IV. Supplier Performance Evaluation

Suppliers are evaluated on the basis of quality, cost, and delivery.

A. Quality

The supplier’s target for quality is based on the supplier’s commodity and PPM and Index performance during the past twelve months. Established targets are indicated on the Supplier Performance Report.

PPM Calculations are made as follows:

Number of rejected parts ÷ Total number of pieces, kilograms and/or gallons received X 1,000,000 = PPM

 

Index calculations are as follows:

          Rank (claim only) Value
          Major 50 Defect that may impair the product function, has a high potential for affecting the customer, and can go undetected at SumiRiko Ohio, Inc., SumiRiko Tennessee, Inc., or S-Riko Automotive Hose de Chihuahua, S.A.P.I. de C.V..
          Moderate 25 Defect that may affect the customer fit, function or appearance requirements or is a repeating issue.
          Minor 5 Defect that does not cause any serious problems for Fit or function.
          Nuisance (claims, concerns, info)
          1 50 Defect requires sorting at the Company’s customer as well as SumiRiko Ohio, Inc., SumiRiko Tennessee, Inc., or S-Riko Automotive Hose de Chihuahua, S.A.P.I. de C.V.. Line stoppage in SumiRiko Ohio, Inc., SumiRiko Tennessee, Inc., or S-Riko Automotive Hose de Chihuahua, S.A.P.I. de C.V..
          2 25 Defect requires sorting at SumiRiko Ohio, Inc., SumiRiko Tennessee, Inc., and S-Riko Automotive Hose de Chihuahua, S.A.P.I. de C.V. only or having to send parts back to the supplier for sorting or rework.
          3 5 No sorting required at SumiRiko Ohio, Inc., SumiRiko Tennessee, Inc., orS-Riko Automotive Hose de Chihuahua, S.A.P.I. de C.V..
          Rejection Factor Index (claims, concerns, info)
          Rejects 1-9 10-99 100-999 1000+
          Value 1 10 50 100

Rejected parts are documented and communicated to the supplier on the Quality Information Sheet (QIS).

 

B. Delivery

SumiRiko Ohio, Inc., SumiRiko Tennessee, Inc., and S-Riko Automotive Hose de Chihuahua, S.A.P.I. de C.V. requires 100% on-time delivery from all suppliers. On time delivery is defined as the correct quantity of product supplied on the due date indicated on the Purchase Order and/or the material release.

Delivery performance is calculated on a monthly basis and is based upon the number of line items received on time verses the total number of line items due.

In the event a supplier misses a delivery:

     a) The Production Control Department will issue an Exception Manifest or Request for Purchase, detailing the immediate action needed (quantity, date required and expedite request.)

     b) A Quality Information Sheet may be issued to request analysis and countermeasure.

 

C. Cost

The supplier’s targets for cost are established based upon the supplier’s ability to meet the cost requirements for the previous twelve months.

Cost performance is determined by the supplier’s ability to meet established targets:

 

Current Items = Cost Reduction Results ÷ Cost Reduction Target = %

C. Cost

Cost performance is determined by the supplier’s ability to meet established targets:

If a supplier consistently fails to meet expectations and/or targets, the Company can implement one or more of the following steps:

  1. The supplier top management team will be required to meet with SumiRiko Ohio, Inc., SumiRiko Tennessee, Inc., and S-Riko Automotive Hose de Chihuahua, S.A.P.I. de C.V. to review recent concerns:
    1. Expectations and targets will be reviewed and clarified (if necessary).
    2. A timeline for improvement will be established.
  2. The Supplier will be designated a High Risk Supplier. This status will be tracked on the monthly Supplier Performance Report.
  3. The supplier will create a corrective action plan that addresses recent concerns and system improvements necessary to maintain acceptable performance.
  4. The supplier will be required to provide weekly updates/reports of progress towards achieving targets.
  5. SRK may perform on-site evaluation of the supplier’s progress and improvements.
  6. The supplier’s product is subject to 3rd Party sorting at the Company’s discretion and supplier’s expense.
  7. The supplier will not be permitted to quote on future business until removed from High-Risk status.
  8. The High-Risk Supplier status can be removed after the following items:
    1. 3-6 month history of consistently meeting performance expectations
    2. No repeat concerns.
    3. Process/System Audit conducted by the Company with all concerns closed.

These items can be considered collectively or individually, based the expectations defined during the initial meeting.