Supplier Handbook - Cummins Inc.

1 Supplier HandbookMarch 20141 IndexA. Purpose ..3B. Intent ..3C. Scope ..3D. Cummins Supplier Code of Conduct ..4E. Acronyms and Definitions ..5-9F. Enterprise Risk Management ..10-11G. Quality System Requirements ..12-13H. Continual Improvement ..14-15I. Supplier Selection ..16J. Design Control ..17K. Advanced Product Quality Planning (APQP) ..18-19 L. Production Part Approval Process (PPAP) ..20-25 M. Non-Conforming Material ..26-28 N. Maintenance and Improvement ..29-30 1. Process, Product, and Supplier Change Control 2. Quality DataO. Perpetuating the SQI Program ..31P. Other Cummins Quality Requirements for Suppliers ..32-33 1. Record Retention 2. Access to Supplier Sites 3.

2 Quotation Criteria 4. GeneralQ. Additional Information ..34-352 Cummins Supplier Quality Improvement ProgramSupplier SelectionContinual Improvement PPAP Maintenance APQPISO/TS3A. PurposeBought out finished and direct purchased material make up over 70% of the total cost of the Cummins finished product. Therefore, it is essential to have clear, documented requirements and interaction processes between Cummins and its direct material Supplier Handbook communicates Cummins Customer Specific Requirements and expectations to Cummins direct material suppliers. These requirements and expectations are known as the Supplier Quality Improvement Program (SQIP), which is depicted in the logo on the previous IntentThe SQIP was developed with three basic principles.

3 1. Incorporate quality as one of the key considerations in new Supplier Assure that quality tools and processes are utilized by suppliers in the development of, and revisions to their products and Provide a framework for sustaining and improving the quality of Supplier products and ScopeThis Supplier Handbook applies to all suppliers of direct material to Cummins Inc., referred to as Cummins in this Supplier Cummins Supplier Code Of ConductCummins values its global supply partners who share the Company's commitment to quality and value, and who operate under a philosophy that focuses on integrity and "doing the right thing." To support that philosophy, Cummins has a Code of Business Conduct for our employees and a Supplier Code of Conduct specifically for its supply base worldwide.

4 The Supplier code outlines the Company's expectations that all suppliers will comply with certain business and ethical standards and to the laws of their respective countries, all other applicable laws, rules and regulations. The code applies to all businesses that produce goods or provide services for Cummins and any subsidiaries, joint ventures, divisions or with the principles of the Cummins Supplier Code of Conduct is required to do business with Cummins . Cummins requires a verification response from all suppliers before they are added to the Supplier database. Since Cummins does business around the world, it has translated the code and response letter into 14 languages so that the intentions and expectations are more information on the Supplier Code of Conduct or to complete the Supplier Code of Conduct Response Letter, visit the Cummins Supplier Portal under the heading Corporate Acronyms and DefinitionsCummins and industry standard acronyms are used throughout the Supplier Handbook for brevity.

5 1. AIAG Automotive Industry Action Group is an industry organization that, among other responsibilities, provides administrative support to the Automotive, Truck and Heavy Equipment industries for Supplier quality requirements, and distributes related manuals and APQP Advanced Product Quality Planning is a structured process for producing a quality plan, which supports the development and production of a product that will satisfy the customer. Reference the AIAG manual (Advanced Product Quality Planning and Control Plan APQP ) for a complete BU A specific Business Unit within Business Continuity Planning (BCP) The Business Continuity Plan is a collection of guidelines and procedures that proactively outline disaster mitigation and response before, during and after the occurrence of an adverse incident, facilitating the continuity of critical functions.

6 An adverse incident is an internal or external event or situation which may result in unacceptable interruption to the organization's operational status and/or its ability to provide customer service. The objective of the business continuity plan is to help establish & maintain a basic level of operations following a disruptive event until normal operations can be fully Component Certification A process whereby the Supplier certifies, in some cases with measurement data, that components are within specification. 6. Cummins Seven Step Problem Solving A disciplined method for problem solving which emphasizes analysis for the true root cause and verification that the corrective action is effective in eliminating the root cause.

7 The Seven Steps in the process are:1) Identify the Problem2) Determine and Rank Potential Root Causes3) Take Short Term Action and Containment4) Gather Data and/or Design Test5) Conduct Tests, Analyze Data, Identify Root Cause(s), Select Solution6) Plan and Implement Permanent Solution7) Measure, Evaluate and Recognize the Team67. Classification of Characteristics (C of C) The process of classifying product and process characteristics for the optimum utilization of engineering, manufacturing, and supply base resources. In TS16949 terms these are Customer Designated Special Characteristics. C of C has four types of characteristic:a. Critical Characteristic A dimension, material property, physical feature, etc.

8 Which, if not to specification could be a safety risk, or will certainly cause operational failure or a loss of performance. b. Major Characteristic A dimension, material property, physical feature, etc. which if not to specification will probably cause operational failure, loss of performance, increased service cost or disruption to manufacturing. c. Minor Characteristic A dimension, material property, physical feature, etc. which has not been classified as Key, Critical or Major. It exists only as a general class to describe characteristics that do not fit other classifications. Although not classified as Critical, Major, or Key the Supplier is responsible for ensuring these characteristics meet the print specification.

9 Cummins Turbo Technology calls these Standard Characteristics. d. Key Characteristic A dimension, material property, physical feature, process, etc. that has been identified as being key to subsequent manufacturing or assembly operations. Key characteristics may be identified by the SQI Engineer. e. Significant Minor (aka Six Sigma Characteristic) A measureable dimension, material property, physical feature, or other characteristic that has been identified by Dimensional Variation Analysis (DVA) or other analysis as being important to be monitored during the manufacturing of the component. Note: Classification of Characteristics is intended to serve as a guide for the development of Supplier process quality plans not to relieve suppliers of the responsibility to produce all features to CQMS Cummins Quality Management Solutions.

10 This refers to a group of key quality functions and the various software tools that support those Direct Material Components and assemblies used in Cummins production processes that become part of the salable product. They are typically included as a Bill of Material Direct Part Marking Defined by Cummins Engineering Standard (CES)18287 which prescribes methods for bar-code identification (1D, 2D, etc) on required products. 11. Disruption Score The process at Cummins of assigning a numerical score to material non-conformances based on the significance of the disruption to the Cummins assembly DQR Drawing Quality Review A detailed cross-functional review of each drawing which ensures that the component is producible to the specification, drawings are accurate and complete, and suitable for PPAP (when applicable)