Through this Manual, contract requirements and otherwise, Dana strives to clearly define the expectations of its suppliers, provide a process to deliver on these expectations and a method for corrective action where expectations are not achieved.

5.1 Non-Conformance determination: Non conformity is defined as the non conformance of PPAP or Production approved parts to one or more of the following documented requirements-

• Print dimensions.

• Material Specifications.

• Engineering Specifications.

• Packaging Specifications.

• Mixed/wrong  parts within a shipment.

• Improper identification of parts.

• Failure of a part to perform during the warranty period Dana has extended to their end customers due to a supplier created discrepancy.

5.2 Non-Conforming Material Parts Per Million (PPM) determination: The PPM assigned to a supplier for non-conforming quantities is determined by the number of discrepant pieces contained within a part shipment to a Dana facility with the following clarifications –

• One or multiple discrepancies on a part constitutes one defective piece.

• “Bulk Material” discrepancies are classified in the units the material is ordered (kg, Liters, lbs, etc…).

• Labeling issues will be defined as one defective piece per incorrect label.

• Mixed parts will be defined as the number of wrong parts found in each correctly labeled container.

• The entire quantity of deviated parts will be considered discrepant unless the supplier has sorted the shipment to identify the number of pieces to be covered by the deviation.

• Exception: if a supplier notifies Dana of a defect, prior to its receipt by Dana, and requests the material be returned then none of the parts will be considered defective.

• Exception: if the deviation becomes a Dana print change then none of the deviated parts will be considered discrepant.

• If discrepant material is sorted, the rejection quantities are updated based on the sort results at Dana or supplier facility.

5.3 Supplier Notification of a Non-Conformance: When a supplier non-conformance has been identified a Supplier Corrective Action Request (SCAR) will be generated. This notification will include the requirements for containment, material, response timing and the appropriate documents if a Dana end customer format for containment results is the required.

5.4 Supplier Initial response to a SCAR: Suppliers are required to update the SCAR and provide an initial response within 24 hours of notification. The initial response must include your containment actions from your organizations current production controls, dock audits and containment actions as well as all other Dana or Dana end customer specified containment requirements.

5.5 Restricted Shipping: Where Restricted Shipping is required, the receiving Dana facility will initiate the Restricted Shipping Process. The Restricted Shipping notification letter will delineate the supplier’s responsibilities in relation to establishing the Restricted Shipping Process and the criteria to exit the process.

5.5.1 Restricted Shipping Level I is a requirement that a supplier put in place an additional 100% containment process at the supplying location to contain for specific and/or specified non-conformances. The supplier must isolate Dana from the receipt of non-conforming material. The additional 100% containment is enacted by the supplier’s employees, unless an alternative approach is approved by Dana, and must be in addition to your normal production process controls.

5.5.2 Restricted Shipping Level II is a requirement that a supplier put in place a certified 3^rd party (approved by the initiating Dana facility) containment process to contain for a specific non-conformance, while implementing a root cause and corrective action problem solving process. The root cause identification and implemented corrective action must be verified as effective by the certified 3^rd party. The 3^rd party containment is in addition to your normal production process controls as well as Restricted Shipping Level I containment activities.

5.6 Root Cause(s) and Solution Identification: It is the supplier’s responsibility to confirm the root cause(s) of the discrepancy identified and identify effective solutions to eliminate the true root cause(s). There are many potential tools to assist your organization with this including (but not limited to); brainstorming, 5 why analysis, capability (quality) index, control chart, decision matrix, design error-proofing / process mistake-proofing, design of experiments, histogram, hypothesis testing, linear regression analysis, run and trend charts and design / process failure mode effects analysis.

Although Dana does not prescribe a specific root cause analysis method, your organization shall demonstrate root cause validation on your SCAR response. Dana representatives shall be permitted to review the submitted root cause validation. Where, in Dana’s opinion, the measurement and analysis plan does not clearly validate the potential root cause(s), Dana may reject your response to the SCAR.

Where root cause(s) have been effectively validated, as determined by Dana and /or the end customer, your organization is responsible for proposing a plan to implement permanent solutions and verify their effectiveness. Where proposed changes impact the design or the PPAP approved processing of a product a SupplierChange / Deviation Request shall be generated, referencing the SCAR number. ( reference the Change Management requirements section of this Manual).

If your proposed plan is rejected, your organization is responsible for providing alternative plans to provide conforming material.

5.7 Permanent Solution Implementation: Once approved, your organization is responsible for implementing the proposal. The SCAR shall be updated by your organization to indicate progress. Dana will monitor the progress based on milestones on the planned activities. Where assistance is required to achieve the plan, the plan cannot be implemented as defined or will not solve the original problem, your organization shall notify Dana before due dates are compromised.

5.8 Permanent  Solution Effectiveness and System Changes: Your organization is responsible for providing evidence of the effectiveness of the corrective action to prevent or control the root cause(s) on the non-conformity. This evidence shall be included in the SCAR response. Where the evidence provided does not clearly indicate the problem has been solved, your organization will be notified to include additional or more comprehensive evidence.

Your organization shall include the updates to their Failure Mode and Effects analysis and Control Plan as part of the evidence in the SCAR response.

5.9 System Wide Deployment: Your organization is responsible for identifying areas in their organization that may share similar process characteristics (failure modes) that may benefit from the permanent corrective actions applied in response to a known non-conformity.

5.10 Non-Conformance Costs: Suppliers shall be responsible for any and all damages or costs incurred by Dana and/or its end customers as a result of suppliers’ supply of non-conforming goods including a reasonable administration fee. All actual charges will be documented in the SCAR and/or related debit memo.

5.11 Supplier Improvement Process: Suppliers with ineffective problem solving processes, multiple high quantity rejections and/or multiple quality incidents will be required to participate in a Supplier Development Improvement Process, the elements of which will be determined by Dana in its reasonable discretion. Suppliers are required to develop a plan (including a schedule for timely response) to address their deficiencies for Dana’s review and approval prior to implementation of corrective action.