PQA Return to Green (RTG) Strategy

1. PQA Return to Green (RTG) Strategy 17 July 2008

2. Objectives At the conclusion of the training, the participant should: Understand how the Return-To-Green (RTG) process compliments the PQA strategy for managing Suppliers Understand the responsibilities of PQA and Supplier roles in managing the RTG plan from Red back to Green Understand PQA management’s expectations for engaging a Supplier

3. PQA Transition to Prevention PQA Strategy 2008 • Full delegation to supply base – end item final acceptance by Lockheed • Martin by exception • Level of oversight will be determined based on data and the supplier’s • quality performance as measured by PQA’s new rating system • More intense and focused oversight activities implemented at • suppliers with performance issues or identified as being at a high • probability of developing performance issues based on early warning • measure and on-site PQA Supplier Quality Engineer (SQE) knowledge • Requires a formalized plan be developed for the supplier engagement • Plan must include measurable milestones • Implementation of Oregon Productivity Matrix (OPM) to measure • progress and sustainment of improvement activities and to provide early • warning signals of potential process and performance degradation History proves when a joint focused effort is implemented to address performance issues, sustained improved performance can be realized

4. PQA Strategy Change – 2008 Forward • Quality Program • Integration • Performance • FAI Engagement • Return to Green • Structured • Surveillance Special Process Sources PERFORM PROCESS/QUALITY MANAGEMENT SYSTEM OVERSIGHT Supplier Approval & Control The following SSP Matrices must be performed annually: Contract ReviewControl of PurchasesFODEnd Item Acceptance • Quality System Approval • 3’rd Party • Registered • Partner Approval • LM Site Survey • - 3 year intervals for QMS • re-assessment for • manufacturers • - 2 year intervals for QMS • re-assessment for • processors • Supplier rating • Quality Excellence Board Suppliers Remainder of SSP Matrices annually Exempt – not delegated EIA If additional matrices are required the supplier should be moved to Med or High risk Remainder of SSP Matrices over 2 year period Baseline Assessments Effective Corrective Action LM Aero PQA and Programs REJECT ACCEPT ACCEPT To Stock Or Customer End Item Acceptance OUTPUT INPUT First Article Planning & Engagement Supplier Production Process Process Approvals Full process checklist performed for each process approval level / specification and every two years thereafter Surveillance performed on at least one area within each discipline at the following frequency Surveillance once every 90 days Critical / High Volume Processors Non-Critical / Low Volume Processors Surveillance once every 180 days Performance Feedback & Assessment

5. Purpose of RTG Process PQA has shifted its focus from managing all Suppliers equally, to identifying those suppliers creating the greatest quality impact on LM Aero operations and focusing valuable PQA resources to manage them back to health. It is the Supplier’s responsibility to get back to Green. PQA’s role is to define the performanceissueand to monitor thesupplier’s progress.

6. RTG Process Map Yes RTG not required No Revise RTG plan and status ? Approved by PQA, Program and MM Yes Save RTG plan to OAT HUD and submit for RTG review Define performance issues and jointly develop RTG items with Suppliers Monitor seller progress on actions Yes No No Exit criteria met? No Yes Entrance criteria met? Reduce oversight level to “Watch List”

7. Supplier Defines Action Items All Action Items need to be clear, concise and SMART. Specific Measurable (objective evidence) Agreed to (between the supplier and SQE) Realistic Time bound- Timeframes and deadlines are stated and specific. Clear statement of expectations: “What needs to be improved?” Any/All action items shall have assigned owner(s) and estimated completion date.

8. Communicate with supplier As the RTG plan is created, evaluated and revised with new status, the SQE is expected to communicate with the supplier In addition to the RTG action items, the SQE should communicate and collaborate with the supplier on all specific findings, corrective actions, supporting tasks, etc. The collaborative and coordinated efforts of the SQE and supplier are believed to provide the greatest value in the RTG process.

9. Monitor supplier Progress/Actions As the supplier meets its action items and deliverables, the SQE shall monitor the suppliers progress at the minimum monthly to determine if the supplier has met the exit criteria. If the action item is not effective and does not meet the original intent, SQE needs to re-evaluate the suppliers RTG plan and update accordingly.

10. Revise RTG Plan & Status The RTG action items shall be revised to reflect the latest status. The minimum requirement is that the SQE shall update the RTG plan monthly. SQE’s are encouraged to update the plan more frequently. SQE’s ask and verify if the supplier: On track to completion of action items ? Needs to revise their action items or completion date?

11. Exit Criteria Met? When the supplier is complete in every action item, the SQE shall present the supplier’s case to the PQA chain of command to request the supplier to be returned to Green status. If supplier is Red in any action item, then it shall remain under RTG management oversight level. *Note: The RTG exit criteria are intentionally stringent. Once a supplier dips into Red, it must achieve a higher level of performance to get out of the RTG process. The expected result of the RTG process is significant, sustained improvement in supplier performance.

12. RTG Gantt Chart Example- Top Level Export to excel High Quality Machine Shop Clickable area to view Detailed Gantt Chart High Quality Machine Shop

13. RTG Gantt Chart Example- Second Level This is the group of actions. All actions under the group must be scheduled to be complete on or before the group’s end date. High Quality Machine shop Hyperlinked items that go to the view action item screen. Milestones are represented by a diamond. Action items with dependencies forming a critical path.