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Supplier Assessment Report

Report No.: FARQ140609

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Factory Audit Report

Auditor: Eason Chen; Jack Wang Date of Audit: 8th June 2014

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Supplier Assessment Report

Report No.: FARQ140609

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Information:

Factory Name Guangdong Changhong Electronics Co.,Ltd (subcontractor of CVT Electronics)

Factory Address

Noth Xongye Road, Nantou Town, Zhongshan, Guangdong, PRC

Contract Person EMIE CHEN

Telephone No. 86-760-3138236 Facsimile No. 86-760-3138201

Email Address kiddy,chen@changhong.com

Ownership Type Joint Venture, Partnership, Corporation Privately Owned,

Foreign Investment, Other:

Year of Facility Established 2003 (i.e. 2nd Sept., 2007)

Last year sales turnover 120 million USD

Products Range LCD TV and PDP

Factory total surface area 1200 km2

Production Lines 0 SMT lines, 6 PCB Assembly Lines, 6 Casing Lines, Others SMT handled by sister company

Total No. of Employees 800 Staffs

Other Major Customers (Due to confidentiality this can be optional)

PILOT, VOXSON, ELECTRA, CAIRA, HOHER, HYUNDAI, KMC and CELESTIAL,

Others

ISO9000 Certified or not Yes (Cert No.:U 10501, Issued by:CEPREI, Expire date:2016.05.03) No

ISO1400 Certified or not Yes (Cert No.: , Issued by: , Expire date: ) No

SA8000 Certified or not Yes (Cert No.: , Issued by: , Expire date: ) No

Other Cert? If so, please list. N/A

Has the factory purchased Comprehensive Accident Insurance Cover? Yes / No

Does the factory has the design capability & software to produce instruction manual of product?

Yes / No

Does the factory has the design capability & software to produce packaging Artwork? Yes / No

Does the factory have a backup electricity supply that would support the normal production demand?

Yes / No

Auditor accompanied by? Mr. Zhong yonggui,

Attendee Nil

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Report No.: FARQ140609

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Summary of the Audit:

Quality Assurance Section Rating Score

QA Quality management system 15 13

QB Incoming Inspections 15 8.5

QC In process quality assurance 20 8

QD Final quality control 15 12.5

QE Technical supports 10 8

QF Reliability testing 8 4

QG Measuring equipment control 7 4

QH Warehouse 5 4

QI Staff interview 5 4

Total Score 66.5

90<=GREEN<=100 75<=BLUE<90 60<=YELLOW<75 RED<60

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Report No.: FARQ140609

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QUALITY ASSURANCE SECTION QA. QUALITY MANAGEMENT SYSTEM

Item Description Rating Score

QA1 Does the factory have Quality Manual & Procedures outlining the quality management system of the factory? If yes, the QM documents Ref. No.: QM-0001

3 3

QA2 Is the factory ISO9000 accredited at least? 2 2 QA3 Are all the documentations issued with control? 2 2

QA4 Are the procedures updated accordingly during using? 1 1

QA5 Are there internal training programs provided for all staff when he/she is employed?

1 0

QA6 Does the training have records & are the records traceable? 1 1 QA7 Do the staff fully understand the Quality policy of the company? 1 1

QA8 Does the staff fully understand the product quality requirement related with his/her daily work?

1 1

QA9 Does factory have all relevant international or national safety standards related to its business?

1 1

QA10 Others 2 1

Rating: 15 Score 13

Item Remark

ISO 9001:2000 certificate has been granted by CEPREI in 2010 and renewed in July 2013, the certificate number is U 105 -1 and the certificate valid until 13 July 2016. The certificated scopes are design, production and service of Color TV, and production and service of Induction Cooker.

Procedures available on the intracnet and relevant personnel may have access to them. Procedures well maintained.

Quality policy statement has been established and well communicated in the factory

Quality manual available on the intranet and key staff may have access to them. Quality manual well maintained and implemented

The records of management review and training records they need to be completely and clearly specified and need to be properly handled.

QB. INCOMING INSPECTIONS Item Description Rating Score QB1 Is there a documented process for approving suppliers/subcontractors? 2 2

QB2 Are there records to show that the suppliers /sub-contractors have been approved prior to orders being placed?

2 2

QB3 Do all the materials have approved drawings / specifications for incoming inspection?

2 0

QB4 Do all the approved parts have the signed golden samples? 1 0

QB5 Is a formal sampling plan used to monitor the quality of the incoming material? If yes, the AQL: Electronic parts:0.4; Mechanical parts: 0.65, Packaging parts: 0.65

1 1

QB6 Do the inspections fullfill the requirements of the material? 1 0 QB7 Are reworked non-compliant goods re-inspected? 1 0

QB8 Are non-conforming raw materials adequately segregated and identified? 1 1 QB9 Are records of all incoming inspections maintained? 0.5 0.5

QB10 Is the defect classification clearly documented? 0.5 0.5

QB11 Is there a documented corrective action procedure for suppliers/sub-contractors who are frequently non-compliant?

0.5 0.5

QB12 And are the corrective actions closed? 0.5 0 QB13 Others 2 1

Rating: 15 Score 8.5

Item Remark

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The golden sample and material specifications need to be reviewed and maintained properly IQC defective specification need to be reviewed and specified defined

IQC the 2nd inspection records need to be tracealble and maintained, re-inspection of production procedure need to be specified

QC. IN PROCESS QUALITY CONTROL Item Description Rating Score

QC1 Is a batch coding method in place for tracing products? If yes please clarify the batch code configuration and its meaning factory internal batch code

2 2

QC2 Are mass production authorization records maintained? 1 1 QC3 Is the ECN (Engineering Change Notes) fully performed on production lines? 2 1

QC4 Are first off samples of in-process and finished products reviewed by the Engineering & Quality departments to ensure that they meet the requirements?

2 1

QC5 Are work instructions (WI) available at each workstation for reference by production and QA/QC personnel?

1 0

QC6 Do the WI’s match the actual produced stations / product, Are the obsolete WI’s removed from the production area?

1 0

QC7 Do the online inspections fulfill the product’s requirements? 3 1

QC8 Is non-conforming in-process production adequately segregated and identified? 1 1

QC9 Is there a corrective action procedure for non-conforming in-process production? 1 0

QC10 Are the production lines tidy and is the ‘5S” good? 2 0

QC11 Does the factory have IQPC to monitor the daily work of production lines to ensure the products fulfill the quality requirement?

2 0

QC12 Others 2 1 Rating: 20 Score 8

Item Remark

Referenced samples for products need to be presented Engineering change need to be completed and properly performed

Work instructions need to be completed and corrected Defective pixels check of LCD panel need to be completed in process of final assembly

Earthing continuity check specified but no conducted in process of final assembly of Class I LCD TV. Hi-pot test need to be clearly specified and completely conducted in process of production

Soldering temperatture control of soldering iron need to be controled Anti-ESD need to be controlled and recorded Temperature of wave soldering oven need to be properly controled and recorded

Density of soldering fluid need to be controled for wave soldering in process of PCB assembly Torque control of fixing screwdrivers need to be properly conducted

QD. FINAL QUALITY ASSURANCE Item Description Rating Score

QD1 Do all finished products have approved drawings / specifications for inspection ref.?

2 2

QD2 Are there golden samples or customer approved samples in FQA? 1 0

QD3 Is a formal sampling plan used to monitor the quality during final inspection? If yes, please provide details of the inspection plan and AQL's: maj 1.0, minar 2.5

2 2

QD4 Is the defect classification clearly documented? 1 1 QD5 Does the final inspection fulfill the products’ requirements? 3 2

QD6 Is the ECN (Engineering Change Notes) fully performed in FQA department? 1 1 QD7 Is non-conforming products adequately segregated and identified? 1 1

QD8 Is there a corrective action procedure for non-conforming products? 1 1 QD9 Are reworked non-compliant goods re-inspected and is the record traceable. 1 1

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QD10 Does the FQA department have weekly and / or monthly meeting to review the quality of products?

1 1

QD11 Others 1 0.5 Rating: 15 Score 12.5

Item Remark Golden sample was not available, procedure and carry out need to be added and maintained Inspection item for the detachable power plug need to be added and checking.

Work instructions and defective specification need to be clear specified

QE. TECHNICAL SUPPORTS

Item Description Rating Score

QE1 Is there an adequate and formal system for controlling customer specifications / requirements?

2 2

QE2 Is there procedure to handle ECN? And are all the issued ECN traceable? 2 1

QE3 Is there adequate Product Engineer (PE) to handle daily issues raised by production lines?

2 2

QE4 Is there adequate Industrial Engineer (IE) to make product manufacturing flow & work instructions.

2 2

QE5 Others 2 1 Rating: 10 Score 8

Item Remark

QF. RELIABILITY TEST

Item Description Rating Score

QF1 Does the factory have documented procedures for handling life & reliability testing? 1 1

QF2 Does the reliability test cover the stage of product developing and mass production?

1 0.5

QF3 Does the factory have the necessary equipment /facilities to conduct life/reliability testing in-house?

1 0

QF4 Are the equipment / facilities maintained regularly? 1 0

QF5 Are the basic reliability tests included? (Such as: Drop test, Burn-in test, Temperature / humidity test, and Temperature shock test, Rubbing test) Please list the actually performed tests: drop test, burn-in test,

1 0.5

QF6 Is there a formal system of investigating failures, 1 1

QF7 And is there a formal feedback to design if any failure? 1 1 QF8 Others 1 0

Rating: 8 Score 4

Item Remark

The reliability test on hi-low temperature, storage operation and vibration test, the facilities are not available

QG. MEASURING EQUIPMENT CONTROL Item Description Rating Score QG1 Are gauges and test/inspection equipment maintained and adequately stored? 1 1

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QG2 Are gauges and test/inspection equipment traceable? 1 1

QG3 Are gauges and test/inspection equipment in good condition & calibrated frequently?

2 1

QG4 Are the calibration certs or internal reports traceable? 1 0.5

QG5 Are the Master Reference equipment keep from being used? 1 0 QG6 Others 1 0.5

Rating: 7 Score 4

Item Remark Work instructions for internal calibration was available with authorized types of apparatus.

Calibration of apparatus need to be planning with document, apparatus need to be duly calibrated Calibration labels attached on the apparatus need to be applied

the specified of master referenced samples need to be properly maintained

QH. WAREHOUSE

Item Description Rating Score

QH1 Does the Factory have suitable warehouse facilities for incoming material & finished goods?

1 1

QH2 Do the non-conforming material / finished goods well separated? 1 0.5

QH3 Are all the material & finished goods well identified in warehouse? 1 0.5 QH4 Is the first-out-first-in well performed? 1 1

QH5 Others 1 1 Rating: 5 Score 4

Item Remark

Non-conformity material the disposal location need to be clear defined and segment

QI. STAFF INTERVIEW

Item Description Rating Score

QI1 List the questions and answers here. QI2 Skills and job knowledge of employees are acceptable 2 QI3 The internal auditors need to be assigned and qualified 1

QI4 Staff training program and training scope need to be improved 1 QI5

Rating: 5 Score 4

Item Remark

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Photos with description for remark(s)

Site Audit Witness Site Audit Witness

Clear identified area for parts waiting for IQC Clear identified area for defective parts

Warehouse (NC-QC status no identified for material storage;

light bulbs not protected by shatterproof plastic diffusers) Identification Label

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Entering month sticker Inventory card

Storage of ICs (NC-humidity exceeds the spec limit) Storage of surface mounting components (remark: SMT

subcontracted to sister company)

Storage of electronic components Storage of LCD panels

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Storage of PCBs Storage of switches

Storage of plastic parts NC-some scrap materials not separately; stock no clearly

identified in the storeroom

IQC workstations (NC-inspection procedure need to follow,

IQC records need to complete) IQC reference samples (NC-referenced sample need to

be completed)

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Inspection of metal parts Inspection of LCD panel

Inspection of Speaker NC- some defective parts not clearly identified

Workshop Components Inserting

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Jumper inserting Components storage

PCB assembly line Maual inserting

Components check and alignment(NC-QC records not

available Wave soldering (NC-density of soldering fluid not controlled)

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Visual inspection Repair station

Assembly line Assembly of mamual control board

Assembly of speaker Assembly of LCD panel

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Assembly of power board and main board Internal wiring connection

Screw (NC-Torque screwdriver need to properly conduct) Initial check

Hipot test TV functional check

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PC input check (NC-defective pixels check of LCD panel need

to complete)

Cleaning&visual inspection(NC: cleaner need identified)

Repair station(NC:repair records not present) OQC station (NC:WI &defective spec need review)

BC

OQC input check Drop test

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Device for vibration test High temperature aging test