Dynapac Supplier Manual 2010 by Dynapac Compaction Equipment AB

Supplier Manual 2010

Contents 1.

Introduction

1.1 1.2 1.3 1.4 1.5 1.6

About this manual About Dynapac The Atlas Copco Group Dynapac in Karlskrona The vision and values of the Atlas Copco Group Environmental policy of the Atlas Copco Group

3 3 3 4 4 5

The basics for business

2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8

Basic requirements for Dynapac's suppliers Quotations to Dynapac Initial samples "First delivery" and prototype orders Drawings and other specifications Dynapac's part number series Tools Supply of spare parts

6 6 6 8 8 9 9 9

Order to delivery

3.1 3.2 3.3 3.3.1 3.3.2 3.3.3 3.4 3.5 3.5.1 3.5.2 3.5.3 3.6 3.7 3.8 3.9 3.10 3.11

On time deliveries EDI (Electronic Data Interchange) Frozen time, firm time, and forecasts Frozen time – Status 0 (zero) Firm time – Status 2 Forecast – Status 4 Delivery schedules and purchase orders Call-off, Kanban and consignment stock Call-off Kanban Consignment stock Order confirmation Advising and booking of transports Goods labelling and delivery notes Packaging and packing instructions Other production locations and supply of parts from Sweden Goods addresses Dynapac

10 10 11 11 11 12 12 13 13 13 14 14 16 17 18 19 20

Invoicing

Claims

5.1 5.2 5.3

Claims for defective material (DR) Claims on basis of incorrect packing or goods labelling Claims on basis of incorrect specified quantity

23 24 24

Egeneering changes (ECN)

Supplier evaluation

7.1 7.2

SPM index Delivery performance index

26 27

Introduction

1.1

About this manual

The purpose of this manual is to describe and define the concepts, documents and routines that Dynapac's suppliers must be able to handle to fulfil their undertakings. The contents in this manual are mainly intended for suppliers to Dynapac in Karlskrona, but where appropriate are also applicable for Dynapac's other production locations. Dynapac is a world leader in its business area. To maintain this position it is essential that we continuously implement improvements for our processes and methods of working. The market sets increasingly stringent requirements for shorter leadtimes, reliable deliveries and cost-efficiency, and our expectations of you are equally high. In so far as this manual does not conflict with other written agreements, Dynapac's suppliers undertake to follow and accept the substance of its contents. We look forward to a successful partnership with you, and we expect your full commitment! Dynapac Compaction Equipment AB

1.2

About Dynapac

The Vibro Factory was established in 1934 in Stockholm. The business concept was based on an invention for the compaction of concrete by means of the use of vibrating rods. This concept was further developed and in the early 50s also included the design and manufacturing of a vibratory roller for compaction of soil. "The Roller", which was manufactured at the Vibro Factory in Ljungby, was very successful and production volumes rapidly increased. Another factory was established in Karlskrona in 1960 to focus on the manufacturing of rollers, while Ljungby concentrated on manufacturing of light equipment and handling of spare parts. Since the beginning of the 90s the group has focused its strategic functions such as purchasing, marketing, research and development, service and after-market, in Karlskrona. Today Dynapac employs 1,800 persons all over the world. Dynapac is certified in accordance with ISO 9001 and ISO 14001, and was one the first OEM player in the world to receive an environmental certificate. Dynapac is now an international manufacturer of compaction and asphalt equipment, with production plants in Sweden, the US, Brazil, China, Germany, India and France. We have become a world leader thanks to our ambition to achieve high quality and performance in relation to overall economy. The components included in Dynapac's products come from over 200 suppliers, primarily in Sweden and Europe. More than 95 percent of the products manufactured in Sweden are exported, whereby North America, Europe and the rest of the world each account for one third. Machines and spare parts are distributed all over the world. Dynapac was aquired by Atlas Copco in 2007 and formed the division "Road Construction Equipment". At the end of 2009 the Light & Concrete product range was moved to the division "Construction Tools".

1.3

The Atlas Copco Group

The Atlas Copco Group is a global group of industrial companies with over 130 years of experience in its three business areas: Compressor Technique, Construction and Mining Technique, and Industrial Technique. The headquarters is in Stockholm. Group turnover is SEK 63 billion, and it has 33,000 employees. Dynapac is part of Atlas Copco, which has long been a recognised company in the construction and civil engineering industry. Atlas Copco and Dynapac have many things in common, of which customer focus and after-market support are two vital aspects. We are also experts on innovative and high-quality products and solutions, developed for higher productivity. Our business activities are managed by separate divisions, which operate on a global basis in over 170 countries. The group is united via a common vision and identity, and shares a common business code - the Atlas Copco Group Business Code of Practice.

1.4

Dynapac in Karlskrona

Figure 1 Dynapac in Karlskrona

Adress: Industrivägen 2 SE-371 46 KARLSKRONA Tel: +46 (0)455-30 60 00 Coordinates: N 56° 12' 3", E 15° 37' 33" Decimals: 15.625726, 56.200917 Tel: +46 455 30 60 00

1.5

Production: Production of vibratory and static rollers Production of drums Total area: 120,000 m² Factory area: 27,000 m² SE-341 26 LJUNGBY el: +46 372 66700

The vision and values of the Atlas Copco Group

First in Mind - First in Choice® Atlas Copco's vision is to be and to continue to be First in Mind - First in Choice® for customers and other important interest groups. This means a continuous effort to be the one you think of first, and then the one you choose. For Atlas Copco it implies being a leader. We must be seen as an innovator that sets standards that surpass high levels of expectations. Atlas Copco's fundamental values - interaction, commitment, and innovation - established the foundation for the group in the past and now govern both the present and the future. These fundamental values give the group a competitive advantage and help us to maintain our leading position in a changing world. Interaction One distinctive characteristic of Atlas Copco is our ability to listen and understand the changing needs of our customers and other interested parties, while at the same time we have the capacity to create new and better solutions on the basis of what we have learned from this cooperation. This procedure demands knowledge, physical presence, flexibility and engagement in the processes of others. We therefore prioritise customer relations and service. And for us this also means that we assume responsibility for the environment. Commitment We fully engage ourselves in finding the best possible solution. We are equally committed to our employees and our efforts to create additional value in the operations of customers, as we are to our own objectives. Irrespective of whether we are penetrating a new geographical market, a new segment in an already established market, or are launching a completely new application for one of our existing products, we are always there to stay. We believe in lasting relationships. This is one of the reasons why we place such great emphasis on always delivering high-quality products and keeping our promises. It is also why our customers feel confident in creating close and long-term relations with Atlas Copco. 4

Innovation We believe that there is always a better way of doing things. This spirit of innovation is an essential part of Atlas Copco's identity and is an important factor for our way of conducting operations. Innovation is the main motivation for long-term profitability and growth. This motivation has made the group a world leader. Business Code of Practice In general Dynapac follows the ethical, social and environmental guidelines established by international organs such as the UN and OECD. United Nations Universal Declaration of Human Rights www.un.org International Labour Organization Declaration on Fundamental Principles and Rights at Work www.ilo.org United Nations Global Compact www.unglobalcompact.org OECD’s Guidelines for Multinational Enterprises www.oecd.org

1.6

Environmental policy of the Atlas Copco Group

Atlas Copco is a world-leading supplier of solutions that enhance productivity for industry. The products and services include air and gas compressors, generators, mining and construction equipment, as well as industrial tools and assembly systems for associated aftermarkets and leasing. Vision and belief Atlas Copco Group endeavours to conduct its business so that the environment is preserved. The Group is proactive and acts as a leader in environmental best practice in its industry. When developing products and services, Atlas Copco tries to understand, address, and minimize the negative environmental effects that the products and services may have when being manufactured, distributed, and used, as well as at their disposal. The main focus will be on increased efficiency in the use of energy. Environmental Management System The Atlas Copco Group will conduct its businesses with an ambition to continuously reduce environmental impact on nature and people. The Group will comply with local environmental legislation and regulations in all of its operations, processes, and services. All divisions must implement an EMS in accordance with the Atlas Copco EMS Requirements as a minimum, or be ISO 14001 certified. All product companies shall be certified according to ISO 14001. All corporate / holdings companies, units and service providers (i.e service workshops, distribution centers and offices) shall implement an EMS in accordance with the Atlas Copco EMS Requirements as a minimum or be ISO 14001 certified. Business partners Atlas Copco Group companies shall evaluate business partners, such as suppliers, subcontractors, joint venture partners and agents from an environmental perspective. In principle a selected business partner should have environmental standards and procedures in line with the Group’s and, if not, they shall be informed about the Group’s expectations. Transparency Atlas Copco Group will maintain a positive attitude towards anyone interested in its environmental performance, and is willing to share information related to the Group’s environmental policies and achievements. 5

The basics for business

2.1

Basic requirements for Dynapac's suppliers

We seek business partners whose policies regarding ethical, social, and environmental issues are consistent with our own, and we make them aware of our commitments and expectations. Business partners are selected and evaluated impartially on the basis of objective factors including quality, delivery, price, and reliability, as well as commitment to environmental and social performance, and development. Suppliers that deliver, or are going to deliver, material for Dynapac's production must have undergone a qualification process that includes the following steps: Evaluation and approval as per Dynapac's supplier assessment, where the supplier's financial, technical, quality and environmental, as well as organisational capacities are evaluated. Assessment and approval as per Atlas Copco's Business Code of Practice. ISO9000/QS9000/TS16949 or equivalent certificate. ISO14000 or equivalent certificate. Accepted and implemented instructions in Dynapac's Supplier Manual. Secured process for order handling and invoicing via EDI. Signed business agreement according to Dynapac's general agreement or the equivalent. Approved initial samples.

2.2

Quotations to Dynapac

A quotation issued to Dynapac must contain all the relevant information required for a commercial decision. In addition to basic information on price, price influencing production batches and packaging quantity, where this is of importance for the supplier's production or handling arrangements, the following information must also be included: HS-codes (Harmonized System codes), weight and country of origin. Leadtime for initial samples, prototypes and serial production. Dynapac's part numbers and denomination. Valid drawings. Supplier denomination. Information on currency effects. Information on raw material price effects. Tool costs, where appropriate. All additional information that can affect the price in the future. Note that packaging and packing materials must be included in the quoted price. In the event a supplier participates in a development project, a quotation must be sent to the responsible purchaser as soon as there is a proposed technical solution. In order to reach a correct decision in the procurement phase it is important that a quotation is presented in conjunction with the technical specification. The supplier shall on request present an â&#x20AC;&#x153;openâ&#x20AC;? quotation. Any product feedback or other proposals as to how the product can be quality assured, or costs reduced, must be presented in conjunction with the quotation.

2.3

Initial sampling

The objective of initial sampling is that the buyer and the supplier can jointly verify that specified requirements are accepted, understood and correctly implemented. The initial samples must be manufactured under serial production conditions in the equipment and at the place where the serial manufacturing is intended to take place. In those cases where there are packing instructions, these must also be followed.

The initial sample shall always be sent to Dynapac in good time before the first serial delivery and shall always be labelled with our yellow goods flag intended for this purpose (see chapter 3.8). When a part is completely new all the dimensions and properties on Dynapac's drawing must be verified. In the case of engineering changes (ECN) on parts in serial production, where the part number is retained and the drawing is given a new revision, only the changes themselves need to be verified. Dynapac must be contacted in good time when the supplier intends to change materials, dimensions or other characteristics, relocate all or parts of the production equipment, or is planning to change supplier, etc. These and other similar situations must be preceded by a new initial sample. Any changes that affect Dynapac's installation must first be approved by Dynapac. The document "Initial Sample/Prototype Report" and the document "Measurement Report", including Dynapac's drawing for the part, must always accompany the sample when it is sent to Dynapac. Position notations must be specified on the drawing in accordance with figure 3 below. Figure 2 Initial Sample report

Figure 3 Drawing with dimension markings

To ensure that the document arrives at our Measuring Center, copies of the document must also be mailed as follows:

Production location

Karlskrona

measuringcenter.karlskrona@dynapac.com

Ljungby

measuringcenter.ljungby@dynapac.com

Table 1 Mail address for sample document

Figure 4 Measurement report

2.4

"First delivery" and prototype orders

The concept "First delivery" is used for initial sampling in the case of less critical changes of materials in ongoing serial production. In this case we do not register a specific purchase order for initial samples, but the material must still be handled in the same way. The actual change must be verified by the supplier, the above documents for the sample must be included, and the delivery must be marked with Dynapac's yellow goods flag. It is especially important that the initial sampling documents are referring to the new revised drawing. Delivery must take place in accordance with the applicable delivery schedule. Material for the construction of prototypes is ordered in the design phase. Note that this material must be handled in the same way as a sample. A measurement report and relevant drawing must accompany the delivery and be marked with Dynapac's yellow goods flag. Drawings provided with the revision letter [K] and a serial number are used in the design phase and when constructing prototypes to distinguish these documents from the ones to be used for serial production. These K0s or K1s, depending on how many times the drawing has been modified, must not be used as documentation for serial production. There are no requirements that prototypes must be manufactured under serial production conditions.

2.5

Drawings and other specifications

Different methods are used to describe a product, depending on the complexity and nature of a purchased product. The most common procedure is that we refer to a drawing, which if a change has been made is provided with a revision letter. BM (Bill of Materials) describes a part by reffering to several part numbers and documents. Dynapac standard is for the purpose of documenting general requirements on quality and tolerances (STD1), painted surfaces (STD67, STD61) and surface roughness (STD2). Also standard parts as hose clamps, o-rings and screws are described in the different standards. . Part numbers in the common Atlas Copco system are described on the web site www.atlascopco.com/gsd (10 digit part numbers that do not begin with 47 or 48). On this site are also different material standards available. 8

2.6

Dynapac's part number series

10-digit part numbers have been introduced as part of Dynapac's integration in Atlas Copco. New Dynapac parts begins with 4812. Existing part numbers are translated in accordance with the following rules:

2.7

6-digit numbers are provided with the prefix 4700:

123456 D4700123456

7-digit numbers are provided with the prefix 470:

1234567 D4701234567

8-digit numbers are provided with the prefix 47:

123456EN D 47123456EN

9-digit numbers are provided with the prefix D:

123456789 D D123456789

Tools

Tools purchased by Dynapac for the supplier's production are the property of Dynapac and must be marked with an identification tag provided by Dynapac. These tools must be maintained and insured by the supplier for as long as they are used. This applies both for serial production and the supply of spare parts. If the supplier wishes to scrap, or change a tool, this may only be done after a written approval from Dynapac.

2.8

Supply of spare parts

Dynapac's spare parts policy means that spare parts are guaranteed to be available for at least 10 years after one of Dynapac's products is no longer manufactured. However, the aim is to have spare parts available on the market for 15 years. If requested it must be possible to deliver directly to our marketing companies or end customers. The supplier accepts Dynapac's right to sell the supplier's parts as spare parts to Dynapac's customers. In the event of a breakdown of machinery or other stoppages on a product in serial production, Dynapac guarantees delivery of spare parts within 24 hours. This undertaking is naturally based on our suppliers supporting this policy. The purchase prices valid for Dynapac's serial production shall be valid for Dynapac's supply of spare parts. The agreed purchase price on a part that is excluded from Dynapac's production shall remain valid until otherwise agreed. A supplier must on request be able to provide Dynapac with complete specifications to enable production of spare part and service documents before Dynapac's serial production starts. This may refer to exploded views and lists of spare parts with supplier designations and part numbers. The classification of wear parts (e.g. â&#x20AC;&#x153;fast moving partsâ&#x20AC;?) may also be requested. It shall be indicated which parts are not sold separately. Prices, delivery times, contact persons, HScodes (Harmonized System codes) and country of origin shall be specified for all separate parts. Contact persons for price inquiries, delivery confirmations and technical support shall also be specified in the documentation. 9

Order to delivery

3.1

On time deliveries

Deliveries must be made on time, i.e. as per Dynapac's orders and FCA Incoterms 2000. The supplier books the freight with the specified carrier. Booking must be made on time, and in accordance with the carrier's regulations. It is the suppliers responsibility to be familiar with these regulations. In the event the goods are not collected on time as a result of reasons related to the carrier, the supplier must inform Dynapac of this in writing to claim that the goods were delivered on time. If there is a risk of delay, Dynapac must be informed in due time before the delivery shall take place. If necessary to avoid disturbances in Dynapacâ&#x20AC;&#x2122;s production the supplier shall at own expense book alternative express transport and inform Dynapac of the tracking number or freight number to enable the goods to be traced. A message that delivery is delayed does not mean that the supplier has complied with his undertaking to deliver on time. In the event that delays or quality problems result in line stop in Dynapac's production, a follow-up of costs will be initiated to describe the total number of working hours that we have not been able to engage personnel in work related to production as a result of the delay or quality problems. In the event Dynapac considers that the delay will not interfere with planned production a request for a delay of the delivery will be approved. The delivery will accordingly be considered to be "on time" if it takes place in accordance with the last approval. Delivery must be made in the correct quantity, i.e. in accordance with Dynapac's order. If a situation should arise whereby the supplier cannot fulfil this, the supplier shall inform Dynapac of this for approval. Partial deliveries to our kit warehouse, where we coordinate deliveries to India, the US and China, will not be accepted.

3.2

EDI (Electronic Data Interchange)

Dynapac communicates forecasts and orders via EDI. By integrating the flow of information between us and the supplier, from the receiving of orders and forecasts to confirming, advising and invoicing deliveries, we can improve the efficiency and quality-assure the entire process from ordering to invoicing. With an integrated EDI solution, EDI messages are sent directly between Dynapac and the supplier's business system. Dynapac stands for the traffic costs. The messages that are used are: Delivery schedule

[DELFOR]

Purchase order

[ORDERS]

Order response

[ORDERRESP]

Advising

[DESADV]

Invoicing

[INVOIC]

A supplier that for some reason chooses not to integrate the flow of information uses a web application instead to collect delivery plans, purchase orders and forecasts. The supplier should in this case also confirm orders, advising and invoicing via this web application. Dynapac stands for the connection and traffic costs. There are no charges to the supplier when using web-edi. It is possible to integrate some of the messages and handle the rest of them via the web. To implement integrated EDI the supplier should contact PipeChain AB, who is our system supplier. PipeChain is also responsible for basic training in the system and other help-desk issues.

Tel.

+46 31 727 86 10

support@pipechain.com

Table 2 Help-desk EDI

In this manual Dynapac has described the basic functions in the EDI system, but we can also place more detailed training material at your disposal. A Dynapac supplier is responsible for the correct use of the system. Incorrect use of the system risks causing interference and extra costs as a result of incorrect information and clearing of the system. Some of the advantages with EDI are: a joint and clear picture of current orders and order confirmations. a joint and clear picture of the supplier's delivery performance. Orders and forecasts, confirmations and delivery advices are always available for both parties. Less impact on the environment by not using fax paper and paper invoices. improved efficiency and quality assurance of the administrative processes

3.3

Frozen time, firm time and forecasts

The majority of the parts Dynapac purchases for its production are ordered via delivery schedule. The delivery schedule is an ongoing order that is normally updated every day after each MRP. There are three different order statuses on the delivery schedule, see figure 5. Frozen period

Firm period

Forcast

About 10 working days About 40 working days About 12 months Time for order

Figure 5 Delivery schedule structure

3.3.1 Frozen time â&#x20AC;&#x201C; Status 0 (zero) Frozen time is given in working days and specifies the time frame in which Dynapac does not intend to change placed orders, either in terms of delivery time or volume. Dynapac is entitled to request changes within the frozen time if specific needs arise. If the supplier can meet this without unreasonable consequences, the delivery should take place in accordance with Dynapac's request. In these cases the interests of both parties should be taken into consideration and if necessary agreed in writing (e.g. via an order confirmation in EDI). If no agreement is reached the delivery should not be considered to be delayed if Dynapac's new required date or volumes cannot be met. As soon as the delivery schedule is entering the froozen time a new reference number will be created. The reference number shall be considered as a purchase order number and shall be specified on delivery noters, pallet flags and invoices, to enable goods receiving and payment routines. Observe that if for some reason, delivery schedules are not updated with new reference numbers, deliveries shall be made according to the existing schedule. If this situation occurs, contact Dynapac.

3.3.2 Firm time â&#x20AC;&#x201C; Status 2 Firm time is given in working days and expresses the time horizon over which Dynapac accept to purchase specified volumes. In those cases where parts are excluded or changed, Dynapac commits to compensate the supplier's accrued material costs in this period. If Dynapac increases or reduces planned production in the firm time the planned orders will also either be advanced or pushed forward. Dynapac's undertaking in firm time must be regulated within one year after the last order is made for the applicable part, with reference to a valid delivery schedule or order. It is the supplierâ&#x20AC;&#x2122;s responsibility to assert a claim in relation to this undertaking. 11

3.3.3 Forecast – Status 4 After "firm time" a forecast is presented of how much material Dynapac is planning to order, and when. Dynapac does not guarantee to purchase the specified quantities in this period. This period extends about 11 months ahead in time from the date of the last updated delivery schedule. Dynapac updates its forecasts daily. It is the supplier’s responsibility to remain updated on any changes that may influence his arrangement and acquisition of materials, and subsequently his delivery capacity to Dynapac. If there is a risk of future delivery problems the supplier must contact their commercial contact person at Dynapac to clarify the problem. In the event parts are excluded this will be indicated in the forecast and will only be notified in exceptional cases by other means.

3.4

Delivery schedules and purchase orders

Figure 6 shows an example of what a delivery schedule looks like in WEB-EDI. 1. Dynapac's part numbers and designations 2. Status of order described in codes 0 (frozen), 2 ( firm) and 4 (forecast)

3 4

3. Order quantity 4. Order quantity as per previous schedule 5. Delivery date, i.e. the date when the delivery must be collected by the carrier

Figure 6 Delivery schedules

6. Date when any changes are made to the schedule 7. Date when the plan is created. 8. Reference number

By selecting “Forecast” and leaving the field for the part number empty, it is easy to obtain a summary of all parts and their current status. This is the most reliable and quickest way of obtaining an overall view of Dynapac's forecasts. It is also possible to export the information to Excel for further processing or analysis. Buyer art. no. 165422

Status 4 Forecast

8W7 8W8 8W9 8W10 8W11 8W12 8W13 8W14 8W15 8W16 8 13 13 12 12 9 9 11 10 10

Dynapac

4 Forecast

HYTT MONT.ENKEL |ENKEL Dynapac Ö HYTT MONT CA702 |HYTT Dynapac

4 Forecast

Article name HYTT MONT CA602 T3

Buyer name Dynapac

165435

HYTT MONT.ENKEL |HYTT

165439 165526 165578

HYTT MONT CA252-402

Dynapac

4 Forecast

165584

HYTT ENKEL MONTÖ|ENKEL Dynapac

4 Forecast

165591

ARBETSBELYSNING MONT Dynapac

4 Forecast

165599

HYTT MONT |CA250/280

Dynapac

4 Forecast

371730

REAR VIEW MIRROR

Dynapac

4 Forecast

1 1

1 8

0 5

12 4

5 14

Figure 7 Forecast exported to Excel

Purchase orders are used instead of delivery schedules for purchases of a less regular nature. This may concern parts in production, or the purchase of initial samples, prototype material and spare parts.

3.5

Call-off, Kanban and consignment stocks

3.5.1 Call-off In those cases where Dynapac intends to order parts to a specific serial number or customer specific accessory, a socalled "Call-off" is used. Dynapac sends a delivery schedule, but only as a forecast. Deliveries must be made according to the Call-off order and handled as a standard purchase order. Dynapac's work order number must be specified in delivery notes and goods flags for Call-off deliveries. The work order number is indicated as shown below.

Figure 8 Call-off order

3.5.2 Kanban Dynapac orders certain materials in accordance with kanban principles, i.e. when a unit is consumed a signal is provided for a new delivery. In this case the delivery schedule functions as a forecast for the supplier's long-term planning, but also defines Dynapac's undertaking in accordance with the firm time. The order signal is sent via EDI and is provided with an order number. The kanban order is "automatically confirmed" in the EDI system and directly placed in the folder "Confirmed" (figure 9). A reminder mail is sent to the supplier to highlight that orders have been placed.

Figure 9 Kanban order in EDI

Advising and invoicing of kanban parts is done in the same way as other orders, and are described a little further on in this manual. A kanban arrangement is regulated in a separate agreement, but is in principle based on the supplier having a minimum buffer so that delivery can take place immediately after the order has been made, most often the next day. The goods must be marked with a special goods flag intended for this purpose, see chapter 3.8.

3.5.3 Consignment stock Consignment stocks are used to link the supplier's stock closer to Dynapac's production of parts that are sensitive to disturbances or parts that have high volume values. The objective is to link the acquisition and payment of a component closer to the actual consumption point. This also ensures delivery flexibility for the supplier, who can to a large extent control which quantities and which times deliveries are to take place, with an undertaking to maintain the consignment stock between agreed maximum and minimum limits. Insurance conditions, phase-out processes and limits for increases or reductions of demand must also be determined. A consignment stock report is distributed to the supplier on a weekly basis, which includes: Specified historical consumption data Current stock balance Status of stock level in comparison with maximum and minimum limits Planned weekly withdrawal approx. 12 months ahead based on a forecast Weekly replenishment proposals for the consignment stock

3.6

Order confimation

The supplier must deliver in accordance with Dynapac's delivery schedule or purchase order. Deviations from this can only be considered to be acceptable in cases where Dynapac has not given the supplier the agreed delivery time, or has unreasonably increased volumes within the fim or frozen times. An order confimation that deviates from the valid schedule shall be considered as not accepted if Dynapac does not give its approval for the change. This also applies to prices. Every purchase order and reference number must be confirmed (price, quantity, date) within four days of the publishing date. Orders are confirmed by clicking the current "Order number" (1), see figure 10.

Figure 10 Order confirmation step 1

In the next step, figure 11, check that the order information is correct (2). Change the values and press Save (3) if you need to adjust the order confirmation. The order confirmation is sent directly to Dynapac's business system.

3 Figure 11 Order confirmation step 2

In the event the proposed change to the order cannot be accepted by Dynapac the order will be sent back to the EDI system under the tag "Changed", and must then be confirmed again. The order will then be updated with a delivery date or the quantities we can accept without risking disturbances in our production. In those cases where Dynapac changes or cancels an order this will be indicted in the same way under the tag "Changed". Note that the supplier must actively register the change to impact the system. In other words in the example below (figure 12) the supplier must change the quantity 8 to 5, and then update by pressing SAVE. In the event of a cancellation the quantity must correspondingly be replaced with a zero quantity.

Figure 12 Order change

3.7

Advising and booking of transports

Every dispatch to Dynapac must be advised. All goods to be sent on a specific date must be booked as one (1) dispatch at the carrier. If goods that are to be delivered on the same date are booked as two or several dispatches, the supplier is responsible for any additional costs. For technical reasons it is not possible to combine parts with reference numbers and purchase orders on the same delivery note. Advising must be made in direct connection with the actual delivery. The order lines that are to be delivered together are marked in the menu "Joint delivery". Note that it is only possible to combine order lines to the same goods address. Press DELIVER, see figure 13.

Figure 13 Advising step 1

In the next stage the following must be registered, see figure 14. The supplier specifies its delivery note number (Delivery number) (1), the date (2) the goods leave the supplier, and the consignment note number (3). The price and quantity (4) are checked and adjusted in those cases where they differ from what has been agreed. The quantity per carrier (5) shall be specified and the box for final delivery (6) shall be ticked if the delivery is complete. By pressing SAVE the information is sent to Dynapac's business system. Dynapac must be contacted if the supplier has a need for partial deliveries.

Figure 14 Advising step 2

3.8

Goods labelling and delivery notes

The correct delivery note is automatically generated via advising in the EDI. The delivery note must be delivered together with the goods. Note that the reference number or order number and delivery note number (Delivery number) must be specified! Material to Dynapac must be labelled with barcode flags in accordance with the Odette standard, see figure 15. Goods flags are generated automatically on completion of advising in the WEB-EDI system. If for some reason the supplier creates pallet flags other than via our WEB-EDI system, the pallet flag must still be arranged according to the example below. The barcode is obligatory and can easily be created via the Word font, FREE 3 OF 9 Extended. It is very important that any staples used to fasten the goods flag do not damage the barcode, and that the barcode is not distorted by text or stretched edges. The goods flag must be protected by a plastic envelope.

1. Receiving production unit

2. Delivery note number 3. Dynapac's part number

4. Number 3 5. Gate way/ware house 6. Supplier 8

7. Number of parcels 8. Dynapac's denomination (as per order)

9. Dispatch date

10. Order number or reference number (not delivery plan number) Figure 15 Goods flag

Kanban deliveries must be labelled with a special goods flag, see figure 16. Note that the goods flag must be protected from the weather because the z Deliveries with pallet and collars shall be labelled on the short side of the lowest collar barcode on the pallet flag will be used for the next order. z A risks If thecomplicating delivery contains more than one package, this must be visible on the label the ordering process. z A goods flag shall only contain one part number and one order (reference) number z

Each package shall have its delivery note attached beside the goods flag on the outside of the collar

The delivery note shall be protected with a plastic envelope

Det får enbart förekomma ett artikelnummer eller satsnummer per lastbärare om inget annat är föreskrivet.

Figure 16 Goods flag for kanban delivery

For delivery of prototype material or initial samples, the goods must always be supplemented with a yellow goods flag. This gives us a clear visual signal that the goods are to be treated separately. The supplier must specify the information highlighted in red in figure 17.

Artikelnr / Part No.....382912..... Prototyp / Prototype Utfallsprov / Initial sample Första leverans / First delivery S/N-uppföljning / S/N Tracking Enligt / According to: ...ECN22085, Order 154356EA 0288.25E

Figure 17 Supplementary goods flag for initial samples and prototypes

3.9

Packaging and packing instructions

Packing material like pallets, lids and collars and also Dynapacs mini and small boxes can be ordered from our packaging pool. Pallets, lids and collars will be invioced according to a separate price appendix. Observe that other packaging and handling costs shall be included in the purchasing price. Parts to Dynapacs foreign production units or kit storage shall be delivered in accordance with the international ISPM 15 standard. A list of approved suppliers of ISPM 15 material and also other information about the ISPM 15 standard can be found on the web site: www.jordbruksverket.se /swedishboardofagriculture/engelskasidor/trade/woodpackagingmaterial. Production location

Fax

Karlskrona Ljungby

+46 455 30 61 44 +46 372 66 740

emballage.karlskrona@dynapac.com emballage.ljungby@dynapac.com

Table 3 Contact information to Dynapac's packaging pool

The supplier is obliged to handle and pack material to prevent damages, rust, scratches and dirt. The deliveries shall be packed according to packing instruction or packaging code, or otherwise according to the standard packaging listed below in table 4. is av To protect from rust, the supplier shall use VCI paper in a closed plastic bag. It shall be possible to open and close the the bag without damaging it. The opening shall be placed in a way that prevent water from getting in, and the bag it self must be packed in a way that prevent it from damages. dProduction EmballagekodCommentKommentar Mat Packaging location Fax Emailallagetyp Packing code EU-pall with collar EU-pall with collar and VCI Smallbox Minibox Smallbox / Minibox and VCI Cardboard box Cardboard box Cardboard box Cardboard box Cardboard box and VCI Specific packing instruction The suppliers package

801...806 81V…86V 400 300 40V / 30V K1 K3 K4 K6 K1V...K6V SPC SUP

Tabell 4 Standard packaging to Dynapac

Maximum weight

The last figure define the number of collars Shall be VCI protected 600x400x250 mm 400x300x250 mm Shall be VCI protected 250x150x150 (+/- 15 mm) 380x190x190 (+/- 15 mm) 600x300x240 (+/- 15 mm) 780x580x485 (+/- 15 mm) Shall be VCI protected

1000 kg 1000 kg 15 kg 15 kg 15 kg 5 kg 15 kg 15 kg 15 kg

Tape may not be applied on painted surfaces Parts delivered on pallets must not exceed the edge of the pallet. Goods must be protected and secured with pallet collars, lids, plastic film, and bands etc. Inserts must be placed on the bottom of the pallet to protect the material and prevent small parts falling out. Pallets with collars, containing small parts, must be banded to prevent the collars separating. Only one part number or kit number must be used per carrier, unless otherwise stipulated. All carriers must be labelled with goods flags on the short side. On plastic boxes the goods flag, in those cases where many boxes are packed on a pallet, must face outwards so that the goods can be identified without breaking the pallet. Goods that risk being exposed to corrosion during transport and storage shall be protected with VCI paper

FÖR PAC K NING S INS TR UK TION PAC K ING INS TR UC TION Utfärdare/Is s ued by

G odkänd/Approved by

R eg.nr/R eg No.

K ers tin Anders s on

Ort/Plac e

Datum/Date

K arls krona

2007-11-20

Dynapac Artikelnr/Part No.

394579

B enämning/Des c ription

E ccenter weight

L as tbärare/G oods c arrier

P allet 1200x800 + 2 collars + cover

Antal i las tbärare/Quantity in unit

As per order. Maximum 18 kits /pallet

394579

Utgåva/Is s ue

S ida/Page

1(1)

B ruttovikt (kg)/G ros s weight (kg) Pac kins truktion/Pac king ins truc tion

Dynapac's plastic boxes and other special carriers may only be used for direct/indirect deliveries to Dynapac. Defective carriers may not be used, and must be immediately returned to Dynapac for repair. These carriers must be marked so that it is clear that they are damaged. All packaging must be of adequate quality. An inventory must be made of Dynapac's specific carriers at the request of Dynapac. If carriers have been used for other purposes than deliveries to Dynapac, or have been misplaced, the costs for these will be debited to the supplier.

Övrig information/Other information

Förpac knings ins truktionen gäller fr.o.m näs ta leverans . / The pac king ins truc tion mus t be followed on all future deliveries .

V ad gäller bes tällning las tbärare, märkning, bandning, etc s e Dynapac s L everantörs manual. R egarding order goods carrier, marking, s trapping etc, s ee Dynapac s S upplier´s Manual.

Figure 18 Example of packing instruction

3.10

Other production locations and supply of parts from Sweden

Dynapac has production locations in several parts of the world, which primarily produce machines for local markets. This means that in principle identical machines are produced at several places in the world. The majority of the materials are sourced locally. But there are also certain components that will be sourced from existing suppliers in Europe, either via joint packing in Karlskrona or via direct deliveries to China, the USA, Brazil or India. The following is applicable: Materials jointly packed in Karlskrona for further transport must be labelled and packed by the supplier for this purpose, without repacking being necessary. Materials for joint packing are ordered via separate purchase orders. These shall be distinquished from parts that are to be used for production in Karlskrona, and must be packed and sent separately. Delivery notes and goods flags must be labelled with the correct order number and receiving address. The supplier must deliver the goods in packaging materials that are approved in accordance with the international standard for wooden packaging ISPM15. This also applies to deliveries made directly to our other production locations outside Sweden. Partial deliveries are not accepted. 19

3.11 Goods addresses Dynapac Note that Dynapac has several different goods addresses. The address given in the order must be indicated on the consignment note and delivery note.

Factory

Receiving point

Karlskrona Sverige

Central Warehouse Centralförrådet

Karlskrona Sweden

Drum shop Valsverkstaden

Karlskrona Sweden

Kit storage: USA, China, India Kitpackningen: USA, China, India

Hoeselt Belgium

Spare Parts Reservdelar

Nashik India

Sorocaba Brasil

Gate 100

063

104

Address Dynapac Compaction Equipment AB Centralförrådet Industrivägen 2 SE-371 23 Karlskrona Dynapac Compaction Equipment AB Valsmonteringen SV Industrivägen 2 SE-371 23 Karlskrona Dynapac Compaction Equipment AB Kitpackningen, Centralförrådet Industrivägen 2 SE-371 23 Karlskrona

Power Tools Distribution Industrielaan B-3730 Hoeselt

Atlas Copco (India) Ltd., 90, MIDC Industrial Area, Satpur, Nashik - 422 007 MAHARASHTRA

Dynapac Brasil Ltda AV. Estrada da Fazenda do Eden 430 Bairro Iporanga CEP 18087-101 SOROCABA / SP Dynapac USA, Inc. 2100 North First Street Garland, Texas 75040

Garland USA

Tianjin China

No. 38, Quanwang Road Wuqing High Tech Industrial Park Tianjin, China 301700

Wardenburg Germany

Dynapac GmbH Ammerländer Str. 93 D-26203 Wardenburg

Lingen Germany Industrivägen 2 SE-371 23 Karlskrona

Dynapac GmbH Darmer Esch 81 D-49811 Lingen

Dynapac Compaction Equipment AB Kitpackningen, Centralförrådet Industrivägen 2 SE-371 23 Karlskrona

Power ls Distribution Industriean B-3730 Hoeselt

Power Tools Distribution Industrielaan B-3730 Hoeselt

Table 5 Goodsadresses

Invoicing

Parts ordered via EDI shall also be invoiced via EDI. Invoices for the purchase of indirect material, services e.g. to Karlskrona shall be addressed to Karlskrona. Suppliers outside the EU must send an original invoice (preferably via EDI) to Dynapac and send a copy of this with the goods to enable custom procedures. The invoice must contain the following information: The supplierÂ´s VAT number or organisation number The supplier's bank, address and Swift address The supplier's account number and IBAN number Goods labelling or the name of the receiver of the goods or service HS-code on invoiced product Delivery note number Part number Order number or reference number Delivered quantity, currency and price Telephone, fax and e-mail to contact for invoice issues Invoicing via WEB-EDI is done as follows. On completion of the advising the order will be transferred to the folder "Invoice". Click on the delivery note to be invoiced, see figure 19.

Figure 19 Select delivery note for invoicing

When the delivery note is selected the invoice number (1), any set-up costs (2) and any costs for pallets and collars (3) must be filled in, see figure 20. Other details such as delivery note number (Delivery number), part number, part designation, order number, delivered quantity and price are already filled in and must be checked. Note that the delivery note number must unconditionally be specified.

Figure 20 Completion of invoice

Press "Recalculate" (4) to calculate the total invoice amount, and then press "Save" (5). The information is matched with the corresponding information in Dynapac's business system. Note that packaging and set-up costs must be agreed in writing to be considered valid. In the event there are any discrepancies between the supplier's and Dynapac's information the process will be delayed and there is a risk that also the payment will be delayed.

Claims

5.1

Claims for defective material (DR)

All parts must be delivered in accordance with the valid drawings and packing instructions. In cases where delivered material does not comply with our requirements the parts will be claimed via a fault feedback system (Discrepancy Report). The objective of the feedback is to create the opportunity for the supplier to improve their processes and to recover the costs incurred as a result of the fault. DR is an electronic form that contains a description of the fault. It is sent to the supplier by email and must be handled as follows: 1. The discrepancy is described by Dynapac's quality technicians. 2. Dynapac noti es what measures have been taken under "Corrective action". The supplier must describe how the fault will be corrected in the white eld. This response must be returned to Dynapac within 24 hours. 3. The supplier must describe under "Preventive action" the long-term measures that will be implemented to prevent the fault occurring again. The report will be closed when this response is received from the supplier and the measures are considered to be adequate. 4. In cases where we have returned the goods to the supplier and receive a replacement delivery, this must be marked with the DR number and the name of the person who has issued the report. 5. The costs incurred, plus the part price and return freight, are debited to the supplier via a "claim invoice", for which no payment shall be made. The money will instead be automatically deducted from the supplier's current invoices. It is therefore not necessary to send a credit note to Dynapac. A replacement delivery must be invoiced.

1 2 2

Figure 21 Example of DR

Figure Fig Fi re 22 Claim Claim i debiting debit bitiing (Claim (Cllaiim invoice) (C iin oiice))

5.2

Claims on basis of incorrect packing or goods labelling

Goods to Dynapac must be packed in accordance with the valid packing instruction, if such exist. Otherwise it must be packed and labelled in accordance with this manual. In those cases where this is not achieved a claim will be issued to the supplier by email to draw attention to the fault. If the supplier does not improve itâ&#x20AC;&#x2122;s process and this repeatedly leads to repacking or manual goods reporting, e.g. as a result of incorrect barcodes, a claim will be issued via the DR system and the costs debited to the supplier in the same way as a claim for material.

5.3

Claims on basis of incorrectly specifid quantity

Occasionally the actual number of delivered items does not correspond to what is specified on the delivery note. In general this means that the applicable invoice does not correspond with what has been delivered. In cases like this the information about the deviation is sent to the supplier by email. The invoice will be paid, but that the difference between the invoice quantity and real quantity will be deducted via a corresponding "claim invoice" from current invoices. Before this is done the supplier has 24 hours to respond to the deviation and to send the missing quantity at own expense.

Engineering changes (ECN)

We continuously improve our products and processes. When a design is changed the technical specifications that describe the purchased product are also changed. The more significant a change is, the more important it is that the supplier participates in this process. Occasionally this only refers to minor adjustments, or the adjustment of valid documents, but most often it is a question of physical changes to the products we purchase. If a change affects other parts of Dynapac's installation this must be coordinated with other changes. It is therefore necessary for the supplier to introduce the change in accordance with the date we have specified on the "change order". The suppliers responsibility is to: Implement the change so that serial delivery can take place from the date specified on the change order. Sign and resend the change order from within two weeks as confirmation that the supplier has received our request for the change, and that it is implemented in accordance with the specified requirements. Immediately notify Dynapac if the date for the implementation risks being delayed, or if there are other aspects that should be taken into consideration. Send the material in a new version labelled with Dynapac's yellow goods flag, containing the specified order number or reference, and to enclose a correctly completed document for initial samples. Costs, as a result of the engineering change, shall be agreed on before invoicing. The invoice shall be marked with corresponding ECN number.

Change orders must be interpreted and handled as follows: 1.

Change order number

Purchase order number for material with new revision. If no speci c order has been speci ed the material in a new revision must be delivered as per the valid reference number, and labelled with a yellow goods ag.

[Tillverkade/Manufactured] explains how the supplier should handle the parts which according to agreement have already been manufactured or are being manufactured.

This section describes the documents that are changed and where appropriate summarises the actual change or other comments that can be of importance.

[Leveransstart/First delivery] explains from which week the deliveries shall consist of products in the new revision. The start of delivery is speci ed by year [y] and week [ww].

Concerning costs for the change, according to valid agreement.

The supplier con rms that the new documents have been received and the changes to the design will be implemented. The form must be returned within two weeks after it has been issued by Dynapac.

The supplier's signature

1 2

Figure 23 Change order

Supplier evaluation

7.1

SPM index

The supplier's delivery performance and quality level are continuously measured in ongoing serial production. The four parameters below are weighted and establish a so-called SPM index (Supplier Performance Measurement Index). Delivery precision (only late deliveries) PPM Number of Discrepancy Reports (DR) Number of disturbances to production or line stops

Supplier Demerit Points by the latest 10 periods 100 80 60 40 20 0 0808

0807

0806

0805

0804

0803

0802

0801

0712

0711

SUPPLIER

Delivery performance

PPM

LineStop

Figure 24 Supplier Performance Measurement (SPM) for a specific supplier

The above information is summarized and gives a value between 0 and 100. The fewer demerit points, the better the performance. The measurements are compiled once a month for the previous three months. Table 6 shows how the supplierâ&#x20AC;&#x2122;s performance affects the demerit points. Deliveries on time

Demerit points

Number of DR

Demerit points

PPM value

Demerit points

Line stops

Demerit points

98-100%

95-97%

1-2

1-1000

90-94%

3-4

1001-3000

85-89%

5-6

3001-6000

75-84%

7-8

6001-9000

< 75%

> 9000

Table 6 The effect of the supplierâ&#x20AC;&#x2122;s performance on the demerit points

7.2

Delivery perfromance index

The supplierâ&#x20AC;&#x2122;s delivery performance is described in the graph shown below, where incoming deliveries are categorised in five different intervals in time. If a delivery is received in week 35 this effects the delivery performance in this week regardless of when the delivery should have taken place. The measurements set the specified dispatch dates in relation to the reported arrival dates, and are adjusted by the transport times given in the system. The measurements can therefore become inaccurate if the transport time or collection dates are incorrect. If the supplier confirms a different time than the one given on Dynapacâ&#x20AC;&#x2122;s order, the new confirmed time will be applicable if it is accepted by Dynapac. To avoid inaccuracies in the measurements, deliveries reported on the basis of plus or minus two days from the estimated arrival date are reported as "on time". Note, however, that the requirement is that a delivery shall be dispatched on the day specified in the order. The data can easily be distributed for the purpose of further discussions. If there are deviations between the data distributed by Dynapac and the data produced by the supplier, then these deviations must be investigated. Observ that the SPM measurement is not affected by early deliveries. Year 09 Supplier

100%

Material Controller (All) Purchaser (All) Lst 100

Delivery Performance

95% 90% 85% 80% 75% 70% 65% Delivery Interval

60%

>10 days delay

55%

6-10 days delay

50%

3-5 days delay On time del.

45%

3-5 days premature del. >5 days premature del.

40% 35% 30% 25% 20% 15% 10% 5% 0% 0901

0902

0903

0904

0905

0906

0907

0908

0909

0910

0911

0912

Month of delivery

Figure 25 Graph of delivery performance

A supplier must continuously analyse their delivery precision and implement improvements in their operations to achieve a higher degree of "deliveries on time". Late deliveries risk causing interference in our production, and early deliveries create inconvenient flows in our goods reception and in our warehouse. The supplier can expect to be debited for costs related to late or early deliveries.

January 2010, REV C 3492012401 We reserve the right to change speci cations without prior notice. Photos and illustrations do not always show standard versions of machines. The above information is a general description only, is not guaranteed and contains no warranties of any kind.

037.50.100.EN

Dynapac Compaction Equipment AB, Box 504, SE-371 23 Karlskrona, Sweden. Tel: +46 455 30 60 00, Fax: +46 455 30 60 30