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SQ1 - Supplier Quality

Requirements & Procedures

MCFA Supplier Quality Engineering

Rev. 4.0

TABLE OF CONTENTS

1 SCOPE .................................................................................................................................................................... 1

2 GENERAL REQUIREMENTS .................................................................................................................................... 1

3 SUPPLIER APPROVAL PROCESS ............................................................................................................................. 1

3.1 GENERAL ............................................................................................................................................................. 1 3.1.1 CONDITIONAL APPROVAL ................................................................................................................................. 1 3.1.2 SUB-TIER SUPPLIERS ......................................................................................................................................... 2 3.2 SPECIAL PROCESS AUDIT ......................................................................................................................................... 2

4 PRODUCTION PART APPROVAL PROCESS (PPAP) ................................................................................................. 2

4.1 GENERAL ............................................................................................................................................................. 2 4.2 ELEMENT REQUIREMENTS ....................................................................................................................................... 2

4.2.1 Bubbled Print ................................................................................................................................................ 2 4.2.2 Control Plan .................................................................................................................................................. 2 4.2.3 Failure Modes and Effects Analysis (FMEA) ................................................................................................. 2 4.2.4 Inspection Report ......................................................................................................................................... 3 4.2.5 Material Certification ................................................................................................................................... 3 4.2.6 Test Reports .................................................................................................................................................. 3 4.2.7 Capability Study ............................................................................................................................................ 3

4.3 PPAP REVIEW ...................................................................................................................................................... 3

5 SUPPLIER QUALITY SCORE .................................................................................................................................... 4

5.1 GENERAL ............................................................................................................................................................. 4 5.2 SCORING .............................................................................................................................................................. 4

6 REJECTED MATERIAL REPORT (RMR) .................................................................................................................... 4

6.1 GENERAL ............................................................................................................................................................. 4 6.2 RMR NOTIFICATION AND RESPONSE PROCESS ............................................................................................................ 4 6.3 ALTERNATIVE RMR RESPONSE PROCESSES ................................................................................................................. 5

6.3.1 Deviation ...................................................................................................................................................... 5 6.3.2 Rework .......................................................................................................................................................... 5 6.3.3 Sort at supplier expense ............................................................................................................................... 5

6.4 APPEAL ................................................................................................................................................................ 5 6.5 FAILURE TO RESPOND ............................................................................................................................................. 5

7 SUPPLIER CORRECTIVE ACTION REQUEST (SCAR) ................................................................................................. 6

7.1 GENERAL ............................................................................................................................................................. 6 7.2 CONTAINMENT ..................................................................................................................................................... 6 7.3 ROOT CAUSE ........................................................................................................................................................ 6 7.4 CORRECTIVE ACTION .............................................................................................................................................. 6

8 RELIABILITY ........................................................................................................................................................... 6

8.1 GENERAL ............................................................................................................................................................. 6 8.2 WARRANTY REDUCTION ACTIVITIES .......................................................................................................................... 7

9 PROCESS CHANGE REQUIREMENTS ...................................................................................................................... 7

10 SUPPLIER REQUEST FOR DESIGN CHANGE ........................................................................................................... 7

11 DEVIATION REQUEST ............................................................................................................................................ 8

12 DRAWING CONTROL ............................................................................................................................................. 8

APPENDIX A - PPAP REQUIREMENTS BY COMMODITY .................................................................................................... 9

SQ1 - Supplier Quality Requirements & Procedures

Document Title Governing Department Approval Manager Revision Date Revision Number

SQ1 Supplier Quality Paul Bookout September 28, 2016 4.0

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1 Scope

This document defines the quality requirements for suppliers of parts and materials that are used in MCFA products. This document describes the expected actions, documentation, and communication to be used by MCFA and MCFA’s suppliers. The required actions defined in this document are intended to ensure that the supplier’s products meet the expectations of MCFA and our customers.

2 General Requirements

It is the expectation of MCFA that each supplier will provide parts that meet all of the functional, physical, and other requirements listed on the drawing and associated

specifications. The use of subcontractors; independently selected, MCFA-designated, or MN-approved, does not relieve the supplier of the responsibility to ensure the quality of subcontracted parts, materials and services.

3 Supplier Approval Process

3.1 General

All new suppliers must be approved by an MCF company (i.e. MCFA, MFD, MN or Rocla). This process will be initiated upon identification of the supplier as a potential candidate for MCFA. The approval process will include completion of a self-assessment using the form contained in JQ191-01 (Appendix 1). In cases where the supplier will provide class I or II parts as defined in

MSJ1-2002, this will also include an on-site assessment by an MCF company quality representative. The self assessment and on-site assessment, if required, shall result in a minimum score as shown in table 1 below.

Part Class Minimum Score

I 90

II 80

III 60

Table 1 – Quality System Assessment Score Requirements

Quality system approval can be revoked at any time at the discretion of MCFA

3.1.1 Conditional Approval

MCFA, at its discretion, may give a temporary conditional approval. To gain full approval, the supplier will be required to complete improvements to their quality system as directed by the Auditor. These improvements must be made within the time frame established by the SQE or the conditional approval will be revoked.




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3.1.2 Sub-tier Suppliers

Sub suppliers may be audited based on the complexity or criticality of part(s).

3.2 Special Process Audit

Special processes (e.g. forging, casting, and heat treating) may be required and will be determined by the SQE. The assessment forms will be provided as needed.

4 Production Part Approval Process (PPAP)

4.1 General

PPAP elements address the planning and production activities for purchased parts to reduce

the potential for receipt of defective components at MCFA. The supplier will be required to submit PPAP elements online in MCFA’s quality information system, HQMS.

PPAPs will be required in each case where a supplier is making a new production part number for MCFA. Unless otherwise specified, on new programs, PPAPs will be required in the pre-production phase. The documentation and parts submitted shall be representative of the intended production process, including tooling. If parts are not representative, notify the SQE or Commodity Manager.

4.2 Element Requirements

The required PPAP elements for each part or part commodity are listed in Appendix A, PPAP Commodity Requirements. For parts not listed in Appendix A, the supplier shall contact an

MCFA Supplier Quality Engineer (SQE) for submission requirements.

4.2.1 Bubbled Print

A bubbled print is prepared by the supplier by adding numbered or lettered bubbles to every characteristic and requirement shown on the approved MCFA print. The purpose of the bubbled print is to identify each characteristic on the initial inspection report that will be submitted.

4.2.2 Control Plan

The control plan defines the controls for important process and product characteristics that are in place during production to ensure conformance to requirements for the final product. The

supplier may use their standard control plan format or may contact the MCFA SQE for an example form.

4.2.3 Failure Modes and Effects Analysis (FMEA)

The FMEA is a document that describes the potential failure modes, potential causes of those failures, and calculated risk associated with each potential cause. FMEA can be performed on either the production process (PFMEA), the part design (DFMEA), or both. MCFA requires corrective action for risk priority numbers (RPNs) using the following rules:




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i. all RPNs greater than 100; ii. the top ten RPNs if there are fewer than ten RPNs having a value greater than 100; or

iii. the top five RPNs if there are fewer than 40 RPNs in the FMEA.

4.2.4 Inspection Report

The supplier shall submit an inspection report with all physical characteristics. The sample size required for the inspection is 3 unless otherwise determined by the SQE. This report shall include all characteristics described on the drawing such as dimensions and other items such as, hardness, paint color, plating, etc. It is expected that this report will not show any characteristics as being out of tolerance and these parts will be inspected at MCFA to verify the

accuracy of the report.

4.2.5 Material Certification

In most cases, the supplier will be required to certify that the material used to produce the component meets the requirements specified on the drawing. This may be accomplished by supplying a certification or test report.

4.2.6 Test Reports

Testing may be required for a commodity to demonstrate that print requirements are being met. Test reports, if required, are listed in Appendix A.

4.2.7 Capability Study

Capability studies describe the ability of the process to meet print tolerances in statistical terms. Capability studies will be required for critical characteristics as defined by the drawing. If critical characteristics are not specified on the drawing the MCFA SQE may specify characteristics as critical based upon experience with the application of the component. Furthermore, the SQE may allow the submission to be deferred until sufficient quantities are produced for low volume components. The minimum Cpk value for critical characteristics is 1.33 unless otherwise specified. If a value of 1.33 is not demonstrated, the supplier will be required to implement actions to ensure that no nonconforming product is shipped to MCFA.

4.3 PPAP Review

After sample parts have been submitted to MCFA, the supplier shall then submit documentation which the SQE will review. PPAP approval will be indicated on the part submission warrant (PSW). The PSW is generated automatically in our system; therefore, the supplier need not submit their warrant to MCFA. If a PPAP component is deemed to be deficient by the MCFA SQE, the supplier will be notified of the deficiency and will be requested to resubmit that PPAP component.




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5 Supplier Quality Score

5.1 General

MCFA assigns a score to each supplier monthly to grade their quality performance for the month. The quality score is a component of the overall score used to evaluate supplier performance by our sourcing group. Scoring is based on PPM which is determined by dividing the quantity of pieces rejected by total pieces received in a given month times one million. Suppliers with low scores are reviewed on a regular basis to determine if corrective action is needed.

5.2 Scoring

There are twenty-five (25) points available for the quality section of the supplier score. Scores are established using receiving inspection results and line rejects. Full points are awarded for achieving a PPM equal to or less than 800 PPM. No points will be awarded for a supplier with a PPM of 5000 or greater. The following table lists PPM scores and its classification rating.

PPM Scoring Range Classification

968 or less 24-25 Excellent A

969-1640 20-23 Acceptable B

1641-2144 17-19 Needs Improvement C

2145 or more 16 or less Unacceptable D

Table – Supplier Scores

6 Rejected Material Report (RMR)

6.1 General

If a nonconformance is found, MCFA communicates the problem using an RMR. It is MCFA’s policy to return nonconforming parts or material to the supplier for replacement. There may be situations where MCFA chooses to not enforce this policy and in these instances, other actions may be taken based upon internal evaluations and discussions with the supplier.

6.2 RMR Notification and Response Process

Upon generation of an RMR, the supplier will be notified by e-mail containing a hyperlink to the RMR. The supplier shall provide a returned goods authorization (RGA) and shipping instructions in the area provided on the RMR. Upon receipt of the RGA, MCFA will return the defective material to supplier at the supplier’s expense.




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6.3 Alternative RMR Response Processes

In those cases where material will not be returned to the supplier, the supplier shall initiate an alternative process to satisfy their obligations. Alternatives to our standard policy include deviation, rework, or sort. At the supplier’s request, parts may also be scrapped at MCFA at supplier’s expense.

6.3.1 Deviation

The commodity manager, in coordination with the supplier, may request that the parts be used as-is by using the deviation process. The deviation request will be filled in by the commodity manager and will be routed to the appropriate personnel at MCFA. If approved, the parts may be used.

6.3.2 Rework

Defective parts may be reworked by the supplier at MCFA or by a third party. The supplier is expected to arrange all rework activities, including transportation to and from the rework location. MCFA may be willing to rework defective parts at the supplier’s expense; however, we do not staff to accommodate rework. The supplier will be charged our fully burdened overtime rate for rework performed by MCFA personnel.

6.3.3 Sort at supplier expense

Defective parts may be sorted by the supplier at MCFA or by a third party. The supplier is expected to arrange all sorting activities, including transportation to and from the sorting

location. MCFA may be willing to sort defective parts at the supplier’s expense; however, we do not staff to accommodate this additional work. The supplier will be charged our fully burdened overtime rate for sorting performed by MCFA personnel. Nonconforming parts will be handled per the requirements stated in section 6 as appropriate.

6.4 Appeal

The supplier may appeal a rejection by MCFA by making a request with the quality department or commodity manager at MCFA. The facts supporting the appeal will be considered by MCFA and the supplier will be notified of our decision. If the appeal is accepted, the RMR will be modified or voided as appropriate.

6.5 Failure to Respond

If the supplier fails to respond to an RMR, MCFA will send a reminder of the need to

respond. If the supplier continues to ignore the need to respond to an RMR, MCFA

reserves the right to scrap the parts at the supplier’s expense or take other actions

as necessary to support MCFA’s needs. Failure to respond will be considered as

implicit acceptance of MCFA decisions and associated charges.




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7 Supplier Corrective Action Request (SCAR)

7.1 General

The SCAR is a process used by MCFA to gain confidence in the supplier’s ability to provide consistent quality or perform at a higher level than has been demonstrated. Reasons for SCAR generation include grievous defects, recurring problems, serious production impact, or other reasons at the discretion of the SQE. The supplier should consider the SCAR to be an indication of MCFA’s perception that a serious system deficiency exists and should treat the subject with urgency and thoroughness.

7.2 Containment

It is our expectation that containment will be initiated immediately upon receipt of notification that a problem has been detected at MCFA. Containment must be sufficient to prevent future shipment of additional defective products to MCFA and will be documented on the SCAR form.

7.3 Root Cause

The supplier is responsible for investigation into the root cause of the problem and may be assisted by MCFA if such assistance is needed. Adequate root cause investigation is necessary to ensure that corrective action can be implemented in a manner that prevents future problems. The results of the root cause investigation shall be documented on the SCAR form.

7.4 Corrective Action

Corrective action must address the root cause and ensure that the defect will not recur. Corrective action will be reviewed for adequacy and approved after the effectiveness is verified by the SQE.

8 Reliability

8.1 General

Our suppliers are a critical partner in providing forklifts to our customers that perform in the expected manner for their design life. To ensure adequate product life, MCFA will define testing and analyses for selected components to validate acceptable performance in expected operating conditions. These tests and analyses may be defined at the component level or higher as deemed necessary by MCFA. The supplier may perform additional tests and analyses

at their discretion that supplement defined requirements. It is expected that the supplier will actively and independently review reliability performance and pursue solutions to reliability problems that may arise throughout the component life cycle.




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8.2 Warranty Reduction Activities

Warranty claims reflect the supplier’s contribution to the reliability of our forklifts. We expect the supplier to actively pursue reduction of warranty claims through process improvements and design changes. The MCFA SQE will assist the supplier in investigations and understanding of product application issues that may contribute to warranty as needed.

9 Process Change Requirements

Any change that may affect quality or reliability of purchased components shall be reported to the MCFA SQE and Purchasing groups at least 90 days prior to implementation of the change. Approval must be obtained from MCFA prior to shipping parts produced under these changed conditions.

The following table lists common changes and typical requirements associated with those changes.

Change Description Typical Requirement

Facility Move Quality System Assessment, New PPAP

Sub Supplier Change Quality System Assessment, New PPAP as required

Production Line Move New PPAP

Material Change New PPAP

Manufacturing Process Change New PPAP

Manufacturing Equipment Change New PPAP

Table 3 – Typical Change Requirements

Requirements associated with changes not listed in the table above will be defined by the MCFA SQE.

10 Supplier Request for Design Change

The supplier is encouraged to request changes to MCFA designed components to improve

quality, reliability, cost, or function. All design change requests should be initiated and routed through the appropriate Commodity Manager. The Commodity Manager will coordinate all activities associated with the proposed change with appropriate personnel at MCFA, MN, and supplier.




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11 Deviation Request

MCFA drawings and standards define the part or assembly requirements. A verbal agreement between the supplier and anyone at MCFA does not relieve the supplier from the responsibility of meeting the requirements listed on the drawings and specified standards. An approved MCFA deviation request is the only acceptable document relieving the supplier of their responsibility to meet all drawing and documented specifications. Prior to shipment of parts or assemblies that do not meet MCFA requirements, the supplier shall submit a deviation request to the MCFA commodity manager and receive confirmation of approval.

12 Drawing Control

All Suppliers shall have the MCFA approved print of the revision specified on the purchase order

for all MCFA components supplied to MCFA. These drawings shall be kept at the supplier’s location as controlled documents.




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Appendix A - PPAP Requirements by Commodity

Unless otherwise directed by purchase order or contract, the following table indicates the quality documents and tests types that will be required for submission to MCFA. The numbers in the Test Report column indicate the required tests as defined below.

1. Material Test Report – These include chemical, physical (hardness, tensile, or yield strength), and the heat treat properties.

2. Climate tests – These are tests such as UV rays, salt spray, extreme temperatures, moisture exposure, or other related testing that is called out on the print or in referenced specifications.

3. Flow / Pressure / Cleanliness test – Confirmation of all rated pressure, burst points, flow rates and cleanliness level of all components that are fluid system based.

4. Weld test – Welds that have a specific penetration depths or special welding requirements listed on the print or other specification must, along with the weld size and visual characteristics, be cross-sectioned and acid-etched for inspection. Welds that have no special requirements need only verification of the weld size and visual quality characteristics. Weld tests must be specified in the Control Plan supplied as part of the PPAP submission.

5. Performance/Functionality tests – These tests include verification of all functional and performance requirements defined in the print or other specification.

Commodity

Bu

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Pri

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Co

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Des

ign

FM

EA

Pro

cess

FM

EA

Insp

ecti

on

Rep

ort

Mat

eri

al C

ert

.

Test

Rep

ort

Air Cleaner • • • 1,3

Axle, Drive • • • •

Axle, Steer • • • •

Axle Housing • • • •

Backrest • • •

Battery • 1,5

Bearings • • • • • 3,5

Bracket (Misc.) •

Brake, Hand • • • •

Brake Assembly • • • • •

Casting • • • 1

Carriage/ Lift Bracket • • • •




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Commodity

Bu

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Pri

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Co

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lan

Des

ign

FM

EA

Pro

cess

FM

EA

Insp

ecti

on

Rep

ort

Mat

eri

al C

ert

.

Test

Rep

ort

Chain, Lift • • • •

Chain Wheels • • • •

Chain Wheel, Support • • •

Channel, Mast • • 1

Counterweights • • •

Cover, Engine/Battery • •

Cylinders • • • 1,2,5

Decals 1,2

Drum, Brake • • • •

Electrical Components • • 2,5

Electric Controller • • • 5

Engine • • • • • 5

Fabricated Parts • • 4

Fasteners • • 1

Flame Cut Part w/machining • •

Flame Cut Part (no machining) •

Forging • • • 1

Forks • • • • • 1,4

Fuel System • • • • 1,3,5

Harness/Cable • • •

Head Guard • • • 1,4,5

Hoses • • • • •

Hub, Rear • • • •

Knuckle Steer • • 1,4

Mast • • • • • 1,4,5

Mast Supports • •

Motor, Pump/Steer/Traction • • • • •

Muffler • • •

O-ring/Gasket • •

Panel, Contactor • • • • 2,5

Panel, Control • • • • 2,5

Panel, Meter • • • 2,5

Pin, King • • 1

Pin, Tie Rod • • 1




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Commodity

Bu

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led

Pri

nt

Co

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ol P

lan

Des

ign

FM

EA

Pro

cess

FM

EA

Insp

ecti

on

Rep

ort

Mat

eri

al C

ert

.

Test

Rep

ort

Pin, Tilt Cylinder • • 1

Piping, Hydraulic/Brake • • • 1,3,5

Plastics (durable plastic parts) • • • •

Plastics (misc. plastic parts) • • 1,2,3

Pump, Hydraulic • • • • 2,3,5

Radiator • • • • 1,2,3,5

Rims • • • • 1,4

Side-shifter • • • • 4,5

Seal • • • 5

Seat • • •

Steel, bulk •

Steer Unit • • • • 3,5

Steering Column • • • • • 5

Transmission • • • • 3,5

Tie Rod • • •

Tires • • • • 1,5

Valve, Control • • • • • 2,3,5

Valve , Down Safety • • • • • 2,3,5

Valve , Flow Regulator • • • • • 2,3,5

Wheels • • • 1,2,5




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Revision History

Revision Change

NC new document

Rev 1.1

added section 1.7

added 6.7.2, and sub-tier definition

added 4.4.1.2

added 4.6 & 6.7.6.6

CSM CAR type under 6.2 QLT

corrected Scorecard section 7

Rev. 2.0 added sections for HQMS and MHI QSA

Rev 3.0 complete rewrite

Rev 4.0

Changed approval manager

Changed governing department

Updated Table of Contents

Updated section 3.1

Added section 3.1.1

Added section 3.1.2

Updated section 3.2

Updated section 4.1

Updated section 4.2.5 title



Updated section 4.3

Updated Section 5.1

Updated Section 5.2

Updated Table in section 5.2

Updated section 6.3

Updated Table 3 in section 9

Updated title for item 1 in Appendix A

Updated Appendix A

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