New Components Introduction (NCI) and Suppliers Selection. General Awareness Presentation Valentina Shirina GE Transportation June 22, 2011 Eskisehir

2 GE Transportation/Dimitry Sevostyanov 17 September 2015 WHAT is NCI process and WHY GE follows it? NCI (New Component Introduction) – is a GE process to establish and statistically prove conformity of a component to a certain set of requirements (typically: specification and drawing), in other words, process designed to approve component for use in manufacturing of GE products. NCI Goals: –Components Quality …. Smooth operations –Cost out… avoidance of costs related to incoming inspection, deliveries shortages due to defects, inventory optimization –Mitigation of product/brand reputation risks…supplier accountability

3 GE Transportation/Dimitry Sevostyanov 17 September 2015 Phase 1: Working with Supplier (BEFORE SHIPMENT OF SAMPLES) GE: Establishes correctness and completeness of drawings and specification (supplier working docs); Conducts component risk assessment and prepares Validation Matrix; Conducts chemical materials verification CHECK DRAWINGS & SPECIFICAITIONS FOR ACCURACY & COMPLETENESS COMPONENT RISK ASSESSMENT & PREPARATION OF VALIDATION MATRIX CONDUCT CHEMICAL MATERIALS VERIFICATION Supplier: Prepares Process Flow Diagram (PFD), analyses potential manufacturing process and component failures ( Process FMEA – Process Failure Mode & Effect Analysis), prepares Characteristics Control Plan for CTQs Produces sample lot GE: Validates measurement system and performs 100% quality inspection of sample lot before its delivery to GE (First Article Inspection) DEVELOP RFD. PFMEA & CCP VALIDATE MEASUREMENT SYSTEM OBTAIN CERTIFICATE OF CONFORMITY AND CONDUCT FIRST ARTICLE INSPECTION

4 GE Transportation/Dimitry Sevostyanov 17 September 2015 Phase 2: Manufacturing Process Validation (AFTER SHIPMENT OF SAMPLES LOT TO GE) GE: Machinability Check (if applicable) Fit up Check (parts dimensional compatibility) Functional Test (individual component) Sub-system Test System Test Environmental Test Reliability and Growth Tests (Field Tests) Approval/Disapproval of NCI MACHNIABILITY CHECK FIT UP TEST FUNCTIONAL TEST SYSTEM AND SUBSYSTEM TESTS ENVIRONMENTAL AND RELAIBILITY TESTS FINAL NCI APPROVAL

5 GE Transportation/Dimitry Sevostyanov 17 September 2015 Phase 3: Post-NCI Monitoring Supplier: Upon approval for serial supply, continues to submit data to GE Process Capability Database for CTQ characteristics GE: Assesses data provided by supplier on on- going basis with goal to detect any process capability or process control deficiencies are established – this allows to defect issues on early stages; Requests suppliers to implement corrective actions in case process capabilities and/or process control deficiencies are identified UPDATE PROCESS CAPABILITY DATABASE VERIFY ACCEPTABILITY OF CAPABILITY AND PROCESS CONTROL TAKE CORRECTIVE ACTIONS IS NECESSARY UPON COMPLETION OF NCI NO CHANGES IN MATERIAL AND/OR PROCESS ARE ALLOWED. ANY PERMANENT CHANGE WOULD REQUIRE A NEW NCI.

Supplier Selection

7 GE Transportation/Dimitry Sevostyanov 17 September 2015 WHAT is Supplier Selection & WHY GE Follows It? Supplier Selection – process designed to find and approve new suppliers for products and services. Supplier Selection Benefits: –Minimization of risks of work with unreliable suppliers … quality, surety or supply and commercial competitiveness directly impact sales –Minimization of product reputation/brand risks … it takes years to create good reputation and just one minute to destroy it –Minimization of financial risks... financially unstable supplier may jeopardize customer’s orders execution –Better understanding of suppliers commercial & capacity capabilities... helping to reach “WIN-WIN” situation with supplier for long term

8 GE Transportation/Dimitry Sevostyanov 17 September 2015 Supplier Selection: Pre-screening (data provided by supplier) Financial Information: –Financial Statements –Loss/Benefits Reports –Reference Information on Major Customers –Results of Independent Financial Audit Commercial Information (examples): –Internet Access and Ability to Work on –line –Production /Process capabilities and certifications –Production Capacity (current and planned) –Logistics Capabilities (proximity to major transportation routes & terminals, warehousing) -Packaging Capabilities etc.

9 GE Transportation/Dimitry Sevostyanov 17 September 2015 Supplier Selection: On-Site Audit Compliance (examples): –EHS –IP protection –Compliance: to local & international law; readiness to adhere to GE Supplier Commitment –Management Integrity etc. General Assessment: - Operational Management - Quality Management System –Manufacturing and Engineering Technology, R&D Capability –Special Processes KNOW YOUR SUPPLIERS !

10 GE Transportation/Dimitry Sevostyanov 17 September 2015 Supplier Selection and NCI… One Process

11 GE Transportation/Dimitry Sevostyanov 17 September 2015 GE Transportation Global Sourcing Matrix Organization: Commodities X Poles >3,500 Global Suppliers ~ $1.5B Spend Globally Europe: Over 110 Qualified Suppliers (85 Active) 15 countries Supplier of Critical Parts and Assemblies to the business

12 GE Transportation/Dimitry Sevostyanov 17 September 2015 Europe: Key Commodities & Suppliers Established Supply: Engineered Systems: pumps, brake systems, heat exchangers, valves, Vibration dampers Bearings: ball & roller (in tamper) bearings Castings: large & mid size (1,000-8,000mt) steel & ductile iron; Al castings Forgings: large, mid, small size forgings (incl forged rings) Machined Parts: rough and fully machined castings and forgings New Opportunities: Fabrications, Electrical Parts, C-class (catalog parts) Looking Forward to Find New Suppliers!

Questions?

14 GE Transportation/Dimitry Sevostyanov 17 September 2015 THANK YOU !