Title Supplier Rating

Code CD-00030-EN
Previous Code CD-030-EN
Version 4
Document type EN\Corporate Document
Status

CD-00030-EN, Version: 4 Originator: F. Pfitzenmaier/QCE 1 / 18

Validity date 05.03.2010
Attention Print-outs are uncontrolled and for reference only.

Remark concerning document language

In case an original edition in the editors native language exists, the interpretation of this
original edition is valid.

Abstract:

This document describes the supplier rating for all divisions at TKT-Presta.

This document is an English translation from the German original. In case of any translation concern
please refer to the original German version for validity.

The copyright of this document and all supplements remain to TKT-Presta. It is strictly prohibited to make copy
of it and to inform or make accessible to a third party without a written authorization from TKT-Presta.

CD-00030-EN, Version: 4 Originator: F. Pfitzenmaier/QCE 2 / 18

0 Change History
Version Date Modified by Description of the modification
1.0 creation
Chapter 3; Revision of classification for audit result, Definition of
responsibility for Data collection
2.0 Change of ppm-target
Revision of supplier rating manual
Revision of attachment
Point 5: Logistics process instead of the shipping instructions.
3.0
Point 7: TKT requirement QT-003 added
Point 2: Table 3 (Responsibility for the Data Management of the
several criteria) integrated.
Point 4: Table 6 (Rating of incoming inspection) modified and
supplemented.
4.0 04.11.09 F. Fitzenmaier
Point 6: Actions, Measures and Escalation supplemented. Table
14 (status, violations, actions etc.) from point 2 integrated,
adjusted and defined
Document in a WORD-template integrated.

Documents to apply

No. Authors Title

CD-00030-EN, Version: 4 Originator: F. Pfitzenmaier/QCE 3 / 18

Table of Content

Supplier Rating ...........................................................................................................1

0 Change History ...........................................................................................................3
1 Scope ........................................................................................................................6
2 Introduction ................................................................................................................6
2.1 Objective.............................................................................................................6
2.2 Terms and definitions ...........................................................................................7
2.3 Criteria, targets and period under consideration.......................................................7
2.4 Supplier status, violations and actions of supplier and TKT-Presta .............................7
2.5 Responsibilities ....................................................................................................8
3 Rating of the criteria QM-System and Audit (Category System) .........................................9
3.1 QM-System .........................................................................................................9
3.2 Audit ................................................................................................................10
4 Rating of the criteria Incoming inspection and ppm (Category Quality) .............................10
4.1 Incoming inspection ...........................................................................................10
4.2 ppm .................................................................................................................11
5 Rating of the criterions Up-to-schedule shippings and Logistics process (Category Logistics)12
5.1 Up-to-schedule shippings ...................................................................................12
5.2 Logistics process ...............................................................................................13
5.2.1 Evaluation of the inbound process.................................................................13
5.3 Evaluation of the communication behaviour...........................................................14
6 Actions, Measures and Escalation ...............................................................................14
6.1 Events or rather occurrences which could lead to an escalation level, are:.................17
6.1.1 Violation of trust..........................................................................................17
6.1.2 Field actions at the customer ........................................................................18
6.1.3 Line shutdowns...........................................................................................18
6.1.4 Indoor breakdowns......................................................................................18
7 Records retention ......................................................................................................18
8 References ...............................................................................................................18

CD-00030-EN, Version: 4 Originator: F. Pfitzenmaier/QCE 4 / 18

List of Tables
Table 1: Terms and definitions............................................................................................7
Table 2: Criteria, targets and period under consideration .......................................................7
Table 3: Responsibilities.....................................................................................................8
Table 4: Point rating QM-System.........................................................................................9
Table 5: Point rating Audit ................................................................................................ 10
Table 6: Point rating incoming inspection ........................................................................... 11
Table 7: Point rating ppm-value ........................................................................................ 11
Table 8: Point conversion up to schedule shipping .............................................................. 12
Table 9: Manual point conversion up to schedule shipping ................................................... 12
Table 10: Total deduction logistics process ........................................................................ 13
Table 11: Total deduction inbound process ........................................................................ 13
Table 12: Deduction points based on logistics complaints .................................................... 14
Table 13: Total deduction communication behaviour ........................................................... 14
Table 14: Definition of the escalation rating ........................................................................ 15
Table 15: Participant and their responsibilities in the escalation management meeting ............ 16
Table 16: Records retention.............................................................................................. 18

CD-00030-EN, Version: 4 Originator: F. Pfitzenmaier/QCE 5 / 18

1 Scope
This CD is valid for all plants of ThyssenKrupp Presta and for all suppliers of serial production.

2 Introduction

2.1 Objective
In conjunction with its suppliers, ThyssenKrupp Presta (hereinafter TKT-Presta) is continuously
striving to optimize its material and information flow.
The supplier rating serves as a controlling tool for both the supplier and TKT Presta, and thus
helps to continually improve and further develop customer-supplier relationships.

The main points of the supplier rating are:

to communicate goals for all 6 rating-criterions (target state);
to present the actual status and deviation to target state of the supplier relationship via
the TKT-Presta Supplier Portal every month;
to realize closed-loop-control between TKT-Presta and their suppliers (elimination of
deviations between actual and target state)
to continuously improve the quality of the delivered products;
to guide suppliers to the 0 ppm-goal
to achieve the QM-system prerequisites required by TKT Presta;
to realize a stable long-term supplier relationship
to provide a clear overview of the suppliers logistics services;
to ensure that suppliers focus on those aspects of logistics that are important for TKT
Presta;
and to reduce the occurrence of failures in the supply process.

The terms, consequences, actions, responsibilities, formula and basic information for the
supplier rating are explained in this manual. Any specific questions should be addressed to the
responsible Division Purchasing department of TKT-Presta.

CD-00030-EN, Version: 4 Originator: F. Pfitzenmaier/QCE 6 / 18

 2.2 Terms and definitions
Rating Each month the supplier receives a rating for all criteria that have been evaluated, whereby
100 points are the highest possible rating, and one point is the worst value.
Target For each criterion a minimum score is defined as target. Targets will be verified periodically
and defined for the next fiscal year.
Violation Every month the supplier misses the target results in a target violation.
Period under To determine the supplier status only violations during the period of consideration are
consideration recorded. There are different periods of consideration for several criterions.
Supplier status Traffic light symbols and additional items indicate the supplier status. The displayed supplier
status leads to actions of supplier and TKT-Presta.

Table 1: Terms and definitions

2.3 Criteria, targets and period under consideration

The evaluation is based on six criteria which are dedicated to three categories.

Category Criterion Target Period under

consideration
System QM System >= 50 6 month
System Audit (result) >= 71 6 month
Quality Incoming Inspection >= 90 12 month
Quality PPM >= 50 (is equivalent to 12 month
50 ppm)
Logistics Up-to-schedule Shippings >= 90 6 month
Logistics Logistics process >= 90 6 month

Table 2: Criteria, targets and period under consideration

A detailed description of the individual criteria is given at a later time.

2.4 Supplier status, violations and actions of supplier and TKT-Presta

The rating of the preceding month is shown on the supplier portal on the 15th of each month.
It is possible that rating data of previous months change due to information arisen after the 15th.

CD-00030-EN, Version: 4 Originator: F. Pfitzenmaier/QCE 7 / 18

Detailed data

The magnifier symbol in the rating of the Supplier Portal is used to access the detail view of
the rating. Clicking on the glasses symbol displays the detail view of a specific material or the
total view of all materials. The detail views can only be called up for those locations for which the
data are automatically determined in SAP.

2.5 Responsibilities
Process definition of the Supplier Escalation Management

The responsible quality department in the division controls and carries out a monthly plausibility
check of the supplier rating. The responsible quality department organises and coordinates the
monthly Supplier Escalation Management Meeting, with number of participants

Center logistic department

Concerned commodity group buyer / purchasing manager
Quality representative of the plant if necessary
Technical specialist if necessary

In case of a grading in escalation level 1-3 the central purchasing manager has to inform the
commodity group buyer or rather the purchasing organisation of the concerned divisions.

Criteria Responsibility for the Data Management of the different criteria

QM-System Purchase controlling TKT-Presta Eschen

Audit Performing auditor TKT-Presta Eschen

Incoming Inspection Responsible Quality Engineer (QB) of the concerned plant

PPM Responsible Quality Engineer (QB) of the concerned plant

Up-to-schedule Shippings Responsible Logistic Manager of the concerned plant

Logistics process Responsible Logistic Manager of the concerned plant

Table 3: Responsibilities

CD-00030-EN, Version: 4 Originator: F. Pfitzenmaier/QCE 8 / 18

3 Rating of the criteria QM-System and Audit (Category
System)
3.1 QM-System
The rating criterion QM-System considers the quality and environmental management system of
the supplier. The quality and environmental management system has to be accepted and
certified by an independent third-party (e.g. certification according to ISO TS16949, ISO14001,
etc.).

Table 4 explains the rating and the corresponding number of points.

QM-System of supplier Point rating

ISO TS 16949 or VDA 6.1 and ISO 14001 100 points

ISO TS 16949 or VDA 6.1 90 points

ISO 9001 and ISO 14001 70 points

ISO 9001 50 points

ISO 14001 30 points
Not fulfilled 1 point

Table 4: Point rating QM-System

The purchase controlling at TKT-Presta Eschen is responsible for data management in SAP.

CD-00030-EN, Version: 4 Originator: F. Pfitzenmaier/QCE 9 / 18

3.2 Audit
The rating criterion TKT Presta Audit is the result of the audit carried out by TKT Presta
employees on the vendors premises. The rating is equivalent to the level of compliance (audit)
according to CD-008 shown in table 5.
(Ratings based on audits processed according to the old classification are valid till next audit.)

Level of compliance (audit) Rating Point rating

92 - 100 % A 92 - 100 points

71 - 91 % B 71 - 91 points

< 71 % C < 71 points

Table 5: Point rating Audit

The Performing auditor at TKT-Presta Eschen is responsible for data management in SAP.
The Central Quality has to be informed by the TKT-Presta Group members about supplier audit
results (if available)

4 Rating of the criteria Incoming inspection and ppm

(Category Quality)
4.1 Incoming inspection
The rating criterion Incoming inspection refers to the existing usage decision. The usage decision
describes whether a release or a deviation has been assigned to a delivery, the delivery is
subject toreworking or sorting, or returns to the supplier (return shipment). The average monthly
rating is calculated from the average value of the existing usage decisions.

For example, four deliveries from a supplier are received at a TKT Presta Group location during
December. A release was effected for one of these deliveries, a deviation for another two, and a
return delivery for the fourth. The corresponding score is calculated using the ratings from Table
6 and the following formula:
Average= (1*100+2*80+1*1)/4=65.25

Because only whole numbers are displayed in the rating, this result is rounded up or down.
In the case of this example, the corresponding score is 65 points.

CD-00030-EN, Version: 4 Originator: F. Pfitzenmaier/QCE 10 / 18

 Rating of incoming inspection Point rating
Release 100 points

Free with exception (inform. complaint) 80 points

Free with exception (official complaint) 50 points

Rework action 50 points

Sorting action 50 points

Return delivery 1 point

Table 6: Point rating incoming inspection

4.2 ppm
ppm is the abbreviation for parts per million. The number of defective parts of all deliveries is
extrapolated to one million parts
(number of defective components*1000000 /total delivery volume).

The ppm-value determines the rating for the criterion ppm. There is a reverted relation between
point rating of the criterion and the ppm-value in the range of 0 - 99 ppm. (The ppm-value and
the rating of the criterion added without units of measurement complement one another to the
value 100.) 0 ppm determine 100 points and 99 ppm determine 1 point. More than 99 ppm are
also evaluated with 1 point (table 7). Exceeding of the maximum ppm-value leads to a change of
the supplier status (according to table 14).

The four deliveries from the preceding example refer to a total delivery volume of 20,000 parts;
the number of defective parts is 35. The PPM number is calculated as follows:
PPM = (35*1000000)/20000= 1750
In this example, the supplier has a PPM number of 1750 and receives one point in accordance
with the table below.

ppm-value Point rating

0 ppm 100 points

1 - 99 ppm 99 - 1 points

> 99 ppm 1 point

Table 7: Point rating ppm-value

The supplier is obliged to inform the responsible quality person if the rating needs to be corrected.

CD-00030-EN, Version: 4 Originator: F. Pfitzenmaier/QCE 11 / 18

5 Rating of the criterions Up-to-schedule shippings and
Logistics process (Category Logistics)

5.1 Up-to-schedule shippings

The criterion Up-to-schedule shippings determine the reliability of a supplier in consideration of
schedules and quantities. It is based on a percentage number and is converted into points as
shown in Table 8:

Up-to-scheduleshippings in % Point conversion

1 % - 100 % 1 - 100 points

<1% 1 point

Table 8: Point conversion up to schedule shipping

The monthly rating is based on the average (arithmetic mean) of all Up-to-schedule shipping
assessments in the period. Each delivery position is evaluated in respect of the quantity on time
in proportion to the total quantity of the delivery:

Up-to-schedule quantity of the delivery

Up-to-schedule shippings of one delivery = --------------------------------------------------
Total quantity of the delivery

Background of the assessment is the receipt of goods at TKT-Presta and the corresponding
delivery scheduling. When pickup dates are displayed in the schedule, transit times are added for
the calculation in case of variable transit times with respective tolerances. Stipulations which
have not been confirmed with a new delivery schedule are not taken into account. They are also
not subject to subsequent reclamations. Tolerances in over shipment, early deliveries and late
deliveries can be determined by TKT-Presta for different reasons. In case of an over shipment,
the tolerated quantity is subtracted from the total quantity in the formula above.

The described automatic rating has not yet been introduced in all TKT-Presta plants. At plants
where evaluation is performed manually, each delivery is evaluated according to the following
scheme (Table 9):

Delivery up-to-schedule Correct delivery quantities Complianc

e

Delivery up-to-schedule Quantity within tolerated bandwidth 100%

Delivery up-to-schedule Slight difference to scheduled and tolerated 80%

quantities

Delivery up-to-schedule Great difference to scheduled and tolerated 0

quantities

Delivery not up-to-schedule Regardless 0

Table 9: Manual point conversion up to schedule shipping

CD-00030-EN, Version: 4 Originator: F. Pfitzenmaier/QCE 12 / 18

It is up to the responsible person for material disposition to distinguish between insignificant and
substantial differences of scheduled quantities. In case of questions, please clarify conditions
with the booker. The monthly rating is carried out in the same way as the automatic rating - it is
the arithmetic mean of all up-to-schedule assessments.

5.2 Logistics process

The criterion logistics process evaluates each delivery according to its compliance with the
instructions agreed with TKT-Presta.

Rating algorithm

The rating consists of the inbound process and communication behaviour. The possible maximum score is
100, the minimum is 1. For every failure points will be subtracted:

Criterion Possible maximum points to be subtracted

Inbound process 75
Communication behaviour 25
Total deduction logistics process 100

Table 10: Total deduction logistics process

The degree of the logistics process will be determined by:

100 possible points
subtracted by total deduction in which a calculated 0 will be the degree of 1.

A violation is arised on a degree < 90.

5.2.1 Evaluation of the inbound process

Criterion Possible maximum points to be subtracted

Quality of Shipment Note via EDI (ASN) 25 *
Packaging 20 **
Delivery papers 15
Labelling 15
Total deduction inbound process 75

Table 11: Total deduction inbound process

* Incorrect EDI content can cause wrong MRP results in our SAP.
** Damaged or wrong packages may have negative influence on product quality.

The total deduction of points complies with the number and status of the logistics complaints.
The complaints will be proofed by failure location EDI, packaging, delivery papers and
labelling.
5 points will be subtracted from every failure location if the status corresponds to one of the
entries in the following table:

CD-00030-EN, Version: 4 Originator: F. Pfitzenmaier/QCE 13 / 18

Status of cause Status of complaint Deduction of No
points deduction
Caused internally all X
in process X
Complaint accepted X
Caused externally or no Complaint not accepted X
status set
Complaint is just a hint*** X
Complaint cancelled X
Table 12: Deduction points based on logistics complaints

*** If a supplier should only be informed with request for remedy the defects and no further
action are necessary the complaint obtains the status Hint complaint. This type of complaint
has no influence on the evaluation.

5.3 Evaluation of the communication behaviour

Criterion Possible maximum point

subtract
Communication behaviour logistics complaints 15
Communication behaviour on violations of a logistics criterion 10
Total deduction communication behaviour 25

Table 13: Total deduction communication behaviour

With communication behaviour, the supplier will be evaluated due to the reply within the given
time. For logistics complaints the given time for a 8D report is 24 hours. Every missed reply
within the given time causes a subtraction of 5 points.

With communication behaviour on violations, the supplier will be evaluated due to the reply on a
violation. The target is the last calendar day of the month after the complaints month. If the reply
is missing the total possible deduction of 10 points will be applied.

6 Actions, Measures and Escalation

Based on the number of violations in regards to the criteria of the supplier rating an automated
status information in form of a traffic light symbol is shown in SAP. The necessary actions and
escalations level are defined in the escalation management meeting under consideration of the
implemented traffic light symbol. This may include actions for Violation of trust, field action at the
customer, line shutdowns and indoor breakdowns.

CD-00030-EN, Version: 4 Originator: F. Pfitzenmaier/QCE 14 / 18

 Status Violation / Incident * Actions by supplier Actions by
(Ampel) TKT-Presta
0 - 3 Violations. Managed by 8D- ESK0
process.
4 - 10 Violations. Managed by 8D- ESK0
process.
4 - 10 Violations The supplier is requested, to ESK1
and/or provide and to implement
Violation of trust, overlapping actions to improve
field action at the customer, the quality- and supply-
line shutdowns, performance. If necessary on site
indoor breakdowns. verification of the actions by TKT-
Presta.
More than 10 Violations. Managed by 8D- process. ESK 0
More than 10 The supplier is requested, to ESK 1
Violations and provide and to implement
Violation of trust, overlapping actions to improve
field action at the customer, the quality- and supply-
line shutdowns, performance. If necessary on site
indoor breakdowns. verification of the actions by TKT-
Presta.
More than 10 The management/board of the ESK2
Violations and/or supplier is requested, to present
Violation of trust, overlapping actions to improve
field action at the customer, the quality- and supply-
line shutdowns, performance at TKT-Presta.
indoor breakdowns.
More than 10 ESK3
Violations and/or
Violation of trust,
field action at the customer,
line shutdowns,
indoor breakdowns.
* Maximum ppm-value** exceeded. Review of
business
relations
Table 14: Definition of the escalation rating

** Maximum ppm-value is equivalent to 100 ppm

CD-00030-EN, Version: 4 Originator: F. Pfitzenmaier/QCE 15 / 18

 Participant Input / Tasks

Quality department division Overview and analysis of the critical suppliers, detailed
information
of the supplier quality performance (8D, photos, sample
parts, and so on.)

Central-logistic department Detailed information of the supplier logistic performance

Concerned commodity group Supplier status, list of the financial critical suppliers
buyer / purchase manager of (Liste der
the plant coordination
wackeligen Lieferanten)

Table 15: Participant and their responsibilities in the escalation management meeting

ESC0 (Escalation level 0):

The supplier fulfils the quality- and/or logistics-requirements ( ppm, service level and so on).
Complaints are handled by the plants.

ESC1 (Escalation level 1):

The supplier does not fulfil the quality- and/or logistic specifications. The supplier is requested, to
provide and to implement overlapping actions to improve the quality- and supply-performance. If
necessary on site verification of the actions by TKT-Presta.
Insufficient performance improvement will lead to a grading in escalation level 2. Effective actions
to improve the quality- and supply-performance will lead to a grading in level 0.

ESC2 (Escalation level 2):

The management/board of the supplier is requested, to present overlapping actions to improve
the quality- and supply-performance at TKT-Presta. If necessary on site verification of the actions
by TKT-Presta.
Insufficient performance improvement will lead to a grading in escalation level 3. Effective actions
to improve the quality- and supply-performance will lead to a grading in level 0.

CD-00030-EN, Version: 4 Originator: F. Pfitzenmaier/QCE 16 / 18

ESC3 (Escalation level 3):
The supplier will be informed by the concerned commodity buyer, that he is blocked for receiving
RFQs for new products. It has to be considered, that each grading in escalation level 3 has to be
approved by the division management.
A grading back in level 0 has to be decided during the Supplier Escalation Management Meeting.
As basis for the decision could be a PPM-Blitz, new auditing, permanent improved quality- and
supply-performance.

6.1 Events or rather occurrences which could lead to an escalation

level, are:

6.1.1 Violation of trust

If TKT-Presta discovers a violation of trust of a supplier, will this one be graded in an escalation
level (ESC1-3).

A violation of trust will be caused, if a supplier is not following the notification requirements. In
case of changes or not conform parts, the supplier is required to notify TKT-Presta and ask for
acceptance with a Request for Engineering Approval (Antrag auf technische Freigabe=ATF).

Examples:
Manufacturing or equipment process change (including tooling) or location change
Component or material change or substitution
Subcontractor or vendor change
non-compliance of the QSV or rather the specification in the supplier portal

Other examples for violation of trust could be:

Launch ramp-up or rate of climb which adversely impacts plant build schedule versus
the agreed timing
Sampling documents or rather supporting data (capability and so on) are incomplete
and/or not plausible
Violation of trust issues which have a big influence on the existing relationship to TKT-
Presta (see arrangement of confidentiality)
Non compliance of binding commitment
Insufficient cooperation (regarding emails, calls etc.)
Communication of incorrect data or documents

CD-00030-EN, Version: 4 Originator: F. Pfitzenmaier/QCE 17 / 18

6.1.2 Field actions at the customer

If the OEM has to carry out field actions because of variations of vendor parts, the supplier will be
graded by a committee decision in an escalation level (ESC1-3).

6.1.3 Line shutdowns

Because of a line shutdown caused by the supplier, the supplier will be graded by a committee
decision in an escalation level (ESC1-3).

6.1.4 Indoor breakdowns

Because of unacceptable number of violations within 6 months, the supplier will be graded by a
committee decision in an escalation level (ESC1-3).
7 Records retention

Storage time Records

Record / Data Responsibility
repository
monthly ratings Division Purchasing 10 years SAP-Archiving
responsible

Q-Data, claims, Test-Reports Division Quality responsible 10 years SAP-Archiving

Logistic-Data, Releases, Delivery Notes, Reception Division Logistics 10 years SAP-Archiving

Notes responsible

Table 16: Records retention

8 References
See process (Income):Supplier rating and supplier development.

CD-00030-EN, Version: 4 Originator: F. Pfitzenmaier/QCE 18 / 18