Vendor Requirements

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Revision 09

TABLE OF CONTENTS

CONTENTS

Page

Section 1

Abbreviations

1.1List of abbreviations………………………………………………………………………...03

Section 2

Definitions

2.1Definitions……………………………………………………………………………………04

Section 3

Vendor Requirements

3.1 Mission statement.…………………………………………………………………………07

3.2Vendor requirement’s aim………………………………………………………………… 07

3.3 Supplier code of conduct………………………………………………………….……… 07

3.4 Quality management……………………………………………………………….……… 09

Section 4

Declaration

4.1 Declaration of acceptance of Methode’s Vendor Requirements………………..……. 30

Section 1 – Abbreviations

1.1List of abbreviations

AAR-Appearance Approval Report

AIAG-Automotive Industry Action Group

APQP-Advanced Planning Quality Process

ASN-Advance Shipping Notice

BOH-Business On-Hold

CAD-Compute Aided Design

CBS-Cost Breakdown Structure

CPK-Process Capability Index

DFMEA-Design Failure Mode Effects Analysis

EDI-Electronic Data Interchange

FOT-First-Off Tooling

IMDS-International Material Data System

MSA-Measurement Systems Analysis

OEE-Overall Equipment Effectiveness

OEM-Original Equipment Manufacturer

PFMEA-Process Failure Mode Effects Analysis

PO-Purchase Order

PPAP-Production Part Approval Process

PPM-Parts Per Million

PPK -Parts per Thousand

PSW-Part Submission Warrant

RFQ-Request for Quotation

SPC-Statistical Process Control

STA-Supplier Technical Assistance

SQA - Supplier Quality Assistance

TQM-Total Quality Management

VAVE -Value-Added Value Engineering

Section 2 – Definitions

2.1Definitions

2.1.1Appearance Approval Report (AAR)

A report submitted to Methode accompanied by the components which have completed fine tuning on the aesthetic content of product.

Refer to sample in web portal: .

2.1.2Bailment

A transfer of possession or custody and not ownership of the item in question.

2.1.3Buyer

Refers to the Buyer, its’ affiliates, its’ secondary Supplier(s), its’ licensees, and its’ customers collectively.

2.1.4Claims

All claims, suits, actions, awards, liabilities, damages, costs, attorney’s fees and other professional fees shall collectively be known as ‘Claims’.

2.1.5First off Tooling (FOT)

The first production samples from tooling. Submission supported by dimensional report.

Refer to sample in web portal: .

2.1.6Intellectual property rights

Means any/all:

(a)copyrights, trademarks, and patents;

(b)rights relating to innovations, know-how, trade secrets, and confidential, technical, and non-technical information;

(c)moral rights, author's rights, and rights of publicity;

(d)other industrial, proprietary and intellectual property-related rights anywhere in the world, that exist as of the date hereof or hereafter come into existence, and all renewals and extensions of the foregoing, regardless of whether or not such rights have been registered with the appropriate authorities in such jurisdictions in accordance with the relevant legislation.

2.1.7Original Equipment Manufacturer (OEM)

Refers to the end-customer.

2.1.8Part Submission Warrant (PSW)

A document issued by Methode indicating the acceptance of product and release tooling for series production.

Refer to sample in web portal: .

2.1.9Parties

Methode and the Supplier

2.1.10Product

The ‘Product’ shall refer to any one of the following:

(a)the purchased component resulting from the tooling, and meeting all design and

functional specifications as defined in the component drawings and specifications;

(b)raw material purchased by Methode;

(c)sub-assemblies or Work-in-Progress component.

2.1.11Product release timing plan

A plan which specifies the tool development milestone dates including but not limited to:

(a)the Critical Design Review;

(b)the FOT;

(c)the submission of the PPAP;

(d)the AAR submission date;

(e)the PSW.

Refer to samples of above documents in web portal: .

2.1.12Production Part Approval Process (PPAP)

The process of identifying the components from the final process which are correct to drawing print (dimensions in tolerance); PPAP Level 3 documentation is submitted along with the components.

Refer to sample in web portal: .

2.1.13Purchase order

A purchase order is the document issued by Methode to the Supplier that defines what is needed, in what quantity, when performance is required, and on what terms, including price and payment terms.

Refer to sample in web portal: .

2.1.14Run@Rate

During the Run at Rate the Supplier’s actual manufacturing process will be assessed to verify its ability to meet the quality and capacity requirements as contracted.

2.1.15Shall

Denotes a mandatory requirement.

2.1.16Supplier

Shall refer to the party (or its designated contractor(s) or agent(s) or authorised representatives) with whom Methode is signing this contract for the purchased product.

2.1.17Tooling

Means production equipment including but not limited to forging dyes, gauges,jigs,moulds, measuring testing equipment, matrices, models, tools, devices, drawings and similar items required for the production and examination of goods.

Section 3 – Vendor Requirements

3.1 Mission Statement

As a Supplier itself for automobile manufacturers, Methode’s aim is to be the customer's highest value Supplier. This objective can only be achieved by striving for perfection in everything that Methode does. To succeed Methode must seek this same level of commitment to excellence from all of its Suppliers.

3.2 Supplier requirement’s aim

This document is intended to convey and clarify Methode’s expectations and requirements from its Suppliers, and provides the foundation upon which, as partners we can build the trust and teamwork necessary to deliver best in class value to our customers, in terms of value for money, service and delivery.

This document covers Methode’s specific requirements and shall read as an annex to Methode’s Purchasing Terms and Conditions along with the requirements found in the ISO 9000 or ISO/TS 16949 standards along with the OEM specific requirements. This applies to all raw materials, component parts, assemblies, sub-contracting and other services provided to Methode Electronics Malta Ltd.

3.3 Supplier code of conduct

Suppliers shall ensure operations are being performed in a manner that is appropriate, as it applies totheir ethical, legal, environmental, and social responsibilities. Below is a listing of the basic requirements:

3.3.1 Compliance with Local Laws and Regulations

Suppliers must adhere to the laws and regulations in the locality in which they reside. This includesall local, state, and federal laws/regulations in the country of origin.

3.3.2 Compliance with Environmental, Health, and Safety Laws

The Supplier must maintain and operate its manufacturing/production facilities and processes inaccordance with local, state, and federal laws/regulations in the country of origin.

At no time shall any Methode person be exposed to hazardous materials or unsafe conditions as aresult of Supplier shipments to a Methode location, or while visiting a Supplier’s location. For items withinherent hazards, safety notices must be clearly visible. As applicable, documented safety handlingand protection information must be provided.

3.3.3 Product Safety

In all instances where a product is manufactured to a new design, for a new system, or for a newapplication, it is important that Supplier and Methode allocate responsibility for assuring that allperformance, endurance, maintenance, safety and warning requirements are met. It is preferred thatthis allocation of responsibility be in writing.

3.3.4 Non-Discrimination

Suppliers shall not discriminate against race, color, sex, religion, age, physical disability, politicalaffiliation, or other defining characteristics as prohibited by local, state, and federal laws/regulations inthe country of origin.

3.3.5 Labor

3.3.5.1 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.

3.3.5.2Forced/Indentured Labor

Suppliers shall not practice the use of forced or indentured labor.

3.3.5.3 Work Hours/Days

Suppliers shall not exceed the daily and weekly working hours as permitted bylocal, state, and federal laws/regulations in the country of origin.

3.3.5.4 Wagesand Benefits

Suppliers shall compensate workers in accordance with local, state, andfederal laws/regulations in the country of origin. This includes minimum legal wage, overtimewages, and benefits (required by law).

3.3.6 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 Methode.

3.3.7 Code of Conduct and Policy Enforcement

This policy applies to Suppliers and their sub-tier sources. It is the responsibility of the Supplier to verify and monitor compliance of this code at their operations and sub-tier source operations.

3.4 Quality Management

Suppliers are expected to implement and operate a total quality management system that ensures that only defect free products are produced and delivered to Methode. Unless otherwise waived during a Supplier Technical Feasibility Commitment [STFC], the quality acceptance criteria shall be Zero ppm.

Suppliers are required to be registered to one of the following Quality Management Systems:

a) ISO 9001:2008 (minimum registration).

b) ISO/TS 16949:2009 (conformity recommended, registration preferred).

It is the supplier’s responsibility to ensure current copies of upgraded or renewed certifications are forwarded to Methode Supplier Development. Suppliers must assume full responsibility for the quality of their products and services.

3.4.1 Documentation

Methode documentation is available on the web portal under supplier information section –.

Key documents are explained further-on in this manual.PPAP documentation in Supplier whichis different from the layout proposed by Methode, will be accepted upon agreement.

3.4.2 Regulatory Compliance

Methode suppliers shall comply with all applicable governmental and legislative regulations. These may relate to Health & Safety, Environmental Protection, Toxic and Hazardous Materials, Import / Export Regulations and Free Trade. Suppliers are duty bound to recognise that additional government regulations might apply in the country of sale / end use as well as the country of manufacture.

3.4.3 Environmental Requirements

Protection to our Environment, land, water and air can only be achieved through joint efforts of Industry, Governments and the Society in General. Methode Electronics Inc. is committed to continually improve our environmental performance. We strive to improve our processes in the choice and use of raw materials, energy, water and other goods and eventually their disposal. This means that together with our supply base our focus shall be to reduce any impact on the Environment to the minimum. Therefore we expect from our suppliers to be actively engaged in environmental concerns and adopt an environmental management system as per ISO 14001 or equivalent standard. Registration to ISO 14001 is strongly recommended and a plan to achieve this is required.

3.4.4 ELV/IMDS – End of Vehicle Life / International material database

The End-of-Life Vehicle (ELV) Directive, 2000/53/EC, was enacted by the European Commission to minimise the impact of end-of-life vehicles on the environment. The use of lead, mercury, cadmium and hexavalent chromium are prohibited in vehicles and their component, with the exception of certain exemptions as stipulated in Annex II of the Directive. This is a mandated requirement for the European Union (EU) Member States and also required by North American and Japanese vehicle manufactures. All suppliers in all regions shall ensure that all components and materials supplied to Methode comply with the above requirement.

To this effect, all automotive suppliers are required to report information on materials within their respective components on the International Material Data System (IMDS). Suppliers are required to submit the required EL/IMDS data to Methode as soon as possible upon award of a new business, but in any case prior to the respective PPAP submission. As part of the PPAP submission the suppliers shall provide confirmation to Methode’s acceptance of the ELV/IMDS data, by including the respective reference number from the international database. Suppliers are responsible to submit the respective ELV data by direct entry into IMDS via the Internet (

3.4.5 Packaging

The European Packaging and Packaging waste directive 94/62/EC covers all packaging placed on the EU market and restricts the presence of heavy metals in packaging. Supplier shall ensure that all packaging material used complies with this directive.

3.4.6 REACH Compliance

Methode Suppliers shall be responsible for ensuring that all REACH legislation requirements are met for the product/s supplied and through the complete upstream supply chain for all sub-suppliers in accordance with REACH Regulation (EC) No. 1907/2006. This also applies to substances that were registered in accordance with Directive 67/548/EEC (registration of new substances). Supplies are governed by the last applicable versions in each caseof Directive (EC) No. 1907/2006.

Suppliers have the legal responsibility to inform Methode about the presence of any substances of a very high concern (SVHCs) and are requested to update information about parts and materials delivered, following any update of the candidate list, twice a year when required ( If SVHC’s are present in the supplied product but they are not banned by these or subsequent directives, the supplier is still required to submit an action plan and timing to eliminate them.

Supplier of chemicals must classify, label and package the substances and mixtures in accordance with the CLP Regulation(EC) No 1272/2008.

3.4.7 RoHS Compliance

The RoHS directive (2011/65/EU) restricts the use of certain hazardous substances, in the manufacturing of electrical and electronic equipment. Methode suppliers shall ensure that the presence of these substances do not exceed the permitted concentration in non-exempt products. This directive restrict the presence of lead, mercury, cadmium, hexavalent chromium, polybrominated biphenyl, polybrominated diphenyl ether, with a maximum concentration of 0.1% (except for cadmium, limited to 0.01%) by weight.

3.4.8 Restricted Substances

Suppliers are responsible to ensure that all materials that are used in part manufacture, satisfy current applicable legislation, regulations, customer or government and safety constraints on restricted, toxic and hazardous materials as well as environmental, electrical and electromagnetic considerations applicable to the country of manufacture and sale. All suppliers and sub suppliers shall use the industry reporting standard, International Material Data System (IMDS).’’

3.4.9 Supplier response and pro-activeness

Suppliers are expected to reply to Methode general enquiries promptly and accurately.

Furthermore, the Supplier shall assume a proactive approach and inform Methode well in advance of any setbacks falling short of agreed targets. Procedures to follow and applicable documents will be explained further-on in this manual.

3.4.10 Communication

All communication between both parties and documents applied as part of this contract shall be in the English language. The Supplier shall submit and maintain on a yearly basis a Supplier Contact Persons List including but not limited to the names of the Operations and Quality Managers and anyone to be contacted after normal working hours

3.4.11Service and Supply Chain Management

All Suppliers must meet 100% on time delivery on all supplied products.

Schedules are communicated through ‘Web EDI’ or ‘Traditional EDI’. The Supplier shall create ASN’s including labels as approved by Methode.

Suppliers are expected to ensure the quality and capacity of material and component parts of their sub-Suppliers.

3.4.12 Resident Engineer

Suppliers whose annual turnover with Methode exceeds €5M are required to appoint an engineer who will be allocated for Methode.

3.4.13Supplier Classification List

When quoting for business, Methode buying team is restricted to request quotations from a list of ‘approved’ Suppliers. A Supplier will be introduced in this list after an assessment and qualification process is followed.

3.4.14 Qualification process

The qualification process for first-time Suppliers’ assessment can be referred to in the web portal: .

3.4.15Pre-Sourcing Requirements

When submitting an offer in response to a Request for quotation (RFQ), Suppliers are requested to compile a package consisting of:

(a)Cost Breakdown Sheet

(b)STFC – A document in which a Supplier is accepting commitment to produce the product at the price quoted on the Cost Breakdown Sheet. Supplier is encouraged to identify any specification that cannot be met / technical improvement and highlight this on the STFC. Supplier must also commit that Methode`smaximum weekly demand can be met.A quote is not valid and business shall not be awarded if STFC document is notreceived; and accepted by Methode. The STFC document is available on the company website in the webportal under supplier information section – .

(c)Supplier Packaging Data sheet (SPDS) – Packaging proposal by Supplier designed to deliver a damage free product which cost is included in Cost Breakdown Sheet. This document must be completed and sent to Methode within three (3) working days from receipt of this document. This package must be completed and returned to Methode category buyer.

The SPDS and packaging guidelines are available on the web portal under supplier information section – .

3.4.16Post-sourcing requirements

Nominated Suppliers are required to satisfy Advanced Product Quality Planning (APQP) activities on all new products and major re-designs of existing products. The guide to be used in this process is the “Advanced Product Quality Planning and Control Plan” reference manual published by the Automotive Industry Action Group (AIAG), and all associated customer specific requirements.

The key requirements are:

a)Participation in Design Reviewsand compiling changes agreed on Methode Design review document.

b)Follow APQP with respective Methode STA and buyer on a weekly basis.

c)Submit and maintain DFMEA (where applicable).

d)Submit and maintain Process Flow, PFMEA and Process Quality Control Plan(s).

e)Conduct and provide Measurement System Analysis / Gauge Reviews

f)Complete a Launch Readiness Review.

g)Fulfill all PPAP (AIAG Level 3) requirements, prior to delivery of pilot production.

h)Conduct a Capacity Analysis Report (OEE+ Run@Rate)

The conclusion of each APQP phase must be documented. Methode STA may conduct audits at specific intervals to review the Supplier’s APQP activities Periodic reporting (weekly basis) is required using the APQP Status Report as per Methode format or OEM format if specifically required by end customer.

3.4.17Sourcing requirements for manufactured components

3.4.17.1Approving Parts for Production

Once business is awarded, a timing plan defining milestones is set. This should define clearly FOT, IMDS and PPAP submission dates. These dates are to be considered as major milestones; hence these must be realistic, achievable and jointly established.

3.4.17.2 First Off Samples

First-of-Samples delivered by the Supplier from a controlled process must be accompanied with the Interim PSW and the Initial Sample report – including dimensions, except references.