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2016-02-16 Supplier Quality Manual PISQM V1.6 1.6 of 19

Created By Checked By

G. Boutsikakis

ECO#: 15052 DESCRIPTION: RELEASED FOR PRODUCTION

________________________

Supplier Quality Requirements

Manual ________________________

Revision 1.6 Released January 21, 2016

____________________________________ ___________________________________

Director of Corporate Quality Director of Supplier Quality

____________________________________

VP Of Global Supply Chain

DocuSign Envelope ID: 048AA545-1A62-4D7A-9EFF-6B9F0EA1DBF7




G. Boutsikakis


Table of Contents PACIFIC INSIGHT ELECTRONICS 3

INTRODUCTION 4 SUPPLIER CODE OF CONDUCT 5 CONFLICT MINERALS POLICY 6

1 • QUALITY SYSTEM REQUIREMENTS 7

1.1 QUALITY MANUAL 8 2 • SUPPLIER APPROVAL PROCESS 8

2.1 SUPPLIER ASSESSMENT 8 3 • GENERAL REQUIREMENTS 9

3.1 COMPLIANCE TO CONTRCTUAL RQUIREMENTS 9 3.2 CONTROL OF SUBTIERS 9 3.3 BUSINESS CONTINUITY 9

4 • PRE-PRODUCTION AND NEW PRODUCT LAUNCH REQUIREMENTS (APQP) 9

5 • PRODUCT QUALIFICATION 10

5.1 PRODUCTION PART APPROVALPROCESS 10 5.2 ANNUAL REVALIDATION 12

6 • PROCESS CONTROL 12

6.1 SPECIAL CHARACTERISTICS 13 6.2 ERROR-PROOFING 13 6.3 WORK INSTRUCTIONS 13 6.4 CONTROL OF MONITORING AND MEASURING DEVICES 13 6.5 STATISTICAL PROCESS CONTROL 13 6.6 PREVENTIVE MAINTENANCE 13

7 • CHANGE CONTROL 14

7.1 CHANGE CONTROL PROCESS 14 7.2 SUPPLIER CHANGE REQUESTS 14

8 • CONTROL OF NON-CONFORMING MATERIAL AND CORRECTIVE ACTION PROCESS 15

8.1 CONTROL OF NON-CONFORMING MATERIAL 15 8.2 CORRECTIVE ACTION RESPONSE 15

9 • ACCOUNTABILITY AND COST OF QUALITY 16

10 • SUPPLIER PERFORMANCE RATING 17

11 • PACKAGING HANDLING, STORAGE PRESERVATION, DELIVERY AND RECORD RETENTION 18

11.1 PACKAGING AND HANDLING 18 APPLICABLE DOCUMENTS 19

FORMS AND EXHIBITS 19





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PACIFIC INSIGHT ELECTRONICS

Company Overview

Pacific Insight Electronics Corp. (PI) designs, manufactures and delivers world class

electronic products and full service solutions to the automotive, commercial vehicle, off-

road, and specialty markets. PI is always there when our customers need service,

technology and high quality product solutions

Company Mission

To be renowned as a world class company that designs and manufactures high quality,

innovative electronic product solutions to the transportation industry. PI is committed to

responsive service, value added product development and to providing flexible

manufacturing in order to assure total customer satisfaction.

Our company’s continued success within the markets we serve and our commitment to

building shareholder value is centered on the

following strategic themes:

Innovation

Our team of Product Managers, along with our

Engineers, link creative ideas and technologies

with engineering discipline to deliver product

solutions that exceed our customer’s

requirements.

Responsiveness

Be “fastest to market” from design concept to Job 1.

Quality

Promote and nurture a culture of quality that exceeds our customer’s expectations

for quality, price and delivery which is the most important part of our business.

People

Be the employer of choice. Commit and invest in our people and a productive

workplace.

Operational Excellence





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Employ sound business management practices and rigidly support our

Manufacturing Development Team’s new product introduction processes and lean

manufacturing programs.

Environment

Minimize our footprint on the environment. Commit to environmental compliance

and annual improvements that green our business activities.

PI Quality Policy

We will exceed our customer’s expectations by delivering safe defect free products on

time.

8 Pillars of Quality

Promote and nurture a culture that quality is the most important part of our business.

Monitor benchmark and continually improve all systems, process and products.

Every associate has an individual responsibility in Quality Assurance.

Commit to the development and diligent use of work instructions.

Focus on prevention rather that detection.

Perform product reviews on all products.

Train and develop all of our employees.

Work as a team to assure quality.

INTRODUCTION Our Suppliers

Pacific Insight Electronics Company recognizes the very important role our suppliers

have in the value we offer our customers. We rely on our suppliers to provide material,

products, and services which meet all of the requirements of Pacific Insight Electronics

outlined in this manual. Purpose

The purpose of this manual is to inform Pacific Insight (PI) Suppliers of the expectations

we have regarding the Suppliers’ quality management systems, design requirements, and

manufacturing process controls required for the purpose of doing business with Pacific

Insight. This manual describes what Pacific Insight expects its Suppliers to do to ensure

that all Pacific Insight requirements and expectations are met. Adherence to these

standards will help ensure successful partnership between PI and our suppliers.

Scope

This manual applies to all Suppliers providing PI with materials, products, processing,

and related services, including intra-company Suppliers. The general requirements





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outlined in this manual do not supersede conflicting requirements in the PI contract, or

drawing, including applicable engineering specifications and process specifications, or

applicable long term agreement(s).

Requirements

In this manual, the terms "shall" and "must" mean that the described action is mandatory;

"should" means that the described action is necessary and expected with some flexibility

allowed in the method of compliance; and “may” means that the described action is

permissible or discretionary.

Questions

Questions concerning this manual should be directed to your respective Pacific Insight

Supplier Development representative.

SUPPLIER CODE OF CONDUCT

Suppliers shall ensure operations are being performed in a manner that is appropriate, as

it applies to the ethical, legal, environmental, and social responsibilities. Below is a

listing of the basic requirements:

Compliance with Local Laws and Regulations Suppliers must adhere to the

laws and regulations in the locality in which they reside. This includes all local,

state, and federal laws/regulations in the country of origin.

Environmental Policy. Pacific Insight Electronics Corp. recognizes that we have

a responsibility towards the environment and an obligation to minimize the

environmental impact of the company’s activities. Pacific Insight Electronics is

committed to:

Reducing losses due to the production of scrap material

Reducing pollution through the reduction of landfill disposal

Complying with all environmental regulatory legislation, consents and

codes

Year over year improvement in environmental performance

Pacific Insight Electronics will achieve the above by:

Establishing an Environmental Management System based on the

requirements of ISO 14001

Integrating environmental management into our business and decision

making processes regularly measuring our performance, and practicing

continual improvement.

Providing a training program to ensure employees and suppliers are aware

of the environmental policies objectives and programs of the company





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Carrying out regular audits of the site to review progress towards

objectives and targets

Requiring its suppliers to comply with the environmental regulatory and

government entities of the country where business is conducted. PI

encourages all suppliers to be ISO 14001 certified or equivalent

PI is required to comply with customer environmental material reporting

objectives and standards. In order to comply with these, PI requires suppliers

provide MSDS (Material Safety Data Sheets) product data sheets, and IMDS

(International Material Data System) submissions upon request.

Also, PI Suppliers must maintain and operate its manufacturing/production

facilities and processes in accordance with local, state, and federal

laws/regulations in the country of origin.

Non-Discrimination Suppliers shall not discriminate against race, color, sex,

religion, age, physical disability, political affiliation, or other defining

characteristics as prohibited by local, state, and federal laws/regulations in the

country of origin.

Labor

o Child Labor – Suppliers shall employ workers of minimum legal age in

accordance with local, state, and federal laws/regulations in the country of

origin. Child labor laws must be followed.

o Forced/Indentured Labor – Suppliers shall not practice the use of forced

or indentured labor.

o Work Hours/Days – Suppliers shall not exceed the daily and weekly

working hours as permitted by local, state, and federal laws/regulations in

the country of origin

o Wages and Benefits – Suppliers shall compensate workers in accordance

with local, state, and federal laws/regulations in the country of origin. This

includes minimum legal wage, overtime wages, and benefits (required by

law).

Gifts and Gratuity Policy It is PI’s policy that no PI employee accepts any gifts

(other than items with small intrinsic value) or other gratuity from any supplier to

PI or bidder for PI’s business. This policy applies to all employees whether or not

they are directly involved in the purchasing activity.

Ethics Evidence of corruption, bribes, improper advantage, or any other form of

illegal practice by the Supplier or associated operations will terminate all relations

with PI. Suppliers will conduct their business in a manner that meets the policy of

the Pacific Insight Electronics Corporation.

CONFLICT MINERALS POLICY Pacific Insight Electronics Corp. is compliant with all industry standards for

quality and environmental management, including TS-16949, ISO 9001 and ISO

14001 certification and we are committed to working with our customers and

suppliers to ensure a socially and environmentally responsible supply chain.





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In July 2010 the United States Congress enacted legislation that requires certain

public companies to provide disclosures about the use of specified conflict

minerals and their derivative metals such as gold, tin, tungsten and tantalum

emanating from the Democratic Republic of the Congo (DRC) and nine adjoining

countries. Section 1502 of the Dodd-Frank Act is intended to make transparent

the financial interests that support armed groups in the DRC area. By requiring

companies using conflict minerals in their products to disclose the source of such

minerals, the law is aimed at dissuading companies from continuing to engage in

trade that supports regional conflicts.

Although Pacific Insight Electronics Corp. is not directly subject to the Dodd-

Frank conflict minerals reporting requirements, many of our customers are. To

support our customers in their compliance requirements, PI actively works with

our global supply chain to collect conflict minerals information.

Pacific Insight Electronics Corp. is committed to due diligence for a responsible

supply chain. In order to support reporting requirements and assurance to our end

customers, suppliers to Pacific Insight Electronics Corp. are directed to:

Determine whether its manufactured products contain one or more of the

identified conflict minerals or their derivatives

Conduct a reasonable country of origin inquiry regarding these conflict

minerals

Undertake due diligence with sub-suppliers to identify the smelters used in

the supply chain to process the raw materials (or validate the origin of

materials as recycled/scrap.)

Complete and return the Conflict Minerals Reporting Template annually

or as requested

Suppliers that are non-compliant with these requirements will be reviewed by our

Supplier Development team.

1 • QUALITY SYSTEM REQUIREMENTS Suppliers shall maintain a Quality Management System (QMS) that promotes defect free

product through prevention, monitoring and continuous improvement. The Quality

Management System shall be suitable to the products and services provided to Pacific

Insight and shall be certified by an accredited third-party certification body to the latest

version of one or more of the following, as applicable:

ISO 9001 - Quality Management System Requirements1

ISO/TS 16949 - Quality System Requirements (Automotive, Truck & Heavy

Equipment)2

See the following sources for a listing of accredited certification bodies:





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1The U.S. accreditation body for management systems can be found at ANSI-ASQ

National

Accreditation Board, http://www.anab.org. For a list of Accreditation Boards from other

countries, refer to the International Accreditation Forum at http://www.iaf.nu. 2 For ISO/TS 16949, see International Automotive Oversight Bureau at

http://www.iaob.org

In the absence of third-party certification, depending on the product, its application,

value, and criticality, the Pacific Insight Supplier Development and quality representative

may authorize the acceptance of other evidence of compliance. This may include second-

party (Pacific Insight) audit or first-party (self) assessment to the applicable criteria

above, or to a set of alternative basic quality requirements (such as those described in a

‘Pacific Insight Supplier Quality Assessment’ checklist).

1.1 QUALITY MANUAL Upon request, the Supplier shall furnish Pacific Insight with a copy of the Supplier’s

Quality Management System Manual, which is to be current and approved by the

supplier's management. The quality management system documentation shall include

supplier’s statements of a quality policy and quality objectives. Top management shall

define quality objectives and measurements which should address customer expectations

and be achievable within a defined period of time. The supplier shall promptly notify the

Pacific Insight Supplier Development representative of any substantive changes to the

supplier’s quality management system or personnel.

2 • SUPPLIER APPROVAL PROCESS

Pacific Insight requires all suppliers to be approved prior to the issuance of contracts. All

suppliers must be approved by Pacific Insight Electronics regardless of approvals by

customers or other entities.

2.1 SUPPLIER ASSESSMENT The Supplier Approval Process may include the following:

a) Supplier Initial Assessment: Pacific Insight may request the Supplier to provide a

copy of its quality management system certificate and/or complete a self-assessment of

its business and quality management system and capabilities (i.e., quality, delivery,

technology, cost, and continual improvement objectives).

b) Documentation Audit: In those cases where a Supplier’s quality management system

has not been certified by an accredited certification body, Pacific Insight Electronics may

request a copy of the Supplier’s Quality Manual and supporting procedures (and perhaps





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internal audit reports) to determine if the Supplier’s quality management system meets

Pacific Insight Electronics requirements.

3 • GENERAL REQUIREMENTS

3.1 COMPLIANCE TO CONTRCTUAL RQUIREMENTS After accepting PI’s contract the supplier is responsible to meet all requirements included

in the contract (drawings, specifications, notes, Purchase Orders etc.). PI or customer

audits do not relieve the supplier of the responsibility of providing acceptable products

and services that meet all customer requirements

3.2 CONTROL OF SUBTIERS The Supplier, as the recipient of the contract, is responsible for meeting all requirements,

including work performed by the Supplier's sub-tier Suppliers (also known as Sub-

Suppliers or subcontract (Suppliers). When the Supplier uses sub-tier sources to perform

work on products and/or services scheduled for delivery to Pacific Insight , the Supplier

shall include (flow-down) on contracts, to its sub-tier sources, all of the applicable

technical and quality requirements contained in the Pacific Insight contract, including

quality system requirements, regulatory requirements, the use of Pacific Insight

designated sources, and the requirement to document and control 'key characteristics'

and/or 'key processes,' and to furnish certifications and test reports as required. PI and its

customers reserve the right of- entry to sub-tier facilities, subject to proprietary

considerations.

3.3 BUSINESS CONTINUITY The Supplier should have a business continuity plan which would allow for the

safeguarding, storage and recovery of engineering drawings, electronic media, and

production tooling in the event of damage or loss. This plan should also contain

contingency plans to satisfy PI requirements in the event of significant utility

interruptions, labor shortages, equipment failure and field returns.

4 • PRE-PRODUCTION AND NEW PRODUCT LAUNCH REQUIREMENTS (APQP) All approved production suppliers involved in pre-production and new product launches

are required to formulate advanced quality plans to support the development of new

products and/or services in accordance with the guidelines in the Advanced Product

Quality Planning (APQP) manual published by the Automotive Industry Action Group

(AIAG).





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5 • PRODUCT QUALIFICATION

5.1 PRODUCTION PART APPROVAL PROCESS When required by the PI contract, the Supplier shall submit to PI a Production Part

Approval Process (PPAP) qualification package. The Supplier is responsible for

obtaining the latest revision of the applicable AIAG reference manuals and forms.

The AIAG Manuals are:

Advanced Product Quality Planning (APQP) and Control Plan

Production Part Approval Process (PPAP)

Potential Failure Mode and Effects Analysis (FMEA)

Measurement Systems Analysis (MSA)

Statistical Process Control (SPC)

When PPAP is specified on the PI contract, the Supplier shall submit a “Level 3” PPAP

package to the PI Supplier Quality Representative, unless otherwise directed. See AIAG

PPAP Manual, Table 4.2, for complete list of submission requirements for each level of

PPAP. Also, see AIAG APQP Manual for related guidance on associated product and

process design and development methodology and techniques. Below are the

requirements on some specific PPAP Elements.

A) Design Record, Change Documents, and Customer Approval The Supplier shall have the design record for the saleable product/part and components;

any authorized engineering change documents for those changes not yet recorded in the

design record but incorporated in the product, part or tooling; and evidence of PI

engineering approval. See AIAG PPAP Manual.

B) Dimensional Results Supplier shall document the dimensional results of five parts per cavity or process stream.

The dimensional results shall include all notes and specifications on the drawing. The

drawing shall be ballooned with the corresponding numbers from the dimensional result

document.

C) Process Flow Diagram The Supplier shall have a visual diagram of the proposed or current process. This

diagram shall clearly describe the production process steps and sequence, and meet the

specified PI needs, requirements and expectations. See AIAG PPAP Manual.

D) Failure Mode and Effects Analysis Suppliers with product design responsibility shall develop a Design FMEA in accordance

with, and compliant to, PI-specified requirements. A single Design FMEA may be

applied to a family of similar parts or materials. Suppliers shall develop a Process FMEA

in accordance with, and compliant to, PI-specified requirements. A single Process FMEA

may be applied to a process manufacturing a family of similar parts or materials if

reviewed for commonality by the Supplier. See AIAG FMEA Manual.





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E) Measurement Systems Analysis The Supplier must develop or obtain gages and standards to control their processes and to

determine product conformance to specifications. Variable gages and measurements are

preferred. Alternative methods, gages or standards may be used at PI to verify the

Supplier’s inspection results. PI may request the Supplier to participate in a correlation

study to compare Supplier measurement results against results obtained by PI gages and

methods. The Supplier shall perform Measurement Systems Analysis (MSA) studies,

e.g., gage repeatability & reproducibility, bias, linearity, stability, for all new or modified

gages, measurement, and test equipment. See AIAG MSA Manual.

F) Control Plan The Supplier shall have a Control Plan that takes into account the output from the FMEA

and defines all methods used for process monitoring and control of special

product/process characteristics. The control plan covers three distinct phases: prototype,

pre-launch, and production. A single control plan may apply to a group or family of

products that are produced by the same process at the same source. See AIAG APQP

Manual.

G) Process Capability Study Process Capability Index (Cpk) is a comparison of the inherent variability of a process

output to specification limits under statistically stable conditions. Most methods for

estimating capability require that the characteristic being evaluated is approximately

normally distributed, and in statistical control.

The distribution should be determined prior to estimating capability. If the process is not

in statistical control, all assignable causes must first be identified and removed. Special

techniques are available for calculating capability when inherent assignable causes, such

as tool wear, are present.

Definitions and calculations for Cpk and Ppk indices are found in AIAG PPAP and SPC

Manuals.

Unless otherwise approved by PI, the Supplier shall use the following as acceptance

criteria for evaluating initial process study results of special characteristics for processes

that appear stable:

Results Interpretation

Index > 1.67 The process currently meets acceptance

criteria.

1.33 ≤ Index ≤ 1.67 The process is marginally acceptable.

Index < 1.33 The process is not acceptable.

If the process is not capable the supplier shall use 100% inspection for the special

characteristic and have a plan to improve process capability with index greater than 1.67.

H) Certification and Test Reports The Supplier shall provide evidence that all required test results and material

certifications comply with the design record.





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The following verifications required by the design record have been completed and that

results indicate compliance with specified requirements:

Material and Performance Test Results – for all parts and product materials with

chemical, physical, metallurgical, and functional performance requirements.

Qualified Laboratory Documentation – documentation showing laboratory results

of the qualifications for the type of measurements or tests conducted and the

standards used.

Sample Product – actual samples as required by the applicable specification or PI

contract.

Master Sample – retain a master sample, and make available upon request.

See AIAG PPAP Manual for applicable forms and instructions.

I) IMDS (International Material Data Sheet) Submission

Prior to PPAP submission the supplier shall submit IMDS requirements through the

IMDS system online

J) Packaging The supplier shall verify internal and external packaging and provide a completed

packaging form with all requirements including testing to assure the quality of their parts

during transportation.

K) Part Submission Warrant Upon completion of all PPAP requirements, the Supplier shall complete the Part

Submission Warrant (PSW). A separate PSW shall be completed for each PI part number

unless otherwise specified

5.2 ANNUAL REVALIDATION Unless otherwise specified, a complete annual layout inspection, including all sub-

components, is required for all parts. All suppliers shall annually revalidate their

respective production components, and be able to provide the results to PI upon request.

At a minimum the revalidation shall include a PSW, a valid material certification

report(s) not more than 12 months old, a full dimensional report, and a capability study

for all print designated special characteristics.

6 • PROCESS CONTROL This section defines the basic necessities for Suppliers to control their manufacturing

processes.





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6.1 SPECIAL CHARACTERISTICS The Supplier shall demonstrate conformity to those special characteristics designated by

PI through means of documentation and appropriate control methods. In addition to any

special characteristics identified by PI, the Supplier shall also review, identify, document,

and control other product and process characteristics that are key to achieving quality.

6.2 ERROR-PROOFING The Supplier should use error-proofing devices and techniques as a form of process

control;

Especially for repetitive functions, difficult tasks prone to mistakes, or where the cost of

error is high.

6.3 WORK INSTRUCTIONS The Supplier shall prepare documented work instructions, as necessary, for all employees

having responsibilities for the operation of processes that impact product quality. These

instructions shall be maintained current and accessible for use at the work station.

6.4 CONTROL OF MONITORING AND MEASURING DEVICES The Supplier shall determine the monitoring and measurement to be undertaken and the

monitoring and measuring devices needed to provide evidence of conformity of product

to determined requirements. As a minimum, where necessary to ensure valid results,

measuring equipment shall:

a) be calibrated or verified at specified intervals, or prior to use, against measurement

standards traceable to international or national measurement standards; where no such

standards exist, the basis used for calibration or verification shall be recorded; and

b) be identified to enable the calibration status to be determined.

6.5 STATISTICAL PROCESS CONTROL Where specified in the Control Plan, the Supplier is required to apply effective statistical

process controls. Suppliers should consult the Statistical Process Control (SPC) manual

published by AIAG for guidance, methods, examples, and related reference information.

6.6 PREVENTIVE MAINTENANCE The Supplier should identify key process equipment and provide resources for

machine/equipment maintenance activities and develop an effective planned total

preventive maintenance system





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7 • CHANGE CONTROL The Supplier is responsible for controlling changes and notifying the PI Supplier

Development representative of all changes to the approved part design, manufacturing

process, or site.

7.1 CHANGE CONTROL PROCESS The Supplier shall have a process to ensure that relevant versions of applicable

documents furnished by PI (as well as those specified of external origin) are available at

points of use.

The Supplier is responsible for the timely review, distribution and implementation of all

PI Engineering standards/specifications and changes in accordance with the schedule

required by PI. The Supplier shall maintain a record of the date on which each change is

implemented in production. Implementation shall include updated documents.

7.2 SUPPLIER CHANGE REQUESTS Suppliers shall not make changes to their processes, location, facilities, equipment,

material, product design (or any change which may affect product design or function)

without written approval from Pacific Insight for:

Correction of a discrepancy on a previously submitted part;

Product modified by an engineering change to design records, specifications, or

materials; or

Any planned changes by the Supplier to the design, process, or manufacturing

location, such as:

a) Use of other material than was used in previously approved part or product

b) Production from new, additional, replacement or modified tools, dies, molds, patterns,

etc.

c) Production following upgrade or rearrangement of existing tooling or equipment

d) Production from tooling and equipment transferred to a different plant site or from an

additional plant

e) Change of sub-tier Supplier for parts, non-equivalent materials, or services (e.g. heat

treating, plating, etc.)

f) Product produced after tooling has been inactive for production for 12 months or more

g) Change to test/inspection method – new technique (no effect on acceptance criteria)

h) For bulk materials: new source of raw material from new or existing Supplier, or

change in product appearance attributes, etc.

Before submitting to Pacific Insight a request for a permanent change to a Supplier-

controlled design, the Supplier shall review the FMEA and Control Plan, as applicable, to

ensure that all process-related issues have been addressed and resolved. Pacific Insight

may require the Supplier to submit an updated FMEA and Control Plan prior to approval

of such permanent changes. Pacific Insight may also require other portions, or all, of the





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related qualification process to be repeated. In some cases, Pacific Insight may elect to

review Supplier proposed permanent changes at the Supplier’s facility.

To request a permanent engineering change, the Supplier shall use the Part/Process

Change Notification form or other equivalent form of notification acceptable to the PI.

To request a one-time or temporary deviation, Suppliers shall use PI’s Supplier Deviation

Request, or other equivalent form acceptable to the Pacific Insight Supplier Development

Representative.

8 • CONTROL OF NON-CONFORMING MATERIAL AND CORRECTIVE ACTION PROCESS

8.1 CONTROL OF NON-CONFORMING MATERIAL Suppliers are responsible for the quality of their product at all times throughout the PI

manufacturing process, installation at the final customer and through the end customer’s

use. Suppliers must have procedures/processes in place to prevent non-conforming

products from escaping their process resulting in shipment to PI.

When non-conforming product/material that does not meet requirement is identified at PI

a supplier non-conformance report is written. The NC report will be forwarded to the

supplier with samples (when applicable) exhibiting the non-conformances.

The supplier shall enact immediate activities to ensure availability of good material to PI

whether by means of correcting the process that caused the non-conformance or by

sorting and reworking the discrepant material.

8.2 CORRECTIVE ACTION RESPONSE

The supplier corrective action response must address the root cause and prevent re-

occurrence of the non-conformance. PI may require the supplier to submit the response in

an 8-D format.

Following is the definition of all 8 sections of a formal 8-D problem solving process.

D1 – Establish Team

Establish Champion

Select team members (cross-functional)

D2 – Describe the Problem

What – the object or part concern

Where – The place this occurred

Hen – When first discovered the problem, when else was seen, when did it occur

in the process

How Big – How many parts/lots are affected, how big is the problem

D3- Containment

Contain symptom immediately to protect the customer





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Purge and Sot immediately at the customer, in transit and in house

Identify Action

Verify Actions stop defects certify material to achieve customer satisfaction

Validate action taken is fully effective.

D4- Identify Root Cause

Use 5-Why methodology

Why did the defect occur

Why did the defect escape the supplier process and arrived at the customer

Why did the system allowed the defect to occur

Verify root cause by turning the problem on and off, (replicating the defect)

D5 – Choose and Verify Corrective Action

Analyze best corrective action, focus on impact and risk

Verify Corrective action eliminates root cause

Choose Corrective action that eliminates the defect escaping to the customer

D6 – Implement Corrective Action

Follow the Engineering Change Process

Implement Corrective Action plan

Assess removal of containment plan

D7 – Prevention

Identify the system, practices, procedures and/or specifications that allowed the

problem to occur (use 5-why methodology)

Identify and implement actions to fix the identified deficiencies

Look across all products and assure the defect is not present and action have been

taken to prevent occurrence

D8- Congratulate Team

Determine appropriate recognition

Recognize team members

9 • ACCOUNTABILITY AND COST OF QUALITY

Suppliers are selected on their ability to provide cost effective, superior defect free

products, their expert knowledge of their product and manufacturing processes, and their

ability to provide responsive and proactive support. With these expectations, suppliers

shall be held accountable and responsible for all costs incurred due to defective product

identified during PI inspection, manufacturing installation, end customer use the product.

Below is a list (not limited to) the cost of poor quality recovery items

Administrative fee of $100 to process the non-conformance

Cost due to an automotive recall

3rd Part Sorting or Reworking costs

Labour for sorting or reworking of raw stock

Labour for sorting or reworking in-process and/or finish goods





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Labour for sorting or reworking finished goods at the end customer

Scrapping or reworking finish goods

Shipping fees related to return of defective product

Fees and taxes related to scrapping of material outside Canada

Warehouse/storage fee accumulated through disposition of suspect product

Tooling gauges or third party testing required for defective material

Freight charges

Production downtime and/or production overtime at PI manufacturing facility

Production downtime at customer plant

Cost of follow up actions and assessments

Any other fees associated with the defective product.

All costs are calculated based on Canadian or US currency depending on the PI

manufacturing location, using standard labour rates established by PI. Appropriate debits

are issued to the supplier through the accounting department in cooperation with

purchasing.

10 • SUPPLIER PERFORMANCE RATING Our supplier scorecard captures and reports on the supplier’s OTD, PPM, Quality

Systems accreditation levels, and a quantitative assessment of supplier performance by

the PI Purchasing team.

The system will provide you with more clarity on what PI expects from its suppliers

strengthen communication and help foster lasting partnerships and drive continuous

improvement.

The following is the weighting we have assigned to each element.

35% Quality DPPM

35% On-Time Delivery (OTD) (% of shipments late, early or wrong quantity)

20% Purchasing team assessment ( 0-100 Points)

10% Quality System Credentials (0 points for none, 100 points for ISO9001 or

TS16949)

The Performance data is then translated into a rating that will be issued to each supplier

A. 100 -90 = Premiere - Meets expectations set by PI

B. 89 -80 = Preferred - Satisfactory no action required

C. 79- 70 = Marginal – Corrective action maybe required

D. 69 -50 = Unacceptable – Systemic corrective action is required, Supplier maybe

required to meet with PI management

F. <50 Unacceptable - Probation and resourcing plan

Pacific Insight Requires 100% quality and 100% delivery from all suppliers





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Pacific Insight will be providing Supplier scorecards to selected suppliers on a monthly

basis and will require corrective action reports in the event that supplier’s performance

does not meet the minimum requirements. Sometime a formal meeting maybe required to

review supplier performance and supplier maybe placed on probation until corrective

actions are agreed upon and executed.

11 • PACKAGING HANDLING, STORAGE PRESERVATION, DELIVERY AND RECORD RETENTION

11.1 PACKAGING AND HANDLING All product shall be packed, packaged, marked and otherwise prepared for a shipment in

a manner which is in accordance with good commercial practice (unless otherwise

specified), acceptable to common carriers for shipment at the lowest rate and adequate to

ensure safe arrival of the material. In accordance with PI’s environmental policy,

packaging materials must be recyclable – preference is given to corrugated cardboard and

paper products over plastic packaging of any kind. Packaging must be tested to assure

product quality during transportation.

Wood Pallets must meet the phyto-sanitary requirements of ISPM15. As of Feb. 1, 2006,

shipments entering Canada from countries other than the USA which do not comply with

this regulation will be rejected. Quarantine expenses will be billed to the suppliers.

All shipments must be accompanied with an itemized packing slip.

Parts with special handling instructions such as ESD sensitivity, RoHS, MSD moisture

sensitivity, WHMIS, and UL must be marked appropriately by the supplier.

Identification requirements may include any or all of the following as specified by PI:

Bar Code labels must be human readable.

a. Part Identification

b. Name of the Manufacturer

c. Lot number and/or Date code

d. PI Purchase Order number

e. Quantity of parts in the container

Suppliers shall identify items of shelf life material with the manufacture date and

expiration date.

11.2 RECORD RETENTION

The Supplier shall retain quality records for a time period specified by the PI contract or

related referenced documents. Upon request, the Supplier shall be capable of retrieving

and delivering required records to PI within forty-eight hours from time of request by PI.





G. Boutsikakis


APPLICABLE DOCUMENTS FORMS AND EXHIBITS If a form is needed the supplier must contact the Quality Department at PI or refer to the

current Production Part Approval Process (PPAP) Manual

Revision History 1.0 Initial release February 24, 2006 1.1 Update to OTD requirements CA# 6047 October 12, 2006 1.2 Update to Sections 3, 5, and 7 EC # 9015 January 16, 2009 1.3 Multiple updates, Red font June 22, 2011 1.4 Conflict Material Update November 27, 2014 1.5 Multiple Updates TOC, page numbers July 15, 2015 1.6 Annual Revalidation, IMDS, ISO 14001, Ratings, Signatures January 19, 2016
