SUPPLIER QUALITY MANUAL

QLY-0-002 EFFECTIVE DATE: 1 January 2011 PUBLISHED DATE: 31 December 2010

Copyright 2011 Carrier Corporation. All rights reserved.

Table of Contents

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15.

CARRIER QUALITY POLICY PURPOSE SCOPE EXPECTATIONS SUPPLIER QUALIFICATION REQUIREMENTS PRODUCTION PART AND PROCESS QUALIFICATION REQUIREMENTS NON-CONFORMING PRODUCT CHANGE MANAGEMENT TRACEABILITY & QUALITY RECORDS SUPPLIER GOLD ENVIRONMENT, HEALTH & SAFETY DEFINITIONS AND ABBREVIATIONS REFERENCE MATERIALS APPENDICES ATTACHMENTS: SAMPLE FORMS FOR GUIDANCE

1. QUALITY POLICY
Carrier Corporation is committed to being the world-class provider of quality heating ventilating, air conditioning and refrigeration equipment and services at competitive prices. Carrier provides internal and external customers with excellence in products and services through the use of ACE and other continuous improvement tools that focus on maximizing innovation and minimizing waste and variability. Suppliers play an integral role in ensuring the quality and cost effectiveness of Carrier products and shall comply with all requirements defined in this manual or communicated otherwise.

2. PURPOSE
This manual defines the initial and on-going requirements for supplier quality systems and performance.

3. SCOPE
This Supplier Quality Manual applies to all suppliers that provide production material or product related services to Carrier facilities. This includes internal suppliers within United Technologies and Carrier (i.e. Carrier owned suppliers), supplier designed products that are incorporated into a Carrier assembly/product, and finished goods branded by Carrier. Individual Carrier plants may have additional plant-specific requirements and will establish specific processes for carrying out these requirements. If a conflict exists between the requirements presented in this manual and individual plant requirements, the more stringent requirements will apply.

4. EXPECTATIONS 4.1. Purchased Products and Product Related Services Shall Comply with Established Specifications and Requirements:
Drawings that apply to the specific product or service. Engineering specifications and/or reliability requirements that apply to the commodity or specific part. Material specifications that apply to the product or service Industry standards not explicitly called out in specifications Situations requiring review or intervention shall follow the documented Production Part Approval Process (PPAP) Any approved changes or deviations. Established Commercial Agreements Note: Every effort will be made to review all applicable requirements during Carrier-Supplier design review meetings.

4.2. Suppliers are required to:

1. Demonstrate compliance with: a. Design, performance and reliability requirements b. Process controls and capability requirements

c. 2. 3.

All documented requirements

Explicitly review and know all requirements related to the product or service provided. Have resources available to participate in product quality planning as requested Have a change control system that reacts to changes in a timely and accurate fashion. In all cases, acquire written approval prior to implementing any change that may impact form, fit, function, interchangeability or reliability. This shall include manufacturing processes, quality standards for acceptance, and testing requirements. Have a documented quality system in place which addresses all stages of product / process development, manufacturing and delivery. Suppliers must agree to on-site assessments as requested. Maintain process, product and service documentation. Deploy to their supply chain, expectations and controls similar to those presented in this document Have the expertise and resources to perform effective root cause analysis and to take corrective and preventive action. Provide notification of any and all situations that may negatively impact the supplied products quality, reliability, and safety; design and/or production; or any other matter described in this manual. Be accountable for the impact of poor quality on Carrier and its customers.

4. 5. 6. 7. 8. 9.

10. Notify Carrier of any condition or change that has impact on UTCs environmental commitments or regulatory requirements. 11. Fully comply with the Carrier Supplier Code of Ethics. Visit Carrier Supplier Code of Ethics page at Carrier.com 12. Have a self audit system which ensures compliance of all the above.

4.3 Communications
In general the following contact points should be used:

Primary Contact The Carrier buyer is the primary contact for all matters regarding Carrier supply chain. Product/Part Quality For all issues regarding product quality, contact Supplier Quality
Assurance (SQA) personnel at the using Carrier site

Ethics concerns UTC maintains a contact site for suppliers who have questions or issues related to the
Code of Ethics. The following link is accessible for suppliers to make direct contact with an independent ombudsman to assist in resolution of concerns. Visit: http://www.utc.com/Governance/Ombudsman+-+DIALOG

5. SUPPLIER QUALIFICATION REQUIREMENTS

Supplier Qualification ensures that the supplier has basic systems in place to produce parts of consistent quality, be capable of reducing cost over time and can perform the required duties of a supplier.

5.1. Quality System

All suppliers shall maintain an effective documented quality system that communicates, identifies, coordinates, and controls all key activities necessary to design, develop, produce and deliver a quality product. or service.

Suppliers shall be certified/registered to one of the following international quality management standards by a recognized independent, certified 3rd party registrar: ISO 9001 ISO/TS16949 SAE AS9100 Quality Management Systems Requirements Quality Management Systems Automotive Requirements Quality Management Systems Aerospace Requirements

All suppliers to Carrier covered under the scope of this document must be third party registered to one of the above quality standards by December 31, 2012. Any exceptions to this must be approved by Carriers V.P. ACE & Quality and the Director of Supplier Quality & Development. Note: Suppliers must notify Carrier immediately if their third party registration expires or is revoked. Carrier reserves the right to: Verify Supplier quality systems with an on-site audit Verify a suppliers compliance to an applicable quality standard Refuse acceptance of a third-party registration Conduct a Q+ audit in lieu of, and/or in addition to, third party certification Disqualify suppliers based on substandard performance. In such cases, full requalification will be required prior to resuming business.

5.2. Carrier Quality System Assessment

Q+ is the quality systems assessment/survey used by Carrier. It consists of a self assessment and an on-site audit conducted by Carrier. This will be used by Carrier only in situations referenced in section 5.1. Both the Q+ Self-Assessment and Survey criteria are intended to assess a suppliers quality system, process control capability, as well as assist the supplier to identify strengths, weaknesses, and/or areas requiring improvement. Note: for more details refer to Supplier Q+ Survey and Audit Kit located on Supplier Tools page at Carrier.com

Q+ Self-Assessment
To determine the suppliers readiness for a site survey the self-assessment is completed by suppliers independently and evaluated by Carrier. The criteria generally follows ISO 9000 adding specific requirements to ensure effective process control and quality results. Suppliers completing self-assessments shall submit action plans to improve any section not meeting minimum requirements. Carrier reserves the right to perform an on-site Q+ audit based on the results of self assessments.

Q+ Survey
This on-site survey consists of various quality system and process control categories and is intended to provide a fair appraisal of the suppliers quality system, process controls, and commitment to quality at the time of the survey. From time to time Carrier will revise this survey to incorporate new quality system requirements.

6. PRODUCTION PART & PROCESS QUALIFICATION REQUIREMENTS

Part Qualification ensures that the part is capable of meeting our technical/performance needs. Process Qualification ensures that the specific manufacturing processes in place will produce a part of consistent and acceptable quality. All production part sample submissions shall be in accordance with Production Part Approval Process (PPAP) PPAP submission should be made as far in advance of production start-up as possible, working to a date agreed to with the Carrier using factory. Suppliers shall not ship production parts until a Full or Interim approval is received from Carrier via a signed Parts Warrant (PSW) Attachment 1. In the case where Full approval is not granted Carrier will advise the supplier of the areas of concern. The supplier must make corrections and resubmit for disposition. . At Carriers discretion, any or all of the PPAP items may be reviewed on-site at the suppliers facility as part of a process qualification audit PPAP Warrant Validity Unless otherwise specified on the PSW, approval is valid for the life of the contract or until revoked by Carrier. Additionally, should one of the following conditions occur, the supplier must notify Carrier prior to first production shipment: Correction of a discrepancy on a previously shipped part. Product modified by an engineering change to design records, specifications, or material on an approved Product Change Authorization (PCA). Use of another optional process or material than was used in a previously approved part. Production from new or modified tools (except perishable tools), dies, molds, patterns, including additional or replacement tooling. Production following refurbishment or rearrangement of existing tooling or equipment Production following any change in process or method of manufacture to include changes in lubricants, mold release agents, or other process solutions Production from tooling and equipment transferred to a different plant location or from an additional plant location Change of source for key subcontracted parts, materials or services (for example, heat treating, Plating) Product re-released after the tooling has been inactive for volume production for twelve (12) months or more. Following a customer request to suspend shipment due to a supplier quality concern Any other activity that will result in a change to the Control Plan (CP) The supplier will utilize a Supplier Deviation Request (SDR), Attachment 8, to notify Carrier should any of these events occur. The SDR will be reviewed by Carrier; a full or partial PPAP resubmission may be required. Should resubmission be required, a new PACS will be issued to the supplier. Full or Interim approval, in writing, must be granted prior to first production shipment.

6.1 Part Approval Check sheet

Part Approval Check Sheet (PACS) The Part Approval Check sheet (PACS) Attachment 7 is a tool used to communicate all part qualification requirements relevant to a specific part or part family. The requirements for PACS must be met using parts produced by the actual production processes under the production environment. Carrier will provide a PACS for each part and/or family of parts, to be produced. The supplier shall: 1. Review the PACS. Questions/disagreements should be addressed prior to acceptance. 2. Sign the PACS. Signing indicates agreement with requirements 3. Return the PACS to Carrier, within 10 business days 4. Contact Carrier as requirements are completed and/or to address any difficulties in successfully meeting the requirements immediately. Carrier will lead a review of the PACS requirements. This joint review includes an examination of drawings and specifications, applicable industry standards, key product or process characteristics, inspection / test requirements, material specifications / certifications, application conditions, packaging requirements, etc.

6.2. Sample Parts

The supplier must: 1. 2. Provide the number of sample parts as specified on the PACS. Take or make samples from actual production tooling and/or processes unless otherwise approved in writing. Where multiple production molds, cavities, dies, machines, etc., are utilized, samples are required from each. Complete the dimensional and performance test reports as required, and provide it with the sample parts.

3.

6.3. Dimensional Analysis

It is preferred that data be submitted electronically. Actual variable data must be provided in terms of measurements, not attribute data (pass/fail; go/no go; etc.). All results must be traceable to the specific samples from which obtained.

6.4. Material, Performance, and Reliability Test Results

The supplier, or a qualified independent third party, must supply specific material, performance and/ or durability test results. Actual results must be compared with agreed upon specifications. For certain parts Carrier may require third party testing.

6.5 Appearance Approval Report (AAR)

Carrier may require an Appearance Approval Report (AAR) Attachment 5 to be submitted. An AAR is typically requested for an item which is exposed to view on the exterior of a finished unit. If an AAR is specified on the PACS, contact the using Carrier plant Quality team to ensure the requirements are clearly understood and agreed upon.

6.6. Key Characteristics (KCs)

A key characteristic is any feature of a material, process, part, assembly, or test, whose variation

within or outside the specified requirement has a significant influence on product fit, form, function or other expected deliverable. Key characteristics shall be certified via Process Certification or other similar, approved methodologies as defined in Appendix 1 Process Certification. Carrier will define the key characteristics which the supplier needs to certify. Key Characteristics will be communicated through various methods, including: Notations and/or symbols documented on Carrier engineering drawings and specifications Part Approval Check Sheets (PACS) Communication of known process issues, production problems or field problems. The various symbols used on Carrier documents to signify key characteristics are shown below:

Additionally, some older drawing may contain other symbols to denote key characteristics. Refer to Appendix 2. A supplier may also identify additional key characteristics beyond those defined by Carrier. This is required for suppliers with design responsibility. Any additional supplier-identified key characteristics will be documented on the PACS and must meet the process certification requirements or other similar, approved methodologies as defined in Appendix 1 Process Certification. Process Capability must be established and demonstrated with results being submitted to Carrier as part of the PPAP. All gages used to evaluate and control Key Characteristics must demonstrate repeatability and reproducibility. Gage capability is accomplished through the supplier completion of R&R studies. Refer to section 6.9

6.7 Short Term (Preliminary) Process Studies

For all key characteristics, an acceptable level of process capability or performance must be determined prior to production. Initial process studies, often referred to as short-term or preliminary studies, refer to assessments of the manufacturing process based on data collected over a short period of time, usually less than 30 days or from one operating run. The collection of this data should consider the type of process and production level. Data should be analyzed with control charts. Based on the capability study analysis and method for sampling, a minimum value of 1.33 Cpk is required. Any exception must be authorized by Carrier in writing. If acceptable process capability/performance cannot be obtained prior to first production, a corrective action plan and revised Control Plan must be developed by the supplier and approved by Carrier. Acceptable interim controls require 100% inspection or other means agreed to with the Carrier using factory. Such controls must remain in place until capability can be demonstrated to Carrier. This short-term capability requirement may be replaced by long-term capability results from the same or similar processes, with Carriers concurrence. Where a product or feature does not lend itself to discrete measurements (Attributes for example, printed circuit boards tested as Go/No Go) the supplier shall propose, for Carrier approval, a method for evaluating process capability.

6.8 Long-Term Process Capability

Long-term process capability studies consist of data collected over a longer period of time or multiple

production runs. The studies reflect all possible types of normal variation found in the manufacturing process, such as material, method, personnel, fixtures, equipment, tool wear, and environment. The period of time should be long enough to include all expected sources of variation. Process capability is defined when the control charts for this interval show the process to be in statistical control. For key characteristics, Carrier requires a minimum of 1.33 Cpk. If the criteria above are not met, suppliers shall implement 100% inspection or other means agreed to with the Carrier using factory. Such controls must remain in place until capability can be demonstrated to Carrier. Note: Since 100% inspection is not cost effective and is often ineffective at screening out nonconforming products, it should be considered an emergency measure, rather than a permanent feature of the process. The overriding quality focus should be on prevention, not detection.

6.9 Measurement Systems Analysis (MSA) and Gage Repeatability and Reproducibility (GR&R)
Gage repeatability and reproducibility (GR&R) studies measure the total repeatability and reproducibility of a gage system as a percentage of the total specification. Carrier requires gage repeatability and reproducibility analysis for all variable gages that are used to monitor key product or process characteristics. Carrier recommends that gage R&R studies be performed at least with each measuring instrument calibration and whenever production personnel using the measuring instrument are changed. The preferred method for performing the gage R&R study on variable gages is the average and range method. The allowable variation of the repeatability and reproducibility of the measurement system (gage and operator) is identified on the PACS. If the supplier uses a gage outside the PACS allowable maximum Carrier shall be contacted for approval, generally, 20% is the maximum allowable. Attribute gages that are used to monitor key product or process characteristics must also undergo gage studies. The method used will be agreed upon between the supplier and Carrier using plant Quality. If the gage system fails, the supplier shall take corrective action to make the gage measurements repeatable and reproducible. 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.

6.10 Process Flow Diagram

The process flow diagram is a schematic representation of the current or proposed process flow and is used to analyze sources of variations of machines, materials, methods, and manpower emphasizing the impact of sources of variation on the process. The flow diagram helps to analyze the total process rather than individual steps in the process. The supplier shall have a process flow diagram that clearly describes the production process steps and sequence beginning at material receipt through packaging and shipping Where process steps include operations performed by outside sources, these steps need to be identified within the diagram. A single process flow diagram may apply to a group or family of products that are produced by the same processes in the same sequence.

6.11 Failure Mode and Effects Analysis (FMEA)

The Failure Mode and Effects Analysis (FMEA) is a preventive analytical technique to methodically study the cause and effects of potential failures in a product or a process. The product or process is examined for all the ways in which a failure can occur. For each potential failure, an assessment is made of its effect on the system and its seriousness, and a review is made of the action being taken (or planned) to minimize the probability of failure or to minimize the effects of the failure. The FMEA is a living document and shall be revised as changes are made to the product or process. When specified on the PACS, suppliers are required to develop a Design (product) FMEA and/or a Process FMEA and submit to Carrier. Suppliers may be invited to participate in the preparation of higher level Design FMEA through participation in a product development team. Suitable alternative risk analysis means may be used either in place of, or in addition to the FMEA as approved by Carrier.

6.12 Control Plan (CP)

The Control Plan (CP) is a detailed step-by-step listing by which the part, component, etc., is to be manufactured, inspected, and tested. In effect, the plan describes the actions required at each phase of the process including receiving, in-process, out-going, and periodic requirements to assure that all process outputs will be in a state of control. During regular production runs, the CP provides the process monitoring and control methods that will be used to control characteristics. The CP is to be maintained and used throughout the product life cycle. Early in the product life cycle its primary purpose is to document and communicate the initial plan for process control. Subsequently, it guides manufacturing how to control the process and ensure product quality. The CP is a living document, reflecting the current methods of controlling the process, and shall be updated as control methods are evaluated and improved. Suppliers are required to develop a CP and submit to Carrier for approval. The CP is identified by part number/part family and revision level and shall meet the requirements as outline in Attachment 6: The supplier shall: Monitor actual processing of the part. Compare processing to the CP in all aspects. Report to Carrier any variances/deviations from the plan.

6.13 Process Audit

Carrier may require a process qualification audit at the suppliers manufacturing facility. This audit focuses on the specific process quality controls that the supplier has in place for the products being manufactured for Carrier, as well as part/commodity specific process requirements. Additionally, Carrier reserves the right to conduct such an audit at sub-tier suppliers Such audits shall not relieve the suppliers responsibility to produce and deliver defect-free parts.

6.14 Certifications, Certificates, and Code requirements

Drawings, contracts, or other specifications may require additional quality system or part certification requirements (e.g., American Society of Mechanical Engineers (ASME) certification for manufacture of pressure vessels, Underwriters Laboratories (UL) / Canadian Standards Association (CSA certification), European Union (CE mark), etc.). It is the suppliers responsibility to ensure these requirements are fulfilled and maintained. If requested, evidence of compliance to these requirements must be submitted as part of the PPAP and/or individual shipments Supplier must notify Carrier immediately if their status to one of these requirements changes.

10

6.15 Additional Requirements

Carrier may impose other requirements as necessary. These or other additional requirements will be identified early in the sourcing process.

7. NON-CONFORMING PRODUCT
Under no circumstances shall a supplier ship non-conforming product without first receiving written authorization from Carrier. The following sections identify and explain key quality requirements that are applicable for non-conforming product.

7.1. Warranty
Definitions of warranty obligations of suppliers are provided in the Commercial Contract in force between the supplier and Carrier.

7.2. Supplier Identified Non-conforming Product

The supplier may find products, through their quality control processes or from reports by other customers, which were produced outside of specifications. The supplier is expected to immediately: Segregate these products and determine if this error may have occurred, undetected, in earlier production. In the following situations notify Carrier utilizing the Supplier Deviation Request (SDR): -If the non-conformance affects form, fit or function of the part. -If there is likelihood that non-conforming product had escaped the factory. -If the non-conforming product will affect deliveries to Carrier. -In all cases where a report of non-conforming product is received from a customer, where Carrier is using a similar part. The supplier is responsible for the segregation and quarantine of nonconforming material. Non Conforming materials shall not be shipped unless until a deviation is granted. Discrepant material received at Carrier without an approved SDR will be rejected and returned to the supplier with all extra handling and shipping costs incurred by the supplier. No discrepant material will be processed until a deviation is approved by all required personnel.

7.3. Carrier Identified Non-conforming Product

The following paragraphs describe required activities when non-conforming material is discovered by Carrier.

Non-Conformances Found Prior to Release to Customer

In the event supplier-responsible non-conformances are discovered by Carrier prior to release to the customer, the parts/components in question will be identified and segregated to preclude further use. A determination of the next steps in the process will be based on several criteria, including but not limited to, the defects criticality, quantity, cost, and other factors. Based on this evaluation, Carrier will determine whether: Defects are accumulated and returned to suppliers in accordance with plant procedures.

11

Supplier sorts defects at Carrier. Supplier reworks defects at Carrier. Supplier contracts 3rd. party to complete inspections at Carrier or at a local off-site location. Contingent on contract specifics, Carrier reworks defect and charges supplier for rework costs. In addition to reimbursement for the cost of the non-conforming parts, suppliers are expected to reimburse Carrier for the costs associated with processing the non-conformances. This will typically be handled through a pre-negotiated standard chargeback to cover the costs associated with processing defective materials. If the actual cost from a defect exceeds the standard charge, the actual cost incurred will be charged back. Additionally, suppliers whose 6 -month defect rate (as measured by Carrier) exceeds a pre-defined rate may be placed on probation and required to submit a formal improvement plan. If improvement does not occur within the subsequent three months, third-party source inspection may be imposed at the suppliers expense. This requires product to be inspected at the independent firewall location, and approved prior to shipment to Carrier.

Field Failure
The warranty obligations of suppliers for non-conforming parts discovered in the field, as well as their disposition, shall be specified in the commercial contract in force between the supplier and Carrier. If a critical field failure issue has been identified, a determination of the next steps in the process will be made based on several criteria including the failures criticality, quantity, cost, and other factors. Based on this evaluation Carrier may require: Defective parts to be repaired/replaced in the field by Carrier. Defective parts be repaired/replaced in the field by supplier. Product be recalled, and repaired/replaced, as determined. In all cases listed above, suppliers are expected to reimburse Carrier for all costs associated with correcting field failures, and for any other costs imposed on Carrier because of such failures.

7.4 Non-Conformance / Corrective Action Reports (CAR)

The need for a formal CAR will be evaluated in terms of potential impact upon production costs, quality costs, performance, reliability, safety, and customer satisfaction. Carrier requests suppliers to submit a formal written corrective action plan to address specific non-conformances identified at either a plant or in the field using the Global 8D Corrective Action Report form Attachment 9. Carrier uses an electronic data tool to communicate corrective actions. To access reference materials visit Supplier Tools page at Carrier.com Supplier response to corrective action requests must include root cause determination, containment action (short-term corrective action), and permanent (long-term) corrective action. As part of the corrective action, a defined implementation plan with implementation dates must be included, as well as disposition of suspect material. The information concerning the containment action (steps D1-D3 of the 8D form) shall be provided in writing to Carrier within 24 hours. If Carrier disagrees with the containment action, the supplier must respond (with a revised containment action) within 24 hours. Failure Analysis leading to the root cause determination shall be done within a reasonable time period agreed to with the Carrier issuing site. The 8D will not be considered complete until proposed corrective and preventive action has been approved by Carrier and its effectiveness verified.

8. CHANGE MANAGEMENT
After product approval, suppliers must not make any changes without prior written notification and approval from Carrier. Suppliers must also flow this requirement across their entire supply chain.

12

Changes are defined as alteration in the product design, production specification, purchased parts, material or services, manufacturing location, method of manufacture, testing, storage, packaging preservation or delivery. For a permanent product change, Carrier reserves the right to requalify the product and will issue an appropriate PACS. Supplier Deviation Request (SDR) forms are used to communicate all requests for deviation and process changes both temporary and permanent.

8.1. Supplier Deviation Request (SDR)

Prior to shipping any non-conforming product or product produced by a process different than what was in place at the time of the PPAP, suppliers must submit a written SDR Attachment 8 to their Carrier Purchasing contact (Buyer) for approval. SDR required information: 1. 2. 3. 4. 5. The current process/product The proposed deviations/changes The reason for deviations/non-conformances with supporting data. State whether the change in question is permanent or temporary. If temporary, these requests shall identify batch or time duration. Mitigation plans to address any risks due to the process change/nonconforming product

Discrepant material received at Carrier without an approved SDR will be rejected and returned to the supplier at the suppliers expense with all additional handling and shipping costs incurred by the supplier. Once approved, all material shipped to Carrier must be accompanied by a copy of the approved SDR. Carrier reserves the right to request a written corrective action plan via a Corrective Action Report (CAR). If approval is not granted, the reason for disapproval will be summarized on the request form and returned to the supplier. SDRs shall not be used to cover up or replace the lack of proper quality systems or controls at the supplier location. Carrier views excessive use of SDRs for non-conforming material as an abuse and an indicator that a supplier may have a serious breakdown in their quality system.

8.2. Product Deviation / Change

In certain instances, it may be necessary for the supplier to deviate from Carrier requirements and specifications. When changes do not affect fit, form or function, an SDR may be submitted for the following: Non-conforming material found at the suppliers facility. To request substitution of material. For a permanent product change, Carrier reserves the right to requalify the product and will issue an appropriate PACS.

8.3. Process Deviation / Change

Process deviations are required for any changes to process different than what was in place at the time of the PPAP approval.

13

Carrier expects suppliers to constantly strive to improve quality and reduce process variation through system improvements. To achieve these goals, suppliers may require process deviations, either temporary or permanent due to design changes or other unforeseen circumstances (such as changes in equipment/ tooling, changes in critical sub-suppliers, etc.). For a permanent process change, Carrier reserves the right to requalify the product and will issue an appropriate Part Approval Check Sheet (PACS). Carrier may require the supplier to maintain a safety stock of product produced under the original processes for a period while deliberate changes are proven out. This safety stock can normally be used later for production. Work transitions from one manufacturing plant to another require early notification to Carrier purchasing through the submission of an SDR. Suppliers making such transitions shall manage these moves in close concurrence with Carrier expectations. Expectations can include, but are not limited to, maintaining a safety stock, pre and post move capability assessment and requalification of the product from the receiving facility

9. TRACEABILITY & QUALITY RECORDS

Traceability: Items requiring traceability will be identified during the development phase of a project. Where Traceability is required, Carrier will work with suppliers to develop an acceptable system. The requirement for traceability will be communicated to suppliers through specification and drawings. Purchase Orders will incorporate the requirement. Records: Suppliers certification, process, test and/or inspection data shall be provided to Carrier upon request, and shall be retained by the supplier for a ten (10) year period after delivery of the relevant products. This requirement does not supersede any governmental or regulatory requirements for records retention. Any exceptions should be brought to the attention of Carrier in writing. Certain data may be required to be included with product shipment. This will be agreed to with the using Carrier factory quality department.

10. SUPPLIER GOLD PROGRAM

UTCs Supplier Gold Program is a method to differentiate suppliers currently operating with high delivery and quality performance levels through the utilization of lean processes. It is a means of recognition for significant continuous improvement efforts and achievements of our suppliers who, through existing continuous improvement programs have achieved world-class levels of performance. The program tracks four levels of performance. All key suppliers in the program are expected to be at the Performing or Gold levels. Suppliers who are not operating at least to the Performing level shall prepare an improvement plan for review with Carrier.

Quality (PPM) Gold 0* & 0 Escapes Performing <500 Progressing <1,500 Underperforming 1,500

Delivery (OTD) 100%* >90% >85% 85%

Customer Satisfaction 6.0

Lean 350

*Meet metrics or Best in Class, defined as supplier with processes and performance that is superior for similar activities within an industry, Alternate criteria for Performing may be established for low-volume suppliers or specific commodities.

14

Additional information may be obtained on the Supplier Development page at UTC.com

11. ENVIRONMENT, HEALTH & SAFETY

Environment, Health & Safety is of prime importance to Carrier. It is expected that suppliers will comply with the UTC EH&S expectations listed below: Provide safe working conditions for all employees, customers and contractors. Adhere to all applicable National, Regional, State and Local laws and regulations governing Environment, Health and Safety. Operate in a manner that minimizes the impact to the environment. Limit the use of natural resources and promote sustainable natural resource practices. Extend and communicate these EH&S expectations to suppliers.

Additional information may be obtained on the Supplier Development page at UTC.com

12. DEFINITIONS AND ABBREVIATIONS

8D A problem solving process developed by Ford Motor Company. The name 8D originates from the fact there are eight disciplines associated with this problem solving format. Carrier has adopted the 8D format to be used for both internal and external problem solving activities. ACE Achieving Competitive Excellence: is the operating system for UTC and Carrier. ACE is a customer-focused, process-based methodology for achieving higher levels of customer satisfaction and business performance. Capability The maximum amount of variation inherent in a manufacturing process. Improving process capability involves taking steps to limit the amount of variation to defined acceptable limits and thus bring the process into control. Capability Index The comparison of available tolerance to the portion of the tolerance consumed by a process in a state of statistical control. Cpk The capability index, which accounts for process centering and is defined as the minimum of CP Upper or CP Lower. It relates the scaled distance between the process mean and the closest specification limit to half the process spread. Corrective Action Report (CAR) A formal request by Carrier to take action to eliminate the cause(s) of an existing nonconformity or other undesirable situation in order to prevent recurrence. Control Plan (CP) Reflects a strategy for controlling parts and processes to ensure all process outputs remain in a state of control. The plan is used and maintained throughout the product life cycle and is responsive to changing process conditions via written descriptions of the actions that are required at each phase of the process from receiving through shipping. Critical Item Any component, material, assembly or complete system which is selected for production and field traceability in order to satisfy safety reporting requirements or to support reliability analysis of high cost / high interest items. For example, a compressor model or certain electronic control modules might be designated as traceable items due to their high replacement costs. A furnace gas valve might be designated due to product safety reporting needs.

15

Failure Mode and Effects Analysis (FMEA) A preventive analytical technique to methodically study the cause and effects of potential failures in a product or a process. The product or process is examined for all the ways in which a failure can occur. For each potential failure, an assessment is made of its effect on the system and its seriousness, and a review is made of the action being taken (or planned) to minimize the probability of failure or to minimize the effects of the failure. Gage Repeatability and Reproducibility (Gage R&R or R&R) The evaluation of a gauging instruments accuracy by determining whether the measurements taken with it are repeatable and reproducible. . Key Characteristic Any feature of a material, process, part, assembly, or test, whose variation within or outside the specified requirement has a significant influence on product fit, form, function or other expected deliverable, and thus should be controlled within prescribed acceptance limits via Process Certification practices. Non-conforming product / service Non-fulfillment of an intended requirement for reasonable expectation for use, including safety considerations. On Time Delivery The number of Purchase Order line items delivered on time to the required date and quantity divided by the number of total Purchase Order line items required. Part Approval Check Sheet (PACS) A document intended to clearly identify requirements and eliminate ambiguity between Carrier and a supplier, prior to production. It identifies Supplier, part information, key characteristics, and qualification requirements, Carrier authorization and supplier sign off. Parts Per Million (PPM) A measurement of the defect rate in a product, calculated as: PPM = (Total number of defective parts) x 1,000,000 / (Total number of parts received). Part Submission Warrant (PSW) The warrant contains supplier, part information, required documentation, the supplier application warrant and Carrier disposition. The submission approval by Carrier authorizes the supplier to start production. Process Capability The range over which the natural variation of a process occurs as determined by the system of common causes. Process capability has three important components: Design specification. Centering of the natural variation. Range or spread of the variation. The importance of process capability is in assessing the relationship between the natural variation of a process and the design specifications. This relationship is often quantified by measures known as process capability indices. The most common is Cpk. Process Certification Process Certification is Carriers methodology to achieve and sustain statistically controlled and capable processes for manufacturing, business, support, maintenance, assembly, and test. Production Material and Services Includes parts, components or raw material that are directly used in the manufacture of Carrier products; supplier designed products that are incorporated into a Carrier assembly/product; and finished goods branded by Carrier.

16

Q-Plus (Q+) A UTC developed quality management standard whereby suppliers are rated at one of four levels of compliance. (refer to section 5.2) Repeatability Assesses the variation in a measurement system caused by the combined sources of measurement variation of a gage or test equipment when used by one operator or under one set of environmental conditions. Reproducibility Variation in measurement averages when more than one operator or set of environmental conditions are imposed on the gage or piece of test equipment. Supplier Deviation Request (SDR) A form submitted by the supplier that is used to document and request approval for any product or process deviation. United Technologies Corporation (UTC) The parent corporation of Carrier, other companies include Otis, UTC Fire & Security, Pratt & Whitney, Sikorsky, Hamilton Sundstrand, and UTC Power. Work Transitions Work Transitions are any movement of production from one manufacturing plant to another.

13. REFERENCE MATERIALS

It is the responsibility of the supplier to ensure that they are working to the latest version of specifications referenced within this document as well as Purchase Order requirements. The publications listed below provide additional information concerning quality assurance processes and techniques discussed in this manual and are available to suppliers through their Carrier contacts.

Business Gifts from Suppliers, UTC Ethics Brochure. The Giving and Receiving of Business Gifts, UTC Ethics Brochure. UTCQR-09.1 Process Certification Requirements.

The following publications are available from the Automotive Industry Action Group (AIAG). These may be ordered on-line at: http://www.aiag.org.

Advanced Product Quality Planning (APQP) and Control Plan (CP). Measurement System Analysis (MSA). Potential Failure Mode and Effects Analysis (FMEA). Production Part Approval Process (PPAP). Statistical Process Control (SPC).

17

14. APPENDICES
Appendix 1 Process Certification Process Certification is Carriers methodology to achieve and sustain statistically controlled and capable processes for manufacturing, business, support, maintenance, assembly, and test. Process Certification Milestones define the steps and the tools used to implement process certification. The following chart shows the relationship between the Milestone steps and the Supplier Quality Manual criteria for Part Qualification.
Task Define KC's Confirm KC's MILESTONE 1 Conduct Process Review Correct PR Findings Map the Process Gage R&R MILESTONE 2 Baseline Capability Control Snapshot Plan MILESTONE 3 Monitor Miminum Process and Capability Stability Control MILESTONE 4 Large Certification ProCert Control Capability Audit Sample

Part Approval Check Sheet Requirements review Process Qualification Audit Process FMEA Gage R&R Analysis Process Control Plan Process Capability Studies

SQM 6.6 SQM 6.1 SQM 6.1 SQM 6.13 SQM 6.1 & 6.11 SQM 6.1 & 6.9 SQM 6.1 & 6.9 6.12 SQM 6.1 SQM 6.12 SQM 6.1 ; & 6.7 ; 6.7 & 6.8 6.7 & 6.8 SQM 6.12 ; 6.7 & 6.8 SQM 6.8 SQM 6.1 ; 6.7 & 6.8 SQM 6.12

Appendix 2-- Key Characteristics On some older Carrier drawings / specifications the following symbols may still be used to denote key characteristics.

Business Unit
Refrigeration

Legacy Identification Methods

F # ! X (C) CTF

BSS / Carlyle

EMEA / Montluel

RLCS

RCD

18

15. ATTACHMENTS:
The following are samples of forms referenced in this manual. To obtain blank forms, or for assistance in completing forms, suppliers should contact their designated Carrier point-of-contact. Or visit Supplier Tools page at Carrier.com Attachment 1: Parts Warrant (PSW) Attachment 2: Production Part Approval- Dimensional Test Results* Attachment 3: Production Part Approval Material Test Results* Attachment 4: Production Part Approval Performance Test Results* Attachment 5: Appearance Approval Report (AAR) Attachment 6: Control Plan* Attachment 7: Part Approval Check Sheet (PACS) Attachment 8: Supplier Deviation Request (SDR) Attachment 9: 8D Corrective Action Report (CAR) *with using plant consent, Suppliers may use their own internal documents/forms, as long as they contain all required information.

19

Attachment 1

20

Attachment 2

Carrier
A United Technologies Company

21

Attachment 3
Carrier
A United Technologies Company

Production Part Approval Material Test Results

ORGANIZATION: SUPPLIER / VENDOR CODE: MATERIAL SUPPLIER: * Customer Specified Supplier / Vendor Code: PART NUMBER: PART NAME: DESIGN RECORD CHANGE LEVEL: ENGINEERING CHANGE DOCUMENTS: NOT OK

* If source approval is req'd, include the Supplier (Source) & Customer assigned code. NAME of LABORATORY: Specification / Test Qty. Material Spec. No. / Rev / Date Limits Date Tested Supplier Test Results (Data)

OK

Blank statements of conformance are unacceptable for any test results.

SIGNATURE TITLE DATE

22

Attachment 4

Carrier
A United Technologies Company

Production Part Approval Performance Test Results

ORGANIZATION: SUPPLIER / VENDOR CODE: NAME of LABORATORY: * Customer Specified Supplier / Vendor Code: * If source approval is req'd, include the Supplier (Source) & Customer assigned code. Test Specification / Rev / Date Specification / Limits Test Date Qty. Tested Supplier Test Results (Data) / Test Conditions OK NOT OK PART NUMBER: PART NAME: DESIGN RECORD CHANGE LEVEL: ENGINEERING CHANGE DOCUMENTS:

Blank statements of conformance are unacceptable for any test results.

SIGNATURE TITLE DATE

23

Attachment 5

Carrier
A United Technologies Company

APPROVAL OF APPEARANCE
CARRIER PART NUMBER PART NAME NAME OF SUPPLIER Reason for Submittal PART SUBMITTAL WARRANT LOCATION OF MANUFACTURING DRAWING NUMBER CARRIER APPLICATIO N REV LEVEL DRAWING DATE

SPECIAL SAMPLE FIRST PRODUCTION SHIPMENT

RE-SUBMISSION ENGINEERING CHANGE

OTHER

EVALUATION OF APPEARANCE
Requirement / Specification Actual

COMMENTS

SUPPLIER SIGNATURE:

PHONE NO.:

DATE:

AUTHORIZED CARRIER REPRESENTATIVE SIGNATURE:

DATE:

NOTE: ATTACH ANY REQUESTED COLOR ANALYSIS REPORTS AS REQUIRED

24

Attachment 6

25

Attachment 7

26

Attachment 8

27

Attachment 9

28

Copyright 2011 Carrier Corporation. All rights reserved.

29