II. Purchasing

Policies contained within this manual, are to be adhered to as specified. Any exceptions must be noted in writing with all quotation submissions, or within 3 days from receipt of any Purchase Order or Material Release. All exceptions must have the Company’s written approval. Failure to provide exceptions as noted will be viewed as full acceptance of the terms of the agreements between the Company and the supplier.

The Purchasing Department residing in Bluffton, Ohio is 100% responsible for commercial agreements with suppliers of direct production components and raw materials for all Sumitomo Riko Company Limited; North American facilities. This includes all pricing, contracts, and commercial agreements.

The SumiRiko Ohio, Inc, SumiRiko Tennessee, Inc., and S-Riko Automotive Hose de Chihuahua, S.A.P.I. de C.V. Purchasing Department requires full cooperation from all suppliers and will strive to maintain a professional working relationship with our suppliers. We view the supplier as an extended member of our company and a significant contributor to the success of our growth and thereby the growth of our relationship. We view regular contacts between our companies as essential to our ongoing business interests. The supplier will allow the Company and/or the Company’s customer the opportunity to verify product and/or processes at the supplier’s premises.

The Supplier is required to sign and submit the “Confidentially Agreement” to the Company’s Purchasing Department. This Agreement must be signed by a Corporate Officer of your company.

The Supplier agrees to periodically provide to us, financial information as requested in the “Supplier Survey” form. This information will be used for the purpose of analyzing the Supplier’s financial stability only and will be considered confidential and proprietary information.

The supplier must provide a copy of the supplier’s Workman’s Compensation and Liability Insurance every year. Suppliers will not be allowed access to our facilities for any work-related activities without this document or having made other prior arrangements with our company. A copy and annual updates must be provided. Any outside contractors awarded business must provide a copy of their Workman’s Compensation and Liability Insurance statements, with SumiRiko Ohio, Inc., SumiRiko Tennessee, Inc., or S-Riko Automotive Hose de Chihuahua, S.A.P.I. de C.V. noted in the document in the “Additional Insured” clause.

A. Request for Proposal (Supplier Proposal)

SumiRiko Ohio, Inc., SumiRiko Tennessee, Inc., and S-Riko Automotive Hose de Chihuahua, S.A.P.I. de C.V. Standard Conditions of Purchase will apply to all purchases. A copy of the Conditions of Purchase is included in this manual (item 14).

Unless noted as a specific exception(s) on the quotation submission to SumiRiko Ohio, Inc., SumiRiko Tennessee, Inc., and S-Riko Automotive Hose de Chihuahua, S.A.P.I. de C.V., the quote shall be considered inclusive of all specifications; including, but not limited to: dimensions and tolerances, and any information contained in the cover letter(s) or other corresponding documentation or requirements within the Request for Proposal (RFP) package.

The drawing and related information reflects the condition in which the part is to be received at SumiRiko Ohio., Inc, SumiRiko Tennessee, Inc., or S-Riko Automotive Hose de Chihuahua, S.A.P.I. de C.V.. Any packaging that is required preserving this condition during shipment and storage of the product must be identified and submitted to Purchasing in the proposal submission. Any deviation from the drawing must be communicated in writing and agreed to by the Company.

Any questions concerning the drawing(s) and/or related information should be addressed and resolved prior to quotation submission to the Company. However, the supplier must provide the quote within the time requested on the Request for Proposal.

All tooling quoted shall include all maintenance, repair, etc. necessary for the supplier to keep the tooling in a usable and productive condition throughout the life of the program, and for subsequent service part requirements.

Tooling payment terms are net 30 days, unless otherwise noted and agreed upon in writing by the Company’s Purchasing Department and the Supplier. Upon PPAP approval, the Supplier will submit their Invoice for tooling payment, together with completed copies of the following items:

          1. SumiRiko Ohio, Inc., SumiRiko Tennessee, Inc., and S-Riko Automotive Hose de Chihuahua, S.A.P.I. de C.V. approved Parts Submission Warrant

Tool Record Sheet

          2. A complete set of detail tool design drawings and or CAD data to include;

All gages and fixtures required for the manufacture and or part confirmation.

          3. A copy of the Company’s tooling Purchase Order

          4. The invoice

SumiRiko Ohio, Inc., SumiRiko Tennessee, Inc., and S-Riko Automotive Hose de Chihuahua, S.A.P.I. de C.V. reserves the right to request no more than three separate one-day production trials of the tooling (based on our daily production volumes). This is to be used as confirmation of the tooling capability and capacity. The Company shall not be charged for anything beyond the production piece price quoted. Any unacceptable trials (i.e. defective products, tool breakage, etc.) will not be counted towards the three separate tooling trials. SumiRiko Ohio, Inc., SumiRiko Tennessee, Inc., and S-Riko Automotive Hose de Chihuahua, S.A.P.I. de C.V. Purchasing Department requires Project Schedule updates to be submitted by the last business day of each month.

All tooling lead times quoted must be accurate at the time of the quotation submission and maintained throughout the program launch.

Cost details (i.e., material cost, processing costs overhead costs, SG&A, outside processing costs, etc.) must be provided with the quotation submission. This information will not be used or disclosed in any way outside of SumiRiko Ohio, Inc., SumiRiko Tennessee, Inc., and S-Riko Automotive Hose de Chihuahua, S.A.P.I. de C.V.. If providing this cost detail to us is unacceptable, the supplier shall indicate this in the quote submission. Selection preference will be given to those suppliers that provide this information.

Quotations must be submitted on or before the date requested by SumiRiko Ohio, Inc., SumiRiko Tennessee, Inc., or  S-Riko Automotive Hose de Chihuahua, S.A.P.I. de C.V.. The SumiRiko Ohio, Inc., SumiRiko Tennessee, Inc., and S-Riko Automotive Hose de Chihuahua, S.A.P.I. de C.V. Purchasing Department must be notified in advance if the supplier is unable to meet the due date indicated on the RFP form(s). Failure to notify the Company of a late submission will be viewed as a “No Quote”.

B. Engineering Changes (ECI)

When the Supplier receives a revised drawing and/or specification that will affect the tooling and/or the selling price, the Supplier must immediately submit a revised quotation with a schedule showing the lead time required to implement the change.

C. Minority Expenditures

All suppliers are encouraged to aggressively seek out opportunities for Minority Suppliers to be included in the supply of products and or materials to be used in the manufacture of SumiRiko Ohio, Inc., SumiRiko Tennessee, Inc., and S-Riko Automotive Hose de Chihuahua, S.A.P.I. de C.V. parts.

 A “Certified Minority Supplier” is defined as: African-American, Asian American, Native American, Hispanic American, etc. with a minimum of 51% ownership.

D. Purchase Order Issuance/Acceptance

Any item(s) or tool modifications, which the supplier intends to bill to SRK, must, without exception, have a valid Purchase Order issued by an authorized SumiRiko Ohio, Inc., SumiRiko Tennessee, Inc., or S-Riko Automotive Hose de Chihuahua, S.A.P.I. de C.V. Purchasing Department Associate. Any shipments made without an approved Purchase Order may not be considered billable to SumiRiko Ohio., Inc, SumiRiko Tennessee, Inc., or S-Riko Automotive Hose de Chihuahua, S.A.P.I. de C.V..

As previously stated, all Conditions of Purchase as stated on the Purchase Order(s) are binding. The supplier will have 3 days to issue any exceptions to those Conditions of Purchase.

The “Due Date” indicated on the Purchase Order is the date that the item(s) is due for receipt at the appropriate SumiRiko Ohio, Inc., SumiRiko Tennessee, Inc., or S-Riko Automotive Hose de Chihuahua, S.A.P.I. de C.V. facility. Failure to meet this in-house due date will be viewed as past due.

The Supplier is expected to meet the delivery date and quantities as stated on the orders. In the event that a supplier is unable to meet the requested delivery date and or quantities, notification must be made to the SumiRiko Ohio, Inc., SumiRiko Tennessee, Inc., or S-Riko Automotive Hose de Chihuahua, S.A.P.I. de C.V. Production Control Department prior to the scheduled shipment date and/or time. The Company’s Production Control Department will determine the required mode of shipment for all past due requirements. The supplier will be responsible for all freight costs on any past due orders except for the Company’s schedule changes inside the supplier’s quoted lead times.

 E. Master Purchase Agreement

Prior to the start of Mass Production, change to the purchase price, and each year thereafter, for the duration of the product life, The Company’s Purchasing Department will issue a Master Purchase Agreement.

The “Master Purchase Agreement” is issued to establish the current purchase price, payment terms, FOB point, and transportation mode.

F. Monthly Forecasts and Firm Orders

The Company’s Production Control Department will issue a three (3) month rolling forecast based on the Customer’s estimated requirements. (This information is to be used for planning purposes only and is not to be mis-interpreted as a firm order). The Supplier is required to guarantee their ability to supply the quantities forecasted. Any exception that the Supplier requires with regard to the three (3) month forecast must be presented and approved in writing by the Company’s Production Control Department.

Firm Orders will be issued by the Company’s Production Control Department and/or Purchasing Department in the form of a Manifest or Purchase Order. The supplier is required to ship to the order quantities and dates detailed in the Manifest and/or Purchase Order.

G. Discontinue of Materials Supplied

If a Supplier decides to stop the manufacturing, change the current formulation, and/or move the current manufacturing location for any reason, the Supplier must provide written notice to SumiRiko Ohio, Inc., SumiRiko Tennessee, Inc., or S-Riko Automotive Hose de Chihuahua, S.A.P.I. de C.V.. This notice must be issued a minimum of six (6) months prior to the change.

The written notice must be submitted and approved on the Company’s “Process Change Request” (PCR). The PCR must include a detailed stop/move schedule and intended inventory build quantities. In the case of a complete stoppage, the inventory build quantities must provide for a minimum period of six (6) months. This inventory will be held by the supplier until released by the Company’s Production Control Department.

H. Build out

Notification of build-out will be issued to the Supplier at least ninety (90) days prior to the forecasted stoppage of mass production.

If SumiRiko Ohio, Inc., SumiRiko Tennessee, Inc., or S-Riko Automotive Hose de Chihuahua, S.A.P.I. de C.V. fails to give the Supplier ninety (90) day’s notice, we will be responsible for: (a) Full selling price of the items forecasted and/or scheduled for release within the first month, (b) for quantities forecasted in the second month, raw materials and processing costs only, (c) for quantities forecasted in the third month, raw materials only. In each case, the supplier must provide evidence that the parts and or raw materials exist. The Company’s Production Control Department together with the Company’s Purchasing Department will review and confirm inventory levels prior to any commitment for reimbursement to the Supplier.

I. Labor Agreement

It is the Supplier’s responsibility to make SumiRiko Ohio, Inc., SumiRiko Tennessee, Inc., or S-Riko Automotive Hose de Chihuahua, S.A.P.I. de C.V. aware of any Labor Agreements, including but not limited to union name, length of agreement, expiration date and any prior work stoppage. This information must be provided at the start of each contract period. The supplier is also required to contact SumiRiko Ohio, Inc, SumiRiko Tennessee, Inc., or S-Riko Automotive Hose de Chihuahua, S.A.P.I. de C.V. Purchasing Department 180 days prior to the contract expiration. At that time, the Company and the supplier will identify necessary supply protection requirements.