Magna Global Supplier Operational

Requirements
January 2024

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Magna Global Supplier Operational
Requirements
As part of an increasingly competitive and demanding industry, Magna has a diversified,
global supply chain that supports our global operations and, ultimately, our OEM
Customers. Magna is constantly innovating and improving, and with our focus on
delivering superior value to our Customers, we will continue to work with competitive
suppliers who are similarly focused on quality and innovation.

We recognize that our supply chain is an integral part of what we do, and we are
committed to continue to standardize many of our supply chain management processes
and systems. As part of that effort, this Global Supplier Operational Requirements
Manual (GSOR) is a fundamental component helping define our business relationship
with our suppliers, through definition of key manufacturing, logistics and quality
requirements. Additional supplier requirements related to ESG (Environmental, Social
and Governance) will be communicated separately to our supply base. Existing ESG
requirements and expectations can be found in our Supplier Code of Conduct & Ethics
and Global Labor Standards at https://www.magna.com/company/suppliers. Future
additional ESG requirements will also be posted on this same site.

This Global Supplier Operational Requirements Manual defines Magna's operational

requirements on behalf of all global manufacturing locations. There may be additional,
customer/Division specific requirements that are also required at a Division level, which
may be more detailed or stringent than requirements defined in the GSOR, and
suppliers are expected to comply with both sets of requirements. Every attempt has
been made to ensure that requirements in this Manual and requirements defined by a
Division level document, are not in conflict. If such conflict does in fact occur, you are
expected to contact your local Division representative who will work to ensure resolution
of that conflict.

Our suppliers are important to Magna, and we will continue to strive to ensure a
relationship of mutual respect and benefit, and we thank you for your support.

Purchasing and Supplier Requirements

Magna International

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Table of Content
1. Introduction 1.1 Magna-Supplier Relationship 4
1.2 Communication – Notification of Change 5
1.3 Continuity of Supply 6
1.4 Corporate Social Responsibility 7

2. Leadership & the Organization 2.1 Supplier Qualifications 7

2.2 Certifications 8
2.3 Supplier Assessments 10

3. Operation – Design & Development Planning 3.1 Defining the Scope 11

3.2 Planning & Definition of Requirements 12
3.3 Product Design & Development 13
3.4 Tooling, Gauges & Test Fixtures 14
3.5 Process Design & Development 14
3.6 Product & Process Validation 15
3.7 Feedback & Assessment 16

4. Operation – Control of Production 4.1 Control of Fixtures & Test Equipment 17

4.2 Monitoring of Product & Process 18
4.3 Non-conformance & Corrective Action 19
4.4 Product or Process Change & Deviations 23
4.5 Warranty 24

5. Operation – Control of Materials/Logistics 5.1 General Requirements 24

5.2 Packaging 25
5.3 Labelling 26
5.4 Materials Planning & Forecasting 27
5.5 Transportation, Schedules & Routing 28
5.6 Border Security 29
5.7 FTA/Customs Compliance 30
5.8 Documentation 30
5.9 MMOG 31

6. Control of External Products & Services 6.1 Supplier Performance Reporting 31

6.2 Operational Rating Criteria 32
6.3 Continuous Improvement 32

7. Glossary of Terms 33

8. References 36

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1.0 Introduction
The expectations, requirements and standards defined within this manual are applicable
to all suppliers providing materials, products, and services to any Magna manufacturing
facility. This includes suppliers of direct materials and, as appropriate, indirect materials,
packaging materials and services (including containment, sorting and calibration
services) with potential impact on any product characteristics affecting Magna’s
Customer requirements. These requirements also apply, in whole, to any supplier that is
directed to Magna, by any OE Customer. The requirements as detailed in this manual
define basic requirements and are supplemental to requirements as defined within the
latest ISO 9001, and IATF and VDA Standards, and any specific requirements as
communicated by your procuring division. The latest version of this manual will be
posted on the Magna website supplier portal
(https://www.magna.com/company/suppliers) or the eRFX portal
(https://eRFX.magna.com), and the Magna Quality Platform – QPF
(https://qpf.magna.com). Suppliers must review any one of these sites on a regular
basis to ensure they have the most recent version available. Suppliers must have
access to eRFX (https://eRFX.magna.com) and to QPF (https://qpf.magna.com). All
suppliers must register and maintain a valid Quality, Sales, and Financial contact in
eRFX. Failure to maintain proper contact information may impact your scorecard and
supplier rating.

1.1 The Magna-Supplier Relationship

Magna is committed to maintaining its position as a global leader within the automotive
and mobility sectors and we recognize the integral role that each supplier to Magna has
in maintaining our position of excellence in innovation, technology, cost, quality, and
delivery. Magna is committed to a zero PPM strategy and expects all suppliers to
support this strategy and manage their own operations, similarly. Our intent is to
establish strategic, long-term relationships with our Suppliers, and it is incumbent on
each supplier to maintain a position of cost leadership while demonstrating a
commitment to sustained quality, highest levels of service and a strong focus on
continuous improvement.

We will endeavour to make every effort to manage our supplier relationships with the
highest degree of integrity and professionalism, and we will ensure that our decisions
are based upon optimization of value to Magna and its stakeholders. We will not allow
any undue influence or inappropriate activity to compromise those decisions.

This GSOR Manual outlines the fundamental operational requirements for all suppliers
to Magna International’s global operations. The Quality Systems requirements have
been aligned across all our global manufacturing sites, to the greatest extent possible.
In addition to the requirements defined in this document, there may be additional

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Division standards applicable to the Magna operating Group(s) with which you conduct
business. The quality and delivery requirements defined herein are to be considered an
addendum to the Purchase Order and Terms & Conditions issued to all Suppliers and
do not replace or alter the terms and conditions covered by these purchasing
documents, the Statement of Work (SOW) or warranty agreements. Suppliers are also
expected to comply with any terms and conditions imposed on Magna, by the Customer
to whom the final products are ultimately being shipped. This includes compliance with
any specific forms or documents specified by any global Customer of Magna. Suppliers
to Magna are also expected to manage their sub-tier suppliers of products and services
to ensure compliance to the requirements defined within this manual, Magna
Purchasing Terms & Conditions, Magna’s Supplier Code of Conduct and Ethics,
Magna’s Global Sourcing Policy, latest global automotive industry standards and any
additional Customer or Division specific requirements.

1.2 Communication – Notification of Changes

It is critical that the relationship between Magna and our suppliers be premised on open,
effective, and proactive communication. The occurrence of non-conforming product,
unauthorized changes, or any related supply chain issues, present a risk to both Magna
and to Magna’s Customer(s), when not communicated and managed effectively. These
risks also manifest themselves at the sub-tier suppliers and sub-contractors that
comprise the overall supply chain. In order to manage these risks most effectively, all
suppliers must communicate as early as possible, the following:

1. Any pending or potential issue which the supplier has identified.

2. All proposed material changes, manufacturing process changes, and all changes
in process related to any product safety or critical characteristics.
3. All proposed changes, including:
• Manufacturing location change
• Tooling capacity change
• Re-commissioning of tooling that has been inactive for one year, or more
• Tooling refurbishment/replacement
• Proposed use of new manufacturing equipment
• Tooling transfer (re-source)
• Packaging changes
4. Any potential manufacturing/quality issues, including suspension, revocation or
withdrawal of Quality Management Systems certification status.
5. Any potential supply and/or capacity issues.
6. Changes to sub-suppliers of raw material, components, or services.
7. Information Technology (IT) or supporting system changes that might impact
production or shipment of product to Magna.
8. Organizational changes with the potential for impact on manufacture or supply of
product to Magna.
9. Changes to ownership structure.

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Suppliers will support all tests, validations, approvals, and submissions required as a
result of product or process changes, as defined by, but not limited to AIAG PPAP
requirements, VDA Vol. 2 Trigger Matrix of Part History or any other submission
requirements as directed by Magna. Suppliers cannot charge for samples or testing
resulting from supplier related or requested changes, unless approved, in writing by
Magna.

Suppliers must be proactive in their communication with their Magna customers

(Reference Section 4.4) and all intended changes must be communicated to Magna,
prior to proceeding with those changes. Failure to notify Magna of potential issues or
changes will result in internal elevation, as appropriate, and may result in notification of
the issue to Magna’s Customers. If necessary, a supplier’s ISO and/or IATF Registrar
will be contacted and asked to conduct any necessary investigations or assessments. In
the absence of proactive communication of potential changes, any costs incurred by
Magna as a result of late notification or insufficient lead time, from the supplier, will be
the responsibility of the supplier and will be charged to the supplier, as appropriate.
Continued non-compliance may lead to loss of business.

1.3 Continuity of Supply

Suppliers are required to have well defined business contingency plans in place to
ensure continuity of supply in the event of disruption to their operations and/or supply of
materials, as a result of man-made events, natural disasters, utility or labour disruptions,
equipment or logistics failures or interruptions, or disruptions/attacks on information
technology systems. These contingency plans shall be reviewed on a regular basis, or
annually at minimum. Suppliers shall immediately notify all Magna Divisions to which
they ship product, the moment they become aware of any potential supply disruption.
Should production interruptions be of an extended nature, requiring a full or partial
stoppage in production, we expect suppliers to conduct and document thorough
shutdown and startup procedures. Magna retains the right to request copies of
shutdown/startup checklists or audits, as deemed necessary by our own risk mitigation
processes.

Each supplier to Magna shall identify an individual from the supplier’s manufacturing
location, with sufficient authority to assume responsibility for dealing with any product
quality and/or delivery related issues that may impact Magna or Magna’s Customers.
The identified contact needs to be available at any time such issues arise. Contact
information shall be made available to the Magna Division being supplied, or uploaded
in the appropriate database(s), as directed by Magna. In the absence of a specially
designated contact, the Quality contact, registered in eRFX, will be assumed to have
sufficient authority.

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1.4 Corporate Social Responsibility/Sustainability

Suppliers shall comply with all Environmental, Social and Governance (ESG)
requirements as directed by Magna and as defined within this Global Supply Chain
Operational Requirements Manual, Magna Purchasing Terms and Conditions and as
specified and detailed on the supplier page of Magna’s public website
(https://www.magna.com/company/suppliers). Suppliers are required to support any
requests for ESG related information that are communicated including, but not limited
to, requests related to the Carbon Disclosure Project (CDP) data, and supplier Self-
Assessment Questionnaire (SAQ), as well as other Environmental, Social and
Governance requirements as listed and detailed on the Supplier page of the Magna
website. Recognizing that Environmental, Social and Governance requirements will
continue to evolve, it is the responsibility of our suppliers to ensure that they are aware
of the latest ESG requirements, by regularly reviewing the Supplier page at
https://www.magna.com/company/suppliers. Compliance to Magna ESG requirements
will be monitored and compliance and performance will be reflected in the Magna
Supplier Scorecard. Failure to comply, or violation to Magna ESG policies may result in
prevention of new business, or loss of existing business as determined by the nature
and severity of such violation or non-conformance.

Suppliers must ensure that there is no risk of counterfeit product being shipped to Magna.
Counterfeit product is defined as items that are, or contain, unlawful or unauthorized
reproductions, substitutions or alterations that have been knowingly mismarked,
misidentified or otherwise misrepresented to be an original manufacturer’s part. Suppliers
must have strict procurement policies in place to ensure traceability for all items
incorporated into their product.

2. Leadership & The Organization

2.1 Supplier Qualifications

All direct material suppliers must have a valid DUNS number as issued by Dun &
Bradstreet and, as applicable by region, a valid VAT or HST number. DUNS numbers
are validated by Magna, and misrepresentation could disqualify you from Magna
business. Suppliers of indirect materials and services may also require a DUNS
number, as directed by your procuring Division.

Any suppliers shipping to any Magna group must be registered in both eRFX
(https://ERFX.magna.com) and QPF (https://qpf.magna.com/). This includes all
suppliers that are directed to Magna, by any of our OEM Customers. Suppliers

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registering in these databases must complete all information fields profiling applicable
business systems, commodity capabilities and identifying key contact personnel. When
registering in eRFX, suppliers will be required to register one Quality contact, one Sales
contact and one Financial contact, at minimum. If a supplier has multiple manufacturing
sites with applicable unique DUNS identification, each manufacturing DUNS site is
required to register in the appropriate database. Suppliers are required to maintain
information in the database to ensure it remains current. At a minimum, data must be
reviewed and, if necessary, updated at least annually. Maintaining current information is
critical as these global databases are accessible to all Magna buyers and quality
personnel, in each global region where we have operations. The eRFX and QPF
platforms are also used during the supplier assessment and supplier sourcing
processes. Key performance metrics and supplier ratings are also communicated via
these databases.

Suppliers to Magna must also meet key operational, financial, and quality criteria, which
combined determine a supplier’s status. These metrics are reviewed on a regular basis
and assist in development of Magna’s overall purchasing strategies, while at the same
time driving Magna’s supplier development processes.

2.2 Certifications

A supplier’s top management shall demonstrate leadership and commitment to their

quality management system, and they are ultimately accountable for the overall
effectiveness of that system. Top management is responsible to ensure that risk-based
thinking is evident and effective in all aspects of a supplier’s management system. To
ensure this, management’s responsibilities should include:

• Conducting contingency planning reviews

• Identify and support process owners
• Support and participate in the escalation process related to all safety relevant
products and processes
• Ensure achievement of customer quality targets and performance requirements
• Implement corporate responsibility initiatives dealing with all required ESG
initiatives and requirements

Magna’s goal is for all suppliers of materials and services, producing or affecting direct
production material, to become certified to IATF 16949. At minimum, all suppliers of
direct production material to Magna, must demonstrate conformity to the latest IATF
16949 Standard, and to other standards that might be directed by the procuring
Division(s) including, but not limited to VDA, CCC, ISO 17025, ISO 45001, ISO/IEC
27001, TISAX/TPISR, ISO 26262 and ISO 15504-5 Automotive SPICE, latest revision
of IPC-A-610, latest revision of DIN EN 61430 and ANSI/ESD S20.20. Suppliers who
are not certified to IATF 16949 must, at a minimum, be certified to the latest ISO 9001
standard and comply with the “Minimum Automotive Quality Management System
Requirements for Sub-Tier Suppliers” (Magna MAQMSR). Demonstration of
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compliance will be validated through a supplier’s Operational Performance and/or the
absence of any major or systemic issues. A supplier’s compliance may also be
validated through the completion of an annual MAQMSR on-site or self-audit.

Depending on the supplier’s Operational Performance, Customer Specific

Requirements, or other risk-based criteria (ie new program launch, warranty, etc.),
suppliers may be subject to an onsite annual management system audit by a qualified
Magna or 3rd party auditor. Both Audits will be conducted in Magna’s QPF system.
(https://qpf.magna.com). Should any existing certification expire, be revoked, or be
placed in suspension or probation, the supplier must immediately contact every Magna
Division to which the supplier ships product, notifying them of the change in certification
status. Any suspension in certification status must be reported to all applicable Magna
Divisions within 5 working days. Suppliers who falsify any certification status or
reporting, including forged documentation or use of non-accredited registrars, will
immediately be placed on business hold with Magna International, and may lose any
existing business as deemed necessary.

Suppliers shall also maintain all required CQI Assessments, as defined by their
processes (Ref. http://www.aiag.org) and all applicable FMVSS, ECE, CMVSS or CCC
Standards, including but not limited to FMVSS 302 (Flammability reporting)
requirements, in support of applicable OE Customer-specific requirements
(Ref. http://www.iatfglobaloversight.org/). CQI Assessments need to be renewed on an
annual basis, as determined by the latest date of completion. Suppliers shall nominate a
product safety representative for each applicable manufacturing location. The product
safety representative must register in eRFX and should be designated as the “Product
Safety Responsible” contact. If a supplier does not have a Product Safety
Representative, the registered Quality Contact shall be deemed to have full authority
and responsibility to act on behalf of the supplier, in all product safety related activities.

Suppliers shall establish and maintain a documented process to ensure identification of

training needs and documentation showing achieved competence levels for all
personnel performing activities affecting conformity to product and process
requirements. This shall include documented verification of competence for personnel
conducting internal audits, including Quality Management System audits and applicable
CQI assessments.

In addition to direct material suppliers the scope of these requirements applies to

suppliers of subassembly, sequencing, sorting and re-work (either on-site or at a remote
location) and services. Suppliers are expected to maintain the same level of quality and
manufacturing controls, for the production of service parts and assemblies (i.e., for the
full life of the program). This shall include any service requirements transferred to any
alternate site, location, or organization. Suppliers of service parts, components or
assemblies must comply with the AIAG Service Parts Production Approval Process
(Service PPAP).

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Suppliers shall post, and update all applicable certifications based on notifications
received from the eRFX system.

Failure to upload required or renewed certifications will result in a penalty to your

supplier scorecard and could impact future business.

Cyber and Information Security

Suppliers must have systems and procedures in place to protect computers, servers,
mobile devices, electronic systems, networks, and data from any form of malicious
attack.

Suppliers must have procedures in place, detailing response to any attempted or actual
cyber-attack. These procedures must include immediate notification to Magna, for any
potential impact to Magna data or business.

With the ever-increasing dependence on electronic systems and communications, and

in recognition of the ever-increasing threats to information protection and security, all
suppliers are encouraged to become certified to ISO/IEC 27000.

Magna is working to be a leader in the area of cyber/information security, and it is

important that all identified confidential information such as, but not limited to,
specifications, design and engineering data and other critical information, is managed
and maintained in a secure environment. In addition to appropriate protection of
technical and product information and data, all necessary steps shall be taken to ensure
protection of personal information and data related to a supplier’s employees, as well as
personal data of Magna employees connected with any of our on-line platforms and
systems.

TISAX (Trusted Information Security Assessment Exchange) (www.tisax.org) and

TPISR (Third Party Information Security Requirements) (https://www.aiag.org/supply-
chain-management/cybersecurity) define industry standards for information security and
establish assessment requirements to ensure globally harmonized levels of information
security.

As determined by the nature and need for protection of information and data, suppliers
shall be able to demonstrate adequate safeguards and appropriate levels of information
and cyber security. Specific cyber security requirements such as TISAX certification,
TPISR, or any other mandated OE Customer specific Cybersecurity requirements will
be directed by your procuring Division.

2.3 Supplier Assessments

Magna reserves the right to review and assess a supplier’s financial, operational,
information and IT security, quality, environmental and Health & Safety systems, for the

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purposes of validating compliance to standards established by applicable ISO, IATF,
VDA 6.3 Standards, OE Customer Specific Requirements or requirements as detailed
within this manual. Assessments or reviews may be conducted from time to time in
order to ensure the on-going stability and viability of Magna’s supply base. All suppliers,
including Customer-designated or Customer-directed, are expected to provide, upon
reasonable notice, access to their facility as well as those of sub-tier suppliers, as
necessary. Following notification of a requested assessment, suppliers are expected to
acknowledge and respond to such request, within 30 days. All appropriate measures
will be taken to protect confidentiality of operational and financial information.

Assessment results are intended for verification of applicable ISO, IATF, VDA and
applicable Customer Specific Requirements and in no way reduce or negate
responsibility to meet specific regulatory, health and safety or other legal requirements
applicable to the supplier.

3.0 Operation – Design & Development

Planning

3.1 Defining the Scope

Magna requires suppliers to complete all advance product planning and submission in
full accordance with the AIAG Advance Product Quality Planning and Control Plan
manual. Unless otherwise directed and approved by your procuring Magna Division(s),
all PPAP submissions shall be as per Level 3 requirements, at minimum. As determined
by Magna’s customer and upon request by Magna, suppliers must additionally meet
submission requirements as per the current version of VDA2.

Suppliers shall ensure a multi-disciplinary approach is used throughout the product life
cycle, and most especially through the design and development planning process.
Suppliers shall conduct all necessary and prescribed activities to ensure clarity of all
customer and Group-specific expectations as defined within Purchase Orders,
Statement of Work etc. This includes activities and reporting related to design, testing,
verification and/or validation and product conformance. Suppliers shall conduct and
document detailed feasibility reviews to ensure all technical, manufacturing,
performance, specification, certification (homologation) and timing requirements can be
supported. Suppliers shall submit such feasibility reviews to Magna, upon request. In
cases where product certification (homologation) is required, the supplier is responsible
for ensuring completion of all homologation specifications and requirements.
Responsibilities shall be mutually agreed upon prior to the start of any certification
activity. Suppliers will ensure that resources are available and able to communicate
effectively, to ensure successful completion of all requirements to meet defined program

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timing. It is also the responsibility of suppliers to ensure any sub-tier suppliers for which
they are responsible, also have sufficient resources assigned.

Suppliers will develop timing and progress charts, in a format as defined by the
procuring Magna Division(s) and will maintain and review timelines on a regular basis.

The supplier shall have a documented sourcing process, for all sub-tier suppliers
affecting customer requirements. The sourcing process shall include a risk analysis that
takes into consideration any available past performance data, overall risk analysis
(commodity, geography, financial stability, technology, supply interruption,
manufacturing capability, etc.) of sub-tier suppliers. The risk analysis shall also include
an evaluation of the sub-tier supplier’s Quality Management System. Suppliers shall
have similar requirements, as defined in this document, in place for all sub-tier
suppliers. Upon request from Magna, suppliers shall provide any relevant information
impacting upon product compliance or performance, including full transparency through
the applicable sub-tier supply chain.

As defined specifically by the Magna group or Division involved, suppliers must have
the ability to securely communicate CAD data, as required. The supplier shall have
adequate safeguards in place to prevent any improper use or communication of this
data.

Suppliers are expected to use all appropriate tools in the product and process planning
phase including, but not limited to:

• Geometric dimensioning & tolerancing (GD&T)

• Design for manufacturing & assembly (DFMA)
• Design of experiments (DOE)
• Simulation & Modelling
• Failure Modes & Effects (FMEA)
• Finite Element Analysis (FEA)

The supplier’s scope of planning will also ensure that all capital and tooling budgets
necessary to support the program, are approved and in place in time to meet timing
requirements.

3.2 Planning & Definition of Requirements

As part of their risk analysis, suppliers will work with the appropriate Magna Division(s)
to ensure definition of key program deliverables, including at minimum:

- Definition of all customer expectations and government or legislative

requirements (e.g., FMVSS, CMVSS, ECE, CCC) related to product development
and approval, as well as serial launch and production. Customer requirements

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 shall include all requirements of the applicable Magna Division(s) as well as all
final Customer and compliance expectations and requirements.

- Review of past warranty, field return or product recall issues for any similar
product design and/or application. Wherever possible, every attempt to
benchmark competitor products shall be made. The warranty analysis shall
include all sub-tier suppliers, where appropriate.

- Historical quality data on previous designs or revisions of the current part, or on

similar parts and manufacturing processes, shall be reviewed. Problem reports
and corrective actions, rework and scrap shall be reviewed to ensure inclusion of
adequate controls to prevent recurrence of previous non-conformities.

- Any campaign prevention data, or government recall or technical service bulletin

data shall be reviewed, if available.

Suppliers shall work closely with Magna to ensure all processes are controlled
adequately so as to prevent the manufacture and transfer of defects. Process controls
must be sufficient so as to control failure modes identified through the Process Failure
Modes Effects Analysis (PFMEA). All related sub-tier documentation shall be available
for review, by Magna, upon request.

Special attention shall be given to all Customer attach or interface points on the final
product and to critical processes such as, but not limited to heat treating, plating,
coating, soldering, welding, and appearance items.

3.3 Product Design & Development

Suppliers with design responsibility must receive Magna approval of all product design,
test, and validation specifications, including CAD specifications and transfer
requirements. Suppliers with design responsibility shall ensure all personnel with design
responsibility are competent in all applicable tools and techniques, as identified by the
supplier. All deviations must be approved by Magna, in writing, in advance of
implementation. Supplier requests for deviations and engineering approvals shall be
documented and controlled as per the requirements and documents of the procuring
Division(s).

Suppliers with design responsibility must complete all appropriate Design Failure Modes
Effects Analysis (DFMEA), in compliance with latest AIAG standards and have them
available for review and approval by Magna. The supplier and Magna will establish
performance approval expectations for each phase including Engineering Validation
(EV), Design Validation (DV) and Production Validation (PV) as defined by the procuring
Division(s).

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Data and results from EV, DV and PV testing shall be used in the design and
construction of test and inspection equipment that will later control the manufacturing
process.

3.4 Tooling, Gauges & Test Fixtures

Tooling design and build is generally the responsibility of the supplier; however, many
Magna groups have developed detailed Tooling Standards to ensure suppliers
manufacture tools that will provide high quality parts throughout the life of the tooling.
These Tooling Standards will be communicated to you via the procuring Division, if
necessary. Suppliers are responsible for the maintenance of all tooling, testing and
inspection equipment. Customer owned tooling, gauges and test fixtures must be
identified as prescribed by the Customer, including identification with appropriate asset
tags, or similar identification. Final payment of tooling will be contingent upon
verification of proper identification and completion of PPAP as defined by AIAG PPAP
or the most current version of VDA2 requirements. PPAP approval will not be signed off
without completion and signing of Magna approved bailment documentation (including
bailment receipts incorporating pictures of tooling, gauges and test fixtures, and
associated tagging or identification) reflecting the rights of Magna and its Customer in
goods, including tooling, which are placed in Supplier’s care and custody. At any time,
following notification to the supplier, Magna reserves the right to complete an on-site
inspection of tooling owned by any Magna Customer directly, or by Magna.

Payment terms may differ within various Magna groups, and suppliers need to make
certain that they reference any applicable tooling purchase order(s) for actual payment
schedule.

3.5 Process Design & Development

As part of the advance planning process, suppliers must design and develop a
manufacturing process that will meet quoted production volumes and all quality
requirements as approved by Magna. The supplier shall use a multi-disciplinary
approach for risk identification and mitigation in developing and improving plant, facility
and equipment plans. Quality planning documentation such as Failure Modes Effects
Analysis (FMEA), Process Flow Diagram (PFD) and Process Control Plan (PCP) must
be developed, reviewed, and approved by Magna prior to production approval and
launch. When a FMEA has a severity or failure mode of 9 or 10, or as defined by any
unique requirements of a Magna customer, the risk must be addressed through design
action/controls or process prevention and detection actions, regardless of the Risk
Priority Number/Level (RPN/RPL). Suppliers are expected to have a strong focus on
prevention, as opposed to detection, and potential failure modes identified through the
Advance Quality Planning process must have appropriate error-proofing designed into

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the manufacturing process to ensure capture and containment of product non-
conformances.

Suppliers must ensure that enough floor space is available to support all necessary
manufacturing and testing equipment. Once production approval is received from
Magna, any change to the manufacturing process must be communicated to Magna,
prior to the change taking place. These changes must subsequently be approved in
writing, by Magna, prior to implementation.

The supplier will also develop necessary packaging and labeling, as per the latest
Automotive Industry Action Group (AIAG) or VDA guidelines, or as defined by Customer
or any applicable legal requirements. In the event that specialty handling or packaging
is required, the appropriate Magna Division will communicate requirements to the
supplier.

3.6 Product & Process Validation

The Production Part Approval Process (PPAP) shall apply to all suppliers supplying
production parts, service parts, production materials or bulk materials. Bulk material
PPAP is not required unless specified by the procuring Magna division. Suppliers
supplying service parts shall comply with PPAP requirements unless such requirement
is waived, in writing, by the procuring Magna division.

Prior to final production approval, the supplier shall validate all control documentation
(FMEA, PCP, and PFD) to ensure the manufacturing process is properly detailed and all
measurement and control systems are identified and implemented. The supplier shall
establish appropriate production reliability/quality goals along with disciplined corrective
action processes to drive improvement through the manufacturing process. Production
Validation (PV) samples must come from the approved manufacturing process and flow,
unless specifically authorized in writing by the procuring Magna Division. Final
production approval will require completion of all AIAG/VDA prescribed activities
including component part dimensions, material certifications (as defined by procuring
Division) and all approved supporting documents, and any additional requirements that
may be defined by your procuring Magna Division. Deviations required to be part of a
PPAP/EMPB submission package, must be approved in writing by the procuring Magna
Division, prior to PPAP submission. Unless otherwise specified by Magna, all level 3
requirements as detailed in the AIAG PPAP Manual, or as agreed upon per VDA2, must
be met. If applicable, suppliers must meet submission requirements according to VDA2
specification agreed upon. Unless otherwise approved in writing, by Magna, production
approval will be contingent upon successful completion of run-at-rate production trials at
the quoted rates, including low or high threshold rates, up to 15% above quoted
production volumes, or as defined by Magna, and using the procuring Division’s process
and form. Process validation run-at-rate must account for the highest level of part
complexity and accommodate assumed scrap or defective product rejection rates.
Successful run-at-rate must meet statistical capability requirements as defined through

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technical, AIAG/VDA standards, or as approved, in writing, by Magna. For PPAP of new
or modified parts, the supplier must submit correct and complete Material Data Sheets
(MDS) in IMDS. The PPAP Warrant/Initial Sample Inspection Report must include the
version number and the ID number of the MDS approved by Magna. Failure to comply
may result in a delay of PPAP approval and subsequent payment of tooling funds. For
IMDS assistance, contact the IMDS Helpdesk at [email protected] or the contact
numbers listed within the IMDS site at www.mdsystem.com. For assistance with the
CAMDS system, contact the corresponding CAMDS support within the CAMDS site, at
www.camds.com. Final approval will be determined by the procuring Division. Suppliers
are also expected to develop and implement detailed launch readiness reviews.

All product characteristics, as identified by Magna or its OE Customer, affecting design,

manufacture, assembly, fit or function (including future/subsequent processing), will be
identified and communicated by the procuring Magna Division. As part of the ultimate
product and process validation, suppliers shall be required to establish, validate, and
maintain short and long term capability, as defined by Magna. Customer designated
special characteristics, as identified by Magna or its OE Customer, affecting safety or
compliance with regulations, must be validated to have acceptable short and long term
capability, and must be controlled through acceptable statistical process control
methods. As determined by Magna’s OE Customer(s) and as directed by your procuring
Division, all FMEA items with a severity score of 8, or higher, must be controlled through
appropriate error/mistake proofing.

As dictated by IATF 16949 Customer Specific Requirements, and unless otherwise

directed by Magna, Suppliers must complete annual revalidation to the technical
specifications and submission level as determined by their procuring Division(s).

In the absence of specific direction from Magna, suppliers must complete an annual
revalidation and submit the ISIR/PSW to the procuring Magna Division. Any reduction in
validation requirements must support applicable OEM requirements and can only be at
the direction of Magna. Suppliers cannot charge for annual validations, unless
specifically agreed to, in writing, by the Magna Division requesting the validation.

Reference samples must be provided at no cost, for any product requiring surface finish
or appearance requirements. These samples shall be taken from a production run made
under serial production conditions. Suppliers shall provide the number of samples
required by Magna and all samples must be regarded as controlled samples, along with
approval signatures and expiry dates, if applicable. Samples will represent the minimal
acceptance standards.

3.7 Feedback & Assessment

As part of the production part approval process for all new and transfer product,
suppliers shall develop an Early Product Launch, or Safe Launch Containment plan.
The process shall include regular reviews of data collected as part of the containment

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checks, with appropriate controls and corrective action implemented to address all
instances of non-conformance. Containment plans, results and corrective action must
be approved by Magna and available for review upon request.

Early product containment must remain in place until the production process is validated
to be stable, and approval is obtained, in writing, from Magna. Unless otherwise
specifically directed by your procuring Division, your early product containment plan
must remain in effect for the first 2000 parts, or for the first 90 days of production
(whichever is more stringent).

Suppliers shall not proceed with shipments of production material without full PPAP
approval, unless an approved waiver, deviation or interim approval has been granted in
writing by Magna. Suppliers can only ship the volume of parts, or for the duration of time
specified by the interim approval.

4. Operation – Control of Production

4.1 Control of Fixtures & Test Equipment

Monitoring

The supplier must have a documented system in place to control, calibrate, and
maintain the proper function and accepted level of repeatability and reproducibility of all
inspection fixtures, measuring / testing instruments, and equipment. All Customer-
owned fixtures and test/inspection equipment must be clearly identified in the manner
prescribed by Magna or by Magna’s Customer.

Updating Instructions

Operating instructions must be readily available at every inspection station along with a
standard, describing the proper methodology for use in inspection. These instructions
must include a reference to the standard, and revision level, and be approved by
appropriate personnel. Whenever there is any change to the inspection procedure that
affects the use of the standard, or when any identification information is revised, the
operating instructions must be updated to reflect the current status.

Validation

All measurement and test equipment must be calibrated annually, at a minimum. Any
lesser frequency of calibration must be supported by appropriate MSA data and in
consideration of any risk presented by the manufacturing environment or use of the
equipment. Such data must be made available to Magna, upon request. Any lesser
frequency of calibration of measurement and test equipment must be approved, in

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writing, by Magna. The calibration record/certificate must be on file at the supplier’s
facility and be traceable to the actual identification information and to the appropriate
standard (e.g., NIST). Calibration Services of equipment must meet the requirements of
the latest released edition of ISO and/or IATF 16949 standards.

Inspection, Measuring, and Test Equipment Records

Records must include any revision information, traceable to the part revision level.
External/commercial/independent laboratory facilities used for inspection, test or
calibration services by the supplier shall have a defined laboratory scope that includes
the capability to perform the required inspection, test or calibration and must have
evidence that the laboratory is acceptable to Magna or must be accredited to ISO/IEC
17025 or national equivalent, by an accreditation body of the ILAC MRA (International
Laboratory Accreditation Forum Mutual Recognition Arrangement).

Measurement System Analysis

Gage and Fixture Measurement System

Analysis (MSA) must be performed as detailed in the latest released edition of the
AIAG Measurement System Analysis
Manual, and must meet the standards of the procuring Magna Division(s).

Record Retention

Suppliers are expected to maintain applicable retention periods as specified in

IATF 16949 latest edition standard, unless subject to longer retention periods in
compliance with all applicable legal, governmental or Customer specific requirements,
pursuant to requirements communicated in writing by the procuring Magna Division(s).
Records must be stored in a location and/or environment that protects against
inadvertent destruction.

4.2 Monitoring of Product & Process

Manufacturing process control must include a continuous monitoring of product/process

characteristics and of all key parameters influencing the manufacturing process.
Appropriate statistical process control methods, or error-proofing, must be applied on all
characteristics identified through the APQP process and as directed by your procuring
Magna Division(s). Process parameters and product characteristics subject to legislative
safety, environmental and/or emissions regulations must be documented in control
plans in compliance with Magna specific requirements and IATF 16949 requirements.

Suppliers must validate compliance to product and process requirements on a regular

basis. This can be accomplished through layered process audits (Ref. CQI-8 LPA

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Guidelines), systems self-audits or similar methods of verification. Records of such
audits shall be immediately available for review when requested by Magna.

4.3 Non-Conformance & Corrective Action

Nonconformance notices will be issued upon discovery of any defective product

identified at any Magna operating site. Nonconformance notices will be issued for
materials or logistics noncompliance issues. The nonconformance process is typically
managed through the following procedure:

• Supplier will be notified of the concern, through the QPF system. All relevant
containment actions must be initiated immediately and remain in place until
corrective action has been reviewed and approved by Magna. Unless otherwise
specified, initial response to the nonconformance must be completed within 24
hours of notification. The 24 hour response is one of the metrics in the supplier
scorecard.
• Upon notification, the supplier shall initiate the Corrective Action Report (CAR)
and any other supporting documentation as directed by the procuring Division(s).
The initial CAR, detailing root cause and corrective action must be submitted to
the Magna procuring Division within 5 days, unless otherwise specified by
Magna. Validation and closure will be determined by the procuring division
• Suppliers shall assess the risk of any reported non-conformance for potential
impact at any other Magna location, globally, that they ship to. If the potential for
such risk exists, they will immediately contact all affected Magna locations
• Quality and delivery non-conformance and response will be reflected in monthly
supplier scorecards
• Suppliers are responsible to review their monthly scorecards, on-line, in eRFX

Under-performing suppliers may be escalated to the Magna Top Focus Supplier

process. Suppliers will be expected to support any development activity that is part of
this process. Costs related to the Top Focus process may be the responsibility of the
supplier, as appropriate.

Suppliers will be responsible for all validated costs for non-conformance issues, based
on (but not limited to) the following criteria:

• Division sorting of supplier product at the Magna facility, until certified stock
arrives
• Production line shutdown
• Finished product sort and/or scrap of material
• Any material transfer of nonconforming supplier product
• Quality Department time for problem investigation
• Testing if required

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 • Any sort/rework charges incurred by Magna, either directly or via 3rd Party
sort/rework
• Related transportation expenses
• Any costs incurred by Magna for disruption of our customers, including costs
associated with sorting, rework, yard holds and applicable field actions
• Costs associated with the disposition/return of unapproved or unauthorized
material sent by the supplier
• Costs related to unauthorized deviations
• Costs incurred by Magna associated with customer recalls or product failures,
caused by supplier non-conformance

Traceability

The supplier shall follow the traceability method as determined by the procuring Magna
Division (e.g., date and shift of manufacture along with sequential processing number).
In some cases, the component may be critical enough so as to warrant part
identification; these instances will be communicated through the appropriate quality and
engineering groups unless superseded, in writing, by the procuring Division(s).
Traceability requirements on prototype production parts may be defined by Magna and
must be supported by the supplier.

A lot should contain a specific quantity of parts and should not exceed eight hours or
one day of production, at a maximum. In the event of certain commodity-based material,
methods such as “dye lots” or steel coils will be acceptable. For approval of a
traceability method exceeding 8 hours, or one shift of production, the Division’s quality
group must be contacted. The supplier must ensure implementation and management
of an effective FIFO method of stock rotation in both the production and shipping
process. The FIFO date used in determining stock rotation, must be the manufacturing
date of the material affected.

Failure to comply with traceability requirements may lead to rejection of material and
issuance of non-conforming material reports. All costs related to containment, material
disposition and corrective action resulting from failure to meet proper traceability
requirements, may be assigned to the supplier. Traceability Records shall be
maintained and accessible for the life of the product, including Service, plus one year.
Traceability record retention deviations are only permitted if approved in advance in
writing from your procuring Division(s).

Controlled Shipping

When directed by Magna, suppliers may need to certify product after a lot rejection has
occurred. Two types of controlled shipping actions are usually employed when this
situation occurs:

• Supplier conducted sort and certification of subsequent part shipments, and

• Third party sorting and certification

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All controlled shipping actions are the responsibility of the supplier to coordinate and
manage. Any third-party sorting, re-work, inspection, and containment activity must be
conducted by a supplier that is designated or approved, in writing, by Magna. Any third-
party arrangements, not specifically directed by Magna, must be reviewed, and
approved by the procuring Magna Division(s). Continued part supply to Magna must
meet released quantities and without supply interruption.
The supplier and the Magna Division will agree on the method to be used to identify all
certified material.

Suppliers who are under controlled shipping or containment conducted by a third party,
or external source, must notify all Magna Divisions they ship product to, of the
containment activity.

Supplier Top Focus and Escalation Process

The Magna Top Focus and Escalation Process is designed to assist Divisions in their
efforts to reduce chronic supplier quality and delivery issues and drive improvement in
overall supplier performance. A key trigger of the Top Focus process is the 6-month
quality or logistics score, as documented in the eRFX Supplier Scorecard. A 6M
logistics or quality score identifies a supplier as underperforming, which initiates a risk
analysis and decision for potential supplier development activity.

The Escalation Process, which may be independent of the quality or logistics score, is
only initiated after reasonable efforts have been made at the Division level, to address
specific concerns and drive improvement, but without satisfactory results.

The escalation process ensures that:

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 • Appropriate levels of management are aware of issues and engaged in the
resolution process
• Adequate resources are assigned to drive resolution of issues and ensure
improvement
• Magna leverages the Customer and the supplier’s ISO and/or IATF 16949
Registrar appropriately, in the event suppliers fail to respond and provide
necessary support
• As becomes necessary, Magna may decide to place the supplier on new
business hold status, or remove existing business, if warranted and appropriate
• Appropriate communication is made to both supplier and Magna executive
management

The length of time spent at each step will be determined by the risk level and cost being
incurred by Magna, as well as by the supplier’s subsequent performance in meeting
defined exit criteria.

Specific activities at each escalation stage may vary minimally, depending on the
Magna Division involved, however in general the escalation process is as follows:

Standard SCM Process occurs at the Division level, and includes:

• Standard/normal complaint management

• Performance Monitoring
• Development activity with under-performing suppliers, where underperformance
is not yet chronic or systemic

Escalation E-1 includes escalation to the Group/Business Unit level and includes:

• Magna Top Focus Process

• Performance review & risk assessment across all Magna Groups
• Necessary containment and controlled shipping activities
• Supplier assessment & corrective action
• Potential new business hold

Escalation E-2 includes escalation to the Magna Corporate level and includes:

• Magna monthly review (Region & Global)

• Potential notification to Registrar
• New business hold and potential re-source

Suppliers who are identified as high-risk suppliers, via our Top Focus/Escalation
process, will be expected to support Magna in appropriate development activities.
Magna may, at its discretion, engage with third-party support as part of this
development activity, and depending on the circumstances and risk level, suppliers may
be held responsible for an appropriate portion of the financial impact of this additional
support.
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4.4 Product or Process Change & Deviations

All proposed changes with any potential impact on design or the manufacturing process
(including changes at your sub-suppliers) must be submitted to the appropriate Magna
Division(s) for approval, in writing, prior to implementation. Suppliers are not authorized
to make changes without documented, written approval from Magna. Supplier must
ensure that all supporting documentation is updated accordingly and may be subject to
a PPAP/VDA submission.

Changes impacting legal requirements of chemical substances (e.g., REACH, ELV

Directive, Global Automotive Declarable Substances List, etc.) on any supplied
products, shall be submitted in a timely manner via the IMDS system. Submissions
must be on a complete and correct Material Data Sheet.

Deviation approvals by Magna must be documented and approved in the format used
by the procuring Division(s) and are limited to a determined quantity of parts or duration
of shipment. Requests must be made in advance and with ample time for
implementation, if approved. Suppliers will be required to build and maintain sufficient
inventories of parts, as determined by Magna, to support any changes and required
approvals.

Suppliers are expected to effectively manage deviation expiry dates and must apply for
any necessary extensions prior to the expiry of current deviations. Suppliers must be
able to support any of Magna’s Customer-specific documentation required as part of the
implementation of proposed changes. Suppliers must also allow sufficient time to
complete all required approvals at Magna, and at our affected Customer.
Implementation of changes prior to final approval can result in:

• Loss of existing status/designations

• Financial impact due to exposure to containment and other related costs to
secure all unapproved materials
• Mandate to return to previous level/design materials, and associated scrap costs
• Loss of future business

Suppliers must have documented approval prior to shipping any material or product for
which a deviation from specification is required.

Initial shipment of all modified product, following implementation of the approved

deviation, must be clearly identified as directed by the appropriate Magna Division.

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4.5 Warranty

A primary focus of Magna’s Customers is expenses attributed to product performance

after vehicle sale. Financial liability associated with warranty is increasingly significant
as consumer awareness improves, and OEM Customers extend warranty coverages.

OEM Customers have stipulated that warranty costs will be shared with their supply
base. As such, suppliers will be expected to participate in warranty activities including:

• Warranty returns reviews/analysis

• Improvement actions
• Warranty cost responsibility

When a supplier’s component is implicated in a warranty, campaign or recall issue, with

financial consequences to Magna based on Magna’s Customers’ warranty or recall
policies, the supplier must be prepared to accept these costs. The costs for which a
supplier shall be responsible shall be determined in accordance with Magna Purchase
Order Terms & Conditions, and as defined by any Division specific Statement of Work
(SOW) or Statement of Requirements (SOR) or warranty agreement.

5. Operation – Control of Materials & Logistics

In support of lean and efficient business processes, suppliers must be able to support
electronic data interchange via Standard or Web EDI. Acceptable message standards
include VDA, ANSI and EDIFACT.

5.1 General Requirements Regarding Logistics

Processes

Suppliers shall design and manage their logistics processes to ensure quality and on
time delivery of directed quantities to the location and at the times specified by Magna.

In partnership with our suppliers, Magna will work to develop logistics planning that
ensures:

• Minimal complexity in logistics business processes

• Maximum flexibility to support response to late changes in volume or timing of
deliveries
• Optimal inventories in the supply chain
• Packaging designs support all handling and loading requirements

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 • Just in time delivery that complies with established delivery times
• Focus on continuous improvement
• Timely communication of all potential supply interruptions

Suppliers must be prepared to provide delivery costs based on:

1. FCA (Free Carrier)

2. DDP (Delivered Duty Paid)
3. Other (As directed by Magna)

Based on the information provided, Magna will determine the Incoterms that will be
used. Suppliers will abide by the latest Inco Terms, as directed by Magna, or the terms
that were in place as part of the contract award and Purchase Order.

Brokerage fees on all imported products are typically the responsibility of Magna, as
dictated in the applicable Incoterms. Any deviation to these terms must be as dictated,
in writing, by the procuring Magna Division.

5.2 Packaging

Suppliers are required to adhere to Packaging Guidelines as defined by the Magna

Global Packaging and Shipping Guidelines, as well as all necessary AIAG/VDA
Standards and Global REACH requirements. The Magna guidelines can be accessed
via the Magna website (www.magna.com), eRFX Portal (https://eRFX.magna.com),
QPF Portal (https://qpf.magna.com ) or from the Magna packaging representative.
Special packaging and labeling requirements, in support of specific Product Launch
activity, may be requested by a Magna facility. In the event that special packaging is
required, design and approval will be managed as part of our overall APQP Program
Delivery Process.

In preparation for product launch, production packaging approval, as well as back up

packaging approval must be obtained from the Magna procuring Division(s) prior to a
line Run @ Rate.

In order to ensure planned packaging optimizes the cube utilization of the transport
vehicle, the Division assembly practices and lean operations, suppliers are responsible
to validate packaging design to these requirements if not directed differently by Magna.
Approval must be submitted with the PPAP submission. A unit load, regardless of
returnable or expendable packaging, must be stackable with overall dimensions that
allow for optimum cube utilization of the transport vehicle. Packaging that will be used to
support service requirements, also requires the approval of Magna. Magna encourages
suppliers to initiate design and cost improvement ideas, and Magna both recommends
and strongly encourages suppliers to design both expendable and returnable packaging
manufactured from viably recyclable material as outlined in the Automotive Industry

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Guidelines (https://www.supplierspartnership.org/sustainablepackaging/). Magna
approval must be obtained prior to implementation of any packaging changes.

A completed Supplier Packaging Form must be submitted to the Magna Division, for
approval of all new packaging or proposed changes to existing packaging. Approval
must be granted prior to the first production shipment.

All suppliers supplying goods to Magna, that are considered to be controlled materials,
must comply with appropriate legislated regulations for labeling, packaging, and
shipping, including MSDS (Material Safety Data Sheet) documentation. Material
requiring MSDS shall not be shipped, without prior approval.
All solid wood packaging/pallets and crates must comply with the International Plant
Protection Convention Standard ISPM #15, as detailed in Magna’s Global Packaging
Guidelines (https://www.magna.com/company/Suppliers).

Suppliers are responsible for the removal of all expired labels and debris from
containers prior to packaging new material. Suppliers are responsible for ensuring that
all containers are clean and that all functional gates or hinges are operational and safe.

5.3 Labelling

The supplier shall be responsible for the clear identification of products during all
phases of production and delivery and shall ensure appropriate labelling prior to
shipment.

All materials for prototype or production consumption, shipped to Magna Divisions, must
be identified with labelling containing both human-readable text / graphics, and
machine-readable, bar-coded symbols.

These materials shall contain, as applicable: container labels, master labels, mixed load
labels, primary metals labels, and part labels if specified by design records or
specifications. All labels must be legible and able to be scanned, in compliance to AIAG
or VDA Standards or standards designated by the Division(s).

Characters and symbols shall comply with the requirements of AIAG, B-8 standard –
Quality Assurance Guide for Shipping Labels, VDA 4994 Standard and Other Bar Code
Applications.

Parts Shipping labels (container, master, and mixed load) shall comply with the layout
formats defined in the latest AIAG or VDA Standards. Customer specific content may be
specified by a Magna Division. Primary Metals labels shall comply with the layout format
defined in the latest AIAG Primary Metals Standards.

Part labels shall comply with the requirements defined in the AIAG, B-4 standard –
Parts Identification and Tracking Application Standard or VDA 4994 Standard.

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Label placement, orientation, quality, and quantities shall follow the guidelines
contained in the AIAG, B10 Trading Partner Labels Implementation Guide, the AIAG
B16 Global Transport Label for the Automotive Industry, or the VDA 4994 Standard,
unless otherwise specified by Division specific requirements. Barcodes shall conform to
the standards published by the Automotive Industry Action Group standard (AIAG-B10)
B-10 Label Specification or VDA 4994 Standard.

5.4 Materials Planning & Forecasting

The nature of the manufacturing and assembly processes, within our Divisions, varies
greatly. Based on the complexity of the manufacturing process, as well as the location
and distribution of the supply base, each Division has unique materials planning
requirements. Logistics and scheduling are Division specific, and the supplier should
contact the Purchasing and Materials Groups at the procuring Division(s), for details.

It is the responsibility of the supplier to immediately contact the responsible Division in

the event they are unable to meet all requirements for delivery date, time, quantity, and
quality or if the supplier has not received a weekly or scheduled production release.
Unless otherwise negotiated with the Magna Division(s) supplied, Magna is responsible
for only those production releases identified as firm or locked releases. Similarly, Magna
is responsible for only those raw material or component releases identified as firm or
locked. Forecast volumes are for forecasting purposes only.

Suppliers must respond to all Material Releases received from Magna in order to ensure
their own supply of components and materials can support Magna Division demands.
During critical stages, such as Product Ramp or Product Launch, suppliers shall meet
all release demands necessary to support system fill and launch. If the product or
component is not fully approved (PPAP) suppliers must receive written authorization or
an approved interim Part Submission Warrant (PSW) from the appropriate Division,
prior to shipment. If the supplier has not received such authorization, they shall elevate
immediately, to the procuring Division’s Materials Management organization, in order to
ensure support of system fill and launch. Under no circumstances should unapproved
material be shipped without proper, signed authorization.

Material forecasting information will be communicated to the suppliers through their

regularly scheduled releases. While this information is an indication of future material
requirements, it is for the supplier’s planning purposes only and does not constitute a
binding release authorization on the part of Magna. Suppliers assume the risk
associated with lead times, of various raw materials and/or components, where
quantities extend beyond those required to support Material Releases.

Suppliers need to maintain sufficient safety stock and finished goods inventory to
accommodate 100% on-time delivery. Short shipments must be communicated
immediately, along with a corrective action and recovery plan.

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Suppliers with production contracts with Magna must maintain the ability to provide
after-market and service components for a minimum of fifteen years following the end of
program or production for individual components or assemblies, or for such longer or
shorter period of time as stipulated by Magna’s respective OEM Customer for the
Program, as communicated to the supplier. The supplier has the responsibility to
maintain any tooling and/or assembly equipment in condition sufficient to support
service requirements. Service schedules and pricing shall be determined in negotiation
with the procuring Division.

5.5 Transportation, Schedules & Routing

It is important that our suppliers are aware of transportation and delivery requirements,
as it is one of the key performance metrics upon which they will be assessed. Magna
supports the industry initiative of inventory reduction, recognizing however the
importance this places on accurate and timely delivery of quality product, while also
ensuring no customer production interruptions. It is our expectation that suppliers will
deliver 100% on time to our locations, in compliance to schedules.

In an effort to support JIT delivery, we expect our suppliers to constantly strive to reduce
lead times with their suppliers, improve flexibility and minimize changeover times. If
necessary to support JIT schedules, the supplier may be asked to support local
warehousing. All appropriate scheduling, routing, and delivery requirements will be
communicated early in program award, typically through the Supplier Statement of Work
or similar documentation used by the applicable Division. All transportation
arrangements and requirements, excluding premium freight resulting from supplier
related issues, which will be the sole responsibility of the supplier, should be signed and
agreed to by both organizations.

Suppliers may receive routing information including transportation method and pick-up
and delivery window times, as communicated by the Magna Division(s) you are working
with. Your procuring Division(s) will make certain that all transportation and routing
details are clearly specified. Suppliers must question any ambiguous or unclear
instructions. Unauthorized deviations from these routing instructions may result in a
debit to the supplier for any incurred excess freight charges, including resultant
administrative charges.

All costs incurred as a result of missed or late shipments, which are the responsibility of
the supplier, shall be recovered from the supplier. All material entering from a foreign
country must have “Country of Origin” clearly marked on the pro forma Invoice, as well
as on the original Commercial Invoice. Brokerage fees for imported product are typically
the responsibility of Magna, unless otherwise negotiated by your procuring Magna
Division. All fees and charges resulting from the export / return of defective product shall
be the responsibility of the appropriate supplier.

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5.6 Border Security

CTPAT/PIP/AEO

In an effort to secure the supply chain and help protect the borders of our respective
countries Suppliers shall cooperate with Magna, and as directed by your procuring
Division(s), in support of compliance to minimum security requirements of the US
Customs and Border Protection (US CBP), Customs-Trade Partnership Against
Terrorism (CTPAT), Canada Border Services Agency (CBSA), Partners in Protection
(PIP) and Authorized Economic Operator (AEO) Border Security programs.

https://www.cbp.gov/border-security/ports-entry/cargo-security/CTPAT
http://www.cbsa-asfc.gc.ca/security-securite/pip-pep/menu-eng.html
https://ec.europa.eu/taxation_customs/general-information-customs/customs-
security/authorised-economic-operator-aeo_en#self

Suppliers, who are currently registered to CTPAT, PIP or AEO must complete the
appropriate sections of the Magna Border Security Questionnaire, available at
https://qpf.magna.com/ and https://erfx.magna.com . Suppliers that are CTPAT Certified
must issue an SVI (Status Verification Interface) monitoring request to their respective
Magna divisions. Suppliers that are participating in the PIP or AEO programs must also
provide (to the applicable Magna division) a copy of the current certification, as
evidence of active status. Suppliers participating in the AEO program must be in the
AEO-S (Security) or AEO-F (Customs and Security) program. Suppliers who are not
currently participating and Certified to CTPAT, PIP or an AEO Border Security Program,
or those participating in an AEO Customs or General program, must complete the entire
questionnaire. All suppliers must upload the completed questionnaire in eRFX
(https://eRFX.magna.com/).

Suppliers must provide an updated Security Questionnaire on an annual basis. Failure

to complete or upload the questionnaire may affect a supplier’s rating and have
potential impact on future business opportunities.

For shipments that cross international borders, suppliers must ensure (where
applicable) for all FTL/Dedicated loads, that a documented CTPAT/PIP/AEO trailer or
container inspection is conducted and that the trailer or container is affixed with a high
security seal that meets or exceeds the standards outlined in ISO/PAS 17712. The seal
number must be included on the supplier’s shipping documentation and in the ASN for
production and service shipments.

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5.7 FTA/Customs Compliance (Applicable regions only)

Suppliers within the North American USMCA region must complete the USMCA
Certificate of Origin, as directed by your procuring Division(s). Suppliers outside the
North American USMCA region, as well as Suppliers in Europe and Asia, must
complete a Declaration or Statement of Origin, as directed by your procuring Division(s).
At times, other documents may be requested to fulfill our obligations under the United
States-Mexico-Canada (USMCA) Free Trade Agreement or in compliance to third
country deliveries within the European Union. All completed documents shall be
submitted as per direction from your procuring Division(s). It is your responsibility, as a
supplier, to notify your procuring Division(s) within thirty (30) days of any change in the
USMCA status of a procured good, or any change in status with any import security
certifications. Failure to complete the requested documents, or advise of a change in
USMCA status, may affect your rating and have potential impact on future business
opportunities. Suppliers shall be responsible for costs incurred as a result of missing,
late, or inaccurate reporting. Suppliers must inform Magna immediately, in the event of
any change to the origin of goods.

It is also expected that suppliers maintain sufficient and required expertise to ensure, in
partnership with Magna, all necessary USMCA and Customs Compliance regulations
and documentation.

http://www.cbsa-asfc.gc.ca/trade-commerce/tariff-tarif/ (Canada)
http://www.cbsa-asfc.gc.ca/publications/pub/bsf5083-eng.html (Canada)
http://www.usitc.gov/tata/hts/bychapter/index.htm (United States)

5.8 Documentation

An Advance Shipping Notice (ASN) must be sent to the Material Planner, or appropriate
Division contact, within 30 minutes of each shipment leaving the supplier’s location. In
the event of a known shortage or late shipment, the supplier shall contact the
appropriate Magna Division(s) and advise of the shortage or late shipment. The supplier
shall also indicate the anticipated time of delivery of the expedited material required to
complete the original schedule. This notification is critical in allowing communication to
production and, if necessary, to a Magna Customer.

The supplier shall maintain a third-party, or an alternate, approved contingency to

facilitate scheduling and ASN communication in the event of a system failure at their
location.

Suppliers must ensure that all material shipped is identified on a Packing Slip or Bill of
Lading. While individual Division specifications may differ, the information typically
required includes:

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Rev. 1.1 012024
 • Shipment date
• Invoice/Packing Slip number
• Address Sold to
• Address Shipped to
• Individual line item for each part number shipped
• Part Number and Part Description
• Purchase Order number, for each part number
• Order release number
• Quantity ordered & Quantity shipped
• Number of cartons/skids/containers shipped
• Total number of cartons/skids/weight

5.9 Materials Management Operations Guidelines

(MMOG)

The "M-7: Global Materials Management Operations Guideline Logistics Evaluation

(MMOG/LE)" guidelines were developed to reduce the time and work required by
Suppliers and customers to determine materials process compliance.

Using the new browser based MMOG.np application (available at

https://www.odette.org/mmog/information), suppliers complete a self-assessment and
receive "A," "B," or "C" ratings based on their compliance. While deficiency in one or
more critical areas automatically earns a "C" rating, the MMOG/LE guide automatically
develops an action plan to allow companies to address deficiencies and drive
continuous improvement.

Suppliers shall, at minimum, complete the Basic MMOG v5 Assessment, or the Full
Assessment or any other specified assessment, as requested by their procuring
Division. Completed MMOG v5 self-assessments must be sent to the Magna mailbox at
[email protected]. Suppliers unfamiliar with MMOG shall contact Odette
for assistance (China – [email protected], North America – mmogle_help_desk@basics-
llc.com, Others – [email protected]).

6. Control of External Products & Services

6.1 Supplier Performance Reporting

Supplier performance and overall status is monitored and reported through various
reporting systems such as eRFX, QPF and other internal reporting systems, designed

31
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to report supplier status to other Magna Divisions. Group and Division specific reports
may be available through local Purchasing or Quality departmental contacts.

6.2 Operational Rating Criteria

Supplier quality and delivery performance is the basis for a supplier’s operational status
and is monitored by Magna on a regular basis. Suppliers can access online
performance data through eRFX (https://ERFX.magna.com). Suppliers will be notified
once their most recent performance results are available, through an automated
message via eRFX. Suppliers must access and review their latest monthly scorecard as
published in eRFX.

Key operational metrics will include, but not be limited to:

• Defective parts per million (PPM)

• Number of non-conformance incidents
• Response time
• Costs of non-conformance
• Special status (CS1, CS2 etc.)
• On time delivery
• Material expedites
• Incidents of premium freight

Suppliers are expected to take immediate and appropriate action to address any
performance shortcomings that are identified through the performance metrics. The
Magna escalation model will be used, as necessary, to address under-performing
suppliers. Suppliers shall have documented processes showing similar rating criteria,
escalation processes and development strategies, for sub-tier suppliers.

6.3 Continuous Improvement

Suppliers must establish continuous improvement as an integral part of their

management systems and business planning process. Continuous improvement
activities must by documented and tracked as key performance indicators. Suppliers are
expected to establish continuous improvement targets and use all appropriate data to
drive continuous improvement and improve customer satisfaction. It is expected that
suppliers will use all appropriate tools, such as the PDCA cycle, Six Sigma, and other
appropriate methodologies to ensure a disciplined and systemic approach to continuous
improvement.

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Glossary of Terms
AEO Authorized Economic Operator

AIAG Automotive Industry Action Group

APQP Advance Product Quality Planning

ASN Advance Shipping Notice

CAD Computer-aided Design

CAMDS China Automotive Material Data System

CAR Corrective Action Request

CCC China Compulsory Certification

CDP Carbon Disclosure Project

CMP Conflict Minerals Platform

CMRT Conflict Minerals Reporting Template

CMVSS Canada Motor Vehicle Safety Standard

CQI Continuous Quality Improvement

Series of self-assessment standards for specialized processes
including heat treat, plating, coating, warranty, welding and soldering.
CS Controlled Shipping

CTPAT Customs-Trade Partnership Against Terrorism

DDP Delivered Duty Paid

DFMA Design for Manufacturing and Assembly

DFMEA Design Failure Modes Effects & Analysis

DOE Design of Experiments

DUNS Data Universal Numbering System

A unique nine-digit identification number, issued by Dun & Bradstreet,
identifying each unique business location.
DV Design Validation

ECE Economic Commission for Europe

EMPB Erstmusterprüfbericht (German Initial Sample Test Report)

ERFX Magna Global Supplier Management System

ESG Environmental, Social and Governance

EV Engineering Validation

FCA Free Carrier

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Rev. 1.1 012024
FEA Finite Element Analysis

FIFO First In First Out

FMEA Failure Mode and Effects Analysis

FMVSS Federal Motor Vehicle Safety Standards

GADSL Global Automotive Declarable Substance List

GD&T Geometric Dimensioning & Tolerancing

GSOR Global Supplier Operational Requirements

IATF International Automotive Task Force

IEC International Electrotechnical Commission

IMDS International Material Data System

ISO International Organization for Standardization

ISPM International Standards for Phytosanitary Measures

JIT Just in Time

MMOG Materials Management Operations Guidelines

MSA Measurement Systems Analysis

MSDS Material Safety Data Sheet

OE(M) Original equipment (manufacturer)

OHSAS Occupational Health & Safety Advisory Services

PCP Process Control Plan

PDCA Plan-Do-Check-Act

PFD Process Flow Diagram

PFMEA Process Failure Modes Effects & Analysis

PIP Partners in Protection

PPAP Production Part Approval Process

PSW Part Submission Warrant

PV Production Validation

QPF Supplier Quality Management Platform

REACH Registration, Evaluation, Authorization and Restriction of Chemicals

RPL Risk Priority Level

RPN Risk Priority Number

SPICE Software Process Improvement and Capability Determination

34
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SOR Statement of Requirements

SOW Statement of Work

SQA Supplier Quality Assurance

SQD Supplier Quality Development

SVI Status Verification Interface

TISAX Trusted Information Security Assessment Exchange

TPISR Third Party Information Security Requirements

TS Technical Specification

USMCA United States-Mexico-Canada Agreement

VDA Verband der Automobilindustrie (German Automobile Industry

Association)

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Rev. 1.1 012024
References
Automotive Industry Guidelines https://www.supplierspartnership.org/sustainablepackaging/

ERFX (Electronic Request for https://ERFX.magna.com

Information)

QPF (Quality Platform) https://qpf.magna.com/

Conflict of Interest Policy https://www.magna.com/company/Suppliers

Conflict Minerals http://www.conflict-minerals.com

CQI (Continuous Quality Improvement) https://www.aiag.org

CTPAT – Customs & Trading Partners https://qpf.magna.com

IATF – International Automotive Task http://www.iatfglobaloversight.org/

Force

IATF 16949 https://www.aiag.org

ISO 9001:2015 https://www.aiag.org

ISPM – International Standards for https://www.magna.com/company/Suppliers

Phytosanitary Measures
Magna Global Packaging Guidelines https://www.magna.com/company/Suppliers

MMOG – Materials Management https://www.aiag.org

Operations Guidelines

Minimum Automotive Quality www.iatfglobaloversight.org

Management System Requirements
(MAQMSR)

USMCA/Customs Compliance Trade and investment agreements (international.gc.ca)

Canadian customs tariff (cbsa-asfc.gc.ca)
Harmonized Tariff Schedule PDFs (usitc.gov)
Free Trade Agreements | United States Trade
Representative (ustr.gov)
Mexico - Customs Regulations (trade.gov)

RMI (Responsible Minerals Initiative) http://www.responsiblemineralsinitiative.org/

TISAX (Trusted Information Security www.tisax.org

Assessment Exchange)
TPISR (Third Party Information Security https://www.aiag.org/supply-chain-
Requirements) management/cybersecurity

36
Rev. 1.1 012024
Record of Revisions
(Cited revisions are those that are substantive, in nature, and do not include minor
wording changes)

Old New
Revision Revision Section Description of Change
Level Level
06-01-2016 03-30-2017 ALL Revised and updated for ISO 9001:2015 and
IATF 16949
03-30-2017 08-20-2018 Sec. 1 &
Links to new Magna website updated
References
08-20-2018 04-30-2019 Sec. 2.1
Requirement for DUNS added
(Pg.8)
08-20-2018 04-30-2019 Sec 2.2
Cyber security requirements added
(Pg.10)
08-20-2018 04-30-2019 Page 7 Addition or requirements for counterfeit product
08-20-2018 04-30-2019 Page 16 Reference to Top Focus process added
08-20-2018 04-30-2019 Page 24 Border Security revised
08-20-2018 04-30-2019 Page 25 FTA/Customs Compliance revised

04-30-2019 01-01-2021 Sec 1.4, Pg 6 Sustainability language updated

04-30-2019 01-01-2021 Sec 1.4, Pg 7 Responsible Sourcing of Raw Materials added
04-30-2019 01-01-2021 Sec 2.1, Pg 8 Contact information added for eRFX registration
04-30-2019 01-01-2021 Sec 2.2, Pg.
Cyber & Information Security updated
10
04-30-2019 01-01-2021 Sec 3.1, Pg.
Sub-tier supplier risk analysis added
11
04-30-2019 01-01-2021 Sec 5.3,
Labelling & Packaging – updated references
Pg.22
04-30-2019 01-01-2021 Pg. 19 Top Focus and Escalation Process revised
04-30-2019 01-01-2021 Pg. 25 Border Security – Requirement for trailer
inspection added

01-01-2021 01-01-2024 Sec. 1.3 Documented shutdown/startup requirements

added
01-01-2021 01-01-2024 Sec. 1.4 ESG detailed requirements removed and
language updated
01-01-2021 01-01-2024 Sec. 2.2 Language for Product Safety Responsible
Representative clarified
Language added to ensure protection of personal
information and data
01-01-2021 01-01-2024 Sec. 3.6 Requirements for AIAG/PPAP submissions for
service components added
01-01-2021 01-01-2024 Sec. 4.1 Validation requirements frequency clarified
01-01-2021 01-01-2024 Sec. 4.3 Requirement added for supplier development
support, including necessary third-party
engagement
01-01-2021 01-01-2024 Sec. 5.2 Recyclable material recommendation added to
Packaging section
01-01-2021 01-01-2024 Sec. 5.6 Enhanced requirements for Magna Border
Security Questionnaire

37
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 38
Rev. 1.1 012024

January 2024