Nominated Supplier Approval Process

The nominated supplier list as it stands is enclosed. It will be periodically updated, and re-circulated. It is intended that by Phase 2 10K, unless otherwise authorized, accessories and trims for Buyer  will be supplied mostly by nominated Supplier on the nominated list. Garment manufacturers that have accessories and trim productions within their own structures may use their own production under Buyer  as long as they conform to Buyer  standards. A Garment Nominated Supplier who is already supplying Buyer  , and is using Accessory / Trims suppliers who are not on the enclosed list, must inform the appropriate buyer or merchandiser as soon as possible: Buyer  will then carry out the proper technical audit of this supplier as soon as possible in order that the supplier may be approved for future use. A Garment Supplier proposing to introduce a potential Accessory / Trim supplier who is not on the approved list must inform Buyer  about this supplier, and the reasons for proposing him. Buyer  will then carry out the proper technical audit of the proposed company as soon as is possible

• All nominated accessories suppliers are responsible for supplying Buyer  orders with desired qualities and within agreed deadlines.
• All nominated accessories and trims suppliers are responsible for ensuring that goods they supply for Buyer  products are compliant with EU regulations, and local regulations for each market in which Buyer  trades
• Buyer  Accessories and Trims Department is responsible for updating the Buyer  Accessory and Trims Manual to reflect the latest legislative and regulatory obligations for the appropriate markets
• All nominated accessories suppliers are responsible for compensating delays caused by themselves.
• Accessories suppliers nominated by Buyer  are responsible for sending Buyer  Accessories Department a copy of each order placed to them. The address to send this copy
• Buyer  will audit these orders on a random basis. This audit may be at any stage of production
• An Accessories Manual will be published within the following 5 months. Until that time, it is important that the Fabric Quality Manual is followed and abided by. Moreover, metal accessories that are “non ferrous” should be used as it is mentioned in memorandum DY.276  “Non Ferrous Trims- Metal Detector Usage” which is not included in the Fabric Quality Manual.
• Since this is a new procedure, if there are any problems with nominated suppliers about Accessories and Trims during this transition period, Accessories and Trim Sourcing Department in BUYER  should be informed about related problems. The Accessories and Trim Sourcing Department contact address
• Garment suppliers and Accessory / Trims suppliers are mutually responsible for their bilateral commercial relations, even if they appear on Buyer  ’s approved list.
• The following points summarise the nature of the relationship between Garment Makers and Nominated suppliers of Accessories and Trims
• Before accepting an order from Buyer , it is the garment maker’s responsibility to make contact with any recommended or nominated accessory / trim supplier. Agreement should be made regarding price, quality and delivery before the garment order is confirmed with Buyer .
• The garment maker should give Buyer  an assurance for quality and delivery after receiving relevant assurances from the supplier. If the garment maker cannot obtain written assurance from the supplier, Buyer  Accessories Department should discuss with the  supplier the reasons why a guarantee cannot be given, and should try to persuade  the supplier to give the guarantee.
• If an assurance cannot be given regarding compliance with Buyer ’s Quality Standard, then the  supplier should state the standard he can achieve. This standard will be considered by Buyer ’s Assistant General Manager (Sourcing), and if he accepts, the stated standard should be agreed in writing between Buyer , the garment maker, and the supplier
• If the Assistant General Manager (Sourcing) does NOT accept the supplier’s stated quality standard then another supplier must be found. If this cannot be done the order will be cancelled
• Should accessories and/or trims fail the Buyer  tests, and should the failure result in a cancellation of either the accessories or the garment order, Buyer  will not be held liable for the accessories. This is an issue to be resolved between the garment maker and the supplier
• The same applies to any cancellation of accessories / trims or garment orders caused by accessories shipment delay. The issue will be resolved between the garment maker and the recommended supplier
• Buyer  will undertake to monitor and audit the performance of accessory and trim suppliers on an ongoing basis. Buyer  will also make efforts to support  accessory and trim suppliers, identify their weak points, and offering advice for improvement. Before nominating an accessory or trim supplier Buyer ’s Accessories and Trims department should always obtain written confirmation that Buyer ’s quality standards will be met, that delivery timetables will be adhered to, and that the nominated accessory and trim suppliers will take full responsibility and cover any loss incurred by garment makers
• Where a problem occurs of shipment or quality of an accessory or trim, Buyer  will endeavor to use its good offices to persuade the  supplier to cover any loss caused to the garment maker
• Should it be found that  an accessory or trim supplier does not meet his confirmed obligations regarding shipment date and quality, he will be removed from Buyer ’s list of approved suppliers
• It must be noted that Buyer ’s recommendation to use a particular accessory or trim supplier does not necessarily mean it is compulsory to use that supplier. Should the garment maker prefer to use an alternative source, this might be acceptable, subject to the source :
• Informing Accessories and Trims Department in writing of the alternative source
• submitting samples of the required quality for testing to Buyer ’s standards
• confirming that Buyer ’s required garment delivery can be met using the alternative source
• showing that there is a price or quality or delivery or flexibility or other advantage in using the alternative source
• being audited successfully by Buyer  Accessory and Trim Department

PURPOSE

To ensure that Nominated Suppliers are selected on the basis of their capability to meet the requirements of Auto Group and therefore evaluated and controlled properly.

 SCOPE:

This procedure is applicable to the selection and periodic assessment of Nominated Suppliers who supply raw, packaging, machinery, equipment and other locally available materials to Auto Group.

 DEFINITION:

Nominated Supplier/Vendor: Person or organization, which has the potential of supplying materials for use by Auto Group.

 RESPONSIBILITY:

It shall be the joint responsibility of Purchasing, Production, and Quality Assurance participates in the selection & evaluation of any Nominated Supplier/Indenter. Manager (Commercial) is responsible for selection of Nominated Suppliers for local & foreign purchase. General Manager (Production), Quality Manager (Export), Manager (HR & Compliance) responsible to verify ethical standard and Store are responsible to verify quality of Nominated Supplier’s products.

 METHOD:

Nominated Supplier/Vendor Selection:

Auto Group shall purchase raw and packaging materials and other items through both local & foreign Nominated Suppliers. The need for a new Nominated Supplier can be determined by Quality Assurance. Production, Maintenance, Compliance and purchasing Department. New Nominated Supplier shall be selected on the basis of their past experience and ability to supply quality products, price of products supplied and delivery.

 Selection Procedures of Local Nominated Suppliers/Vendors:

Manager (Commercial) or authorized nominee shall select local Nominated Suppliers on the basis of their past experience, quality of products supplied, their prices and delivery. For selecting new local Nominated Suppliers, Manager (Commercial) authorized nominee shall verify the specifications of the to-be-purchased materials, samples (as appropriate) and compare with the existing specifications. In case of local Nominated Suppliers having manufacturing facilities. The facilities shall be audited (if needed) before selecting them as approved Nominated Suppliers. If the specifications of the products or materials are found to be satisfactory. Manager (Commercial) shall then ask the to-be-Nominated Suppliers to submit prices for comparison with current prices of other Nominated Suppliers. If the prices are found within acceptable limits and test sample are acceptable, then he will recommend the Nominated Supplier(s) to Director for inclusion of the name in the approved Nominated Suppliers List (ASL) of local Nominated Suppliers.

Selection procedures for Foreign Nominated Suppliers/Vendors:

After a prospective foreign Nominated Supplier or Indenter is identified as a possible source of a material, Manager (Commercial) shall ask the prospective Nominated Supplier for supplying

documentary evidence that may prove to be a good Nominated Supplier subject to satisfactory

survey report about past experience, Manager (Commercial) shall ask the prospective Nominated Suppliers or their local representatives/indenter to submit samples of raw and other materials with their product specifications, certificates of quality test etc. In case o new raw materials and new Nominated Supplier, Quality Assurance, Production Dept. shall verify the quality of the Nominated Supplier’s products by detailed test and analysis and submit report to Manager (Commercial) shall ask the prospective Nominated Suppliers of their local representatives/indenter to submit samples of raw and other materials with their product specifications, certificates of quality test etc.

Request for quote shall clearly indicate the detailed specifications of materials of

products. Their quantities, source of origin, name of manufacturers and Nominated Suppliers. Name of local indenters/representatives and delivery schedule. If the specification and quality of the product are acceptable, quotation is competitive and the price is well within the range, the Nominated Suppliers might be provisionally selected. Later on after successful shipment and acceptance of a particular consignment of raw materials and machinery parts for the plant; the Nominated Supplier will be placed in the approved Nominated Suppliers list of overseas Nominated Suppliers provided other selection criteria are met. At times depending on urgency and circumstances, the director may use his discretion to enlist name of any overseas Nominated Supplier provisionally pending its performance and subsequent placement in the ASL.

Selection of Suppler/Vendors for a particular Import Order:

First of all Manager (Commercial) will ask the Nominated Supplier/indenters of ASL to supply pre-purchase-samples with their specifications, quality test report/certificates. Subject to satisfactory quality report by Auto Group of QA, Production Dept. the Nominated Suppliers shall be requested to quote in bulk quantity. Depending on the price and terms and conditions of delivery, the director shall approve one or more Nominated Suppliers for importing a particular batch or consignment of raw materials, equipment, machinery parts or other importable items. after the selection of Nominated Supplier(s) Manager (Commercial) will start processing to open letter(s) of Credit. After the shipment and arrival of the consignments(s) at the port. Subsequent clearance will be made and samples will be sent again for quality testing by Auto Group QA, Production Dept.

At the end of the month upon receipt of the satisfactory quality report from quality

assurance dept. or from the material receives register (As mention in maintained by Store dept. be used `Nominated Supplier History Form’ will be filled by the Head/Executive of Purchase Dept.

 Comparative Performance study of Local Nominated Supplier/Vendors:

Executive (Purchase) shall maintain `Nominated Supplier History Form for all local and foreign Nominated Suppliers. This from shall be updated once a supply is received from Nominated Supplier. Summarizing all Nominated Supplier History Forms. Manager (Commercial) will evaluate the local and foreign Nominated Suppliers once in every year. Following system shall be used to evaluate the Nominated Suppliers of Auto Group.

Manager (Commercial) will fill up the Nominated Supplier Evaluation Form based on the respective Nominated Supplier History Form. Evaluation will be done material wise and in the following four categories.

Quality: Good Satisfactory Unsatisfactory Delivery Prompt Satisfactory Unsatisfactory

Price Highly Comparative Reasonable High To be on the ASL, a Nominated Supplier should have at least “Satisfactory” in the `Quality’ and `Delivery’ category and “Reasonable” in ‘Price’ category.

Based on the overall performance of the Nominated Supplier, Manager (Commercial) will write comments/recommendation on the Nominated Supplier Evaluation Form. Director shall be responsible to approve the Nominated Supplier Evaluation Form. Only the approved Nominated Suppliers List (ASL) An Evaluation Form will be used for a particular suppler to evaluate its last one-year performance. Manager (Commercial) will update the approved Nominated Supplier List (ASL) based on the evaluation form of each Nominated Supplier. Purchasing will be carried out from the ASL. However purchasing could be done from other Nominated Suppliers, which aren’t in the ASL with prior approval from Director.

Conclusion

When Buyer  buyers or authorised representatives recommend or nominate to garment makers the use of particular suppliers of accessories / trims, it should be clearly understood that Buyer , in nominating a supplier, do not assume responsibility for any failure of shipment date or quality which may subsequently occur. Any costs and / cancellations resulting from such failures must be resolved withing the bilateral relationship between the garment maker and the Nominated Supplier