Challenge Manufacturing Supplier Quality Manual
Challenge Manufacturing Supplier Quality Manual
Supplier Quality
Manual
Expectation for suppliers throughout the
U.S and International
Achieve
Success
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Revision: 11/29/2022
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Challenge Manufacturing
3200 Fruit Ridge Ave., Walker, MI 49544
www.challenge-mfg.com
Table of Contents
Challenge Quality Policy............................................................................................................................ 5
Challenge Objectives ................................................................................................................................. 5
Expectations & Philosophy ....................................................................................................................... 5
SECTION 1- Introduction ........................................................................................................................... 6
A. Policy and Vision................................................................................................................................ 6
B. Purpose ............................................................................................................................................... 6
C. Scope................................................................................................................................................... 6
D. Responsibility ..................................................................................................................................... 6
E. Challenge Supplier Quality Manual Availability .............................................................................. 7
SECTION 2- Challenge Supplier Requirements ....................................................................................... 7
A. Supplier Selection and Approval Process ....................................................................................... 7
1. ISO 9001:2015, TS 1649:2009, and IATF 16949:2016 Registration ............................................ 7
2. Challenge Supplier Evaluation (Ref. Section E for form) .............................................................. 7
3. Preferred Supplier List .................................................................................................................. 7
4. Customer Dictated Sources .......................................................................................................... 7
B. Supplier Launch Readiness .............................................................................................................. 7
1. Supplier Classification .................................................................................................................. 8
2. Challenge 5-Phase Supplier Launch Readiness .......................................................................... 8
3. Advanced Product Quality Planning (APQP) ................................ Error! Bookmark not defined.
4. Production Part Approval Process (PPAP) ................................................................................... 8
5. Run @ Rate .................................................................................................................................. 8
6. Government Regulatory Compliance............................................................................................ 8
7. End-of-Vehicle Life Directive (ELV) .............................................................................................. 9
8. Material Reporting ...................................................................................................................... 10
9. Conflict Mineral Reporting .......................................................................................................... 10
10. Packaging ................................................................................................................................... 10
11. Lot Control and Traceability ........................................................................................................ 11
12. Supplier Management Process................................................................................................... 11
C. Continual Improvement Process .................................................................................................... 11
1. Supplier Performance Reporting ................................................................................................ 11
2. Concern Management/ Problem Solving .................................................................................... 11
3. Escalation of Issues .................................................................................................................... 12
4. Controlled Shipping .................................................................................................................... 13
5. Supplier Cost Recovery .............................................................................................................. 14
6. Supplier Request or Engineering Change (SREA) (Ref. Section E for form) ............................. 14
7. Part Validation or Annual Validation ........................................................................................... 15
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CHALLENGE OBJECTIVES
The procedures and policies defined in this manual will help support supplier efforts toward
our shared objectives.
Challenge competes for business in the most competitive markets in the world. We must
constantly improve our performance, our technologies, and our costs to remain competitive.
Our suppliers are critical to our ability to succeed and must fully support our efforts in these
activities.
The goals for Challenge and our suppliers are simple; be the very best at what we do and
do it at the lowest cost. We must have the best quality, the lowest cost, and the highest
level of customer satisfaction to survive and to ensure profitable growth. To achieve this, we
must have a highly flexible, highly motivated and highly robust supply base.
Challenge requires 100% On-Time Delivery from all suppliers. We expect “Zero” defects and
rigorous continuous improvement from suppliers. We expect 100% on time and 1st time
approval for PPAP from all suppliers. We expect “flawless” supplier launches.
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SECTION 1- Introduction
A. Policy and Vision
It is the policy of Challenge Mfg. Company LLC (“Challenge”) to utilize only those suppliers who
can fully support our competitive goals, fully utilize the concepts of Continual Improvement, and
strive to be number one in quality, delivery, and costs.
B. Purpose
The purpose of the Challenge Supplier Quality Manual is to clearly define the expectations and
policies for suppliers to Challenge
C. Scope
This manual applies to all direct material and service suppliers to Challenge. In addition, many
of the policies and procedures defined in this manual apply to indirect material and service
providers when indicated on the purchase order.
D. Responsibility
1. Suppliers are responsible for ensuring that they are using the most recent revision of the
Supplier Quality Manual, and all other reference documents cited herein. This includes,
but not limited to Customer, Industry, as well as Statutory and Regulatory requirements.
2. Suppliers are responsible for meeting the requirements defined in this manual.
3. Failure to meet these requirements may result in loss of existing or future business with
Challenge. Any/all costs associated with supplier failures will also be the responsibility of
the supplier.
4. Suppliers are responsible for 100% on-time delivery and “Zero” defects.
5. Suppliers are responsible for supporting Challenge continuous improvement activities.
6. Suppliers are responsible for supporting Challenge efforts and procedures for ensuring
flawless launches, including on-time PPAP submissions. This includes compliance with
any applicable Customer Specific Requirements for Program specific documentation or
other requirements.
7. Suppliers are responsible for ensuring compliance to Challenge requirements throughout
their respective Supply Chain.
8. Suppliers are responsible for developing and implementing part specific and executable
contingency plans for ensuring continued delivery of product and services in the event of
unplanned events including catastrophic events.
9. Suppliers are responsible for Annual Validation unless otherwise stated in writing.
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The process will include the steps identified in IATF or TS16949 and the appropriate AIAG
guidelines. Successful launches and launch documentation submitted on time will be key
performance metrics for suppliers. Examples of some of the requirements defined in this process
include:
1. Supplier Classification
Supplier/ Commodity is classified into categories, which define the level of Challenge
participation, and the type of documentation a supplier must submit to support a new
product launch.
2. Challenge 5-Phase Supplier Launch Readiness
Challenge has a 5-Phase launch process for suppliers.
The phases include:
• Phase 1- Plan and Define
• Phase 2- Process/Tooling development
• Phase 3- Product & Process Validation
• Phase 4- Production Launch Plan
• Phase 5- Continuous Improvement Plan
3. Process Flow Diagrams are required for all Level 3 PPAP submittals. (Process Flow)
Supplier must submit a process flow chart to identify each process step for manufacturing
product. Each process step number must be identified the same as on the Control Plan
and FMEA.
4. Control Plans are required for all Level 3 PPAP submittals. (Control Plan) Supplier must
submit a control plan which includes all manufacturing applications. Special characteristic
if applicable must be identified. The gage and measurement technique should be described
and listed along with tool, fixture, frequency and test device used for data collection.
Reaction Plan for failed product or process should be listed as well.
5. Potential Failure Mode and Effects Analysis (FMEA) Supplier FMEA must list each process
step on the FMEA table. The list should include all the ways the product or process can fail
during manufacturing. Assign Severity, Occurrences, Detection and calculate RPN
rankings. Supplier decides which failures will be worked on based on the risk priority
numbers. Focus on the highest RPN, re-evaluate each of the potential failures once
improvements have been made and determine the impact of the improvement. Special
Characteristics must define as product characteristics or manufacturing process
parameters which can affect safety or compliance with regulations, fit, function,
performance, or subsequent processing of product.
6. Supplier must submit (CPK) showing process is capable and in control by measuring it’s
spread / dispersion within the specification limit. Challenge require CPK of 1.67 or greater
and PPK of 1.33
7. Measurement Systems Analysis (MSA) For all Level 3 PPAP submittals, Challenge
requires separate GR&R’s be submitted for each measurement gage or device family
gage that is used to validate Special (Significant, Critical, Major or CSI) Characteristics
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Executive team meets with CMC Executives where the Supplier Exit Plan is
initiated and cancelling of PO’s.
*De-Escalation occurs when the supplier meets KPI agreements within the designated
time frame & corrective action is effective.
4. Controlled Shipping
Challenge may determine that special measures are required to ensure adequate quality
and delivery performance.
Controlled Shipping is a requirement by Challenge for a Supplier to add a separate,
redundant inspection process for containment of a specific non-conformance, while
implementing Corrective Action(s). The containment activity is in addition to normal
controls and should be completed in a separate, controlled area. Submission of the
sorting data showing inspection results is required. The data obtained from the
redundant inspection process is critical as both a measure of the effectiveness of the
secondary inspection process and the Corrective Actions taken to eliminate the initial
non-conformance.
Challenge will notify the Supplier when they have been placed in Controlled Shipping.
Examples of criteria for a Supplier being placed on controlled shipping may include the
following:
• Repeat quality performance issues
• Product nonconformance during Launch
• Repeat Shipping (count, labelling, etc.) discrepancies
Two levels of Controlled Shipping exist
• Level 1 includes a problem-solving process as well as a redundant inspection
process. The Supplier’s employees at the Supplier’s location enact the inspection
process in order to isolate the Customer from receipt of non-conforming parts/
material.
• Level 2 includes the same processes as Controlled Shipping Level 1, with an added
inspection process by a third-party representing Challenge or our Customer. The
third party is selected by the Supplier, approved by Challenge, and paid for by the
Supplier. Continued failure to meet expectations could result in removal from the
Approved Supplier List.
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NOTE: Suppliers at CS level 2 are not permitted to bid for new, existing or transfer
business unless notified by either the plant or Challenge Purchasing.
Other measures may be required if level 2 controls are not effective.
Criteria for exiting Controlled Shipping Level 1 or 2:
• Challenge will make the determination whether the Supplier can effectively correct
the nonconforming material situation through the normal corrective action process
and isolate Challenge from the problem.
• Application for an Exit Letter from Level 1 or 2 will be reviewed and approved by the
Challenge plant, provided all of the criteria has been met, and action plans have
been completed and validated.
5. Supplier Cost Recovery
Suppliers are responsible for the quality, on-time delivery, and reliability of the product
they supply. Product must meet all design and specified requirements. The Supplier
accepts financial responsibility for the consequences of nonconforming product and
rejected PPAP submissions. This includes, but is not limited to, costs incurred for
containment, sorting, premium freight, rework, repair, and replacement of defective
material, resulting overtime, and productivity loss incurred by Challenge or by Challenge
customers.
• Charge Back Debit
The method of charge back will be by debit memo, processed by Challenge Mfg.
Purchasing.
• Changes
In cases where a Supplier has implemented an unauthorized change or has failed to
deliver contracted products in accordance with the specifications and terms of the
Challenge Purchase Order, all cost that are incurred by Challenge and/ or its customers
will be the sole responsibility of the Supplier.
6. Supplier Request or Engineering Change (SREA) (Ref. Section E for form)
Any changes to process or product [Including, but not limited to: Material Change,
Manufacturing Method Change, Process Order Change, Machine Change, Jig/Tool
Change, Die/Mold Change, Inspection Method Change, New sub-supplier, Design
Change, and Transportation/Packaging Change] must be submitted to CMC Purchasing
and then by Challenge in writing. Prior to production shipments of the change,
PPAP/PA/IPP submission will be required as necessary. The initial shipment of the
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changed parts shall be denoted with an orange CMC ‘New Model’ sticker on the outer
container of the first parts shipped. Failure to obtain written approval before any change
is implemented will be viewed as a nonconformance. It can also result in immediate loss
of the existing business.
7. Part Validation or Annual Validation
Suppliers are required to submit an Annual Validation for all, or any Production Part(s) or
Service(s) provided to Challenge Manufacturing.
Unless otherwise specified, any Validations must be submitted utilizing the AIAG PPAP
format and criteria for completion.
Challenge will specify the Level of submission.
Annual assessment of “CQI” results for Special Processes (CQI 9, CQI 11, etc.) shall be
submitted
8. Business Continuity Planning
It is expected that Suppliers to Challenge prepare a Business Continuity Plan for the all
Products/Services on contract (Business Continuity Planning checklists and templates
can be found at the AIAG or SAE websites). This plan ensures that suppliers are
prepared for natural disasters and man-caused events that can disrupt business
practices. A contact list with alternate and “all- hour” contacts is required. The plan and
lists (including updates) must be provided to Challenge Corporate Purchasing and the
appropriate Contact Lists to Challenge user plants.
9. Records and Sample Retention
Records or Sample Retention must comply with the appropriate statutory, regulatory,
industry and/ or Customer standard.
D. Verification of Purchased Product
Challenge representative and/or our customer’s representative shall be afforded the right to verify
at the supplier’s premises that the product/services conform to specified requirements.
Such verification shall not be used by the supplier as evidence of effective control of quality by
the supplier. Verification by Challenge or our customer shall not absolve the supplier the
responsibility to provide acceptable product, nor shall it preclude subsequent rejection by the
customer.
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3200 Fruit Ridge Ave., Walker, MI 49544
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E. References
NOTE: All applicable publications are assumed to be current to the most recent “practical” edition.
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