Business Conduct, Ethics Expectations and Key Requirements ...



BUSINESS CONDUCT, ETHICS EXPECTATIONS, ANDKEY REQUIREMENTS FOR SUPPLIERS & CONTRACTORSbusiness code of conduct & Ethics expectationsPurposeSouthco, Inc. and each of its subsidiaries and affiliates, whether directly or indirectly held and wherever they may be located (hereafter collectively referred to as “Southco” or “Company”)is committed to unyielding integrity and the highest standards of business conduct in accordance with Southco's Global Business Code of Conduct. Our commitment is fundamental to the core values and beliefs held by Southco’s employees and investors and integral to the global communities where we do business.In selecting suppliers, contractors subcontractors, or any other organization supplying products, goods, raw materials, parts, components, services or anything else, directly or indirectly, to Southco or otherwise working directly or indirectly with or on behalf of Southco (collectively, “Suppliers”), Southco works hard to choose reputable business partners who are committed to the ethical standards, values, and demonstrated business practices compatible with those of Southco.All of our Suppliers are expected to commit the resources required to understand and comply with these requirements, and in turn, require their suppliers, contractors and subcontractors to conform as well. A continuing business relationship which is mutually rewarding depends upon it. Southco reserves the right to verify that a Supplier’s business operations meet these expectations. Failure to act in a manner consistent with these expectations may impede our ability to do business together in the future.Southco expects its Suppliers to maintain and enforce policies requiring adherence to business conduct and practices in accordance with applicable law and which comply with our requirements. These expectations may be updated or amended from time to time. The most current version is available at .Health, Safety, and Environmental (HSE)The health and safety of our employees and all personnel associated with our work is our highest priority. Our Suppliers must:Provide a safe and healthy work environment that supports accident prevention, minimizes exposure to health risks, is in compliance with applicable workers health and safety laws, and minimizes harmful impacts to the surrounding community;Apply safe work practices (including regulatory and contract-specific requirements) to all their activities and install safety in every aspect of their work processes and in the attitude and behavior of all their workers; andConduct their operations in an environmentally responsible manner and in accordance with applicable environmental laws.Human Rights and Employment PracticesOur Suppliers must:Support and respect human rights and the dignity of all people. Avoid complicity in human rights abuses, including engaging in human trafficking, slavery, or sexual exploitation;Treat all their workers with dignity, respect, and fairness;Conduct all their operations in a socially responsible, non-discriminatory manner whether or not mandated by applicable laws. Respect applicable law associated with equal opportunity, child labor, forced or compulsory labor, working hours, wages and benefits, freedom of association, data privacy, and harassment-free work environment;ensure women workers receive equal treatment in all respects of employment. Pregnancy tests will not be a condition of employment and pregnancy testing will be voluntary and the option of the worker; not use, or participate in the exploitation of workers, or forced, or involuntary labor. All members of the workforce should be free to resign their employment in accordance with local and national laws or regulations without unlawful penalty. respect workers' rights to freedom of association and collective bargaining in accordance with applicable legal requirements.Financial ControlsOur Suppliers must:Keep accurate, complete, fair, timely, transparent, and understandable financial and operational books, records, and accounts, and a system of effective internal records; andCreate, retain, and dispose of business records in accordance with applicable legal and contractual requirements.Conflicts of Interest, Gifts, Entertainment, and Business CourtesiesOur Suppliers, their employees, and their family members must not receive improper or unlawful benefits through their relationship with Southco or allow other activities to conflict with acting in the best interests of Southco. Our Suppliers must:Limit promotional items or entertainment involving our employees to common business courtesies within accepted business practices and never with the intent to improperly influence a business decision or create a potential conflict of interest or the appearance of impropriety and disclose any potential conflict prior to entering into any business transaction;Not accept any form of bribe. Southco maintains zero tolerance for bribery and expects our Suppliers to do the same. Bribery is directly or indirectly giving or promising to give anything of value to improperly influence actions of a third party. Bribes may include money, gifts, travel expenses, hospitality, vacations, expenses, below-market loans or products, reciprocal favors, political or charitable contributions, or any direct or indirect benefit or consideration;Any Supplier that violates this policy risks immediate loss of all existing and future Southco business.Suppliers are required to comply with the US Foreign Corrupt Practices Act, the UK Bribery Act 2010 and any other similar laws and regulations in effect.Trade ControlsOur Suppliers must:Know and comply with applicable import-export controls, economic sanctions, and anti-boycott laws applicable to their work and with Southco; andNever participate in boycotts or other restrictive trade practices prohibited or penalized under United States or applicable local pany ResourcesSouthco resources include property, assets, intellectual property, and confidential information. Our Suppliers must:Safeguard Southco’s resources utilized in the course of performing work, to use such resources solely for legitimate business purposes to advance the interest of Southco; Honor the intellectual property rights of Southco and the third parties at all times; andMaintain, handle, and if applicable, process any confidential information internally and on a need-to-know basis only, with the utmost care and in accordance with applicable peting FairlySouthco believes in the free-market system where merit, quality, price, and other objective factors determine who succeeds and who fails. Our Suppliers must:Compete honestly and fairly; Comply with applicable antitrust and competition laws; andNever participate in anti-competitive practices such as price fixing or bid ernment WorkOur Suppliers who work on projects where government entities or agencies are involved must follow any special rules that apply.Monitoring and ComplianceSouthco will take affirmative measures, such as announced and unannounced inspections of Southco’s Suppliers facilities to ensure compliance is within this policy. Southco’s Suppliers must maintain at each production facility all documents necessary to demonstrate compliance with this policy. Southco's Suppliers must allow representatives from Southco and, if requested, Southco’s customers, full access to production facilities, workers records, and workers for confidential interviews in compliance with local laws.Anti-Slavery and Anti-Human TraffickingSouthco is committed to ensuring that there is no modern slavery or human trafficking in our supply chains or in any part of our business. Southco forbids its Suppliers from performing any of the following activities: engaging in any form of trafficking in persons; procuring commercial sex acts; using forced labor in the performance of any work; destroying, concealing, confiscating, or otherwise denying access by any employee to the employee’s identity or immigration documents, such as passports or drivers’ licenses, regardless of issuing authority; using misleading or fraudulent practices during the recruitment of employees or offering of employment/contract positions such as: failing to disclose necessary information in a format and language understood by an employee or applicant; or making material misrepresentations during the recruitment of employees regarding the key terms and conditions of employment; including, but not limited to, terms related to: wages; fringe benefits; the location of work; the living conditions; housing and associated costs; any significant cost to be charged to the employee or applicant; or the hazardous nature of the work (if applicable); using recruiters that do not comply with local labor laws of the country in which the recruiting takes place; charging applicants recruitment fees; if required by law or contract, failing to provide return transportation or failing to pay for the cost of return transportation upon the end of employment; if required by law or contract, failing to provide or arrange housing that meets the host country’s housing and safety standards; or if required by law or contract, failing to provide an employment contract, recruitment agreement, or other required work document in writing with legally required information and in a language the employee understands. Southco requires all Suppliers to: put in place mechanisms for monitoring and verifying compliance with these provisions and all applicable laws and regulations related to modern slavery and human trafficking; conduct due diligence and identify any risks surrounding modern slavery and human trafficking and remedy and such risks to Southco’s satisfaction; commit a zero-tolerance stance on modern slavery and human trafficking and immediately remedy any potential risks identified by Southco or any other party; and establish mechanisms for reporting and addressing any suspected instances of modern slavery and human trafficking at their operations or in their supply chain. In the event that Southco or any other party identifies any form of potential modern slavery or human trafficking in a Supplier’s operations, the applicable Supplier shall (i) formulate a remediation plan immediately, including but not limited to, notifying local authorities in accordance with applicable law and (ii) identify any gaps in the recruitment or management process at the relevant worksite and implement a corrective action plan as soon as possible, but no later than thirty (30) days from the date that the incident was discovered. California Transparency in Supply Chains Act of 2010 & Modern Slavery Act 2015Regarding disclosures involving human trafficking and slavery, Southco's Suppliers must comply with the policies described above. We select Suppliers who support our values and commitment to the highest standards of integrity and ethical business conduct, however, we do not currently verify product supply chains or audit Suppliers specifically to evaluate risks of human trafficking and slavery or require our direct Suppliers to certify that materials incorporated into products comply with laws regarding human trafficking or slavery in countries in which they do business.Prohibition of Forced LaborSouthco explicitly prohibits the use of all forms of forced, bonded or compulsory labor within its supply chain and requires it Suppliers to comply with all applicable local laws, and international norms and standards including, but not limited to, those set forth UN Guiding Principles on Business and Human Rights and the relevant conventions by the International Labour Organization (ILO). All of Southco’s Suppliers must have a zero-tolerance approach to any form of forced labor and must take proactive steps to prevent forced labor from taking place in any part of the its operations or its supply chain. All of Southco’s Suppliers must ensure that their employees will work on a voluntary basis, without the threat of any penalty or sanctions, and free of coercion or deception, and no Supplier can permit the use of any captive, prison, bonded or abducted labor in its operations or in its supply chain. Southco’s Suppliers must ensure its employees’ right to leave work and terminate their employment freely, without any penalty or threat. No Supplier may allow any form of debt bondage in its operations or in those of its suppliers, contractors or subcontractors. All Suppliers must strictly forbid any employment relationships founded on any debts between the employee and the employer or between the employee and other person or entity in its operations. All of Southco’s Supplier’s employees must be free from debt-bondage and other unacceptable financial costs across including, but not limited to, owing recruitment costs or any other fees to secure employment. Southco’s Suppliers must: put in place mechanisms for monitoring and verifying compliance with these procedures and all applicable laws and regulations related to forced labor; conduct due diligence and identify any risks surrounding forced labor within its workforce or its supply chain and remedy any such risks to Southco’s satisfaction; commit to a zero-tolerance stance on force labor and immediately remedy any potential risks; andestablish mechanisms for reporting and addressing any suspected instances of forced labor at its facilities or in its supply chain. If Southco or a Supplier identifies any form potential of forced labor in the Supplier’s operations or in its supply chain, the Supplier must: formulate a remediation plan immediately; and identify the gaps in the recruitment or management process at the relevant worksite and implement a corrective action plan as soon as possible, but no later than 30 working days from the date that the incident was discovered. Freedom of Association & Collective BargainingSouthco respects the rights of its employees and workers within its supply chain to form and join trade unions, engage in collective bargaining, and to prevent discrimination, retaliation, or intimidation based on union membership or activities. Southco recognizes the right of its employees and workers within its supply chain to engage in peaceful assembly and Southco will not interfere with its employees’ right to support or join a labor union or other collective body or the or rights of workers within its supply chain. Where employees are represented by a legally recognized union, Southco is committed to establishing a constructive dialogue with the union’s freely chosen representatives, and Southco is committed to bargaining in good faith with such representatives. Southco observes local laws and regulations relating to freedom of association and collective bargaining. Where such laws do not exist, Southco applies best practices of industry standards. Southco holds its Suppliers to these same standards with respect to their employees and workers within their supply chains. All Southco Suppliers must: provide a safe and healthy workplace, free from discrimination and harassment and allow its employees to organize collective actions without fear of retaliation; conduct regular assessments of labor practices within its operations to identify any labor rights violations and take corrective action where necessary; and implement grievance mechanisms that allow its employees to report violations of their rights to freedom of association and collective bargaining. In the event of any violation of any right of freedom of association or collective bargaining, the applicable Supplier must: acknowledge the violation and take responsibility for its actions; and address the underlying issues that led to the violation; and engage with stakeholders, including its employees, unions, and civil society organizations, to understand their concerns and perspectives and seek their input on remediation efforts.Anti-Discrimination and Anti-HarassmentSouthco values diversity and equality in the workplace and its supply chain. Southco requires its Suppliers to treat all of its employees equally and without discrimination based on their race, gender identity, age, religion, sexual orientation, disability, ethnicity, marital status, national origin, language, political affiliation, citizenship, union membership, or any other status protected by applicable local laws in hiring and other employment practices. ? Southco’s Suppliers must have zero tolerance for harassment of any kind including, but not limited to, sexual harassment, verbal abuse, physical intimidation or bullying. Southco’s Suppliers must provide all of its employees with fair and impartial treatment regardless of their background or personal beliefs.? Southco’s Suppliers must prohibit all forms of discrimination or harassment in its workforce and supply chain and must: provide equal opportunities to all of its employees to develop his or her talent in the workplace; comply with all applicable local laws and regulations and provide equal hiring opportunities to all job applicants and prohibit discrimination against its employees in compensation, promotions, job assignments, training, performance evaluations, benefits, social and recreational programs, disciplinary actions, termination, and all other employment practices; provide pregnancy and postnatal employment protections, benefits and pay as well as maternity and paternity leave in line with local laws and regulations. All Southco Suppliers must exclude pregnant and breastfeeding women from performing hazardous work and must take reasonable actions to eliminate and minimize health and safety risks in their working environments such as adjusting their duties and providing reasonable breastfeeding facilities;encourage its employees to report any incidents of discrimination or harassment and must strictly forbid any form or retribution or repercussions to the complainant for reporting a genuine concern, even if the concern turns out to be unfounded; andimplement immediate corrective action where any risk or noncompliance is identified and analyze the root cause of any such risk or noncompliance to prevent reoccurrence. Protection of Juvenile WorkersSouthco’s Suppliers must abide by the local laws related to the employment of juveniles. Southco is committed to protecting all juvenile workers and requires its Suppliers to: establish procedures and mechanisms for monitoring and verifying compliance with laws and regulations related to juvenile workers; maintain a complete and accurate roster of all juvenile workers in its operations; ensure that all juvenile workers in its operations are treated in compliance with the anti-harassment and anti-discrimination requirements of this policy; not engage juvenile workers in night shifts or hazardous environments/conditions that could pose a danger to their health, safety or social development; ensure that supervisors are aware of the special needs of juvenile workers and take special protection measures if required; and provide Juvenile Workers with: the necessary education and training on occupational health and safety; access to grievance channels; and regular medical check-ups, as may be required by applicable laws or regulations. Southco’s Supplier’s must keep accurate records for each of these areas. If any juvenile worker is identified working at night or in hazardous environments/conditions in a Supplier’s operations or in its supply chain, the Supplier must: formulate a remediation plan immediately, including: removing the juvenile worker from night shift or hazardous environments/conditions; providing a medical check-up to evaluate the impact of hazardous work; and providing an opportunity to change work positions to one that is appropriate for juvenile workers; and monitor and keep track of the process of the corrective actions until such time that Southco determines compliance. Child LaborSouthco is against all forms of child labor. We endeavor to comply with all international norms and standards including, but not limited to, those set forth in the United Nations Convention on the Rights of the child and the relevant conventions by the International Labour Organization. We recognize the right of every child to be protected from economic exploitation and from performing any work that is likely to be hazardous or to interfere with a child’s education, or to be harmful to a child’s health or physical, mental, moral or social development.?? We acknowledge that child labor is a serious violation of human rights and can lead to negative social, economic, and environmental consequences.?? We believe that eliminating child labor is not only a legal obligation, but also a moral and ethical imperative.?? Southco requires all Suppliers to adhere to the standards set forth in the preceding paragraph. Southco’s Suppliers must: establish procedures and mechanisms for monitoring and verifying compliance with this policy and laws and regulations related to child labor including, but not limited to, conducting regular audits of its operations and supply chain to ensure that there are no instances of child labor; put in place a suitable, fully functional, and up-to-date age verification system that includes review of identification documents in its operations; ? require that all documentation in relation to the age of its employees meet the minimum requirements of applicable local laws and regulations and be subject to audit at any time; ?and work with other organizations and stakeholders to promote the eradication of child labor and to support initiatives aimed at protecting children from exploitation.?? ? If Southco or a Supplier identifies child labor at any of Supplier’s facilities in its workforces, the Supplier must take the following corrective actions: formulate a remediation plan that will serve the interest and wellbeing of the child worker. The remediation plan must, at a minimum: arrange a health check of the child worker; provide for interim medical and accommodation expenses for the child worker; provide for a safe return of the child worker to his or her place of residence and all other arrangement whenever it is appropriate; identify the gaps in the recruitment or management process at the relevant worksite and implement a corrective action plan as soon as possible, but no later than 30 working days from the date that the incident was discovered; and monitor and keep track of the process of the remediation program until the child labor case is completely closed. Wages, Overtime and BenefitsSouthco offers fair wages, reasonable overtime and adequate benefits to promote the economic well-being for its employees. We ensure that our employees are compensated fairly for their work based on market standards and each employee’s skill, education and experience, regardless of an employee’s gender, race, or any other factors that may unfairly lead to pay inequities. This includes meeting national legal or industry benchmark standards and providing a living wage that allows employees to meet their basic needs. Southco ensures that all of our employees are paid correctly and in a timely manner. Southco may make only authorized or legally allowed deductions from wages. Southco shall correctly calculate wages and overtime and provide compensation (including minimum wages, allowances, and overtime pay) that satisfies or exceeds applicable laws. Southco ensures that its employees are not required to work excessive hours and negatively impact their health or well-being. Southco shall comply with all applicable laws and regulations. Southco endeavors to comply with all applicable local laws and regulations, respect and support the international norms and standards including, but not limited to, those set forth in the United Nations Universal Declaration of Human Rights, the UN Guiding Principles on Business and Human Rights and the relevant conventions by the International Labour Organization. Southco requires all Suppliers to adhere to the standards set forth in the preceding paragraph. Southco’s Suppliers must: conduct surveys and benchmark industry-leading standards in relation to employees’ wages and benefits to ensure that they meet applicable legal requirements and industry practices and that its wages and benefits remain fair and equitable; audit its payroll data, benefits usage, and overtime work records; ensure that its employees’ overtime work shall be on a voluntary basis, and all overtime work records will be submitted and signed by the employees themselves; communicate to its employees to help them understand the local labor laws, and provide sufficient information to its employees to enable them to understand how their overtime or benefits packages are calculated; and encourage its employees’ feedback and input. In the event that Southco or a Supplier identifies any noncompliance with this policy, the applicable Supplier must take the following immediate action: conduct a thorough investigation to identify the root cause, implement corrective actions to address any identified deficiencies, such as updating policies and procedures, providing additional training to employees , and conducting regular audits to monitor compliance; and evaluate the effectiveness of the remediation efforts and making any necessary adjustments to ensure ongoing compliance. Working Hours and Vacation Southco is committed to ensuring the health and safety of all of its employees and all workers in its supply chain by adhering to local laws and regulations regarding working hours, rest breaks and vacation. Southco’s Suppliers must: ensure that its employees are not required to work excessive hours and that its employees’ work will not negatively impact their health or well-being;comply with all applicable laws and regulations in the countries where its employees operate; use time management systems to monitor and maintain up-to-date records of its employees’ working hours;ensure that its employees’ working hours are kept within the legal limits and will comply with all applicable local laws and regulations; ensure compliance with all legal requirements in relation to rest breaks and vacation; andensure that procedures for complying with local laws and requirements in relation to working hours and vacation will be available to all of its employees. In the event of noncompliance with these procedures by any Supplier, the Supplier must take the following actions immediately to remediate the situation: conduct a thorough investigation to identify the root cause for the noncompliance; review its procedures to identify any potential gaps that led to the noncompliance; implement corrective actions to address any identified deficiencies, such as updating its procedures, providing training to its employees, or conducting audits to monitor its compliance; andevaluate the effectiveness of the remediation efforts and make any necessary adjustments to ensure ongoing compliance.WhistleblowingSouthco is committed to conducting our business with honesty and integrity and encourages reporting ethics violations and suspected violations of law by or within Southco or within its supply chain. Southco’s Suppliers must: provide a secure and easy channel for a whistleblower to report concerns in good faith regarding any suspected or actual criminal conduct, unethical conduct or other misconduct by or within the Supplier or its supply chain without fear any adverse consequences for making the report; not tolerate any form of retaliation against a whistleblower who has reported a genuine concern, or any person who otherwise assists in the reporting or investigating process;ensure that the confidentiality of the whistleblower’s identity and details of the concern are respected and protected; investigate all reported concerns promptly, thoroughly and fairly and record and retain all reported concerns in accordance with applicable laws, and regulations. keep the whistleblower informed of the progress of the respective investigation and of any likely timescale; andinform the whistleblower of the Supplier’s determination of findings and outcome after proper review. Event of ViolationIf a Supplier is in breach of this policy, Southco may require the Supplier to implement a corrective action plan to cure the non-compliance within a specified time period. If the Supplier fails to meet the corrective action plan commitment Southco may terminate the current and future business relationship. Southco reserves the right to hold the Supplier responsible for reasonable costs of investigating into the non-compliance.Reporting ConcernsOur suppliers, contractors, and their employees should promptly report any business conduct and ethics concerns involving or affecting Southco, whether or not the concern involves the Supplier, by contacting one of the following:Their Southco representative.Southco’s Head of Supply Chain at: 1-610-459-4000Southco’s Legal Counsel at: 1-610-459-4000Corporate Headquarters: Southco, Inc.210 N. Brinton Lake RoadConcordville, PA 19331USASupplier Quality Statement of RequirementsPurposeThe Supplier Quality Statement of Requirements constitutes an extension to the contract between the Supplier and Southco, Inc. or one of its affiliates, covering the items (Goods) as described in the Purchase Order.Supplier’s acceptance of the Purchase Order shall constitute Supplier’s agreement to the requirements stated therein and herein, without modification, addition or alteration. In the event of any inconsistencies between the Purchase Order and the requirements set forth below, the terms and conditions of the Purchase Order shall take precedence.Suppliers are responsible to periodically review Southco’s website for changes / additions: GoalAll suppliers are expected to supply products and services to Southco with zero defects. Suppliers are encouraged to use error prevention processes and techniques (such as poke-yoke) and process improvement tools such as Lean, Six Sigma, in their manufacturing processes to meet this quality goal.Quality System RequirementsSouthco’s quality system includes the requirement for all suppliers to maintain a Quality Management System certified through third-party audits (ISO 9001, IATF 16949, AS9100, etc.). The certificate must be issued by an accreditation body bearing the mark of a recognized IAF MLA member (International Accreditation Forum Multilateral Recognition Arrangement) and where the accreditation body's main scope includes management system certification to ISO/IEC 17021.The current list of recognized IAF MLA members by country can be found at the following link: REQUIREMENTS FOR APPROVALALL SOUTHCO SUPPLIERS:Form 1178 – Mutual Supplier Confidentiality and Nondisclosure Agreement…review & signForm 0022 – Business Conduct, Ethics Expectations, and Key Requirements for Suppliers & Contractors…review & signForm 1315 – Preliminary Supplier Evaluation…complete & signForm 1315 C-TPAT Survey…complete & sign if importing to a U.S. Southco facilityQuality System Certification (ISO 9001, IATF 16949, AS9100, etc.)…provide a copy of current certificateSouthco will review these documents and either accept, reject, or conduct an on-site audit to determine if the supplier meets Southco requirements. Where the supplier does not fully meet all Southco requirements, implementation of corrective action plans to address any deficiencies may be required.Southco ProceduresSuppliers are to use the tools and/or requirements contained in the following documents:Advanced Product Quality Planning & Control Plan Reference Manual (AIAG)Potential Failure Mode and Effects Analysis (FMEA) Reference Manual (AIAG)Measurement Systems Analysis (MSA) Reference Manual (AIAG)Statistical Process Control (SPC) Reference Manual (AIAG)Production Part Approval Process (PPAP) Manual (AIAG)Continual Improvement per IATF 16949, 10.3.1 (AIAG)Supplier Global Control Plans (applicable to certain plating and heat treating applications only)Routing Guide (Southco Form 1218)Terms and Conditions (Southco Form 1104 or 2006/3 as applicable)Any additional requirements noted in Southco purchase order textRequest sub-assembly suppliers to use FIFO practicesAdvanced Product Quality PlanningSuppliers must use an advanced product quality planning process that follows the Automotive Industry Action Group (AIAG) APQP Project Plan that ensures production readiness with parts that meet 100% of the product specifications.Suppliers are expected to complete all elements of the AIAG APQP process (as applicable) to ensure all program benchmarks are met, and be able to provide the Southco Supplier development representative with a timing chart that adequately reflects the timing of the APQP Project Plan deliverables (Tooling, Fixtures, PFMEA, Control Plans, PPAP, etc.).Suppliers are expected to participate in a pre-production meeting with Southco Supplier Development/Purchasing as needed.Suppliers are expected to share key aspects of the product or process requirements including key characteristics with the sub-tier suppliers.Process Failure Modes and Effects Analysis (PFMEA)Suppliers must do the following:Consider any lessons learned from previous program and/or similar part or component designs.Drive simple and inexpensive devices into the process to help prevent and detect errors.Prepare the PFMEA with input from a multi-disciplinary team (Assembly, Manufacturing, Materials, Quality, Service, Tooling supplier, Tier 2, 3, etc.).Ensure that the current process controls listed in the PFMEA are listed on the Control Plan.If the process, material or manufacturing location has changed, revise the PFMEA and re-evaluate the effect on the severity, occurrence and detection.Production QualityAll suppliers are expected to have the base manufacturing capability (Ppk’s/Cpk’s) to support zero PPM.All suppliers are expected to supply parts to Southco with zero defects. Funding is expected to be identified in the initial quote, and subsequent quotes, to reflect error occurrence prevention (poke yoke, error proofing devices, etc) and defect outflow detection and feedback (in-process and subsequent inspection).PPM reduction plans must be in place to meet this zero defect target. Effective plans must include root cause identification, irreversible corrective action, timing, data, etc.All suppliers are required to have effective manufacturing practices and procedures to ensure a continuous flow of high quality parts into Southco production facilities.Should a problem occur, suppliers are required to implement effective and immediate containment and comply fully with SCAR (form 1172) requirements and the containment efforts that may result.Nonconforming Product – in the event Supplier obtains goods, items or materials which are not in conformity with Buyer’s specifications, drawings, other requirements of Buyer or Supplier’s warranties hereunder, which Products are to be provided by Supplier pursuant to this Order, Supplier shall immediately notify Buyer, in writing, identifying the Products, together with the subject matter of the nonconformity. Buyer, in its sole and exclusive discretion, may determine, on a case-by-case basis, that Supplier may use or deliver to Buyer the nonconforming Product; provided however, that such determination by Buyer shall not constitute a waiver of any obligations, warranties or liabilities of Supplier as provided in this Order, except with respect to the specific portion of the Product which is the subject of Supplier’s written disclosure to Buyer and Buyer’s subsequent written consent to use or deliver such nonconforming Product.Supplier Evaluation SystemThe supplier scorecard consists of a Quality and a Delivery component, each worth a possible 50 points, for a maximum possible score of 100 points each reporting period.QualityThe Quality component of the supplier scorecard is determined as follows for a given time period:Quality Rating – 50 Points (max.)PPMScorePPMScore0 – 300502701 – 300041301 – 600493001 – 330040601 – 900483301 – 360039901 – 1200473601 – 3900381201 – 1500463901 – 4200371501 – 1800454201 – 4500361801 – 2100444501 – 4800352101 – 2400434801 – 5100342401 – 2700425101 and Above0The supplier will be notified of rejections via Southco Material Discrepancy Report or Supplier Corrective Action, Form 1172.DeliveryThe Delivery component of the scorecard is derived by dividing the total number of on-time lines received by the total number of lines shipped in a given time period multiplied by 50. Maximum score possible is 50 points. Southco requires deliveries to be 100% on-time to our request date.Supplier StatusSupplier status is determined using the scorecard evaluation system above. Changes in status are made automatically in the business system based on supplier performance.Approved – the supplier is currently meeting quality and delivery requirements and is maintaining a total score of 85 points or above on the scorecard.Probation – the supplier has failed to meet quality and/or delivery requirements and has allowed their performance score to fall below 85 points for three consecutive reporting periods. In order to return to Approved status the supplier must achieve a score of 85 points or above for three consecutive reporting periods. If a supplier is unable to achieve Approved status again Southco may seek a replacement.ChangesIn the event of a proposed change, suppliers must notify the Southco Supplier Development representative and submit for part approval prior to the implementation of the change to determine the type of quality re-certification required (PPAP documentation). Production part approval is always required prior to the first production shipment of product in the following situations (unless specifically waived by Southco Supplier Development representative):Product modified by an engineering change to design records, specifications, or materials.Use of another optional construction or material than originally approved.Production from new or modified tools (except perishable tools), dies, molds, patterns, etc., including additional or replacement tooling (partial or complete).Production following refurbishment or rearrangement of existing tooling or equipment.Production following any change in process or method of manufacture including changes that impact safety, form, fit, function, performance, durability, and/or appearance of the product.Production following a change in test/inspection method (no effect on acceptance criteria).Production from tooling and equipment transferred to a different plant location or from an additional plant location.Change of source for subcontracted parts, materials, or services (e.g. heat treating or plating).Product re-released after the tooling has been inactive from volume production for twelve months or more.Following a Southco request to suspend shipment due to a supplier quality concern.Control of Sub-Tier SuppliersThe Supplier, as the recipient of the contract, is responsible for meeting all requirements, including work performed by the Supplier’s sub-tier Suppliers (also known as Sub-Suppliers or subcontract Suppliers). When the Supplier uses sub-tier sources to perform work on products and/or services scheduled for delivery to Southco, the Supplier shall include (flow-down) on contracts to its sub-tier sources all of the applicable technical and quality requirements contained in the Southco contract, including quality system requirements, statutory and regulatory requirements, the use of Southco designated sources, and the requirement to document and control key characteristics and/or key processes and to furnish certifications and test reports as required.Obsolescence ManagementSupplier shall inform Southco of all items that will become obsolete within the next 12 months. Supplier shall maintain regular communication with sub-tier Suppliers with regard to possible raw material or component obsolescence. Supplier shall notify buyers of obsolescence within a reasonable amount of time so as not to disrupt delivery schedules.InspectionsSouthco (along with its customers and governmental agencies) shall have the right to enter Seller’s facilities (and those of its approved subcontractors) at reasonable times to inspect (and if applicable test) the facility, goods, materials, records (including without limitation the quality systems) and any property of Southco covered by this order. Southco’s inspection of the goods, whether during manufacture, prior to delivery or within a reasonable time after delivery, shall not constitute acceptance of any work-in-process or finished goods.Records Retention RequirementsQuality records that are created and/or retained by the supplier must be complete, legible, and identifiable to the corresponding product/process. Quality records shall be maintained for a minimum of 10 years or as specified on the purchase order. Records will be made available upon request by Southco or its customers at no charge.If Southco requests a hard copy of any quality record, supplier must fax or send an electronic copy within four hours of the request.Counterfeit Part PreventionSupplier represents and warrants each of the following: Only authentic materials are used in goods delivered to Southco.Goods or services delivered or sold to Southco contain no Counterfeit Items.Supplier shall only purchase materials or goods for resale to Southco from Authorized Sources.These representations and warranties shall apply regardless of the source of such goods or materials and irrespective of whether Southco has approved such source in advance.If Supplier sells or otherwise furnishes Southco with any Counterfeit Item, Southco shall have the right to impound such items, and Supplier shall promptly replace such items with items acceptable to Southco. In such case, Supplier shall be liable to Southco for all costs relating to impoundment, removal, replacement and proof of physical destruction. Southco may withhold payment for any Counterfeit Items and may turn such items over to governmental authorities for investigation. Supplier shall be responsible for and communicate this requirement down to all sub-tier suppliers to prevent the inadvertent use of counterfeit parts and materials.Conflict MetalsThe Dodd-Frank Wall Street Reform and Consumer Protection Act was adopted August 22, 2012. It prohibits the use of metals derived from Conflict Minerals in goods (any material, part, sub-component, component, or product, which is to be incorporated into a product). Conflict Mineral is defined as an ore columbite-tantalite (coltan), cassiterite, gold, wolframite or their derivatives originating from a Conflict Region that is processed to create the following metals: Tantalum, Tungsten, Tin, and Gold.A conflict region is a geographical region involved in armed conflict where mining operations and proceeds may contribute to serious human rights violations. Currently, the Democratic Republic of Congo and adjoining countries are considered Conflict Regions.To help Southco keep conflict minerals out of our supply chain suppliers are required to do the following:Supplier declares that any material, part, sub-component, semi-finished or finished product supplied to Southco either directly or via third parties do not, to the best of its knowledge, contain any metals (Tantalum, Tungsten, Tin, Gold) originating from the Democratic Republic of Congo and its adjoining countries as defined in Section 1502 of the “Dodd-Frank Wall Street Reform and Consumer Protection Act” and its affiliated laws or regulations.Supplier will proactively undertake due diligence and continuous monitoring of our supply chain to avoid direct or indirect procurement of Conflict Metals.If the supplier becomes aware of the use of metals that have been derived from Conflict Minerals in any goods supplied to Southco, it shall immediately notify Southco. Such notification shall include tracking information to specify which goods may contain these materials.Systems and Procedures AccessAll Southco specific procedures and documents referenced can be obtained by contacting your Southco Supply Chain contact or email to: scm@.All AIAG documents can be obtained at: .SUPPLIER ACKNOWLEDGEMENTPlease sign & return this page to SouthcoDear Southco,I have read Southco’s Business Conduct, Ethics Expectations, and Key Requirements for Suppliers & Contractors and acknowledge all the terms and conditions that apply within and will ensure total compliance at all times, and understand any violation to the policy risks immediate loss of all existing and future business.Supplier Name:Supplier Representative:Title:Signature:Date: ................
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