Direct Material Supplies Quality Agreement - Arçelik
Direct Material Supplies Quality Agreement - Arçelik
Direct Material Supplies Quality Agreement - Arçelik
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<strong>Direct</strong> <strong>Material</strong><br />
<strong>Supplies</strong> <strong>Quality</strong><br />
<strong>Agreement</strong><br />
<strong>Agreement</strong> Date:<br />
<strong>Agreement</strong> No :<br />
F. Code : 933180<br />
Rev : 0.2<br />
Issue : 2006
<strong>Direct</strong> <strong>Material</strong> <strong>Supplies</strong> <strong>Quality</strong> <strong>Agreement</strong><br />
1. Scope and implementation<br />
This specification describes the main framework and conditions of business relations between<br />
Arçelik and the Supplier in connection with quality implementations.<br />
This Specification has been drawn up with the objective to ensure that materials and services with<br />
impact on product quality provided to Arçelik by the Supplier are secured continuously and at the<br />
expected level.<br />
Conditions defined under this Specification have been read and accepted by the Supplier.<br />
2. Parties<br />
Arçelik<br />
Supplier<br />
Arçelik A.Ş.<br />
Karaağaç Cad. No:2-6, 34445 Sütlüce İstanbul<br />
3. Supply conditions<br />
3.1. General Conditions<br />
3.1.1. <strong>Direct</strong> material purchasing general conditions are at the same time Supplier sales<br />
conditions. Any notice contrary to the conditions of this specification, and included on any invoice,<br />
dispatch note, consignment document, e-mail or any other document drawn up by the Supplier<br />
shall be invalid and ineffective. Supplementary conditions to this specification shall only be valid<br />
with the written approval of the Arçelik Purchasing <strong>Direct</strong>orate.<br />
3.1.2. The Supplier shall be obliged to establish a quality management system which meets ISO<br />
9001:2000 standards in the minimum, as a guarantee that the provisions of concerned laws and<br />
regulations are complied with, continuous improvement is ensured in effective and efficient working<br />
conditions, and that Arçelik’s expectations can be addressed in the long run.<br />
3.1.3. The Supplier shall be responsible to ensure that the materials procured by the Supplier<br />
comply with the specifications defined in technical documents and designated standards. This<br />
responsibility includes compliance with packing material and shipping specifications also.<br />
3.1.4. The Supplier shall ensure that the required technical documents are updated and kept in<br />
complete form and are accessible for use.<br />
3.1.5. The Supplier shall ensure that the product purchased by the Supplier complies with the<br />
identified buying specifications. Type and content of the control applicable to the Supplier and the<br />
purchased product shall depend on the impact of the purchased product on the subsequent<br />
product realization, or on the end product.<br />
3.1.6. The Supplier shall develop process and final control plans to ensure that all shipped<br />
materials comply with quality standards; shall realize the required and proper tests and inspections<br />
in line with the control plan, and draw up the related verification documents.<br />
3.1.7. The Supplier shall perform the final controls with a customer perspective for materials with<br />
completed final inspections and tests; and give quality certification for shipment. The quality and<br />
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quantity of such controls made through a customer perspective shall conform to the characteristic<br />
of the material and its function in the product.<br />
3.1.8. The Supplier shall give a first part approval for starting mass production under the following<br />
conditions:<br />
<br />
<br />
<br />
Changes of production equipment setup parameter,<br />
Production equipment or line stands (bench/line stands due to quality problems, failures,<br />
etc.),<br />
At the beginning of each shift.<br />
Records of quality controls made in the cases described above shall be maintained.<br />
3.1.9. The Supplier shall maintain an adequate number of human resources with the required<br />
qualifications.<br />
3.1.10. The Supplier shall maintain measurement equipment calibrated in accordance with<br />
international measurement standards; and use such equipment at the proper control points. The<br />
measurement equipment and systems employed shall have the accuracy capable of measuring the<br />
concerned measurement size. The Supplier shall make an estimate of measurement equipment<br />
uncertainties for the measurement ranges used.<br />
3.1.11. The Supplier shall identify and maintain the infrastructure required to ensure compliance<br />
with product specifications. The Supplier shall provide resources for machine/equipment<br />
maintenance and establish a planned and effective preventive maintenance system.<br />
3.1.12. The Supplier shall monitor the economic useful life of production equipment and dies; and<br />
shall make an estimate of remaining life.<br />
3.2. Operation plans<br />
The Supplier shall prepare operation plans accessible by all employees for use, and also including<br />
assignments of responsibility for the operation of processes with an impact on product quality.<br />
Operation plans shall include all the steps required for product realization. Wrapping and<br />
packaging are a part of internal/external dispatch steps operation plan.<br />
Changes in operation steps shall be reflected in operation plans which must be continuously<br />
updated.<br />
3.3. Control plans<br />
The Supplier shall develop and implement control plans for products, semi-finished products,<br />
components and/or materials.<br />
The control plan<br />
<br />
<br />
<br />
<br />
Shall include the checklist used for production process control,<br />
Shall include the methods for monitoring the controls made on the special characteristics<br />
identified both by the customer and the organization,<br />
Shall include information if any, requested by the customer and<br />
Shall initiate the identified reaction plan when the process becomes unstable and<br />
statistically incapable.<br />
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Records relating to the implementation of control plans shall be maintained. Control plans shall be<br />
revised in line with information, i.e. Arçelik feedback, process controls, etc.<br />
3.4. Product identification and traceability<br />
The Supplier shall identify the material by proper means at the product realization stage. The<br />
Supplier shall identify material status according to monitoring and measurement specifications. In<br />
manifest situations, product location identification will be adequate in the automated production<br />
transfer process. Changes in material and production specifications shall be recorded.<br />
3.5. Arçelik property<br />
The Supplier shall pay due care to Arçelik property as long as such property is under the control of,<br />
or used by the Supplier. The Supplier shall identify, verify, protect and secure the safety of<br />
customer property provided for use, or for incorporation in the manufacture of a product. Unless<br />
otherwise approved in writing by Arçelik, all dies, benches, raw materials, substances, products,<br />
semi-finished products, etc. which are the property of Arçelik may only be used for the production<br />
of products or services for Arçelik. Arçelik shall be notified of any Arçelik property lost, damaged or<br />
found in unusable condition; and records thereof shall be maintained.<br />
Unless otherwise notified in writing by Arçelik, insurance policies for the materials and equipment<br />
which are the property of Arçelik and kept at the Supplier’s premises shall be taken out by Arçelik.<br />
Returnable packages which are the property of Arçelik are subject to this article.<br />
3.6. Procurement process<br />
The Supplier shall ensure that the product purchased by the Supplier complies with the identified<br />
purchasing specifications. Type and content of the control applicable to the Supplier and the<br />
purchased product shall depend on the impact of the purchased product on the subsequent<br />
product realization, or on the end product.<br />
Employment of the sources identified by Arçelik shall not release the Supplier from its responsibility<br />
to ensure the quality of purchased products.<br />
3.7. Change control<br />
The Supplier shall notify Arçelik of all product realization changes with an impact on Arçelik<br />
specifications and obtain Arçelik’s approval.<br />
The following changes shall be verified for validity before implementation:<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
Production method and parameter change (production and control cycle change),<br />
Design change,<br />
<strong>Material</strong> change,<br />
Supplier change,<br />
Change in test equipment and methods,<br />
Change in the location of production equipment at the same premise,<br />
Re-commissioning of equipment and line which have not been operational for more than<br />
one year,<br />
Technical specification change.<br />
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The Supplier shall maintain the change records.<br />
The Supplier shall give a written notice to Arçelik about location changes of production facilities,<br />
and obtain the written approval of Arçelik. Arçelik shall be entitled to make Supplier inspections<br />
and assessments in order to verify that the new production facility has the proper conditions for<br />
product realization.<br />
Getting approval for the first material samples and mass production shall be the responsibility of<br />
the Supplier. After giving a written “feasible (first sample)” approval for initial samples, Arçelik might<br />
request machine/process capability analyses to measure the “repeatability (mass production)”<br />
capability of the part quality. Arçelik shall be entitled to realize the said analyses at site in<br />
cooperation with the Supplier.<br />
3.8. <strong>Quality</strong> records<br />
The Supplier shall maintain at an easily accessible place which is not exposed to damage, the<br />
quality records drawn up as a reassurance of product quality, for a period of minimum five years as<br />
from shipment date, unless a different period is identified by Arçelik,. The Supplier shall be obliged<br />
to submit the quality records to Arçelik upon request.<br />
3.9. Sample request and approval process<br />
The Supplier must send to Arçelik the samples requested by Arçelik for material and process<br />
verification. The Supplier shall verify the samples with proper measurements and inspections<br />
before dispatch.<br />
The Supplier shall send to Arçelik verification records together with the samples. Arçelik may<br />
request detailed material, process and inspection records together with the sample request.<br />
The Supplier shall dispatch the samples marked as “SAMPLE”. Where production is realized with<br />
more than one die or die cell, the Supplier shall send an equal number of samples from each die or<br />
die cell and indicate on the sample to which die or die cell the sample belongs. At the end of each<br />
sample approval process, Arçelik shall inform the Supplier of its “APPROVAL” or “REFUSAL”<br />
decision. Approval to pass on to mass production shall be given at the end of the “first sample<br />
approval process”. Arçelik may request a test party before mass production approval.<br />
3.10. Packaging<br />
The Supplier shall identify and submit to the approval of Arçelik the packaging means to prevent<br />
damage during the transport of the material to Arçelik and in storage. Arçelik shall be entitled to<br />
determine the packaging and shipment specifications and request the compliance of the Supplier.<br />
Packaging identification to be made by the Supplier shall include a specific code, sign, or product<br />
identification which will prevent any confusion in relation with the material. Signs on reusable<br />
plastic, metal or wooden cases should not get detached during transport and storage, even if easily<br />
wiped or detached.<br />
Arçelik shall be entitled to reject the concerned shipment party in cases of material damages which<br />
might occur due to nonconforming packaging specifications, confused materials, unclear material<br />
identification due to inadequate marking, etc. All re-transportation, re-packing and re-marking<br />
expenses to arise therefrom shall be borne by the Supplier.<br />
The Supplier shall make at least the following identifications on each shipment pack, case, or<br />
pallet:<br />
Arçelik material number,<br />
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<strong>Material</strong> description,<br />
Shipment date,<br />
Arçelik Facility,<br />
Supplier’s name,<br />
Supplier’s production facility (if the Supplier has more than one facility)<br />
<strong>Quality</strong> control approval sign<br />
Freight bill number<br />
batch / charge number<br />
Arçelik may supplement the above identifications with a written notice.<br />
3.11. Environmental concern<br />
3.11.1. Environmental conformance<br />
The Supplier shall have an awareness to minimize all the conditions at all its facilities and in all its<br />
production processes, which might be a threat to human health and environmental cleanliness.<br />
3.11.2. Special condition for prohibited chemicals and/or chemicals requiring restricted use<br />
The Supplier shall be responsible to procure materials conforming to the national and international<br />
declarations and customer’s need. The Supplier represents and warrants that the substances<br />
used in raw materials, semi-finished products and/or components produced, or provided from third<br />
parties and processed by the Supplier do not contain substances prohibited by national and/or<br />
international laws, regulations, procedure 90-ÇP-001 which can also be found in<br />
http://supplier.arcelik.com and, that substances restricted with specified usage limits are used<br />
inside those limits.<br />
The Supplier shall fill in the declaration given in [Appendix 1 Form Code: 92641X] as a<br />
commitment that the substances indicated under the relative <strong>Direct</strong>ive are restrictively used, or not<br />
used at all.<br />
Further to the compliance declaration, Arçelik may request compliance test results of an accredited<br />
laboratory in order to guarantee such compliance.<br />
In cases of nonconformance originating from the Supplier, the Supplier shall undertake all penal<br />
obligations arising out of the use of substances restricted or prohibited under the <strong>Direct</strong>ive, in the<br />
materials delivered to Arçelik*:<br />
<br />
<br />
<br />
<br />
All materials determined to be nonconforming and not yet included in Arçelik production<br />
(kept in storage areas) shall be replaced with conforming materials by the Supplier (without<br />
any charges payable by Arçelik).<br />
All costs for rectification incurred to ensure the conformance of all products processed at<br />
Arçelik’s production facilities shall be borne by the Supplier (process and labor costs, cost<br />
of other materials which remain out of use, transportation and packaging costs).<br />
All costs which might be incurred due to the blocking and reprocessing of products in cases<br />
of nonconformities in Arçelik end products originating from materials shall be borne by the<br />
Supplier.<br />
The Supplier shall be liable for all customer returns which might occur due to<br />
nonconformities originating from the Supplier, and for all circumstances necessitating<br />
statutory penalty. All penal clauses which might be realized in accordance with the<br />
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agreements executed between Arçelik and Arçelik customers shall be covered by this<br />
Article, including shipment delay penalties arising out of the said problem.<br />
*For details, see Article 5.4 – Supplier Chargeback.<br />
In cases of a circumstance contrary to the commitment and conformity declaration<br />
submitted by the Supplier and/or identified in conformity test reports (cases of<br />
nonconformance), determined at the Arçelik production facilities and/or in tests and<br />
inspections made by independent accredited laboratories, the Supplier represents and<br />
warrants to pay to Arçelik a fine of 1.000 (one thousand) Euro; and for each such<br />
repeating circumstance 3.000 (three thousand) Euro.<br />
3.11.3. Special condition for wooden materials<br />
Wooden pallets and wooden products used by the Supplier for the materials provided to Arçelik,<br />
shall comply with the ISPM 15 Standard (International Standards for Phytosanitary Measures 15)<br />
about packs and pallets made of non veneered wood and used in international trade, specified in<br />
Rome in 2002 with the participation of the members of the International Phytosanitary Protection<br />
Convention (IPPC) Secretariat which is a sub-agency of United Nations Food and Agriculture<br />
Organization (FAO).<br />
3.12. Ethical Rules<br />
A joint CECED Business Rules of Ethics has been drawn up and signed by the European Union<br />
White Goods Manufacturers Association (CECED-http://www.ceced.org) where Arçelik is also a<br />
member, with a view to global conditions and consumer expectations.<br />
Arçelik expects suppliers to continue their operations in line with the following general rules of<br />
ethics as required by this joint responsibility:<br />
3.12.1. Laws and regulations<br />
Should comply with the laws and regulations applicable in the country of operation<br />
3.12.2. Communication<br />
It is the Supplier’s responsibility to inform its employees and suppliers about the requirements of<br />
these rules.<br />
3.12.3. Forced labor<br />
Employees should not be forced in any way to work. This requirement includes forced labor in<br />
prisons, employment in return of giving a loan with high interest, or other forms of forced labor.<br />
3.12.4. Child labor<br />
Child labor should not be used. Unless a higher age limit is provided for in local laws, no person<br />
below the age of 15 who has not completed his/her compulsory education shall be employed<br />
(excluding the provision of ILO <strong>Agreement</strong> No. 138). Employees below the age of 18 shall not be<br />
assigned to hazardous jobs and at night shifts for purposes of addressing the training<br />
requirements.<br />
3.12.5. Harassment<br />
Employers shall not be subjected to corporal punishment; or physical, sexual, psychological or<br />
verbal harassment or molestation.<br />
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3.12.6. Compensation<br />
Wages, including benefits and overtime, shall be equal to or above the level provided for in<br />
applicable laws and regulations.<br />
3.12.7. Work hours<br />
Employers shall not be asked to work regularly for more than 48 hours/week and over 60 hours in<br />
total during one work week (including overtime) unless the maximum working hours provided for in<br />
local laws are below the hours stated above, and excluding extraordinary business requirements.<br />
Employees shall have at least one day off during each seven day period, except extraordinary<br />
business requirements.<br />
3.12.8. Nondiscrimination<br />
In all employment decisions including but not restricted to recruitment, promotion, compensation,<br />
benefits, training, redundancies, and dismissals, all employees whether male or female shall be<br />
dealt with according to their capabilities and qualifications.<br />
3.12.9. Health and Safety<br />
A healthy and safe work environment, and where applicable, healthy and safe housing facilities as<br />
per applicable local laws shall be provided to employees in order to prevent accidents and injuries.<br />
The Supplier shall be liable for providing the general safety rules required for workplace and<br />
human health for all the vehicles used for the material shipment in such cases that the Supplier<br />
undertakes the material shipment to the Arcelik Facility out of the Supplier's own resources.<br />
Arcelik has the right not to let the vehicles used or commissioned by the Supplier into Arcelik<br />
Facility if Arcelik determines that these vehicles and all the other means of transportation are<br />
defective. Arcelik notifies the Supplier of the situation by an official report. The Supplier shall be<br />
held liable for any poses or job losses that shall occur out of this situation.<br />
3.12.10. Freedom of association and collective bargaining<br />
Employers shall entitle employees to establish lawful associations and to the right of collective<br />
bargaining, and shall act in line with these principles.<br />
The Supplier shall make adequate improvements within latest 6 months following the<br />
noncompliance determination and notification made by Arçelik.<br />
4. Supplier performance management<br />
4.1. Continual improvement<br />
4.1.1. Zero defect approach<br />
Arçelik bases its Supplier relationships on a strategy of continual product provision in accordance<br />
with technical specifications. Consequently, the Supplier shall develop a basic quality system to<br />
ensure continual improvement by focusing on reducing deviations and waste. Such quality system<br />
serves the purpose of zero defect product realization.<br />
“Specific and periodical Supplier quality PPM targets” is an operational definition aimed at the zero<br />
defect target, facilitating and prompting continuous improvement.<br />
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4.1.2. Corrective/preventive action<br />
Arçelik may request the Supplier to take corrective action and preventive action for<br />
noncompliance in the quality or shipment of the materials purchased, and for potential<br />
noncompliance respectively. The Supplier shall be responsible to develop a system to assess<br />
such requests, plan corrective and preventive actions for noncompliance, and inform Arçelik about<br />
such plans and implementation results.<br />
A written response by using Arçelik forms shall be given by the Supplier to quality complaints and<br />
“Corrective Action Requests” notified in writing to the Supplier by Arçelik.<br />
The Supplier response shall meet the following conditions:<br />
The Supplier shall notify the interim precautions taken against the problem within 48 work hours.<br />
Such interim precautions shall include re-inspection, sorting, and stock assortment processes; and<br />
product blocking by the Supplier.<br />
The Supplier shall notify within 10 work days the permanent precautions taken against the<br />
problem. Permanent precautions shall include the following:<br />
<br />
A description of the problem’s root cause,<br />
<br />
<br />
Corrective action steps,<br />
Planned preventive action if the corrective action is extendable to other processes with an<br />
impact on Arçelik,<br />
<br />
Definition of responsibilities and time schedule for corrective action.<br />
Arçelik shall use the complaint and/or “Corrective Action Request” information as a Supplier<br />
performance assessment input.<br />
4.2. <strong>Material</strong> compliance verifications by Arçelik<br />
Arçelik shall be entitled to perform admission quality controls as required in the materials<br />
purchased. “Admission <strong>Quality</strong> Control” activities qualify as the compliance verification by Arçelik,<br />
of the materials dispatched by the Supplier. For this purpose, Arçelik may take samples from<br />
dispatch parties in the amounts identified by Arçelik, and shall have the right to increase or<br />
decrease the sample size as required.<br />
The Supplier shall be obliged to send a quality document with each dispatch upon request. Such<br />
documents shall be deemed satisfactory only if they include test results or statistical results.<br />
Upon the determination of noncompliance originating from the material in Arçelik’s own production<br />
or assembly lines, or at final inspections, Arçelik may repeat material verification inspections; and<br />
may return from production lines processed material or material ready to be processed.<br />
Arçelik may request the implementation of one or more of the following alternatives upon<br />
discovering noncompliance as the result of tests and inspections made in the samples:<br />
a) Arçelik may request from the Supplier all the raw material, process and final inspection<br />
records expected to be kept by the Supplier.<br />
b) Arçelik may reject the dispatch party; and may request the Supplier to immediately supply<br />
new materials as a replacement of the rejected dispatch party. All costs to be incurred for<br />
the supply of replacement materials shall be borne by the Supplier.<br />
c) Arçelik may request the Supplier to make an assortment in the dispatch party. The<br />
Supplier shall realize a post-assortment re-verification for the party. It is up to Arçelik to<br />
decide whether assortment shall be made at Arçelik facilities or the premises of the<br />
Supplier. Arçelik may identify a special method or plan for the re-verification activities. The<br />
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cost of assortments and verifications to be performed by Arçelik or by third parties upon the<br />
discretion of Arçelik shall be borne by the Supplier.<br />
d) Emergency action plans shall be identified by Arçelik and shared with the Supplier for<br />
materials, semi-finished products, and finished products under a potential risk on the<br />
grounds of the non complying dispatch party, and already on Arçelik production lines or<br />
storage areas; and for replacement material supply, and reprocessing semi-finished or<br />
finished products.<br />
e) Arçelik may request extra verification activities including a 100% pre-dispatch inspection to<br />
be performed by the Supplier, in order to prevent repeating noncompliance in the<br />
subsequent dispatches of the Supplier, and the delivery of risky materials to Arçelik.<br />
4.3. Conditional acceptance<br />
The Supplier shall be obliged to produce material complying with technical specifications and<br />
ensure such compliance up to delivery at Arçelik production facilities. In cases of a probable non<br />
compliance with technical specifications originating from production reasons, the Supplier shall<br />
notify Arçelik of the situation in writing. Arçelik may give a written approval for dispatch after<br />
making a technical assessment. For conditional acceptance approval, Arçelik may request from<br />
the Supplier samples for assessment or request the Supplier to make measurements and<br />
inspections. Arçelik may request the Supplier to submit the results of such measurements and<br />
inspections to Arçelik.<br />
Arçelik may accept conditionally the material rejected after the admission quality control. Such<br />
acceptance however does not alter the fact that the material has been rejected, which rejection<br />
shall be taken into consideration in the assessment of the Supplier’s quality performance. If the<br />
material is conditionally accepted under an assortment or repair decision, such assortment and/or<br />
repair shall be performed by the Supplier at the Supplier’s premises or at Arçelik if found proper by<br />
Arçelik.<br />
Post-assortment deficient materials shall be returned to the Supplier.<br />
4.4. Free pass system<br />
Arçelik may exclude supplied materials from Admission <strong>Quality</strong> Control processes depending on<br />
the qualifications of the group of goods such material belongs in and/or the Supplier’s performance<br />
history for the concerned material. Such material shall be defined as “EXCLUDED MATERIAL”.<br />
The Supplier shall dispatch materials with the status of “EXCLUDED MATERIAL” by labeling them<br />
as “EXCLUDED” on the “<strong>Material</strong> Identification Card”, or above the barcode on materials supplied<br />
with a barcode, in a way so that the barcode remains visible. The “EXCLUDED” label serves as the<br />
Supplier’s commitment that all the inspections have been performed in accordance with the<br />
material quality control plan and that the material has been verified by the Supplier. Arçelik shall be<br />
entitled to request the records of such inspections made in accordance with control plans. Arçelik<br />
may invalidate the “EXCLUDED” status for the material at its discretion and notify the Supplier of<br />
the new material status.<br />
4.5. Inspections<br />
Arçelik may make an at site assessment of the Supplier’s compliance with the expected process,<br />
environmental and quality management system standards through “system and process”<br />
inspections. The Supplier shall support inspection requests with short lead times also. The<br />
Supplier shall allow the access of Arçelik and Arçelik customers as required, to all the production<br />
sites, test units, warehouses, and quality documents. Arçelik shall show due care for the<br />
confidentiality and work safety issues reasonably required by the Supplier. Arçelik shall submit<br />
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inspection results to the Supplier. Upon the request of any corrective action, the Supplier shall<br />
inform Arçelik about plans and developments in due time.<br />
4.6. Monitoring of the Supplier’s periodic performance<br />
Arçelik monitors the PPM (parts per million) value to assess the quality performance of its<br />
suppliers; and this value is used in the periodic Supplier performance assessment.<br />
PPM values are monitored individually for “Admission <strong>Quality</strong> Control” and “Manufacturing Line”<br />
PPM rates and calculated as follows:<br />
Probable number of<br />
defective materials <br />
Incoming Control<br />
Reject PPM<br />
= (Number of defective materials / Number of samples taken) x Party size<br />
= (Probable number of defective materials/Total number of materials delivered)<br />
x 1000.000<br />
Return from line PPM<br />
= (Number of materials returned from line/Total number of materials delivered)<br />
x 1000.000<br />
5. Product liability<br />
5.1. Product liability<br />
The Supplier shall be liable for failures and damages to be incurred by the customer arising out of<br />
the materials supplied for Arçelik products. The Supplier represents and warrants herewith that the<br />
materials supplied by the Supplier are not harmful to Arçelik products and customers. In cases of<br />
problems originating from the Supplier, i.e. epidemic defects (defects leading to Workshop Failure<br />
Rate or Product Return in a high number of products, or defects with vital hazard to the customer),<br />
the Supplier shall be obliged to recompense maintenance, material and product replacement costs<br />
and other expenses borne by Arçelik.<br />
5.2. Supply of <strong>Material</strong>s for After-Sales Service<br />
The Supplier shall ensure the supply of materials under this <strong>Agreement</strong>, for use in the after-sales<br />
services of Arçelik, for a period of ten years as from the last date the Supplier sold materials to<br />
Arçelik for use in production. The Supplier may not during this time, discard and sell the dies,<br />
apparatuses and production equipment used for manufacturing such material without the written<br />
consent of Arçelik. If, during the ten year period it becomes impossible for the Supplier to supply to<br />
Arçelik the material under this specification, then all the costs to be incurred shall be paid to Arçelik<br />
by the Supplier. For this purpose, the Supplier shall ensure the compliance of supplied materials<br />
with Arçelik specifications; and all materials shall be dispatched after the performance of proper<br />
quality control processes and in proper packages. <strong>Material</strong> package shall be selected by the<br />
Supplier with a view to prevent any damages to the material in shipment and storage. Arçelik<br />
reserves the right to claim for legal compensation from the Supplier in the case it is determined that<br />
the Supplier sells material qualifying as spare parts to third parties without the written consent of<br />
Arçelik.<br />
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5.3. Warranty<br />
Further to these quality obligations, the Supplier shall also comply with the provisions of the Law<br />
about the Protection of Consumer Rights. The Supplier shall warranty until the end of the product<br />
warranty period, conformity of the material provided by the Supplier. The warranty period shall<br />
begin on the date the final product is delivered by Arçelik.<br />
All costs, including those compensated by third parties, incurred during the warranty period due to<br />
nonconformities originating from materials shall be borne by the Supplier.<br />
Some, or where available all the materials replaced at the customer by Arçelik authorized<br />
workshops in the warranty period shall be sent to the Supplier by Arçelik for troubleshooting.<br />
Examinations made to find the root cause of the defect shall be reported to Arçelik. For defects<br />
originating from the Supplier, the responsibility to prevent recurring defects, realization of corrective<br />
and preventive actions, and informing Arçelik about these activities lies with the Supplier.<br />
5.4. Supplier Chargeback<br />
The Supplier shall be responsible for the continuous supply of materials to Arçelik at the expected<br />
level, including services after the product realization process.<br />
Arçelik shall request from the Supplier the failure costs incurred by Arçelik due to nonconforming<br />
materials provided by the Supplier, prorate with the impact on such failure. The sum requested to<br />
be reimbursed by the Supplier on the basis of nonconformity costs is not a “penalty” imposed on<br />
the Supplier but aims at enhancing the Supplier’s sensitivity and response to the requests for<br />
continuous improvement and corrective action.<br />
All the following provisions shall be applicable for noncompliance situations originating from the<br />
Supplier. Arçelik shall share with the Supplier, evidence indicating that the nonconformity<br />
originates from the Supplier; and may invite the Supplier to make an at site determination of the<br />
nonconformity. The definition of nonconformity originating from the Supplier includes, besides<br />
quality nonconformities, delay in shipment, and dispatched materials which are over or under the<br />
ordered amount.<br />
All materials determined to be nonconforming and not yet included in Arçelik production (kept in<br />
storage areas) shall be replaced with conforming materials by the Supplier (without any charges<br />
payable by Arçelik).<br />
<br />
Supplier chargeback shall not be required for nonconformities recovered by the Supplier<br />
through replacement materials and which do not cause product and production loss.<br />
Arçelik may request the Supplier to reimburse Arçelik for the following costs arising out of<br />
nonconformities originating from the Supplier:<br />
<br />
<br />
<br />
<br />
<br />
All assortment and reprocessing costs incurred to ensure product, semi-finished product or<br />
material conformity,<br />
All costs incurred due to the stand in Arçelik production lines (product non realization),<br />
All costs relating to other materials rendered unusable due to nonconformities originating<br />
from the Supplier,<br />
All product, by-product, and material blocking costs,<br />
All costs incurred for product recall from the site (warehouse, authorized dealer or end<br />
customer).<br />
Such costs include the following items:<br />
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<br />
<br />
<br />
<br />
all extra process and labor costs incurred,<br />
all costs of other materials which are rendered useless including materials rendered<br />
useless as the result of employing assorted material,<br />
All re-transportation, re-packaging, and re-marking costs including labor and consumed<br />
material costs, and<br />
Storage costs for blocked materials, products and semi-finished products.<br />
The Supplier shall also be liable for all customer returns and situations necessitating legal<br />
penalties and arising out of nonconformities originating from the Supplier.<br />
Product sale cost shall be borne by the Supplier in cases of customer returns on the basis of<br />
nonconformity originating from the Supplier.<br />
All penal clauses which might be realized in accordance with the agreements executed<br />
between Arçelik and Arçelik customers shall be covered by this Article, including shipment<br />
delay penalties arising out of the said problem.<br />
All penalties which might arise out of the infringement of directives and laws due to<br />
nonconformities originating from the Supplier shall also be borne by the Supplier.<br />
Arçelik data shall constitute the basis for Supplier chargeback calculations.<br />
6. Confidentiality and the Protection of Business Secrets<br />
“Arçelik Supplier Portal” access passwords given/ to be given to the Supplier are confidential. The<br />
Parties represent and warrant to keep confidential during the <strong>Agreement</strong> term and for a period of<br />
five years thereafter, and refrain from disclosing to third parties without the written approval of the<br />
other party, all information, know-how, methods, or ideas, implementations, methods, innovations,<br />
designs, artworks etc. (“Business Secrets” or “Confidential Information”) which are yet unknown to<br />
industrial circles and obtained by the parties on the basis of the <strong>Agreement</strong>, and providing a<br />
competition advantage to the party who obtains such information. The Supplier accepts to return to<br />
Arçelik at the termination of the <strong>Agreement</strong> all technical drawings, technical instructions, notes<br />
(audio tapes, computer diskettes, etc.), records and documents received from Arçelik, and used,<br />
reproduced and controlled by the Supplier during the <strong>Agreement</strong> term; and to destroy the copies<br />
thereof.<br />
7. Intellectual and Industrial Property Rights<br />
Arçelik and the Supplier are not deemed to have given to each other any license, patent, and<br />
industrial design or copyright under this <strong>Agreement</strong>. Arçelik shall be legally liable for any<br />
infringement of third party intellectual property rights by the production or supply of the materials in<br />
cases where designs of materials supplied to Arçelik by the Supplier are made by Arçelik. In cases<br />
where the design of materials provided to Arçelik by the Supplier are made, or ordered to third<br />
parties by Arçelik, license for the production of the materials protected under know-how, patent, or<br />
industrial designs shall be given to the Supplier with the condition that such materials shall be sold<br />
only to Arçelik (and not sold to third parties). In cases where the design of the materials provided<br />
by the Supplier to Arçelik are made or ordered to third parties by the Supplier, the legal liability to<br />
arise out of the infringement of third party intellectual property rights by the production or supply of<br />
such materials and use of the materials supplied in the products of Arçelik shall be borne by the<br />
Supplier.<br />
Supplier represents and warrants that it has full authority and license to manufacture and sell the<br />
materials and that the manufacture and supply of the materials to Arçelik and the supply of Goods<br />
by Arçelik to any third party or its inclusion in Arçelik’s products does not infringe the rights of any<br />
third party nor give rise (whether now or any time in the future) to any claim for royalty payments<br />
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whether in respect of any part of the Goods or any format, patent or other Intellectual Property<br />
Right against Arçelik. In the event that any necessary license to manufacture expires, lapses,<br />
ceases or becomes necessary for any reason during the Term of this <strong>Agreement</strong>, Supplier shall<br />
have the sole responsibility and cost of obtaining a new or alternative license and any<br />
consequential re-tooling or redesign of the materials.<br />
Supplier indemnifies and holds Arçelik and its suppliers, distributors and customers (the<br />
“Indemnified Parties”) harmless from and against any costs, losses, liabilities and expenses,<br />
including all damages (including punitive damages), wasted advertising and promotion costs, court<br />
costs, bond costs, interest, reasonable expenses and reasonable attorney’s fees (collectively<br />
“Losses”) that the indemnified party may suffer, incur or be subjected to by reason of any legal<br />
action, proceeding, arbitration or other claim by third whether commenced or threatened, arising<br />
out of or as a result of any breach of warranties contained in this clause.<br />
Further, Supplier agrees to indemnify Arçelik for any damages arising out of, or related to<br />
Supplier’s breach of any warranty or representation; supplier’s violation of any law, rule, or<br />
regulation; intellectual property infringement claims related to the Supplier’s goods or service; or<br />
Supplier’s reckless or willful conduct.<br />
8. <strong>Material</strong> Sales to the Supplier<br />
The Supplier may purchase from Arçelik some of the materials to be used for Arçelik production to<br />
the extent it is not possible for the Supplier to provide such materials for reasons of Arçelik quality<br />
rules, import regime regulations, supply difficulties and similar reasons. Prices for the materials<br />
sold to the Supplier under this framework shall be determined by Arçelik. Transportation charges<br />
for such materials shall be borne by the Supplier. Sales made to the Supplier in this way, shall be<br />
traced in a current account together with the purchases from the Supplier. Arçelik may suspend<br />
material sales to the Supplier in order to prevent a deficit balance in such current account due to<br />
the purchases made by the Supplier from Arçelik; or may make material sales in a way to create a<br />
deficit balance against an indefinite term bank letter of guarantee in the sum to be determined by<br />
Arçelik. For late payments, a value date calculation shall be made at the default interest rates<br />
applicable by Arçelik and a default interest invoice shall be drawn up.<br />
9. Consigned <strong>Material</strong>s<br />
The following provisions shall be applicable between the Parties in cases where materials are<br />
consigned to the Supplier by Arçelik for processing:<br />
Consigned raw materials/materials are the property of Arçelik and shall be delivered to the Supplier<br />
in consignment against document. Arçelik records shall constitute the basis in determining the<br />
units of raw materials/materials delivered to the Supplier, and the units of parts/components<br />
produced out of such materials and delivered to Arçelik.<br />
The Supplier shall use the raw materials/materials taken over from Arçelik in consignment only for<br />
purposes of producing the goods and services requested by Arçelik. The said raw<br />
materials/materials may not be used in any way for any production to be realized by the Supplier<br />
for its own use or for the use of third party individuals and corporations. The Supplier represents<br />
and warrants herewith to refrain from selling, transferring, consigning; pledging and delivering the<br />
raw materials/materials taken over in consignment by the Supplier, to third party individuals and<br />
corporations, without the written approval of Arçelik. Upon determining that the raw<br />
materials/materials consigned to the Supplier by Arçelik are used contrary to the above provision,<br />
Arçelik may bill the cost of raw materials/materials used for purposes other than those identified<br />
above, plus 50% of such cost to the Supplier, besides reserving the right to terminate the<br />
<strong>Agreement</strong> unilaterally.<br />
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The Supplier accepts to perform the quality control of the raw materials/materials taken over in<br />
consignment from Arçelik, in accordance with the control criteria and methods to be submitted to<br />
the Supplier by Arçelik; not to use nonconforming materials and notify Arçelik of the situation within<br />
maximum one business day. Arçelik shall notify the Supplier in writing of its request for the<br />
conditional use of the raw materials/materials.<br />
The Supplier accepts to store the raw materials/materials taken over from Arçelik in consignment<br />
under the storage conditions to be notified to the Supplier by Arçelik and make these available to<br />
inspection by Arçelik.<br />
Arçelik records shall serve as a basis for the determination of raw material/material units delivered<br />
to the Supplier; for the units of parts/components delivered by the Supplier; and Gross<br />
Consumption Per Unit. Maximum raw materials/materials which must be used by the Supplier for<br />
the units of parts/components delivered to Arçelik shall be calculated as follows:<br />
Consigned Raw<br />
materials/<strong>Material</strong>s to be<br />
Used<br />
=<br />
Gross Consumption Per<br />
Unit<br />
X<br />
Units of Parts/Components<br />
Delivered<br />
In the inventories to be performed by Arçelik, stocktaking of raw materials/materials in consignment<br />
at the Supplier’s site shall also be made by Arçelik representatives. A comparison shall be made,<br />
of the amount of raw materials/materials in consignment which must have been used, and the<br />
actual amount of raw materials/materials used in the same period. In the case the amount of raw<br />
materials/materials is determined in this stocktaking to be less than the amount of raw<br />
materials/materials which should be available at the Supplier’s site, the cost for such short amount<br />
shall be paid to Arçelik by the Supplier in cash and all at once.<br />
Upon the written request of Arçelik, the Supplier shall inform Arçelik in writing of the amount of raw<br />
materials/materials in consignment at the Supplier’s site, and semi-finished and finished products<br />
in periods other than the stocktaking periods.<br />
Arçelik shall pay the insurance expenses for the raw materials/materials delivered to the Supplier<br />
in consignment.<br />
The Supplier accepts to return to Arçelik at the first request of Arçelik, all the raw<br />
materials/materials at the Supplier’s site upon the termination of the <strong>Agreement</strong> or the termination<br />
of the consignment delivery implementation by Arçelik unilaterally. Under such circumstances,<br />
Arçelik records shall constitute the basis for determining the amount of raw materials/materials to<br />
be returned.<br />
10. Legal Obligations<br />
The Supplier shall act in compliance with its regional, national and international legal obligations<br />
with respect to the products manufactured and the production technology used by the Supplier<br />
(end user safety, environment, work safety, worker health, etc.).<br />
Otherwise, losses which might be incurred by Arçelik shall be borne by the Supplier.<br />
11. Termination<br />
The Supplier shall be liable to supply materials with the proper quality and reliability specifications<br />
during the cooperation term. Upon any substantial infringement of this Specification which aims at<br />
ensuring compliance guarantee, or upon noncompliance with the identified minimum quality<br />
requirements, Arçelik may permanently drop the Supplier from the Approved Suppliers List.<br />
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The decision for termination shall be notified to the Supplier in writing by the Purchasing <strong>Direct</strong>or.<br />
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12. Competent Courts and Enforcement Offices<br />
Courts and Execution Offices of any European Country shall have jurisdiction over the disputes<br />
arising from the <strong>Agreement</strong>.<br />
Read, understood, and accepted.<br />
SUPPLIER<br />
ARÇELİK A.Ş<br />
.................................... ....................................<br />
.................................... Purchasing Manager<br />
...../...../200.. ...../...../200..<br />
.................................... ....................................<br />
.................................... Purchasing <strong>Direct</strong>or<br />
...../...../200.. ...../...../200..<br />
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