Supplier Quality

Assurance Manual Revision: C S-002

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Table of Contents

Section HFI Quality Policy………………………………………………………………………… 3 Introduction………………………………………………………………………………. 4 1.0 Purpose………………………………………………………………………….. 5 2.0 Objectives………………………………………………………………………… 5 3.0 Scope…………………………………………………………………………….. 5 4.0 Supplier Selection & Assessment…………………………………………….. 5 5.0 Production & Prototype Components………………………………………… 6 5.1 Production Parts Approval Process……………………………………… 6 5.2 Design Changes…………………. ………………………………………… 7 5.3 Process Changes………………………………………………………….. 7 5.4 Communications……..…………………………………………………….. 7 5.5 Supplier Review…………………………………………………………….. 8 6.0 HFI Standard Purchase Order Requirements………………………………... 8 6.1 Labeling and Packaging……………………………………………………. 8 6.2 Documentation……………………………………………………………… 8 6.3 Print and Specification Requirements……………………………………. 8 7.0 Nonconforming Product & Supplier Corrective Action………………………. 8 8.0 Supplier Visits……………………………………………………………………. 9 9.0 Control of Supplier’s Subcontractors………………………………………….. 9 10.0 References……………………………………………………………………….. 9 11.0 Revisions…………………………………………………………………………10 Appendix A Production Part Approval Process– Warrant …………………..……………. 11 B Production Part Approval Process– Dimensional Results….………………. 12 C Production Part Approval Process– Sample…………………………………. 13 D Supplier Corrective Action Request…………………………………………… 16

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HFI Quality Policy

We will attain total customer satisfaction through continuous improvement of our distribution, manufacturing, marketing, sales, and customer service operations. The success of our company depends upon our ongoing commitment to quality through teamwork, education, communication, and consistency of all HFI employees, processes, and products.

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Introduction The basic requirements of HFI’s Supplier Quality Assurance system will best be satisfied through the practice of:

• Mutual respect and co-operation • Free exchange of information • Agreement on evaluation of performance • Commercial competitiveness • Acceptance of respective responsibilities • Conformity to specification

HFI is committed to the developing long-term supplier partnerships that will ensure the continued growth and prosperity for both companies. This partnership begins with gaining a thorough understanding of each organization’s people, business, needs, and capabilities. Through working together as a team, HFI and our partner suppliers will develop the best solution for our customers’ needs in terms of product performance, quality, cost, and delivery. HFI hopes this manual will help you with the basic requirements and expectations we have of you as a partner supplier. We welcome any suggestions for improvement, which will serve the mutual benefit of both HFI and our suppliers. If you have any suggestions for improvement or questions regarding these requirements in this manual, please contact: HFI Fluid Power Products Michael Heuser Quality Engineer 1232 Washington Avenue Racine, Wi 53403 262-634-5534 phone 262-633-9386 fax mheuser@hfifluidpowerproducts.com

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1.0 PURPOSE The function of Supplier Quality Assurance is to ensure that HFI receives products and services that meet all HFI requirements. 2.0 OBJECTIVES The objective of the HFI Supplier Quality Assurance initiative is to work with the supplier to achieve and maintain compliance to all requirements and promote the continuous improvement of the supplier. 3.0 SCOPE Applies to outside suppliers of assemblies, parts, materials and services to HFI Fluid Power Products. 4.0 SUPPLIER SELECTION & ASSESMENT Supplier Quality System Assessment The purchasing department will notify QC when a new supplier is added to the database. In order to be approved as a supplier, an assessment is made of the company’s ability to meet and maintain HFI quality requirements. This may include: A survey of the supplier’s quality system. Technical assistance may be requested from Engineering, Manufacturing, Sales or Purchasing as required. A visit by the supplier to HFI to review the application of the product or service supplied. Many potential suppliers may have a quality program in place that meets a recognized standard. HFI may accept as proof of acceptability a recent satisfactory survey by a mutually acceptable authority. We expect our suppliers to demonstrate continuous improvement in their quality system and to ultimately become ISO 9000:2000 compliant. Supplier assessment may be carried out in the following circumstances: • New supplier – HFI or customer specified • Existing supplier – new facility or change in ownership • Supplier of new product • Change of source for subcontracted parts, materials, or services. • New or modified tooling. • Re-assessment due to poor quality record. • Any change in manufacturing methods or processes.

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5.0 PRODUCTION & PROTOTYPE COMPONENT REQUIREMENTS Technical requirements. Due to the fact that many of HFI’s designs are based on SAE (Society of Automotive Engineers) specifications, suppliers should not assume that typical industry standards and tolerances apply. Suppliers should review all prints and documents carefully to ensure they meet HFI specifications. If a clarification is needed, please contact HFI’s Engineering department before quoting any orders or producing product.

5.1 Production Parts Approval Process (PPAP) Production Parts Approval Process submissions are required for:

• New product first runs for HFI. • Product modified by HFI engineering change (revision change). • New tooling or modification to existing tooling.

Production Parts Approval Process submissions may be requested for:

• Prototype components. • Quality concerns. • Design Changes • Process Changes • Communications • Supplier Performance Feedback

An approved PPAP is required before any production lots will be accepted. When an HFI Purchase order is received, the supplier must review all HFI’s design requirements and specifications. The supplier must provide feedback if their manufacturing process is not capable of meeting the defined requirements. All new product first runs (PPAP) submitted to HFI must be clearly labeled and have the attached documentation. This documentation is to include:

• Full inspection reports of one sample per cavity. The report must reference all HFI drawing or specifications (see attached appendix C for a sample report). A completed report includes a warrant cover sheet, a dimensional result sheet for each sample, and a print marked with all drawing dimensions and notes referencing the item numbers.

When specified by HFI, additional documentation may be required for the PPAP. This may include, but not limited to:

• Material certification. • Process control plans. • Process capability studies.

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The sample(s) used to complete the PPAP request must come from a significant production run using the same production tooling, materials, equipment, and methods as the remaining production volume will come from. A typical run will be from one hour to one shift.

When shipments arrive at HFI, they will be crosschecked to the supplier results and will be either accepted or rejected. HFI purchasing will notify the supplier of any rejections. Approval of samples by HFI will not reduce the supplier’s responsibility to continue supplying only conforming material.

5.2 DESIGN CHANGES

HFI may change its drawings, design and/or specifications at any time and generate an Engineering Change Notice (ECN). Depending on the change, HFI may elect to inspect per the revision in effect when the order was placed. Otherwise, HFI inspection will inspect product to the latest revision at the time of receiving the product. It will be the supplier’s responsibility to notify HFI immediately if the supplier cannot supply product that meets the new revision (i.e. parts in process or inventory). The supplier may request an engineering change to an item. Such changes should be directed to HFI’s designated buyer. Such changes may include:

• Specifications • Materials • Processes • Sub tier suppliers

HFI has many important customers. Therefore, the supplier shall not make any changes until permission is given by HFI purchasing representative.

5.3 Process Changes The supplier must inform HFI of any process or supplier changes, even when specifications are being met. The supplier must receive approval from HFI’s Engineering department before making any such changes.

5.4 Communications

Problems associated with documentation must be communicated to HFI immediately. Under no circumstances will the supplier accept verbal changes in design or specifications. All information on design and specification will be in writing. Design changes shall be communicated in released drawings. Specifications may be communicated through purchase order or drawings.

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5.5 Supplier Review All suppliers are evaluated as suitable vendors to HFI Fluid Power Products at a minimum of once per year. The Management Review Committee reviews and determines the status of suppliers based on quality, on-time delivery, pricing and service. The MRC also reviews the “Certified” status to applicable suppliers. A supplier may be reviewed at any time as determined by HFI purchasing staff or by the Production and Quality Planning Committee. The MRC may convene to specifically review a supplier, issue corrective action to a supplier, or to remove a supplier from the active supplier list. Any supplier seeking re-activation after removal must be approved by the HFI MRC. 6.0 HFI STANDARD PURCHASE ORDER REQUIREMENTS The following set of requirements applies to each HFI purchase order and is to facilitate the orderly processing of deliveries from suppliers:

6.1 Labeling and Packaging • All orders must be identified with the HFI purchase order number, HFI part

number, and the quantity. • A packing list that references the HFI purchase order and part numbers must be

included with each shipment. • Parts must be segregated and packaged to prevent damage from shipping and

handling. • Every container must be identified with the HFI part number. • Each part number should be packaged separately. • Component boxes shall not weigh more than 50 pounds. • If the parts originally ordered on the purchase order have been modified by an

ECN, then this notation must be included on the packing slip.

6.2 Documentation • When specified, Certificates of Compliance must accompany each shipment. • Full supporting documentation (PPAP and tagged parts) must accompany initial

production samples.

6.3 PRINT AND SPECIFICATION REQUIREMENTS • By acceptance of an HFI purchase order, the supplier acknowledges

understanding of all print and material specification requirements. This includes an understanding of inspection methods and capabilities.

7.0 NONCONFORMING PRODUCT AND SUPPLIER CORRECTIVE ACTION It is the responsibility of the supplier that only conforming material is delivered to HFI. In the event that a production nonconformance is identified, HFI will notify the supplier. The supplier is required to immediately inspect, segregate and correct similar parts within the supplier’s own facility to assure that HFI will not receive any additional shipments of suspect product until the cause for the nonconformity has been identified and controlled.

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Any product rejected due to the fault of the supplier will be subject to one or more of the following actions:

• 100% inspection at the suppliers cost. • Rework at the suppliers cost. • Return to the supplier at the suppliers cost.

HFI reserves the right to rework locally any supplier error that would pose a threat to production delivery dates being achieved. The supplier will be billed for the material and labor costs associated with the rework.

8.0 SUPPLIER VISITS Following supplier approval and initial sample approval, HFI Supplier Quality Assurance may initiate periodic reviews with Purchasing to ensure quality standards are maintained. The visits are also intended to open up the lines of communication and identify area for continuous improvement for both companies. The HFI representatives are expected to be provided with all necessary access to facilities and equipment so that an assessment can be made. 9.0 CONTROL OF SUPPLIER’S SUBCONTRACTORS A supplier shall not subcontract for components, processes, completed or substantially completed items supplied to HFI without prior written approval from HFI. The supplier will ensure that all sub-tier suppliers who have access (directly or indirectly) to HFI’s specifications, internal HFI data, or other confidential information will sign and be governed by a Nondisclosure Agreement (NDA) that is similar in form and substance to HFI’s NDA with supplier. Approval by HFI of a subcontractor selected by the supplier shall not alter the supplier’s obligation to HFI. The supplier is ultimately responsible for the continued compliance to quality standards of their subcontractors of materials and services. The supplier must assure that its suppliers meet all required quality standards. With reasonable notice, the HFI Quality department will be allowed access into any supplier’s sub-contract source accompanied by the supplier’s representative. Suppliers are responsible for keeping records to verify the quality of materials and services provided to HFI and from the supplier’s subcontractors and suppliers. 10.0 REFERENCES Production Parts Approval Process (PPAP) Report Supplier Approval Form Supplier Corrective Action Request

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11.0 REVISIONS Revision Prepared By Date Description Draft Michael Heuser 10-8-03 First Draft A Michael Heuser 4-1-06 Released B Michael Heuser 5-29-08 Updated DMR form C Michael Heuser 7-22-08 Update to S-000

Production Part Approval -Part Submission Warrant

kg

The results for dimensional measurements appearance criteria

Part Disposition

Part Number

Weight

Dated:

Purchase Order No.

Customer Name

Government Regulation

Additional Engineering Changes

Date

Date

Tooling: Transfer, Replacement, Refurbishment or additional

EXPLANATION / COMMENTS:

Supplier Authorized Signature

FOR CUSTOMER USE ONLY

Customer Signature

Phone No.

Approved Rejected Other

Title

statistical process package

No

Print Name

These results meet all drawing and specification requirements: Yes

I affirm that the samples represented by this warrant are representative of our parts and have been made to the applicable customer drawingsand specifications and are made from specified materials on regular production tooling with no operations other than the regular production process. I have noted any deviations from this declaration below:

(If "NO" - Explanation Required)

Customer Name / Division

City / State / Postal Code

material and functional tests

DECLARATION

Approval Report, Process Capability Results, Capability Study, Process Control Plan, Gage Study, FMEA.

Approval Report, Process Capability Results, Capability Study, Process Control Plan, Gage Study, FMEA.

Level 4 -Per Level 3, but without parts.

SUBMISSION RESULTS

Supplier Name

Other - please specify

Engineering Change(s)

REASON FOR SUBMISSION

REQUESTED SUBMISSION LEVEL (Check one)

Level 1 - Warrant, Appearance Approval Report (for designated appearance items only).

Level 2 - Warrant, Parts, Drawings, Inspection Results, Laboratory and Functional Results, Appearance Approval Report.

Supplier Code

Correction of Discrepancy

Change to Optional Construction or Material

Sub-Supplier or Material Source Change

Change in Part Processing

Parts Produced at Additional Location

Initial Submission

Materials / Functional

Checking Aid No. Dated:

Dimensional

SUBMISSION INFORMATIONSUPPLIER MANUFACTURING INFORMATION

Application

Part Name

Dated:Engineering Drawing Change LevelSafety and/or

Yes No

Shown on Drawing No.

Level 5 -At Supplier Location - Warrant, Parts, Drawings, Inspection Results, Laboratory and Functional Results, Appearance

Level 3 -At Customer Location - Warrant, Parts, Drawings, Inspection Results, Laboratory and Functional Results, Appearance

Engineering Change Level

Appearance

Street Address Buyer / Buyer Code

Production Part Approval -Dimensional Results

Part Revision

Sample #

Item OK NOT OK1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

Vendor

Customer Name Customer Part Number Part Name

Date

Technician

Dimension / Specification Supplier Results

Vendor Part No.

________________________________________________________Signature, Title, Date

Production Part Approval -Part Submission Warrant

X

kg

X

X

X

The results for X dimensional measurements appearance criteria

X

Part Disposition

1/28/2005

Part Number

Weight

Dated:

Purchase Order No.

M248248

Customer Name

Fitting, 90º Elbow

AGovernment Regulation

Additional Engineering Changes

Date

Date

Tooling: Transfer, Replacement, Refurbishment or additional

EXPLANATION / COMMENTS:

Supplier Authorized Signature

FOR CUSTOMER USE ONLY

Customer Signature

Quality Control Manager 123-456-7890Phone No.

Approved Rejected Other

Title

statistical process package

No

Print Name Don Smith

These results meet all drawing and specification requirements: Yes

I affirm that the samples represented by this warrant are representative of our parts and have been made to the applicable customer drawingsand specifications and are made from specified materials on regular production tooling with no operations other than the regular production process. I have noted any deviations from this declaration below:

(If "NO" - Explanation Required)

Customer Name / Division

City / State / Postal Code

material and functional tests

DECLARATION

Approval Report, Process Capability Results, Capability Study, Process Control Plan, Gage Study, FMEA.

Approval Report, Process Capability Results, Capability Study, Process Control Plan, Gage Study, FMEA.

Level 4 -Per Level 3, but without parts.

SUBMISSION RESULTS

Supplier Name

Other - please specify

Engineering Change(s)

123 Any Street

Any Town, WI, 12345

REASON FOR SUBMISSION

REQUESTED SUBMISSION LEVEL (Check one)

Level 1 - Warrant, Appearance Approval Report (for designated appearance items only).

Level 2 - Warrant, Parts, Drawings, Inspection Results, Laboratory and Functional Results, Appearance Approval Report.

Supplier Code

Correction of Discrepancy

Change to Optional Construction or Material

Sub-Supplier or Material Source Change

Change in Part Processing

Parts Produced at Additional Location

Initial Submission

Materials / Functional

Checking Aid No. Dated:

XYZ Company Dimensional

SUBMISSION INFORMATIONSUPPLIER MANUFACTURING INFORMATION

Application

Part Name

Dated:Engineering Drawing Change LevelSafety and/or

Yes No

Shown on Drawing No.

4/1/06

Level 5 -At Supplier Location - Warrant, Parts, Drawings, Inspection Results, Laboratory and Functional Results, Appearance

Level 3 -At Customer Location - Warrant, Parts, Drawings, Inspection Results, Laboratory and Functional Results, Appearance

Engineering Change Level

Appearance

Street Address Buyer / Buyer Code

Production Part Approval -Dimensional Results

Part Revision

ASample #

Item OK NOT OK1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

1Vendor

Customer Name Customer Part Number Part Name

Date

Don Smith 4/1/2006

Technician

Dimension / Specification Supplier Results

Fitting, 90º Elbow

1/16-27 NPTF

M248248HFI Fluid Power Products

XYZ Company M248248

Vendor Part No.

7/16-20 UNF 37º Flare Good

1/4-18 NPTF Good

1/16-27 NPTF Good

1.057

1.088

Steel

Zinc Yellow

7/16-20 UNF 37º Flare

1/4-18 NPTF

1.090

1.050

Steel

Zinc Yellow

________________________________________________________Signature, Title, Date

mheuser

Text Box

Appendix C

DEFECTIVE MATERIAL REPORTHFI Fluid Power Products 1210 Washington Avenue Racine, WI 53403 262-634-5534 Fax: 262-634-2127

DMR # 2527

Date 3/17/2008 HFI Part# 704-B-90

HFI Revision C

Inspector Mheuser

Shop/PO# 106037-00

Quantity 6900

Corrective Action Required?

Defect Excessive chatter on the barb area.

DMR completed

Assigned To:

Short Term

Root Cause

Preventitive Action

Complete date: 3/28/2008

Verification Date

4/4/2008

Author

HFI Complete date3-31-08

Authorized by

Disposition Complete

Disposition 100% sort visually for chatter. May need to wash first. See samples.

DMR COMPLETION

THIS PORTION TO BE COMPLETED BY THE INSPECTOR

THIS PORTION TO BE COMPLETED BY HFI ENGINEERING

HFI-8415-25-06

Scrap.

Mheuser

Disposition of Non-

Conforming Material

Authorized By:

Due Date

BUILDING 4 Screw MachineSupplier:

Classification Final Inspection

THIS PORTION TO BE COMPLETED FOR CORRECTIVE ACTION - RETURN TO PRODUCTION MANAGER WHEN COMPLETE

Disposition VerifiedVerification Date: 3/31/2008Labor Hours 12.0 Scrap Quantity: 272

Informational Only?

1232 Racine StreetRacine WI 53403262-634-5534Roy