supplier requirements manual issue 5 purchasing_d4255...supplier requirements manual issue issued by...

Purchasing Raw Materials

Supplier Requirements Manual

Issue: 5 Date: December 15

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Without supplier signature

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Purchasing Raw Materials Supplier Requirements Manual

Issued by Reviewed by Approved by Issue No.

Date

Dep. Name Dep. Name Dep. Name

5 Dec 15th,

2008 CP K. Hatakka CP

QM EP (Tires) EP (CT) QM/EM (CT) QM (CT) IH CVD Law

Y. Polaster M. Schmitz F. Seefeldt J. Wawoczny F. Weber W. Kock C. Böge B. Schaefke S. Kroemer F. Schroeder T. Simon M. Guenther K. Czech-Scharif-Afschar K. Braukmann J. Stark

CP QM

L. Toscani T. Reese

Changes compared to previous version are highlighted in red and invalid passages are canceled.

Internal source: U:/My Documents

External source: www.conti-online.com/generator/www/com/en/continental/portal/general/home/index_en.html/ Global Sourcing/Supplier Requirements Manual




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Site Map Preface Environmental Protection, Safety, Security and Health (ESH) Policy of Continental Quality Policy of Continental Corporate Social Responsibility Policy of Continental 1. Introduction

1.1. Scope, Validity and Application 1.2. Definitions and Abbreviations

2. Basics 3. General Requirements

3.1. Supplier Approval Process 3.1.1. Supplier Self Assessment 3.1.2. Supplier Site Assessment

3.1.3. Supplier Certification 3.1.4. Quality Assurance Agreement 3.2. Product Approval Process 3.3. Supplier Audits

3.3.1. System Audit 3.3.2. Process Audit 3.3.3. Product Audit

3.4. General/Product Liability Insurance 3.5. Obligation to Inform

4. Quality Requirements

4.1. Long Term Quality Data 4.2. Production Lots and Specified Product Characteristics 4.3. Packaging Weight Tolerance, Shelf Life and Storage Conditions Data 4.4. Inspection Certificates 4.5. Complaints 4.6. Corrective Action Requests and Improvement Action Plans

5. Environmental Requirements

5.1. Environmental Compliance 5.2. Environmental Impacts on Air, Soil and Natural Surrounding 5.3. Energy and Resources




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6. Logistics Requirements

6.1. Conditions of Purchase 6.2. Logistics Processes 6.3. Electronic Data Interchange 6.4. Allocation of Resources

6.4.1. Procedure 6.4.2. Fluctuating Quantity Requirements 6.4.3. Special Cases

6.5. Dates and Quantities in Purchasing Documents 6.6. Consignment

6.6.1. Product List 6.6.2. Management and Handling 6.6.3. Inspections 6.6.4. Liability 6.6.5. Stock Issues and Payment 6.6.6. Insurance

6.7. Purchasing Specifications 6.7.1. Material Specification 6.7.2. Material Safety Data Sheet 6.7.3. Packaging Specification 6.7.4. Transportation Specification

6.8. Terms of Delivery 6.9. Packaging

6.9.1. General Requirements and Procedures 6.9.2. Functions and Types of Packaging

6.10. Identification and Labeling 6.10.1. Material Labels 6.10.2. Health and Safety Labels

6.11. Shipment Documents 6.11.1. Shipping Note Specification 6.11.2. Additional Shipment Documents

6.12. Shipment 6.12.1. Agreement of Date of Delivery 6.12.2. Agreement of Delivery Quantity 6.12.3. Notification of Readiness for Shipment 6.12.4. Making Products Available for Shipment 6.12.5. Advance Ship Notice

6.13. Customs 6.14. Invoicing 6.15. Relocation of Production Site 6.16. Obligations in Emergencies 6.17. Supplier Rating 6.18. Continuous Improvement

7. Acceptance of Binding Obligation




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1. Introduction 1.1. Scope, Validity and Application

All previous versions of corporate Supplier Requirement Manuals (as defined hereinafter) issued for Continental AGs Tire divisions and/or ContiTech division for Chemical Raw Materials (as defined hereinafter) and/or Reinforcements (as defined hereinafter) are invalid. The only valid Supplier Requirements Manual for Continental AGs Tire divisions and ContiTech division for Chemical Raw Materials and Reinforcements is this Purchasing Raw Materials Supplier Requirements Manual (“Manual”) in the on-line version on the Internet.

www.conti-online.com/generator/www/com/en/continental/portal/general/home/index_en.html/ Global Sourcing/Supplier Requirements Manual This Manual is intended to give detailed information about Continental’s Supplier (as defined hereinafter) requirements and expectations.

The stipulations in this Manual are mandatory and valid for all business agreements, including all products, for beneath specified Products:

• Chemical raw materials, often referred to as compounding materials, for the use as direct (production) material (“Chemical Raw Materials”)

• Reinforcements, made of various materials, e.g. steel, textile, etc., for the use as direct (production) material (“Reinforcements”)

This Manual is an integral part of each purchasing agreement between Continental and the Supplier and states binding requirements for the Supplier. Unless otherwise explicitly agreed in writing by Continental, the Supplier must meet the stipulations stated in this Manual. In the event that any provision of this Manual is not applicable or enforceable, all other provisions shall remain in full force and effect. Compliance with the requirements stated in this Manual is essential and mandatory. It is therefore requested that the Supplier informs all responsible members of its staff of the content of this Manual. 1.2. Definitions and Abbreviations The Basics

Policy describing Continental's vision, values and beliefs, partly described under Section 2. Chemical Raw Materials

One group of Raw Materials, often referred to as compounding materials, for the use as direct material Continental

Refers in this Manual to Continental AG’s Tire divisions and ContiTech division and all subsidiaries and affiliates thereof Corporate Quality

Department within Continental AG




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Corporate Social Responsibility Policy of Continental

Continental policy document EN

European standard Environmental Protection, Safety, Security and Health (ESH) Policy of Continental

Continental policy document FMEA

Failure mode and effects analysis General Conditions of Purchase of Continental Aktiengesellschaft and of the Business Units of the ContiTech Division

Continental’s purchasing conditions Greenfield

Construction of an entirely new production site ISO

International Organization of Standardization PAH

Polycyclic aromatic hydrocarbon PCB

Polychlorinated biphenyls PE

Polyethylene PP

Polypropylene PPAP

Production part approval process PPF

Produktionsprozess und Produkt Freigabe (production process and Product release) Product

Result of a process (either material or immaterial) Example: Chemical Raw material, Reinforcement, etc. Process

Set of interrelated or interacting activities which transforms inputs into outputs Purchasing Raw Materials

Department within Continental AG




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Purchasing Raw Materials Supplier Requirements Manual, also referred to as “Manual”

This Document with Supplier requirements PVC

Polyvinyl chloride Quality Policy of Continental

Continental policy document Raw Materials

Collective term for Chemical Raw Materials and Reinforcements Reinforcements

One group of Raw Materials, made of e.g. steel, textile, etc., for the use as direct material Supplier

External organization or person that provides a Product (material or immaterial) Example: Producer, distributor, retailer or vendor of a Product, or provider of a service or information Supplier Requirements Manual

Document with Supplier requirements Supplier Site Assessment

One of the steps in the evaluation and selection process of new production sites with the aim to collect and evaluate general, standardized and quantified data to serve as a basis for deciding on further steps TS

Technical Specification VDA

Verband der Automobilindustrie (German Association of the Automotive Industry)

2. Basics

The success and competitiveness of a company can nowadays not simply be defined by its growth and profitability, even the best Products are of no use when social and environmental requirements are not taken into account.

Quality is part of Continental’s entrepreneurial approach and it affects all dimensions of Continental’s work.

Continental is conscious of its social responsibility and its responsibility towards the environment as a global corporation.

Continental is committed to corporate social responsibility, environmental protection and quality as defined in following policies

• The Basics

• Corporate Social Responsibility Policy

• Environmental Protection, Safety, Security and Health (ESH) Policy of Continental

• Quality Policy of Continental




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Continental expects its Suppliers to demonstrate their social and environmental responsibility and commitment to quality consistent with the principles in above policies.

3. General Requirements 3.1. Supplier Approval Process

New Suppliers undergo an approval process, starting with Supplier self assessment and possibly followed by additional sequential steps. 3.1.1. Supplier Self Assessment “Supplier Self Assessment” requires completion of the Supplier self assessment form and submissions together with additional documents, as stipulated in the form. Following submission, Continental then conducts an internal review based on information tendered, together with the Product risk, and determines what other actions are required. 3.1.2. Supplier Site Assessment Following Supplier Self Assessment and Continental internal review, Continental decides about conducting a “Supplier Site Assessment”. Supplier Site Assessments are conducted at the manufacturing sites facilities and include checks with respect to company, technology, supply, quality and cost/finance. A successful Supplier Site Assessment is required prior to that facility becoming an approved Continental source of supply. 3.1.3. Supplier Certification Suppliers of Products having an impact on Continental’s product quality (mainly, but not limited to, Suppliers of production material) must have their quality system certified according to ISO 9001 (latest issue). A certification according to ISO/TS 16949 (latest issue) is appreciated.

Suppliers are also expected to provide a valid ISO 14001 (latest issue) certificate.

Suppliers for Continental on-site work or other service providers shall provide legal qualifications

respectively permits and certified competences and skills. 3.1.4. Quality Assurance Agreement

In selected cases, the final stage in the Supplier approval process is completion and submission of the Quality Assurance Agreement provided by Continental.




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The content of the Quality Assurance Agreement addresses quality related topics and regulates

• requirements on Supplier’s quality and environmental management system

• serial approval

• specifications

• notification of defects

• information

• documentation

• process changes

• audits

• Product responsibility and Product safety

• secrecy

• applicability to affiliates of the customer 3.2. Product Approval Process

The Product approval is an indispensable precondition for the use of any Product used as direct (production) material for the production in series production. Product approvals are necessary for

• materials supplied by production sites from where materials have not previously been obtained

• materials with changed material form

• materials of a new or improved type with specification deviating substantially from an existing one

Unless there is any decision to the contrary in special cases, the approval of a material only applies to the one named Continental plant and/or company. The scope of the technical approval procedure for a material depends on

• how strongly the material concerned can influence the properties of semi-finished and finished products

• to what extent correlations have been established between laboratory measurable material properties and the properties of semi-finished and finished products

Continental’s Product approval procedure varies for different Product types, includes however principally following steps

• laboratory approval

• production approval

• PPAP/PPF (VDA 2) approval (in specific cases) 3.3. Supplier Audits

For various reasons, Continental may determine the need for an audit. The following describes the expectations and the process for the audit.




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The audit begins with a presentation given by Supplier regarding Supplier’s company. This should be followed with a general description of the quality and environmental functions with emphasis on

• organizational structure

• main tasks

• quality assurance manual

• limits of authorities

• process flow charts showing quality check points Continental audit team leader will present a short summary of the reasons for the audit and the functions of individual audit team members and then Continental audit team proceeds with the audit. The audit generally ends with a closing meeting with a summary of the audit results, where feedback will be given to Supplier’s management team. The Supplier should at least be represented by

• plant manager and the management team (at the opening and closing sessions)

• quality manager

• production manager

• other competent technical managers (e.g. laboratory, research & development, sales) Continental audit team will need to see

• quality assurance manuals

• organization charts

• job descriptions

• specifications

• control plans

• process flow charts

• control charts

• FMEA

• operation procedures

• test procedures

• laboratory records

• labeling procedures

• raw materials in process work procedures

• finished Products procedures

• storage procedures

• production quality records (e.g. capabilities, etc.)




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Remarks

• The audits established herein shall not transfer to Continental any liability for Supplier’s processes, Products and systems, which shall be constantly revised and improved by Supplier.

• The schedule of the process audit is coordinated with Supplier.

• If requested by Supplier, the questionnaire can be sent to Supplier in advance.

• Supplier must clearly point out if information is copyrighted or to be handled strictly confidential.

• If a formal declaration of confidentiality is required, Supplier must formally request this in writing to Continental audit team leader at least fourteen (14) days before the audit date.

• The audit report is sent to Supplier after the audit.

• Supplier has to sign the audit report and to send it back to Continental together with an improvement action plan, including responsibilities and timings for completion.

The audit requires approximately one (1) to two (2) days. Continental reserves the right to conduct audits, eventually together with Continental’s customer, at Supplier site(s) after prior agreement with Supplier.

Should quality problems arise, caused by the services and/or supplies of sub-suppliers, then the Supplier shall upon Continental’s request endeavor to enforce a joint audit at the sub-suppliers. 3.3.1. System Audit “System Audit” is a qualitative appraisal of Supplier’s quality management system. 3.3.2. Process Audit “Process Audit” is to assess the quality capability of the manufacturing process at Supplier. This means checking and assessing certain methods, working procedures, Products and their production processes for compliance with quality requirements and appropriateness of the specifications. 3.3.3. Product Audit A “Product Audit” is the planning, conducting, evaluation and documentation of inspections on selected variable and attributive characteristics in comparison with target specifications. In the course of a Product audit the specified characteristics are checked. The results of the checked characteristics must lie between the tolerances of the specification. For attributive characteristics there must be conformance with comparative samples. The check of the specified characteristics may be performed by a third party approved by the Supplier in the event that the material is urgently required and the Supplier does not have sufficient resources. 3.4. General/Product Liability Insurance

Suppliers are requested to purchase and maintain, on their own cost, a public-liability insurance as well as a general/Product liability insurance, each with commercially reasonable limits for claims for bodily injury, property damage, in Brazil additionally pain and suffering, considering the risk-exposure of the service/Product provided and a worldwide scope.




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In no event will a limit of less than a minimum coverage of five (5) million Euro per claim be considered commercially reasonable. Product liability coverage is to include claims occurring in foreign jurisdictions, including USA/Canada. Upon request of Continental the Supplier has to bring approval of the existence of said insurances. 3.5. Obligation to Inform

Suppliers are requested to contact Continental immediately in case of any deviations from the requirements stated in this Manual as well as any deviations from any applicable legal requirements or with the suspicion that incorrect Products were already delivered.

Suppliers have to inform Continental immediately about any change of the production process or the production location not properly authorized in writing by Continental.

4. Quality Requirements 4.1. Long Term Quality Data

Supplier is obliged to ensure that long term quality records are kept for all specified inspection characteristics, marked in the specification with a “C” or with another symbol which is specified by Continental. Long term capability index reflecting the long term (greater than three (3) months) process total variation has to be available in the form of a tabular compilation and in the form of check cards. Details of the calculations are to be explained on a supplementary sheet. This requirement is not valid for all materials where the Supplier uses 100 % sorting or selection of material in order to ensure the compliance of the delivered material with the Continental specification limits.




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With respect to the conditions for compliance with long term quality data and process capabilities, following requirements are valid

• characteristics For all specified characteristics, long term quality data is to be reported.

• number of lots for evaluation of long term quality data minimum: thirty (30)

• transmission of long term quality data minimum: once every six (6) months and/or on Continental’s request

• data, per characteristic, to be provided n, x, X bar, CV index, Cp, Cpk, time period, limits where n = number of test results for all production lots x = single value X bar = (Sum i (x))/n delta = smallest difference between X bar and one of the tolerances s = sample standard deviation s (n – 1) CV = (s/X bar) * 100 Cp = tolerance/6s Cpk = delta/3s

• capability index Cpk target: greater or equal to 1,33 minimum: 1,00 In cases where Cpk is less than 1,33, a copy of the relevant improvement action plan is to be added to the bi-yearly long term quality data or process capability report.

4.2. Production Lots and Specified Product Characteristics

One shipment should include one production lot only. If this is not possible, then the maximum number of production lots in one shipment is two (2).

To verify compliance with all C-marked specified Product characteristics, samples shall be taken by the Supplier from each production lot. The maximum number of samples taken per lot is three (3). The maximum number of test values per sample is five (5). 4.3. Packaging Weight Tolerance, Shelf Life and Storage Conditions Data

Before first shipment, the Supplier has to agree with Continental for every Product on

• the tolerance for the packaging weight (+/- one (1) % is standard)

• the total shelf life

• the maximum storage period

• the minimum remaining shelf life at the time when Continental receives the Product (fifty (50) % of total shelf life is standard)

• the storage conditions 4.4. Inspection Certificates

For every shipment, the Supplier is requested to submit to Continental an inspection certificate for each production lot included in the shipment.




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Suppliers should ensure that inspection certificates are issued in accordance with EN 10204:2005-01 3.1. Inspection certificates have to include following information

• Supplier, Supplier address and Supplier contact person with contact data

• manufacturer and manufacturer address (if not the same as Supplier)

• customer (receiving Continental plant (from the corresponding purchase document))

• inspection certificate number

• Continental internal Product number (from the corresponding purchase document)

• Continental internal Product description (from the corresponding purchase document)

• manufacturer lot number

• date of production (YYYY-MM-DD)

• inspection characteristic(s)

• unit for the inspection characteristic(s)

• inspection result for the inspection characteristic(s)

• inspection method for the inspection characteristic(s)

• name and department for the inspector with contact data

• date of the inspection (YYYY-MM-DD)

• signature of the inspector The samples for the tests are to be taken from the shipped Product (specific test report) and the Product tests must be carried out in compliance with the corresponding specification and technical rules. Test results, per referenced test methods, are required for all “C” characteristics, or adequate alternatives, shown in the material specification data sheet. Receivers of inspection certificates may vary from one Continental location to another. The Supplier has to conclude a specific agreement with each Continental location on the recipient and submission method for inspection certificates in that location. Inspection certificates must be submitted as agreed and be available at Continental location before or together with the shipment. Any deviations from these requirements shall be subject to mutual agreement between Continental and the Supplier. Any additional costs incurred by Continental as a result of Supplier not meeting these requirements shall be charged to the Supplier. 4.5. Complaints

Continental may issue a complaint for any case of non-conformity. The complaint is issued on a standardized form by the concerned Continental plant. The form contains information about the rating of the delivery, the reason for the complaint, Continentals decision how to proceed with the delivery and actions requested from the Supplier. Besides those deviations, detected by Continental during the incoming inspection, the Supplier might be notified when there is a shift in the average value for a characteristic.




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The shift in the average value for a characteristic can be based on Continental’s measurements and/or taken from the inspection certificates issued by the Supplier. Suppliers are required to process complaints from Continental within the time frame stipulated in the complaint. Suppliers are further required to circulate documents and information, related to the complaint and received from Continental, timely to appropriate functions and/ or persons to assure a proper and speedy resolution of the complaint. Apart from taking short-term corrective action and further action to prevent the recurrence of non-conformities, Suppliers are required to keep statistics of non-conformities which are evaluated and distributed within their organization, especially within the functions affected. For claims, the applicable paragraphs in the General Conditions of Purchase for Continental Aktiengesellschaft and of the Business Units of the ContiTech Division are valid. The supplier is charged with all costs connected with the complaint. The Supplier is charged additionally with 2000:- Euros per day and function for the administrative involvement of any Continental functions, including, but not limited to

• Research and Development

• Laboratory

• Purchasing

• Supplier Development

• Quality Management In cases where the involvement of Continental employees becomes necessary at Supplier’s site, the Supplier is charged with the actual travel and hotel expenses of such Continental employees. 4.6. Corrective Action Requests and Improvement Action Plans

There will be occasions when a corrective action request is addressed to the Supplier and the Supplier is requested to present an improvement action plan. The format for such a plan is optional. If requested by Continental, the problem resolution should be reached by using a systematic problem solving approach, such as the “8 Discipline” (“8 D”) approach recommended by the automotive industry. The improvement action plan must describe the operational key indicator requiring improvement, its performance goal for the given time period, individuals responsible for achieving the performance objectives and the improvement actions. Responses to corrective action requests and copies of improvement action plans are to be forwarded to Continental per following frequencies

• semi-annually for any process capability (Cpk) less than required 1,33

• within thirty (30) days for any corrective action request due to a complaint

• within fifteen (15) days for any corrective action request due to a non-conforming shipment

• as defined, on any other request for Product, process or system improvement




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5. Environmental Requirements 5.1. Environmental Compliance

Suppliers have to ensure compliance with all applicable legal environmental requirements (international, national, federal, regional, local, e. g. the Regulation (EC) No. 1907/2006 (REACH)) as well as any specific requirements of the authorities concerning environmental protection with respect to water, soil and air protection, conservation of resources, waste minimization, noise protection, flora and fauna and humans.

Continental expects its Suppliers, supplying any Continental plant in the European Union, to pre-

register all required substances in time and to complete registration before end of transitional

period.

The registration can be done either by Supplier himself or by a third party representative if the

Supplier is located outside the European Union.

In case Supplier withdraws a product from the market, Supplier has to inform Continental

immediately. Compliance with all relevant Continental internal environmental specifications is required (specifications are provided by Continental on Supplier’s request). Continental company policies (see in this document) have to be complied with. Should any further specification be required by the Supplier, the Supplier is responsible to request the information for environmental protection (e.g. standards) from Continental. In some cases it will be the responsibility of the Supplier to translate the contents of the English standards so that the requirements are comprehensible to persons speaking the national language. In case there is a discrepancy between the national environmental requirements and the Continental internal standards, the Supplier is obliged to address the topic and to achieve a mutual agreement about the further proceedings with Continental. 5.2. Environmental Impacts on Air, Water, Soil and Natural Surrounding

Suppliers shall minimize emissions into air (e.g. volatile organic compounds, dust, greenhouse gases) and water (e.g. oil, particles, chemicals). Contamination of soil, groundwater, and the natural surrounding shall be minimized (e.g. spills, leaks, incidents). 5.3. Energy and Resources

Suppliers are requested to use energy and resources (e.g. materials, water) efficiently. Information about the energy efficiency of machines, equipment and other electric tools shall be provided to Continental.




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6. Logistics Requirements 6.1. Conditions of Purchase

The General Conditions of Purchase of Continental Aktiengesellschaft and of the Business Units of the ContiTech Division apply to all purchase orders or purchasing agreements. They become an integral part of the contract once a purchase order is accepted. Any conditions of sale enclosed with the Supplier's offer or the Supplier's confirmation of an order do not apply even if Continental does not expressly object to them. 6.2. Logistics Processes

Continental aims to optimize all processes in the entire supply chain from Suppliers to Continental and from Continental to Continental’s customers in the interests of all. To make purchasing and/ or supply processes smoother and to minimize the liaison required, the purchasing and/or supply process may have to be redesigned in order to optimize the logistics chain between Continental and the Supplier. Continental expects active support and contribution from Suppliers to any change in the logistics processes proposed by Continental. 6.3. Electronic Data Interchange (EDI)

International markets and increasing complexity of the supply chain result in an increased need for automated data exchange between Continental and Suppliers. Through the implementation of EDI Continental and Suppliers can experience improved quality and decreased cost. The introduction of EDI defines the business data exchange between computer systems of two or more companies and brings following benefits

• minimum manual data input required

• reduction of input and verification cost

• fewer errors and incorrect shipments

• significantly reduced processing times The exchange messages are standardized and can be handled by all participants automatically. The result is a continuous free exchange of business data where all participants interpret the information in a standardized way. Therefore all participants must agree on the same structure of EDI messages during the development of the process. A common structure is given by the United Nations and is called EDIFACT (Electronic Data Interchange for Accommodation, Commerce and Transportation). Continental uses EDIFACT as basis to build up a structure in order to communicate with its Suppliers electronically and automatically. Continental aims at transmitting all order/ shipment relevant data and documents electronically via Rubber Network.




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Continental encourages its Suppliers to provide all order/ shipment relevant data and documents electronically. For each individual case, Continental concludes a specific EDI agreement with the Supplier. 6.4. Allocation of Resources

Suppliers must ensure that resources are allocated in such a way as to ensure a secure supply of Products to Continental irrespective of fluctuations in Continental’s demand or in the supply of materials and other resources by Suppliers’ suppliers. 6.4.1. Procedure

In order to meet this general requirement, the Supplier must, prior to the start of series production, carry out, as part of its advanced planning, appropriate resource planning to ensure that the quantities required by Continental can be supplied, both at the start of production and in the course of subsequent production, thereby taking into account possible fluctuations. The Supplier is requested to conduct advanced quality planning, including

• capacity plan

• process flow chart

• process FMEA

• packaging plan Continental sees FMEA as an essential tool for ensuring the quality of logistics processes. The Supplier shall include in his FMEA

• shipment

• storage and FIFO (first in, first out)

• packaging and labeling

• order make-up processes

• handling processes

• contract handling

Continental considers the logistics FMEA additionally as a tool for continuous improvement of existing processes. In addition to advance planning, the Supplier must conduct periodic planning reviews in the course of production. In the course of planning work, the Supplier must liaise closely with Continental to ensure that the plans are based on updated quantity forecasts etc.. In the event of unforeseen problems, which may arise despite the allocation of resources by the Supplier, including tool wear, purchasing bottlenecks, machine failures etc., the Supplier must notify Continental without delay so that appropriate remedial actions may be taken. Continental reserves the right to conduct logistics audits at Suppliers’ site(s) by agreement with the Supplier.




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6.4.2. Fluctuating Quantity Requirements

Continental’s customers expect Continental to show certain flexibility. Continental expects the same flexibility of its Suppliers. Suppliers must allocate resources, including a sufficient buffer inventory, in such a way as to take account of Continental’s demand fluctuations. 6.4.3. Special Cases The start and end of series production and the relocation of production are special cases which may require the Supplier to produce Products in advance. In any such case, the Supplier must agree on production quantities with Continental and ensure that the required resources are available. 6.5. Dates and Quantities in Purchasing Documents

Purchasing documents, issued by Continental, inform the Supplier of Continental’s current requirements. Dates and quantities stated in such documents are binding for the Supplier. The Supplier is not permitted to split the quantities into several shipments, as this would result in additional cost; if the Suppliers still does so, any additional cost shall be charged to the Supplier. Exceptions must be agreed in writing between Continental and the Supplier prior to shipment. All dates and quantities stated in Continental’s purchasing documents shall be deemed to have been approved by the Supplier unless an objection by the Supplier is received within three (3) working days after the issue of the purchasing document. Any additional carriage costs (premium freight) and/ or additional internal costs incurred by Continental as a result of delivery problems caused by the Supplier shall be charged to the Supplier. The Supplier has an obligation to inform Continental about shipments with “premium freight”. 6.6. Consignment

In cases where the Supplier’s production site(s) is (are) not in the vicinity of Continental plant(s), Continental may implement consignment stocks in order to ensure optimized supply from the Supplier’s production site(s) to Continental plant(s). Continental may also implement Consignment Stocks for other reasons. The provisions for the consignment handling, in each specific case, must be laid down in a agreements with the Suppliers (“Consignment Stock Agreement”) . Such a Consignment Stock Agreement must be in accordance with the applicable law at the location of the concerned Continental plant. Following general provisions apply always to consignment handling.




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6.6.1. Product List The Products included in consignment handling must be listed in the Consignment Stock Agreement. For each Product, following specific data must be agreed on and recorded in the agreement

• Continental Product number and name

• shipment lot quantity

• agreed stock limits

• production lot

6.6.2. Management and Handling

The Supplier delivers the Products, intended for Continental and listed in the Consignment Stock Agreement, to the consignment storage. The delivery address of the consignment storage must be defined in the Consignment Stock Agreement. The Agreement must also specify the party responsible for bearing the cost of storage space, inventory accounting, stock management and handling at the consignment storage as well as the party being responsible for operating the consignment storage. In addition the agreement must state the responsibility for training the operators in the consignment storage (identification, labeling, FIFO, etc.). The operator of the consignment storage must provide the required storage space as well as the specified storage conditions and is obliged to safeguard and manage the Products with due care. The operator of the consignment storage must maintain the Supplier’s Products stored there as property of the Supplier. 6.6.3. Inspections The party to the Consignment Stock Agreement which does not act as the operator of the consignment storage is authorized to perform on-site verification of proper management of the stock and its status during normal business hours, after providing advance notice.

In certain cases Continental may commission a third party to perform these inspections on behalf of Continental. Such cases are stated in the Consignment Stock Agreement. Complaints concerning quantity shortfalls and non-conformities are made to the Supplier in writing without delay after detection. Inspection does not operate in any way to relieve the Supplier from its obligations 6.6.4. Consignment Conditions

All shipments to the consignment stock must be addressed to the consignment stock and are to be made on the basis of the conditions laid down in the (frame-) purchase and supply agreement or, in the absence of such, the General Conditions of Purchase of Continental Aktiengesellschaft and of the Business Units of the ContiTech Division.




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6.6.5. Stock Issues and Payment

The Supplier must make the Products delivered to the consignment storage available for withdrawal by Continental. Continental will notify the Supplier of Products withdrawn from the consignment storage in accordance with conditions in the Consignment Stock Agreement. Provisions of the price payable for Products withdrawn from the consignment storage, as well as provisions of invoicing and payment are subject to the (frame-) agreement or, in the absence of such, the General Conditions of Purchase of Continental Aktiengesellschaft and of the Business Units of the ContiTech Division. As defined in the Consignment Stock Agreement the transfer of title to Products withdrawn from the consignment stock takes place according to the relevant purchase and supply agreement. 6.6.6. Insurance

The Supplier is responsible for insuring the Products in the consignment storage at its own expense against damage or loss. 6.7. Purchasing Specifications

For all Products, a complete purchasing specification consists of following elements

• material specification

• material safety data sheet

• packaging specification

• transportation specification A (frame) purchasing agreement between Continental and the Supplier can be concluded only when a complete purchasing specification is available and agreed upon between Continental and the Supplier. 6.7.1. Material Specification The chemical/ technical characteristics are defined in the material specification (with target values and tolerances), including the form in which the Product must be supplied. Packaging materials that are processed together with the Product are also specified. The material specification is to be signed by the Supplier for acknowledgement. 6.7.2. Material Safety Data Sheet (MSDS) The Supplier has to provide the latest version of the MSDS according to the legislation of the respective country for the delivery (e.g. in Europe according to Regulation (EC) No. 1907/2006 (REACH) or ISO 11014-1). The MSDS must be provided prior to the first delivery as well as with the delivery in case of an update of the MSDS. MSDS shall also be provided for any type of chemical or substance which might be included in a machine, equipment, tool or utility. The recipient of the MSDS is the delivered location and the language used in the MSDS has to be the language of the country where the material is delivered. Continental prefers receiving the sheets in electronic form.




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For materials imported or purchased in the U.S.:

1. The Supplier certifies that all components of the Product are listed on Toxic Substances Control Act (TSCA) inventory as maintained by United States Environmental Protection Agency (US EPA)

2. Information provided in the MSDS shall meet the minimum requirements of the “Hazard Communication Standard“ as promulgated at 29CFR 1910.1200

6.7.3. Packaging Specification The packaging specification contains following information (for the packaging unit and for the shipping unit)

• packaging material and method of packing

• dimensions

• weight (target and tolerance)

• packing instructions (for transport)

• identification and labeling 6.7.4. Transportation Specification The requirements for the delivery/shipment are established in the transportation specification or directly in the purchase order text. The transportation specification contains following information

• method of transportation

• load weight

• container type and size

• trailer loading/unloading configuration 6.8. Terms of Delivery

Continental and the Supplier should agree on terms of delivery in accordance with Incoterms (latest edition, currently Incoterms 2000) in order to avoid misunderstandings and possible litigation (e.g. in the event of damage). The use of the Incoterms acronyms is standard practice in international trade, allowing work which could previously only be performed manually to be completed by computer systems (e.g. reports to the Federal Statistics Bureau, etc.). Any cost incurred by reason of failure of the Supplier to comply with shipment agreements shall be borne by the Supplier. 6.9. Packaging

The Supplier is responsible for the quality of the Products and therefore also for the compliance with these packaging requirements. In order to ensure safe handling (in accordance with accident prevention and other regulations) and smooth operations, it is essential for all Products to be packed and shipped in accordance with the requirements stated in this section.




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6.9.1. General Requirements and Procedures This standard sets the basic requirements of Continental on the transportation devices used to ship raw materials from the Supplier to Continental tire plants and ContiTech mixing facilities.

• Wood is not allowed for packaging.

• Full metal boxes or crates have to be used for shipment of natural rubber and synthetic rubber. These devices have to be light weight, easy to handle, stackable and foldable (example: MB5 from Goodpack).

• Metal pallets have to be used for chemicals. Pallets used to handle big bags may be plastic, too.

• No packaging allowed, which may have adverse impacts on health, safety or import non native biota.

Remarks:

• Exceptions have to be approved by Continental Quality Management and should be limited in time. (example: shortage of metal crates)

• A schedule for reaching full compliance with this standard has to be approved by Continental Quality Management.

It is the responsibility of the Supplier to provide individual and collective packaging for the Products. The packaging provided by the Supplier must be designed to withstand normal conditions of planned transit route and shall ensure that the Products reach their destination in satisfactory condition. The packaging shall protect the Products from damage and from deterioration caused by environmental effects. The packaging shall also protect personnel against hazards resulting from the Products themselves (e.g. regulations concerning the handling of hazardous Products must be complied with). The Supplier shall submit a packaging proposal (for the packaging unit and for the shipping unit) to Continental and agree with Continental upon the packaging which will result in minimal cost in handling and disposal. Continental reviews the packaging proposal and, based on this review, defines the packaging in the packaging specification. Upon request by Continental, the Supplier must submit samples of packaging material and conduct any packaging tests which may be required. The packaging proposal must be an essential part of the quotation submitted by Supplier. When the packaging is defined, the packaging specification becomes a part of the purchasing specification. The Supplier is obliged to comply with the packaging specification. Any deviations (e.g. in the event of a shortage of packaging materials) is subject to the approval of Continental. In the event of a failure by the Supplier to comply with the agreed packaging requirements, Continental reserves the right to refuse to take the shipment or to repackage the Products involved and to charge the cost of handling and repackaging to the Supplier.




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The approval of packaging by Continental does not relieve the Supplier from its responsibility to supply Products which are free from damage. 6.9.2. Functions and Types of Packaging All packaging must be designed to perform the following functions

• protective function

• storage and shipment function

• identification and information function

• use function

• separable

• recyclable Packaging can be subdivided into the following types

• non-returnable packaging Non-returnable packaging is to be avoided where possible. All such material shall be environmentally compatible and recyclable.

• returnable packaging Continental aims to use returnable packaging and tack-back systems where possible.

With respect to the growing volumes and values of the packaging involved, it is essential to implement procedures for the handling of returnable packaging. Procedures for the use of returnable packaging must be defined between Continental and the Supplier in each individual case. Quantities of packaging shall be minimized to the amount needed to fulfill the above stated requirements. 6.10. Identification and Labeling

Correct identification of Products allows for smooth processing which helps to avoid delays and additional costs. Continental’s aim is to develop a standard identification and labeling solution for all Continental plants. Any deviations from these requirements shall be subject to mutual agreement between Continental and the Supplier. Any additional costs incurred by Continental as a result of the Supplier not meeting the requirements shall be charged to the Supplier. 6.10.1. Material Labels Each packing unit must be marked with Supplier’s product name (high contrast, min 30 mm letter size), readable from two (2) m distance. Each shipping unit must be marked with a label. In specific cases, Continental may request the Supplier additionally to mark the packaging unit with a label.




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All labels must be according to Continental’s specification and sufficiently robust to ensure that they can be read both manually and by bar code readers and must be readable and remain in the specified position for the shelf life of the Product. Any old labels must be removed prior to shipment. The material label standard is available on the Internet. www.rubbernetwork.com (Resources - Supply Chain Documents) All material identification labels must be clearly visible from the outside. In applicable cases (e.g. cartons, pallets, etc.), two (2) labels must be used, one (1) on the short side and one (1) on the long side of the packaging. In order to ensure that bar codes are readable both manually and by barcode readers, labels must be positioned horizontally. Any fasteners used for a label must not impair its legibility. 6.10.2. Health and Safety Labels Hazardous symbols (pictograms) as well as other legally required hazardous warning information must be clearly visibly and permanently attached to the individual packaging as well as on the outer packing of shipping units. They shall comply with the specific legal requirements of the country to which the material is consigned. Suppliers shall comply with CE (Conformite Europeene) labeling requirements. Unless otherwise agreed, the CE symbol must be affixed to items in a clearly visible position. The declaration of conformity and the hazard analysis must accompany all items. 6.11. Shipment documents

Correct shipping documents allow for a quick identification of Products and a smooth further processing which help avoid delays in processing and additional costs. The Supplier must hand over all shipping documents (shipping note, bill of lading, customs declaration, etc.) for a shipment to the carrier along with the Products being shipped. In the case of packages delivered by postal or parcel services, shipping documents may be attached to the outside of the package. Any deviations from these requirements shall be subject to mutual agreement between Continental and the Supplier. Any additional costs incurred by Continental as a result of the Supplier not meeting the requirements shall be charged to the Supplier. 6.11.1. Shipping Note Specification

Each shipment must be accompanied by a shipping note. All shipping notes must be according to Continental specification. The shipping note standard is available on the Internet. www.rubbernetwork.com (Resources - Supply Chain Documents)




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6.11.2. Additional Shipment Documents

Additional documents (e.g. certificates, invoices, etc.) may be required in special cases. The Supplier must collect corresponding information from the competent authorities in the country of the Supplier. 6.12. Shipment

The instructions given in this section apply irrespective of the terms of delivery agreed with the Supplier. They govern the cooperation between Continental, the Supplier and the transportation company (“Forwarder”). The means of transport, route and Forwarder are to be determined by Continental and the Supplier together, in accordance with the agreed terms of delivery. The Supplier must only hand over shipments to an agreed Forwarder. Any cost incurred by Continental by reason of failure to comply with these instructions shall be borne by the Supplier. 6.12.1. Agreement of Date of Delivery

The date of delivery is the day of the week laid down in Continental’s purchasing document or other corresponding day agreed by Continental and the Supplier and refers to the day for arrival of the shipment at the specified Continental Production site. The Supplier must enforce the Forwarder to have shipment arrive on the correct day and during Continental’s normal goods receiving hours. 6.12.2. Agreement of Delivery Quantity The delivery quantity is the quantity laid down in Continental’s purchasing document or other corresponding quantity agreed by Continental and the Supplier. Delivery quantity tolerances must be laid down in the general purchasing agreement. 6.12.3. Notification of Readiness for Shipment

The Supplier must notify the Forwarder that Products are ready for shipment so that the Products can be collected by the Forwarder. The Supplier must inform the Forwarder of the following data

• gross and net weight

• quantity and precise type and size of shipping units

• stackability/non-stackability of shipping units

• required declarations for hazardous Products

• required date and time of arrival of the shipment at Continental 6.12.4. Making Products Available for Shipment

The Supplier shall make the Products available for shipment with all the documents required so that the Forwarder may collect the Products as agreed between the Supplier and the Forwarder.




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The Supplier is responsible for and must ensure that the vehicles of the Forwarder can be loaded promptly and are of sufficient quality and cleanliness to ensure that the Product reaches Continental in sound condition. 6.12.5. Advance Ship Notice (ASN) The Supplier must notify Continental of the shipment so that Continental may take any necessary action for receiving and inspection of the shipment and the Products included in the shipment. Continental aims at transmitting such an ASN electronically. The Supplier has to ensure that the electronic ASN number equals to the shipping (delivery) note number and that only one (1) ASN is sent for one (1) shipment. 6.13. Customs

The Supplier must complete forms and give the declarations of the origin of the Products as required by customs regulations in the country of concerned Continental plant. By doing so, the maximum custom preferences must be declared by Supplier. In case of doubt, the Supplier is responsible for clarifying any unclear points with the customs authorities or chambers of commerce concerned. The Supplier shall be liable to Continental for any cost incurred by Continental by reason of delay in any declaration, or the failure to submit a binding declaration, or the failure to obtain a preferred customs declaration. 6.14. Invoicing

As a part of the electronic data interchange via EDI/Web EDI, Continental is introducing its collective self-invoicing process together with Rubber Network. A significant advantage for the Supplier is that payment is done on-time and no invoices have to be sent. Credit memos are to be handled in accordance with the applicable law at the location of concerned Continental plant. 6.15. Relocation of Production Site

In order to prevent bottlenecks, the Supplier is required to give Continental at least six months advance notice of any Production relocation plans and to notify Continental of the action proposed to ensure supplies during relocation. 6.16. Obligations in Emergencies

The Supplier is required to draw up and distribute within its organization an emergency plan for the eventuality of disturbances affecting its logistics and Production processes and the continuous supply of Products to Continental.




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Disturbances may include, for example

• relocation of tools and machinery

• capacity problems

• damage or delays in shipment

• non-conformities

• tool breakage

• disturbances in supplies from subcontractors

• computer problems

• other events (strikes, accidents, etc.) The Supplier is required to develop, define and implement emergency procedures to ensure smooth supplies to Continental even in the event of such disturbances. In the event of any of the disturbances listed above, the Supplier must promptly notify Continental in order to ensure timely, effective liaison and adequate supplies to Continental. Suppliers are required to designate contact persons who shall be available at all times (i.e. also at weekends and outside normal business hours) to deal with emergencies such as quality problems with the Products supplied causing imminent production hold-ups at Continental. Suppliers must notify Continental of the names of these contacts. 6.17. Supplier Rating

Continental rates its Suppliers regularly. Continental’s Supplier rating gives Continental and the Supplier an overview of the Supplier’s performance on the basis of general, standardized performance indicators. The Supplier rating allows so the identification of possibly improvement actions and is a basis for a continuous improvement of the Supplier’s performance. The results from the Supplier rating are one criterion for Continental’s consideration of the future development of the business relation with the Supplier. Continental expects Suppliers to distribute the results of the Supplier rating to all involved members of Suppliers’ staff and to take appropriate actions to improve the performance. 6.18. Continuous Improvement

A continuous improvement philosophy should permeate all of Suppliers’ processes, systems and Products. To be effective, an improvement strategy must have a tactical, as well as an operational element. The tactical or strategic element must be long range, sustained and focused on those key processes which provide value-added substance to the company’s objectives, including customer satisfaction. The operational element must be specific and measurable, i.e. performance requirements, goals and targets, results needed, where and when.




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7. Acceptance of Binding Obligation This Manual shall be deemed accepted by Supplier’s commencement of performance, provision of services, shipment of products, or other indication of agreement, whichever occurs first, and shall constitute acceptance of this Manual and all of its terms and conditions. This Manual, in addition to any terms and conditions contained in (i) any of Continental’s purchase orders, (ii) any of Continental’s requests for quotes or bids, and (iii) a contract with a Supplier signed by an officer of Continental, (collectively, with the Manual, the “Agreement”) constitute the entire agreement between Continental and Supplier and specifically supersede all prior or contemporaneous agreements, arrangements, representations and communications whether oral or written regarding its subject matter, including, without limitation, quotations, proposals, or bids. Continental hereby objects to any terms proposed by a Supplier in either a Supplier's quotation, or acceptance or acknowledgment of a Continental offer or purchase order, which add to, vary from, or conflict with the terms of the Agreement. Any such proposed terms shall not operate as a rejection of a Continental offer or purchase order, but are deemed a material alteration, and such offer or purchase order shall be deemed accepted by the Supplier without said additional, different or conflicting terms. If this Manual or the Agreement is deemed under applicable law to be an acceptance of a prior offer by Supplier, such acceptance is limited to and expressly conditioned on Supplier’s assent to the terms contained within this Manual. This Manual may be modified only in a writing signed by a Continental officer.