SIA SUPPLIER MANUAL



Subaru of Indiana Automotive, Inc.

PURCHASING SUPPLIER MANUAL

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Issued by Purchasing Administration

FOR SUBARU PARTS

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Table of Contents

I. INTRODUCTION Page #

A. SIA Organization--------------------------------------------------------------- 3

B. Company Relationships------------------------------------------------------- 4

C. Subaru Contact Information------------------------------------------------- 5

D. Production Facility Information---------------------------------------------- 5

E. Operational Overview--------------------------------------------------------- 6

F. SIA Acronyms & Definitions-------------------------------------------------- 6

G. Plant Map----------------------------------------------------------------------- 9

II. PURCHASING

A. SIA Supply Agreement-------------------------------------------------------- 11

B. Purchase Order----------------------------------------------------------------- 11

C. Tooling Payment Information------------------------------------------------ 12

D. Tooling Development Guidelines-------------------------------------------- 12

E. Accounts Payable/Receivable------------------------------------------------ 13

F. LDS Claims Against Supplier------------------------------------------------- 14

G. Reimburse Claims from Supplier / Obsolete Parts----------------------- 14

H. Value Analysis, Value Engineering /Cost Reduction--------------------- 14

I. Request For Quotation------------------------------------------------------- 15

J. Design Changes / Specifications / ECS Timing--------------------------- 16

K. Problem Advance Notification (PAN)--------------------------------------- 16

L. Service (Aftermarket) Parts-------------------------------------------------- 17

M. International Material Data System (IMDS)------------------------------- 18

III. MATERIALS / LOGISTICS

A. Packaging Selection Procedure---------------------------------------------- 20

B. Packaging Procedure---------------------------------------------------------- 20

C. Packaging Requirements & Maintenance---------------------------------- 21

D. Receiving/Shipping Responsibilities----------------------------------------- 22

E. Transportation------------------------------------------------------------------ 23

F. Labeling-------------------------------------------------------------------------- 23

G. Freight Claims Procedure----------------------------------------------------- 25

IV. SYSTEM APPLICATIONS

A. EDI – Electronic Data Interchange------------------------------------------ 27

B. RFQ (Request For Quotation) Application--------------------------------- 28

C. ANTS Application – Advanced Notice Tracking System------------------ 29

D. NAFTA Application------------------------------------------------------------- 29

E. Nexprise – SQA Quality Application----------------------------------------- 30

V. PRODUCTION CONTROL

A. Estimate & Authorization------------------------------------------------------ 32

B. Delivery Order------------------------------------------------------------------ 32

C. Advanced Shipping Notice---------------------------------------------------- 32

D. Emergency Delivery Order---------------------------------------------------- 33

E. SIA Supplied Parts------------------------------------------------------------- 33

VI. SUPPLIER QUALITY ASSURANCE

A. Subaru Supplier Quality Manual--------------------------------------------- 35

B. Supplier Rating Program------------------------------------------------------ 35

C. QIP / Pre-QIP------------------------------------------------------------------ 36

D. Third Party Sorts--------------------------------------------------------------- 36

E. 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. The automobile'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. In January 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 the desire to maintain a safe and clean environment for our Associates; we also realized that there was potential 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 our suppliers 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 subaru-. 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

Department Associate Telephone/Facsimile

Purchasing Purchasing Vice President PH: 765-449-6470

Planning & Admin. PH: 765-449-6425

Manager PH: 765-449-6474

1st Procurement PH: 765-449-6416

Manager

2nd Procurement PH: 765-449-6014

Manager

Supplier Management PH: 765-449-6480

Manager

Orders, Receipts Materials Management Manager PH: 765-449-6411

Mtls Group Leader PH: 765-449-6404

Transportation PH: 765-449-6559

Packaging Manufacturing Eng. Logistics PH: 765-449-6119

Inspection Supplier Quality Manager PH: 765-449-6673

Assurance Support Staff PH: 765-449-6692

Information Systems EDI & FTP Manager PH: 765-449-6039

EDI Systems Analyst PH: 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 |262,000 units |

|Permit: | |

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 |

|Recreation Center |19,795 square feet |

|Training/Reception Center |14,598 square feet |

|Child Development Center |13,341 square feet |

|Technical Training Building |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 |Fuji USA (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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II. PURCHASING

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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.) and are 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 SIA Supplier Portal.

A. SIA SUPPLY AGREEMENT

All suppliers are given an SIA Supply Agreement as 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 the Quality 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 Suppliers/SupplierPortal. Hardcopies are NOT to be used as this is a controlled document and is subject to revision.

E. ACCOUNTS PAYABLE/RECEIVABLE

SIA processes payment based on Net 25th Prox. This means that all shipments received from the first of the month to the end of the month will be paid on the 25th of the next month.

SIA uses an invoice-less system for payment of production and service (aftermarket) parts. Suppliers should not send invoices to SIA at the time of shipment for production or service parts. The only exception to this rule is that an invoice should be sent for all manual purchase orders that begin with DPS, REP, RPS, SAP, DSS and/or PPO, followed by 5 digits. See section B above.

In order for suppliers to verify shipments and quantities, SIA will issue up to 3 documents/spreadsheets in order for suppliers to confirm receipts: 1) Payment Notice, 2) Accounts Payable report and 3) Debit Memo for Supply Parts (SAP). All 3 documents are issued at the beginning of each month, the first working day of the month. All suppliers will receive the Payment Notice and Accounts Payable report; however, only a select few suppliers will also receive the Debit Memo for Supply Parts. These documents are briefly explained below.

1. Payment Notice – The Payment Notice is a word document that shows the total amount of payment for the previous month’s shipments. This document must be signed by a representative of the company and returned to SIA by the 25th of the month in order to receive payment. Electronic signatures are acceptable.

2. Accounts Payable Report – The accounts payable report can be obtained by suppliers via EDI or FTP effective April 1, 2011. This report will list all shipments received by SIA for the previous month with detail for each shipment (i.e. quantity, delivery order number, piece price, etc.).

3. Debit Memo for Supply Parts – This report will list all parts sent to the supplier by SIA or directly from another supplier and can be obtained by the supplier via EDI or FTP effective April 1, 2011. These parts are identified on the drawing as SIA sourced parts and we classify these parts as SAP (service assembly parts). This document must be signed and returned to SIA in order for suppliers to receive payment. These parts are further explained in Section 5, Production Control. Not all suppliers will receive this report.

If there are discrepancies found with the Accounts Payable/Receivable report, the supplier must still sign and return the Payment Notice and Debit Memo. A Discrepancy Log Sheet must to be completed and returned to SIA. The Discrepancy Log Sheet is used to make corrections, if necessary, to the account the following month. All fields on the sheet must be completed in order to expedite processing. Please fax or email the completed Discrepancy Log Sheet to Purchasing Administration or your buyer. This sheet can be found on the SIA Supplier Portal.

The supplier must report discrepancies found on an Accounts Payable/Receivable Report to SIA within sixty (60) days of receipt or the supplier will be deemed to have waived its right to receive any additional payment that may be owed. If, upon timely submission, SIA discovers a large discrepancy, SIA will, with the buyer's approval and proper documentation, adjust the payment for the month’s activities. The supplier must submit shipping records, receiving document with signature of SIA or any other proof of delivery to the buyer on or before the 15th of the month. A manual adjustment will be made for the payment on the 25th.

F. LDS CLAIMS AGAINST THE SUPPLIER

In the event that SIA incurs costs and expenses due to the supplier’s breach of the Supply Agreement, or associated contracts and/or orders, SIA Purchasing will submit a claim to the supplier in the form of a letter with a total number of hours involved and total dollar amount. The supplier has 3 weeks from the date the letter is issued to submit a dispute to the charges. The dispute must be submitted in writing to the buyer by the due date in the letter. If the supplier does not respond by the due date, the deduction will be automatically deducted from the supplier’s next monthly payment.

G. REIMBURSEMENT CLAIMS FROM SUPPLIER

A supplier can request reimbursement from SIA for a specific reason using the Reimbursement Claim Form which can be obtained from your buyer. The reason for the claim must be clearly defined on the form. If the form is not completely filled out by the supplier, it could be rejected by SIA. If the submission is for obsolete or build-out parts, the form must be received at SIA within 30 days after final shipment of parts. If the claim is for a part number change/ECS change, the form must be received at SIA within 30 days prior to the initial shipment of the new parts. An Engineering Change Summary (ECS) must be attached to all requests. Pictures must be attached to show work in progress of the parts for which the claim is being submitted. For tooling reimbursement, an ECS, tooling cost breakdown and tooling modification sheet must be attached in order to be considered for compensation. All submissions for reimbursement must be submitted to your buyer.

The dollar amount of such a claim will depend upon a number of factors, including but not necessarily limited to the following:

1. Amount of time involved in production delay or rework.

2. Number of man-hours involved in the production delay or rework.

3. SIA labor rate effective at the time of the production delay and/or rework (i.e. standard time, time and one half, double time, etc.) will be used to determine dollar amount. SIA labor rates are confidential.

H. VALUE ANALYSIS/VALUE ENGINEERING FOR COST REDUCTION

The following constitutes the process for management of a Value Analysis/Value Engineering (VA/VE) proposal from a supplier. This process is provided for jobs for every concerned section of a proposed VA/VE for US sourced parts from a supplier, and for the purpose of immediate acquisition effort for the proposal. The VA form can be found on the SIA Supplier Portal.

Process of a VA/VE proposal from the supplier:

1. Supplier issues a proposal for its parts and material via VA/VE proposal form to the specified buyer. The form must be written in English or bilingual. The supplier must complete all areas of the form or it could be rejected back to the supplier.

2. The buyer will submit the completed form to Administration.

3. Administration will assign each VA/VE a specific proposal number and forward the original to FHI for approval. Administration will maintain a copy and a copy will be given to the buyer.

4. Upon completion of evaluation, FHI will inform Purchasing Administration of the results.

5. Purchasing Administration will record the data, results and any other specified items. A letter documenting the results will be sent to the supplier, with a copy to the buyer, along with a copy of the VA/VE proposal.

6. If accepted, the supplier must then follow the rules for ECS change with regards to ISR submission if it is decided by FHI for a new ECS to be issued or a PCR (Process Change Request) submitted to the SQA section. The supplier will be notified of the decision of the VA proposal.

I. REQUEST FOR QUOTATION

The Request For Quotation (RFQ) is the first formal communication with a potential production part supplier and is issued prior to purchasing a new part or for a design change of an existing part. A copy of the Engineering Change Summary (ECS) and related drawings will be included along with volume quantity required, FOB destination, RFQ due date and any other requests/comments requested by the buyer. The primary contact will receive an email alert indicating the request. The supplier will be required to use the RFQ application to obtain the quote, ECS and drawings. All price change submissions must be uploaded through the RFQ application. Further details regarding the RFQ application can be found in Section 4, System Applications. It is important to remember on any part change requested by SIA, the supplier must complete all related forms and provide a Part Ship Date via the Timing/Development form. This date must include SIA’s lead-time for ISR approval (8 weeks). Should there be any questions regarding this procedure or the RFQ itself, contact your buyer.

To assure proper evaluation of your RFQ, each supplier is required to observe the following RFQ requirements:

1. All documents in the RFQ package must be thoroughly completed and submitted within the specified time limit.

2. RFQ’s not received within the specified time and not submitted on the SIA specified forms, may be excluded from consideration based on the buyer’s individual discretion.

3. Components and process costs must be explained in detail for an RFQ to be accepted by SIA.

4. Lead-time and tooling schedule must be provided on SIA’s timing and development form.

5. Tooling life in pieces must be quoted on the RFQ.

6. Suppliers must quote all tooling, fixtures, jigs, etc. separately.

7. All items must be quoted in US dollars.

8. Piece price and tooling must be quoted separately.

9. Volumes indicated are estimates only and should not be considered firm or binding.

10. Quotes must be based on SIA prints and specifications. If using an alternate design, you must clearly indicate this on the quote. Qualifications or restrictions must be clearly stated.

11. RFQ’s must include all packaging costs for returnable packaging, racks, maintenance and replacement.

12. If prototype pricing applies, complete prototype details on SIA’s timing and development form.

Once SIA has selected a supplier for a new production part, an Award Letter will be sent to the supplier by Supplier Management. Award Letters will not be sent for carry-over parts. On the second page of the Award Letter, there are 3 areas that must be completed by the supplier: tooling location, estimated tooling lead-time and mass production manufacturing location. These areas must be completed and returned to Supplier Management within 2 weeks after receipt of the Award Letter. If you have any questions regarding the Award Letter, you must contact the buyer or Supplier Management.

J. DESIGN CHANGES

If changes are required due to an FHI Engineering requests or per supplier’s request, certain procedures must be followed. It is important to note that final design change authority rests with FHI Engineering in Japan. To help understand how to best work within SIA’s procedure, please note the following:

1. FHI Initiated Changes

a) A Request for Quotation (RFQ) and applicable drawings will be sent for the suppliers review. At this point, the supplier must submit the following:

i. RFQ along with required documents attached.

ii. A determination in the form of a Tooling Change Timing Chart, including ISR submission timing of when design change can be implemented.

2. Supplier Request for Changes

a) SIA encourages suppliers to improve upon current design. SIA’s targets for improvement are in the areas of cost, quality and enhancing overall processes, which can lead to efficiency in manufacturing parts supplied for vehicles produced at SIA. The changes requested should be in a Value Analysis (VA) format via the VA Proposal form as explained in the Purchasing section, part H of this manual. A completed VA Proposal form must be submitted to the buyer in charge of your account. This form can be found on the web site or requested from the buyer.

b) If the supplier’s changed is approved by SIA and FHI, they must follow the SQA guidelines for a Process Change Request (PCR) or ISR submission. Both of these functions can be found in the SQA system, Nexprise which is maintained by the SQA section. If you need further assistance regarding Nexprise, please contact your SQA representative.

K. PROBLEM ADVANCE NOTIFICATION (PAN)

The manufacturing business can be challenging at times due to unexpected activity. SIA believes that during these times it is imperative that our suppliers keep a good open line of open communication. Our Problem Advance Notification (PAN) is to be used by our suppliers to inform SIA of any and all supplier activity that could adversely affect quality, cost and delivery (QCD)for both production parts as well as service parts. This communication is to be provided at the earliest possible time by our supplier. (Note: URL or web address is located on the PAN form) In addition, if a permanent countermeasure has not been determined at the time the PAN is submitted, SIA suppliers are to utilize our Corrective Countermeasure Form (form 7-4). Both forms can be accessed anytime on the on-line supplier portal at Suppliers/SupplierPortal. Your user ID is “supplied” and your password is “parts”. Please reference “Action for Quality Problems” (task 7-3) of the Quality Manual to address any quality issues associated to development and mass production.

L. SERVICE (AFTERMARKET) PARTS

For the current and past model Legacy, Outback and Tribeca, along with all future models built at SIA, service (aftermarket) parts will be ordered through SIA via the ANTS (Advanced Notice Tracking System) application which is explained further in Section 4, System Applications. However, service parts for the model prior to the 22C (1995 model year) Legacy will continue to be ordered directly by Subaru of America (SOA). All suppliers must provide replacement parts for a minimum period of ten (10) years after the conclusion of a model.

SIA will issue an RFQ for service parts. SIA requests production piece price for current models and then further breakdown on packaging and labels. All RFQ’s for service should be returned to your buyer.

SIA uses an internet-based application for the ordering and shipping information for service parts. All suppliers are required to use this application, ANTS. There is a user manual for this application on the homepage of the ANTS application. SIA can provide individual logon ID’s for each user which will be unique to that user. In order for suppliers to receive payment for service part shipments, the shipping information, ASN (advanced shipping notice) must be entered into the ANTS application. Failure to follow these procedures could result in non-payment. If there are any questions regarding this application, please contact your buyer or Purchasing Administration.

Subaru of America (SOA) requests all service parts be individually packed (unless otherwise authorized by SOA) and labeled with the Genuine Subaru label that contains the following information:

• Part Name and Part Number

• Bar Code of Part Number

• Quantity

• Production Date

• Country of Origin Statement

It is the suppliers’ responsibility to procure the labels used for service. For further instructions regarding service labels, please use the SOA packaging specification, Part Label Spec, PS-10002 or feel free to contact the Packaging Specialist at SOA, 317-769-7050. Below is an example of the Subaru Genuine label.

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Packaging and label specifications are available on the SIA portal or can be obtained via SIA/SOA. It is the supplier’s responsibility to provide, unless otherwise approved by SOA, proper parts packaging by following the specs provided.

❑ Suppliers may continue to produce their own labels. The SOA approved artwork can be obtained at logos.. A white background with PMS 280 blue ink should be used.

For supplier convenience, SOA has procured the following label source if you wish to procure labels at your expense. Please contact the following company:

Address: The Whitlam Label Company, Inc.

24800 Sherwood Avenue

Center Line, MI 48015-1059

Phone #: 586-757-5100

All arrangements will be made between Whitlam and the supplier. Subaru of America will not be involved in these transactions. Ordering and billing will be between Whitlam and the supplier.

All suppliers that supply service parts should be supplied with a Subaru Routing Guide provided by Subaru of America. The primary source for the Subaru of America – Vendor Routing Guide is the Internet. The most up-to-date information is available by accessing the guide through your web browser at: . Instructions for the Vendor Routing Guide can be found on supplier portal.

M. INTERNATIONAL MATERIAL DATA SYSTEM (IMDS)

All suppliers are required to participate in the IMDS online data entry system. IMDS is the material data system used by almost all automotive manufacturers and is quickly becoming the international standard to collect parts information from suppliers. SIA is working with the IMDS system in order for suppliers to comply with the End of Life vehicle directive which makes it possible to recycle old automobiles. All suppliers must register with IMDS and assign one or more client managers. Parts are entered by the supplier and then accepted or rejected by the automotive manufacturer. In order to obtain or confirm your user name/password, you must contact a member of the Supplier Management section.

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III. MATERIALS / LOGISTICS

Production Parts

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A. PACKAGING SELECTION PROCEDURE (Production Parts)

The supplier must submit a copy of the appropriate SIA Packaging Sketch form to the Manufacturing Engineering Logistics section and Purchasing section of SIA. There are two different forms, depending on whether the parts are small enough to ship in totes or whether they require shipment in a bulk bin or rack. The supplier will use the correct form and fill it in as completely as possible. SIA’s Packaging Engineer will then determine if the packaging style conforms to any and all restrictions. This form can be found on the SIA web site or by contacting the Manufacturing Engineering Logistics section.

If any problems are discovered, Manufacturing Engineering Logistics section will notify the supplier by letter or e-mail. The supplier should respond in writing with countermeasures for each problem to Manufacturing Engineering Logistics and Purchasing. The response should also include any packaging cost impact. After a tentative agreement on a packaging style plan is reached between Manufacturing Engineering Logistics and the supplier, SIA will request that a test pack be assembled and shipped to SIA and that a representative from the supplier be available for receiving and analysis. Whenever possible, the test pack should be shipped to SIA with a full load of parts.

The test pack will be analyzed for shipping damage as well as space limitations and ergonomic issues at line side. Upon completion of analysis, an SIA Packaging Sketch form, if approved, will be provided to the supplier to confirm acceptance. If the pack is not approved, SIA will list the reasons on the Packaging Sketch form. A copy will then be provided to the supplier to begin working on countermeasures.

B. PACKAGING PROCEDURE (Production Parts)

Packaging plays a key role in SIA’s material supply program. All new suppliers, depending on ship location, who will be shipping via Subaru milk run or direct route must launch with returnable containers. Likewise, all suppliers currently shipping via milk run or direct route must implement the use of returnable containers. If the supplier has a legitimate business requirement to use expendable packaging, the supplier must submit a request in writing to SIA’s Packaging Engineer and Purchasing. The supplier will not be excused from the returnable container requirement, unless SIA’s Packaging Engineer issues an authorization in writing to use expendable packaging. It is important to use the packaging guidelines set forth on the SIA Packaging Sketch and comply with AIAG standards. Based on this standard, SIA will standardize case types, sizes, and parts identifications to improve material handling efficiency. You should refer to the Subaru Packaging/Rack manual for further rules/guidelines.

1. Number of Cases in One Container

As a rule, a case should fulfill the following requirements:

a) Rack -- 4 way fork entry required and can be equipped with casters

b) Box -- Each box must weigh less than 40 lbs. (since they are handled by hand). SIA reserves the option of requesting a lighter package if there are specific ergonomic concerns with SIA’s process.

2. Delivery Lot

The delivery lot must be set up for the highest container loading efficiency.

Example: One container's SNP = 50

Delivery lot 50 x 16 = 800

Container Module

3. The approved case types and sizes can be found in the appropriate Subaru Packaging Specifications document for either returnable containers or for special racks.

4. Returnable containers are purchased by the supplier. Some exceptions to this objective may be granted after negotiation with Purchasing and Manufacturing Engineering Logistics.

5. Short term use of disposable packaging may be authorized by SIA during the transition from disposable packaging to returnable packaging. Formal approval must be obtained from Manufacturing Engineering Logistics and Purchasing prior to implementation.

6. Packaging size must consider Subaru’s line side requirements and applicable material handling methods.

7. Subaru will only use secondary warehousing as required to allow off-site sequencing by an authorized third party logistics provider.

8. Specific advice on packaging is available from Subaru’s Manufacturing Engineering Logistics section.

C. PACKAGING REQUIREMENTS & MAINTENANCE (Production Parts)

Packaging is a key element in the Subaru material logistics program. The Subaru daily parts ordering system will issue order quantities based on multiples of approved packaging (lot sizes), and approximating daily production requirements. Our goal is to minimize in-plant inventory and improve the line side conditions, while utilizing environmentally sound materials for packaging. Listed below are requirements for developing acceptable package types:

1. Collapsible or nestable returnable containers are preferred.

2. Interior dunnage, if required, shall be returnable or recyclable.

3. Parts should be packaged in hand held returnable containers with a maximum weight limit of 40 pounds or less as explained above. Parts restricted by size, weight or unique requirements will be reviewed on an exception basis.

4. When hand held containers cannot be used, AIAG standard returnable containers with 30” x 32” or 45” x 48” (double drop door) container footprint are preferred.

5. Hand held containers must be palletized to permit handling with powered equipment.

6. Hand held containers should be uncovered in even layers with a common cover/lid. Mixed pallet loads are acceptable with prior approval by Materials Management.

7. Subaru requires stretch/shrink wrap for palletized loads.

8. All loads handled by powered equipment must be four-way entry.

9. All packaging, expendable and returnable, must be stackable for transportation and storage. Even temporary expendable packaging must be stackable to prevent parts damage during shipment and during storage in SIA’s warehouse.

10. Label identification shall be in accordance with Subaru’s shipping/parts identification label requirements with the latest approved additions and/or modifications.

11. All hazardous materials shall be labeled and shipped in accordance with the latest provisions of Title 49, Code of Federal Regulations. The shipper is responsible for compliance with Title 49.

12. Subaru approval of submitted packaging does not relieve the supplier of responsibility as shipper for meeting carrier regulations and providing adequate protections for the contents of the packaging.

13. Required maintenance and repair of supplier owned containers, under normal use and handling is the responsibility of the supplier.

14. The Subaru “Packaging Sketch” form, including an illustration of proposed packaging, must be included with your RFQ’s or Specification Tender response. Return the original form to SIA’s Manufacturing Engineering Logistics section and SIA Purchasing.

15. Additional packaging trials and shipping trials may be required by SIA’s Manufacturing Engineering Logistics section to confirm that parts will be adequately protected during shipping and handling. SIA’s Packaging Engineer will notify the supplier of these additional trial requirements. These trials must be completed successfully, as determined by Manufacturing Engineering Logistics, prior to final approval of the Packaging Sketch.

16. Deviations from approved packaging methods must have prior consent by the Manufacturing Engineering Logistics section. If a packaging change is proposed, a new “Subaru Packaging Sketch” form must be submitted for approval.

Suppliers are responsible for making sure that part quality and associate safety is unaffected by worn or damaged packaging. Regardless of packaging ownership, all suppliers are responsible for ensuring that the containers in which they ship Subaru parts to SIA are in good condition.

1. Suppliers must periodically audit their packaging fleets to identify any damaged containers. If damage is observed which may impact safety or part quality, the supplier must take action to repair or replace the packaging.

2. Suppliers are responsible for cleaning their packaging as required to prevent parts contamination or damage due to dirt transfer.

For further directions or exceptions to above requirements, contact the Manufacturing Engineering Logistics section.

D. RECEIVING/SHIPPING RESPONSIBILITIES (Production Parts)

It is the responsibility of the supplier to provide SIA with an Advanced Shipping Notice (ASN) through the EDI system. If the supplier does not use EDI, a packing list must be provided to SIA. The packing list is to be carried by the driver of the delivery truck and handed to Materials Management at the time of delivery/unloading. The packing list must contain the following information:

1. SIA assigned Subaru supplier code (A...)

2. Delivery order number for each part number shipped

3. Quantity for each Delivery Order number

4. Ship date

5. SIA part number for each Delivery Order number

All containers must have the required labels as explained in the logistics section of this manual.

It is also the suppliers’ responsibility to notify the materials expediter (along with the purchasing buyer) of shipping problems, production problems, and/or any reason an expected delivery date cannot be kept by the supplier via the Problem Advance Notification Report. This document is very important to our company and must be used if the supplier is experiencing or foresees any problem that may prevent the supplier to meet the delivery schedule. All areas must be completed on this document and must be faxed to SIA Materials Management and Purchasing immediately. This document can be found on the supplier portal.

E. TRANSPORTATION (Production Parts)

All suppliers are required to quote on an FOB destination/freight prepaid basis unless otherwise indicated by your buyer. In most cases, SIA uses a prearranged freight service or milk run. Subaru will schedule deliveries based on normal production operating shift schedules of 6:00 a.m. to 2:30 p.m., Monday through Friday (1st shift); 4:30 p.m. to 1:00 a.m., Monday through Thursday, and 3:30 p.m. to 12:00 midnight, Friday (2nd shift). From time to time, normal day and night shift delivery schedules will occur on Saturday when there is scheduled Saturday production. The materials management section is responsible for all transportation arrangements.

1. Transportation Terms

|  |Trans |Contract |Trans |Ownership |

|Parts |Terms |W/Carrier |Arrangement |Transfer |

|Synchronous Parts |FOB SIA |Supplier |Supplier |SIA's Door |

|General Parts |FOB Supplier |SIA |SIA |Suppliers Door |

2. Emergency Transportation

a) If a supplier misses a scheduled pick-up, the supplier must assume the responsibility of delivering the parts to SIA immediately at the suppliers’ expense. The supplier must also contact the designated SIA Materials Management Associate (expediter) to inform them of the miss-shipment. SIA may request the supplier to use a specific expedited carrier or require air freight but all costs will be the responsibility of the supplier. SIA can assist in making the arrangements for the expedited shipments. Suppliers should not use the SIA provided transportation to ship any past due orders without written consent from an SIA Materials Management associate. Failure to follow these procedures will force SIA to deduct any incurred freight costs from the suppliers monthly payment via Debit Memo without prior consent of the supplier. It is very important all suppliers communicate with the Materials Management section regarding late shipments. If SIA needs to halt production due to suppliers fault on lack of production parts, the supplier will be responsible for all charges related to the line stop.

b) When SIA is responsible for the additional transportation: SIA will formally request additional transportation from the supplier. SIA will also arrange the transportation vehicle and conduct the transportation (at SIA's expense).

F. LABELING (Production Parts)

Suppliers are required to attach a label to all shipments being sent to SIA for production and/or trial parts. Production parts will use the standard case label format which is explained in detail below. For all trial or non-production part shipments to SIA, a special shipping tag must be attached to the box/shipment. A special shipping tag can be obtained two ways, one via the ANTS application or the second is through the SQA department. It is imperative that if you are making a shipment to SIA for something other than production, you must identify the shipment with a special tag; otherwise, the receiving section will not know what to do with the parts which could delay your intended use. Please note that service parts are never shipped to SIA. All service orders are shipped to one of the SOA distribution centers which is identified when you receive the order.

The case label below must contain the necessary information for a smooth handling of parts and materials in the plant after unloading. It will be in a standard AIAG format using Code 39 symbology and be attached to the minimum packing unit. If all parts on the pallet are the same part number and delivery order number, a master label will need to be used. If the pallet contains more than one part number or delivery order number, then a MIXED SKID label will need to be used. Another label SIA uses is a QR code sheet which should be sent with the shipping documents. Refer to the QR Code Implementation Guide.

Example of a Case Label Format can be found on the next page.

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1. Part # = The identification number for each car component. Subaru’s part number is 15 digits.

2. Qty = The quantity in the minimum packing unit as specified by SIA.

3. Supplier = The supplier code is SIA’s 4 digit alphanumeric code that is assigned by SIA Purchasing Planning & Administration section.

4. D/O # = The Delivery Order Number (DO#) that is written on the delivery order sheet assigned to each shipment.

5. Part Name = The part name as written on SIA’s delivery order sheet and blanket purchase order.

6. SLC = The Safety Lot Control is used for suppliers with safety related parts. Those suppliers will need to put “SLC” in this area to alert SIA Materials Management.

7. Mfg. Date = The Manufacturers Date is the date in which the parts were produced at your company and should be put in this area.

8. EC # = The engineering change level (ECS level) which is currently being shipped to SIA on this shipment of parts. This is a requirement of all shipments made to SIA.

9. WH-LOC = The warehouse location which is stated on SIA’s delivery order should be in this area.

10. FIT-LOC = The fitting location is the assembly line location as shown on SIA’s delivery order sheet should be in this area.

G. FREIGHT CLAIMS PROCEDURE (Production Parts)

In the event that the supplier supplies cargo to SIA on a FOB supplier plant basis, the supplier is responsible for any discrepancies with regards to the parts shipped (quantity), since SIA cannot verify cargo until it arrives at SIA. FOB supplier plant means SIA is responsible for the freight arrangements.

In the event that the supplier supplies cargo FOB SIA, the supplier is wholly responsible until the cargo arrives at SIA's plant. At that point SIA will verify cargo and inform supplier of any discrepancies.

Examples of such claims are listed below:

1. Supplier's negligence

a) For defects found during the acceptance test (including damage during transportation), SIA will return to the supplier defective items, together with a defect announcement issued by Supplier Quality Assurance or Materials Management. Then, the following steps will be taken:

-Large quantity of defective items (that affects production)

An emergency delivery order (EDO) will be released.

-Small quantity of defective items

A request to include the missing items in the next delivery will be released.

b) Defects found during assembly of final product will be the same procedure as above.

1. Non-compliance with Delivery Orders

a) Items missing when being checked against the Delivery Order or ASN

SIA will consider the items undelivered and request the supplier to have them delivered.

-Large quantity missing (to affect production)

An emergency delivery order will be issued to the supplier.

-Small quantity missing

A request to include the missing items in the next delivery will be released.

Missing items found after receipt will be the same procedure as above with the consent of the supplier.

b) Excess quantity

Inform the supplier of the quantity amount.

The supplier may within two (2) days, take back the excess items at supplier's expense or the over shipment could be applied to a future delivery order. In the latter, the supplier will be notified of that order number.

Any costs or expenses incurred as a result of the above will be resolved pursuant to the terms and conditions contained in the Supply Agreement and accompanying agreements/documents.

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IV. SYSTEM APPLICATIONS

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A. EDI (Electronic Data Interchange)

SIA considers the use of EDI a requirement of its suppliers. Though there are exceptions to this requirement, all suppliers who are not currently taking advantage of this form of information interchange will be strongly urged to do so.

SIA requires production suppliers to electronically receive Material Releases and electronically submit Advanced Shipment Notifications (ASN) via the process of EDI. SIA supports the EDI-X-12 standards endorsed by the Automotive Industry Action Group (AIAG). We also support the material forecast transaction for estimated orders and raw material advance authorization.

Most often the worries of cost or complexity, and the suspicion of unreliability, cause a reluctance to adopt the use of EDI. In this section of the manual, SIA hopes to eliminate all misconceptions suppliers may have about EDI. Please see our SIA web-site: edispecs/subaru/subaru.htm for more detailed information on our supported EDI transactions.

Advantages of EDI:

1. Increase Data Accuracy

Using EDI helps to ensure that the data the supplier will receive from SIA will exactly match SIA's current requirements. Though a facsimile or mailing can be made of the same data in printed form, such manual methods will require data entry on the part of the supplier, allowing for possible mistakes. Conversely, data received from the supplier is a reflection of the suppliers’ actual system record and will forestall any data entry mistakes by SIA personnel. Such accuracy is critical to a supplier in matters requiring later reconciliation of payment or shipping quantity questions.

2. Enhance Communication

EDI will remove the clerical barriers of information exchange. Sending data, which is already resident in the supplier’s system, is far more conducive to fast and accurate communication than a system depending on multiple clerical processes such as preparing and sending documents and verifying manually that such documents have been received and understood.

3. Cost Reduction

Though there are associated costs in utilizing EDI (see the cost section of this manual) the benefits far outweigh the overhead expenses. If the supplier can reduce or eliminate the labor involved in data entry and clerical functions the savings are apparent. More importantly, larger potential savings can be attained from fast and accurate communication assisting both the supplier and SIA in discovering shortages or missed receipts. Such situations can result in line stoppages at SIA or untimely payment to the supplier.

4. Improve Payment Processing

SIA uses ASN data to process goods receipt and generate proper payment transactions.

Each SIA supplier that wants to get started with EDI can contact SIA’s Information Systems Department and ask to speak with the EDI representative or e-mail to edi.coord@subaru-. SIA uses a web-based transaction system that may be used in lieu of the traditional EDI, please contact the Purchasing Department to see if this application is available for you and how to become a user of this system. All suppliers that provide service parts to Subaru are REQUIRED to use this system, whether traditional EDI is used or not.

B. RFQ APPLICATION (Request For Quotation)

The RFQ application is a web based application that suppliers use to retrieve drawings, ECS cover sheets, Requests for Quotes, Timing and Development forms as well as uploading cost change activity and completed quotes. Each user will have a unique log on ID and password and those can be obtained from the Purchasing Administration section. The web address for this application is sia-. This will direct you to what SIA refers to as the “star” page. Several applications can be accessed via the star page by moving the cursor over the stars which are individually labeled. Manuals for each application can be found on the home page of these applications. The RFQ application can be found on the lower left, smaller star. When a document is issued by the buyer, the main contact of the supplier will get an email notification of the type of document issued. There are 3 types of main notifications that the supplier will receive and those are explained in the RFQ process below.

1. RFQ Process – The RFQ process begins with the drawings and cover sheet. Once SIA receives this information from FHI, we forward those documents to the supplier electronically via the RFQ application. An ECS can be issued in one of 3 types:

a. IF – An IF (Information Only) ECS designates the document is for information only. There is no RFQ required for this ECS.

b. DC – A DC (Drawing Change) ECS designates the document is for drawing change only and no RFQ is required for this ECS.

c. QU – A QU (Request for Quotation) ECS implies this ECS should be quoted by the supplier. All RFQ documents required the Timing/Development forms to be downloaded, completed and uploaded as well as the RFQ form.

2. Once the supplier receives the email notification, it is the responsibility of the supplier to notify the correct person and the documents must be downloaded from the web site and saved at the supplier’s location. Paper copies will not be generated by SIA and sent to the supplier.

3. It is also the responsibility of the supplier to upload RFQ’s when required as well as upload Timing/Development form based on requirements. Both documents will utilize the RFQ Application.

The cost change process is also accessible in the RFQ application. Suppliers use the cost change function to make price changes for multiple parts and is mainly used for TSR activity where no ECS is issued. A brief explanation of the cost change process is described below:

1. Supplier must download a spreadsheet with all the parts supplied which will display the current production cost and other pertinent information.

2. The supplier modifies the spreadsheet by completing the required sections/fields with “new” price information.

3. The supplier then uploads the cost change spreadsheet using the cost change upload function in the RFQ application.

4. If the cost change is uploaded successfully, the buyer will receive an email notification alerting the buyer to the request.

Email notifications are a vital part of the RFQ application for both SIA and the supplier. When documents are required by SIA, the main contact will receive an email alert. If an RFQ goes past due, the main contact will receive a past due alert. When the supplier completes a successful upload, the buyer receives email notifications.

C. ANTS (Advanced Notice Tracking System) Application

The ANTS application can be used for production orders but is required for trial, pre-pilot and service orders. Both the RFQ Application and ANTS Application can be accessed via the same web address, sia-. Like the RFQ Application, an email notification will be sent to the users depending on the access type for that user. The application will generate several types of email notifications, included but not limited to are: new orders, past due orders, no commit date, invoice reminders, etc. Once an email is received, it is the users’ responsibility to react to the email alert.

A supplier can have unlimited users in ANTS and user logon ID’s are based on a users email address. Users can have access to service orders, production orders or both. When submitting a request for a user, the email, phone and type of access is required in order to create an account. You can contact a Purchasing Administration member or your buyer. Further information regarding ANTS is described below.

1. Production – ANTS can be used to view the most current E & A (Estimate & Authorization) issued for suppliers. The daily orders can also be obtained via ANTS but EDI should be utilized.

2. Service – All orders issued for service must be obtained via the SIA ANTS Application. EDI is a secondary source for receiving service orders. In order to get paid for service shipments, an ASN must be created in the ANTS Application. Commit dates must also be entered into ANTS for service orders so SOA can monitor the order status.

3. Trial and Pre-Pilot – All orders must be obtained via the SIA ANTS Application. There is no secondary source. In order to get paid, suppliers must submit an invoice to Purchasing that includes the Purchase Order number.

a. For trial and pre-pilot orders, suppliers are encouraged to enter commit dates in order for the ordering person/section to review and know when to expect the request.

D. NAFTA (North America Free Trade Agreement) Application

The NAFTA application requires a unique logon ID and password and SIA uses this application to obtain all the required data we need in order to submit our information to the Government. SIA will usually request this data once a year but not limited to once a year. An email notification will be sent to the NAFTA contact that should include SIA’s required due date. At this point, you must log into the NAFTA application and complete all the required fields for each part number. A Certificate of Origin (CofO) is also required for each part number. Suppliers can use the automated CofO that the NAFTA application creates or they may submit their own version; however, all the required fields must be included or it could be rejected by SIA. A User Manual that further explains the application can be found on the home page of the NAFTA application. If you need assistance regarding this application, contact the Purchasing Administration section.

E. Nexprise

The Nexprise Application is a web based communication system that allows suppliers to access the SQA (quality) information from any location with the appropriate logon ID and password. If your company has a quality problem, the quantity of rejected parts will be shown by MCDT’s (Material Claim Defective Ticket). This quantity is used to calculate your company’s PPM. If a problem needs to be communicated to your company, a PRC (Problem Report and Countermeasure) is generated in Nexprise by SQA. All suppliers will be required to reply with root cause and countermeasures by the due date (unless an extension is granted by SQA). IRS’s (Initial Sample Report – PPAP) and Process Change Requests are processed on the Nexprise Application. The application was developed to expedite approvals and eliminate paperwork. Also, the Nexprise application keeps track of your company’s quality performance utilizing PPM (Parts Per Million). You may view/utilize this information real time.

If you need access to Nexprise or are having problems, you will need to contact your SQA representative. This application is maintained by the SQA section, any questions regarding Nexprise should be directed to SQA.

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V. PRODUCTION CONTROL

Production Parts

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A. ESTIMATE & AUTHORIZATION (E&A)

The objective of the Estimate and Authorization (E&A) is to enable the Supplier to plan their purchase of raw materials or component parts according to the production plan of SIA and to make a parts production schedule that will coincide with SIA's Master Schedule.

The E&A is a breakdown of a seven (7) day firm order, two (2) week production authorization, four (4) week material procurement authorization and a six (6) week estimate for planning.

N WEEK | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | |

*

ISSUANCE

|

\\\\\ |

| | |

| | | | | | | | | | PRODUCTION RAW MATERIAL ESTIMATED

AUTHORIZED AUTHORIZED PRODUCTION

(2 WEEKS) (4 WEEKS) (6 WEEKS)

\\\\\ - 7 DAY FIRM ORDER

SIA issues an E&A by Supplier code every Friday for JIT (just-in-time) suppliers and Monday or Tuesday for weekly suppliers via EDI or email. SIA's Materials Management will be responsible for getting the E&A to the supplier.

B. DELIVERY ORDER

The delivery order is a release, which informs the supplier of SIA's requirements in regards to the part number, part name, quantity, and timing of the deliveries. This will ensure that all parts are delivered in a timely manner.

Issuance of Delivery Orders (D/O)

1. All D/O's will be issued by SIA’s supplier code (ie. A followed by 3 digits, A999).

2. D/O's are issued every Monday by fax for non-EDI, and Tuesday for EDI weekly suppliers; D/O’s for JIT suppliers are issued on Friday’s regardless of EDI or manual.

3. The D/O's are transmitted to those suppliers that are set up with EDI. Materials Management is responsible for the facsimile and/or the mailing of all D/O's weekly to those suppliers that do not have data transmission system. The D/O's will be transmitted on Friday for JIT suppliers and Tuesday for weekly suppliers for each week.

C. ADVANCED SHIPPING NOTICE (ASN)

The objective for an ASN is to make SIA aware of what the supplier is shipping the next day. SIA will receive the ASN before the actual shipment is received. Materials will then check the ASN against the actual packing list. If there are any discrepancies, the expediter will inform the supplier of such matters.

ASN requirements are as follows:

1. ASN’s are to be sent for each trailer that is delivered.

2. ASN’s must be transmitted through Electronic Data Interchange (EDI).

3. The following information should appear on each ASN sent by the supplier:

a) Issue date and time - This is the date and time when the supplier issues the ASN.

b) ASN number - This is a number that is assigned by the supplier to each shipment. The number is used to track when the shipment is received at SIA. (12 digits or less).

c) Supplier code number - This is a 4 digit number assigned by SIA (A...).

d) Ship date - Scheduled shipping date from supplier. (mm/dd/yy)

e) Expected receiving date & time - Date to be received at SIA (mm/dd/yy) and expected time (08:00).

f) Consignee - 2 digit warehouse code assigned by SIA.

g) Trailer No. - Number of the trailer used for the delivery. (15 digits)

h) Carrier code no. - 5 digit carrier code assigned by SIA.

i) Shipped from - supplier's name, address, telephone and fax number.

j) Parts number - Identification numbers for items delivered.

k) Subaru parts - 9-12 digits

l) ECS Level – Actual ECS level at which parts are being shipped.

m) Quantity shipped - The number of actual parts shipped in relation to the delivery order requirement.

n) D/O Number - Delivery order number (10 digit assigned by SIA)

o) Weight - The weight of each item on shipment (must be specified in units of kg).

p) Remarks - Any special comments.

D. EMERGENCY DELIVERY ORDERS

There are cases when existing Delivery Orders are placed do not meet the anticipated production requirements. In such cases, the following would happen:

1. For urgent orders that are needed within the same day or next few days, an emergency delivery order (EDO) is issued. The materials expediter will call the supplier, give them the EDO number as well as fax the order to the supplier. The EDO number must be listed on the packing list/ASN from the supplier. The same payment process will apply for EDO’s as normal delivery order shipments.

There are several reasons why an EDO may be used (i.e. production fluctuations, quality problems, scrap, etc.). SIA will work with all suppliers to make delivery of this emergency order as smooth as possible.

E. SIA SUPPLIED PARTS

In some cases, SIA will provide suppliers with parts from another supplier either local US, Canada, Mexico or Japan. SIA calls these parts “SAP” (service assembly parts). These parts can be supplied directly from another vendor (drop ship) or via SIA. These parts will be identified on the drawing as SIA sourced parts and should be included on the quote submitted to SIA.

As a supplier, your company should work very closely with SIA materials section in order to maintain a workable inventory. These parts will be charged via the Accounts Receivable report as soon as the parts arrive at the supplier. It is the supplier’s responsibility to confirm the quantity and notify SIA materials section of any discrepancies within 48 hours of the receipt of these parts. Failure to notify SIA in a timely manner could result in an over charge situation. During a model change, it is the supplier’s responsibility to provide an accurate inventory count to the SIA materials section directly in order to prevent an excess of inventory.

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VII. SUPPLIER

QUALITY ASSURANCE

Production Parts

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A. SIA QUALITY MANUAL (Production Parts)

The Subaru Supplier Quality Manual covers SIA’s concepts, general rules, and procedures for suppliers of automotive parts and materials. This manual is presented to all suppliers in order to assist in meeting SIA’s quality requirements. Adherence to this Quality Manual is a requirement with respect to any parts and materials delivered to SIA.

The manual explains SIA’s basic requirements for the pre-production and production of quality products. It also contains samples of many forms used in the Supplier Quality Assurance Section.

All suppliers are provided a copy of the SIA Supplier Quality Manual. If you do not have a copy, one can be obtained from the SQA or Purchasing Administration Sections.

B. SUPPLIER RATING PROGRAM (Production Parts)

On a yearly basis, SIA will consolidate suppliers performance based on three main categories: 1) quality, 2) delivery performance for both production as well as service and 3) cost program participation. In this manner, a supplier will need to excel in all categories in order to win an award for that year. Each supplier must realize that their score is NOT a combination or average of the three different categories. Each category requirement must be satisfied independent of one another in order for a supplier to be considered for a supplier award. Below is a brief explanation of the categories.

1. Quality Requirements

The quality requirements are tracked using the Nexprise (database) System. You are able to monitor your company’s progress utilizing Nexprise. Targets for the year are announced at the Supplier Conference/Ceremony and can be compared to your progress. The unit of measure is PPM (Parts Per Million) and is based on the number of NG (no good) parts identified by SIA QC compared to the number of parts received at SIA. Please keep in mind that just meeting the PPM Target does not guarantee an award, it moves you to the next step. Other factors considered but not limited to are then evaluated: warranty claims, recalls, safety related rejects, supplier responsiveness, etc. PPM’s are calculated by each part number and all part numbers received per supplier. Judgment is made by the total parts received from the supplier. Vital safety parts require zero (0) PPM for the year in order to be qualified for an award in any given year.

2. Delivery Performance (Production & Service)

Delivery performance is based on the following guidelines and must meet 100% in order to be considered for an award. For production, if a supplier provides 2 different part numbers to SIA and sends both part numbers on the same truck, as required by the delivery orders. The total Delivery Order Items on that truck is 2. Thus, if the supplier sends 5 trucks (or Milk runs) a month with these same 2 part numbers, then the suppliers’ total Delivery order items for that month is 10.

From this total number SIA will subtract all part number shipments that were ‘short’ as well as those that were scored as ‘late’. This ‘corrected’ final number will then be divided by the original total tally to give the supplier a delivery score in percentage form.

A part number item is considered short if it is not the exact quantity required by the D/O. Even if the D/O is only one (1) piece short, it is still considered short. As of this writing, excess amounts will not count against a suppliers score.

A D/O item will be considered late if it does not arrive or is not delivered within the pre-arranged and mutually agreed upon time window. If you are required to load your product on a milk run, and you miss the truck, then the supplier is responsible for procuring a delivery truck to ensure the parts arrive on time. If your parts are put on the milk run truck on time, but the truck arrives late at SIA (for some unforeseen reason), it will not be considered the fault of the supplier. Any questions about this delivery window or SIA delivery requirements should be directed to materials section group leader. Service delivery percentage will be obtained from the ANTS application and is based upon on-time deliveries. Due dates for service delivery orders are based on what the supplier quoted as the lead-time for each part number. ANTS will determine the monthly delivery performance percentage based on the due date and ASN shipping date.

3. Cost Program Participation

All suppliers will be required to participate in SIA’s cost reduction program. Each supplier may be given a percentage goal that they must achieve. Suppliers will work closely with their buyer in order for these goals to be attained. This activity will also be considered in the yearly evaluation for awards.

C. QIP – PRE-QIP

All SIA direct parts suppliers performance will be monitored by the SQA section. Those suppliers who fail to meet the established standards are subject to an improvement process which is designed to help get their performance back up to expectations. There are 2 steps that we will use in order to help the supplier improve. The first is Pre-Quality Improvement Program (P-QIP) which is the entry level program. The more formal and structured corrective active system is Quality Improvement Program (QIP). Supplier performance is tracked on a monthly basis using a Supplier Performance Monthly Review report. The report is generated by the SQA section based on information in the Nexprise system that SQA uses for suppliers. SIA Top Management will review the reports and determine if the corrective action process is required. If selected, the supplier will be required to participate in a six month improvement plan. Further information regarding these programs can be obtained through Supplier Management.

D. THIRD PARTY SORTS

SIA does not allow our suppliers to sort or rework their defective parts at SIA after they are delivered. SIA uses a third party sort company. Every supplier will be responsible for establishing a financial contract with this company when sorting or when rework is required at SIA. The sort company will prepare, train and supervise their own associates. It is the suppliers’ responsibility to notify SIA of any suspect shipments that may be in route to SIA so we may be able to take preventative action before the parts are delivered to the production line for use. Suppliers are financially responsible for all costs incurred by the third party sort company and/or SIA. The third party sort company will bill your company directly.

F. SPECIAL SHIPMENT TAGS

In some cases the usage of the Special Shipment Tag may be needed to help with identification of Parts. All non mass production, prototype, and pre-production parts should have a Special Shipment tag. The Special shipment Tag is also used to identify first parts of an engineering change or break points for countermeasures. Refer to Special Shipment Identification Tag Procedure 10-SSQ4-035 available in the Nexprise.

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Part Number Bar Code (B)

Qty (D)

Part Number (A)

PART NAME (C)

QTY

P/NO

P/NAME

Production Date (E)

P/DATE

SUBARU OF AMERICA, INC. /

FUJI HEAVY INDUSTRIES U.S.A., INC.

Country of Origin Statement (F)

99Z-X9999

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