eaton supplier excellence manual 12172014.pdf

Eaton Corporation Global Supplier Excellence Manual

Last updated December 2014 Available at www.eaton.com

GLOBAL SUPPLIER EXCELLENCE MANUAL

Dec 2014 of 31 Rev. 11

Table of Contents

1 DOING BUSINESS WITH EATON .................................................................................... 4 1.1 Purpose of the Global Supplier Excellence Manual ........................................................... 4 1.2 About Eaton ...................................................................................................................... 4 1.3 Supplier Responsibilities ................................................................................................... 4 1.4 Ethics ................................................................................................................................ 4 1.5 Supplier Confidentiality ...................................................................................................... 5 1.6 Supplier Diversity .............................................................................................................. 5 1.7 Business Changes............................................................................................................. 5 1.8 Communications ................................................................................................................ 5 2 SUPPLIER QUALITY SYSTEM REQUIREMENTS ........................................................... 6 2.1 Quality Planning ................................................................................................................ 6 2.2 Sub-Tier Supplier Control .................................................................................................. 6 2.3 Lot Traceability .................................................................................................................. 6 2.4 Problem Solving ................................................................................................................ 6 2.5 Internal Audits ................................................................................................................... 6 2.6 Operator and Inspection Instructions ................................................................................. 7 2.7 Drawing and Change Control ............................................................................................ 7 2.8 Change Management ........................................................................................................ 7 3 SUPPLIER PERFORMANCE AWARD ............................................................................. 8 4 SUPPLIER ASSESSMENT AND QUALIFICATION .......................................................... 8 4.1 Initial supplier Profile ......................................................................................................... 8 4.2 Supplier Screening/Data Analysis Process ........................................................................ 8 4.3 Supplier Assessment ......................................................................................................... 8 4.4 Assessment Results .......................................................................................................... 9 4.5 Approvals status for Business Awards ............................................................................... 9 5 QUALITY PLANNING AND PRODUCT APPROVAL ....................................................... 9 5.1 General Requirements ...................................................................................................... 9 5.2 Record Retention .............................................................................................................. 9 5.3 International Material Data System (IMDS) ........................................................................ 9 5.4 Advanced Product Quality Planning (APQP) ................................................................... 10 5.5 Performance Test Requirements ..................................................................................... 10 5.6 Measurement System Analysis (MSA) Requirements for Special Characteristics .................................................................................................... 10 5.7 Process Capability Requirements for Special Characteristics .......................................... 10

5.8 Production Part approval Process (PPAP) ....................................................................... 11 6 COST OF POOR QUALITY ............................................................................................ 11 7 CLOSED LOOP CORRECTIVE ACTION ........................................................................ 12 8 SUPPLIER DEVELOPMENT .......................................................................................... 12 9 SUPPLIER MANAGEMENT ............................................................................................ 13


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10 WISPER AND SUPPLIER VISUALIZATION ................................................................... 13 10.1 DUNS Number ................................................................................................................ 13 10.2 WISPER & Supplier Visualization .................................................................................... 13 10.3 Supplier Web Based Software Fee .................................................................................. 14 11 CONTINUOUS IMPROVEMENT ..................................................................................... 15 11.1 Innovation Drives Excellence, Achievements and Savings (IDEAS) ................................ 15 12 SUPPLY CHAIN RISK MANAGEMENT AND BUSINESS CONTINUITY

GUIDELINES .................................................................................................................. 15 13 GLOBAL LOGISTICS ..................................................................................................... 16 14 ELECTRONIC COMMERCE ........................................................................................... 19 15 SUSTAINABILITY, ENVIRONMENTAL, AND REGULATORY

INFORMATION ................................................................................................................ 19 15.1 Sustainability .................................................................................................................... 19 15.2 Environmental Health and Safety (EHS) .......................................................................... 20 15.3 Conflict Minerals ............................................................................................................... 20 15.4 Carbon Disclosure Project (CDP) .................................................................................... 21 15.5 U.S. Government Contracts – Counterfeit Electronic Parts ............................................... 21 15.6 Product Stewardship ........................................................................................................ 21 15.6.1 Materials Declaration ........................................................................................................ 21 15.6.2 Packaging ......................................................................................................................... 21 15.6.3 Product Lifecycle Assessment .......................................................................................... 21 16 BUSINESS SPECIFIC REQUIREMENTS ........................................................................ 22 16.1 Electrical Group ................................................................................................................ 22 16.2 Vehicle Group Automotive ................................................................................................ 22 16.3 Vehicle Group Truck ......................................................................................................... 22 16.4 Hydraulic Group ............................................................................................................... 22 16.5 Aerospace Business Group .............................................................................................. 22 17 APPENDIX ....................................................................................................................... 30 17.1 Definitions ........................................................................................................................ 30


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1 DOING BUSINESS WITH EATON

1.1. Purpose of the Global Supplier Excellence Manual

The purpose of this manual is to define the minimum requirements, processes, and systems for doing business with Eaton (Eaton and its affiliates shall be referred to herein as “Eaton”). The manual outlines processes used to ensure that Eaton’s supply base is continually improving to prevent quality and delivery disruptions, provide the lowest cost, and top level service. Implementation of the processes outlined in this manual will not only reduce risk of supply chain disruptions, but will also help Eaton and its suppliers to increase our competitive industry position and ensure our continued mutual success. In this manual, the terms “shall” and “must” mean that the described requirement is mandatory, while the term “should” means that the described requirement is needed and expected with some flexibility in how it is implemented. When the WISPER system is referenced within this manual, the Supplier shall submit the information requested in the WISPER system. For Eaton locations not yet on WISPER, the Eaton site will provide the Supplier with the required equivalent submission format.

1.2. About Eaton

Eaton is a diversified power management company. Eaton is a global technology leader in electrical components and systems for power quality, distribution and control; hydraulics components, systems and services for industrial and mobile equipment; aerospace fuel, hydraulic and pneumatic systems for commercial and military use; and truck and automotive drivetrain and powertrain systems for performance, fuel economy and safety. Eaton has in excess of 103,000 employees and sells products to customers in more than 175 countries. For more information, visit www.eaton.com. Eaton works with suppliers who deliver the best quality, value and service at the most competitive cost. Our suppliers are innovative and dedicated to driving continuous improvement in their operations. Together we address all aspects of cost reduction, waste elimination and efficiency improvement in a dynamic global environment. To learn more about doing business with Eaton, please access our web-site at: http://www.eaton.com/Eaton/OurCompany/DoingBusiness/SellingtoUs/index.htm

1.3. Supplier Responsibilities

It is the responsibility of all suppliers including distributors and each Tier-1 Supplier’s sub-tier/sub-contract suppliers to review, understand and ensure compliance with this manual as part of doing business with Eaton. Eaton understands that our businesses are different in nature and in many cases have unique supplier quality requirements that are market specific. However, the processes and tools represented in this manual represent the core expectations and requirements of our business. The differences that you will see across our organization will be minimal and will be driven by customer and/or market specific requirements. Business Specific requirements can be found in Section 16 of this manual.

1.4. Ethics

Code of Conduct: This Code outlines Eaton’s minimum expectations regarding workplace standards and ethical business practices. Eaton requires our suppliers to adhere to this Code. Please make your employees aware of our Supplier Code of Conduct. The Supplier Code of Conduct has been translated into multiple languages and may be downloaded from the website link below to share with your organization as appropriate. The review and acceptance of the material contained within the Eaton Code of Ethics and Supplier Code of Conduct shall be completed by your company’s highest ranking official. Eaton requires that the appropriate person access the on-line form available at the 'Selling to Us' page on Eaton.com (link at end of section) to affirm your organization’s commitment to ethical business practices.

Corporate Social Responsibility: As a premier diversified power management company, Eaton cares about “doing business right” in meeting the needs of our global customers, employees and communities.

http://www.eaton.com/

http://www.eaton.com/Eaton/OurCompany/DoingBusiness/SellingtoUs/index.htm


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Outlined in this document is a summary of some of the commitments that exemplify our approach to ethics and integrity in everything Eaton does.

Eaton Code of Ethics: Eaton Corporation requires that its directors, officers and employees abide by these fundamental principles of ethical behavior in performing their duties.

Eaton Ethic's Guide: The Ethics Guide is intended to give Eaton employees around the world general

guidance in making ethical business decisions and to direct them to sources for further help.

Gift and Entertainment Policy: Eaton developed this policy to help employees make the right decisions when providing or accepting gifts, entertainment or travel while conducting business on behalf of Eaton.

To access each of the Eaton policy documents, and to confirm your agreement to abide by the Eaton

code of conduct, click the link below to access the 'Selling to Us' page on Eaton.com. http://www.eaton.com/Eaton/OurCompany/DoingBusiness/SellingtoUs/index.htm

1.5. Supplier Confidentiality

Documents furnished by Eaton to the Supplier are solely for the purpose of doing business with Eaton. These documents shall be controlled by the Supplier and must not be transmitted to others without the consent and approval of Eaton.

1.6. Supplier Diversity

Eaton believes that our corporation and our communities benefit from providing equal opportunities for diversity business enterprises to compete for Eaton business. Our suppliers are our business partners, and it is important that these partnerships reflect the communities where we live, work and serve. Eaton is seeking small, veteran, minority and women-owned businesses as well as HUB Zone enterprises that provide quality products and services at competitive prices. Companies wishing to apply as a diverse business must be US-based, 51% owned, controlled or operated by the diverse business owner. For more information, please access our website at: http://www.eaton.com/Eaton/OurCompany/DoingBusiness/SellingtoUs/SupplierDiversity/index.htm

1.7. Business Changes

Any significant changes in business climate such as acquisitions, divestitures, pending litigation, or any activity that may change the financial viability of the supplier’s organization must be communicated to Eaton.

1.8. Communications

All documentation must be communicated to Eaton in English unless otherwise specified by the using facility. Suppliers must maintain and have access to an electronic form of communication i.e., the internet/worldwide web.

http://www.eaton.com/Eaton/OurCompany/DoingBusiness/SellingtoUs/index.htm

http://www.eaton.com/Eaton/OurCompany/DoingBusiness/SellingtoUs/SupplierDiversity/index.htm


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2 SUPPLIER QUALITY SYSTEM REQUIREMENTS All suppliers must be compliant to an internationally recognized quality management system, certified by a 3rd party registrar, as specified by each Eaton business group. Refer to the business-specific information in Section 16 for the minimum certification requirements. Suppliers must notify Eaton within 30 days if their third party registration status changes. All existing / legacy suppliers not having 3

rd party registration shall maintain a minimum quality management system

that encompasses the following:

2.1. Quality Planning

Suppliers shall follow industry standard Quality Planning. Please see the Advanced Product Quality Planning (APQP) section for additional examples. Quality planning must be maintained throughout all phases of the product life cycle, from inception to delivery to the customer. See section 5.0 of this Manual for more detailed information.

2.2. Sub-Tier Supplier Control

The supplier must maintain sub-tier suppliers/contractors qualification records along with on-going quality and performance test data as applicable on products purchased through these sub-tier suppliers.

Supplier shall flow down requirements to their sub-tier suppliers that enables supplier to meet Eaton product print, specification, quality expectations, and any contractual agreement.

Eaton reserves the right to specify or approve sub-tier suppliers contracted by its suppliers for work performed on Eaton material. This applies to all suppliers including special process (Non-Destructive Testing, Heat Treating, Welding, Chemical Processing, Plating and Coatings), material testing services, and distributors.

2.3. Lot Traceability

Suppliers shall establish a lot traceability system that tracks components throughout the value stream, from raw material through shipment to Eaton. This includes all process steps including inspection and test procedures, rework and sub-tier supplier operations. Where a 'shelf life' restriction applies, suppliers shall ensure that materials are tracked and controlled to prevent expired materials from being used in production. Suppliers must certify, as part of sample submission, compliance with current constraints on restricted substances as specified by PO or contract, especially toxic and hazardous substances (i.e. International Material Data System).

2.4. Problem Solving

All suppliers for Eaton must establish and maintain documented procedures for implementing a system of closed loop corrective and preventive action with disciplined problem solving methods (i.e. 8D).

2.5. Internal Audits

Suppliers must conduct regular internal audits to ensure continued compliance with internal procedures and customer requirements.


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2.6. Operator and Inspection Instructions

To ensure manufacturing and quality personnel are qualified, the supplier will prepare written operator and inspection instructions for employees who have responsibilities for completing production process and inspection tasks. In addition, suppliers will prepare, train and appropriately maintain operator and inspection instructions. The supplier may use reduced-frequency (sampling) inspection plans only when historical records indicate that a reduction in inspection can be achieved without jeopardizing the level of quality. The supplier may employ sampling inspection in accordance with nationally accepted or customer required standards, as-specified by the Eaton business.

If sampling identifies a defect or discrepancy, 100% inspection of the lot is required.

The supplier shall maintain quality records in sufficient detail to establish evidence that required tests and verifications were properly performed, and that only material meeting specified requirements have been accepted for production and delivery to Eaton. These records shall be available for review by Eaton or an Eaton authorized representative. Copies of individual records shall be furnished to Eaton upon request.

2.7. Drawing and Change Control

The supplier’s quality system must ensure that the latest engineering drawings and specifications are availab le at the manufacturing, test and inspection location.

The written procedure(s) should indicate the method utilized for receipt, review or distribution of all changes and the method of recalling and disposing of an obsolete item.

A review process must be established in that system to confirm that applicable drawings and specifications are at the latest revision level with the issuing source.

If Eaton contract/PO is for purchase of previous revision, then supplier must ensure the applicable prior revision documentation is available for manufacturing, test and inspection; in this case, additional care must be exercised to ensure correct revision is produced.

2.8. Change Management

Eaton understands that change is necessary to achieve continual product and process improvement and is in support of this; however it is a decision that must be made mutually with input from all the affected parties. Unauthorized changes to products and/or processes can have a significant financial impact on both of our organizations. Eaton requires all suppliers to submit and obtain change request approval in writing prior to any change being implemented. The applicable changes covered under this requirement are adopted from AIAG PPAP manual and is referenced in the table below. Eaton may elect to require formal PPAP submission and approval. In these cases, suppliers shall not ship products to Eaton sites prior to approval. Failure to contact Eaton and obtain formal approval prior to implementing changes and shipment of product may result in New Business Hold and responsibility for compensating Eaton for all associated costs as a result of the unapproved change. Conditions requiring Eaton notification include, but are not limited to the following:

Change of material

New or modified production tooling

Production parts produced at a new facility

Product or process changes (internal or externally by sub-suppliers)

Change of raw material suppliers or sub-supplier for outside services (heat treat, plating, Non Destructive testing, etc.)

Change in test/inspection methods (techniques)

Shipping to additional Eaton facilities (approval at one Eaton facility does not constitute approval at other facilities)

Change in engineering drawings or specifications


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3 SUPPLIER PERFORMANCE AWARD

Eaton recognizes suppliers who achieve benchmark performance levels in the standard metrics of cost competitiveness, quality and delivery performance. The highest performing suppliers receiving our top award must also display high value add contributions of value engineering, innovative technology, service and sustainability while embracing the highest standard of ethics and values in working in partnership with Eaton.

4 SUPPLIER ASSESSMENT AND QUALIFICATION

Each Eaton business group maintains a supplier selection and sourcing process that adequately evaluates and identifies potential sourcing partners. Eaton suppliers must be capable of meeting the applicable Eaton business group’s quality, delivery, cost, environmental health and continuous improvement requirements. Eaton will validate these requirements as a part of their supplier selection process through supplier assessment and qualification activities. Supplier Quality Assessment results from one Eaton business may be a sufficient endorsement for another Eaton business to use that supplier without re-qualification. This is at the discretion of each Eaton business and any such assessment may require additional surveillance for specific business needs. The supplier assessment and qualification process includes the following:

4.1. Initial Supplier Profile

The “Initial Supplier Profile Survey” (Access via WISPER tool) or similar tool is used to obtain initial data and information concerning a supplier that will be used throughout the sourcing and assessment process.

4.2. Supplier Screening/Data Analysis Process

The SCM Group will perform the screening process based on several factors, most important considerations below:

Supplier’s current delivery performance based on 100% on-time expectation

Supplier’s quality performance

Supplier’s registration to an industry-standard quality system. (i.e., TS16949)

Cost competitiveness

Supplier’s financial strength for future growth

Upon completion of the initial screening process, the group responsible for sourcing approval will meet and review the outcome. This group will make a determination whether the supplier qualification process will continue. Further follow-up and/or corrective actions may be requested of the supplier. If the results are considered acceptable the process continues.

4.3. Supplier Assessment

Once the initial screening process is completed and the supplier is identified as a potential supplier to Eaton, a thorough assessment of the suppliers Quality System shall be completed either on-site or via desk-audit or self-assessment. Suppliers are encouraged to conduct self-assessments to become familiar with Eaton’s Quality System expectations. The results of the assessment will be reported and maintained via the Eaton WISPER system.

In addition, Eaton business groups may use an audit format that is specified by market and or customer requirements. Eaton may also, at its option, conduct financial assessments/reviews on a periodic basis. Per customer requirements, some Eaton facilities may require annual on-site supplier quality assessments.

Eaton reserves the right to schedule additional assessments based on factors not limited to risk, performance and/or non-compliance to quality system requirements. The cost associated with audits performed as a result


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of risk induced by supplier performance or compliance issues may be charged to the supplier at Eaton’s option.

Third party quality system registration may be recognized in lieu of a periodic on-site assessment if the Eaton business group deems it appropriate. Any third party providing certification to these standards must be accredited from a country authorized entity such as ANAB (USA).

4.4. Assessment Results

When system deficiencies are identified, a response time expectation will be provided by Eaton personnel for the supplier to define corresponding corrective actions. Failure to provide a suitable response in a timely manner is cause for a supplier to be removed from further consideration. Eaton reserves the right to discontinue the qualification process at any time.

4.5. Approvals status for Business Awards

Status of approvals:

Full approval – enables Eaton to award business with a supplier at any time within the capabilities or categories identified for that supplier.

Conditional approval – enables Eaton to award business to a supplier that is pending a corrective action completion/verification from the assessment. A corrective action plan must be submitted and approved by Eaton as defined by the business

Eaton shall not award new business to suppliers who are not approved. Once Approval has been established, the supplier will be added to an Approved Supplier Listing (ASL) as defined by the business group.

5 QUALITY PLANNING AND PRODUCT APPROVAL

5.1. General Requirements

Advanced Product Quality Planning (APQP) is a structured method of defining and establishing the steps necessary to assure that a product meets customer expectations, and that the Supplier’s manufacturing processes have the capability to consistently meet these requirements. http://www.aiag.org/scriptcontent/index.cfm This section defines the general requirements for production part qualification and approval. Additional requirements may apply. Prior to first production shipment, each part or component being sourced must be approved for production by the Eaton facility. The Eaton facility or business group will approve parts through the PPAP process.

5.2. Record Retention

The supplier must retain adequate quality system records, including records associated with management reviews, internal audits, calibration, change management, maintenance, and root cause corrective action. Additionally, supplier must maintain all advanced quality planning documents; including process guidelines, laboratory test instructions, gauge/test equipment verification, calibration and performance test methods and product and process validation test results.

5.3. International Material Data System (IMDS)

Where required by our customers, Eaton may request supplier’s entry of product data into IMDS. It is Eaton’s full expectation of supplier cooperation and agreement to fully enter product data into the IMDS and to manage that data as required. Where necessary Eaton may provide assistance to suppliers not otherwise enabled to engage the IMDS. http://www.mdsystem.com/imdsnt/startpage/index.jsp

http://www.aiag.org/scriptcontent/index.cfm

http://www.mdsystem.com/imdsnt/startpage/index.jsp


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5.4. Advanced Product Quality Planning (APQP)

The work practices, tools, and analytical techniques describing Advanced Product Quality Planning are based on the latest version of the AIAG (Automotive Industry Action Group) APQP and Control Plan manual.

Some of the most important items are listed below:

Technical and Specification Review

Design Failure Mode and Effects Analysis (DFMEA)

Process Flow Diagram

Process Failure Mode and Effects Analysis (PFMEA)

Control Plan

MSA Studies

Process Capability

Full Dimensional Layout

Pass Through Characteristics

5.5. Performance Test Requirements

If performance testing is required to be done by the supplier to confirm that current production meets design requirements, Supplier shall document the test requirements in a control plan and perform testing accordingly. Performance test failures are cause for a supplier to stop production immediately, pending analysis of the process and corrective action. Suppliers are required to immediately notify the Eaton location of test failures, suspended shipments, and identify suspect shipped lots, if quality or deliveries to Eaton will be impacted.

5.6. Measurement System Analysis (MSA) Requirements for Special Characteristics

The Supplier shall perform Measurement Systems Analysis (MSA) studies for all gauges used to measure special characteristics (see Definitions) as defined by the Design Record (drawings and specifications). The supplier’s measurement and calibration methods must be agreed to by Eaton to ensure consistent qualification of parts. Any Gage R&R over 30% is unacceptable. Due to the importance of the application of Eaton products, Eaton’s expectations are Gage R&R to be under 10%. Suppliers should reference the latest version of the AIAG Measurement Systems Analysis manual for further details.

5.7. Process Capability Requirements for Special Characteristics

Process Capability Study: When Special Characteristics are identified, Supplier shall perform process capability analyses at new product launch and when product or process changes affect these characteristics. Additional periodic capability analyses may be required by each Eaton business. If no special characteristics are identified, the Supplier should evaluate and identify product and/or process characteristics that can be used to ensure process capability. This should be reviewed and agreed to by Eaton representatives to ensure alignment with Eaton expectations. Initial process studies shall be summarized with the following capability or performance indices: (Cp / Cpk / Pp / Ppk)


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Results and Interpretation: Eaton minimum requirements for short-term capability and stability is an Index > 1.67. Eaton minimum requirements for long-term capability and stability is an Index >1.33. If acceptance criteria are not satisfied, Supplier shall contact Eaton with a corrective action plan and a modified Control Plan providing for 100% inspection and/or error-proofing mechanism. Variation reduction efforts shall continue until the acceptance criteria are met, or until approval is obtained from Eaton. Note: 100% inspection methodologies are subject to review and concurrence by Eaton. For special cases where the annual usage volumes do not meet the guidelines for a thorough process capability assessment, requirements shall be defined by the Eaton business. Suppliers should reference the latest version of the appropriate AIAG manual for further details.

5.8. Production Part Approval Process (PPAP)

The PPAP submission will be based on the latest edition of the Production Part Approval Process (PPAP) Manual, available through AIAG (Automotive Industry Action Group). An Eaton representative from Quality Assurance or Supplier Development will identify the appropriate PPAP submission level and additional requirements for the part or component to be sourced. Unless otherwise specified, a Level 3 PPAP shall be submitted. All PPAP samples must be produced using production tooling and processes at the production line rate. Supplier shall ensure compliance to all requirements listed on Eaton Design Record (drawings and specifications) and purchase orders. Additional acceptance testing may be required. PPAP documents may be posted via the Eaton WISPER system, and sample parts shall be submitted to Quality Engineering and/or specified Eaton personnel. Suppliers may be required to perform annual layout / re-validation and PPAP submission as directed by the Eaton business.

PPAP Status (As determined by the Eaton facility):

Approved: Indicates that the product meets all Eaton requirements and authorizes supplier to ship production quantities of the product.

Interim Approval: Permits supplier to ship product on a limited time and/or piece quantity basis. Note: Interim approval expiration will be determined by each business. A PPAP re-submission is required by the supplier, along with a corrective action, to obtain a status of “Approved”. Additional guidelines on product containment should be reviewed in the latest edition of the AIAG PPAP manual.

Rejection: Indicates that the PPAP documentation and/or product does not meet Eaton’s requirements for approval. Appropriate action shall be taken by the supplier to correct the deficiency and PPAP re-submission is required. Note: Supplier is not authorized to ship product until product is at least interim approved by Eaton.

6 COST OF POOR QUALITY

All costs incurred by Eaton that are associated with the failure of a supplier to meet Eaton’s quality requirements will be charged back to the supplier.

Supplier shall pay a minimum $250 Administration Fee for any Defective Material Report (DMR) issued regardless of the value of rejected Lot received or number of parts being rejected.


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Costs incurred beyond this administration fee will be assessed separately; below is a sample list of Cost of Poor Quality charges:

7 CLOSED LOOP CORRECTIVE ACTION

All suppliers for Eaton must establish and maintain documented procedures for implementing a system of closed loop corrective and preventive action with disciplined problem solving methods. This shall be used when a nonconformance to specification or requirements occurs. When supplier nonconformances are identified within an Eaton Business, a Defective Material Report (DMR) will be issued to the supplier via WISPER or other system by the issuing plant, which will serve as a Corrective Action Request (CAR). Containment actions must be completed within the appropriate time indicated by the Eaton facility. Failure to do so may negatively impact the supplier’s quality performance metric. Suppliers should be cautious to avoid root causes of “operator error” and instead look deeper for underlying factors. If operator error is truly the cause, error-proofing actions must be employed to prevent recurrence; re-training alone is insufficient. Suppliers shall include adequate detail and supporting data in the corrective action response to assure that appropriate system improvements have been completed. Responses are to be returned by the date required on the DMR. Eaton may require an on-site review of implemented corrective actions to validate effectiveness. Failure to respond to a corrective action request may result in penalties up to and including loss of future business awards. Supplier shall ensure that all quality system documents affected by any implemented corrective action are updated to accurately reflect the changes.

8 SUPPLIER DEVELOPMENT

Each Eaton business selects suppliers for development who present the best opportunity for improvement and the greatest potential impact to the organization. Suppliers may be selected for development based on the following factors:

Strategic growth suppliers

Provider of critical parts

Risk revenue partner

Key to manufacturing flow

Performance issues

Sorting Line Disruption / Speed

Reduction Premium Freight

Premium product cost paid to support production

Overtime Outside processing & testing

required

Rework i.e. labor, tooling, and fixturing

Scrap Reimbursement of all charges

from customer

Added inspection, certification of product, etc.

Warranty costs


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Suppliers selected for development projects must demonstrate a willingness to change and improve, and show evidence of internal continuous improvements efforts.

9 SUPPLIER MANAGEMENT

Eaton recognizes that our suppliers are key to delivering world class products and services to our customers and the marketplace. To support these efforts our suppliers must share our vision, goals and performance expectations. Eaton’s supplier management process recognizes that establishing supplier performance on a regular basis requires: a) Measuring results through a standardized supplier scorecard process; b) Business Reviews; and c) Continuous improvement to drive value for our end customers. Eaton’s standardized supplier performance management process ensures that key direct, indirect and logistics suppliers understand our expectations and meet our requirements. Our governance processes include, but are not limited to, the following key measures:

Net Productivity %

Quality – DPPM

Delivery - OTD

Pay Terms performance

Third Party Certifications

PPAP/FAI - acceptance & timeliness

Compliance to Code of Conduct, Conflict Minerals, Sustainability requirements

Continuous Improvement

Service level achievement

10 WISPER AND SUPPLIER VISUALIZATION

All active or new suppliers to Eaton must register for the WISPER and Supplier Visualization (VIS) systems via the supplier portal at http://supplierselect.eaton.com/ when notified to do so. Once Suppliers are registered, Suppliers will be provided with a User ID and a password. Suppliers will then have the ability to set up additional users at their facility. In order to register Suppliers must meet the following conditions:

Supplier must be a current Eaton supplier.

Supplier must supply an Eaton facility that has fully implemented WISPER or VIS.

Supplier must be a direct material / Direct Source Supplier

10.1. DUNS Number

Every supplier must have a Dun & Bradstreet number (D&B D-U-N-S number) for each manufacturing location. Eaton will use this number to track supplier by each specific manufacturing location. For information on verifying or obtaining a D&B D-U-N-S number at no cost to your company, visit the D&B website (www.dnb.com). Enrollment in D&B Financial Service is not required.

10.2. WISPER & Supplier Visualization

WISPER: The Eaton Worldwide Interactive Supplier Performance Evaluation Resource system (WISPER) is a web-based application utilized for gathering, summarizing, reporting, and evaluating supplier performance. WISPER provides suppliers global access to information on commodity usage for all Eaton facilities worldwide and allows suppliers to showcase their capabilities to the entire supplier resource

http://supplierselect.eaton.com/

http://www.dnb.com/


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management personnel of Eaton. The WISPER system allows a supplier to review their own part/product activities as well as their performance across all of Eaton. Once registered in the WISPER system the supplier must establish and maintain its “Supplier Profile”. When completed this will give all of the Eaton facilities access to information on the following:

Supplier Capabilities - the supplier must list, upload and maintain all current quality system certifications.

Products

Contact Information - the supplier must list & maintain all current contact information. Keeping this contact information current is critical as Eaton personnel will reference them in order to make contact with the appropriate functions at supplier facilities.

Quality System Status

Diversity Status, if applicable.

The system will also provide the supplier and the Eaton facility with the following:

PPAP / First Article Submission Tracking

Deviation Tracking

Ship to Stock Status

Part Information

Discrepant Material Reports

Audit Information

Performance Information

Competitor Rankings

The “HELP” tabs and “Communication and Training” link located within the WISPER system provide information that will assist users in setting up their profiles and working within the WISPER system.

SUPPLIER VISUALIZATION: Supplier Visualization is an Eaton global web based application that supports materials replenishment by giving Eaton and suppliers shared visibility of forecasts, purchase orders, inventory, schedules, material receipts and the ability to create advanced shipping notices (ASN). Below are some of the benefits it provides to Eaton and Eaton suppliers:

Improves communication with suppliers

Supports inventory reduction

Reduces expediting (faxes, emails, phone calls)

Reduced transactional costs (manual to electronic)

Overall improvement to supplier ownership of the processes.

An appropriate Eaton contact will contact you when it is time to register for access to and become trained on using Supplier Visualization. Please do not register until notified to do so.

10.3. Supplier Web Based Software Fee

Suppliers shall support the ongoing maintenance of these supplier systems by contributing an annual fee based on the amount of annual business with Eaton worldwide. There will only be one Supplier Web Based Software fee assessed per supplier, which will cover all supplier locations regardless of the number of registered users for a supplier. Refer to the following link for more information: http://www.eaton.com/WISPER

http://www.eaton.com/WISPER


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11 CONTINUOUS IMPROVEMENT

Eaton may deploy Supplier Development Engineers to work with suppliers based on the criteria stated in the Supplier Development section of this manual. However, Eaton Corporation requires all of its suppliers to pursue continuous improvement initiatives and the deployment of these initiatives are the responsibility of Eaton’s suppliers. Eaton requires supplier-initiated cost-reduction and improvement suggestions. Eaton wants open, forthright dialogue with our suppliers so that, in collaboration we can reduce waste and improve quality. Eaton seeks creativity, innovation and ingenuity in improving how we do business together.

11.1. Innovation Drives Excellence, Achievement and Savings (IDEAS)

Eaton makes available to suppliers the IDEAS program as a method to submit Continuous Improvement suggestions. For more information, download an IDEAS Program Brochure at the webpage linked below. To submit an IDEAS suggestion, download the Suggestion Form from the webpage and return the completed form to your principal Eaton Supply Chain Management contact. For more information refer to section 2.8 on Change Management and visit: http://www.eaton.com/Eaton/OurCompany/DoingBusiness/SellingtoUs/IDEASProgram/index.htm

12 SUPPLY CHAIN RISK MANAGEMENT AND BUSINESS CONTINUITY GUIDELINES

Eaton’s supply chain has become increasingly complex, global, diversified and subject to a variety of risks that could jeopardize continued operations. In this environment, our customers have challenged us to establish Business Continuity Plans within our businesses, operations and supply chain, as these are more important than ever before. Similarly, Eaton is challenging its suppliers to establish Supply Chain Risk Management and Contingency Plans. While it is clear that contingency plans cannot be developed for all potential scenarios, Eaton is asking suppliers to establish recovery plans and steps that will facilitate quick response, reaction and resumption of parts and services in the event of disruptions. Eaton suppliers are expected to establish a comprehensive crisis management approach to deal with potential disruptions (proactive) and disasters (reactive). The approach should include plan of action, checklist of activities, communication plans, escalation procedures, and organization with teams, roles, and responsibilities. When Eaton deems necessary, based on the risk situation or as part of the Business Performance Review process, the supplier may be asked to provide risk management and business continuity plans. The supplier is expected to conform to the risk management and business continuity requirements in the Supplier Excellence Manual including alternate manufacturing site or process options wherever applicable to ensure operation’s continuity. Eaton wil l notify suppliers in writing when identified as part of a risk situation or as part of the Business Review process. Also, in case of financial risks, Eaton expects their suppliers to provide requested financial information wherever applicable. Eaton suppliers must plan for the following (as applicable) disruptions:

Business Continuity to deal with event-based risks such as fires, chemical spills, natural disasters, terrorist threats, medical emergencies, and human resources issues (Example: Strikes)

Supply Chain Continuity to check and prepare the “Supplier’s” suppliers to deal with potential disruptions (proactive) and disaster situations (reactive)

Pandemics Preparedness Plan (Example: Avian Flu Pandemic)

IT Disaster Recovery and IT Security for “Supplier” telecommunications, data, systems and infrastructure

Eliminate potential disruptions due to Financial and Regulatory Non-Compliance [Example: For US publicly traded companies – SOX404 or International Financial Reporting Standards (IFRS) in Europe], as applicable

http://www.eaton.com/Eaton/OurCompany/DoingBusiness/SellingtoUs/IDEASProgram/index.htm


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Human Resources guidelines to conducting security, drug & background checks

Confidentiality Policy (including protection of Eaton Intellectual Property), as applicable Eaton suppliers are expected to develop, deploy and maintain these business continuity planning requirements. Eaton suppliers are expected to periodically monitor the Global Supplier Excellence Manual for changes or additions to the risk management and business continuity requirements. Trade Compliance The purpose of this section is to re-emphasize Eaton Corporation’s commitment to trade management, regulatory compliance and provide awareness to our supply base and business partners. Eaton expects all of its partners to comply with any applicable regulations listed below. As a global company, Eaton expects all of its partners to adhere to all local and regional trade management regulations. Below are two U.S. government websites for your reference and basic overview of U.S. export regulations.

Export Commercial/Dual-Use articles and data controlled under the Department of Commerce (DOC) jurisdictionally need to comply with the Export Administration Regulations (EAR):

http://www.export.gov

http://www.access.gpo.gov/bis/ear/ear_data.html

Military/U.S. Munitions List articles and data controlled under the Department of State (DOS) jurisdictionally need to comply with the International Traffic in Arms Regulations (ITAR):

http://www.pmddtc.state.gov

Import As a supplier exporting to Eaton where Eaton is the importer of record with the U.S. Customs and Border Protection (CBP), there are specific Federal regulations and Eaton required procedures to follow. Refer to contractual documentation and your Eaton contact for further information regarding the Eaton required procedures. Suppliers shipping to the USA and its Territories/Commonwealths must comply with the following requirements.

Commercial Invoice and Packing List

Free Trade Agreement Requirements

Country of Origin Marking Requirements

ISPF 15 – Wood Packaging Requirements

Importer Security Filing

C-TPAT – Customs Trade Partnership Against Terrorism

Please check with the local customs broker or your Eaton Corporation contact for requirements for other international shipments that are non-USA, its Territories and its Commonwealth. For further details please consult the link below: http://www.eaton.com/Eaton/OurCompany/DoingBusiness/SellingtoUs/TradeComplianceRequirements/index.htm

13 GLOBAL LOGISTICS

Global logistics has Regional Specific requirements as well as Global Requirements. Americas Region Shipping Instructions: -- Americas Paid Shipments:

http://www.export.gov/

http://www.access.gpo.gov/bis/ear/ear_data.html

http://www.pmddtc.state.gov/

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EatonRoute tool provides Standard Routing/Shipping Instruction for U.S. Activity, Cross Border Canada and Mexico. These routing instructions are applicable for inbound collect shipments and third party shipments where Eaton Corporation is responsible for freight payment. Eaton Corporation suppliers should obtain Standard Routing Instructions via the Internet by accessing: www.eatonroute.com. Suppliers are required to access EatonRoute every 30 days to verify no changes have been made (or prior to shipping if more sporadic) by selecting “Get Route Guide” within the EatonRoute tool. Suppliers must adhere to routing instructions contained in EatonRoute unless a change is authorized by Eaton Corporation. Failure to follow shipping instructions prescribed in EatonRoute may result in charge backs for additional costs incurred. All Shipments billed to Eaton Corporation for non-Cooper divisions require the Eaton Freight Location Number (EFLN) and instructions on mailing the freight invoice to be provided in the special instructions box of the Bill of Lading (BOL) or in the body of the BOL. Instructions should be provided as follows:

Bill To Mail Freight Bill To:

‘Legacy’ Eaton (Electrical, Hydraulics, Aerospace, & Vehicle Groups)

Eaton Corporation, EFLN XXXX Eaton Corp EFLN XXXX C/O Cass Information Systems, PO Box 182175, Columbus, OH 43218- 2175.

3rd

Party ‘Legacy’ Eaton (Electrical, Hydraulics, Aerospace, & Vehicle Groups)

Eaton Corporation (COMPLETE ADDRESS), EFLN XXXX

Eaton Corp EFLN XXXX Cass Information Systems, PO Box 182175, Columbus, OH 43218- 2175.

Cooper Divisions Cooper (Division Name) Cooper (Division Name) C/O, Cass Information Systems, PO Box 182368, Columbus, OH 43218- 2175.

Shipments managed by CEVA

Eaton Corporation, EFLN XXXX Eaton Corp EFLN XXXX C/O Cass Information Systems, PO Box 182175, Columbus, OH 43218- 2175.

Shipments managed by FedEx Supply Chain

Eaton Corporation, EFLN XXXX, C/O FedEx Supply Chain, PO Box 1108, 5455 Darrow Road, Hudson, OH 44236 *Shipment ID required on Freight Invoice

Eaton Corp EFLN XXXX C/O Cass Information Systems, PO Box 182175, Columbus, OH 43218- 2175.

All Eaton suppliers are required to set up correct processes and procedures in export arrangement. All Eaton suppliers shall check with and use Eaton managed and approved logistics services providers for Eaton paid shipments before a shipment is made. For additional information and specific routing instructions, contact your Eaton buyer. Suppliers must obtain the EFLN from an Eaton representative upon agreeing and before initiating any third party bill to Eaton shipments, for any purpose. Asia Pacific (APAC) Region Shipping Instructions: -- APAC Paid Shipments: Each Asian country has established clear requirements in shared responsibility concerning import process. All Eaton suppliers are required to understand such informed compliance and set up correct processes and procedures in export arrangement. All Eaton suppliers shall check with and use Eaton managed and approved logistics

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services providers for Eaton paid shipments before a shipment is made. For additional information and specific routing instructions, contact Eaton APAC Logistics at Eaton, Shanghai, China. Europe, Middle East & Africa (EMEA) Region Standard Routing/Shipping Instructions – EMEA paid Activity Eaton Corporation suppliers should obtain Standard Routing Instructions from Eaton Central Freight Procurement EMEA via [email protected]. This support will provide routing instructions for shipments paid within EMEA. These routing instructions would be applicable for inbound collect shipments (or third party shipments*) where Eaton Corporation is responsible for freight payment. For additional information, contact Eaton EMEA Logistics at Eaton, Morges, Switzerland. Global Shipping Hazardous Materials/Dangerous Goods to/from Eaton and its Affiliates Suppliers must comply with all applicable laws and regulations governing the domestic and international transport of Hazardous Materials or Dangerous Goods to or from all designated Eaton locations. Compliance includes adherence to the laws and regulations of the relevant, originating Eaton location and those for the destination of the shipment. The regulations and relevant authorities include but are not limited to those prescribed by the U.S. Department of Transportation (DOT) 49 CFR (USA Transport); Transportation of Dangerous Goods (Canada Transport); International Air Transport Association (IATA) or International Civil Aviation Organization (ICAO) for international and domestic air shipments; and International Maritime Dangerous Goods (IMDG) for international or domestic dangerous goods by water. Supplier’s obligations include compliance with those regulations governing:

Hazardous Materials/Dangerous Goods Description

All documentation/Recordkeeping requirements including but not limited to associated shipping papers,

training records, etc.

Labeling and Markings

Packaging

Placarding (if required)

Communication - All shipments must have a Safety Data Sheet (SDS) attached with the shipment.

US Companies must be registered and have a certificate showing you are registered with the Department of

Transportation for the current year (expires each year June 30th)

Required training for all appropriate employees, agents or contractors of Supplier

Any of these violations could be a cause for the shipment being rejected and have it returned back at the Supplier’s cost. For additional information, contact your Eaton Supplier/Commodity Management Representative. If a supplier has any questions regarding their obligation for compliance with any of the aforementioned requirements, the Eaton representative can refer such inquiries to the Eaton Global Logistics Team at Eaton WHQ, Cleveland, Ohio. Global Sourcing and Vendor Managed Inventory (VMI) Some Eaton businesses operating in North America utilize integrated logistics and VMI programs in support of global sourcing initiatives and inbound material requirements. VMI programs are currently utilized for non-U.S. suppliers shipping to Eaton facilities in the U.S. UPS currently operates a VMI hub in Carol Stream, IL (Chicago area). The Carol Stream hub stores parts and feeds Hydraulics Group plants in US. Expeditors International operates a hub in Detroit which feeds Vehicle Group plants in US.

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Program Eligibility:

Final determination of supplier eligibility to participate in the program will be made by the respective Eaton Business Unit’s Commodity Management Lead. Once participation is confirmed, a three-phased implementation process will commence. (1) Data acquisition, (2) inventory planning, and (3) process training, required for all participating suppliers. Program User Guide and other relevant documents will be provided during the supplier on-boarding phase.

Logistics Services are provided by third party logistics service providers (LSP) and managed by Eaton Global Logistics. For additional information, contact Eaton Global Logistics Team at Eaton Center, Cleveland, Ohio. The LSP provides all logistics activities including freight/order consolidation, transport, customs entry / brokerage, physical distribution and the supporting technology. The standard incoterms are FCA (Free Carrier, named place). Ocean freight is the primary mode of transport. Eaton pays the transportation cost from named origin to the hubs, warehousing/storage cost for the hubs (for the UPS managed program) and transportation cost from hubs to plants. Inventory planning and management is a collaborative effort by the LSP, supplier and Eaton Supply Chain Management personnel. The supplier’s inventory management responsibility is to maintain required inventory levels in the hub facility by working closely with the materials planners and buyers responsible for the parts purchased. The LSP provides web-based transactional visibility (receipt, number of pieces consumed by plants, etc) tools and an inventory management system to perform the necessary functions. Complete training in system use will be provided by the LSP prior to shipment of the first production order. For additional information regarding the program and its applicability to your situation, contact your Eaton Commodity Management representative.

14 ELECTRONIC COMMERCE

There are three key steps to our e-Commerce initiatives:

Initiation of the Replenishment activities

Submission of the Invoice and

Payment for the goods and services.

Suppliers must comply with Eaton’s suite of e-Commerce tools (where implemented) for electronic purchase orders, invoicing, and payments as described on eaton.com where allowable by the statutory requirements of each country. These requirements include the utilization of Eaton’s Supplier portal “Supplier Select”, as applicable, in combination with the internet-based framework for the e-Commerce tools utilized by Eaton which include, but may not be limited to the following:

Electronic purchase orders – Supplier Visualization, EDI, etc.,

Electronic invoicing – EDI, ERS, OB10, Eaton’s Supplier Invoicing North America Tool, etc.), and

Electronic payments – EFT / ACH, Wire Transfer, etc.

(Doing Business > Selling to Us > Electronic Commerce) http://eaton.com/Eaton/OurCompany/DoingBusiness/SellingtoUs/index.htm

15 Sustainability, Environmental, and Regulatory Information

15.1 Sustainability

At Eaton, sustainability isn’t an autonomous program or initiative. It’s how we do business – and it’s an

increasing part of our business success. Eaton has been living it for years as “Doing Business Right,” and it is

central to our vision to become the most admired company in our markets.

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Throughout Eaton, we are building a culture of responsibility that encourages every employee to ask the

questions that lead to more sustainable processes and practices, and help our company support a

sustainable future. Delivering on this commitment requires alignment by Eaton suppliers to principles of

sustainability and “doing business right”.

Sustainability is more than the cost of doing business for multi-national companies - it is an integral part of everyday business. Key aspects of sustainability for supply chain management include issues such as materials compliance, environmental responsibility, human rights and working conditions responsibility, anti-bribery and other business ethics expectations.

15.2 Environmental Health and Safety (EHS)

Through our products, practices and people, Eaton is helping to create a more sustainable world. Eaton’s commitment to sustainability goes far beyond a mere program. It’s woven into the fabric of our culture. Our suppliers are an important part of this culture. Eaton encourages ISO14001 for all our suppliers, and expect suppliers to adhere to principles of

Offering a safe work environment for employees

Protection of the environment and pollution prevention

Committing to continuous improvement in EHS performance

Eaton expects all suppliers to implement Management Systems that identify, document and address operational risks to the environment and employee health and safety. These EHS Management Systems should include identification of key EHS risks and impacts, development of operational controls to address the risks and minimize the impacts and preparation of response plans to address emergencies. Product Stewardship: "Eaton is committed to compliance with global EHS related regulatory requirements including those governing product content, development and disposition (also known as Product Stewardship). To that end, all suppliers are required to comply with those requirements as applicable for the jurisdiction involved and as set forth in any supply agreement with Eaton." Eaton expects all suppliers to adhere to legal requirements for EHS (local, state, provincial, and federal) in all jurisdictions in which supplier operates. Please refer to the Eaton Supplier Code of Conduct on-line at: http://www.eaton.com/Eaton/OurCompany/DoingBusiness/SellingtoUs/SupplierCodeofConduct/index.htm

15.3 Conflict Minerals

Eaton is committed to ensuring that the products sold do not incorporate “conflict minerals” (minerals which are smelted into tin, tantalum, tungsten and gold) sourced from entities which directly or indirectly finance conflict in the Democratic Republic of Congo or adjoining countries. Eaton intends to fully comply with the requirements of Section 1502 of the Dodd-Frank Act, which requires that Eaton perform due diligence into the sources of such minerals, and disclose the results of such diligence. Eaton requires its suppliers to:

Perform sufficient due diligence into their respective supply chains to determine whether products sold to us contain tin, tantalum, tungsten or gold, and, if so, whether and to what extent those metals are sourced from conflict-free smelters;

Report to Eaton the results of such due diligence on the Conflict Minerals Reporting Template, or other agreed format, to enable Eaton to comply with its legal obligations and policy goals; and

Commit to being or becoming “conflict-free”, so that any such metals are sourced only from conflict-free smelters.

Questions pertaining to conflict minerals should be directed to [email protected]

http://www.eaton.com/Eaton/OurCompany/DoingBusiness/SellingtoUs/SupplierCodeofConduct/index.htm

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15.4 Carbon Disclosure Project (CDP)

Eaton has joined the CDP supply chain network as a data member. Since 2011, Eaton has invited leading suppliers to respond to a Supplier Information Request. Suppliers should respond as thoroughly as possible. Eaton will use the data to help determine carbon impact of our suppliers, and work together to develop strategies to reduce our impact on climate change. CDP is an independent, not-for-profit organization holding the largest public database of primary corporate climate change information in the world.

15.5 U.S. Government Contracts – Counterfeit Electronic Parts

For U.S. Government contracts subject to the Cost Accounting Standards (CAS), Eaton will take appropriate action for counterfeit electronic part avoidance and detection as required by DFARS 252.246-7007. These activities include developing systems to detect and avoid counterfeit electronic parts, training, use of qualified and trusted suppliers, and flow down of counterfeit avoidance and detection requirements to subcontractors. Compliance with Eaton’s Suppler Excellence Manual and the Eaton SCM Policy Manual and Guidelines is critical to efforts to abolish counterfeit electronic parts proliferation.

15.6 Product Stewardship

15.6.1 Materials Declaration

The supplier is expected to establish, document and communicate to Eaton a system for the control and identification of substances contained in products supplied to Eaton, including packaging materials, to facilitate Eaton’s global regulatory compliance obligations (i.e. RoHS, REACH, PROP 65).

15.6.2 Packaging

All packaging used for shipping products to Eaton should be compliant with applicable environmental packaging requirements. Where feasible, supplier should use returnable packaging unless otherwise required by Eaton.

15.6.3 Product Lifecycle Assessment

Eaton strongly supports the approach of integrating the lifecycle assessment of products in accordance with ISO-14040 and other international standards. Suppliers shall cooperate in this approach and make information available required during the lifecycle inventory analysis phase involving the compilation and quantification of inputs and outputs for a product throughout its life cycle when requested by Eaton.


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16 BUSINESS SPECIFIC REQUIREMENTS

Each Eaton business has certain specific requirements for its suppliers that may or may not apply to another Eaton business. Suppliers should review the business specific requirements below for those Eaton businesses supplied.

16.1 Electrical Business Group

Any additional requirements will be communicated by the business group. 16.2 Vehicle Group Automotive

(http://www.eaton.com/Eaton/OurCompany/DoingBusiness/SellingtoUs/supplierexcellencemanual/automotive/index.htm)

16.3 Vehicle Group Truck

(http://www.eaton.com/Eaton/OurCompany/DoingBusiness/SellingtoUs/supplierexcellencemanual/truck/index.

htm)

16.4 Hydraulic Group

Click Here or see page 23 below

16.5 Aerospace Business Group

Click Here or see page 25 below

http://www1.eaton.com/EAMO2/EAMO_Special_Forms_and_Requirements_Links.pdf

http://www.eaton.com/Eaton/OurCompany/DoingBusiness/SellingtoUs/supplierexcellencemanual/automotive/index.htm

http://www.eaton.com/Eaton/OurCompany/DoingBusiness/SellingtoUs/supplierexcellencemanual/automotive/index.htm

http://www1.eaton.com/Truck2/Truck_Special_Forms_and_Requirements_Links.pdf

http://www.eaton.com/Eaton/OurCompany/DoingBusiness/SellingtoUs/supplierexcellencemanual/truck/index.htm

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16.4 Hydraulic Specific Requirements:

In addition to the requirements noted on the body of supplier Excellence Manual, all Hydraulics Group suppliers shall meet the specific requirements outlined below:

Minimum Quality System Requirements

All suppliers being considered for new business shall have ISO-9001 3rd

party certification as a

minimum.

All existing / legacy suppliers not having 3rd

party certification shall maintain a minimum quality

management system as noted in section 2.0 of the manual above.

Special Characteristics Process Capability Requirements – PPAP and Production

Eaton Hydraulics has established control characteristics for certain characteristics of the product(s). The control characteristics are labeled with a symbol designating their importance as shown below for design critical and design significant features.

Supplier shall take the following actions and provide the following information to Eaton depending on the specific special characteristic:

For design critical and design significant characteristics, supplier must ensure that the capability established at the time of PPAP submission/approval (see above table) are maintained throughout the products life

It is the supplier’s responsibility to ensure the capability data is available for Eaton review upon request

If at any time the process capability showing a decaying trend, it must be shared with Eaton Hydraulics

Improvement actions must be taken when process capability is less than levels indicated in the above table. Whenever any of indexes above are not achieved, 100% inspection or alternate special control(s) shall be performed.

Eaton Hydraulics must approve any actions taken by the supplier related to product shipments when capability is not met

In special cases Eaton Hydraulics may require initial capability data for non-designated special characteristics in order to determine the process feasibility. In these cases on-going data will not be required.


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When the measurement of special characteristics causes part to be destroyed or are attribute type, alternate special control(s) (see AIAG reference manuals) shall be performed to show on-going capability.

In regards to quality indices and initial / on-going process capability studies, supplier shall use AIAG PPAP manual latest edition, SPC and MSA manuals

Special Processes – Heat Treat, Coating, Plating, and Welding

Supplier shall audit heat treat, plating and coating processes (their own or subcontractors) utilizing the AIAG CQI-9, 11, and 12 Special Process surveys for existing business or prior to initial award. Supplier shall maintain records of the audit and process improvement subject to periodic review by Eaton Hydraulics. Once in production, annual audit shall be done and be available for review at Eaton’s request. The focus of annual audit shall be the processes provided to Eaton.


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16.5 Aerospace Business Group

(http://www.eaton.com/Eaton/OurCompany/DoingBusiness/SellingtoUs/supplierexcellencemanual/aerospace/index.htm)

Additional Requirements for Aerospace Suppliers

2.0 Supplier Quality System Requirements

Requirements shall be in effect for those suppliers who directly supply product or services to Eaton Aerospace (Tier 1), including service, and special process suppliers, regardless of tier.

Distributors - Distributors shall have a quality system that conforms to AS9120.

Special Process Suppliers - Special Process suppliers shall have a quality system that conforms to AS/EN9100 or accredited to AC7004 (by PRI-Nadcap).

Calibration Suppliers - Calibration suppliers shall have a quality system that conforms to A2LA, ISO 17025 (Guide 25) or other country certifying body.

Raw Material Suppliers - Raw material suppliers shall have a quality system that conforms to ISO 9001.

Suppliers that supply product for Ground based applications (e.g. Ground Refuel in Irvine) must be ISO9001 compliant.

All other suppliers shall have a quality system that conforms to AS/EN9100.

All suppliers added after Nov 1, 2014 must be certified to the above standards unless documented approval is authorized by the Aerospace VP Supply Chain.

Conformity to the above quality standards must be evidenced by either: third-party certification; or an Eaton-approved audit to assess any gaps to the AS/EN9100 requirements.

A supplier not meeting the above quality system requirement may be assessed at any time for reasons not limited to performance, and may be liable for the actual costs of such assessments, at Eaton’s option.

Any Tier 1 supplier whose third party certification has been revoked must, within 24 business hours of the receipt of formal notification of revocation by the accrediting entity, notify the top Procurement Manager and Quality Manager at each Eaton Aerospace plant to which product has been sold within the prior 18 months or is currently on order.

2.2 Sub-Tier Supplier Control

Regardless of tier, all suppliers shall use only Eaton, Aerospace Group approved and Nadcap accredited special process suppliers, unless otherwise authorized by contract. Any supplier may request that a sub-contractor be added to the Eaton, Aerospace Group’s External ASL through the appropriate Eaton supply chain contact, however, such sources may not be used prior to receipt of documented Eaton, Aerospace Group Quality approval. Actual costs of approval for a new sub-contractor may be the responsibility of the requestor.

Eaton, Aerospace Group participates in the Nadcap Program (special processes audit and accreditation) as a Subscribing User Member. The Nadcap Program is governed by a conglomerate of aerospace manufacturers (Subscriber User Members) and is administered by the Performance Review Institute (PRI). In accordance with the March 2012 mandate, unless specifically exempted by contract terms exhibiting an Eaton, Aerospace Group Supplier Quality approval, suppliers who perform the following special processes on Eaton, Aerospace Group products, must have these processes Eaton, Aerospace Group approved and Nadcap accredited: Nondestructive Testing (NDT), Heat Treat (HT), Welding/Brazing (WLD), Chemical Processing (CP), Coatings (CT), Nonconventional Machining and Surface Enhancement (NMSE), and Materials Testing (MTL).

http://www.eaton.com/Eaton/OurCompany/DoingBusiness/SellingtoUs/supplierexcellencemanual/aerospace/index.htm

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2.8 Change Management

Direct material suppliers, including distributors supplying to Eaton Aerospace, are required to obtain documentation of Eaton Aerospace approval prior to implementing any change to part processing or packaging. This requirement must be flowed down to all levels of the supply chain.

4.3 Supplier Assessment

Upon notification from Eaton Aerospace, any direct material supplier must submit a self-assessment or a copy of a currently valid internationally recognized third party certification certificate, as requested by Eaton. At Eaton’s option, calibration sources may submit A2LA, ISO 17025, or equivalent accreditation in place of a requested survey. Nadcap's AC7004 Quality System Assessment is as another acceptable accreditation and AS9120 for distributors.

4.5 Approvals Status for Business Awards

Scope of approval will also be designated as part of the approval

5.2 Record Retention

The supplier must retain quality performance records, including but not limited to control charts, FAI, inspection and test results. At a minimum, the supplier must retain the records for the periods indicated herein and make them available for review as required:

All quality records (non-electronic) shall be documented in ink or other permanent marking

Quality system records (control charts, inspection and test records, audit records) - 10 calendar years

Quality performance records (production part approvals, purchase orders and amendments, tooling records) - one calendar year after part production is discontinued.

For some Eaton Aerospace facilities, the above records must be retained for longer than 10 years (The supplier will be notified via PO/contract when this is a requirement). The supplier agrees to transmit to Eaton, those records kept in support of Eaton work, in the event that the supplier discontinues business operations.

5.7 Process Capability Requirements for Special Characteristics

Suppliers shall implement a process conforming to AS9103 Variation Management for Key Characteristics. SPC data, including quarterly Cp and Cpk summaries for key characteristics identified in the control plan, may be required with each shipment at the discretion of the receiving facility.

5.8 First Article Inspection (FAI)

FAI is required upon initial submission, and when any of the changes listed in the General Requirements section apply. FAI requires that all dimensions for a part be checked and verified prior to full production and receipt of part into the Eaton facility. All dimensions, (except reference dimensions), characteristics, and specifications, as noted on the Design Record (drawings and specifications) and process control plan, are to be listed on the FAI Report with the actual dimension results recorded. Blanket statements of conformance are not acceptable. It is the supplier’s responsibility to meet all applicable specifications. If the supplier is unable to meet any of these requirements, the Eaton plant quality engineer or appropriately designated Eaton employee is to be contacted for determination of corrective action. First Articles shall be performed by the supplier in accordance with AS/EN9102.


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6.0 Cost of Poor Quality

Supplier shall pay a minimum $500 Administration Fee for any Defective Material Report (DMR) issued regardless of the value of rejected Lot received or number of part being rejected. Costs incurred beyond this administration fee will be assessed; below is a sample list. The DMR Administrative Fee is debited or invoiced to suppliers after the DMR is issued or upon DMR closure (depending upon Eaton Business specific processes.)

12 Succession planning

All suppliers must develop a succession plan that ensures continuity of business.

15.5 U.S. Government Contracts – Counterfeit Electronic Parts

Supplier must comply with Eaton Aerospace SD-013 Policy through the Appendix of this Supplier Excellence Manual. To protect the Eaton Aerospace Group, our supplier partners, and ultimately our customers from the infiltration of counterfeit or questionable pedigree components into our end products

Additional Requirements

Source Inspection

When requested by Eaton Aerospace, the supplier shall support Source Inspection activities by Eaton, Customer, or Government representatives. The supplier will contact the appropriate party for source inspection upon completion of the product in such cases. Product shall not be shipped until source inspection has been completed including appropriate documentation. If the supplier has difficulty in reaching the appropriate source inspector, Supplier shall contact their buyer for support without undue delays. Foreign Object Debris/Damage (FOD) Prevention Program Product suppliers must have a FOD program for the purpose of prevention, detection, and removal of foreign objects. The program should meet the following requirements as applicable:

FOD prevention must be implemented in all areas as applicable and FOD training awareness must be provided to all people involved in the production, inspection, test, packaging and material handling of product manufactured for Eaton. Appropriate records must be maintained to document the training, and may be assessed by Eaton with 24 hour notice. Parts must be protected from handling damage in all areas; material handling awareness training must be provided to all employees and handling standards documented.

Supplier must document all FOD incidents and perform root cause analysis.

Metrics must be documented if FOD incidents occur.

If critical FOD areas are noted/ required, Physical Entry Controls shall be established with entry requirements visually posted outside each area.

Internal auditing of FOD prevention in all critical FOD areas must be conducted and documented. Certification of Conformance (C of C) Unless otherwise specified by PO/contract, a supplier must provide adequate certification of conformance for all materials and processes specified on the purchase order or contract, for each shipment. Where available, these may be submitted electronically. Suppliers are responsible for all PO terms and conformity characteristics per the PO/Contract/Blue Print/Specification accepted; i.e., for tier 1 (direct) suppliers delivering a product which includes sub-contracted or special processes, all such processes must be indicated on the direct supplier’s certificate of conformance. When required by contract, components procured from a supplier holding an applicable Airworthiness Approval from their local regulatory authority, are to be supplied with the applicable Airworthiness Tag/Certification (i.e., EASA Form1 or 8130). This is particularly important for proprietary parts that may not be readily inspected/tested on receipt. In addition to any specific requirement for Airworthiness Release Tags, the basic categories of C of C


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documentation for all products or services are General, Special Process, Raw (Mill) Material, and Age-Sensitive materials.

General Certificates A general certification of conformance, signed by the Quality Management Representative or designated company officer, shall be used for all parts and materials. For machined components; if the supplier also supplies the raw metallic material, a copy of the original mill certificate shall be provided. Special Process Certificates In addition to the general certification, an additional special process certification is required. The certificate of conformance will contain at a minimum:

The process(s) performed

The special process supplier’s name

The special process supplier’s NADCAP certification #

The expiration date of the special process supplier’s NADCAP certification

The specification number of the process(es) performed

Revision level

Purchase order number

Part number

Lot size

Sample size

Applicable process specifications/controls

Applicable test results

Serial numbers where applicable to contract

Raw Material (Mill) Certificates Raw metallic materials (including forgings and castings) supplied shall include a copy of the original mill certificate or material test report (certification) from an accredited test lab. Raw material mill certifications may not be altered or have any markings other than check marks from verification of physical and chemical values and/or indication of inspection acceptance. Stamps may be applied by warehouses/distributors to add incidental information such as the Eaton purchase order, weight shipped, etc.

Casting and forging suppliers shall also include the physical or mechanical properties with heat treat batch-lot numbers.

When required by contract/PO, certification shall show that all materials comply with all Government requirements including country of origin and country where the material is melted.

The certification must be signed, dated with heat lot and specification used

Age-Sensitive Material Certificates Age Sensitive Material suppliers shall additionally supply the lot number, source construction number (hose/sleeve only), and cure date (age-sensitive items) within the C of C document. Separate C of C documents must be submitted when multiple lots from different heats are shipped at the same time. DFAR Preference for Domestic Specialty Metals (Reference DFAR Clause 252.225.7009) Where required by contract or PO, DFAR requirements shall apply. “Specialty Metals” means: Steel – With a maximum alloy content exceeding one or more of the following limits: manganese, 1.65 percent; silicon, 0.60 percent; or copper 0.60 percent; or, Containing more than 0.25 percent of any of the following elements: aluminum, chromium, cobalt, columbium, molybdenum, nickel, titanium, tungsten, or vanadium; Metal alloys - consisting of nickel, iron-nickel, and cobalt base alloys containing a total of other alloying metals (except iron) in excess of 10 percent;


Dec 2014 of 31 Rev. 11

Titanium and titanium alloys; or, Zirconium and zirconium base alloys.

DFAR Specific Requirements Any specialty metals incorporated in articles delivered to Eaton Aerospace shall be melted in the United States, its possessions, Puerto Rico or a qualifying country. (Reference DFAR)

This requirement shall be flowed down to all sub-tier raw material sources.

Prior Eaton approval is required if specialty metals not meeting the requirements are planned for use in articles delivered under contract or purchase order to Eaton Aerospace sites.

Any and all exceptions to this requirement shall be noted on the Certification of Conformity. Supplier Validation of Raw Material Unless material is procured directly from Eaton, the supplier shall perform & document periodic validation of test results for raw materials purchased, using accredited inspection services approved by Eaton per AS/EN9100 requirements.


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17 APPENDIX

Definitions Control Plan Written description of the system for controlling processes that produce products for Eaton. Suppliers must establish a control plan for each new product and address all significant and critical design characteristics, process parameters and performance tests. DMR A Defective Material Report (DMR) is a method by which all non-conforming quality conditions are reported to the supplier and corrective action is requested. Functional Check Evaluation performed on initial samples by some Eaton facilities to ensure that the samples can be assembled properly and conform to operational requirements. The engineering sample evaluation report is utilized for this approval. Pass Through Characteristics (PTC) – Those component characteristics with potential fit or function issues that will not get detected within Eaton or the customer using facility. Process Change Change in a process that could alter its capability to meet design requirements or durability of a product. This includes: (1) new, different, relocated or rehabilitated production machinery/equipment; (2) any change in subcontracted products or services including the use of engineering-approved alternate materials; or (3) changes to rework methods. Process change also includes changes in the sequence of operations and chemical compounds such as adhesives, sealers, lubricants, etc., which are parts of the product. Contact your Eaton business group representative for further definition. Special Characteristics Characteristics designated in the Design Record (drawings and specifications) that, with reasonable anticipated variation, could significantly affect a product’s safety or compliance with applicable standards or regulations and/or are likely to significantly affect customer satisfaction with a product. Special Characteristics may be described by the Engineering teams in various Eaton businesses as ‘special’, ‘key’, ‘critical’, ‘safety’ ‘significant’ or ‘pass through’ and are designated by those teams with defined symbols in the Design Record (drawings and specifications). All these designations are generally referred herein as ‘Special’. Quality System Assessment (QSA) Multi-part questionnaire used for a supplier self-assessment and used by an auditing team during an on-site visit to verify a supplier's effective implementation of a quality system and environmental compliance.

Date Revision Change

12/15/2014 11 All Business Specific Requirements are moved from every sections and kept as separate requirements at the end of the manual Section - 16

12/15/2014 11 Product Stewardship section 15.6 added

12/15/2014 11 Section 1: Numbering adjusted and few sections added

12/15/2014 11 Section 1.4: Ethics section added and verbiage change


Dec 2014 of 31 Rev. 11

12/15/2014 11 Section 2: Numbering adjusted and whole section revised and re written

12/15/2014 11 Section 3: Name and verbiage changed

12/15/2014 11 Section 4.5: Verbiage changed

12/15/2014 11 Section 5: Numbering adjusted and verbiage changed

12/15/2014 11 Section 6: Rewritten and modified

12/15/2014 11 Section 7: Rewritten

12/15/2014 11 Section 8: Rewritten

12/15/2014 11 Section 9: Name and verbiage changed

12/15/2014 11 Section 10: Numbering changed and few points added

12/15/2014 11 Section 11.1: Eaton makes available… Line added

12/15/2014 11 Section 12: Name and minor verbiage changed

12/15/2014 11 Section 13: Rewritten and modified

12/15/2014 11 Section 14: (where implemented) added in the verbiage

12/15/2014 11 New Section 15 added for Sustainability, Environmental, and Regulatory Information

12/15/2014 11 Hydraulic External Link is removed from the Contents

09/30/2014 10 Section 4.3 – For Aerospace Suppliers – Clarification on Aerospace Audit Timing (Removed 36 months requirement)

eaton supplier excellence manual 12172014.pdf

Documents

supplier assessment

supplier responsibilities

supplier confidentiality

supplier diversity

tier supplier control

supplier performance

initial supplier profile

change control