Subaru of Indiana Automotive, Inc.

PURCHASING SUPPLIER MANUAL

Issued by Purchasing Administration

FOR SUBARU PARTS

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Issued: 04/2011 06-SPU4-161

Revision: 3.1PURCHASING SUPPLIER MANUAL

Table of Contents

I.INTRODUCTIONPage #

  1. SIA Organization------3
  2. Company Relationships------4
  3. Subaru Contact Information------5
  4. Production Facility Information------5
  5. Operational Overview------6
  6. SIA Acronyms & Definitions------6
  7. Plant Map------9

II.PURCHASING

  1. SIA Supply Agreement------11
  2. Purchase Order------11
  3. Tooling Payment Information------12
  4. Tooling Development Guidelines------12
  5. Accounts Payable/Receivable------13
  6. LDSClaims Against Supplier------14
  7. Reimburse Claims from Supplier / Obsolete Parts------14
  8. Value Analysis, Value Engineering /Cost Reduction------14
  9. Request For Quotation------15
  10. Design Changes / Specifications / ECS Timing------16
  11. Problem Advance Notification (PAN)------16
  12. Service (Aftermarket) Parts------17
  13. International Material Data System (IMDS)------18

III.MATERIALS / LOGISTICS

  1. Packaging Selection Procedure------20
  2. Packaging Procedure------20
  3. Packaging RequirementsMaintenance------21
  4. Receiving/Shipping Responsibilities------22
  5. Transportation------23
  6. Labeling------23
  7. Freight Claims Procedure------25

IV.SYSTEM APPLICATIONS

  1. EDI – Electronic Data Interchange------27
  2. RFQ (Request For Quotation) Application------28
  3. ANTS Application – Advanced Notice Tracking System------29
  4. NAFTA Application------29
  5. Nexprise – SQA Quality Application------30

V.PRODUCTION CONTROL

  1. Estimate & Authorization------32
  2. Delivery Order------32
  3. Advanced Shipping Notice------32
  4. Emergency Delivery Order------33
  5. SIA Supplied Parts------33

VI.SUPPLIER QUALITY ASSURANCE

  1. Subaru Supplier Quality Manual------35
  2. Supplier Rating Program------35
  3. QIP / Pre-QIP------36
  4. Third Party Sorts------36
  5. Special Shipment Tags------36

I. INTRODUCTION

A.SIA ORGANIZATION HISTORY

The history of SUBARU of INDIANA AUTOMOTIVE, INC. is unique to the automotive industry. Its origins date back many decades and involve the dedication of numerous individuals and companies. Originally, SIA was a joint venture between Fuji Heavy Industries Ltd. and Isuzu Motors Limited. This venture was formed in March of 1987. At the beginning of 2003, Fuji Heavy Industries Ltd. became the sole owner of SIA. SIA Associates now build the Subaru Legacy, Outback, and Tribeca along with the Toyota Camry.

At the very beginning, Chikuhei Nakajima established the Aircraft Research Laboratory in Japan in 1917. From 1945 to roughly 1953, the company separated into twelve smaller companies with divisions in automobile, aircraft, rolling stock (train, diesel locomotive, etc), industrial engine, and bus/coach production.

In 1953 Fuji Heavy Industries Ltd. (FHI) was established from five of the leading companies remaining after the division, and from that corporation Subaru arose. "Subaru" is a Japanese word for Pleiades (Plee-a-dees), a constellation widely known since ancient times, which is used as Subaru's logo to symbolize unity and purpose.

The company named Subaru first began manufacturing the Rabbit motor scooter. Then, in 1958, FHI decided to enter the automobile market with the Subaru 360. Theautomobile's advanced features won Subaru a lasting place in automotive history.

Now, FHI leads the way for automotive advances, including the first mass produced all-wheel drive car, the horizontally opposed boxer engine and the innovative Subaru Intelligent Drive system.

In May 1986 FHI and Isuzu agreed to a joint venture to establish a manufacturing plant in the United States. Of the many cities originally explored in the United States, 13 sites were eventually chosen for further consideration in seven states, including the state of Indiana. Hoosier pride was very evident in Indiana as cities competed to provide local access to auto parts industries, present and future. In December of 1986 Lafayette was selected as the site for the plant and Subaru-Isuzu Automotive was incorporated in March of 1987 as the managing company for this site.

In May of 1987, ground was broken for the SIA plant and construction began. The 2.3 million-square foot facility performs all integrated operations from stamping to final assembly. The production of the Subaru Legacy and Isuzu Pick-up began on September 11, 1989. The plant was officially dedicated on October 16, 1989 with a week long grand opening ceremony. Throughout the years, SIA Associates have built the Subaru Legacy, Outback, Baja and Tribeca, as well as the Isuzu Pick-up, Rodeo, Amigo and Axiom and the Honda Passport. InJanuary 2003, SIA became Subaru of Indiana Automotive, Inc. signifying the sole ownership by Fuji Heavy Industries Ltd. SIA discontinued production of Isuzu vehicles on July 23, 2004, and began to build the Toyota Camry on February 28, 2007 under contract with Toyota.

In 1994, Subaru of Indiana Automotive, Inc. became the first automotive assembly plant in the United States to completely ban indoor smoking. At that time, very few workplaces in America banned smoking as evidence of the adverse health impacts of second-hand smoke had not been fully revealed and the evidence that existed had not been widely accepted. At SIA, in addition to thedesire to maintain a safe and clean environment for our Associates; we also realized that there waspotential for significant cost savings, an increase in productivity and an improvement in product quality through a ban on smoking in our workplace. Since adopting the ban on indoor smoking in 1994, SIA has added benefits to encourage our Associates to quit smoking, including 100% coverage for the cost of smoking cessation programs/medications.

The future of SIA depends on receiving assured high quality goods from oursuppliers at fair prices and within schedule demands. This manual will explain how SIA does business so that suppliers can blend their excellence with that of SIA to foster mutual future success.

The SIA web address is All the purchasing forms mentioned in this document can be found on the SIA web site via the Supplier Portal. A user name and password can be obtained from your buyer. Further explanation regarding each application can be found in the System Applications section of this manual.

In 2003, Subaru of Indiana Automotive, Inc. became the first automotive assembly plant designated as a Backyard Wildlife Habitat by the National Wildlife Federation. SIA’s 800+ acres serves as a home for various wildlife including: white-tail deer, rabbits, Canadian Geese, Mallard Ducks, squirrels, beavers, coyote, snapping turtles, frogs, Red-Tail Hawks, Blue Heron and the Bald Eagle.

In 2004, Subaru of Indiana Automotive, Inc. became the first automotive assembly plant to be “Zero-Landfill.” SIA achieved this outstanding accomplishment in May of 2004 and has remained zero landfill since that time. SIA sends nothing from its manufacturing process to the landfill. In other words, a typical household puts more trash in the ground that SIA’s entire manufacturing facility.

B.COMPANY RELATIONSHIPS

Fuji Heavy Industries Ltd. (FHI), Japan has the ultimate responsibility for the design engineering (drawings and specifications) and development of the Subaru vehicle. Those drawings and specifications are sent to SIA for processing. FHI also has responsibility for the master production schedule.

Subaru of America, Inc. (SOA) is responsible for the sale of our vehicles to the dealerships. They also issue our service (aftermarket) part requirements.

C.SUBARU CONTACT INFORMATION

DepartmentAssociateTelephone/Facsimile

PurchasingPurchasingVice PresidentPH: 765-449-6470

Planning & Admin.PH: 765-449-6425

ManagerPH: 765-449-6474

1st ProcurementPH: 765-449-6416

Manager

2nd ProcurementPH: 765-449-6014

Manager

Supplier ManagementPH: 765-449-6480

Manager

Orders, Receipts Materials ManagementManagerPH: 765-449-6411

Mtls Group LeaderPH: 765-449-6404

TransportationPH: 765-449-6559

PackagingManufacturing Eng.LogisticsPH: 765-449-6119

InspectionSupplier QualityManagerPH: 765-449-6673

AssuranceSupport StaffPH: 765-449-6692

Information SystemsEDI & FTPManagerPH: 765-449-6039

EDI Systems AnalystPH: 765-449-6024

D.PRODUCTION FACILITY INFORMATION

1. Site Area: / 820 acres (excluding easements and right of ways)
2. Improved Area: / 620 acres
3. Building Area (Foot Print): / 2,966,179 square feet
4. Floor Space (with Mezzanine and Penthouse): / 3,401,664 square feet
5. Conveyors: / 10.7 miles
6. Current Production Capacity: (units/month with current manning; based on an eight hour-per-shift schedule) / 20,000
7. Allowable Production Volume Under SIA’s Air Operating Permit: / 262,000 units

Shop Outline:

Stamping / 374,908 square feet
4 Transfer Presses: (1) 4,500-ton, (2) 3,500-ton, (1) 2,700-ton
High Speed Tandem Press (1): (1) 5,000-ton
Body Assembly / 562,942 square feet
Paint / 876,807 square feet
Trim & Final / 1,015,640 square feet
Engine / 118,403 square feet
Administrative Office / 227,473 square feet

Other Facilities:

Container Yard / 482,460 square feet
RecreationCenter / 19,795 square feet
Training/Reception Center / 14,598 square feet
ChildDevelopmentCenter / 13,341 square feet
TechnicalTrainingBuilding / 10,500 square feet
Test Track / 2 miles
Motor pool / 143 acres

E. OPERATIONAL OVERVIEW

1. Address: / 5500 State Road 38 East, Lafayette, Indiana
2. Established: / March 17, 1987
3. Capital: / $794.045 million
4. Facility Investment: / $1.224 billion
5. Number of Associates: / 2,747
6. Staffing: / Administrative: 497 Production: 2,250
7. Production Shifts: / 1st Shift / 6:00 am - 2:30 pm
2nd Shift / 4:30 p.m. - 1:00 am (Friday 3:30 pm-12:00 am)

F. SIA ACRONYMS & DEFINITIONS

Below is a list of SIA acronyms and their definitions. These acronyms will be used throughout this document.

1P / 1st Procurement
2P / 2nd Procurement
AAS / Advanced Authorization Sheet
AIAG / Automotive Industry Action Group
ANTS / Advanced Notice Tracking System, web based application for SIA part orders
ASN / Advanced Shipping Notice
B9 / Tribeca model
BOM / Bill Of Materials
BOMECS / Bill Of Materials ECS - internal drawing application that stores all drawings/ecs's
CIF / Cost, Insurance and Freight
CKD / Japan supplied parts (Cargo Knock Down)
C of O or C/O / Certificate Of Origin
DC / Drawing Change
DCR / Design Change Request
DIP / Delivery Improvement Program
DO / Delivery Order
DPS / Direct Parts Subaru (Manual Purchase Order)
DWG / Drawing
E&A / Estimate and Authorization, SIA 13 week forecast for production parts
ECR / Engineering Change Request
ECS / Engineering Change Summary
EDI / Electronic Data Interchange
EDO / Emergency Delivery Order
EU / European hazardous free material directive
EZ5 / Internal code for 2009 Subaru Legacy model
F/T / FittingTrial
FHI / Fuji Heavy Industries Ltd, Subaru parent company in Japan
FIT-LOC / Fit Location (Line side Location)
FOB / Freight On Board
FUSA / FujiUSA (SOA related)
IF / Information Only (Drawing type)
IMDS / International Material Data System
IS / Information Systems
ISO / International Standardization Organization
ISR / Initial Sample Report
JIT / Just In Time
LDS / Local Deviation Sheet
MCDT / Material Claim Defective Ticket
MOQ / Minimum Order Quantity
NAFTA / North American Free Trade Agreement
NEXPRISE / SQA quality software
NG / No Good
OBK / Outback
PAM / Parts Accuracy Management (RFQ application)
PAN / Problem Advance Notification
PC / Production Control
PCR / Process Change Request
PUG / Parts Unit-Gauge
PPA / Pre-Pilot Event
PPM / Parts Per Million
PPP / Pre-Pilot Production Manual Orders
PRC / Problem Report Countermeasure
QIP / Quality Improvement Program
RFQ / Request For Quotation
RQ / Required Quality
SAP / Service Assembly Parts, components provided to supplier from SIA
SDN / Sedan
SIA / Subaru of Indiana Automotive, Inc.
SLC / Safety Lot Control
SM / Supplier Management
SNP / Standard Number Pack
SOA / Subaru of America, Inc.
SQA / Supplier Quality Assurance
SRD / Subaru Research & Design
TSR / Total Cost Structure Revolution - purchasing cost reduction plan
TSR-VC / Total Cost Structure Revolution - Value for Customer (Value for Competitiveness)-purchasing cost reduction plan
VA / Value Analysis
VE / Value Engineering
WGN / Wagon
WH-LOC / Warehouse Location


G. PLANT MAP

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Issued: 04/2011 06-SPU4-161

Revision: 3.1PURCHASING SUPPLIER MANUAL

II. PURCHASING

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Issued: 04/2011 06-SPU4-161

Revision: 3.1PURCHASING SUPPLIER MANUAL

This manual is intended to be used by SIA suppliers and will fully explain all aspects in regards to doing business with SIA and the Purchasing section. It also describes our policies, procedures and what forms to use. If you are a new supplier to SIA for production parts, you should request your buyer to arrange a meeting with all related sections prior to providing parts to SIA for Subaru vehicles. This manual applies to Subaru parts only, Toyota parts are not directly purchased by SIA.

The SIA purchasing section uses several applications that contain information (documents, forms, etc.) andare necessary in order to submit documents to SIA. They all require unique logon ID’s and passwords and each user must be set up by an associate in the Administration section of purchasing. These applications are further explained in Section 4, System Applications. SIA utilizes emails for multiple functions within our department so it is very important if a contact changes, SIA be notified immediately in order to eliminate any interruption of important communication. There is a contact sheet that should be completed and returned whenever a change occurs within your organization. This form must be completed and returned to your buyer so our contact databases can be updated with the most recent information. If assistance is needed, please contact your buyer and you will be directed to the appropriate person. The contact sheet can be found on the SIASupplierPortal.

A.SIA SUPPLY AGREEMENT

All suppliers are given an SIA Supply Agreementas one of the first requirements for doing business with SIA. The Supply Agreement sets forth the terms and conditions upon which suppliers provide parts to SIA. It is SIA's policy that all suppliers have a signed Supply Agreement on file in order to start or continue to conduct business with SIA. Please contact the Purchasing Administration section or your buyer if you do not have a copy of SIA’s Supply Agreement or need further information.

B.PURCHASE ORDER

A purchase order contains the name, item number and purchase price (US dollars) of parts or materials purchased by SIA from the supplier. A purchase order is issued when the supplier and SIA agree upon the terms and conditions of the purchase of direct parts or materials.

There are two types of purchase orders

  1. Blanket Purchase Order - A blanket purchase order is issued for production, service parts or materials, which are purchased on a continuing basis. It includes but not limited to the purchase price (US dollars), effective date, and freight terms of the blanket purchase order, along with the part number and part name. Effective November, 2010 SIA will send all blanket purchase orders via a PDF document to the main contact in an email. Upon receipt of the blanket purchase order email, the supplier should closely check the contents and if there are any discrepancies, contact your buyer. If acceptable, the supplier must confirm the purchase order by selecting the confirm button.
  2. Manual Purchase Order - A manual purchase order is issued for parts that need to be ordered outside the blanket purchase order process. Included but not limited to in the manual purchase order is the agreed price (US dollars), quantity, delivery date and delivery location. When a manual purchase order is complete, an invoice must be sent by the supplier to SIA, attention Purchasing Administration, in order for the supplier to receive payment. A manual purchase order number will begin with DPS, PPP, PPO, RPS, REP, SAP, DSS… followed by 4-5 digits.

C.TOOLING PAYMENT INFORMATION

The buyer, if applicable, will issue a Tooling Agreement for a specific part number and amount. The Tooling Agreement states the total (U.S.) dollar amount agreed upon between the supplier and SIA. The tooling effective date, tooling agreement number, model code, payment terms, number of payments, ECS (Engineering Change Summary) number, along with SIA-owned or supplier-owned tooling will be stated on each agreement. Payment by SIA will not be made until after parts have been approved by SIA’s Supplier Quality Assurance (SQA) section and ISR (Initial Sample Report) or PCR (Process Change Request) has been fully approved. After approval by SQA, the supplier must submit an invoice for the total amount on the Tooling Agreement and any additional documents required by the buyer. Payment will begin after submission of all required forms. Payment will be made to the supplier on the 25th of the month according to the payment terms agreed upon.

D.TOOLING DEVELOPMENT GUIDELINES

The early phase of development is critical to ensure requirements and timelines are achieved to meet all new model launch activities. Subaru uses our Quality Manual (latest version on line – supplier portal) as a guideline for SIA and our suppliers to coordinate all development activities. Historically, following this manual with previous new model activities has proven to increase our level of developmental success. We ask that you and your development staff take time to review our Quality Manual and ensure that you are and will meet all requirements spelled out in each task in the appropriate timelines specified.

Key Development Activity and Requirements include (but not limited to):

  1. Award Letter: Official letter confirming business approval and is to be used to officially kickoff tooling development.
  2. Appointment of Management Representative for Development: Instruction for this requirement can be found in task 1-2 of the Quality Manual. This form (form 1-1) should be submitted prior to the start of development.
  3. Advanced Product Quality Timing Plan (APQP – Form 1-2): Instruction for this requirement is spelled out in task 1-4 of the Quality Manual. This completed form is to be submitted within a period of 30 days of an awarded part.
  4. Prevention of Misassembling & Poke Yoke: Detailed instruction is covered in task 3-1-2 of Quality Manual (Note: Poke Yoke shall be established for all items that are relevant to Vital/Important Quality/Safety Regulated parts and processes).
  5. Required Quality Meeting: Detailed instruction and purpose of this meeting is defined in Quality Manual (Task 3-2).
  6. Production Trials: Detailed instruction covered in Task 4-1 of Quality Manual for trial with tact time runs for equipment & operator.
  7. Readiness Audits & Decision to Ship:These activities are covered in Task 6-3 & Task 7-13 of theQuality Manual.

All suppliers are to work closely with your SIA, Purchasing Supplier Management Development Engineer. If you have any questions, please contact them at your earliest convenience for prompt direction. Please note, the latest version of the Quality Manual can be accessed anytime on the on-line supplier portal at Hardcopies are NOT to be used as this is a controlled document and is subject to revision.