Supplier Quality Manual

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Contents

Introduction

Supplier Code of Conduct

Suppliers shall ensure operations are being performed in a manner that is appropriate, as it applies to their ethical, legal, environmental, and social responsibilities. Below is a listing of the basic requirements:

Compliance with Local Laws and Regulations

Suppliers must adhere to the laws and regulations in the locality in which they reside. This includes all local, state, and federal laws/regulations in the country of origin.

Compliance with Environmental, Health, and Safety Laws

The Supplier must maintain and operate its manufacturing/production facilities and processes in accordance with local, state, and federal laws/regulations in the country of origin. At no time shall any Chess Group person be exposed to hazardous materials or unsafe conditions as a result of Supplier shipments to a Chess location, or while visiting a Supplier’s location. For items with inherent hazards, safety notices must be clearly visible. As applicable, documented safety handling and protection information must be provided. Chess Group maintains their own EHS policies as well.

Non-Discrimination

Suppliers shall not discriminate against race, color, sex, religion, age, physical disability, political affiliation, or other defining characteristics as prohibited by local, state, and federal laws/regulations in the country of origin.

Labor

  • Suppliers shall employ workers of minimum legal age in accordance with local, state, and federal laws/regulations in the country of origin. Child labor laws must be followed.
  • Suppliers shall not practice the use of forced or indentured labor.
  • Suppliers shall not exceed the daily and weekly working hours as permitted by local, state, and federal laws/regulations in the country of origin.
  • Suppliers shall compensate workers in accordance with local, state, and federal laws/regulations in the country of origin. This includes minimum legal wage, overtime wages, and benefits (required by law).

Ethics

Evidence of corruption, bribes, improper advantage, or any other form of illegal practice by the Supplier or associated operations will terminate all relations with Chess Group. Suppliers will conduct their business in a manner that meets the ‘Code of Ethics’ policy of Chess Group Inc.

Code of Conduct and Policy Enforcement

This policy applies to Suppliers and their sub-tier sources. It is the responsibility of the Supplier to verify and monitor compliance of this code at their operations and sub-tier source operations.

Confidentiality

The Supplier shall ensure the confidentiality of Chess-contracted products and projects under development, and related product information, as well as intellectual property shared as a result of the working relationship.

Conflict Materials Policy

All suppliers must adhere to our Conflict Materials Policy regarding Tin, Tungsten, Tantalum, and Gold.

Supplier Quality Management System Overview

Chess Group requires all of its suppliers to maintain a Quality Management System

Quality System Requirements

Suppliers shall maintain a Quality Management System (QMS) suitable to the products and services provided to Chess, that is certified by an accredited third-party certification body to the latest version of one or more of the following, as applicable: ƒ* ISO 9001 - Quality Management System Requirementsƒ* AS/EN/JISQ9100 - Quality Management System Requirements (Aerospace)ƒ* ISO/TS 16949 - Quality System Requirements (Automotive, Truck & Heavy Equipment)ƒ* ISO 13485 - Quality Management System Requirements (Medical)See the following sources for a listing of accredited certification bodies:

  • The U.S. accreditation body for management systems can be found at ANSI-ASQ National

Accreditation Board, http://www.anab.org. For a list of Accreditation Boards from other countries, refer to the International Accreditation Forum at http://www.iaf.nu.

In the absence of third-party certification, depending on the product, its application, value, and criticality, the Chess Buyer and Quality representative may authorize the acceptance of other evidence of compliance. This may include second-party (Chess Group) audit or first-party (self) assessment to the applicable criteria above, or to a set of alternative basic quality requirements.

Quality Manual

Upon request, the Supplier shall furnish Chess Group with a copy of the Supplier’s Quality Management System Manual, which is to be current and approved by the Supplier's management, including or making reference to related documents. The quality management system documentation shall include Supplier’s statements of a quality policy and quality objectives. Top management shall define quality objectives and measurements which should address customer expectations and be achievable within a defined period of time. The Supplier shall promptly notify the Chess Buyer of any substantive changes to the Supplier’s quality management system or personnel

Supplier Selection, Assessment, and Approval

Supplier Selection

Potential Supplier’s go through a selection process and upon approval are listed in the Approved Supplier’s List. Sourcing is done from those listed in the Approved Supplier’s List and remaining in good standing. An evaluation process is conducted to ensure all Supplier’s continue to meet Chess' expectation for quality, delivery, responsiveness, ability to stay current with technology and cost.

Continuous Improvement

It is our expectation that Supplier’s implement a visual business operating system (BOS) that involves all employees in driving continuous improvement activities through the organization. It is expected that this measurement based continuous improvement methodology be utilized to prioritize and focus company resources on the most important aspects of the business such as safety, environmental, quality, cost, delivery and human development.

Costs of Lean Manufacturing

We recognize that adopting Lean Manufacturing Principals is an inherently more cost effective method of managing a business. Preference will be given to Supplier’s who adopt these principles at a plant level and company- wide. These programs should include training of all employees to these principles, holding workshops (improvement events), establishing measurable, communicating results to all employees, and cascading the expectations to sub-tier Suppliers.

Quality Management System

All present and potential suppliers to Chess Group shall be able to demonstrate, with evidence that they have implemented and maintain a Quality Management System that conforms to the requirements detailed in ISO 9001:2008. Third party registration to ISO 9001:2008 (or TS-16949:2009) is required by Chess Group for automotive and some castings Suppliers.

Environment, Health, and Safety

The environment is a priority to Chess Group and therefore Suppliers are encouraged to be certified to ISO 14001 or working toward certification. Further, the Supplier shall be able to demonstrate, upon request, compliance with local, national, and international standards and regulations regarding health, safety, and environmental issues relevant to the Supplier’s business.

Supplier Assessment

A Potential Supplier Assessment (PSA) by Chess Group Supplier Quality Assurance may be required prior to the approval of a purchasing agreement. The PSA is structured to evaluate the supplier’s QMS conformance to TS 16949, ISO 9001:2008, AIAG requirements, and Customer Specific Requirements. The PSA may contain additional requirements, which will be communicated to the supplier prior to the survey.

Non- automotive suppliers may be required to conduct a self-audit as an interim approval at the discretion of Chess Group Supplier Quality Assurance.

Supplier Approval

The Chess Group operation buyer will notify the nominated Supplier of a new business award by issuing a Purchase Order for the program. In special circumstances, a letter of intent may be issued and can only be issued by ChessGroup Inc. Corporate Purchasing Department. The Supplier will submit FAI, PPAP, or other requested paperwork based on Purchase Order acceptance, other discretionary requirements will be clearly identified as a condition of the Purchase Order.

General Requirements

Contractual Requirements

Upon accepting a Chess Group contract, the Supplier is responsible for compliance to all contract (e.g., engineering drawing, specification, purchase order) requirements. All documents, drawings and specifications, regardless of origin, are applicable to the Supplier when specified in the contract or documents referenced in the contract, and are required to be used at all levels of the supply chain. Unless otherwise specified in the contract, the document revision in effect on the date of issue of the contract applies to the contract. Neither audit, surveillance, inspection or tests made by Chess, representatives of Chess or its customer(s), at Supplier's facilities, at any sub-tier facilities, or upon receipt at Chess , relieves the Supplier of the responsibility to furnish acceptable products or services that conform to all contract requirements; nor does it preclude subsequent rejection by Chess or its customers.

E-Business Requirements

Chess Group is currently using and continually expanding the use of electronic business tools to facilitate day-to-day activities using electronic linkages between Chess internal operations as well as with Chess Suppliers and Customers. Contracts, delivery schedules, notification of product rejections, requests for corrective action, etc. may be transmitted to Suppliers electronically, and Chess expects that Suppliers will adopt these tools to reduce errors and improve efficiency. For a list of e-business requirements and opportunities contact the Chess Buyer.

Business Continuity

The Supplier should have a business continuity plan which would allow for the safeguarding, storage and recovery of engineering drawings, electronic media, and production tooling in the event of damage or loss. This plan should also contain contingency plans to satisfy Chess requirements in the event of significant utility interruptions, labor shortages, equipment failure and field returns.

Product Qualification

This section defines the generic requirements for production part qualification and approval. The purpose is to determine if all Chess Group design and specification requirements are properly understood by the Supplier and that the manufacturing processes have the capability to consistently meet these requirements.

First Article Inspection

As a minimum, a First Article Inspection (FAI) is required to initially qualify a part/process for Supplier approval, unless the PPAP process (below) is used instead. Furthermore, a new FAI may be requested if there is an extended gap of time since last production. The FAI requires that all features and characteristics on the design specification and control plan be inspected and verified prior to production. Actual measured values shall be recorded as opposed to general statements of conformance or other notations simply indicating acceptance. For First Article Inspection guidance, see AIAG PPAP Manual (Appendix C, D, & E) – Production Part Approval Process (available from www.aiag.org). When submitting a First Article Inspection report, the Supplier should use the form provided by the Chess Buyer. Otherwise, a generic or other convenient and equivalent may be used. In addition to an FAI, Suppliers shall, as a minimum, develop a Control Plan by identifying special product and process characteristics that are key to achieving quality. The Supplier shall also include those special characteristics designated by Chess Group in the drawing, specification, or contract.

Production Part Approval Process

When required by the Chess Group contract, the Supplier shall submit to Chess a more comprehensive Production Part Approval Process (PPAP) qualification package. The Supplier is responsible for obtaining the latest revision of the applicable AIAG core tool reference manuals and forms.The AIAG Core Tools Manuals are:

  • Advanced Product Quality Planning (APQP) and Control Plan
  • Production Part Approval Process (PPAP)
  • Potential Failure Mode and Effects Analysis (FMEA)
  • Measurement Systems Analysis (MSA)
  • Statistical Process Control (SPC)

When PPAP is specified on the Chess Group contract, the Supplier shall submit a “Level 3” PPAP package to the Chess Buyer which consists of the following items, unless otherwise directed. See AIAG PPAP Manual, Table 4.2, for complete list of submission requirements for each level of PPAP. Also, see AIAG APQP Manual for related guidance on associated product and process design and development methodology and techniques.

Chess Group maintains a template we prefer our suppliers use which is our Supplier PPAP Template. We also need details on your Equipment and Processes which we collect using our

Design Record, Change Documents, and Customer Approval

The Supplier shall have the design record for the saleable product/part and components; any authorized engineering change documents for those changes not yet recorded in the design record but incorporated in the product, part or tooling; and evidence of Chess Group approval. See AIAG PPAP Manual.

Process Flow Diagram

The Supplier shall have a visual diagram of the proposed or current process. This diagram shall clearly describe the production process steps and sequence, and meet the specified Chess needs, requirements and expectations. See AIAG PPAP Manual.

Failure Mode and Effects Analysis

Suppliers shall develop a Process FMEA in accordance with, and compliant to, Chess-specified requirements. A single Process FMEA may be applied to a process manufacturing a family of similar parts or materials if reviewed for commonality by the Supplier. See AIAG FMEA Manual.

Measurement Systems Analysis

The Supplier must develop or obtain gages and standards to control their processes and to determine product conformance to specifications. Variable gages and measurements are preferred. Alternative methods, gages or standards may be used at Chess Group to verify the Supplier’s inspection results. Chess may request the Supplier to participate in a correlation study to compare Supplier measurement results against results obtained by Chess gages and methods. The Supplier shall perform Measurement Systems Analysis (MSA) studies, e.g., gage repeatability & reproducibility, bias, linearity, stability, for all new or modified gages, measurement, and test equipment. See AIAG MSA Manual.

Control Plan

The Supplier shall have a Control Plan that takes into account the output from the FMEA and defines all methods used for process monitoring and control of special product/process characteristics. The control plan covers three distinct phases: prototype, pre-launch, and production. A single control plan may apply to a group or family of products that are produced by the same process at the same source. See AIAG APQP Manual.

Process Capability Study

Process Capability Index (Cpk) is a comparison of the inherent variability of a process output to specification limits under statistically stable conditions. Most methods for estimating capability require that the characteristic being evaluated is approximately normally distributed, and in statistical control. The distribution should be determined prior to estimating capability. If the process is not in statistical control, all assignable causes must first be identified and removed. Special techniques are available for calculating capability when inherent assignable causes, such as tool wear, are present. Definitions and calculations for Cpk and Ppk indices are found in AIAG PPAP and SPC Manuals. Unless otherwise approved by Chess, the Supplier shall use the following as acceptance criteria for evaluating initial process study results of special characteristics for processes that appear stable:

Results Interpretation
Index > 1.67 The process currently meets acceptance criteria.
1.33 ≤ Index ≤ 1.67 The process is marginally acceptable.
Index < 1.33 The process is not acceptable.

Certification and Test Reports

The Supplier shall provide evidence that the following verifications required by the design record and control plan have been completed and that results indicate compliance with specified requirements:

  • Dimensional Results – for each unique manufacturing process, e.g., cells, lines, molds, patterns, a record of actual results of all characteristics.
  • Material and Performance Test Results – for all parts and product materials with chemical, physical, metallurgical, and functional performance requirements.
  • Qualified Laboratory Documentation – documentation showing laboratory results of the qualifications for the type of measurements or tests conducted and the standards used.
  • Sample Product – actual samples as required by the applicable specification or Chess contract.
  • Master Sample – retain a master sample, when required by the Buyer, and make available upon request.
  • Checking Aids – if requested by the Buyer, submit part-specific assembly or component checking aids.
  • Records of Compliance – copies of records showing compliance to all applicable Chess-specific requirements.

See AIAG PPAP Manual for applicable forms and instructions.

Part Submission Warrant

Upon completion of all PPAP requirements, the Supplier shall complete the Part Submission Warrant (PSW). A separate PSW shall be completed for each part number unless otherwise specified by the Chess contract. Upon receipt, Chess will review and either approve, reject, or provide interim approval. See AIAG PPAP Manual for forms and instructions.

Special Processors

Chess Group has adopted the Nadcap accreditation process as part of its control for all special process suppliers. It is the Supplier’s responsibility to submit current Nadcap accreditation certificates toChess Group Quality Dept.; Chess Group must be notified regarding any change of certification status.It is the Supplier’s responsibility to keep Chess Group informed as to which special process suppliers they are using.

Special Processes can be mainly categorized as:

  • Heat Treat
  • Plating
  • Drilling

Measurement, Analysis, and Improvement

Error-Proofing

The Supplier should use error-proofing devices and techniques as a form of process control; especially for repetitive functions, difficult tasks prone to mistakes, or where the cost of error is high.

Work Instructions

The Supplier shall prepare documented work instructions, as necessary, for all employees having responsibilities for the operation of processes that impact product quality. These instructions shall be maintained current and accessible for use at the work station.

Control of Monitoring and Measuring Devices

The Supplier shall determine the monitoring and measurement to be undertaken and the monitoring and measuring devices needed to provide evidence of conformity of product to determined requirements. As a minimum, where necessary to ensure valid results, measuring equipment shall:

  1. be calibrated or verified at specified intervals, or prior to use, against measurement standards traceable to international or national measurement standards; where no such standards exist, the basis used for calibration or verification shall be recorded; and
  2. be identified to enable the calibration status to be determined.

The Supplier is preferred use procedures to control Measuring and Test Equipment (M&TE) that are in compliance with the requirements of ANSI/NCSL Z540-1 or ISO 10012.

Statistical Process Control

Where specified in the Control Plan, the Supplier is required to apply effective statistical process controls. Suppliers should consult the Statistical Process Control (SPC) manual published by AIAG for guidance, methods, examples, and related reference information.

Preventive Maintenance

The Supplier should identify key process equipment and provide resources for machine/equipment maintenance activities and develop an effective planned total preventive maintenance system.

Source Inspection

Supplier’s products or services may be subject to source inspection by Chess Group, representatives of Chess Group or applicable government or regulatory agencies. Source inspection requirement will be included on the contract and may apply to any and all operations performed by the Supplier or the Supplier’s sub-tier sources, including prior to delivery of products to Chess. The Supplier shall provide the necessary access, equipment and resources required to effectively accomplish the source inspection.

Sampling Inspection

The Supplier is responsible for 100% verified quality for all items delivered to Chess Group. For all custom parts, when the Supplier elects to use statistical methods for the acceptance of products or processes, such methods are preferred to be in compliance with the requirements established by SAE ARP9013, 9013/1, 9013/2, 9013/3 and 9013/4 as applicable, except that in all cases the sample sizes shall be AQL 4.0 or higher (i.e., AQL 1.0, .65, etc.) and the criteria for lot acceptance as zero (i.e., C=0). A copy of Suppliers statistical process control plan shall be furnished to Chess upon request.

Chess Supplied Gages

Gage Control: The supplier is responsible for maintenance and repair of gages. The supplier is also responsible for calibration necessary to assure accuracy and conformation of gages.

Change Control

Change Control Process

The Supplier shall have a process to ensure that relevant versions of applicable documents furnished by Chess Group (as well as those specified of external origin) are available at points of use. The Supplier is responsible for the timely review, distribution and implementation of all Chess Group standards/specifications and changes in accordance with the schedule required by Chess. Timely review should be as soon as possible, and shall not exceed two working weeks. The Supplier shall maintain a record of the date on which each change is implemented in production. Implementation shall include updated documents.

Supplier Change Requests

Suppliers shall not make changes to their processes, location, facilities, equipment, material, product design (or any change which may affect product design or function) without written approval from theChess Buyer for:

  • Correction of a discrepancy on a previously submitted part;
  • Product modified by an engineering change to design records, specifications, or materials; or
  • Any planned changes by the Supplier to the design, process, or manufacturing location, such as:
    1. Use of other material than was used in previously approved part or product
    2. Production from new, additional, replacement or modified tools, dies, molds, patterns, etc.
    3. Production following upgrade or rearrangement of existing tooling or equipment
    4. Production from tooling and equipment transferred to a different plant site or from an additional plant
    5. Change of sub-tier Supplier for parts, nonequivalent materials, or services (e.g. heat treating, plating, etc.)
    6. Product produced after tooling has been inactive for production for 12 months or more
    7. Change to test/inspection method – new technique (no effect on acceptance criteria)
    8. For bulk materials: new source of raw material from new or existing Supplier, or change in product appearance attributes, etc.
    9. Use of any non-conventional manufacturing methods such as electro-discharge machining (EDM), electro-chemical machining (ECM), laser or abrasive water jet metal cutting, flame spray coatings, etc.

Logistics

Expedited Freight

All expedited freight (ground or air) payable by Chess Group must be authorized in writing or e-mailed by the Chess buyer. All invoices for expedited freight must be accompanied with the written authorization to ensure payment.

Package Damage

The supplier is responsible for damage to parts or packaging all the way to Chess Group's dock. This includes part damage, internal package damage or damage resulting from improper packaging, mold and mildew, or any other logistical issue causing cost to Chess Group but not the fault of Chess Group. All charges related to improper packaging material, package choice will be charged back to the supplier. Please note, this excludes damage of parts from mishandling of all shipment and logistics companies.

Quantities

Supplier’s must ship parts in pack quantities equal to the material releases. Any deviation to this has to be pre-approved. Any delay in shipping to schedule must be communicated to Chess immediately to avoid downtime issues.

Timeliness

It is critical to Chess operation that shipments leave the Supplier’s facility and arrive at Chess' warehouse on time. Failure to deliver shipments as scheduled may result in charges for Chess Group increased costs. Suppliers must notify Chess immediately if the selected carrier does not pick up goods as scheduled.

Quality & Timeliness Issues

It is Supplier’s responsibility to automatically expedite should the Supplier’s foresee or incur a past due situation.

Age Sensitive - Life Limited Parts

Parts shall be segregated and marked by manufacturing lot/cure date when shipped to Chess Group.

Customs

All material shipping cross borders must have “Country of Origin” and “HS Tariff Classification” clearly marked on the commercial invoice along with a written description and value in currency of transaction. Suppliers are responsible for accurate completion of customs documents and ensuring all documents are given to carrier at time of shipment for proper clearance through Chess Groups dedicated broker. Any delays in Customs and/or penalties for incomplete or inaccurate information will be the responsibility of the Supplier.

All charges resulting from the export and return of defective product shall be the responsibility of the Supplier.

Important Note on Carton / Pallet Quantity Reporting

All suppliers MUST report actual number of cartons to Customs, in AMS and to freight forwarder. Simply sharing the number of pallets is unacceptable. You will be held responsible for lost merchandise as a result of not reporting carton quantity for each part and each shipment.

Important Note on ISF Filing

Offshore shippers must inform freight forwarder of all information needed to complete the Importer Security Filing form (ISF-10 obtained by contacting the freight forwarder being used) for US customs at time of shipment. Suppliers will be responsible for any costs or penalties relating to Suppliers failing to provide certification or providing fraudulent certification. If a shipper is chosen other than our preferred shipper, and we are fined with the ISF penalty of $5,000, you agree to pay this by supplying us. If you use our preferred shipper, you will be relieved from this fine in the future.

Any vendor or shipper which does not follow the below method of information exchange is responsible for cost due to delay, storage, or transfer that Chess incurs prior to it landing at our warehouse.

Process for Shipping to Chess Group USA from International Sources By Boat or Air

  1. Stamp the Original Bill of Lading - Telex Release
    1. Please make sure Vista Global is set as a secondary Notify Party. Please use the address below in step 5 and a phone number of 847.719.7705
  2. Create an email with the attached Telex Release Original BOL
  3. Also attached the Packing Slip and Invoice
  4. Email to Vista Global and CC Chess Group
    1. Email to Import.Ocean@vistaglobal.us
    2. CC documents@chessgroupinc.com
  5. Send 1 Original Bill of Lading to Vista Global Headquarters
    • VistaGlobal Logistics - Tradeserve
    • 115 N Main Street
    • 2nd Floor
    • Algonquin, IL  60102
  6. Send any other Original Bill of Ladings to Chess Group Headquarters
    • 7010 Fly Road
    • East Syracuse, NY  13057

Process for Shipping to Chess Group Mexico (Ajedrez) from International Sources By Boat or Air

  1. Stamp the Original Bill of Lading - Telex Release
    1. Please make sure GTS Customs is set as a secondary Notify Party. Please use the address below in step 5 and a phone number of 899 922 7204 (Marco)
  2. Create an email with the attached Telex Release Original BOL
  3. Also attached the Packing Slip and Invoice
  4. Email to GTS Customs and CC Chess Group
    1. Email to marco.centeno@servicios-gts.mxs
    2. CC documents@chessgroupinc.com
  5. Send 1 Original Bill of Lading to Chess Group Headquarters
    • 7010 Fly Road
    • East Syracuse, NY  13057

Shipments with high value and weight please send them to Manzanillo Port.

Small shipments please send them to our Hidalgo, Tx warehouse via In-bond

Contacts for Forwarding Offices

China

Casia Global Logistics Co.,Ltd   Hangzhou Branch

Room 619, 1st Building of Lv Jing Guo Ji, Tong Yi Rd., Gongshu District, Hangzhou City, Zhejiang Province, 310000

Phone: +86 571 8817 3621

Cell: +86 157 5710 1136

Name Email
Lareine Li Lareine.li@casiaglobal.com CC: nst@casiaglobal.com
Taiwan

MAYTRANS INTERNATIONAL CORP.
26F-6 NO. 31 HAI PIEN ROAD, KAOHSIUNG, TAIWAN
TEL: 886 7 3362189
FAX: 886 7 3367689

Name Email
Ms May Wang mayw@maytrans.com.tw
Ms Jane jane@maytrans.com.tw

Revisions

Revision Table

Authors
Rob Dugan
Aphrodite Rose