TRUST RESPECT THINKING Supplier selection and development

Electrolux business Cookers, Ovens and Hobs Refrigerators and Freezers Dishwashers Laundry products Vacuum cleaners and Small appliances Air Conditioners and Dehumidifiers Products for professional use Share of net sales in 2010 A global company Supplier selection and development

Our 2015 desired position We will be the ‘best’ appliance company in the world Our vision Our customers Our shareholders Measured by... Our employees Supplier selection and development

Our Electrolux Drive for ResultsPassion for InnovationCustomer Obsession Values Foundation Ethics & IntegrityRespect & DiversitySafety & Sustainability Vision Strategy The worldwide leader in making life easier and more enjoyable with the help of powered appliances People Products & Services Growth BrandCost Supplier selection and development

Nyíregyháza Refrigerator factory Budapest Sales and Marketing Division Floor Care & Small Appliances Sourcing Europe Jászberény Holding Floor Care Factory Refrigerator / Chest Freezer Factory Tool and Special Machine Factory Logistic Centre CEE Supplier selection and development

Electrolux in Hungary Position  Net Sales HUF 181,4 billion  Investments between HUF 98,6 billion Figures as of 2011 Products  More than 4,5 million products per year  To meet the real needs of consumers and professionals People  3499 in Hungary  More than 2500 in Suppliers Supplier selection and development

„An organization and its suppliers are interdependent and a mutually beneficial relationship enhances the ability of both to create value.” (International Organization for Standardization Quality Management Principles: Principle 8: Mutually beneficial supplier relationships) Supplier selection and development

Our Quality starts at our Suppliers 1. Market Analysis 2. Potential Supplier list 3. RFQ Grip - Benchmarking 4. Selected supplier list 5. GSQA Procedure sent and supplier feedback 6. Profile EL29001 fulfilling by the supplier 7. Preliminary quality audit EL29002P DP1 Decision to proceed 8. Drawings, Supply Specif., Q requirements 9. Supply and Quality Agreement (Preliminary) 10. Pre - Production, Quality Ass. Planning EL29003 Supplier selection and development

Our Quality starts at our Suppliers 11. Preliminary samples with test results reports 12. Fine-tune product and re-sampling 13. Supplier process audit EL29002A 14. Pre - Production, Quality Ass. guided Implem. EL Initial sample homologation 16. Industrial trial (Application homologation report) 17. Supply and Quality Agreements finalization DP2 Production / Delivery release 18. Ramp-up production 19. Ongoing business evaluation (Q statusing, QES report) 20. EL29002A follow up (Within 6 months from production) Supplier selection and development

Our main focus is to actively engage pro-active suppliers who can interact multi-functionally within Electrolux in order to :  generate innovation  shorten the time-to-market  reduce total product cost  improve product quality  optimize performance/cost ratio  have early project involvement (front-loading) (front-loading) Supplier selection and development

SupplierclassificationDescription Supported Fulfill Electrolux’s requirements, see e.g. price, accepted quality, support Electrolux’s processes with their strategy. Active If the supplier of the previous category cannot be used, this satisfies Electrolux’s minimum quality requirements Restricted (hold) The supplier is not involved in the new projects. No committment to the realization of common goals. Excluded Electrolux’s minimum quality requirements are not met. No partnership in the future. Potential For the time being, not an Electrolux partner, but has the potencial to become a partner in the future. Supplier selection and development

Logistics Financial Purchasing Supplier profile Quality (GSQA) Strategic Supplier Selection Supplier Development R&D Other functions Supplier selection and development

The supplier criteria fall into seven categories which together give a comprehensive picture of requirements and performance/ capabilities. Category Criteria Quality/operations Quality and process system assurance Quality performance Capacity flexibility Logistics Delivery performance (errors) Lead time Finance Financial position Environmental position Environmental systems and effort Company profile Strategic confidence Supplier commitment Technology R&D capabilities Price Price level Price risk/trend Commodity specific Commodity specific criteria* Commodity specific criteria* Supplier selection and development

Strategic Supplier Selection Supplier Development Requirement Profile Mapping Supplier Profile Mapping Set-up activitiesOngoing activities Criteria Quality and process system assurance Quality performance Capacity flexibility Delivery performance (errors) Lead time Financial position Environmental systems and efforts Strategic confidence Supplier commitment R&D capabilities Price level Price risk/trend Criteria Quality and process system assurance Quality performance Capacity flexibility Delivery performance (errors) Lead time Financial position Environmental systems and efforts Strategic confidence Supplier commitment R&D capabilities Price level Price risk/trend Criteria Quality and process system assurance Quality performance Capacity flexibility Delivery performance (errors) Lead time Financial position Environmental systems and efforts Strategic confidence Supplier commitment R&D capabilities Price level Price risk/trend Criteria Quality and process system assurance Quality performance Capacity flexibility Delivery performance (errors) Lead time Financial position Environmental systems and efforts Strategic confidence Supplier commitment R&D capabilities Price level Price risk/trend GAP After an initial set-up of mapping requirement profiles and supplier performance profiles, Supplier profile tool will support various ongoing activities. Supplier selection and development

 T/OCR s. stamping:min. 4 M € S. s. stamping:min. 5 M €  150 – 400 TO press machines with free capacity  Experience in production with progressive tool  RoHS declaration  Language skill (R&D, Quality, Sales)  Competitive added value  Experience in white goods industry  Advantage:- Experience in production from stainless steel - Tool production inside - Powder painting line  Investment possibilities COMMODITY STRATEGY STAMPING Supplier short selection criteria Mechanical press with coil feeder and progressive tool Supplier selection and development

Source: As – ROA VTC frame project Raw material Freight Packaging Profit Overhead Transformation Raw material Transformation Freight Packaging Profit Overhead COMMODITY STRATEGY STAMPING Cost driver analysis Manual stamping / 1.

Source: A – ROA VTC frame project Raw material Freight Packaging Profit Overhead Transformation Raw material Transformation Freight Packaging Profit Overhead COMMODITY STRATEGY STAMPING Cost driver analysis Manual stamping / 2. Stainless steel: Electrolux purchased material scrap recover calculated Scrap recover Carbon steel: Electrolux purchased material scrap recover calculated Scrap recover Freight+Mat. handl. Nett raw material Freight+Mat. handl. Nett raw material

Supplier development program 1.Selection of proper parts and suppliers 2. Classification – factory working group 3. Supplier Assessment 4. Meeting with the selected supplier 5. Supplier Audit 6. First follow-up meeting (after 3 months) 7. Second follow-up meeting (after 6 months) Supplier selection and development

Supplier performance, follow-up and actions Supplier selection and development

Decision making methodology Check yearly turnover of new component(s) on EXW and DDP base Check: SMS registration SMS2 registration Payment term Frame work After market Consignment stock REACH Quality agreement Long term agreement Total turnover for the financial year

„Everyone who is successful must have dreamed of something.” (Native American proverb) (Native American proverb) Supplier selection and development

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