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SRS-001 31-Aug-2012 Rev: C of 26

© 2012-2012 BAKER HUGHES INCORPORATED (UNPUBLISHED WORK).

All rights reserved. Terms and conditions of use: By accepting this document, the recipient agrees this document (together with the contents) is confidential and proprietary property of Baker Hughes Incorporated and includes valuable trade secrets, proprietary information of Baker Hughes (collectively “information”). Baker Hughes retains all rights under copyright laws and trade secret laws of the United States of America and other countries. The recipient further agrees the documents may not be distributed, transmitted, copied or reproduced in whole or part by any means, without express written consent of Baker Hughes, and may not be used in any way detrimental to Baker Hughes.

Baker Hughes Supplier Requirements Specification

FOR THE PROCUREMENT OF ALL BAKER HUGHES PRODUCTS AND SERVICES

SRS-001 31-Aug-2012 Rev: C of 26

BHI Supplier Requirements Specification (SRS)



TABLE OF CONTENTS

Section Page

1 VISION .................................................................................................................................................. 5

2 GOAL ..................................................................................................................................................... 5

3 PURPOSE ............................................................................................................................................... 5

4 QUALITY MANAGEMENT SYSTEM ....................................................................................................... 5

4.1. General Requirement .............................................................................................................. 6

4.2. Documentation Requirement .................................................................................................. 6

4.2.1 General

4.2.2 Quality Manual

4.2.3 Control of Documents

4.2.4 Control of Records

4.2.4.1 Requirement for Baker Hughes Certification and Records

5 MANAGEMENT RESPONSIBILITY ......................................................................................................... 8

5.1. Management Commitment ..................................................................................................... 8

5.2 Customer Focus ....................................................................................................................... 9

5.3 Quality Policy ........................................................................................................................... 9

5.4 Planning ................................................................................................................................... 9

5.5 Responsibility, Authority, and Communication ..................................................................... 10

5.5.1 Responsibility and Authority

5.5.2 Management Representative

5.5.3 Internal Communication

5.5.3.1 Quality Control Process Clinics

5.6 Management Review ............................................................................................................. 10

5.6.1 Management Review General

5.6.2 Management Review Input

5.6.3 Management Review Output

6 RESOURCE MANAGEMENT ................................................................................................................ 11

6.1 Provision of Resources ........................................................................................................... 11

6.2 Human Resources .................................................................................................................. 11

6.3 Infrastructure ......................................................................................................................... 11

6.4 Work Environment ................................................................................................................ 12

7 PRODUCT REALIZATION ..................................................................................................................... 12

7.1 Planning of Product Realization ............................................................................................. 12

7.1.1 Acceptance Criteria

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7.2 Customer Related Process ..................................................................................................... 12

7.2.1 Determination of Requirements Related to the Products

7.2.1.1 Critical Characteristics

7.2.2 Review of Requirements Relating to the Product

7.2.2.1 Production Part Approval Process

7.2.2.2 First Article Inspection Process

7.2.2.3 Quality Control Plan

7.2.3 Customer Communication

7.3 Design and Development ...................................................................................................... 19

7.3.1 Design and Development Plan

7.3.2 Design and Development Input

7.3.3 Design and Development Output

7.3.4 Design and Development Review

7.3.5 Design and Development Verification

7.3.6 Design and Development Validation

7.3.7 Design and Development Change

7.4 Purchasing ............................................................................................................................. 21

7.4.1 Purchasing Process

7.4.2 Purchasing Information

7.4.3 Verification of Purchased Products

7.5 Production and Service Provision .......................................................................................... 21

7.5.1 Control of Production and Service Provision

7.5.2 Validation of Processed for Production and Service Provision

7.5.3 Identification and Traceability

7.5.4 Customer Property

7.5.5 Preservation of Products

7.6 Control of Monitoring and Measuring Devices ..................................................................... 23

8 MEASUREMENT, ANALYSIS, AND IMPROVEMENT ........................................................................... 24

8.1 General .................................................................................................................................. 24

8.2 Monitoring and Measurement .............................................................................................. 25

8.2.1 Customer Satisfaction

8.2.2 Audits

8.2.3 Monitoring and Measurement of Processes

8.2.4 Monitoring and Measurement of Products

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8.3 Control of Nonconforming Products ..................................................................................... 25

8.3.1 Customer Waiver

8.4 Analysis of Date ..................................................................................................................... 26

8.5 Improvement ......................................................................................................................... 26

8.5.1 Continual Improvement

8.5.2 Corrective Action

8.5.3 Preventive Action

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1 VISION

Our vision is for all Baker Hughes suppliers to implement and maintain a quality system that allows them to produce and deliver Baker Hughes globally competitive products and services.

2 GOAL

The goal of the Baker Hughes Supplier Requirements Specification (SRS) is to provide a uniform method for communicating general requirements, expectations, and guidelines to the supply chain.

3 PURPOSE

The Baker Hughes Supplier Requirements Specification Manual:

Defines the fundamental quality system activities that Baker Hughes expects from suppliers and their supply chain to ensure on-going quality planning, control, and improvement.

Helps suppliers in further developing their own quality systems. In many sections throughout the manual instructions can be found not only on what the requirements are, but how to meet the requirements.

4 QUALITY MANAGEMENT SYSTEM

Baker Hughes encourages our Supply Chain to become compliant to ISO/TS 29001. This specification represents the minimum requirement for Baker Hughes. Certain requirements within this specification may be waived, based upon product complexity and an on-site assessment.

To achieve continuous improvement, Baker Hughes expects our suppliers to embrace a sound quality system and to work with us in a spirit of trust, cooperation, and teamwork. This specification establishes expectations for quality activities, while recognizing that each Baker Hughes unit has unique customer needs. Mandatory requirements of this specification are indicated by the use of the word “shall”. This manual is not intended to replace a supplier’s existing quality system. As included in the terms and conditions, acceptance of a Baker Hughes purchase order constitutes acceptance of the requirements of this manual. Suppliers should require similar terms and conditions with their supply chain. Suppliers are expected to discuss and understand the specific applicability of these requirements with their Baker Hughes representatives and their applicable supply chain in order to make effective business decisions.

The following chart illustrates the representative authority level of documents utilized for the Baker Hughes Supplier Quality Program. If any conflict should exist between documents, the next higher level document requirements supersede that called out in the lower tier document. All such conflicts shall be brought to the attention of the BHI Buyer so all conflicts can be resolved.

HIERARCHY FLOWCHART

CONTRACTURAL AGREEMENTS (MASTER SERVICE AGREEMENTS, PURCHASE ORDERS, ETC.)

TECHANICAL DOCUMENT/SPECIFICATION (PRODUCT DRAWINGS, ASSEMBLY INSTURCTION AND OTHER PRODUCT-SPECIFIC REQUIRMENTS, ETC.)

SUPPLIER REQUIRMENTS SPECIFICATION (SRS)

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4.1 General Requirements

The supplier should establish, document, implement, and maintain a quality management system and continually improve its effectiveness in accordance with the requirement of the Baker Hughes Supplier Requirements Specification manual. The supplier shall:

Identify the processes needed for the quality management system and its application throughout the organization.

Determine the sequence and interaction of these processes.

Determine the criteria and methods needed to ensure that both the operation and control of these processes are effective.

Ensure the availability of resources and information necessary to support the operation and monitoring of these processes.

Monitor, measure, and analyze these processes.

Implement actions necessary to achieve planned results and continual improvement of these processes.

Where an organization chooses to outsource any process that affects product conformity to the requirements of this manual or the purchase order, the organization shall ensure control over such processes. Control of such outsourced processes shall be identified within the quality management system. Baker Hughes suppliers shall use only approved Baker Hughes suppliers for the following products and services:

Castings and Forgings

Elastomers and Elastomeric Bonded Material

Raw Material/Mills

Heat Treatment

Welding and/or Hardfacing

Non Destructive Examination (NDE)

Premium Threading

Coating/Plating (excluding: painting)

Electronics

Radioactive Source

Explosive

Note: Raw Material must come from a Baker Hughes approved mill; exceptions are noted within SRS-QA01.

4.2 Documentation Requirements

4.2.1 General

The quality management system documentation should include:

Documented statements of a quality policy and quality objectives.

A Quality Manual.

Documented procedures as required by this Baker Hughes Specification.

Documents needed by the organization to ensure the effective planning, operation, and control of its processes.

Records required by this Baker Hughes Specification.

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4.2.2 Quality Manual

The supplier should have a Quality Manual that is a controlled document and includes the following:

The scope of the quality management system.

Documented procedures or references to them.

A description of the interaction between the processes of the quality management system, such as with a flowchart.

4.2.3 Control of Documents

A supplier shall establish and maintain documented procedures to control all documents and data of external origin such as standards and customer drawings. For specifications referenced within a document, a supplier shall have currently released editions of these documents available at all appropriate manufacturing locations.

A supplier shall have a documented procedure for control and distribution of drawings and/or standards. Obsolete drawings shall be destroyed or appropriately identified as such.

Baker Hughes Supplier Standards and Specifications are available at: bakerhughesdirect.com.

4.2.4 Control of Records

All quality records shall be kept for at least Five Years. These records shall be legible, stored in an environment that protects documents from deterioration, and are readily accessible upon request by a Baker Hughes representative. It is also expected that the supply chain’s records pertaining to Baker Hughes product shall be retained in the same manner.

Examples of such records may include, but are not limited to:

Material Test Reports (MTR’s)

Employee Training Records

Measurement Data

Inspection Results

Internal/External Audit Reports

Nondestructive Examination Reports

Quality Plans or Control Plans

Production Part Approval Documents

Non-conformance reports and Disposition records

4.2.4.1 Requirements for Baker Hughes Certifications and Records

All certifications required shall be traceable to the Baker Hughes Incorporated purchase order number. At a minimum the PO number, Baker Material number/Part Number, Quantity shipped or any other information noted on the purchase order, drawing or other BHI specifications shall be included. All information shall be submitted in the English language.

In addition, all certification required by this document must follow these formatting and legibility guidelines:

Definition and contrast of supplied documents shall be adequate to ensure that a third generation photocopy made from the supplied document is still fully legible (i.e. a copy of a copy taken from a copy of the document to be supplied is still fully legible).

To facilitate binding and photocopying/ microfilming/scanning activities, all documents shall have a border all around of approximately 0.8 inch or 20 mm.

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Original documents are preferred to be in black ink to ensure maximum contrast for copying.

Baker Hughes requires original documents whenever practical. The supplier must have access to the original document or to a previously verified copy. Facsimile copies are discouraged. When facsimile copies are required the originals must be mailed the same day.

The supplier shall maintain copies of all certification supplied to Baker Hughes on file for a minimum of time required by the Baker Hughes Incorporated or local Record & Retention Policy but not less than five (5) years. The supplier shall deliver this information upon request throughout the retention period.

5 MANGEMENT RESPONSIBILITY

Top Management should take an active role in the quality management system. This commitment should address the managerial processes of quality planning, quality control, and quality improvement.

Quality Planning

Develop and maintain quality policies.

Determine customers and their needs.

Support supplier development strategies.

Develop and maintain training procedures.

Quality Control

Create an environment for quality and process control by individual workers through procedures and job instructions documentation.

Develop and maintain Quality Plans and Control Plans.

Develop and maintain gage calibration system.

Develop and maintain change notification procedures.

Adhere to problem containment and traceability procedures.

Quality Improvement

Integrate controls in problem solutions.

Identify projects to resolve current problems.

Communicate corrective action to customers.

Provide resources and training.

Provide recognition.

5.1 Management Commitment

A supplier to Baker Hughes should demonstrate top management commitment to continuous improvement. Top management should provide documented evidence of its commitment to the development and improvement of the quality management system by:

Communicating to the organization the importance of meeting customer as well as regulatory and legal requirements.

Establishing the quality policy and objectives.

Conducting regularly scheduled management reviews of the quality system and execution.

Ensuring the availability of necessary resources.

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5.2 Customer Focus

Top management should ensure that customer needs and expectations are determined, converted into requirements, and fulfilled with the aim of achieving customer satisfaction. Needs and expectations of Baker Hughes include conformance to design and performance specifications, reliability, delivery, cost management, and technical support.

5.3 Quality Policy

Top management should endorse a written quality policy that:

Is appropriate to the purpose of the organization.

Includes a commitment to meeting customer requirements and to continuous improvement.

Provides a framework for establishing and reviewing quality objectives, and

Are communicated and understood at appropriate levels in the organization, and is reviewed for continued appropriateness.

5.4 Planning

Top management should ensure that quality objectives are established for the appropriate functions and levels. The quality objectives should be measurable and consistent with the supplier’s quality policy.

Baker Hughes encourages the supplier to have a structured quality planning process. This long-term quality plan should include, but is not limited to:

Quality Training

Quality Planning processes and tools.

Root cause determination, mistake proofing, and team involvement.

Basic statistical concepts identifying and improving variation and control.

Inspector and operator training programs in the use of control plans and care of measurement and test equipment.

Manufacturing and Tooling Improvements

Capability studies and capability objectives for current and new processes, and for approval of new tooling.

Training aids for set-up and operation of equipment.

Preventive Maintenance programs.

Quality Information Systems

Integration of computers to statistically analyze data, to assist corrective action activities, and to provide timely reporting to Baker Hughes.

Installation of inspection equipment and gaging to provide improved monitoring of manufacturing processes and quality data collection.

Quality Budgeting

Budget planning for quality and plant improvements such as training, equipment, and program development.

A quality plan to shift resources spent on appraisal and correcting internal and external failures to defect prevention, such as: Quality Planning, PPAP (Production Part Approval Process), Control Plans, and other continuous improvement methods and activities.

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5.5 Responsibility, Authority, and Communication

5.5.1 Responsibility and Authority

A quality management system should be implemented in order to provide confidence that the organization can

satisfy the needs of its customers. The system should be consistent with the size, culture, and products of the

organization. A supplier should show evidence of a quality policy emphasizing continuous quality improvement

driven by top management through preventive and corrective action. Management should define specific

quality indicators (metrics) and have a system in place to track them and monitor for trends. Improvement

activities should be based around these trends.

5.5.2 Management Representative

Top management should appoint member(s) of management who should have responsibility and authority for planning, execution, control, and improvement of quality-related activities.

5.5.3 Internal Communication

The organization should ensure that communication takes place between its various levels and functions regarding the processes of the quality management system and their effectiveness. This communication may take the form of team meetings, bulletin boards, publications, electronic media, or other techniques.

5.5.3.1 Quality Control Process Clinics

Quality Control Process Clinics are visual aids used to convey current levels of performance to Baker Hughes requirements. The supplier should have a visual board in place to communicate performance specific to Baker Hughes orders to all employees. The board should be placed in an area that is highly visible to not only internal employees, but to Baker Hughes employees visiting the supplier. The QCPC should include, at a minimum:

Internal failures (scrap, rework)

External failures (customer complaints, Baker Hughes Escapes)

Process or Product Quality Trends

Supplier Quality Performance (where applicable)

On time delivery

5.6 Management Review

5.6.1 Management Review – General

The supplier should have a process for conducting management reviews on a regular basis. The management review should involve management personnel from the various groups within the organization. The results of management reviews should be documented and maintained.

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5.6.2 Management Review Input

Inputs to management review should include current performance and improvement opportunities related to:

Audit results and schedule

Customer Feedback

Process performance and product conformance

Status of preventive and corrective actions

Follow-up actions from earlier management reviews.

Changes that could affect the quality management system.

5.6.3 Management Review Output

The outputs from a management review should include supporting and leading actions addressing deficiencies relating to:

Improvement of the system and its processes.

Improvement of product related to customer satisfaction.

Resource needs.

6 RESOURCE MANAGEMENT

6.1 Provision of Resources

Employees shall be qualified for the job they perform through education, training, or work experience and be knowledgeable of appropriate quality tools and processes that affect the quality of products and services provided to Baker Hughes. Further, employers shall ensure employees are provided with the equipment, facilities, and a work environment conducive to producing high quality products and services that consistently meet functional requirements and product specifications and provide genuine value to Baker Hughes and our customers. The skill level of the employees shall be evaluated to determine their understanding of quality tools and processes and their ability to apply these tools relevant to their job.

6.2 Human Resources

A supplier should provide a system of ongoing monitoring of each employee’s education, training and work experience, and provide opportunities for training and continuing education to improve employees’ skill level. The training should provide employees with an awareness of the relevance and importance of their activities and how they contribute to the achievement of quality objectives.

6.3 Infrastructure

A supplier shall provide and maintain facilities, equipment, workspace, hardware, software, and support services to achieve conformity to product specifications and functional requirements.

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6.4 Work Environment

A supplier shall provide a work environment that supports safety and quality objectives by identifying and managing human and physical factors that affect safety and the quality of products and services provided to Baker Hughes.

7 PRODUCT REALIZATION

7.1 Planning of Product Realization

An effective and structured product realization planning process shall result in the determination of:

The quality objectives for the product or service.

The need to develop specific processes, resources, facilities, and documentation.

Verification and validation activities and the criteria for acceptability.

7.1.1 Acceptance Criteria

For supplier controlled designs, acceptance criteria shall be approved by Baker Hughes, where required

For suppliers that supply product or services to a Baker Hughes design, Baker Hughes shall provide the acceptance criteria

7.2 Customer-Related Processes

7.2.1 Determination of Requirements Related to the Product

Specific quality planning activities are required for every new or revised part or process. Quality planning activities help ensure that new products or process, and changes to existing products or processes, fulfill their intended purposes. Quality planning provides a consistent, structured, and preventive process for managing risks associated with new or revised parts, assemblies, and changes to the suppliers and processes.

Quality Control plans and/or Control plans shall be created when specified by Baker Hughes in accordance to ISO 10005: Quality Management Systems – Guidelines for Quality Plans.

7.2.1.1 Critical Characteristics

A critical characteristic is a product or process characteristic whose variation or targeting control is necessary to meet customer requirements and that directly or significantly impact customer satisfaction through compliance with government, country or industry standards and/or regulations, ability to perform its intended design requirements (form, fit, function), or manufacturability and ability to assemble.

There are three types of critical characteristics:

Critical components/assemblies.

Critical Dimensions/features.

Critical Processes.

Critical Components/Assemblies are defined by Baker Hughes engineering and shall be identified when specified by Baker Hughes through the Baker Hughes Purchase Order.

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Critical Dimensions/features are defined by Baker Hughes engineering and can be defined through various means such as a BHI Purchase Order, a BHI drawing, a BHI specification, or a Supplier Quality Control Plan.

Critical Processes are those processes whose characteristics significantly impact customer satisfaction and that require extra control, such as Process FMEA, Gage R&R, statistical process monitoring, control plans, and/or capability studies to manage variation and targeting to ensure that the product is within tolerance and/or specification. Critical Process characteristics shall be documented on the Quality Control Plan and/or Control Plan.

Baker Hughes has differentiated the above characteristics as critical. However, all characteristics specified in Purchase Orders, Specifications, and Drawings are important to the quality of our products and services. It is the supplier’s responsibility to ensure products and services conform to all requirements specified by Baker Hughes.

7.2.2 Review of Requirements Related to the Product

7.2.2.1 Production Part Approval Process

Suppliers that provide products that are used in, or have an impact on the products that Baker Hughes provides to our customers may be required to be approved through the production part approval process (PPAP) below. The purpose of the PPAP is to evaluate the supplier’s ability to consistently provide products with Baker Hughes stated requirements. The production part approval process is used to demonstrate that the new or changed manufacturing process has the potential to produce product that consistently meets all requirements stated below.

A PPAP can be requested for any of the reasons following, but is not limited to:

New Part or Product.

New Supplier.

New Process or Technology.

Revision of a product or process.

When a new part or product is sourced at a supplier, the supplier will be notified by Baker Hughes if the part is Non-Critical (Type 1) or Critical (Type 2).

Non-Critical (Type 1) are parts or products that do not have any of the qualifications to make it a Critical (Type 2) part.

Critical (Type 2) are parts or products that due to requirements of stress, strain, load, fit, or finish are deemed to be critical to keep the assembly from failing.

Note: Parts identified as D3 will be categorized as a Type 1 part and parts identified as C1 or D2 will be categorized as a Type 2 part.

The criticality status will be determined prior to the PPAP process by Engineering, Quality, and/or Manufacturing.

The Level of PPAP will be decided by Supplier Quality Engineer and Supplier Representative depending on the following factors:

Criticality of the part.

Supplier Audit Findings.

History with the supplier.

History of the part.

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The supplier must provide detail supporting all required PPAP elements to the Supplier Quality Engineer for approval. This submission must be electronic and addressed to the Supplier Quality Engineer or designee. Each location may handle submission differently so the supplier should check with each location. All submissions must be received prior to the submission due date. The Supplier Quality Engineer will then disposition the PPAP with one of the status listed below:

Approved - the PPAP meets all requirements.

Rejected - The PPAP is not acceptable and needs to be resubmitted. Items needed for approved status will be detailed.

Conditional Approval - After review of the PPAP the product is deemed "sellable" however certain noted items must be resolved within 90 days.

Level 1 PPAP for Non-Critical (Type 1) Part Suppliers

Only a supplier for a Non-Critical (Type 1) product shall be allowed to complete a Level 1 PPAP. After completion of a Level 1 PPAP, shipment of parts can begin on a temporary approval from Baker Hughes.

Level 2, 3, or 4 PPAP

If the part is a Non-Critical (Type 1), it is then eligible for dock to stock. If the part is a Critical (Type 2) part, it will be put on a maintenance inspection level determined by the Baker Hughes facility receiving the part.

First Article Inspections

First Article Inspections shall be completed in accordance to Section 7.2.2.2 of this standard. For Level 2 PPAP and above, the First Article must come from production machinery at production speed. Production speed is dictated by previously agreed upon capacity with Strategic Sourcing and Purchasing.

Prior to shipping any material, the supplier will submit documents detailing the packaging of parts to the Supplier Quality representative and/or Manufacturing Engineer. The Baker Hughes Supplier Quality representative is responsible for making sure the supplier packaging process meets, at a minimum, all Baker Hughes packaging specifications.

Process Maps

In order to complete a Level 2 PPAP and above, a process map must be completed. The process map must document the supplier process flow and include all steps the part follows from receiving to shipping. The process map shall include any outside processing that is completed and should be revision controlled and documented. Any changes to this process must be documented and Baker Hughes must be notified prior to implementation. Process maps for product “families” are acceptable upon agreement that the parts share commonality. Primary process steps must match both the Control Plan and Process FMEA once they exist.

In order to complete a Level 3 PPAP and above, the process map must clearly identify the steps where the Critical features of the part are affected and a visual representation of this process map must be displayed in the factory and marked with the areas where defects have been identified in the last 6 months.

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DFMEA (Design Failure Modes and Effects Analysis) and PFMEA (Process Failure Modes and Effects Analysis)

In order to complete a Level 3 PPAP and above, a DFMEA and PFMEA must exist for the product and process. A DFMEA (For instances in which the supplier is responsible for the design of the product) is used to show evidence that potential failure modes and their associated risks have been addressed in order to eliminate or minimize their effects through design changes and improvements.

A PFMEA is used to show evidence that any potential failure modes and risks have been assessed for the manufacturing process. A single DFMEA and PFMEA for 'families' of parts are acceptable as long as there has been previous agreement that the parts share commonality. A DFMEA can be waived if the part was designed by Baker Hughes. The DFMEA and PFMEA should link together and contain rankings for Severity, Occurrence and Detection.

The FMEA document shall be reviewed by the Baker Hughes Supplier Quality Engineer. Items in the top 25% of Risk Priority Number (RPN) = Severity x Occurrence x Detection shall have action items with completion dates assigned to them. The DFMEA and PFMEA should clearly label features that are critical to safety and regulatory, critical to performance, and critical to assembly.

Quality Control Plans/Control Plans

In order to complete a Level 3 PPAP and above, a Control plan must exist for critical components. At a minimum this control plan must document the critical features identified in the PFMEA and DFMEA as well as:

Measurement Device used.

Measurement Frequency.

Any additional process control methods used.

In order to complete a Level 4 PPAP all processes must be monitored and analyzed with records documenting this. Process monitoring should result in the ability to produce both rolled throughput yield and known defect levels for major process steps.

Measurement System Assessment (MSA)

In order to complete a Level 4 PPAP, an MSA must be conducted on all gauges used to measure critical features on critical components. An MSA is used to ensure the measurement system is documented and the right measurement system for the process being measured. At a minimum this should include a Gage R&R (repeatability and reproducibility) that meets AIAG (Automotive Industry Action Group) standards or written BHI specifications. A Gage R&R is used to make sure that the gages used are accurate regardless of the number of times they are used or who uses them.

An overview of required PPAP activities is provided in Table 1 below (next page).

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Required PPAP Activities for Each Level and Type of Part

Non-Critical (Type 1 [D3]) Critical (Type 2 [C1,D2])

PPAP Level One 100% FAI Dimensional at Supplier

Proof of Packaging approval from Baker Hughes

N/A

PPAP Level Two 100% FAI at Supplier on part made on production equipment at production speed

Documented Process Map

Customer Notification Process for all proposed changes


Records of material test results (optional)

100% FAI at Supplier on part made on production equipment at production speed

Documented Process Map

Customer Notification Process for all proposed changes


Records of material test results

PPAP Level Three In addition to Level Two activities

DFMEA, PFMEA

Identification of critical components (Critical to safety, performance and assembly)

Control plan for Critical components

Identification in Process Flow where Critical components are affected

Visual representation of where defects come from in process

In addition to Level Two activities

DFMEA, PFMEA

Identification of critical components (Critical to safety, performance and assembly)

Control plan for Critical components

Identification in Process Flow where Critical components are affected

Visual representation of where defects come from in process

PPAP Level Four In addition to Level two and three activities

Process monitored and analyzed with records maintained

MSA conducted on gages for critical components

Known defect level for process major steps

Rolled throughput yield

In addition to Level two and three activities

Process monitored and analyzed with records maintained

MSA conducted on gages for critical components

Known defect level for process major steps

Rolled throughput yield

Level one and two stand independently. Level three is inclusive of level two, and level four is inclusive of level three and level two.

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7.2.2.2 First Article Inspection Process

First Article Inspections shall be set by Baker Hughes Engineering during the design process and noted accordingly on the Purchase Order. In all other instances, the First Article requirement shall be determined by the local Purchasing and/or Quality representatives and will be noted on the Purchase Order. Parts requiring First Article Inspection include, but are not limited to:

Castings/Forgings

Machined Bar Stock

Shafting

Housings

Bushings

Sleeves

Bearings

Rotors

Laminations

For all other part types; the determination for First Article Inspection shall be based on component criticality, component risk, or supplier risk.

For suppliers providing products for First Article Inspections, the following requirements shall be met. The supplier shall:

Ensure the material is from a Baker Hughes approved mill and verify the related material test reports (material mill test reports, heat treatment, plating, etc) conform to design specification

Verify the certificates or conformances from sub-suppliers conform to and reference the Baker Hughes Specification

Verify that the measurement gages are equal to or better than the gages that would be used at the Baker Hughes location to verify the First Articles. The calibration of the measuring instruments used to inspect parts shall be current

Pick, at a minimum, one piece and perform a 100% documented dimensional inspection. The product shall be inspected to the latest approved revision Baker Hughes engineering drawing and engineering specifications. The drawing shall be numbered and the actual dimensions found during the inspection process shall be documented on the Baker Hughes Supplier First Article Inspection Form provided by Baker Hughes. Castings and molds with multiple cavities shall have one part from each cavity inspected.

The results of the supplier inspection shall be documented as accept or reject with an explanation for any discrepancies. Any non-conformance noted during the document review or the physical inspection of the product shall be cause for rejection of the First Article inspections.

Deviation forms will not be accepted with First Article parts. Any dimension that is within 10% of the specification limit shall be flagged. The exception to this is a dimension that is purposefully manufactured toward the specification to allow for wear. Parts that cannot be fully inspected until hydraulic testing or assembly may be requested to be sent to a Baker Hughes facility before the First Article Inspection is considered complete.

If a First Article Inspection has been rejected three times, additional attempts will require approval from Baker Hughes.

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First Article inspection results shall be approved by verification personnel designated by Baker Hughes. This verification could occur at a BHI facility, at the supplier’s facility, or remotely through the review of the documentation provided. FAI results should include, at a minimum:

A copy of the most recent Purchase Order.

A copy of the Baker Hughes drawing used for final approval.

Material Test Reports, including additional physical and chemical testing of material, as required.

Nondestructive examination results, as required.

Certificates of Conformance for outsourced products or services. The Certificate of Conformance shall reference the applicable Baker Hughes specifications.

Completed Baker Hughes Supplier First Article Inspection Form with all drawing attribute and characteristic inspection results documented.

Any other assembly or testing results, as required (i.e. torque charts, functional test results, etc.).

Upon completion of the First Article Inspection verification, the supplier shall be notified in writing of the results. If a PPAP is required, the results of the FAI shall become part of the final PPAP documentation. If a PPAP is not required, the Baker Hughes purchasing agent responsible for the supplier shall be notified.

7.2.2.3 Quality Process Control Plans

Suppliers that provide products that are used in, or have an impact on the products that Baker Hughes provides to our customers, may be required to create Quality Process Control plans and/or Control plans. When a Quality Process Control plans and/or Control plans are required they shall be created in accordance to ISO 10005: Quality Management Systems – Guidelines for Quality Plans.

The first step in the development of a process control plan is a complete understanding of the potential sources of variation. The pre-requisite for this understanding is the process flow-chart and/or process FMEA. Hand-in-hand with the understanding of variation is the selection of the inspection and measurement system that moves from identification of random process error to overall control of the process.

An effective Quality Control Plan should have all key operations identified within the process that have the greatest effect on attaining the target production and its acceptable limits.

Elements of the Quality Control Plan shall include, at a minimum:

Process Number

Process Name/Operation Description

Machine, Devices, Jig, Tools for Manufacturing

Product and Process Characteristics

Product/Process Specification and Tolerance

Evaluation/Measurement Technique

Sample Size and Frequency

Control Method

Reaction Plan

Remarks/Customer Activity

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The Quality Control Plan shall document:

Supplier’s QCP number, revision control feature, and date.

Supplier’s business name and physical address.

Supplier’s contact person including name, email, and phone number.

Baker Hughes business name and physical address.

Baker Hughes contact person including name, email, and phone number.

Baker Hughes product description, part number, and revision level.

Supplier’s responsible authority approval name, title, signature, and date.

Baker Hughes responsible authority approval name, title, signature, and date.

Suppliers shall revise the Quality Control Plan with any changes that materially affect the process, characteristic, inspection method, or acceptance criteria, etc. Suppliers shall maintain all previous revisions of the Quality Control Plan. Suppliers shall submit revised Quality Control Plans to Baker Hughes for approval prior to implementing the revised process.

7.2.3 Customer Communication

The supplier shall identify and implement a communication plan with Baker Hughes and with their supply chain relating to product or service information, contracts or order handling, product or process changes, contract amendments, and customer feedback. Where product requirements are changed, the supplier shall ensure that relevant documentation is revised appropriately. The supplier shall also ensure that personnel involved in the realization of the product or service are made aware of the changed requirements.

Supplier changes that require documentation for Baker Hughes review include, but are not limited to:

Machine Changes (type, location, dies, molds, etc.).

Volume change of +/- 25%.

Any change affecting form, fit, or function of the part.

Material other than what was previously specified by Baker Hughes.

Production after tooling has been inactive for 12 months.

Change in inspection method or test criteria.

Addition of facilities or closure of facilities.

Changes in a supplier’s physical address.

7.3 Design and Development

Section 7.3 applies only in instances where Baker Hughes is purchasing a product or service in which the supplier owns the design responsibility.

7.3.1 Design and Development Planning

The supplier shall plan and control the design and development of product.

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During the design and development planning, the supplier shall determine:

The design and development stages.

The review, verification, and validation are appropriate to each design and development stage.

The responsibilities and authorities for design and development.

7.3.2 Design and Development Inputs

Design verification and validation plans are developed to ensure that the product design shall meet the objectives for performance and reliability that have been established resulting in a product that meets or exceeds defined customer needs.

7.3.3 Design and Development Outputs

The output of design and development shall be provided in a form that enables verification against the design and development input and shall be approved prior to release. Design and development outputs shall:

Meet the input requirements for design and development.

Provide appropriate information for purchasing, production, and for service provision.

Contain or reference product acceptance criteria.

Specify the characteristics of the product that are essential for its safe and proper use.

7.3.4 Design and Development Review

At suitable stages, systematic reviews of design and development shall be performed in accordance with planned arrangements to:

Evaluate the ability of the results of design and development to meet requirements, and identify any problems and purpose necessary actions.

Participants in such reviews shall include representatives of functions concerned with the design and development stage(s) being reviewed. Records of the reviews and any necessary actions shall be maintained.

7.3.5 Design and Development Verification

Verification shall be performed in accordance with planned arrangements to ensure that the design and development outputs have met the design and development input requirements. Records of the results of the verification and any necessary actions shall be maintained.

7.3.6 Design and Development Validation

Design and development validation shall be performed in accordance with planned arrangements to ensure that the resulting product is capable of meeting the requirements for the specified application or intended use, where known. Whenever practical, validation shall be completed prior to the delivery or implementation of the product. Records of the results of validation and any necessary actions shall be maintained.

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7.3.7 Control of Design and Development Changes

Changes to the design of a product or service shall be identified, documented, communicated, and controlled. Suppliers shall take appropriate measures to communicate all their proposed changes. The supplier shall evaluate the effect of any proposed changes to all constituent parts and completed products. The results of the review of changes and subsequent follow-up actions shall be documented.

7.4 Purchasing

7.4.1 Purchasing Process

As a primary supplier to Baker Hughes, the supplier is responsible for the quality of the products and services provided by their supply chain.

The requirements of this document should be extended to the supplier’s supply chain. A supplier shall have a documented system to properly select suppliers with the capability to meet this standard and other applicable Baker Hughes standards. Suppliers shall monitor their supply chain’s performance. Suppliers shall have a communication plan to notify their supply chain of the latest specifications and to verify the product on an ongoing basis.

7.4.2 Purchasing Information

Purchasing documents of Baker Hughes suppliers shall contain information describing the requirements for approval of the product and the qualification of the procedures, processes, specifications, equipment, and personnel necessary to produce the product.

7.4.3 Verification of Purchased Product

Verification of purchased product shall be conducted using a documented quality assessment methodology. The primary supplier to Baker Hughes is fully responsible for the quality of the products and services they provide, including that of the supplier’s supply chain.

7.5 Production and Service Provision

7.5.1 Control of Production and Service Provision

Process control is needed to ensure that the manufacturing process is performed under stable conditions. Documentation shall be provided to assure quality of products at initial production and is used to maintain ongoing acceptable quality levels. Examples of process control documents are process sheets, inspection and test instructions, test procedures, standard operating procedures, preventive maintenance instructions, and specific part control plans.

7.5.2 Validation of Processes for Production and Service Provision

The supplier shall validate any special processes for production and service where the resulting output cannot be verified by subsequent monitoring and measurement. This includes any processes where deficiencies may become apparent only after the product is in use or the service has been delivered. Examples of special processes are welding, heat treatment, coating, and Nondestructive Examination.

Validation shall demonstrate the ability of the processes to achieve planned results.

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The supplier shall define arrangements for validation that shall include the following, as applicable:

Qualification of processes.

Qualification of equipment and personnel.

Use of defined methodologies and procedures.

Requirements for records.

Re-validation

7.5.3 Identification and Traceability

Suppliers shall when specified by Baker Hughes establish and maintain documented procedures for product identification. Suppliers shall have product traceability to the extent required so that if a discrepancy is found, product can be contained and corrective action initiated. Identification is a process to identify product during all stages of production. Traceability allows for parts to be matched to a certain time frame, processes, and specific lots of material. Should a problem arise, Baker Hughes and the suppliers shall identify suspect parts.

Products furnished to Baker Hughes shall retain raw material heat/batch traceability. Heat/Batch identification removed during the machining process must be re-identified prior to shipping to Baker Hughes.

Additional identification and traceability may be communicated through the Baker Hughes Purchase Order or the Baker Hughes drawing.

7.5.4 Customer Property

The supplier shall exercise care with all Baker Hughes property, including intellectual property, while it is under the supplier’s control or being used by the supplier. The supplier shall identify, verify, protect, and maintain Baker Hughes property provided for use or incorporation into product. Occurrence of any Baker Hughes property that is lost, damaged, or otherwise found to be unsuitable for use shall be recorded and reported to Baker Hughes. Processing equipment, tooling, and measuring equipment/fixtures owned by Baker Hughes are covered under this section.

7.5.5 Preservation of Product

The supplier shall preserve conformity of product with customer requirements during internal processing and delivery to the intended destination. This shall include identification, handling, packaging, storage, and protection.

All material shall be protected from damage during shipment using adequate strapping, wrapping, or boxing. Material that is packaged in a manner that could pose a danger to receiving personnel is subject to return at no charge to Baker Hughes. All Baker Hughes packaging shall be returned to our dock with the shipment of the order. The only exception will be special made crates for oversized equipment.

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Corrosion Resistant Alloys (CRA) material shall be handled with special precautions. When handling CRA material, the following shall be required:

Forklift protective sleeves shall be used

CRA material being run on machines during the machining process shall be run with soft jaws or protected with shim material.

Steady rest rollers should not be steel.

CRA material being moved or lifted by means of an overhead crane shall be lifted by nylon straps. No metal chains or straps are allowed for moving or lifting CRA material.

CRA material being loaded for shipment or transportation shall not be chained down with metal to metal contact. Protection shall be placed between the chain and the CRA material or nylon straps are to be used.

CRA material placed on pallets or loaded on trucks for shipment shall be separated by some means to prevent metal to metal contact.

All parts shall be packaged in quantities of no more than 50 pieces provided there is no metal to metal contact, unless otherwise specified by drawing. Appropriate thread protection is required on all threads.

Electronic components shall be handled per the following requirements:

The material shall be packaged in the best commercial fashion for Electrostatic Discharge (ESD) protection.

All static shielding bags must be folded over at the open end and sealed shut with an appropriate ESD label for complete protection from electrostatic charges.

Use antistatic, or anti-dissipative foam to protect leads of materials.

Acceptable packages include, but is not limited to static dissipation bags, conductive foam, foil impregnated bags, and static dissipation tubes.

Do not place any documents of any kind within the static shielding bag. All printed wire assemblies shall be packaged and shipped in a cushioned static shielded bag and wrapped in cushioning bubble wrap. At no time will wire assemblies or PCB fabricated boards will be allowed to be in contact with each other during packaging or shipment.

Supplier shall use Moisture Sensitive Device (MSD) packaging and labeling for all moisture sensitive devices.

7.6 Control of Monitoring and Measuring Devices

7.6.1 Gaging Selection

In selecting measuring equipment, Baker Hughes is concerned with the capability of the measurement system to detect and indicate even small changes of the measured characteristic. The measuring equipment selected should have a discrimination of less than one-tenth of the total product tolerance being measured.

7.6.2 Calibration

A supplier shall establish and maintain documented procedures for the calibration, control, and maintenance of measuring, inspection, and test equipment used to assure that products and processes conform to applicable requirements. A supplier shall calibrate these devices at consistent periodic intervals against applicable standards with known traceability, and safeguard them against adjustments that would invalidate the calibration. Whenever a gage is found out of calibration and it has been used to verify parts for Baker Hughes, the supplier shall notify Baker Hughes of the suspect parts.

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For certain applications, Baker Hughes will send gages, test fixtures, and test machines to a supplier. The supplier shall ensure that the equipment being used is calibrated accordingly and in good condition. In the event that either of these conditions is not met, the equipment shall be returned to Baker Hughes for calibration or disposition.

7.6.3 Gage Repeatability and Reproducibility

When required by the PPAP process (Section 7.2.2.1), a gage repeatability and reproducibility (R&R) study shall be performed. A Gage R&R study measures the total repeatability and reproducibility of a gage system as a percentage of the total specification. The personnel who will be using the measuring instrument in production should always conduct the Gage R&R Study. Baker Hughes recommends that Gage R&R studies be performed whenever production personnel using the measuring instrument are changed. The method for performing the Gage R&R study is either the Range Method or the ANOVA method with three or more operators.

Gage R&R studies apply to variable gages. Attribute gages (such as ring or plug gages) do not require gage R&R studies unless otherwise specified by Baker Hughes. Attribute gages shall be checked periodically for accuracy. For non-dedicated gages such as coordinate measuring machines, a repeatability and reproducibility analysis shall be conducted utilizing specific part programs as identified by Baker Hughes.

Total variation is the ratio of the uncertainty of the repeatability and reproducibility of the gaging system to the tolerance range of the characteristic to be measured. If the total variation of the repeatability and reproducibility of the gage system (gage and operator) is less than 30 percent of the total tolerance range, the gaging system is acceptable for use. If the supplier uses a gage with a total variation greater than 30 percent, Baker Hughes shall be contacted for approval. A gage shall be proven repeatable and reproducible before it can be used in a capability study or is used to accept or reject parts. If the gage system fails, the supplier shall take corrective action to make the gage measurements repeatable and reproducible.

8 MEASUREMENT, ANALYSIS, AND IMPROVEMENT

8.1 General

Measurement, analysis, and improvement is the process of planning, defining, and using performance metrics in processes and products critical to Baker Hughes. These performance metrics are used to determine the current level of performance, drive continuous improvement activities, and monitor long-term performance levels.

Critical to the use of these performance metrics are statistical tools. These statistical tools are not only used on processes and products, but also measure customer satisfaction and supply chain performance.

A supplier shall define, plan, and implement measurements where processes affect the quality of products or services Baker Hughes receives.

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8.2 Monitoring and Measurement

8.2.1 Customer Satisfaction

Suppliers should include a customer satisfaction metric in the review of its quality management system. This metric should be included in the management review process. Trends in customer satisfaction performance should be reviewed and improvement activities developed around the data. Customer satisfaction improvement activities should utilize a structured process improvement technique.

8.2.2 Audits

The supplier should have a documented program to perform internal audits. The results of the audits should be documented and retained for at least five years. These audit records should be made available to Baker Hughes personnel for review upon request. A formal corrective action process that includes root cause determination should be used to correct deficiencies. Subsequent audits should include verification of corrective actions. The supplier should have internal auditors who are qualified to audit the requirements of this Baker Hughes Supplier Quality Manual. Trained personnel that are independent of the area being audited should perform the audits.

Baker Hughes reserves the right to conduct a quality system assessment, a process assessment, or a product assessment at the supplier’s facility. When performing the assessment, Baker Hughes would expect access to a supplier’s personnel, documentation, gaging, and test facilities. At the close of the assessment, Baker Hughes will share findings in a closing meeting and issue a report to the supplier summarizing the results. In addition, Baker Hughes also reserves the right to perform an assessment of sub-tier suppliers as necessary.

8.2.3 Monitoring and Measurement of Processes

A supplier should determine and implement measurements necessary to monitor processes critical to customer satisfaction. Mistake proofing activities should be the first method of control considered. If mistake proofing is not feasible, statistical techniques should be used to monitor the process.

8.2.4 Monitoring and Measurement of Product

Product measures and monitors are required to confirm the products are being produced properly and remain stable over time.

When required by the PPAP process, capability/variability studies shall be conducted on all critical characteristics plus other attributes that are identified by Baker Hughes and the supplier in the quality planning process.

When required by the PPAP process, suppliers shall verify products according to the control plan.

8.3 Control of Nonconforming Product

The supplier shall establish and maintain documented procedures to ensure that proven or suspected nonconforming products are prevented from unintended use or installation. This control shall provide for identification, documentation, evaluation, isolation, disposition of nonconforming products, and for notification to the departments concerned (internal and external).

When nonconforming product is corrected, it shall be subject to re-verification to demonstrate conformity to the requirements.

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Product with unidentified or suspect status shall be classified as nonconforming product.

Instructions for rework, including re-inspection requirements, shall be accessible and utilized by appropriate personnel.

Baker Hughes shall be informed immediately in the event that nonconforming product has been shipped.

8.3.1 Customer Waiver

In the instance that a supplier wants to ship a product not meeting the specified requirements, a deviation waiver shall be submitted to the respective Baker Hughes buyer for written approval. The supplier shall include the Baker Hughes written approval with the document package upon shipment.

8.4 Analysis of Data

Baker Hughes encourages suppliers to obtain appropriate data and apply statistical and problem solving methods to solve specific problems and to drive continuous improvement activities.

At a minimum, the supplier should analyze the following:

Internal failures (scrap, rework)

External failures (customer complaints, Baker Hughes Escapes)

Process or Product Quality Trends

Supplier Quality Performance (where applicable)

On time delivery

Summarized quality performance should be made available to all of the supplier’s employees through the use of visual boards or Quality Control Process Clinics (QCPCs).

8.5 Improvement

8.5.1 Continual Improvement

Evidence should demonstrate the use of data, past experience, and lessons learned to show continuous

improvement of the quality management system.

8.5.2 Corrective Action

Corrective Action eliminates the cause(s) of nonconformities in order to prevent recurrence. The supplier

should have a method to investigate resolution to nonconformities through the use of Corrective Actions.

8.5.3 Preventive Action

Preventive Action eliminates the cause(s) of potential nonconformities in order to prevent their occurrence. Preventive action focuses on building good quality into the product and processes to ensure that nonconforming products never reach the customer. The supplier should have a method for defining and implementing preventive action activities.

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