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Mihrem Emin

Manager, Site STA Exterior within Purchasing organization

Volvo Car Corporation Quality assurance on supplied products

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PURPOSE OF THIS PRESENTATION

- Give You an introduction to VCC;s view, demands on suppliers

and collaborating principles within the topic of Quality Assurance

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SUPPLIER QUALITY

In order to achieve World Class Customer Satisfaction and Safety

VCC will select and develop its Global Supply base to provide the

highest Quality & Manufacturing Capability.

Customer satisfaction and profitability require delivery of high-quality

products and services by the Volvo Car Corporation. Through

knowledge of customer needs, the Volvo Car Corporation together with

its suppliers continuously improves the quality of its products and

services.

STA (Supplier Technical assistance) is responsible for:

•Supporting suppliers regarding quality assurance activities.

•Approving PSWs for new and changed parts.

•Developing suppliers as regards Quality Assurance and Lean Production.

•Reporting supplier readiness for new program management.

•Evaluating potentially new suppliers

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SOURCING FOR QUALITY

Sourcing for Quality ensures that supplier quality and program risk

assessments are included in the sourcing process for awarding new

business.

The pre-requisite for a new supplier to become a future VCC supplier is

a STA judgment that the supplier has potential to achieve the Volvo

Cars Quality through Excellence Award VQE within 6 months after start

of production.

The buyer will ask the potential new supplier to conduct a self-

evaluation of the Manufacturing Site Assessment (MSA) before a STA

visit.

The pre-requisite for a current supplier to be considered for new

business is VQE status = YES. This correlates to a rating A in all ingoing

award elements.

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MANUFACTURING SITE ASSESSMENT (MSA) The MSA evaluates whether the supplier is performing up to customer

expectations and will identify any opportunity for improvement.

The manufacturing site assessment addresses:

Planning and Demonstration of Manufacturing Process Capability:

• What is a given facility capable of?

• Have they planned to best leverage their manufacturing and quality potential?

Variability Improvements (Consumer Driven 6 Sigma):

• Does the manufacturing process demonstrate ongoing variability reduction on current

business?

• Does a supplier plan introduction of variability reduction techniques for new programs?

Manufacturing Efficiencies:

• Does the supplier exhibit a systematic approach to lean manufacturing for current parts?

• Are surrogate data, First Time Through (FTT) and Overall Equipment Effectiveness (OEE)

used to improve new programs?

• Has the supplier achieved lean manufacturing improvements on current business?

Customer Satisfaction:

• Has the supplier achieved customer satisfaction improvements on current business?

• Are these improvements documented in a robust Quality Operating System (QOS)?

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MANUFACTURING SITE ASSESSMENT (MSA)

The MSA consists of 16 chapters, checklist is used to provide

objective evidence that satisfies the expectations

A ranking system with Red/Yellow/Green sets the status

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MANUFACTURING SITE ASSESSMENT (MSA)

Extract of checklist chapter 1

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Dear supplier, Welcome to join our strategic journey towards zero quality defects. In the first quarter of year 2011 Volvo Cars launched our new supplier quality recognition: Volvo Cars Quality Through Excellence Award > VQE Award < The relationship we hold with you our supplier is of key importance to us and it is based on mutual respect and openness. Jointly and side by side we work together to develop, launch and manufacture the vehicles which shall exceed our customer expectations. The VQE Award will help you to understand our full expectations as a customer and to identify your weaknesses and strengths while managing projects, vehicle launches, daily production and the aftermarket. The reward for improving quality and maintaining the VQE Award over time is the recognition that your facility is among the best in the industry. As a VQE supplier with the award in good standing your Company furthermore is perceived by us as the supplier of choice while sourcing new business. Please join us in the quest for quality through excellence.

Table of Contents Introduction - Prerequisites 1 to 2 The VQE Award 3 Award elements rating & score 4 Award thresholds 5 to 6 Award elements detailed descriptions 7 to 23 Award approval / withdrawal 24 Supplier site award codes 25

VOLVO CARS QUALITY THROUGH EXCELLENCE AWARD (VQE)

Extract of VQE-manual

VQE Manual

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Introduction The VQE Award is based on a set of fundamental quality and manufacturing disciplines which, when followed, ensure a supplier’s success and drive a supplier’s continuous improvement. Our award is created with a positive mindset and focus is on recognition and cooperation. Suppliers are expected to attain the award qualifying rating in all ingoing award elements and to put the tools in place to maintain excellence and also to continuously improve over time. Suppliers are not expected to achieve the VQE Award independently – it is a relationship. Volvo Cars Supplier Technical Assistance, STA stands ready to support with manufacturing expertise throughout the journey towards zero defects.

General prerequisites • Site must be an external manufacturing location of production

or service parts • Site must be assigned to a STA site engineer who is

responsible for verifying VQE Award eligibility. • The site is set as STA Active in VSIM • Site has deliveries to the customer the previous six months • When a site is assigned Production and Service STA, the

Production STA Site Engineer has the VQE Award process lead. However, the two engineers must collaborate on decisions.

• The supplier is fully registered in VSIM and have performance data in all award elements.

1 2

• Award status is based on matured data. • The VQE Award can also be attained by a directed Tier 2

supplier. In VSIM all performance data will not be available but surrogate data may be used and will then be reviewed by STA.

The award approval is provided once also the Tier 1 supplier endorses the Award.

• The VQE Award is a formal recognition from the Customer to the Organization

VOLVO CARS QUALITY THROUGH EXCELLENCE AWARD (VQE)

Extract of VQE-manual

VQE Wheel

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Element rating & score Each element is individually rated and scored against the award threshold table, see page 5 & 6. The rating is set to three possible levels: A - Indicates that the supplier is fully capable B - Indicates that the supplier is capable C - Indicates that the supplier is incapable and might have severe deviations in one or more of the award elements. To qualify for the VQE Award the supplier shall achieve the

rating A for all elements for the period of at least three

consecutive months and to maintain the award the

supplier needs to stay within rating A in all elements.

The base line score is 0 for all suppliers Scores are set from 0 points up to 60 points in each element. The maximum score a supplier may achieve is 300 points. Rating A followed by a high score is indicating not only that the supplier is qualifying or maintaining the award but also that the supplier is top performing. Observe that some of the elements are weighed with a higher score i.e. 60 points and those set the base fundamentals for the award and requires normally most efforts to be achieved. The elements concerned are Certificates, Manufacturing Site Assessment and PPM.

The VQE Award The VQE Award is built up by eleven award performance elements and a twelfth complementary element for the final award step, customer endorsements. There are three elements with sub-elements, these elements will have the final rating based on worst performing sub-element’s rating. Below find the element descriptions. Detailed information about each element will follow further on in the manual. 1. Certificates ISO 14001, ISO/TS 16949 and any Customer

Specific certificates 2. Manufacturing Site Assessment, MSA 3. Lean Deployment Assessment, LDA 4. MMOG/ LE 5. Site 6 Month PPM vs. Target 6. Logistics - Communications and Delivery Performance 7. Customer Plant Impact – QR Incidents, VCPA A80/ S300

Calls & Launch Issues 8. Escalation 9. Stop Shipment 10. Field Action 11. Trust 12. Customer Endorsements – Receiving Plants, MP&L,

Service and Supplier Technical Assistance, STA

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VOLVO CARS QUALITY THROUGH EXCELLENCE AWARD (VQE)

Extract of VQE-manual

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6

VOLVO CARS QUALITY THROUGH EXCELLENCE AWARD (VQE)

Extract of VQE-manual

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Ongoing

Production

VQE AWARD

training

Customer Satisfaction

Sourcing with

Quality

Program

Development

and Changes

1. CBP, Commodity

Business Plan

2. SFQ, Sourcing for

Quality Process, Supplier

Evaluation

3. SCM, Supplier Choice

Meeting

1. APQP, Advanced Product

Quality Planning

2. SEP, Supplier Engagement

Process

3. PPAP, Production Part

Approval Process

4. Product and Process

Changes.

1. Concern resolution, FASS

process, 8D-, DMAIC-

methods

2. MSA/LDA Manufacturing Site

Assessment/Lean

Deployment Assessment

3. Supplier Escalation process

Lessons Learned and Continuous Improvement

Ongoing

Production

Sourcing Program Development

and Changes

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Q & A

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Mihrem Emin

Manager, Site STA Exterior within Purchasing organization

THANK YOU