Supplier Scorecard Guidelines

Revision Date: 1 September 2004

Approved
(Signature on file)

John Saliture, Director Supplier Quality & Technical Performance Integrated Systems Sector

General Information As part of our efforts to more effectively rate supplier performance, Northrop Grumman Integrated Systems has refined the Supplier Scorecard Process. The Scorecard is used to support our commodity management and strategic sourcing objectives, and is also used as the main criteria for our Platinum Source Certification program. More importantly, we believe the Scorecards facilitate stronger communications between Northrop Grumman and our production supplier team members. Production suppliers who supply material that is ultimately delivered to our customer will receive a Scorecard. Manufacturers and distributors will receive a Scorecard. Special processors, service suppliers, and tooling suppliers will not receive a Scorecard. Supplier Scorecards are posted quarterly on the Northrop Grumman OASIS website located at https://oasis.northgrum.com/ under MyOASIS. Northrop Grumman Team Members Both Quality and Procurement review and have input into your Scorecard. Each supplier has been assigned a Supplier Quality and Technical Performance (SQ&TP) Process Manager. The Process Manager insures accuracy of the Quality Profile and inputs the Process Health/ Lean/ Six Sigma rating. Some suppliers receive purchase orders from multiple sites within the Integrated Systems sector and therefore have various buyers assigned to them. The buyers are responsible to review and correct the Delivery metrics prior to publication. The buyer who has the most open purchase order dollars has been identified as the lead buyer. The lead buyer is responsible for loading the Customer Satisfaction element of the Scorecard. Access to MyOASIS A user ID and password are required to access Supplier Scorecards within MyOASIS. If your company does not have a user ID and password, please contact one of these individuals for help: Suzette Sakazaki Internet Supplier Programs (310) 814-0597 suzette.sakazaki@ngc.com Lisa Terry Integrated Delivery Team (310) 331-1055 lisa.terry@ngc.com Lori New Supplier Quality Administration (310) 332-6689 lori.new@ngc.com

For MyOASIS login problems, please call Suzette Sakazaki.

Scorecard Elements Your Supplier Scorecard is made up of the following elements. These elements have assigned point values and when combined together comprise your Scorecard rating. Objective Elements Quality (ref: Figure 2) Late Delivery o Material received more than 7 days late based on the negotiated purchase order date within the last 6 months. Team Assessment Elements o Customer Satisfaction Responsiveness Responds quickly and thoroughly to requests, written and verbal o Always o Usually, requires an occasional follow up o Seldom, typically requires multiple follow up Able to Accommodate Changes to Requirements with Reasonable Cost and Schedule Impacts o Yes, typically minimal impact o Accommodating but needs follow up and extra effort to define impacts o Accommodates changes, but cost and schedule impacts seem excessive Oversight Oversight Required in the Areas of Quality, Technical and Delivery Requirements o No Oversight Required o Minimal Oversight Required o Regular Oversight Required o Excessive Oversight Required Management Displays Technical and Management Expertise Required to Identify and Implement Innovative Solutions to Issues o Proposed solutions are accurate, concise and insightful, addressing all issues at hand o Average, most solutions are acceptable. Some require further work. o Unable to consistently offer effective solutions o Process Health/ Lean & Six Sigma Process Health Mature Planning and Schedule Management Processes o Supplier has proven Production Control and Planning systems that provides sufficient methods to provide parts to contract reqts o Suppliers Production Control and Planning systems inconsistently provides sufficient methods to provide parts to contract reqts o Supplier has no Production Control system in place or is not used to monitor shop load reqts and the Planning system is non-existent or deficient

Lean & Six Sigma Embraces Continuous Process Improvement with Tools such as Lean and Six Sigma o Employees are Trained and Knowledgeable o Evidence of some Ongoing Activities or Events that Generate Cost Reductions and/or Lead Time Improvements o Aggressively Practiced Throughout the Enterprise. Continuous Improvement of Costs and Lead Times Feedback Any questions regarding your Scorecard should be directed to your Quality Process Manager or your Buyer.

Supplier Scorecard Format (Figure 1)

Quality Profile Rating (See Figure 2)

Actual 100 90 80 77 70 67 57 54 47 44 34 30 20 10 0 Points 50 45 40 39 35 34 29 27 24 22 17 15 10 5 0

Late Delivery
(last 6 months) (PO Date > 7 days) Points Actual 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% > 9% 30 27 24 21 18 15 12 9 6 3 0

Customer Satisfaction
Points 10 9 8 7 6 5 4 3 2 1 0

Process Health/Lean/ Six Sigma

Points 10 9 8 7 6 5 4 3 2 1 0

Supplier Scorecard Rating Blue 91-100 Green 75-90 Yellow 51-74 Red 0-50

Scorecard Formula (Quality Score) + (Late Delivery Score) + (Customer Satisfaction score) + (Process Health Score) = Overall Score

Quality Profile Rating (Figure 2)

Hardware Acceptance Rating (70% wt)

100 99 97 - 98 0 - 96 (70) (47) (24) (0)

QADRRs (30% wt)

0 1 2 3+ (30) (20) (10) (0)

Supplier Quality Profile

100 = 67 to 99 = 35 to 66 = < 35 =

Blue Green Yellow Red

Hardware Acceptance Rating: 1 (Quantity of pieces rejected divided by the quantity of pieces received) x 100 based on previous 12 months of supplier history. QADRRs: Three (3) months of closed QADRRs and all QADRRs with open Corrective Action. Quality System disapproval, appearing in a GIDEP alert or advisory, or a disclosure of nonconforming hardware that has been delivered to a Northrop Grumman customer within the last 12 months will result in an automatic RED Quality Profile rating of a one (1).

Supplier Scorecard

3rd Qtr 2004 Supplier Number: Supplier Name: Mfg./Dist. Address:

123456 XYZ Company 123 South St. Orange, NJ 00000

Buyer Name
ACS: AEW: AGS: Parker, G Quail, P Thomas, C

Process Manager
Williams, B

Platinum Source
Yes

IS Programs
E-2C BQM-34 JSTARS

Scorecard Ratings
Available Pts. Earned Pts.

Quality
Notes: IS - Integrated Systems ACS - Air Combat Systems AEW/EWS - Airborne Early Warning/ Electronic Warfare Systems AGS/ BMS - Airborne Ground Surveillance/ Battle Management Systems

50

27

Late Delivery Customer Satisfaction Process Health/ Lean Total

30

30
10
10
77

10
10

Blue = 91 100; Green = 75 90; Yellow = 51 74; Red = 0 - 50