (MP&L), Supplier Technical Assistance (STA), and Ford Customer Servic(FCSD) for service parts, must provide the supplier with an endorsement. Ford plant eis solely based on a site's most recent performance in the immediate prior six-months tfollowing criteria:

    No stop shipments with any supplier responsibility Commodity PPM is less than 150% of the relevant industry commodity PPM Delivery rating (weighted average) of 81 points or higher Six-months QR trend shows improvement or flat trend Site action plan is not effective in addressing manufacturing quality concerns

    Ford plants may withdraw their endorsement based on site performance above. The Fowill document the basis for their decision and will discuss their rationale with STA prinotification. Loss of any customer endorsement is entered in the Manufacturing Site Assessment. Trequired to submit a corrective action plan to STA within 30 days of the loss of the end Continuous Improvement Are suppliers getting better each year? The ability to drive continuous improvement is built into Q1. To maintain Q1 status, smust embrace continuous improvement. With this in mind, the Q1 thresholds for perfometrics and site assessment may be raised to encourage overall continuous improvemefinal analysis, the automotive customer of tomorrow will demand and accept no less.

    Q1 Score

    Q1 Score = Capable Systems + Ongoing Performance + ManufacturingAssessment

    How are Capability, Performance, and Manufacturing Site Assessment tabulated to arrfinal score?

    Q1 Score: Suppliers must maintain an overall score of at least 800 points for QEvery site begins with a 1,000 point Q1 score.

    Capable Systems: Sites must maintain certification to QS-9000/TS 16949, ISOand compliance to MS 9000/MMOG/Odette (Appendix A).

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    Page 7 of 18

  • Q1 2nd Edition Ford

    Q1 Score (continued)

    Ongoing Performance: Sites gain or lose points based on their performance memust perform to the minimum Q1 scoring thresholds (Appendix B).

    Manufacturing Site Assessment: Site must meet all Q1 manufacturing requirem

    implement an effective corrective action plan. The site will use the latest site achecklist available on the Ford Supplier Portal (FSP) at https://web.bli.ford.com

    Sites that do not meet Q1 requirements, or fail to perform ongoing manufacturing site at the required frequency or fail to implement an effective corrective action plan, will lpoints and may lose Q1 status. This applies whether the site is a new supplier or an existing Q1 location that wishes toQ1 status in 2003 and beyond. CONSEQUENCES

    Revocation of Q1 A supplier's overall Q1 score will be updated monthly to reflect the most recent six momature data. Suppliers must maintain a minimum of 800 points. Certain situations may result in a recommendation to revoke a supplier's Q1 status:

    Loss of certification to ISO 14001, QS-9000 or TS 16949 Field Service Action with any supplier responsibility Two or more stop shipments with supplier responsibility (Q1 impact may be w

    if the supplier demonstrates proactive intervention and the suspect component hbeen used in Ford production and the underlying root cause is resolved in a timm anner, as agreed by STA)

    Monthly commodity PPM exceeds any relevant industry commodity PPM in anfive forward months after the six-month commodity PPM exceeds the industry by 100%, with the site PPM is greater than 110

    Delivery rating falls below 81 points Manufacturing site assessment is delinquent, or the corrective action plan is del

    o r ineffective in execution

    Violation of Trust (refer to the 2nd Edition change summary and Appendix B) Overall Q1 score falls below 800 points

    April 24, 2003 Uncontrolled Copy Confidential

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    Page 8 of 18

  • Q1 2

    nd Edition Ford

    Consequences (continued) If a supplier has not satisfactorily addressed the performance or customer satisfactionthe supplier's Q1 status will be affected. These situations cannot be offset in the Q1 score by positive performance in other arewill make the final determination on supplier Q1 status. To regain Q1, the supplier mall requirements for six consecutive months, and obtain STA and customer endorsemappropriate. BENEFITS OF Q1 Your Q1 status has many benefits, most importantly, membership among the industrythe associated respect and rewards:

    Recognition: Flying the Q1 flag and displaying the Q1 plaque is a sign that ystands shoulder to shoulder with the best suppliers in the world.

    Publicity and Advertising Privileges: Q1 status will enable you to advertise ayour company with the additional prestige of Q1. Suppliers are required to obfrom Ford Public Affairs as a prerequisite of use.

    Self-Certification: As a Q1 supplier, you will be eligible, with STA concurrecertify to the PPAP requirements of QS-9000 and TS 16949.

    World Excellence Award: As a Q1 supplier you will be eligible for this awardacknowledge the best of the best.

    Preferred Status with Ford: Only Q1 facilities are considered for new productand sourcing.

    April 24, 2003 Uncontrolled Copy Confidential

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    Page 9 of 18

  • Q1 2nd Edition Ford C

    APPLYING FOR Q1 Ford Supplier Technical Assistance (STA) will help you through the Q1 process. The you'll need to do is contact your Ford STA site engineer. The STA site engineer will then guide you through the steps necessary before you can formal Q1 application. For example:

    Is your site eligible for Q1 status? Who are your Ford assembly and manufacturing plant customers for Q1 consid

    What is your classification: a new supplier, a new manufacturing site of an exissupplier, a manufacturing site attempting to qualify initially for Q1 status.

    What Manufacturing Site Assessment process will be used Ford STA or self-

    Your facility will conduct a self-evaluation to ensure that you meet Q1 criteria. Once yyour facility is ready, based on the site performance reported in SIM, the next step is tonecessary customer endorsements. These endorsements are valid for six months from the signature on the endorsement documents. The next step in the Q1 process is formal application to Ford STA. When your self-evshows your site to be up to Q1 standards, and you have collected the necessary customendorsements, notify your STA site engineer in writing, along with documentation of ycertification to TS 16949 (or QS-9000 until December 14, 2006) and ISO 14001, and with MMOG (or MS-9000, Odette). Ford STA will take it from there. A Q1 on-site evaluation may be scheduled to reviewqualifications for Q1. The responsible STA manager will provide a final recommendaon demonstrated site capabilities, performance metrics, manufacturing site assessment overall Q1 points maintained during the prior six months of mature data.

    Administration Suppliers must have at least six consecutive months of production or service shipping If a supplier location has not shipped to Ford within the prior twelve months it is consiinactive and is no longer considered to meet Q1 requirements.

    April 24, 2003 Uncontrolled Copy onfidential

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    Page 10 of 18

  • Q1 2nd Edition Ford Co

    Administration (cont.)

    Q1 is a Ford-exclusive designation. Facilities that no longer ship to Ford may not adtheir Q1 status or fly the Q1 flag. For external production suppliers, Ford Purchasing Supplier Technical Assistance (Sadministers the Q1 program globally. For suppliers of service products, the responsquality activity administers the Q1 program globally. On-line Availability This document and information relating to Q1 are accessible to suppliers on the FordPortal (FSP) at https://web.bli.ford.com.

    April 24, 2003 Uncontrolled Copy nfidential

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    Page 11 of 18

  • Q1 2nd Edition Ford

    APPENDIX A CAPABLE SYSTEMS: Basics Before a supplier is considered for Q1, it must demonstrate system capability in seveThese capabilities must also be maintained for the supplier to keep Q1 status. ISO 14001 Environmental Management System Ford has led the way in the automotive industry by becoming the first automotive mto certify its global manufacturing facilities to ISO 14001. Q1 suppliers share a keyenvironmental commitment and efforts toward continuous improvement. All existing Q1 supplier-manufacturing sites are to be third-party certified to the ISOstandard by July 1, 2003. Sites which are not certified at that time may lose 250 poistatus. New suppliers and suppliers re-instated to Q1 status must be third party certiISO 14001. QS-9000 Quality Management System TS 16949 Supplier Quality System As one of the key stakeholders, Ford participated in the development of QS-9000 insupplier requests to harmonize supplier quality requirements and assessment documother automotive manufacturers. QS-9000 and TS 16949 provide a framework of fuquality systems that enable continuous improvement and emphasize defect preventioreduction of variation and inefficiency within the value chain. Q1 suppliers are required to be third-party certified to QS-9000 or TS 16949. Sites certified will lose 250 points and Q1 status.

    April 24, 2003 Uncontrolled Copy Confidential

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    Page 12 of 18

  • Q1 2nd Edition Fo

    MS 9000 Material Management System Requirements MMOG Materials Management Operations Guideline Ford developed MS-9000 and MMOG to drive the use of fundamental material masystems and processes that result in outstanding delivery performance, exceptionalsatisfaction and continuous improvement. Q1 suppliers are required to submit an annual self assessment indicating compliancMMOG or Odette (Volvo). The appropriate self assessment summary must be enteon-line by August 1st of each year. As before, random on-site reviews of supplier ccontinue. If a supplier is found to be out of compliance and its corrective action plMP&L requirements based on effectiveness and timeliness, Q1 status may be jeopa APPENDIX B Ongoing Peformance: Scoring Thresholds Every supplier site starts with a Q1 score of 1,000 points. Based on calculations incategories which reflect the most recent six mature months of data, the sites then gpoints, according to their performance. Suppliers must have a minimum of 800 poexample, if a supplier has any responsibility in a Field Service Action, the site losethe Q1 score drops to 750 and Q1 status is revoked. Some categories, like Stop Shipment, have specific thresholds. A supplier must mup to those thresholds in order to maintain Q1 status Certain categories, like Parts Per Million (PPM) performance are measured on a sliIf suppliers achieve or outperform PPM targets, they gain points, according to the ethey outperform expectations. If they miss the mark, they lose points accordingly. As part of Q1's commitment to continuous improvement, both the baseline threshoQ1 (800 points), and the thresholds necessary to succeed in each category and retaiwill increase as time goes on.

    April 24, 2003 Uncontrolled Copy rd Confidential

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    Page 13 of 18

  • Q1 2nd Edition Ford

    Field Service Action (0 or -250 points) Directly impacts Customer Satisfaction and Brand Image When Ford must intervene with a Field Service Action in which the supplier has resor the supplier has involved Ford in a Field Service Action due to their own actions,site loses 250 points and Q1 status. Stop Shipment (0 to 250 points) Directly impacts Customer Satisfaction If Ford experiences two or more Stop Shipments, the supplier loses 250 points and QQ1 impact may be waived if the supplier demonstrates proactive intervention, the sucomponent has not been used in Ford production and the underlying root cause is rea timely manner, as agreed by STA. PPM (+ 100 to 250 points) Provides incentive for continuous improvement, increasing Customer Satisfaction Site PPM: A site can gain positive Q1 points by achieving 60 or less overall PPM fproduction and service site PPM. A site will no longer lose points for site productioperformance; negative points still apply for site service PPM performance. Commodity PPM: A supplier can gain positive Q1 points by outperforming the incommodity PPM. If a site provides multiple commodities, it will only receive pointworst performing commodity for production and for service, respectively. Negativeonly assigned if the site PPM is greater than 110. Sites can receive positive points woutperform the commodity PPM. Should a site's six month commodity PPM level, for either production or service, exongoing industry commodity PPM by 100% or more, and the site PPM is greater thasite will lose 150 points. When this situation occurs, the site commodity PPM cannothe monthly industry commodity PPM in any month for any commodity during the fsubsequent months, regardless of customer, or the site will lose 250 points and Q1 s The industry commodity PPM level will be locked for 12 months based on the priorindustry PPM for each low commodity for both production and service. To gain or lose points for PPM performance, suppliers must have shipment activity the prior six months. Suppliers to FCSD must have reject activity in four of the priomonths to lose 250 points and Q1 status.

    April 24, 2003 Uncontrolled Copy Confidential

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    Page 14 of 18

  • Q1 2nd Edition Ford ial

    PPM (+ 100 to 250 points) continued Low-volume rule: If the six month overall site shipment for production is less thanpieces and the site has five or fewer rejected pieces, it will not receive negative poincommodity or site PPM performance. A supplier can receive positive points when tindustry commodity PPM or they achieve 60 or fewer PPM. The low-volume rule ato production shipments. PPM points are determined as indicated in the Scoring Thresholds table (Page 12F)

    Delivery Rating (+ 100 to 250 points) Drives excellence in communication and shipping performance A supplier can gain positive Q1 points for both production and service delivery perfon the weighted six month average delivery rating. Suppliers must have shipment aleast two of the prior six months to gain positive points for delivery performance. Ifmultiple production or service delivery ratings, it will only receive points for the woand service ratings, respectively. If a supplier's production or service Delivery Rating falls below 81 points for (i) themonth average, (ii) for the last 2 mature months and (iii) for the current month, the slose 250 points and Q1 status. Should a supplier's weighted six month average delivbelow 81 points, and there is no shipment activity in either the current month or onetwo mature months, the site will receive zero points. Delivery points are determined as indicating in the Scoring Thresholds table (Page

    Violation of Trust (0 or 250 points) Drives integrity and trust essential to the Q1 relationship If Ford Supplier Technical Assistance (STA) determines that a supplier has committof Trust, it will lose 250 points and Q1 status. A Violation of Trust occurs when a snotify STA and obtain approval through the Supplier Request for Engineering Apprprocess for:

    Manufacturing or equipment process change (including tooling) or location ch Component or material change or substitution Subcontractor or vendor change

    Other examples of Violation of Trust may include:

    Launch ramp-up or rate of climb which adversely impacts plant build schedulagreed timing

    Self-certified PSW is incomplete or inaccurate PSW supporting data lacks integrity Other trust issues which severely impacts the ongoing business relationship w

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    Page 15 of 18

  • Q1 2nd Edition Ford C

    Warranty Performance (TBD points) Drives excellence in Customer Satisfaction and Brand Image Warranty performance is measured on the basis of annual improvement in repairs per parts shipped. A supplier can gain or lose Q1 points for demonstrated changes in warranty based on monthly warranty claims relative to the site's overall Ford business. Warranty performance will be incorporated as part of Q1 scoring later in 2003, when site warranty data is reported in SIM (2003 rollout will impact US/Canada vehicles only). Suppliers must demonstrate knowledge of the warranty impact of their parts on Ford Motor Company vehicles. Warranty metrics should be integrated in the supplier's QOS along with roadmap actions to deliver significant year over year improvements. In addition, suppliers must have plans in place to monitor low time in service warranty to detect and to correct emerging customer concerns. Suppliers should utilize available warranty tools, such as the Analytical Warranty System (AWS), SIM Warranty (available 2nd Quarter 2003), and regional warranty parts return centers. In addition, suppliers are strongly encouraged to participate in existing warranty improvement efforts through Ford engineering

    APPENDIX C

    Q1 MANUFACTURING SITE ASSESSMENT Principle: The Manufacturing Site Assessment defines Ford quality requirements and is a key component of Q1. The assessment reviews the fundamental areas of the supplier quality system by evaluating how well the site has planned for and demonstrated manufacturing process capability. Suppliers must demonstrate these fundamentals based on objective evidence in order to achieve and keep Q1. Satisfying the fundamental areas of the quality system is essential to delivering manufacturing efficiencies, variability reduction, and ultimately customer satisfaction. These areas are the basis of continuous improvement around which Ford and the supplier manufacturing site will establish an ongoing collaborative relationship. The Manufacturing Site Assessment has been updated with additional emphasis onsite QOS, customer satisfaction, warranty performance, launch performance, sub-supplier process control and lean manufacturing metrics. The site assessment impact on a supplier's Q1 score has been revised and is now supported by a two-step process at the discretion of the STA engineer. The process will be triggered by: Site assessment is late to the required 6 or 12 month frequency Corrective action plan is not submitted to the STA engineer within 30 days after the site

    assessment Corrective action plan is ineffective in its execution

    The first STA action will result loss of 150 points, and the second STA action will result in loss of 250 points and Q1 status. April 24, 2003

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  • Q1 2nd Edition Ford ial

    Manufacturing Site Assessment (cont.) Fundamentals: Suppliers will perform a full site assessment based on the site quality segment status segment I and II every six-months, segment III and IV every twelve-months. Suppliers are encouraged to conduct a focus element partial assessment, as appropriate, in order to drive continuous improvement and customer satisfaction. Focus elements are indicated by asterisks (*). T

    he site assessment addresses the following areas of manufacturing process capability:

    Planning for Manufacturing Process Capability - Quality procedures, QS-9000, TS 16949, QOS - FMEAs, Control Plans * - Employee Readiness, Training Review - APQP, Launch, PPAP, Run-at-Rate Review * - Manage the Change

    Demonstration of Manufacturing Process Capability - Sub-supplier Quality Management * - Control of Incoming Quality - Control Plans, Operator Instructions * - Process Variability Monitoring, Reduction * - Gage Calibration and Use * - Part Identification, Nonconforming Parts, Packaging, Shipping - Testing, Engineering Specifications - Preventive Maintenance (PM), Housekeeping * - Manufacturing Flow, 6-Sigma and Lean Manufacturing Metrics * - Problem Solving, Corrective Actions *

    Suppliers must evaluate each area and based on objective evidence determine if all Q1 manufacturing site requirements are satisfied. If a supplier fails to complete and submit their Manufacturing Site Assessment to the STA engineer at the required 6 or 12 month frequency, it may lose 250 points and Q1 status. Instructions for submission of the site assessment can be found on FSP at https://web.bli.ford.com. A more detailed explanation of the site requirements, including the Q1 Site Assessment Summary, follows this section. Any area of the manufacturing site assessment not meeting Q1 requirements will necessitate a site corrective action plan. The supplier will develop and begin implementation of the corrective action plan within 30 days of the site assessment. Failure to execute an effective and timely corrective action plan may result in a loss of 250 points and Q1 status. Ford STA will participate and review the site assessment, including corrective action plan follow-up, on a case-by-case basis.

    Uncontrolled Copy Page 17 of 18 April 24, 2003 Confident

  • Q1 2nd Edition Ford l

    Manufacturing Site Assessment (cont.) Continuous Improvement: A supplier mu at it meets the site assessment requirements to maintain Q1 status. To achievadvantage, suppliers should develop and implenew programs, as follows:

    Launch Performance: Suppliers are expecprogram launches with the objective to achifor supplier launch performance include:

    Tracks performance to meet PSW date Supports vehicle prototype and pre-pro Conducts operator-based Quality Stand

    and incorporates Quality Stand Down i Conducts Fresh Eye Reviews on all ne

    documents the findings with action pla Conducts milestone reviews to commu

    status to supplier senior management. Captures and incorporates lessons learn

    Suppliers must meet program launch requireidentified launch readiness issues, in an agrelaunch requirements based upon manufacturQ1 status.

    Lean Manufacturing: suppliers will drivedocumented in their Quality Operating Syst

    Variability Reduction: suppliers will driveCharacteristics (SC), Critical Characteristicsspecific actions documented in their QOS.

    Customer Satisfaction: suppliers will drivrepairs per 1000 (R/1000) by utilizing Globdeveloping specific action plans that are doc

    Continuous improvement of the manufacturingongoing manufacturing efficiencies, variabilityimprovement thresholds will be provided on Fdetailed explanation of the Q1 manufacturing Refer to Q

    Manufacturing

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    ments, including responsiveness and ced-upon timely manner. If a supplier fing quality requirements, it may lose 2

    FTT and OEE improvement through spem (QOS).

    Ppk and Cpk improvements on all Sig (CC) and High Impact to Customer (H

    e improvement in Things Gone Wrongal Quality Reporting System (GQRS) dumented in their QOS.

    processes serves as the framework for reductions and customer satisfaction.

    SP at https://web.bli.ford.com. The folsite requirements.

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    Page 18 of 18

    Global PurchasingC O N T E N T SINTRODUCTIONSUMMARY of CHANGES1. Commodity PPM Performance (production and service)The threshold for commodity PPM performance has been revised:

    RationaleCapable SystemsWhat are the capabilities of a supplier's underlying systems?Ongoing Performance

    Manufacturing Site AssessmentCustomer EndorsementAre the supplier's customers satisfied with the service and quality they receive?Ford plants may withdraw their endorsement based on site performance above. The Ford plantwill document the basis for their decision and will discuss their rationale with STA prior to supplier notification.Are suppliers getting better each year?

    Q1 ScoreQ1 Score = Capable Systems + Ongoing Performance + Manufacturing Site AssessmentHow are Capability, Performance, and Manufacturing Site Assessment tabulated to arrive at afinal score?

    CONSEQUENCESRevocation of Q1BENEFITS OF Q1APPLYING FOR Q1AdministrationOn-line AvailabilityAPPENDIX ABasicsISO 14001 Environmental Management SystemQS-9000 Quality Management SystemTS 16949 Supplier Quality SystemMS 9000 Material Management System RequirementsAPPENDIX BOngoing Peformance: Scoring ThresholdsDirectly impacts Customer Satisfaction and Brand ImageDirectly impacts Customer SatisfactionProvides incentive for continuous improvement, increasing Customer SatisfactionDrives excellence in communication and shipping performanceDrives integrity and trust essential to the Q1 relationshipIf Ford Supplier Technical Assistance (STA) determines that a supplier has committed a Violation of Trust, it will lose 250 points and Q1 status. A Violation of Trust occurs when a supplier fails to notify STA and obtain approval through the Supplier Manufacturing or equipment process change (including tooling) or location changeComponent or material change or substitutionSubcontractor or vendor change

    Drives excellence in Customer Satisfaction and Brand Image

    Suppliers must demonstrate knowledge of the warranty impact of their parts on Ford Motor Company vehicles. Warranty metrics should be integrated in the supplier's QOS along with roadmap actions to deliver significant year over year improvements. In addparts return centers. In addition, suppliers are strongly encouraged to participate in existing warranty improvement efforts through Ford engineering

    APPENDIX CQ1 MANUFACTURING SITE ASSESSMENTPlanning for Manufacturing Process CapabilityDemonstration of Manufacturing Process Capability