Volvo supplier quality assurance manualfdf

Third Edition January 2014

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INTRODUCTION

The Quality Challenge

Every day at VOLVO, we are working to improve our organization, our processes and the skill of our employees to be the best in class. We are committed to quality excellence, a customer-focused process approach and continuous improvement. We expect and encourage our suppliers to adopt these same principles and practices. The mission of VOLVO Purchasing is to provide a competitive advantage to our organization and our customers through the selection, development and partnership with suppliers that are capable of exceptional performance. VOLVO is actively seeking to attract suppliers that are capable of delivering superior products in terms of quality, delivery, price and features. In support of our strategy, this manual describes the sourcing process used to identify and select suppliers that share the VOLVO “Drive for Quality”. This manual also covers the expectations, requirements, guidelines and practices expected of suppliers doing business with VOLVO. Once selected, our goal is to work closely with these suppliers to develop a strong, stable, structured relationship. We expect a commitment from our suppliers to achieving a ZERO DEFECT APPROACH. Suppliers demonstrate this commitment through:

Delivering fully conforming parts and products

On time delivery

Rigorous adherence to approved processes and requirements

Pro-active risk management VOLVO products have always been characterised by quality and safety. Maintaining the reputation of selling the highest quality and safest products in the market is a must for us. We expect suppliers to contribute to maintaining this reputation by the care they invest in the parts they produce and deliver. VOLVO suppliers are expected to extend the requirements in this manual to their suppliers and assume responsibility to ensure that quality is consistent through their supply chain. This document is intended to serve as a reference document and a guide to understanding VOLVO specific requirements and the responsibility shared by our suppliers in ensuring products that meet consistently high standards for quality and safety. With your commitment to participate as a VOLVO supplier, we will succeed in our mission to our customers and at the same time begin a long term and mutually beneficial relationship. Patrik Lundblad Martin Ranäng Abdennasseur Abouayoub Senior Vice President Vice President Supplier Quality Vice President Global Volvo Group Purchasing Volvo Group Purchasing Volvo Bus Purchasing

Table of Contents

INTRODUCTION…………………………………………………………..……….2 TABLE OF CONTENTS………………………………………………..………….3 USING THIS DOCUMENT……………………………………………..………….4 BASIC REQUIREMENTS………………………………………………..….…….5

PERFORMANCE EXPECTATIONS………………………………… 6 MANAGEMENT SYSTEM REQUIREMENTS……………………… 7

SOURCING……………………………………………………………………........8 MANAGEMENT SYSTEM REQUIREMENT………………………… 9 SHORT SUPPLIER EVALUATION MODEL………………………… 9 CONFIDENTIALITY AGREEMENT…………………………………… 9 REQUEST FOR QUOTATION……………………………………..… 9 SUPPLIER EVALUATION MODEL…………………………………… 10 INDEX AUDITS………………………………………………………… 10 FINAL AGREEMENT……………………………………………………. 10

ADVANCED PRODUCT QUALITY PLANNING………………………..………11 SCOPE…………………………………………………………………… 12 APQP – PLANNING…………………………………………………… 12 RESPONSIBILITIES IN APQP………………………………………… 12 KEY COMPONENT DEFINITION……………………………………… 13 APQP REVIEWS………………………………………………………… 13 SOFTWARE APQP REQUIREMENTS……………………………… 14

PRODUCTION PART APPROVAL PROCESS…………………….....……….15 REFERENCE…………………………………………………………… 16 PROCESS……………………………………………………………… 16 SIGNIFICANT PRODUCTION RUN………………………………… 17 DOCUMENTATION REQUIREMENTS……………………………… 18 PRODUCT PROCESS CHANGE NOTICE………………………… 18

VOLVO SPECIFIC REQUIREMENTS……………………………………..……20 REVIEW OF TECHNICAL SPECIFICATIONS……………………… 21 PRODUCT APPLICATION AGREEMENT…………………………… 21 PART HANDLING REVIEW…………………………………………… 22 SPECIAL CHARACTERISTICS…………………………………….… 22 CONFORMITY OF PRODUCTION…………………………………… 23 CLEANLINESS REQUIREMENTS…………………………………… 24 PROTOTYPE PARTS………………………………………………… 24 PRE-LAUNCH CONTROL PLANS…………………………………… 25

SAFETY MANAGEMENT…………………………………………….…………..26 RESPONSIBILITY……………………………………………………… 27 IDENTIFICATION OF SAFETY CHARACTERISTICS……………… 27 PRODUCTION REQUIREMENTS………………………………….… 27 SAFETY MANAGEMENT AUDITS…………………………………… 28 LOT TRACEABILITY REQUIREMENTS……………………………… 29 PASS THROUGH PART REQUIREMENTS……………….………… 29

PRODUCTION REQUIREMENTS……………………………………………….31 REQUESTING DEVIATIONS…………………………………………. 32 LOT TRACEABILITY…………………………………………………… 32 FIRST IN FIRST OUT CONTROL…………………………………… 32 SUB-TIER SUPPLIER REQUIREMENTS……………..……….…… 32 PACKAGING……………………………………………….…………… 33 WARRANTY………………………………………………………….… 33 SERVICE PART REQUIREMENTS……………………………….…. 33 LABORATORY REQUIREMENTS…………………………………… 33 RECORD RETENTION…………………………………………………. 34

PERFORMANCE MEASUREMENT AND CORRECTIVE ACTION…………35 MANAGEING NONCONFORMING PARTS …………………….…. 36 SCORE CARD PRESENTATION ……………………………………. 37 QUALITY PERFORMANCE MEASUREMENT …………..………… 38 DELIVERY PRECISION ……………………………………………… 40 THE VOLVO PROCESS AUDIT …………………………….………. 40 CONTINUOUS IMPROVEMENT ……………………………......….… 40 LOW PERFORMING SUPPLIER …………………………………… 41

GLOSSARY OF TERMS……………………………………………………….…42 REVISION RECORD…………………………………………………………...… 43

SECTION 0.0

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USING THIS DOCUMENT

0.1 ORGANIZATION

This document defines the expectations and working procedures intended to assist suppliers in achieving and maintaining a successful working business relationship with VOLVO. This document is organized in chapters related to our main processes.

0.2 KEY ELEMENT PROCEDURES

In addition to this supplier manual, VOLVO maintains a set of procedures that define specific requirements and expectations in key areas. These Key Element Procedures cover VOLVO requirements related to environment, logistics, corporate social responsibility, and cost management. Suppliers should consider the Key Elements Procedures as part of this document. The Key Element Procedures are available on the supplier portal.

0.3 THE VOLVO SUPPLIER PORTAL

VOLVO maintains an internet portal that allows suppliers to access current documents and news regarding

changes that may impact them. Suppliers are responsible to apply for access to the VOLVO Supplier Portal

by contacting the host buyer or Supplier Quality Engineer. Suppliers are also responsible for maintaining the

contact information for key individuals in their organization. The latest version of this Supplier Quality

Assurance Manual is available in the Quality Section within the E-Library.

http://supplierportal.volvo.com/vsp/ap/en/E-Library/Quality/3P_SQA_Manual/

Additional guidelines, communication kits, and templates are posted in the quality section of this E-library.

0.4 GUIDE TO SYMBOLS USED IN THIS DOCUMENTS

0.5 SUPPLIER FEEDBACK

Feedback concerning this document is welcomed and encouraged. Any suggestions, including suggestions for additional information or improvements to this document, should be emailed to: [email protected]

To simplify the text:

The word VOLVO refers to VOLVO Truck, Mack Trucks, Renault Trucks, VOLVO Buses, Prevost, Novabus,

UD Trucks, Eicher VECV, and Renault Trucks Defense. VEHICLE refers to both trucks or busses.

Basic Requirements Sourcing VOLVO Specific

Requirements APQP PPAP Production

Requirements

Managing Performance

Safety Management

Text in frame boxes provides an overview of the information in the section and may be used as a quick

reference.

MANDATORY REQUIREMENTS ARE

HIGHLIGHTED IN THIS FORMAT

SECTION 1.0

BASIC REQUIREMENTS

Performance Expectations and Management Requirements

Supplying products to the vehicle Industry is a very demanding business. It requires the ability to mass produce complex assemblies employing state of the art technologies. To achieve this level of performance, the vehicle industry and their suppliers have developed specialized processes and systems to support the demands of this type of production while delivering high levels of quality expected by the vehicle customer. VOLVO has adopted these quality processes and systems, and successful application by our suppliers is key to our shared success.

The success of our performance is determined by the final customer. These customers are the businesses and people who rely every day on safe, reliable transportation solutions. We believe that achieving this level of quality and reliability can only be achieved by robust processes and rigorous monitoring. This requires a Customer focus mind set, a continuing search for effective solutions, and opportunities for continuous improvement.

Perf

orm

an

ce

RESULTS

OUR ATTITUDE: Never satisfied, Let nothing happen by chance,

striving for ZERO defect performance

Processes

SECTION 1.0

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1.1 PERFORMANCE EXPECTATIONS

1.1.1 The table below defines the target performance levels for VOLVO suppliers. Our desire is that all suppliers strive to meet and exceed these target values. All suppliers are expected to adopt a Zero Defect mind set and continuously strive to achieve the goal of Zero Defects.

For specific products, additional part specific targets may be defined in the Request for Quotation.

MEASUREMENT TARGET

Parts Per Million Zero Kilometre Non-conformances

Calculated on a monthly and three month

rolling average.

Expected Zero Defect*

Quality Performance Measurement (QPM)

For scoring explanation, see section on

“PERFORMANCE”

Below 40

Fault Frequency

Warranty Claims per vehicle within the first 12 months of service.

Safety features – 0%

Common components – below 0.005%

Fasteners, brackets, etc – below 0.0005%

Additional fault frequency targets may be specified in the part specific Technical Requirements.

Service campaign

The number of vehicle recalls due to reliability/warranty problems.

0

Safety recall

Number of vehicles recalled due to Safety concerns.

0

Delivery Precision

Percentage of parts delivered on time divided by the total delivered.

98% as a minimum requirement.

100% For delivery in sequence.

*Actual targets for a supplier may be modified based on commodity, product technology, function

or part criticality. Exceptions must be documented in a Long Term Agreement, contract or PPM

contract.

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1.2 MANAGEMENT SYSTEMS REQUIREMENTS

Area Required Level Reference Documents

Quality system ISO/TS16949 Current Certificate

Environmental system

ISO 14001:2004 Current Certificate VOLVO Environmental self-assessment

Key Element Procedure 5 - Environmental Requirements

Supplier Evaluation Model (SEM)

Preferred greater than 90% Acceptable over 60% No stopping parameters

Key Element Procedure 1 – General

Product Safety Management Program (Applies to suppliers of safety critical components)

Approved greater than 90% Conditional greater than 60% No stopping parameters

Safety Management Audit Documentation

Index Audit (Applies to suppliers of Index related processes*)

Score over 60% No stopping parameters

Index Audit section of this manual

VOLVO Customer Specific Requirements

Compliance to RTS, COP, PAA, PHR Customer Specific Requirements section of this manual

Software (Software Suppliers)

SPICE level 3 Current certificate or equivalent by an accredited 3rd party

Statement of Work

Ethics Corporate Social Responsibility Self-assessment

Key Element Procedure 6 - Corporate Social Responsibility

Logistic evaluation MMOG self-assessment level A Key Element Procedure 7 - Logistic

EDI 100% Electronic communication Key Element Procedure 1 – General 7 - Logistic

*Index Audits

Casting (Ferrous and Aluminum)

Metallurgy (Heat Treat and Forging)

Polymers (Plastic and Rubber)

Electronics

Surface Treatment

Software Key Element Procedures are available on the supplier portal at the following location: http://www.volvogroup.com/suppliers/global/en-gb/supplierselection/ourrequirements/keyelements/Pages/KeyElementProcedures.aspx

http://www.volvogroup.com/suppliers/global/en-gb/supplierselection/ourrequirements/keyelements/Pages/KeyElementProcedures.aspx

http://www.volvogroup.com/suppliers/global/en-gb/supplierselection/ourrequirements/keyelements/Pages/KeyElementProcedures.aspx

SECTION 2.0

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SOURCING

Join the VOLVO Team

The awarding of business to a supplier is one of the most important decisions made by VOLVO Purchasing. It directly impacts our ability to deliver to their customers, remain competitive and deliver future developments through projects. The VOLVO Global Sourcing Process is designed to ensure that all divisions of VOLVO have the opportunity to contribute to the selection process and ensures the coordination of these decisions across all VOLVO locations. It’s the first step in building a strong relationship between VOLVO and our suppliers.

Suppliers have an important role to play in the selection process.

Actively participating in evaluation audits performed by VOLVO.

Demonstrating their capability to achieve future quality results.

Responding to action plans to reach the requested level.

The following chapter explains the main steps in the process required to become a VOLVO supplier. In this section the information that suppliers can expect to receive and the evaluations that are required are further defined.

Short SEM

Management System

Requirements

Enter Supply

Base

Business Award

Sign Contracts, & Agreements

Index Audit

SEM Confidentiality

Agreement

Request for

Quote

SECTION 2.0

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2.1 MANAGEMENT SYSTEM REQUIREMENTS

2.1.1 All potential suppliers must have a quality system compliant to ISO/TS 16949 and an Environmental Management system compliant to ISO 14001 in place, functioning and approved by a third party registrar.

2.2 SHORT SUPPLIER EVALUATION MODEL

2.2.1 Potential suppliers may be requested to complete the Short Supplier Evaluation Model (SSEM). A copy of the SSEM is available on line at: http://www.volvogroup.com/suppliers/global/en-gb/supplierselection/supplierevaluation/Pages/selectioncriterias.aspx 2.2.2 Potential suppliers can access this site, complete the short SEM and submit it to VOLVO purchasing for consideration. This site is a public site and does not require VOLVO granted access.

2.2.3 Typically the first formal contact with a supplier will be a Request for Information (RFI). At that time suppliers may be requested to complete the Short Supplier Evaluation Model (SSEM).

2.2.4 This evaluation collects general data about the company, its products and capabilities. Specific quality topics included in the short SEM are:

Quality Systems: Application and certification by an accredited third party to the ISO/TS 16949 Quality Management System and ISO-14001 Environmental Management System.

Quality Planning: Well organized approach to quality planning including the use of quality methods like Advanced Product Quality Planning (APQP), and Failure Mode & Effects Analysis (FMEA).

Quality Performance: Past performance in quality, reliability and deliveries. Performance targets will be established based on past performance and industry best practices.

Reliability: Practices in place for verification and validation testing that ensures their products will meet the minimum useful life expectations.

Other requirements:

Information regarding specific requirements related to environment, corporate and social responsibility, cost reduction can be found in the Key Element procedures on the supplier portal.

2.2.5 Current suppliers to VOLVO that have not participated in a recent evaluation may be requested to complete a Short SEM or participate in a normal on-site SEM prior to the award of additional business. VOLVO routinely monitors all current suppliers’ based on their performance as measured in the Supplier Scorecard (PPM, QPM, recent audit scores, Inspection Reports, Low performing Supplier status, etc.). Based on these results, VOLVO may request a new short SEM be completed or request further evaluation audits.

2.3 SIGN THE CONFIDENTIALITY AGREEMENT

2.3.1 VOLVO realizes that maintaining an effective supplier/customer relationship may require sharing information, communications, data or technology that is sensitive in nature. Before receiving a Request for Quotation (RFQ), suppliers are required to sign and return a confidentiality agreement. The supplier shall treat all information and data related to the business relationship with VOLVO in strict confidence and report any intentional or non-intentional breach of confidentiality to VOLVO management. The Confidentiality Agreement template will be sent by the buyer.

2.4 REQUEST FOR QUOTATION (RFQ)

2.4.1 To be considered for business, suppliers must fully address each section of the RFQ and include all of the requested supporting documents when responding. This includes, but is not limited to a preliminary Advanced Product Quality Plan (APQP), Review of Technical Specification (RTS), Statement of Work (if

The short version of Supplier Evaluation Model provides a simple way for potential suppliers to share their standards and capabilities with VOLVO.

http://www.volvogroup.com/suppliers/global/en-gb/supplierselection/supplierevaluation/Pages/selectioncriterias.aspx

http://www.volvogroup.com/suppliers/global/en-gb/supplierselection/supplierevaluation/Pages/selectioncriterias.aspx

SECTION 2.0

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The VOLVO SEM is the primary tool for the evaluation and selection of suppliers. The audit is designed to provide a broad, overview picture of the supplier’s organization. The SEM is an on-site face-to-face evaluation of a supplier’s

capabilities and preparedness.

VOLVO has developed a group of technology-based process audits (Index Audits). Index audits focus on production processes that use technology considered critical to the function of the products. For suppliers in the specific technology areas, the Index Audit is a requirement for award of business. The Index Audit may also be used as part of process improvement activity or to investigate severe quality problems.

Surface Treatment

Software

Safety

Electronics

requested) and all documents needed to support and justify the information in the RFQ response. 2.4.2 The quality requirements and targets are highlighted in the quality section of the RFQ. Suppliers are expected to be able to fulfill all quality requirements. VOLVO may audit the evidence related to the fulfillment of these quality requirements. In the event there are requirements that cannot be fulfilled, suppliers may be required to develop and submit an action plan with the returned RFQ. Suppliers are responsible for all costs associated with the fulfilment of the quality requirements. Some of these requirements may require testing at Volvo approved testing facilities. These costs should be included in all RFQ responses.

2.5 THE SUPPLIER EVALUATION MODEL (SEM)

2.5.1 The VOLVO SEM has been developed using its history of working with suppliers, lessons learned and “Best in Class” practices. This audit normally takes two to three days, depending on the size of the organization and is required for each supplier manufacturing location that will be shipping to a VOLVO site.

2.5.2 Suppliers must achieve a minimum score of 60% and achieve an acceptable score on all “Stopping Parameters”. The SEM audit is based on the evaluation of 11 criteria:

2.6 INDEX AUDIT

2.6.1 VOLVO requires all new suppliers, sub-suppliers and sub-contractors using the processes included in the list of technologies to have an Index assessment of their production process prior to supplier selection in the sourcing process. 2.6.2 Current suppliers, who provide

products covered by any of the technologies listed below, but have not had an Index Audit assessment, should contact the responsible buyer host to arrange an audit. The Index Audit results are a major consideration in the sourcing decision process. The scoring of the Index Audit is similar to the scoring process used for the SEM or general Process Audit. Regardless of the score, suppliers are expected to work aggressively to address any concerns or action items identified during the audit. Current Index Technologies:

2.7 FINAL AGREEMENT

2.7.1 Once the supplier is selected, the Purchasing Agreement and Warranty Charter must be signed and returned to VOLVO. Templates for these agreements are available in the Request for Quotation package.

Company Profile

Management

Environment

Quality

Logistics

After-market

Competence

Product development

SUCCESSFUL COMPLETION OF THE SEM AUDIT IS REQUIRED

FOR THE AWARD OF VOLVO BUSINESS

Casting (Ferrous and aluminium)

Metallurgy (Forging, heat treatment)

Polymers (Plastic and Rubber)

Finance

Productivity

Sourcing

SECTION 3.0

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ADVANCED PRODUCT QUALITY PLANNING (APQP)

Driving Quality

In 2006, VOLVO adopted the AIAG guideline for APQP as the standard planning method for suppliers bringing products to production.

Suppliers are expected to develop a detailed Advanced Product Quality Plan for the development and prove-out of processes used to produce VOLVO products.

The following chapter describes the expectations related to APQP and requirements for synchronizing the plan with the VOLVO Global Development Process (GDP).

Staying competitive in the markets where VOLVO participates requires continuous development of new products and regular improvements to existing product.

Supporting the introduction of new products requires a well-defined and organized process for project planning and launch. VOLVO organizes all new product introductions into projects. Suppliers are required to have an effective project planning process that is capable of supporting the VOLVO process and timing for project management.

Software APQP

Responsibilities Key

Components

Planning Scope APQP

Reviews

SECTION 3.0

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VOLVO requires suppliers to use Advanced Product Quality Planning (APQP) as a tool to support process development, integration and prove-out. The AIAG publication “Advanced Product Quality Planning (APQP) and Control Plan” should be used as a reference in developing these plans. Supplier’s plans should include VOLVO specific requirements.

3.1 SCOPE

3.1.1 We believe that the ultimate quality of delivered parts is determined during the design and development phase of the production process. VOLVO expects suppliers to create product launch plans to support:

Launch of new components intended for serial production.

Significant changes to existing products, or process

Development of new manufacturing processes

3.2 APQP – PLANNING

3.2.1 The objective of the planning process is to deliver the project on time, at cost and at the highest level of quality. The initial development of the APQP should begin upon receipt of the RFQ. This initial plan should be included as part of the RFQ response package.

This timing chart gives an overview of the activities typical of a standard launch. This is provided as a reference only. Suppliers are encouraged to develop a plan suited to their specific business. An example of a generic project plan, as expected by VOLVO, is available on the VOLVO supplier portal.

3.3 RESPONSIBILITIES IN APQP

3.3.1 VOLVO has learned that successful projects require a level of cooperation and teamwork between customer and supplier. A detailed list of the shared roles and responsibilities is available on the supplier portal. Here is a short list of the key areas of responsibility.

SUPPLIERS ARE RESPONSIBILE TO DEVELOP AND DRIVE APQP

FOR ALL COMPONENTS.

APQP identifies the tasks to be completed, the expected timing, assigned responsibility for completion and the critical path.

The SUPPLIER is responsible to:

Assign a dedicated project manager or APQP leader

Organize a cross-functional APQP project team

Develop and execute an APQP Plan to support a successful product launch

VOLVO is responsible to:

Identify the VOLVO project team members,

Assign an SQE to support the completion of APQP activities with the project team

Identify key milestones and project parameters

SECTION 3.0

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Concept Study Detailed development Final development Industrialization

DG FDCG IG PPG RG

A

Release

B

Release

C

Release

P

Release

Supplier

selected

PPAP

Approved

Volvo

PPAP

order

VOLVO Project team performs

APQP activities under its

responsibility and consult Supplier

APQP deliverables

Concept Study Detailed development Final development IndustrializationConcept StudyConcept Study Detailed developmentDetailed development Final developmentFinal development IndustrializationIndustrialization

DG FDCG IG PPG RG

A

Release

B

Release

C

Release

P

Release

Supplier

selected

PPAP

Approved

Volvo

PPAP

order

DGDG FDCGFDCG IGIG PPGPPG RGRG

A

Release

A

Release

B

Release

B

Release

C

Release

C

Release

P

Release

P

Release

Supplier

selected

Supplier

selected

PPAP

Approved

PPAP

Approved

Volvo

PPAP

order

Volvo

PPAP

order

VOLVO Project team performs

APQP activities under its

responsibility and consult Supplier

APQP deliverables

SQE coordinates

completion of

VOLVO APQP

activities with the

Project Team

Supplier performs

APQP activities under

its responsibility

Supplier

Product

Design

Supplier

Process

Design

Supplier

Process

Development

Supplier

Product &

Process

Validation

Supplier

Product

Design

Supplier

Product

Design

Supplier

Process

Design

Supplier

Process

Design

Supplier

Process

Development

Supplier

Process

Development

Supplier

Product &

Process

Validation

Supplier

Product &

Process

Validation

APQP

KICK-OFF

review

APQP

PRODUCT DESIGN

review

APQP

PROCESS DEVELOPMENT

review

APQP

LAUNCH

review

APQP

INDUSTRIALIZATION

review

3.4 KEY COMPONENTS DEFINITION

3.4.1 All parts used in the vehicle are important to customer satisfaction and the safe, reliable operation of the final product. However, there are some parts that require additional attention. At the start of a project, a cross-functional project team identifies parts that will be subjected to closer control and monitoring. These parts are designated as Key Components. The VOLVO buyer or Supplier Quality Engineer will notify suppliers of parts selected as Key Components and any associated requirements. Suppliers of Key Components will typically be expected to participate in APQP and joint steering committee reviews during the project.

Key component selection criteria

3.5 APQP REVIEWS

3.5.1 Suppliers of key components are required to report the project status at regular, established intervals during the project development. As a general rule, these reviews are held four weeks prior to the project milestone gates or drawing revision release. Suppliers should prepare for these project review meetings by completing or updating the APQP Review Template, their project plan and the project milestone dates. Suppliers can access the APQP Review information on the supplier portal under the e-Library, Quality, APQP/PPAP section. There are separate APQP Review Templates and requirements for design responsible suppliers and those responsible for production of VOLVO designed parts.

3.5.2 The initial APQP Review meeting (Kick-Off Review) should occur within two to four weeks after the award of business.

3.5.3 To support these reviews, VOLVO has developed a checklist designed to document the project status at each review. The information related to the “APQP review” file is available on the supplier portal. Suppliers are responsible to complete and maintain the information for each review meeting. The completed form will be used by the joint team as the basis for evaluating the project status.

3.5.4 This picture illustrates the relationship between VOLVO’s Global Development Process (GDP) and the supplier’s project plan. The illustration shown is for a project where the supplier is Design Responsible.

APQP Reviews are formal meetings where VOLVO reviews supplier’s project plan and status. During this meeting, VOLVO and supplier jointly review that the project is on track with respect to

deadlines and results.

Safety Critical components

Regulatory or legal requirements

Parts with critical characteristics

Supplier designed products

Complex part or component

Parts that constitute vital function in a system.

High value part or component

Expensive or long lead time tooling

Long lead-time part

Parts with known or potential quality concern

Extensive verification or validation testing

Parts with features that cannot be verified prior to use by a customer (unchecked characteristics)

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3.6 SOFTWARE APQP REQUIREMENTS

3.6.1 The process used for the quality assure of software is centered around Joint Reviews similar to those used for product development and production. 3.6.2 There are five Joint Reviews in a normal software development project:

Project Planning Review

Requirements Review

Initial Design Review

Final Design Review

(SW) PPAP Review

3.6.3 As the majority of software development occurs during the product design phase of the project, most of the reviews occur during this phase. The only exception is the SW PPAP Review.

3.6.4 The requirements applicable to supplier software projects and quality assurance system are described in a separate requirement document called Quality and Development Process Requirements (QDPR). Supplier delivering software to VOLVO shall be certified to level 3 according to an ISO 15504 (also known as SPICE) assessment, or have a plan for achieving certification according to the automotive SPICE assessment model( see www.automotivespice.com).

The graph illustrates the software quality assurance activities in relation to the APQP process and the VOLVO GDP system.

http://www.automotivespice.com/

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PRODUCTION PART APPROVAL PROCESS (PPAP)

Approval of New or Revised Parts

Product &

Process Changes

The Production Part Approval Process (PPAP) demonstrates that the manufacturing process used to produce parts for VOLVO is fully developed, thoroughly tested, and capable of serial production of parts conforming to the technical specifications.

For the PPAP (as for the APQP) VOLVO follows the AIAG requirements, with the exceptions for trucks and heavy equipment.

Sample parts and the supporting documentation are submitted to show evidence that:

The design records and specifications have been properly understood and met

The manufacturing process has the capability to produce conforming parts in the actual production environment.

The manufacturing process has the capacity to support production quantities at a consistent quality level.

Documentation Requirements

Significant Production

Run Process Reference

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4.1 REFERENCE

4.1.1 Suppliers shall ensure that the PPAP document and sample submissions are in accordance with the requirements of the Automotive Industry Action Group (AIAG) PPAP Manual (latest edition, using exceptions applied for truck and heavy equipment). Additional guidelines and a copy of the PSW template are available on the VOLVO supplier portal.

4.1.2 VOLVO requires its suppliers to follow the Customer Notification and Submission requirements as specified in the AIAG PPAP Manual. This includes but is not limited to:

4.2 PROCESS

4.2.1 VOLVO uses a four step release process for new part development. These releases are labelled, “A”, “B”, “C” and “P” releases with the “P” release being the final approved document package for the start of production. The PPAP process can only be completed and approved based on the final or “P” release of the specifications. 4.2.2 When the design has reached the “C” release stage, the VOLVO Buyer will issue a Sample Order to notify the supplier that a PPAP is required. At this point, the design is considered firm enough that suppliers are authorization to place tooling orders and start the production process design and development. This early release is intended to give suppliers as much time and information as possible to prepare for start of production. This sample order will be amended once the “P” documents and specifications are completed. 4.2.3 PPAPs can only be approved based on the “P” release of the drawing and document package, unless there is a clear agreement with the VOLVO SQE and an approved deviation. 4.2.4 The preliminary target date for PPAP submission may be included as part of the RFQ information. Additional information concerning the target date for PPAP submission will be included in the Sample Order. PPAP submission dates must be planned as a milestone in the supplier’s APQP plan. Any issues, delays or changes to the PPAP target date should be communicated to the VOLVO buyer and SQE. 4.2.5 The supplier is responsible for the PPAP preparation:

Suppliers must notify the VOLVO Buyer and SQE of the proposed shipment date; failure to acknowledge the PPAP order is considered agreement to the due date

Suppliers (Tier1) are responsible for the planning, approval, corrective action, follow-up and retention of PPAPs submitted sub-suppliers and sub-contractors

Supplier must indicate to the SQE if this PPAP part has been produced from new, revised or refurbished VOLVO Group owned tooling, including our T-Purchase Order Number as reference

Cpk studies for PPAP approval must be completed on a minimum of 30 pieces

Full documentation is required on five parts selected from the Significant Production Run

4.2.6 Upon satisfactory completion of all required measurements and tests, the supplier shall complete the required information on the Part Submission Warrant (PSW).

Completing the PSW

Suppliers are requested to use the VOLVO PSW form that is available on the supplier portal.

A separate PSW shall be completed for each VOLVO part number unless otherwise specified by the SQE.

Introduction of new components

Changes to an existing part

Drawing or specification changes

Corrections to a prior discrepancy

Supplier process change

Material changes or substitutions

Changes of sub-tier suppliers

VOLVO REQUIRES PPAP APPROVAL PRIOR TO SHIPMENT OF ANY PRODUCTS FOR USE IN

CUSTOMER VEHICLES

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The PSW shall be signed by the authorized supplier representative before submission.

4.2.7 VOLVO SQE will review all PPAP packages and assign one of the following:

Fully approved and in compliance with all specifications.

Conditional or Interim Approval.

Not approved. 4.2.8 In the case where interim approval is given, it must be supported with an approved Deviation. All deviation requests require review and approval by both VOLVO Product Development and the SQE. Full approval of the deviation also requires a plan from the supplier that addresses correction of all open issues.

4.3 SIGNIFICANT PRODUCTION RUN

4.3.1 A Significant Production Run (SPR) is required for all new part introductions and is the basis for the Production Part Approval Process. This sample run is to be conducted using production tooling/equipment, environment (including production operators), facility, and cycle time.

4.3.2. The “Significant Production Run” requires that an adequate quantity of parts be produced to allow:

Overall process stabilization time

Accurate calculation of manufacturing cycle time

Determine production through put time

Sufficient volume for completion of capabilities studies

4.3.3. The minimum quantity of parts to be produced during the Significant Production Run is specified by VOLVO but can be increased by the supplier. The number of parts produced during the Significant Production Run should be determined by the type of equipment, tooling and production processes required by the type of part. Suppliers should ensure enough parts are produced during the Significant Production Run to ensure that the process is fully tested. Samples used for the PPAP must be taken from the parts produced during the run.

4.3.4 The SPR also provides a good opportunity to identify and correct potential manufacturing process bottlenecks. To be fully accurate, the capacity calculated from the SPR results should take into account the actual OEE results from the process and include any planned down time.

DOCUMENTATION REQUIREMENTS-LEVEL OF SUBMISSION

4.3.5 Suppliers are required to submit a Level 4 PPAP package for all components unless other arrangements have been agreed between VOLVO and the supplier.

The minimum requirements for a Level 4 PPAP include:

Process FMEA

Control Plan

Dimensional results

Material test results

Performance test results

Appearance approval report if applicable

Part Submission Warrant

4.3.6 Suppliers shall only submit PPAP packages based on the production-released drawings (P-Drawings). A copy of the VOLVO drawing must be included in the submission package. PPAPs cannot be approved based on supplier’s drawings. Balloons supporting dimensional checks must be done on the VOLVO drawing.

4.3.7 The SQE may ask for the submission of additional information. Agreement to provide additional data

must be documented prior to submission of the PPAP. Prior to submission, suppliers should contact the responsible SQE to determine if additional documentation is required. Proprietary documents that cannot be

THE PPAP MUST BE FULLY APPROVED BY THE SQE BEFORE SERIAL PRODUCTION

AUTHORIZATION; OR INTERIM PPAP APPROVAL WITH APPROVED DEVIATION

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submitted must be available for review. Suppliers may be required to travel to VOLVO sites for review of proprietary documents.

Exceptions to PPAP level 4:

4.3.8 Upon VOLVO request, suppliers may be required to submit a Level 3 PPAP package for Key Components.

S= The supplier shall submit a copy of the records or documentation and retain a copy at appropriate locations

R= The supplier shall retain at appropriate locations and make available to the VOLVO upon request. *= The supplier shall retain at appropriate locations and submit to the VOLVO upon request

4.4 PRODUCT PROCESS CHANGE NOTIFICATION – PPCN

4.4.1 In accordance with the ISO/TS 16949 standard, the PPAP guidelines, and VOLVO Purchasing conditions, a supplier cannot implement a change to a product or production process after PPAP approval, without prior approval from VOLVO.

All proposed changes to the product, production process, material or suppliers after PPAP must be submitted to VOLVO for approval using the PPCN process. Requests for change must be submitted at least 12 weeks prior to the introduction of the change.

NO CHANGE TO PRODUCT OR PROCESS SHOULD BE IMPLEMENTED

PRIOR TO VOLVO APPROVAL

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4.4.2 The purpose of this requirement is to prevent quality & delivery issues resulting from unapproved, untested changes or modifications after PPAP approval. This applies, but is not limited to the following cases:

4.4.3 The supplier desiring or requiring a change shall submit a completed Product and Process Change Notification form to the VOLVO buyer with a copy sent to the Supplier Quality Engineer as soon as the modification project is known, and at least 12 weeks prior to the intended Start of Production. Suppliers may be required to submit additional information to support evaluation of the proposed change. The PPCN form is available on the supplier portal. 4.4.4 Since VOLVO functions as a global company with manufacturing functions on most continents, suppliers must be prepared to support the impact of a change request at all VOLVO using facilities. This expectation applies to all changes covered by submission and approval of a PPCN. Suppliers making a process or product change must be capable and willing to provide information and resources required to secure product quality and uninterrupted deliveries. 4.4.5 Introduction of changes without VOLVO approval may result in any or all of the following actions:

All costs related to correcting the situation created by an unauthorized change will be charged back to the supplier.

The supplier’s 3rd party Certification Body will be formally notified that the supplier is not following quality system or customer requirements.

Supplier will be required to complete corrective action and demonstrate effective controls to prevent recurrence .

Supplier will be put on hold for new business until effective corrective action is taken. 4.4.6 After receipt by VOLVO, the request is submitted to a team for analysis. Based on the impact to VOLVO and the risk associated with the change, the PPCN may have one of the following decisions:

Authorize the supplier modification.

Ask to adapt the content of the supplier modification.

Ask the supplier to delay the implementation until extra actions/verifications are performed.(Actions include, but are not limited to, audits, safety stock, testing, …)

Ask the supplier to cancel the proposed modification.

4.4.7 Once approved by VOLVO suppliers will be notified by an official letter. Upon receipt of the approval letter, suppliers should implement the modification project according to the agreed implementation plan.

4.4.8 The level of PPAP documentation required to support the introduction of the change will be determined by the SQE. Authorization to start shipping (with the changes implemented) is only granted via the return of the signed PSW following PPAP approval.

Transferring of the production line: partly or totally; to a new or existing location, plant or building

New production layout or changes to production line

Change of a sub-tier supplier

Changes of a process at a contract supplier, (surface treatment, machining…..)

Packaging changes or repackaging operations

Change at sub-tier suppliers that affect fit, form or function of the product

Renewal of current tooling

Change to the raw material

Outsourcing all or part of production to a sub-tier supplier

Request for change to product design including dimensions, tolerance, function, appearance

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VOLVO SPECIFIC REQUIREMENTS

Customer Specific APQP Activities

In addition to the specific activities required by Advanced Product Quality Planning, VOLVO has developed a select group of activities that support the process of new part introduction. These additional requirements have been developed in response to lessons learned in previous projects or to address specific customer needs.

Frequently these tasks require close cooperation between the members of the VOLVO and supplier’s project team. Suppliers are encouraged to be full participants in these activities. All of the tasks required to support these activities should be included in the supplier’s project plan.

Review of Technical

Specifications

Special Characteristics

Prototype Parts Cleanliness

Requirements

Conformity of Production

Part Application Agreement

Part Handling Review

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5.0 VOLVO SPECIFIC REQUIREMENTS

5.0.1 In addition to the requirements described in the AIAG APQP reference manual, VOLVO requests the planning and completion of the following cross-functional activities:

Review of Technical Specifications

Product Application Agreement

Part Handling Review

Process Audit

5.1 REVIEW OF TECHNICAL SPECIFICATIONS (RTS)

5.1.1 The goal of this process is to minimize the need for late design changes or design changes after the PPAP order or Tooling Order has been placed.

5.1.2 The Review of Technical Specification ensures that all the technical information defining the part or component has been thoroughly reviewed, clearly understood by the supplier and is feasible. The RTS process also provides the opportunity to collect and incorporate the supplier’s comments and suggestions into the drawing and technical specification. During the RTS process VOLVO welcomes supplier suggestions that will improve the quality of the product or reduce the costs associated with tooling or the product.

5.1.3 The RTS template is included with the RFQ documentation. The supplier is to complete the RTS compliance matrix and return with the RFQ documentation package. As part of this review, suppliers must determine if any of the technical areas included in the Index Audit section of this document apply to their products.

5.1.4 Suppliers must be prepared to prove or plan activities to ensure that all processes covered by a one of these technologies are performed by approved suppliers unless approved by the appropriate Technology Specialist.

5.1.5 After the matrix is submitted and reviewed by VOLVO, the RTS is signed by VOLVO and the supplier. Signing the RTS signifies agreement by all parties that the Technical Requirements, VOLVO Standards and General Specifications applicable to the part have been received, are understood and are achievable.

5.1.6 A copy of the completed RTS should be included with the PPAP documents when submitted. This ensures that all issues addressed during the RTS process are properly addressed during the PPAP review.

5.2 PRODUCT APPLICATION AGREEMENT (PAA) (If applicable)

5.2.1 The Product Application Agreement (PAA) is a process intended to ensure that suppliers fully understand and accept the installation conditions of a supplier developed component.

VOLVO has developed a unique system for control of technical documentation including the drawing. This system uses the Part Version Report (PVR) rather than a drawing as the top level document. The PVR contains the part and drawing revision information along with references to the technical information.

SUPPLIERS ARE RESPONSIBILE TO COMPLETE THE RTS FOR ALL NEW PARTS OR

DESIGN CHANGES

THE PAA IS MANDATORY FOR KEY COMPONENTS WHERE THE SUPPLIER IS FULLY

OR PARTIALLY RESPONSIBLE FOR THE DEVELOPMENT

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5.2.2 This process involves a joint review by the supplier and VOLVO of the performance requirements and the physical installation of the component in the final truck application. 5.2.3 By signing the PAA, the supplier agrees with the environment and application in which their product is to be used. The activity related to the PAA process can start as early as the APQP kick-off review but must be completed before Industrialisation Gate.

5.3 PART HANDLING REVIEW (PHR)

5.3.1 To ensure that supplier product quality is not compromised during shipping, storage, handling, or

installation after transfer of ownership to VOLVO, VOLVO invites suppliers to participate in a Part Handling

Review (PHR). The PHR is conducted at each VOLVO facility using the supplier’s product. The process

encourages suppliers to participate in an audit of handling, and installation practices from receipt at a

VOLVO facility until shipment to the next facility. The purpose of the audit is to share information and gain

the supplier’s observations that will prevent the possibility of compromising product quality due to improper

handling or installation practices.

5.4 SPECIAL CHARACTERISTICS

5.4.1 While all characteristics of a part are required to conform to specifications, there are a few characteristics that are selected as special characteristics. The selection criteria and guidelines related to special characteristics are based on the VOLVO specification: ‘Critical Characteristics of Design Products – Identification & Grading’, STD 105-0001. This standard describes the system used by VOLVO to highlight and grade critical characteristics appearing in drawings and technical specifications. 5.4.2 Special characteristics are identified using the symbols [1], [2], [3], [SC] or [CC] next to a feature in a VOLVO technical document. For all features identified as a special characteristic, the following requirement applies:

5.4.3 The requirements related to special characteristics are also applied to all parts classified as Safety

Critical Characteristics

level [1], [CC] Critical Characteristics

levels [2], [3] or [SC]

Process under statistical control

Normally distributed

Cpk≥1,67 Cpk≥2,0 for electronic components Checking frequency adequate to demonstrate

On-going process control

Compliance to capability requirement

Cpk≥1,33 Checking frequency adequate to demonstrate

On-going process control

Compliance to capability requirement

Control not achieved Preferred alternative

Electronic or Automated Poka Yoke Effectiveness verified once per shift

Electronic or Automated Poka Yoke Effectiveness verified once per shift

Control not achieved Accepted alternative

Process 100% automatic check 100 % control/inspection Full traceability

Process 100% automatic check

The PAA is designed to anticipate and prevent problems related to the integration of supplier designed parts into the systems or sub-systems of the truck. The process provides an opportunity for the supplier to review the performance of their product in

the final application.

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Governmental authorities, the automotive industry and environmental organizations have developed guidelines and regulations that are placed on vehicle manufacturers. These regulations apply both to the customer vehicle and to the manufacturing processes. Ensuring compliance to these regulations is referred to as Conformance

of Production or COP.

Critical or Conformity of Production (COP). The specific application and any additional requirements related to Safety and COP are detailed in the relevant sections of this document. 5.4.4 In addition to the special characteristics identified in VOLVO drawings or technical documents, suppliers must identify any special characteristics related to their product. Suppliers should communicate their standards for selecting and ranking critical or key characteristics and the methods used for designation on drawings. Suppliers shall also define any special considerations for handling, assembly, application, capability or use required to ensure safe, reliable performance of the product.

5.5 CONFORMITY OF PRODUCTION - COP

5.5.1 Individual components or systems that are directly connected to legal requirements or regulations or features of a part that have the potential to impact compliance, are identified using the symbols [2R] or [3R]. These symbols appear on VOLVO drawings or are stated within the related VOLVO technical specifications controlling the part. The determination of [2R] or [3R] grading is based on an assessment of how seriously the consequences of non-compliance with the requirement, for the characteristic in question, will interfere with the legal or governmental requirement.

5.5.2 VOLVO standard STD 105-0004 defines the guidelines for grading characteristics. This standard generally applies to components intended for powertrain applications (engines, transmissions and driven axles), but may apply to any component of a vehicle. 5.5.3 Suppliers must be well acquainted with the regulations and legal requirements that apply to their components. In all cases, the fulfilment of directives and regulations concerning Vehicle Approval and/or Certification system are the responsibility of the supplier. In some cases the supplier will carry the full responsibility for gaining component approval from the appropriate agent. Once approval of a COP related component is achieved, VOLVO prevents the introduction of any changes until the required testing has been completed and formal approval has been obtained. 5.5.4 All parts with features designated as [2R], [3R] are also considered “Key Components” and are subjected to the same level of control. The designation of [2R] or [3R] differentiates the degree of significance of the characteristic in question. 5.5.5 It is mandatory for [2R], [3R] parts to be inspected or tested and the necessary documentation (inspection results, test reports, certificates) to be kept at the supplier for a period of time consistent with the documentation retention policy. All inspections or tests required to ensure compliance to [2R], [3R] regulation must be included in the control plan. A summary of the results from inspections or tests should be communicated to VOLVO at regular intervals. Conformance to COP process requirements must be respected during the entire product lifetime. No changes to product or process are allowed without formal approval from VOLVO.

5.5.6 When characteristics for regulatory compliance are identified the following requirement applies:

ALL [2R], [3R] FEATURES MUST BE MEASURED AND THE RESULTING

DOCUMENTATION MAINTAINED

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COP Characteristics level 2R COP Characteristics level 3R

Process under control

Cpk≥1,33 On-going SPC data recording (Control charts or electronic data stored and available upon request.)

Cpk≥1,33 Inspection completed to control plan (Inspection results recorded maintained and stored, available upon request.) Cpk analysis conducted every 12 months

Process control not achieved

Machine or process 100% automated checking surveillance.

Machine or process 100% automated checking surveillance.

5.5.7 In the event of non-conformance of an identified characteristic or component escaping the supplier’s location, the following actions must take place immediately:

Containment at supplier, VOLVO locations and In Transit

Short term corrective action

Notify the VOLVO buyer and SQE

Begin cause analysis

Develop an action plan to recover full conformance

5.6 CLEANLINESS REQUIREMENTS

5.6.1 When the part drawing or the Technical Requirements (TR) include a specification for cleanliness in accordance with STD: 107-0002, suppliers are required to perform cleanliness testing at intervals that demonstrate adequate control of the cleaning process.

5.6.2 In addition, a cleanliness audit in accordance with STD: 107-0003 may be required by the assigned SQE. The responsible SQE will provide the appropriate information if a cleanliness audit is required.

5.7 PROTOTYPE PARTS

5.7.1 To support design verification testing, or early build trials, suppliers may be required to deliver prototype parts. By the VOLVO definition, prototype parts are any parts that are built on a production process other than the final PPAP approved process. Any prototype parts produced after the “C” Release of the drawing must be built on production intent tooling and are required to be fully conforming to the product design requirements unless approved by VOLVO engineering and supported by an approved deviation.

Example: Cleanliness Requirement Call Out

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5.7.2 Suppliers are required to develop a Prototype Control Plan to support the production, inspection and testing activity. 5.7.3 Prototype parts, where the part or any of the features of the part fall under the requirements for Conformity of Production, Safety Critical or special characteristics, must meet the requirements as defined in the related section of this manual. The section of the capability requirements chart “Process control not achieved” shall be applied. All special features must be clearly identified in the Prototype Control Plan. 5.7.4 Unless otherwise agreed between the supplier and VOLVO, suppliers of prototype parts are required to perform 100% measurement evaluation prior to shipment to VOLVO. The documentation demonstrating the inspection and the actual measurement values must be recorded and copies of the records forwarded to VOLVO at the time of shipment. All shipments of prototype parts must be clearly identified as a shipment of prototype parts using an orange label with the word PROTOTYPE prominently displayed on the exterior of the shipping skid or container. Specific details related to shipment guidelines, the prototype identification label and documentation requirements can be obtained by visiting the VOLVO Supplier Portal or by contacting the buyer that placed the prototype order. 5.7.5 Prototype parts must be clearly identified with the part number, the part version and marking that allows the part to be identified as a prototype after installation. The purpose is to identify prototype parts so they are clearly identifiable in the production environment and on vehicles. The intention is to insure that prototype parts can be easily differentiated from PPAP approved P release parts. Prototype specific identification should be appropriate to the part and agreed between the supplier and VOLVO engineering. 5.7.6 Unique requirements related to prototype parts specific to a VOLVO plant, business unit or region are available on the supplier portal or by contacting the buyer.

5.8 PRELAUNCH CONTROL PLANS

5.8.1 Suppliers are expected to use pre-launch control plans to increase the level of quality controls applied during ramp up and early production stages of new part launch. A prelaunch control plan is defined by increased frequency, levels of inspection and increased controls during the early stages of production. The purpose is to protect the customer from problems until process controls can be refined and start-up problems can be identified and resolved. The level of controls within the control plan should be adjusted once the production process has been stabilized and process control can be assured. Additional information regarding VOLVO expectations and requirements for control plan development can be obtained from the SQE assigned to your organization. 5.8.2 Suppliers may be required to implement a separate inspection activity at process start up that is independent of the inspections and controls required by the control plan. The purpose is to verify the affectivity of the control plan, and determine the capability of the production process. The application of this additional control may be required by the VOLVO SQE for early production when a supplier’s performance indicates that current controls are not adequate to identify and address problems prior to reaching the customer. Shipments of products that have been through additional process controls should display prominent notification on each shipping unit (box, package or skid).

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SAFETY MANAGEMENT

Protecting the Customer

From the founding of VOLVO in the 1920’s, quality and safety have been core values of the corporation. Since that time, the continued commitment to the research and development of new and often unique safety solutions has made the VOLVO name synonymous with safety around the world. Today, Quality, Safety and Care for the Environment continue to be the core values of the organization and form a foundation for all business practices including the cooperation between VOLVO and our suppliers.

The VOLVO definition of safety not only includes the safety of the immediate user of our products, but also understanding the entire scope of potential impact of our products on society.

The primary objective is to develop products that assist in preventing accidents from occurring or, in the event an accident does occur, to minimize the consequences for the drivers and others on the road. The supplier’s contribution to safety lies in developing innovative solutions, implementing safety features and producing fully conforming products. The VOLVO safety management program focuses on both the suppliers’ management systems, and product quality related to safety.

Traceability Safety

Management Audit

Production Requirements

Identification Responsibility

More information on VOLVO group safety policy can be found at:

http://www.volvo.com/group/global/en-gb/volvo+group/ourvalues/safety/safety.htm

http://www.volvo.com/group/global/en-gb/volvo+group/ourvalues/safety/safety.htm

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6.1 DEFINITION

6.1.1 Safety requirements are determined based on the potential of a feature, product or system to create a personal hazard to any person in contact with the products or effects caused by the product. A Safety Customer Effect is considered when a danger can lead to injuries to vehicle operator, passengers, other travelers, passers-by or maintenance personnel.

6.2 RESPONSIBILITY

6.2.1 The production of safe, fully conforming products to the VOLVO Group companies is the supplier’s responsibility and is part of the supplier’s contractual commitment. Any assistance provided by VOLVO does not in any way limit the supplier’s responsibility to supply parts that conform to all technical specifications, standards, regulatory, contractual and legal demands. 6.2.2 Suppliers are required to conduct a criticality analysis for features of the product design and production process that could result in a safety effect. For suppliers having design responsibility, special characteristics related to safety must be clearly identified within their design specifications, verification/validation plans, drawings and technical documentation. Suppliers of products impacting safety and who are design responsible suppliers are required to develop System, Sub-System, Design and Process Failure Modes Effects Analysis to assist in the analysis, and identification of potential safety effect features of the product. 6.2.3 Suppliers are responsible to ensure that all sub-suppliers and contractors are aware of and comply with the requirements related to safety requirements. Tier I suppliers must have procedures and practices to ensure an adequate level of control and requirements are deployed at all suppliers or sub-suppliers whose product or processes could have an effect on safety related features.

6.3 IDENTIFICATION

FEATURE IDENTIFICATION 6.3.1 A safety critical characteristic is identified when non-compliance with the requirement has the potential to lead to a Safety Customer effect.

6.3.2 If any feature of a part is identified as having an impact on safety, the parts is considered safety critical. Suppliers of a safety critical part are categorized as a Safety Part Supplier. Safety Critical related features are designated by the presence of the symbol [1] next to the feature on the drawing or in a specification.

6.3.3 The VOLVO standard, ‘Critical Characteristics of Design Products – Identification & Grading’, STD 105-0001, describes the system used by VOLVO to identify, highlight and grade critical characteristics. PRODUCT IDENTIFICATION 6.3.4 The methods used for marking lot/serial numbers on safety critical parts must support identification, traceability and failure investigation through all phases of the products life. In principle, the serial number or lot number should be applied to the actual part and preferably should be easily visible when mounted on the vehicle.

6.3.4 Unless otherwise specified in product documentation, the preferred method for marking is:

Item serialization

Bar code (In Accordance With VOLVO STD 103-0013 or VOLVO approved alternative)

Recording of safety critical product or process parameters (Preferred)

Recording OK/not OK is acceptable with evidence of 100% effectiveness

6.4 PRODUCTION REQUIREMENTS

VOLVO MUST BE NOTIFIED IMMEDIATELY

IN THE EVENT A NON-CONFORMANCE OR POTENTIAL CUSTOMER RISK IS IDENTIFIED

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6.4.1 With regard to dimensional, material, test and functional requirements for product features identified as safety critical [1] or [CC], the following requirements apply and supersede the general requirements. Safety critical characteristics must be clearly identified throughout the manufacturing process and in all associated documentation such as process FMEA, control plans and work instructions.

6.4.2 Capability requirements for parts identified with [1] [CC] characteristics are described below:

Critical Characteristics

level 1, [CC]

Process under control

Cpk≥1,67 Cpk≥2,0 for electronic components Checking frequency must demonstrate On-going process control Compliance to capability requirement

Process not under control Preferred Alternative

Automated or electronic Poka Yoke (Effectiveness verified once per shift)

Process not under control Acceptable Alternative

The process must have 100% automatic check 100 % inspection control 100% traceability

6.4.3 Data records resulting from SPC, automated checking, and inspection results must be available for download upon request by the VOLVO SQE. The data must include identification of the production lot or serial number information. 6.4.4 In addition to the demands detailed in the table above, the supplier must apply the following requirements on the shop floor;

Identification of the operations which have a direct or indirect influence on safety feature

Clear signs or placards defining the characteristic and potential effects of non-compliance

Training status and authorization for all operators working on safety feature related workstation

6.4.5 During the APQP, Process Audits or PPAP activity, the VOLVO SQE will verify the evidence of completion and compliance to these requirements for concerned products. 6.5.6 Thorough documentation is necessary in order to;

Demonstrate that critical components do not have any safety related defects, either from VOLVO or supplier.

Demonstrate that both VOLVO and legal requirements are met.

Limit the number of products subjected to field actions, if any.

6.5 SAFETY MANAGEMENT AUDIT

6.5.1 Suppliers of safety critical components or assemblies must have safety system requirements embedded in their quality management system. Suppliers must be able to demonstrate they have the organization, systems, processes, and competences to manage the VOLVO requirements related to safety critical features. 6.5.2 VOLVO has developed and uses a technical audit to evaluate the Safety Management Systems of suppliers of safety related parts. This audit evaluates the presence of an adequate management system and

NO DEVIATIONS ARE ALLOWED ON SAFETY CRITICAL FEATURES

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the capabilities to properly manage safety parts through-out the production process. A Safety Management Audit (SMA) will be conducted during the sourcing process and potential suppliers are required to achieve a passing score prior to the award of business. 6.5.3 Suppliers that achieve a passing score but do not achieve the preferred 90% are required to develop a detailed action plan with a timeline for achieving the 90% score. This plan must address all audit findings. After achieving a 90% score, suppliers are re-audited periodically to ensure that the SMA systems and processes impacting quality remain in place. VOLVO reserves the right to conduct a Safety Management Audit at any time following a major quality spill or recall. 6.5.4 A copy of the Safety Management Audit template is available for review on the VOLVO supplier portal.

6.6 LOT TRACEABILITY REQUIREMENTS

6.6.1 The basic requirements for lot traceability are covered under the section on Production Requirements. The following requirements apply to safety critical parts, components or assemblies and are in addition to the basic traceability requirements. Suppliers shall have an effective system of traceability that ensures delivered product can be traced from a finished product in the customer application back to specific lots, sub-components, parts, blanks and raw material. 6.6.2 In addition to component/materials traceability, the system must be capable of providing the production history of a lot or serial number. This history must include:

- Rework operations or activity - Product and process special characteristics - Test records - Process parameters influencing conformance - Machine settings influencing conformance - Maintenance activity of machines, equipment, jigs, gages and test equipment - Operators and personnel qualification records for operators performing the work

6.6.3 If product is controlled in lots or batches, a risk analysis related to severity of non-conformance and probability of occurrence must be conducted and used in establishing the lot sizes to minimize the impact of product recall. 6.6.4 The minimum requirement for storage of information related to safety critical parts is 15 years from date of manufacturing. Any additional requirements related to storage related to applicable legal requirements must be maintained.

6.7 PASS THROUGH REQUIREMENTS

6.7.1 “Pass Through Parts” are defined as parts that are shipped to VOLVO by a supplier who processes

parts from their suppliers, without value added activity or modification to form, fit or function to the safety

critical feature. Tier I suppliers assume all responsibility for the quality of “Pass Through Parts” that are

considered safety critical. This requirement applies to parts or features identified as Safety Critical by either

VOLVO criteria or criteria identified by the supplier as having the potential to impact safety.

6.7.2 A VOLVO SMA on-site audit will be conducted at the supplier of Safety Critical “pass through parts”.

The VOLVO safety auditor will conduct the audit focusing on Chapter 1 – “Company Management” and

Chapter 4 – “Supplier Chain Management”.

6.7.3 VOLVO requires Tier I suppliers to have an active Safety Management Audit process for their

suppliers. For those suppliers that do not have an audit process of their Safety Critical suppliers, VOLVO

does offer assistance to Tier I suppliers in developing a Safety Management Program. This assistance may

include conducting a joint audit at a Tier II supplier. The Tier I supplier is responsible to continue the SMA

program and follow up on all action items initiated during the original audit. VOLVO does not assume

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responsibility for the supplier’s SMA program, audit results, or follow-up activity. All responsibility for the

SMA program and the quality of safety related products remain the responsibility of the Tier I supplier.

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PRODUCTION REQUIREMENTS

Supporting Processes

While the production operations ultimately determine the quality of product, ensuring consistent quality also depends on the capability of supporting processes.

The processes described in this section do not directly determine or improve product quality, but failure of these processes has the potential to adversely affect product quality.

Requesting

Deviations

Sub-Tier Supplier

Controls

Laboratory

Requirements

Service Parts

Requirements Warranty

Lot Traceability First In First Out Packaging

Record

Retention

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7.1 REQUESTING DEVIATIONS TO SPECIFICATIONS

7.1.1 In the case where the supplier wishes to request a deviation to supply parts that do not fully comply with VOLVO requirements, the supplier must inform VOLVO and request approval. The request must be approved prior to shipment.

7.1.2 To request a deviation, suppliers must complete and submit a Global Deviation Request. This form is available on the VOLVO Supplier Portal in the Serial Production section of the Quality E-Library or by accessing the link below:

http://supplierportal.volvo.com/vsp/int/en/E-Library/Quality/3P_and_Powertrain/serial_production/Pages/Serialproduction.aspx 7.1.3 All shipments made under a deviation should be identified on the exterior of the shipping container. Specific labelling type should be agreed between the supplier and the SQE. Any label should include the deviation approval number. Suppliers requesting a deviation must complete an 8D response identifying the cause, corrective action, and measures taken to prevent recurrence.

7.2 LOT TRACEABILITY

7.2.1 Lot control and traceability should be established to limit the size and impact in the event of the need for product recalls or campaigns. The control system must be capable of linking production quantities to production processes to support root cause analysis activity. 7.2.2 When lot control is utilized, the system must establish and maintain one-to-one relationship between a lot/batch traceability number and a certain quantity of produced parts. If a traceability number, other than the serial number, is used for identifying serialized parts, a one-to-one relationship between the traceability number and the serial number must be maintained. 7.2.3 The extent of definition and control shall be based on risk analysis of the product and the potential impact to customers. Suppliers are responsible to ensure that the lot traceability system maintains its integrity through-out the entire supply chain, including raw material, purchased components/products, and sub contracted operations.

7.3 FIRST IN FIRST OUT INVENTORY CONTROL – FIFO

7.3.1 Suppliers are responsible to have inventory control systems that positively identify and control obsolete material to prevent inadvertent shipment to VOLVO. Where feasible, suppliers shall maintain First In/First Out (FIFO) inventory management practice. The system for FIFO control must ensure controls extend to rework/repair, test activity and off-site (sub-contract) processes.

7.4 SUB-TIER SUPPLIER REQUIREMENTS

7.4.1 VOLVO Purchasing requires that all sub-tier suppliers are 3rd

party registered to ISO 9001 with a plan for achieving ISO/TS 16949. VOLVO strongly encourages our suppliers to support ISO TS 16949 certification of their suppliers. Suppliers have full responsibility for the quality assurance and corrective action of products delivered from sub-tier suppliers for use in VOLVO products.

7.4.2 VOLVO Purchasing reserves the right to have direct access to sub-tier suppliers and processes that could have significant impact on final product quality. This will generally concern technical processes like surface treatment, heat treating, forging, casting etc. Please check with your SQE to determine if your sub-tier or contract suppliers would fall into one or more of these categories. Access to sub-tier suppliers or

VOLVO WILL NOT APPROVE DEVIATIONS TO SAFETY CRITICAL OR [2R] [3R]

CHARACTERISTICS.

http://supplierportal.volvo.com/vsp/int/en/E-Library/Quality/3P_and_Powertrain/serial_production/Pages/Serialproduction.aspx

http://supplierportal.volvo.com/vsp/int/en/E-Library/Quality/3P_and_Powertrain/serial_production/Pages/Serialproduction.aspx

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approval of sub-tier suppliers by a VOLVO Technical Specialist, does not change or reduce the supplier’s responsibility for quality of products supplied by those sub-suppliers.

7.4.3 VOLVO Purchasing requires suppliers to use the AIAG Production Part Approval Process (PPAP) and that this requirement is applied to sub-tier suppliers of products to be used in VOLVO products. Suppliers have the responsibility for managing the PPAP at their suppliers and maintain evidence of compliance.

7.4.4 Once a part is approved, changes at sub-tier suppliers that affect fit, form or function must be documented and approved by VOLVO using the Product Process Change Notification process.

7.5 PACKAGING

7.5.1 In support of the Core Value towards protecting the environment, VOLVO has developed a process for returnable packaging and integrated logistics system. Additional information related to packaging can be accessed through this link. http://supplierportal.volvo.com/vsp/int/en/E-Library/inboundlogistics/volvo_powertrain/deliverymanual/Pages/deliverymanual.aspx

7.6 WARRANTY

7.6.1 Responding to field warranty claims remains a top priority at VOLVO. When Field failures are determined to be the result of a supplier’s product, suppliers will be notified through receipt of a warranty claim. It is expected that suppliers will fully participate in the investigation, root cause analysis and corrective action when field failures are identified. Suppliers should have an established process for the handling, analysis, investigation, reporting and corrective action of customer field returns. VOLVO has developed and conducts a Warranty specific process audit of supplier’s capability to manage customer field returns. 7.6.2 If the non-conformance is generated by a supplier, a VOLVO warranty department may call the responsible supplier for immediate correction or replacement of products. The conditions defining response and responsibility are included in the Purchasing conditions, purchasing agreement and/or warranty charter. A copy of the warranty charter is included as part of the Request for Quotation.

7.7 SERVICE PART REQUIREMENTS

7.7.1 VOLVO has the same level of quality requirements and expectations for parts produced for service and aftermarket as required for production parts when service parts are identical to the serial production parts.

Please refer to contract order.

7.8 LABORATORY REQUIREMENTS

7.8.1 All suppliers’ laboratories or contract laboratories used to evaluate VOLVO products must comply with the requirement of Chapter 7.6 ”Control of monitoring and measuring devices” of the ISO/TS 16949. Laboratory and measurements reports must comply with the requirement of Section 4.2.4 ”Control of Records”.

7.8.2 In particular, laboratory and measurement reports shall include :

The identity and location of the laboratory used

References to the test methods used

Any deviation to the test method shall be noted

THE PRODUCTION PART APPROVAL PROCESS, DOCUMENTED BY PART SERVICE

WARRANTS IS REQUIRED FOR PRODUCTS FROM SUB-TIER SUPPLIERS

http://supplierportal.volvo.com/vsp/int/en/E-Library/inboundlogistics/volvo_powertrain/deliverymanual/Pages/deliverymanual.aspx

http://supplierportal.volvo.com/vsp/int/en/E-Library/inboundlogistics/volvo_powertrain/deliverymanual/Pages/deliverymanual.aspx

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Measurement results

All necessary materials and process traceability information on the tested components or samples

7.9 RECORD RETENTION

DOCUMENT TYPE

EXAMPLES MAINTENANCE INTERVAL

PPAP Documentation

Drawings, Process Flow Charts, Control Plans, FMEAs, PSWs, Manufacturing Instructions, etc

Duration of production and service activity Plus 1 year Unless otherwise specified by VOLVO

Quality Records

Inspection Records, Functional Test Results, Material Certifications, Torque Records Other Test Results (Cleanliness, etc)

3 years from date of production

Quality System Documents

Internal quality system audits, Product Audits, Management Reviews

3 years from date of creation

Product Safety Related Records

Inspection Records, Test Results, Material Certifications, Torque Records, Traceability Records

15 years from date of product manufacture

The above time periods shall be regarded as minimum. Retention periods longer than those identified above may be specified by an organization in its procedures.

These requirements do not supersede regulatory requirements.

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SUPPLIER PERFORMANCE MEASUREMENT

AND CORRECTIVE ACTION

Responding to Problems

Low

Performing Suppliers

Even under ideal conditions and careful preparation, problems may occur. In addition to performance, VOLVO measures a supplier based on their cooperation in aggressively seeking to resolve problems. Suppliers are evaluated on the promptness in response when notified of a problem, the timeliness of their response, and the effectiveness of actions taken to resolve the problem. VOLVO invites suppliers to work as partners in the problem solving process.

VOLVO recognizes that the performance of the supply base has a direct and immediate impact on organizational performance. In response to this, VOLVO has developed a system for the measurement and evaluation of supplier performance. The indicators resulting from this process are compiled every month and are reviewed and evaluated at all levels of the VOLVO organization. These measurements are available for review on the Supplier Scorecard on the supplier portal.

Continuous Improvement

Improvement Process

Audits

Quality Performance

Measurement

Supplier Scorecard

Non-conforming

Material

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In the event non-conforming parts or materials have been identified at a VOLVO location, suppliers will be notified using an INSPECTION REPORT [IR]. The Inspection Report is sent to an internet location along with an email to the supplier’s quality

contact.

8.1 MANAGING NON CONFORMING PARTS

INSPECTION REPORTS 8.1.1 It is in the interest of both VOLVO and the supplier, to identify and address non-conforming parts as quickly as possible.

8.1.2 Suppliers shall take all necessary actions to respond to nonconforming product that reach a VOLVO facility (production site, warehouse, etc). Every effort is taken to investigate and document non-conformances and to notify the supplier immediately. When possible, suppliers will be given early notification of a problem prior to the issuing of an Inspection Report (IR).

8.1.3 VOLVO has developed a set of guidelines used by VOLVO plants in determining the non-conformance quantity for each Inspection Report. These guidelines are referred to as the “Inspection Report Golden Rules” and are available on supplier portal. 8.1.4 All costs (administrative, sorting, handling, shipping, and rework) associated with addressing a non-conformance will be the supplier’s responsibility. These costs may include any secondary costs incurred by VOLVO resulting from a non-conformance. These include the costs associated with tear down, reassembly, re-testing, and logistics support. 8.1.5 Under normal circumstances, suppliers are expected to respond immediately to any nonconformance and ensure that all receiving plants are protected within 24 hours. Suppliers are required to notify VOLVO immediately if it is suspected that non-conforming material has been shipped to a VOLVO facility. 8.1.6 Depending on the type of non-conformance and material status, supplier parts may be sorted, reworked or adjusted. Supplier approval is required before any rework or adjustment will be performed. Suppliers should be prepared to take any or all of the following actions after nonconforming material are identified at a VOLVO facility.

Replacement nonconforming material

Provide resources to perform required sorting or rework

Provide third party sorting resources

Authorize VOLVO to begin third party activities on the suppliers behalf

Provide instructions and acceptance criteria required to support inspection, sorting, or rework 8.1.7 VOLVO has agreements with third party sorting companies who are capable of providing sorting activity on the part of the supplier. All costs associated with work and materials associated with the activity of this third party are the supplier’s responsibility. Suppliers have the option use this service or to contract a third party to do sorting or rework on their behalf. Third parties selected by the supplier must be approved by VOLVO prior to starting any sorting or rework. 8.1.8 Nonconforming parts or material will be returned to suppliers or scrapped at VOLVO based on supplier’s direction.

CORRECTIVE ACTION RESPONSE REPORTING 8.1.9 The 8 Disciplines (8D) process is a common problem solving process used in responding to customer returns or major quality issues. It defines the key steps involved in problem resolution including containment of the problem, root cause analysis, problem correction, and problem prevention. 8.1.10 Each time a non-conformance or a defect has been documented, the causes for the problem must be investigated and reported. It is recommended that suppliers respond using the VOLVO 8D format. A copy of the 8D template is attached to each Inspection Report. A copy is also available in the e-library on the VOLVO supplier portal. Suppliers may respond using their corrective action format as long as it includes all key areas of the 8D format. To avoid delay and extra work, suppliers should submit their corrective action

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The scorecard is a tool for monitoring the supplier performance. The scorecard is made available to suppliers to allow them to be proactive in addressing production quality issues. The scorecard can also assist in reviewing performance for negative quality trends.

response format for approval to their SQE. 8.1.11 On a continual basis, supplier performance is monitored for the following performance indicators:

CORRECTIVE ACTION RESPONSE TIMING

8.1.12 It is of vital importance that the supplier starts the problem solving process upon notification. It is critical that appropriate actions occur immediately to contain the problem and avoid any further disturbances to production or potential quality hazard.

8.1.13 When notified of a non-conformance suppliers are requested to react in accordance with the following timeline:

Immediately: Acknowledge receipt of IR

24 Hours: Begin containment activity to include sorting internally, in-transit and at Volvo, (3rd

party allowed). Problem analysis started.

48 Hours: Containment completed and short term corrective action fully implemented

10 working days: (Timing starts after confirmation of non-conformance) Root cause analysis complete for both occurrence & non detection, permanent corrective action defined and implemented

20 working days: Effectiveness of permanent corrective action checked and recurrence prevented

8.1.14 If the resolving time lasts longer than 20 days, the supplier must reach an agreement with SQE. 8.1.15 In addition to correction of the documented problem, suppliers shall apply the lessons learned to all similar products or processes. (Horizontal Deployment). Permanent countermeasures for all defect categories should be

implemented for all parts and processes.

8.2 SCORECARD PRESENTATION

8.2.1 VOLVO maintains a scorecard of the quality and delivery performance for each supplier that delivers parts to a VOLVO facility. The measurements on this scorecard are regularly reviewed to track supplier performance and identify negative trends.

8.2.2 This information is available for supplier review over the supplier portal. It is recommended that suppliers review this information on a regular basis. Regular review of their performance data allows suppliers to take action to address problems and trends before VOLVO is required to take action with the supplier.

AN 8D RESPONSE IS REQUIRED FOR ALL NON-CONFORMANCES

QPM Level

PPM Level

Delivery Precision

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8.2.3 The supplier’s performance is calculated for a calendar month and the scorecard is updated during the first half of the following month. Information about the latest update can be found under “information/sources”. The scorecard shows information for a month, but ratings of a supplier’s performance are based on a three month rolling average. Information for other periods is available using the ‘View Performance Breakdown’ page. 8.2.4 In addition to performance information, the scorecard contains other important information for the supplier. This includes information related to:

REJECTED PARTS PER MILLION (PPM)

8.3 QUALITY PERFORMANCE MEASUREMENT (QPM)

The QPM score is calculated based on performance for a three month window. 8.3.2 The QPM process has been developed as a better indicator of a supplier’s actual performance than using PPM alone. Including the actual number of parts rejected, the number of Inspection Reports written and the value of rejected parts compared to the value of parts delivered compensates for anomalies inherent

Supplier address and company structure

Supplier Evaluation Audit Results

Purchasing Contracts

Quality Certificates

Environmental Certificates

REACH Compliance

Agreements.

Supplier quality and delivery performance

Supplier Sales to VOLVO

VOLVO Buyer

Supplier Host

Supplier contact persons for VOLVO Group co-operation

EDI Capability

Supplier portal - enter password

Evaluations and

certificates

Sel

ect

Select

The information in the scorecard provides a picture of how VOLVO views the supplier ability and capability. The information in the scorecard is routinely used in making sourcing decisions.

To access this information, suppliers should contact their respective VOLVO buyer.

PPM is a key indicator of the quality of products shipped to a VOLVO facility. (0 Km rejections).

QPM is a key indicator of supplier performance that reflects the impact that delivery of nonconforming parts has on VOLVO over the prior three months.

8.2.5 The rejected PPM measurement is calculated as the number of nonconforming parts identified divided by the number of parts delivered, normalized over one million parts. Parts per million is calculated at the beginning of the month for the previous month. PPM performance visible on supplier scorecard is based on a rolling three month period.

8.3.1 Quality Performance Measurement (QPM) is a tool developed by VOLVO to provide an objective method for measuring supplier performance. The QPM has proven to provide a better indicator of supplier performance than by using PPM alone.

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in the PPM calculation. Example: If a supplier had 1 part from a shipment of 10 pieces rejected during a three month period, the resulting PPM for that period would be 100,000. The related QPM for this same three month period would be:

PPM: 20 + NCp: 5 + IR: 0 + V/V: 20 = QPM: 45 8.3.3 The measurement criterion for each measureable is defined in the tables below:

8.3.4 Explanation of Terms used in QPM. Parts Per Million – The number of parts rejected, divided by the number of parts delivered multiplied by 1 million.

Inspection Report: Refers to the total number of Inspection Reports issued to a supplier during the three month window.

Non-conforming Parts: Refers to the total number of parts returned during the months being evaluated.

Volume Value: Is the percentage calculated by dividing the cost of returned material for a three month period by the total value of products delivered during that same time period. This calculation compensates for the situation where suppliers may have a large number of rejects of very low value products while successfully supplying high value products but at a lower volume. Formula for calculating QPM:

QPM = PPM points + NCp points + IR Raised points + Vol Val points. 8.3.5 The QPM is calculated and updated on the supplier score card on the second week of each month after the end of the 3 months being measured.

Parts Per Million

Inspection Reports Volume Value.

Noncoforming Parts

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8.4 DELIVERY PRECISION

8.4.1 A supplier’s delivery performance score is included on the Score Card as a measure of supplier’s performance. The supplier’s delivery performance is based on the ability to deliver correct quantities, on time. These two measurements are compared to the total of the supplier’s deliveries to determine the score. The delivery precision indicator is automatically calculated on the scorecard. 8.4.2 Delivery performance is calculated for both a supplier’s overall performance and also their performance to each VOLVO location. Questions related to delivery performance should be addressed to the supplier’s contact in the VOLVO materials group.

8.5 THE VOLVO PROCESS AUDIT

8.5.1 VOLVO routinely conducts process audits as a prevention activity as well as tool to support corrective action. Process Audits may be performed under any of the following circumstances:

During APQP

During production ramp up

New supplier evaluation

Introduction of a new process

Move production to a new location

Poor quality performance.

After a major incident 8.5.2 In addition to the situations listed, the production processes of components that have been identified as critical to the safe, reliable function of a vehicle are subjected to annual audits. These audits are to ensure that the production processes used during the “Significant Production Run” remain unchanged and capable of delivering consistent quality products. 8.5.3 VOLVO reserves the right to perform process audits whenever it is deemed necessary. Suppliers will be given reasonable advance notice of a pending audit. A copy of the Process Audit template used by VOLVO in conducting the audit is available for review on supplier portal. 8.5.4 One or more process audits may be required during the development and launch phases of the introduction of a new product or process. The respective VOLVO SQE will communicate this requirement to the supplier during the development of the APQP activities. In addition to audits conducted by VOLVO, suppliers are expected to routinely conduct internal audits of their production processes. Records of any findings from internal audits and actions taken in response to findings should be available for review during the VOLVO process audit.

8.6 CONTINUOUS IMPROVEMENT

8.6.1 Suppliers are expected to use the lessons learned from each incident to improve production process, product design, or underlying business systems. The goal is to eliminate the possibility of similar incidents, not only by making procedural and processes adjustments on the manufacturing floor, but by removing the environment that allowed the issue to surface. Lasting improvement requires correcting the systems and strategies that support the production process. 8.6.2 In addition to isolated events, suppliers shall use statistical data to continually evaluate and refine their processes. This evaluation should include analysis of quality incidents, PPM, scrap, downtime, and warranty failures. The clear objective of this analysis must be reduction of variation with the finished product. The supplier shall have on-going, active improvement projects that target two or three of the

Periodically VOLVO supplier quality will conduct an in depth audit of the process steps that have a direct impact on the quality of delivered products. Suppliers are required to develop a robust improvement plan to close the gaps identified during the process audit.

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The goal of the Low Performing Supplier (LPS) process is to initiate and drive improvement activities with VOLVO suppliers who are performing below expectations.

largest problem areas and be able to demonstrate a positive trend in reducing incidents and repeat occurrences.

8.7 LOW PERFORMING SUPPLIER – LPS

8.7.1 VOLVO monitors supplier performance on a monthly basis. When any of the monitored measurement parameters indicate negative performance trend or significant abnormality, the supplier is considered for elevation into the Low Performing Supplier process. 8.7.2 Suppliers will be notified of the potential inclusion in

the LPS process by a warning letter sent to the supplier’s quality department. The letter will include the reason or reasons a supplier is being considered for entry into the LPS process. 8.7.3 The LPS procedure provides a clearly defined guide to the analysis, actions and monitoring that will take place while a supplier is engaged in this process. Supplier improvement activities are initiated and monitored through a three-stage elevation process. Each stage has defined criteria for entry and exit and identified actions to be completed during the stage. Exit criteria are based on improved performance results and implementation of process improvements. Suppliers that do not meet the criteria for a stage by the target completion date are elevated to the next LPS stage level.

8.7.4 Each time the supplier is elevated to a higher stage, the actions required will be those of all previous stages, plus the additional actions required by the new stage. At any time that the exit criterion is met for a specific stage the supplier is moved to the “Monitoring” status. A supplier can be placed in the LPS based on performance for an individual part number, multiple part number bases or organizational performance. Supplier performance is tracked based on the VOLVO assigned Parma code.

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GLOSSARY OF TERMS

AAR Appearance Approval Report APQP Advanced Product Quality Planning (AIAG Reference Manual) BOM Bill of Materials COP Conformity of Production Cpk Capabilities Development Supplier Supplier who collaborates with VOLVO in development DFMEA Design Failure Mode & Effects Analysis ePS Electronic Purchasing System FMEA Failure Mode & Effects Analysis GDP Global Development Process GSC Global Sourcing Committee IR Inspection Reports INDEX Audit Technology based Audit KEP Key Element Procedure KPI Key Performance Indicator LPS Low Performing Supplier NC Non-Conforming (Parts) Non Development Supplier Supplier who produce a part according to a drawing given by VOLVO PAA Product Application Agreement PARMA code (or number) Supplier code in VOLVO information system. PFMEA Process Failure Mode & Effects Analysis PHR Part Handling Review PLCP Pre-Launch Control Plan PPAP Production Part Approval Process PPM Parts Per Million Product recall Process involving final customers to eliminate or reduce safety

related product problems. PSL Potential Supplier List PSW Part Submission Warrant PVR Part Version Report QDCF Quality Delivery Cost Features QJ Quality Journal QPM Quality Performance Measurement RFQ Request for Quotation RTS Review of Technical Specification Service campaign Process involving final customers to eliminate or reduce product

reliability problems. Shall Mandatory requirement Should Recommendation SOW Statement of Work SPC Statistical Process Control SPR Significant Production Run SQAM Supplier Quality Assurance Manual SQE Supplier Quality Engineer

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Revision Record

EDITION REVISIONS DESCRIPTION

01-2009 First release

06-2010 Integration of VOLVO Powertrain, VOLVO Buses, Prévost and Novabus in the scope of application. NO MAJOR CONTENT CHANGE:

Wording clarifications all along the document.

Reworked chapters :

Acknowledgement page, Conformity of production (COP) Special characteristics Lot traceability, Record retention,

Added chapter:

Laboratory requirements APQP reviews, Software,

Removed:

Appendixes, reference to toolboxes

01-2014 Chapters re organized Specifications for prototype parts added. Wording clarification all along the document New Graphics Deleted

• Acknowledgement • References to Premium Supplier Concept • PPM Agreement • Cpm for unilateral tolerances

Additions • Reference to Index Technologies • Added [2R] [3R] symbols • Cleanliness Testing Information • Expanded Prototype Part Information • Separate sections for Safe Launch and Pre-Launch Control

Plans • Pass Through Requirements for Safety Critical Parts • Additional information on QPM calculation

SECTION 1.0

VOLVO

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