SUPPLIER CONTAINMENT INSTRUCTION

1. PURPOSE
The purpose of supplier Containment is to protect the Customer by preventing
non-conforming material from being shipped to us or subsequently passed to
our customers.

Note: This instruction does not provide an authorization to ship.

2. SCOPE
This procedure applies to all parts, materials, and/or processes produced for
us, and will be used for Proactive and Reactive Containment in both
Advanced Quality Planning (APQP) and current production. Containment will
be applied as outlined in this procedure for start-up and acceleration of a new
product or manufacturing process, after a change requiring PPAP, after an
extended shutdown period, for new or change in workforce, for problem
resolution, or as deemed necessary by the supplier or supplier quality
engineer to ensure product quality.

3. DEFINITIONS:
3.1 Pre-Launch Control Plan -The early production period containment
control strategies are documented in the Pre-Launch Control Plan. The
Pre-Launch Control Plan is a significant enhancement to the supplier’s
production control plan, and increases confidence that all early
production containment shipments will meet or exceed our quality
expectations. The Pre-Launch Control Plan also serves to validate the
production control plan. (Reference AIAG Advanced Product Quality
Planning and Control Plan Manual for the initial building blocks. Supplier
Quality will communicate any additional requirements.)
3.2 Supplier Quality Engineer - Refers to the responsible our Supplier
Quality Engineer (AQE-Advanced Quality Engineer or SQE-Supplier
Quality Engineer) for purchased parts or materials.
3.3 Supplier - A provider of purchased parts or materials (pre-production,
production, or service).
3.4 Early Production Containment Period - Production runs during the
start-up and acceleration of a new or changed product or manufacturing
process.
3.5 Change - Any change in a part or process in which PPAP or customer
approval is required. Suppliers should refer to the AIAG PPAP manual
for understanding and compliance to the approval requirements.

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3.6 Value Stream - A value stream contains all the actions currently required
(value added and non- value added) to bring a product from raw material
to the form specified by the customer.

4. RESPONSIBILITIES
The Director of Global Supplier Quality and Development is
responsible for overseeing the implementation of this procedure with
our external suppliers. The appropriate Supplier Quality Engineer is
responsible for ensuring that processes are implemented to meet this
procedure.

5. PROACTIVE CONTAINMENT

5.1. EARLY PRODUCTION CONTAINMENT

5.1.1. The minimum timeframe for the early production
containment period is (30) regular production days. The
Pre-Launch Control Plan strategies are utilized for all early
production containment program requirements (i.e. pilots,
PPAP builds, etc.) and continue for the duration specified by
the procuring location. The duration may be revised, as
directed by the supplier quality engineer, to reflect our
acceleration plans to full production rate or other specific
requirements. (See 8.2.1 for exit criteria).

5.1.2. The Pre-Launch Control Plan:

5.1.2.1. Must have the controls that are documented in the regular
production control plan fully implemented. In addition,
special efforts over and above the production control plan
requirements should be implemented. The Pre-Launch
Control Plan takes into consideration all known critical
conditions/characteristics of the part as well as potential
areas of concern identified during PPAP, and should
comprehend part variation within a product family.
5.1.2.2. Is a living document throughout the early production
containment period. Modifications to the plan, as directed or
approved by us, should be made as necessary to
incorporate Lessons Learned during each early production
run. Any non-conformances that are found during
pilot/prototype runs should be appropriately comprehended.

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5.1.2.3. Must be submitted for PPAP and each time a revision is
made following the initial PPAP submission
5.1.3. A gate chart should be kept during all runs prior to PPAP.
The gate chart and the Prototype Control Plan should help
determine some of the items to be checked in the Pre-
Launch Control Plan. To ensure accurate reporting,
operators should set aside questionable parts for review by
management before those quantities are added to the gate
chart.

5.1.4. Work instructions, training, verification of gauges, data

collection, reaction plans and management auditing, all need
to be included. In some cases, certain early production
containment controls may remain as part of the production
process flow and should be documented as such in the
Production Control Plan. The Supplier establishes an overall
Early Production Containment strategy that
includes/addresses the following.
5.1.4.1. Identification of the person responsible for the overall
Early Production Containment process.
5.1.4.2. Development of a Pre-Launch Control Plan (Reference
SPDP Appendix 11: A-8 Control Plan Checklist)
5.1.4.3. Based on historical production process factors, PFMEAs,
Prototype Control Plans, statistical data, etc., additional
controls may include:
• Increased frequency/sample size of receiving,
process and/or shipping inspections
• Mandated sub-supplier containment and/or sub-
supplier audits
• Addition of inspection/control items and functional
testing
• Increased verification of label accuracy
• Statistical evaluations
• Enhancement of process controls
• Increased verification of error proofing devices
• Increased involvement and visibility of top
management
• Increased audits, verifying key manufacturing quality
fundamentals such as standard work, part handling,
adherence to established quality practices

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5.1.4.4. Establishment of a reaction plan for immediate
containment of non-conforming material and notifying us
if non-conforming material has been shipped.
5.1.4.5. Identification of the measurement equipment and data
collection devices/activities to be used.
5.1.4.6. Special characteristics 100% checked during the early
production containment period. Process parameters, that
have a direct effect on special characteristics should also
be monitored and documented at an increased frequency.
If this is not possible, sampling should be done at our
agreed upon frequency and monitored for variation over
time/operator/set up.
5.1.4.7. Increased reactive containment that might be needed
prior to an established additional inspection area, focusing
on any specific issue(s) that are discovered during the
additional established inspection.
5.1.4.8. When specifically instructed by us, the supplier will
implement an early production containment activity
utilizing all, or elements of, the Controlled Shipping II
process stated in section 6.2. The criteria for conducting
this containment will be established by the supplier and
the appropriate Global Supplier Management
representatives.
5.1.4.9. Supplier should attach to each shipping label a green dot
signed by a designated senior management
representative to indicate compliance with the Pre-Launch
Control Plan. (The green dot should have a diameter of
1.25 to 2 inches (3 to 5 centimeters) or as defined by
other customer specific requirements or instructions.
5.1.5. The supplier quality engineer reviews the supplier’s Pre-
Launch Control Plan prior to or in conjunction with the PPAP
package. The supplier quality engineer evaluates the overall
plan including the specific items listed below. The analysis
team should include the AQE, supplier and our Plant Quality
personnel.
• PRR, prototype, and pilot issues are addressed
• High RPN’s are addressed by the Pre-Launch Control Plan
and recalculated as necessary based on early production
first time quality or data collection that may change the
occurrence and detection numbers.

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• The supplier used the PFMEA and statistical data to

determine where additional controls are necessary, including
adequate consideration of special characteristics.
• Past issues from similar parts past parts and processes are
incorporated.
• FTQ process is implemented correctly and the data is
reviewed to ensure the objectives of the early production
strategies are being met and the customer is protected.

5.2. PROVISIONAL CONTAINMENT

Provisional Containment is a proactive action taken when special
conditions create a heightened risk of producing or shipping non-
conforming parts or material. These conditions include, but are not
limited to: production start-up after extended shutdown periods for
vacations, holidays, or strikes; significant tool or equipment repair;
power outage; abnormal shifts in product quality; out-of-control or
incapable processes; new or significant change in workforce; or other
applicable circumstances.

In general, the supplier is expected to self impose this containment, but

it may also be directed by us. The Provisional Containment process
may consist of elements from the Early Production process outlined in
section 5.1 or Controlled Shipping 1 process outlined in section 6.2.
The process implemented must have the necessary rigor and
discipline to manage the condition and eliminate risk to us.

6. REACTIVE CONTAINMENT

6.1. Problem Report - Containment Information

The problem report document will be issued as a result of a complaint
communicated by us (e.g. Problem Solver, phone call, fax, etc) to the
supplier. The immediate containment sections, of the problem report,
documents the necessary activities to immediately prevent future
nonconforming product from reaching us or our customers.

The supplier provides an initial response consisting of the following

information, at a minimum, within one (1) business day of receiving the
problem report:

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• Immediate and ongoing containment actions to be taken by the

supplier to prevent further shipments of nonconforming parts or
material. Containment includes data collection and analysis.

• Disposition of the nonconforming parts or material at the our

location and in-transit. The supplier analyzes the entire value
stream chain to identify any suspect material at, or in-transit, to
any of our locations.

• Date of the next shipment of conforming parts or material,

including how it will be identified. The supplier takes into
account the conforming material ship dates of all plants
receiving the corrected parts or material.

• Name, title, and phone number of the supplier representative

who provided the above information.

The following is a step-by-step approach for an effective reactive

containment process:
• Identify the non-conformance or problem. The non-conformance
could be identified by us or by the supplier.

• Quarantine the complete supplier value stream for all impacted

sites, including material; parts in process, stock, and/or in transit
from all affected or potentially affected processes and locations.
Consider the impact on service part shipments.

• Clearly label the suspect material and identify the date, part
number, non-conformance and the person responsible for follow-
up.

• Establish the break points where the non-conformance began

and ended.

• Isolate the non-conforming/suspect material to prevent

inadvertent use, utilizing a robust process to effectively identify
and segregate and include all hidden factories.

• Review the material to determine which of the following actions

will be taken:

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- Customer approved rework that meets the specified
requirements
- Accept with or without repair (based on acceptance criteria,
engineering permit, etc.)
- Re-grade for alternative application
- Reject and scrap

• Notify us if there is a possibility that non-conforming material has

been shipped and of nonconforming material breakpoints. The
corrective action plan and the containment plan will be reviewed
with us to assure compliance to our procedures. Please see
Customer Specific Requirements located on our Supplier Portal,
under Frequently Used Documents.

• Re-inspect repaired or reworked product in accordance with the

Control Plan and/or other documented procedures.

• Identify the cause of any non-conformance and pursue short and

long-term corrective action.

• Record the activities that took place after the non-conformance

was discovered. Revalidate the manufacturing process and
verify that it is stable and capable. The minimum recommended
time period for containment is the equivalent of three (3) shifts
of corrected normal production volume supplied to and used by
the customer(s). The time period required would be determined
by our Supplier Quality Engineer based on product/process
type, impact to us and our customers, and other factors
associated with ensuring Zero Defects to customers.

• Return to normal process control methods as described in the

Control Plan.

6.2. Controlled Shipping

6.2.1. General
If appropriate, we may formally place a supplier on Controlled
Shipping. The intent of Controlled Shipping is to implement a
rigorous process that protects us from the receipt of
nonconforming parts and/or material. Controlled Shipping is a
formal demand by us for a supplier to put in place an additional
inspection process to sort for nonconforming material, while

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implementing root-cause analysis and corrective actions. The
Controlled Shipping process is in addition to normal controls.
The data obtained from the Controlled Shipping inspection
process is critical as both a measure of the effectiveness of the
containment process and the corrective actions taken to
eliminate the initial nonconformance.

The Controlled Shipping containment process includes the

following:
• A highly visible and properly lighted and equipped
containment area.
• A well-defined efficient material flow including clearly
identified areas for incoming and outgoing parts/material.
• Provisions for repairs/rework separate from the
containment area.
• Containment area separated from the supplier’s normal
production process.
• Information boards prominently displaying non-
conformances, metrics, inspection results (e.g. SPC
charts, trend charts, Gate charts, etc.), action plans and
status, and other results from the containment activity.
• Daily review of updated charts by top supplier
management.
• A documented and data driven team problem solving
activity.
• Proper job instructions, quality standards, boundary
samples, tools, equipment, and qualified measurement
devices to facilitate the containment operations.
• Proper operator training with adequate details of the
process
• An area/storage container marked in a way that quickly
and clearly identifies any contents as SUSPECT or NON-
Conforming (Work Place Organization and Visual
Controls).
• Proper preventative maintenance as required.

6.2.2. Determination of the need for Controlled Shipping

The following are to be considered for determining the need for
Controlled Shipping:

• Repeat Problem Cases

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• Duration and severity of the problem

• Incapable processes
• Customer quality issues
• Inadequate containment and/or resolution of non-
conformances
• Major Disruptions/Spills

Based on the above, we decide whether Level I or Level II would be

appropriate.

6.2.3. Controlled Shipping Levels

6.2.3.1. Level I Controlled Shipping requires an additional
inspection process enacted at the supplier’s
manufacturing facility. The inspection process ensures
that we will be protected from receipt of nonconforming
parts and/or material.
6.2.3.2. Level II Controlled Shipping includes the same
processes as Level I Controlled Shipping, with an
additional inspection process that is completed by a
third party. We and the supplier mutually agree upon
the third party company and location. The supplier
owns the financial responsibility. The Level II inspection
is required to be performed outside the supplier’s
facilities unless otherwise approved by us.

6.2.3.3. The Key Steps of the Process

• Consensus within us that current controls by the
supplier are not sufficient to protect us from the
receipt of nonconforming parts/material.
• Determination by us of which level of Controlled
Shipping is required and how it is to be
implemented.
• Communication to the supplier of action (Level I or
Level II) to be taken including exit criteria.
• If Level II is necessary, it is recommended that a
Level II kick-off meeting be held with supplier
management to provide a full explanation of the
containment process (e.g. containment area,
deliverables, and the roles and responsibilities of the
involved parties).
• Review of containment status and effectiveness.

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• Review of irreversible corrective action plans and

updates to the control plans and FMEAs as
appropriate.
• Removal of CS status when appropriate.

6.2.4. Level I Controlled Shipping Process

The Controlled Shipping process starts with notification by the
supplier quality engineer to an appropriate staff level member of
the supplying location as follows:
• A live conversation to ensure that the process is initiated
appropriately.
• Issuance of Level 1 Controlled Shipping in Problem Solver
registered. We will issue a written confirmation letter.

6.2.4.1. Supplier Responsibilities:

6.2.4.1.1. The supplier will respond to the Controlled
Shipping notification through the Problem Solver
System. If the supplier is not registered for the
Problem Solver system, the supplier will
complete the Controlled Shipping Confirmation
Reply form and return to the appropriate Nexteer
Automotive contact.
6.2.4.1.2. Immediately establish an additional inspection
activity over and above the current process
control plan, which includes a monitoring and
reaction process.
6.2.4.1.3. Commence the sort activities and display the
results on the information board (s).
6.2.4.1.4. Establish breakpoints for conforming material
and ensure traceability of nonconforming
material.
6.2.4.1.5. Establish appropriate identification to indicate
controlled shipping status on outgoing material.
6.2.4.1.6. Conduct management reviews of the results, at a
minimum once per shift to ensure that the
containment activities are in place and effective
to protect the customer.
6.2.4.1.7. Communicate results of sort activities to us in a
format and with a frequency agreed to by the
supplier quality engineer.

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6.2.4.1.8. Implement permanent corrective actions and
verify effectiveness.
6.2.4.1.9. Meet the defined exit criteria.
6.2.4.1.10. Submit a request to exit from controlled
shipping including the appropriate data and
documentation that the corrective actions are
effective to the supplier quality engineer.

6.2.4.2. The supplier quality engineer evaluates if the exit

criteria have been met and provides a written response
(See SPDP Appendix 47) to the supplier.

6.2.5. Level II Controlled Shipping Process

6.2.5.1. The supplier quality engineer, with input from the
receiving plant as appropriate, analyzes the
nonconformance situation and determines if CSII is
required.

6.2.5.2. A supplier quality engineer notifies the supplier of CSII

by calling the appropriate staff level member of the
supplying location. This is official notification of
controlled shipping status. This notification will be live
and not by voice mail or other forms of
communication. Issuance of CS11 in the Problem
Solver System confirms this conversation. If the
supplier is not Problem Solver registered, we confirm
the status in writing to the supplier.

6.2.5.2.1. The Problem Solver communication includes the

following:
• The reason for CSII
• The action being undertaken
• The nonconformance(s)
• The inspection checks required
• Exit criteria required to be achieved

Distribution of Controlled Shipping notifications will be

determined by the appropriate DGP personnel as required.
(See SPDP Appendix_45)

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The supplier will respond to the Controlled Shipping
notification through the Problem Solver System. If the
supplier is not Problem Solver registered, the supplier will
complete the Controlled Shipping Confirmation Reply form
and return to the appropriate Nexteer Automotive contact.

6.2.5.3. The following list describes roles and responsibilities

of key personnel:

6.2.5.4. Supplier Quality Engineer

6.2.5.4.1. Provides the list of recommended third
party containment suppliers.
6.2.5.4.2. Reviews, verifies, and approves the
containment action plan.
6.2.5.4.3. Reviews, verifies, and approves the
corrective action plan.
6.2.5.4.4. Conduct a supplier Production Process
Review, if necessary.
6.2.5.4.5. Provide the exit criteria.
6.2.5.4.6. Directs resolution of all issues.
6.2.5.4.7. Evaluates if the exit criteria have been
met and if met provides acceptance of the
supplier’s request to exit CS11 in the
Problem Solver system. If the supplier is
not Problem Solver registered, our contact
will respond in writing (See SPDP
Appendix 48) allowing the supplier to exit.

6.2.5.5. Global Supplier Management (Buyer)

6.2.5.5.1. Responsible for resolution of all
commercial and financial issues arising
from the CSII activity.
6.2.5.5.2. Participates in the decision of which CS
third party will conduct the Level II
containment activities, if requested.

6.2.5.6. Supplier Responsibilities

6.2.5.6.1. Contact and issue a purchase order to the
third party inspection source for Controlled
Shipping Level II activities. The supplier is
responsible for all costs of the third party

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inspection activities. (See SPDP Appendix
43)
6.2.5.6.2. Respond to the CS11 notification in the
Problem Solver system.
6.2.5.6.3. Continue to perform the inspection activity
and records results for Controlled
Shipping Level I in conjunction with
Controlled Shipping Level II.
6.2.5.6.4. Provide appropriate documents and
equipment to the third party inspection
source.
6.2.5.6.5. Establish appropriate identification to
indicate controlled shipping status on
outgoing material.
6.2.5.6.6. Determine root cause and implement
irreversible corrective action(s).
6.2.5.6.7. Communicate the action plan and status
to us in a format and frequency agreed to
by the supplier quality engineer.
6.2.5.6.8. Communicate results of third party
inspection activity to us in a format and
with a frequency agreed to by the supplier
quality engineer.
6.2.5.6.9. Notify their QS Registrar.

7. Tracking
Problem Resolution and containment progress will be tracked using an agreed
upon report format Weekly controlled shipping progress reports will be
submitted to us via the Problem Solver System Controlled Shipping section.

8. Exit Criteria
8.1. When establishing Exit Criteria:
• Include clear and measurable elements
• Be specific and relevant to the nonconformance issues to be
addressed
• Require documentation to demonstrate corrective actions
taken are effectively implemented and institutionalized

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The supplier will be eligible to exit Containment after meeting the
established exit criteria. If the supplier is unable to meet the exit
criteria or the supplier’s Containment plan continues to identify non-
conformances, then the containment continues.

8.2. Exiting a containment process will be based on the following:

8.2.1. Early Production Containment

8.2.1.1. The effectiveness of the early production
containment process strategies to meet our
expectations of Zero Defects during the
procuring location specified ship duration. . (As
evidenced by the number of defects received
by us and/or the number of Problem Cases
written related to the specific product covered
by the early production process/strategies)
8.2.1.2. All formal customer complaints/Problem Cases
related to this specific product are closed or
there is a Nexteer Automotive approved plan to
close them.
8.2.1.3. Supplier’s Production Control Plan is validated.
Any Gate charts maintained by the supplier
should also be reviewed.
8.2.1.4. The supplier exits from the Early Production
Containment process when the supplier quality
engineer has verified that all exit criteria have
been met.
8.2.2. Provisional Containment
Self-exit based on our and supplier approved exit criteria.

8.2.3. Problem Report

Exit based on implementation and institutionalization of
corrective actions, documentation of lessons learned, look
across and overall assurance that the problem has been
resolved.

8.2.4. Controlled Shipping 1 & II

8.2.4.1. The duration will be as specified by the
supplier quality engineer based on the
supplier’s ability and timeframe required to

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meet our containment objectives and exit
criteria. .
8.2.4.2. Data from the containment activity, which
demonstrates that the revised production
controls are effective for controlling the
discrepancy identified in the controlled shipping
activity.
8.2.4.3. Evidence in the 5-Why or other areas of the
Problem Case showing the root cause was
identified and verified.
8.2.4.4. Copies or excerpts of all documentation
revised as required (control plan, FMEAs, flow
diagram, operator’s instructions, etc.), and as
requested by the SQE.
8.2.4.5. Note: Upon exit from CS Level II, the supplier
may be required to remain in Level I as
determined by the SQE
8.2.5. When the exit criteria for Controlled Shipping have been
met, we will communicate through the Problem Solver
System that Controlled Shipping has been removed, and
controlled shipping activities can cease. Suppliers cannot
exit from Controlled Shipping or cease the controlled
shipping activities without closure of Controlled Shipping in
the Problem Solver System.
8.2.6. Note: Reference Customer Specific Requirements
concerning suppliers’ responsibility to their 3rd party registrar
regarding CS11.

REFERENCES

Located on our Supplier Portal, under Frequently Used Documents:

SPDP Appendix 11 - AIAG Checklists
Extended Downtime Checklist
Customer Specific Requirements
SPDP Appendix 60 – Containment Checklist

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