Código de Manual

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Supplier Quality Manual

Version 2015

Código de Manual

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Fecha aprobación:

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Mission

Our mission is to achieve customer satisfaction through

quality and durable products with the confidence of

always delivering on time.

Providing personal and professional security to our HI-

LEX Mexicana Family, generate suppliers and

shareholders with a mutual satisfaction of goods and

services.

Vision

Keep the preference of our customers, exceeding their

expectations to generate more utilities, keeping our

costs together with the participation of all providers and

our Hi Lex Mexicana family.

Quality and Environmental Policy

HI-LEX Mexicana manufacture control cables and

window regulators for the automotive industry, we

are committed to prevention of pollution, to reduce

potential environmental impacts and compliance

with legal requirements, volunteers and our

customers. Through continuous improvement

activities we engage in quality, cost and delivery

of all our products.

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INDEX

TOPICS PAGE

Mission, vision, quality and environmental policy. 02

Supplier´s Objectives 2014 – 2015 04

Quality Creed 05

Supplier Quality Manual Objective 06

Purpose and Scope.

HI-LEX Mexicana Requirements.

I.- Requirements for the approval of potential suppliers 06

Initial contact with Supplier Developers of Purchasing Area.

Potential Supplier initial assessment.

Potential Supplier Process.

II.- Advanced Product Quality Planning. 07

III.- Production Parts Process Approval. 08

Special Characteristics.

IV.- Quality System and/or Production Process Evaluation and Audits. 11

V.- HI-LEX Mexicana S.A. de C.V. Specific Requirements. 12

Quality Certificate.

Information needed for label of Raw Materials and Components to be received at HLM.

Update drawings.

Invoicing.

Control statistical summary.

Engineering deviation request.

Packing and Shipping Identification

VI.- Continuous Improvement. 15

Engineering Change Requisition (ECR).

Supplier Cost Reduction Approvals.

VII. - Discrepant Materials report. 15

Corrective action report (8D´s) 16

Penalties 17

Recurrence and Containment Levels 17

Developing of Supplier Quality System Management 17

VIII.- Supplier Reliability. 17

Delivery on time.

Number of DMN issued.

Parts Per Million (PPM).

Response to problems (quality, commercial or development).

Cost.

IX.-Score analysis. 18

Classification of the reliability.

X.-Assessment tool owned by HI-LEX Mexicana 19

XI.-Glossary. 20

XII.-Appendices. 21

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October, 2014

Dear Supplier:

I want to thank the support you gave to Hi-Lex Mexicana during October 2013 – September 2014, in

your total performance it is so, that regarding quality and deliveries there was a lot of improvement

comparing to last year’s.

I would also like to share the objectives for this new FY October 2014 – September 2015 in which we

line up our supplier data base with the requirements from our customers. Following are the objectives.

OBJECTIVES FROM OUR SUPPLIERS FROM OCTOBER 2014 TO SEPTEMBER 2015

1. DELIVERIES: 100%

2. QUALITY (SQA)

a) PPM´s max. 15PPM

b) Product audit before shipment (Dock Audit).

These audits are just after packing the product, tag it and be in stand by for the shipment, in

that moment a random sample is taken and audited, the requirement is to fulfill that and

document it.

c) PPAP (PSW). Complete and on time according to the program agreement. Previously

revised and send to the titular buyer, in order to start the process of revision, evaluation and

approval from the ASQA of Hi-Lex Mexicana. PPAP samples are delivered together with

the PPAP information at level requested.

d) Quality Creed of Hi-Lex Mexicana and their suppliers. Signed Quality creed from Hi-

Lex Mexicana and suppliers.

e) Sub-suppliers audits. Have a supplier audits plan or evidence in which you can prove that

the sub-supplier sends the material according to Hi-Lex Mexicana’s specifications.

3. PRICES

a) Price reduction of 3%. to be implemented starting from Oct 01 2014

b) Improvement Ideas for cost reduction. Submit for analysis to our buyers during the first

quarter of this period (Oct-Dic14) at least 3 cost reduction ideas (associated with the

material, design or logistics), from each of the 100% savings obtained per idea implemented

50% will be shared with the supplier.

4. TERMS. Will be updated and sent from our buyers.

5. PAYMENT CONDITION. According to Hi-Lex Mexicana’s calendar.

6. ISO TS 16949 & ISO 9001 CERTIFICATE. All suppliers need to send to the SQA their

update certificate every time you have a renewal.

7. ISO 14000 CERTIFICATE. All suppliers must promote with their sub-supplier ISO 14000,

and have the ISO 14000.

This points will be measured, evaluated and taken into account for their. 1.- business revision, 2.-

negotations, 3.- awarded new project and 4.- participate in the annual suppliers event of 2015.

For any doubt or comment please contact directly our buyers.

Mr.Carlos García S.

Purchasing Manager

Hi-Lex Mexicana S.A de C.V.

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HI-LEX MEXICANA AND SUPPLIERS QUALITY CREED.

Hi-Lex Mexicana and its suppliers have a high commitment with their product quality in which we

declare our commitment in fulfilling the following basic principles.

1. We don’t have any material, process, drawing, lay-out and supplier change without our

customer authorization, if it´s necessary we will officially request throughout an ECR

(Engineering Change Request).

2. Assure that the materials used in the manufacturing out products is my responsibility, which is

why we audit, monitor and give support to our suppliers in order to assure that our supply chain

improvement continues.

3. Follow the procedures declared in our Quality Manual and we follow the standard in which we

have been registered.

4. We work through the Ethic and Conduct code of Hi-Lex Mexicana and the seven principles of

the Automotive Enterprise:

Professional conduct

No discrimination

No social harassment

No alcohol nor drugs

Confidentiality of personal data

Company’s documents and data (Confidentiality)

Company’s documents and data are protected

Be an Earth responsible company

Fulfill norms and practices

No forced work

Minors working under the permit of the tutor/according the law of the

country

Benefits and salaries according to the entity or country law

Safe work conditions

Working hours according to the entity or country law

Mr. Oscar Rivera Martínez Mr. Carlos García Sánchez

Supplier Quality Assurance

(SQA)

Purchasing Manager

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Objetive

All Hi-Lex Mexicana’s supplier must develop and maintain their quality system to provide continual

improvement, focusing on the prevention of flaws and the reduction of the process variety and the

disposals in the costumer-supplier chain.

Purpose

Communicate all Hi-Lex Mexicana, SA de CV, requirements to fulfill the quality system of the

companies which provide materials to our company.

Approach

All Hi-Lex Mexicana’s national suppliers of component parts for our control cables connection and

window elevators (directly to production) with a possible application of USA and Hi-Lex Japan

suppliers (TSK).

Hi-Lex Mexicana Requirements.

Hi-Lex Mexicana adopted and ISO/TS16949:2009 Quality System to its organization, and it is a

requirement that all of its component suppliers directly to production must have that certification in

their quality system SAC in ISO 9001:2008 as minimum. This requirements support and are an

extension during the purchase order.

Supporting documents.

The appendix A lists the supporting documents referred in this manual among all the sources. It is, Hi-

Lex Mexicana actual and future supplier’s responsibility to obtain and maintain the actual editing of

those documents.

HI-LEX MEXICANA REQUIREMENTS.

I.- Approval requirements for potential suppliers

Initial contact with purchasing supplier developers.

The potential suppliers and Purchasing Supplier Developers team get to an agreement regarding their

business opportunities, quality system and installation evaluations.

Initial potential supplier evaluation

Hi-Lex Mexicana Purchasing Supplier Developers team give out the Supplier Opening Format

(Appendix B, format HFM-C.005) to the new supplier. Same that should be totally filled in and handed

in back to Purchasing Supplier Developers.

This questionnaire will help to have a general vision and idea of the facilities, abilities, Quality system

operation and supplier study organization. In order to approve a new supplier Quality manager,

Purchasing manager, Finance manager, the Vice-president and the President have to sign as an

approval´s agreement.

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Potential Suppliers Process.

It is required for potential suppliers a Process (QAV2) audit (format HFM-C.09) for the current year. If

the process verification list (by commodity) is not available the auditor should stick to the control plan

regarding a part number that includes the most of the process including ins and outs.

For the quality system audit case this audit can be omitted only if the potential supplier presents a copy

of their ISO/TS 16949:2009 or ISO-90001:2008 certificate.

In case the potential supplier is starting to implement their quality system based on ISO/TS 16949:2009

or ISO-9001:2008 it is necessary that the supplier presents a preview of their certification program, this

will be evaluated (first part). The second parts evaluation not realized by HI-LEX Mexicana SA de CV

will be also evaluated. Once these documents are handed in, the approval should be done and the

supplier will be part of HI-LEX Mexicana SA de CV suppliers list.

Those suppliers who are not based on the quality system ISO/TS 16949:2009 or ISO-9001:2008 will be

conditions or rejected based on the result of the Supplier Opening Format (HFM-1.002)

II.- Advanced Product Quality Planning APQP

Purpose

Assures the realization of all the previous production activities of a product in order to achieve 0

defects and avoid delays. The assigned characteristics should fulfill requirements a 100%.

As a part of the APQP process the supplier feasibility revision is to assure that the product can be

produced as the drawing specification, Process ability and required capacity. These revisions should be

done before approving a contract.

The APQP process for suppliers must be accordance of APQP Manual of reference about A.I.A.G.

Supplier should have a main contact for each new program or component. Coordinator and

quality/purchasing representative of Hi-Lex Mexicana will review that each step should be confirmed

and verify it.

The supplier will state responsibility and application of:

The APQP Stages:

1.- Program Planning and Definition

2.- Product Design and Develop

3.- Design and Development Process

4.- Product and Process Validation

5.- Continuous Improvement

The Compliance dates of supplier to deliver at HLM must be labeled and we will apply a penalty if

supplier has a delay according schedule of tooling, design, samples, etc.

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III.- PPAP Production Part Approval Process

Is mandatory submit PPAP, when it happens any of situations set on chart I.3.1 of last edition of

PPAP’s Handbook

The levels to submit PPAP are:

Level 3.- For All suppliers certified on ISO TS16949: 2009

Level 3.- For all suppliers without certification and new components, unless there is

Another agreement with our ASQA

For all parts that will be delivered to our customer FORD, is mandatory requirement to submit PPAP

level 3 (Ref. chart I.4.1 Levels of submission of PPAP manual).

Likewise for our customer Honda is mandatory to meet with IPP system (Initial Production Parts),

which is basically to identify the first shipment byproduct of some change mentioned on the section II

of PPAP manual (Appendix C) and/or according another agreement with our ASQA.

Suppliers should send to purchasing area – Suppliers Development – such samples and documentation

requested on PPAP manual according last revision). The samples must be 6 pieces as minimum,

identified according pre-production scheme Label and must be adhered on the box Samples must be

marked considering same as samples that supplier use for their layout report and were taken from as

initial normal production that totals 300 pieces as minimum or with another agreement with HI-LEX

Mexicana and supplier.

PRE-PRODUCTION LABEL SKETCH

(Filling instructions)

If there is some doubt, you could contact to supplier developer or ASQA.

Supplier name _____

Parte number _____ Component Description ____ Engineering Level ___

Quantity of pieces ____ Program/Project _________

(Please mark with X according reference)

PROTOTIPE SAMPLES Deliver to Program Manager

PPAP SAMPLE Deliver to Incoming Inspection.

(Fill out by HI-LEX)

Stage: Internal Dimension / test

External test

Hi-Lex Analysis results

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There is an option to samples are reviewed on supplier facilities, agreement with supplier.

When component is approved our MRP system will be updated. If a component is rejected, the supplier

must fix it and submit samples again.

About PPAP Annual Validation, supplier must submit PSW level 2 or 4, to update current condition

of process and dimensions.

- PSW

- Dimensional Report

- Raw material certificate (No more than one year)

- Schedule of preventive maintenance for tooling ( If Apply)

MANDATORY REQUIREMENTS IN PPAP DOCUMENTS (before to send to HLM Supplier must

check completely and request support from ASQA, SQA and/or Supplier Developer if it is necessary).

The material can’t be shipped until PSW has been approved.

* The Supplier needs to consider the timing or due dates before make any modification to PPAP. If

Supplier has doubts or questions do not hesitate to contact to ASQA, SQA or Supplier Developer

assigned to Project. Please consider that all Documents need to cover the International Standards

indicated by AIAG and meet HI Lex expectations.

1. The format to issue a PPAP document for new projects or engineering changes is:

a. Paper size: A4

b. Letter size: Preference Arial 10, however Supplier can use any formal and legible letter

(There aren’t acceptable characters that affecting the formality of this document).

c. Hi Lex is not going to accept documents with erasures or deletions. If Suppliers needs to

make any modification must be on original document.

d. The complete PPAP must be delivered on schedule and date indicated by ASQA, SQA

or Supplier Developer. Please consider that HI Lex will not accept incomplete

information.

e. If PPAP is sent by a Foreign Supplier, the Documents needs to be send by

Envelope/Package. The documents needs be packed to ensure safe transportation with

ordinary care in handling.

f. Hi Lex will not accept obsolete documents. Please review that all documents are active

according to AIAG Manuals.

g. It is necessary that complete PPAP accomplish the PPAP’s Check List (before provided

by Hi Lex).

PSW (Part submission Warrant): This is the form that summarizes the whole PPAP package. This

form shows the reason for submission (design change, annual revalidation, etc.) and the level of

documents submitted to the customer. There is a section that asks for "results meeting all drawing and

specification requirements: yes/no" refers to the whole package. If there are any deviations the supplier

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should note on the warrant or inform that PPAP cannot be submitted. This document needs to fulfill

according to AIAG Standards. If you have fields without information it is necessary to indicate:

“N/A”. If you have any doubt or question do not hesitate to contact to ASQA, SQA or Supplier

Developer.

Samples: The minimum quantity of samples required is 6 pcs however ASQA, SQA and Supplier

Developer could request more material. The samples must be identified by cavities (if applies) and

packed with a label indicating the part number and/or “Bar Code”.

Dimensional Report: It is a list of every dimension noted on the drawing. This list shows the product

characteristic, specification, the measurement results and the assessment showing if this dimension is

"ok" or "not ok". Usually a minimum of 6 pieces is reported per product/process combination. The

critical characteristics need to be marked.

Warranty Certificate (Product): The reports have to indicate the tolerances applied on design and

measurement system. The Product Warranty Certificate must be added to PPAP Package.

Raw Material Certificate: Certificates of raw material of sub-suppliers must refer to material

required in the design. Moreover the certificate must offer support and traceability according to

applicable standard. Example: Include ASTM Standard. "The certificate must have 1 year maximum

as validity or effective date."

Flowchart: Process Flow Diagram, also known as a process flow chart, shows the document and

clarifies all steps required in the manufacturing of the part in question. The process flow diagram must

match both the control plan and the Process Failure Mode and Effects Analysis (PFEMA). The process

flow diagram must include all of the main steps in the processing of the part and also all offline

activities such as handling, measuring, inspection etc. The diagram also needs to show the flow of non-

conforming materials (rejects), parts that can be salvaged, and parts that can be waste or scrap from the

product.

Control Plan: A control plan of the process should be included in PPAP submission. It should mirror

the PFEMA and be signed by the relevant parties. This area can also be seen as a Pre-Launch Control

Plan if the part is completely new or if no relevant control plans exist.

Flawless Launch Contract: Must be filled qualifying characteristics that are identified in the

processes before starting negotiations with Hi-Lex Mexicana. The method is:

Well = G

Wrong = R

Requires improvements = Y

Team Feasibility Commitment: Team Feasibility determines whether the proposed design can be

manufactured within the guidelines and specifications. A cross-functional design/manufacturing review

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team is charged with assessing design feasibility. Once workability is established, the Supplier

undertakes the responsibility of following the design/manufacturing review process and reassessing

feasibility for any design or part change that may occur during product development. This document

must be delivered with PPAP package.

Special Characteristics:

ASQA, SQA or Supplier Developer must notify to Supplier the Control Key Features or Customer’s

special designations. The special characteristic must be included in PPAP package by Supplier.

In case of deviation:

If any parts do not meet the correct specification for a valid reason which could continue into mass

production then the supplier should create an exception report. This will document any abnormal

readings, and these should be commented on to show why these anomalies have taken place in two

Phases to HI Lex:

a) Adjustments to machinery (pressures, loads, time machines, etc.)

b) Changes in lot materials, new features to Sub-supplier.

c) Changes in working methods, (Visual aid, operation sheet, testing format, etc.)

d) Environment Analysis (heat, noise, moisture, transportation, packaging, etc.)

e) Use alternative equipment (gauges, jig, etc.)

f) Minor tooling adjustments (pin gages, bolts, punches, sensor, etc.)

g) Dimensional changes in tolerances must meet and demonstrate compliance with

phase I before test run at Customer plant, must be in two sections: the proposal

and analysis (see example).

h) In case of Major changes in Tooling the Supplier must deliver two quotes as

minimum to Hi Lex for analysis.

The points that can cause penalties from Hi-Lex Mexicana, S.A. de C.V. to their Suppliers are:

a) The Non-Fulfillment in pre-production programs on timing required.

b) The Non-Fulfillment in PPAP Package on timing required.

c) The Non-Fulfillment in Samples (pieces) on timing required.

IV. Supplier evaluation system and QAV2: Production Process

It is requirement of Hi-Lex Mexicana that all Suppliers being able to demonstrate that its Quality

System is in accordance with requirements detailed in ISO/TS16949 and/or ISO 9000 or that they are

in Certification process.

Considering our Environmental Policy, we recommend to our suppliers implement Environmental

Guidelines applicable to products under ISO-14001 standard being applied to the care of our

environment, in the future this Standard will be Mandatory, with previous notification from HI Lex.

Suppliers certified in ISO/TS16949: 2009 and ISO 9001: 2008 must deliver a copy of their valid

Certificate to HI LEX.

I PHASE

II PHASE

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Auditing Quality System and/or QAV2: Production Process

HI - LEX Mexicana reserves the right to audit their suppliers (even if they are certified) when any of

the following situations occurs:

a) Before assign a new project.

b) According to result in Quality Reliability,

c) Continuous Quality problems (DMN's),

d) When it is a Customer’s requirement.

The audit process (QAV2) is leaded by Purchasing and Quality areas of HI-LEX Mexicana. The

follow up to observations as a result of audit will be defined internally by responsible auditor.

At the beginning fiscal year the Supplier must delivery to Supplier Developer or SQA its Annual

Internal Audit Program and at the end of the fiscal year the Supplier must deliver the result of this

Program. This information is auditable by Hi Lex Mexicana.

V. Specific Requirements from HI-LEX Mexicana S.A. de C.V.

Quality certificates / receipt of materials at HI-LEX.

The Quality of all Products received at HI LEX is responsibility of Supplier. Each lot of material or

each shipment must be delivering with a Certificate of Conformance that meets the required

specifications according to drawing, this document must have:

a) Part number with current engineering level.

b) Dimensional report.

c) Testing’s required.

d) The special dimensional characteristics must be indicated in format HFM-Q-041.

The internal process of receipt of materials at HI Lex is as follow:

Stop material

on Quarentine

Area

Shipping

documents:

Invoice,

packing list,

and import

manifest if it is

necessary.

GOOD Arrival of

Components Inspection

YES Deliver to

Warehouse

WAREHOUSE

NO

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Information needed for label of Raw Materials and Components to be received at Hi Lex

Mexicana.

All the products (components and raw materials) received at Hi Lex Mexicana must be identified with

“Bar Code” with following information:

1. Supplier info (internal code used at HI Lex, Name, address) **

2. Part number (internal code used at Hi Lex). **

3. Item Description.

4. Quantity. **

5. Supplier production Date

6. Production Lot (Prefix 1T) **

The supplier must meet the following special instructions:

1. Printing out code is 39.

2. Mandatory Fields **

3. The lot information must include Prefix (1T)

4. The Label size must be adapted to product or package.

Example:

Note:

The supplier must keep the information 10 years. If the commercial relationship is over, the supplier

must deliver the information to HLM.

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Update drawings.

Hi-Lex Mexicana Supplier Development Engineer is responsible for updating and delivers the

components drawings at last level to our suppliers and also the specifications mentioned on the

drawings.

Invoicing.

All materials should be delivered to Hi-Lex Mexicana together with invoice/s and Purchase Order. If

the supplier does not have this info together with the material, the material is not going to be received.

Furthermore, suppliers should deliver the material respecting the Warehouse Schedules.

Statistical Control Summary.

The supplier should keep must records for statistical process control related with the critical

characteristics, which should be available at any time in order to be reviewed by Hi-Lex Mexicana. In

case that the supplier does not have this information, supplier should verify all inventories at Hi-Lex

Mexicana in order to be sure that the Quality of the materials are meeting the specification.

All thise characteristics that does not meet a CPk > = 1.33 should be include in a Corrective action

Program in order to meet the CPk requested in a short period of time notified to the SQA.

All suppliers should have all their processes under a consistent statistical control guided by the AIAG´s

SPC and all related manuals.

Engineering Deviation Request.

The supplier is responsible to assure the Quality of all the material before the shipment to Hi-Lex

Mexicana. If the supplier finds nonconforming material, should request a deviation to Hi-Lex

Mexicana before the shipment. Hi-Lex Mexicana reserves the right to accept or not the deviation.

The deviations have to be send it to the SQA or ASQA following the Internal deviation request format

together with a Corrective and Preventive (8 D´s) in order to be analyzed.

Note: Supplier should meet the delivery request at 100%.

Packing and Shipment Identification.

Products must be packaged and shipped to Hi-Lex Mexicana providing the necessary protection for

their storage.

All material delivered to Hi-Lex Mexicana should have its packaging norm previously approved by Hi-

Lex Mexicana ASQA or SQA. Material should also have the production lot number for its traceability.

The packaging should match/correspond with the material shape, dimension and weight otherwise

should be considered as a nonconforming product.

Each returnable container should be used only for the parts which are approved by Hi-Lex Mexicana.

Any container damaged due mismanagement, will be deducted from the supplier invoices.

Each container should be identified with the following information:

* Hi-Lex Mexicana part number, including the engineering level.

* Quantity

* Lot number.

* Bar code.

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* Number of deviation from quality/engineering Hi-Lex Mexicana (Only if is applicable).

* Supplier name.

* Identification of contention (Only if is applicable. If is applicable, please mentioned the

issue).

VI.- Continuous improvement.

Engineering change request (ECR).

If the supplier suggests an Engineering or Process Change that improves the quality of the product, the

safety and reduce costs improving the product optimization or cost reductions due the usage of new

materials shall be through a Engineering Change Request (ECR). This request will be analyzed and

approved by a multidisciplinary team at Hi-Lex Mexicana.

Hi-Lex Mexicana hopes that suppliers present suggestions with a mutual benefit/s. The

multidisciplinary (including Engineering Area) result shall be communicated to the suppliers through

the Developers.

Supplier cost reduction proposals.

Taking and advantage of all the efforts made to improve the productivity and consolidate the

purchasing amounts, Hi-Lex Mexicana expects that suppliers present to our Buyers an annual cost

reductions ideas.

VII.- Defective material reports.

At the moment that the defective material is detected in our Customers facilities or in Hi-Lex

Mexicana, the supplier is informed via telephone and/or through the notification of Material Defective

Notice (DMN “HFM-Q.047”). The disposition of the material must be confirmed by the supplier using

this document in period of time not longer than 12 hours. (12 X 12 program). If you exceed this time,

Hi-Lex Mexicana is going to determine the disposition of the material, which must be respected by the

supplier. This material might be reworked or returned to the supplier. If the problem occurs in our

Customers facilities and the issue is supplier responsibility, Hi-Lex Mexicana will give immediate

assistance to our Customer, requesting in some cases the suppliers services only if is necessary. All

costs incurred due the issue like travelling expenses related to Hi-Lex Mexicana personnel, will be

charged to the supplier through a credit note, as well as the costs incurred for Customer or Hi-Lex

Mexicana assy lines shutdowns.(Format HFM-Q.017).

Once the supplier is informed of the existence and material not conformity, the supplier must give full

and timely service to Hi-Lex Mexicana (containment of the problem and material disposition). It is

important to point out that is not allow to make sorting and reworks in Hi-Lex Mexicana. In the cases

that Hi-Lex Mexicana urgently needs to apply these kinds of activities, we will do it with our staff

charging the costs mentioned on below chart to the suppliers. Please consider that these activities could

be made by an outsourcing company. Therefore, Hi-Lex Mexicana will charge to the supplier the

outsourcing company cost plus some administrative charges.

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TABLE 2. SORTING CHARGES / MATERIAL DISPOSITION (USD / MAN/HR)

CONCEPT DOMESTIC INTERNATIONAL ASIA- Hi-Lex Mexicana

SORTING $20 $40 $20

FG INSPECTION $20 $40 $20

RE-WORK $30 $50 $30

SCRAP APPLY THE UNIT PRICE + 50 usd per defect.

TABLE NOTE 2: The recovery made by Hi-Lex Mexicana staff, can only be performed when

resources are available.

TABLE 3. SHUTDOWNS CHARGES ON ASSY LINES (USD / MINUTE)

LINE Up to the

min. 15

Up to the.

16 al 30

Up to the

31 al 60

Up to the

61 al 120

Change model for lack

of materials

CHANGE ON SET-UP

INNER-OUTER $59 $62 $65 $72 $59

CABLE ASSY LINE $46 $49 $52 $59 $65

W/R ASSY LINE $65 $72 $78 $85 $65

If Hi-Lex Mexicana does not receive any material disposition from suppliers within the following 30

calendar days after the notification, we will have the right to take any decision on the material.

All administrative charges arising from re-works authorized by the supplier (DMN) will be confirmed

through Purchasing Area to Finance in order to apply the charges.

Corrective actions report DMN (8 D’s).

All Quality issue that interrupts Hi-Lex Mexicana production program or jeopardize our deliveries to

our Customers must be answered by Suppliers with a report of corrective and preventive actions

following up all the necessary actions in order to solve the issue and avoid happens again in future. The

Suppliers has 10 days in order to deliver and close the corrective actions reported since the date in

which was notified.

The supplier must respond on the DMN the materials dispositions, attaching the corrective actions

taken. The final decision about the material disposition must be made within the following 12 days

after the issue was reported. If a supplier requires additional time to respond, a written request should

be send it the SQA and must include the action plan considering the additional timeline for the solution

implementation.

The supplier sometimes may be required by Hi-Lex Mexicana to complete a corrective actions report

or critical non-conformities following the format of corrective and preventive actions.

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Penalties:

The supplier that presents defective material, will receive and administrative charge from Hi-Lex

Mexicana. In the same Hi-Lex Mexicana is going to apply charges on the following cases:

Release DMN No material disposition

answers No answers to DMN No close DMN on time

US$200 US$100 US$100 US$100

Repetitive issues and Containment Levels (Control Shipping, CS1, CS2, Business on Hold)

Every quality or failure modes variety in one or more part numbers supplied, which could be chronic or

presents repetitive incidences; should be fixed by supplier showing evidence to the SQA for all

corrective actions already implemented.

The SQA is responsible for defining and notify to the supplier through a letter the corresponding

containment levels that should be apply by the supplier. The supplier must follow the guidelines

required by the SQA on the documentation, criteria, as well as the costs incurred for each contingency

level.

Hi-Lex Mexicana reserves the right to enforce contingency levels using internal/external resources.

If a suppliers is having these kind of issues, Hi-Lex Mexicana could place the supplier in a Business on

Hold status.

Supplier Quality Management Systems Development.

Hi-Lex Mexicana promotes the development of the Supplier Quality Management System. We are

reviewing this point every time that the Suppliers answer the annual self-assessment audit that we send

to them. This self-assessment answer have to include evidence of the Quality Management System that

each suppliers is handling.

VIII.- Suppliers Reliability.

Deliveries on time: All the suppliers should meet 100% the deliveries requested by Hi-Lex Mexicana

through the releases and Purchase Orders.

DMN´s submitted to the suppliers: The DMN´s submitted to the suppliers should be zero, because all

suppliers must be looking to meet the zero defects and zero complains from Hi-Lex Mexicana.

Parts per Million (PPM): PPM = Nonconforming material estimated X 1’000,000

Total material received

Response to problems (quality, commercial or development): The suppliers should share on time

any kind of information requested by Hi-Lex Mexicana.

** It is mandatory to use the GP12 methodology for initial samples on the first lots with a minimum

period of time of 40 days for preventing defects and get the process and test level maturation required

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assuring the quality since the beginning of the project. Suppliers should use GP12 labels for this

material. (See attached GP12 steps).

Cost: All suppliers should be looking to offer competitive prices to Hi-Lex Mexicana in order to have

possibilities to be considered for new business opportunities.

IX.- Performance Analysis.

The total supplier performance rate will be obtained considering all the monthly results and their effort

in order to meet Hi-Lex Mexicana requirements. We would like to explain to all the suppliers how Hi-

Lex Mexicana classified the Suppliers Reliability.

Supplier Reliability Classification.

The results of the supplier’s performance are classified in 5 categories (SUPPLIER

PERFORMANCE STATUS):

EXCELLENT (99.5 – 100 %)

Supplier meeting ISO/TS16949: 2009 requirements and all Hi-Lex Mexicana specifics requirements. If

the suppliers keep this result during 12 months consecutive months will be considered as a

distinguished supplier demonstrating a consistency on quality, deliveries and cost. Also this supplier

could be considered for new business in the short term.

GOOD (95 – 99.4 %)

Suppliers demonstrating that their quality system is working in compliance with the requirements of

Hi-Lex Mexicana. The suppliers can keep current business with Hi-Lex Mexicana and he could

considered for new business in the medium term.

RELIABLE (85 – 94 %)

Suppliers who has problems on keeping the quality level required by Hi-Lex Mexicana. If the suppliers

is having this kind of performance for 3 consecutive months, a plan of corrective actions in the medium

term is going to require by Hi-Lex Mexicana. This supplier is going to have as conditioned their current

contracts with Hi-Lex Mexicana. If the supplier status does not change, Hi-Lex Mexicana deserves the

right to terminate the business relationship at the end of the contract and this supplier should not be

considered for new business in future.

NOT RELIABLE (0 – 84 %)

Supplier that has demonstrated minimum ability to meet all Hi-Lex Mexicana ´s requirements.

A corrective action plan should be submitted within a period of thirty days after being notified. The

supplier is going to have as conditioned their current contracts with Hi-Lex Mexicana not having the

opportunity to be considered for future business. Purchasing Area shall prepare an emergency plan to

develop a new alternative source for the materials provided by this kind of supplier.

If the supplier keeps the same kind of performance, Hi-Lex Mexicana deserves the right to terminate

the business relation.

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X. Tooling evaluation owned by Hi-Lex Mexicana.

The Development Area is going to request to all suppliers a Tooling Annual Program in which all the

suppliers that have tooling and devices owned by Hi-Lex Mexicana, should confirm the status of each

one. All these goods should be mentioned on the Commodatum Contract that Hi-Lex Mexicana has

with each supplier.

As soon as the Tooling Annual Program is received, the Development Area could request to the

suppliers some visit to the suppliers facilities in order to evaluate and verify the tooling and devices

status. The Developer should take some pictures and make the tooling status report together with the

supplier.

At the moment that the evaluation and verification is finished, the tooling annual program shall be

adjusted and the supplier should give to the Developer a copy of the tooling status report. (See

attachment F).

Upon completion the verification will be updated tooling study program. Also, the original to the

shopping area of the report on physical condition of the tooling for its control and a copy will be

delivered to the supplier.

The supplier should meet the PPAP revalidation according with the SQA request. By other hand, in

case that we have a tooling transfer, the documentation approval should be approved by the ASQA.

The supplier is responsible to make a report before start the project or ship samples to Hi-Lex

Mexicana notifying to the Developer, the SQA and the ASQA (depends on the case) in case that the

tooling does not meet the specifications required on the drawing. If the suppliers does not inform to Hi-

Lex Mexicana about this issue, all the expenses generated are going to be charge to the supplier.

Every time that we have and Engineering change, the supplier should have records about it. For the

tooling transfer the supplier should place and identification tag/mark in order to keep a traceability

between previous supplier and the current one.

Each level in the piece the provider change must be considered in the records of the mold, turn in

transfer of molds must be a mark of identification, in relation the previous provider to be able to

determine responsibilities and better tracking to the final product.

The supplier is responsible for the proper use and the maintenance of the tooling and device owned by

Hi-Lex Mexicana. The supplier should keep records about the quantity of pieces produced and all the

maintenance applied to the tooling. The supplier should report to the Buyers the remaining tooling life

in order to apply the proper actions before the tooling life is over.

The tooling and devices owned by HI-LEX should be identified properly as follow: “Property of Hi-

Lex Mexicana”.

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XI.- GLOSSARY

QMS.- Quality Management System

QAV.- Quality Audit Visit

A.I.A.G.- Automotive Industry Action Group

ASQA.- Advanced Supplier Quality Assurance

IMDS.- International Material Data System

CPK.- Process Capability.

DMN.- Defective Material Notice.

Purchase order.- It is the document in which Hi-Lex Mexicana states its commercial terms and

conditions that are not negotiable. This document is submitted to our suppliers by the Buyers reflecting

our releases requirements.

Potential suppliers.- All suppliers that are starting business relations with Hi-Lex Mexicana and also

the ones that are being reviewed and developed by our Developer Area. These suppliers does not have

a firm commercial relation with Hi-Lex Mexicana.

PPAP.- Production Part Approval Process.

PPM . - Parts Per Million.

TIMING (Program).- Official document for following up any kind of issue.

Mass Production.- Components used directly in our assy lines.

SQA.- Supplier Quality Assurance.

ASQA.- Advance Supplier Quality Assurance.

Purchasing Quality Assurance: This is the supplier result of all the combined efforts (technical,

commercial and human) in order to meet all the specifics requirements for Hi-Lex Mexicana.

CS1.- Contingency level 1.

CS2.- Contingency level 2.

Business on Hold.- Final level as a consequence from the CS1 and CS2 and other issues caused by the

suppliers.

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XII.- Appendix.

Appendix A

These documents are ISO/TS16849: 2009 requirements and contain information mentioned on this

Manual:

** APQP - (ADVANCED PRODUCT QUALITY PLANNING AND CONTROL PLAN)

** PPAP - (PRODUCTION PART APPROVAL PROCESS)

** PFMEA - (POTENTIAL FAILURE MODE AND EFFECTS ANALYSIS)

** SPC - (STATISTICAL PROCESS CONTROL)

** MSA - (MEASUREMENT SYSTEMS ANALYSIS)

These documents are available on the AIAG, Automotive Industry Action Group and can be purchased

on:

AUTOMOTIVE INDUSTRY ACTION GROUP

26200 Lahser Road, Suite 200

Southfield, Michigan 48034

Phone: (810) 358-3570

Fax: (810) 358-3253

Internet: http//www.aiag.org

Appendix B.- Supplier opening sheet (HFM-1.002)

Appendix C.- IPP flow diagram.

Appendix D.- Internal Deviation Request (HFM-Q.007)

Appendix E- Tooling status report.

Appendix F- PPAP check list.

This Supplier Quality Manual and all the related documents should be available in all the Suppliers

Productions Areas.

This Manual is Hi-Lex Mexicana property, the partial or total reproduction is prohibited. Only the

Purchasing Manager and the SQA of HLM could authorize any kind of changes on it.

Hi-Lex Mexicana documents are for Hi-Lex Mexicana and Sister Companies usage. The suppliers are

responsible to use the latest revision of this Manual.

The suppliers that received and used Hi-Lex Mexicana documents, are agree to assume any kind of

responsibility in order to accomplish with the patents as well any kind of infringement of those patents

too.

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This Manual was reviewed by:

Mr. Carlos García.

Hi-Lex Mexicana, Purchasing Manager.

Mr. Oscar Rivera

Hi-Lex Mexicana, SQA.

This Manual was edited by: Mr. Oscar Rivera, Hi-Lex Mexicana SQA

Change control

Change

Information needed for label of Raw

Materials and Components to be received at

Hi Lex Mexicana.

Annual revision

Approval

Owner of the document:

Responsible for development or updating.

SUPPLIER QUALITY ASSURANCE (SQA)

Mr. OSCAR RIVERA

Name and signature

Responsible for approval:

Head of Document Owner.

PURCHASING MANAGER

MR. CARLOS GARCÍA

Name and signature