Purchasing Guidelines

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Purchasing Guidelines

(Version 1)

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Release

This version (V1) of the Purchasing Guidelines is hereby approved and released by the management of voestalpine Stamptec Holding.

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Changes

Present version: V1

Version Changes Release

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The objective of the Guidelines is to develop measures and policies for an efficient cooperation between the specialist purchasing agents and the applicable consumers and to define them in writing. Therefore, the Guidelines are also a practical instruction that precisely governs the individual process steps and responsibilities along the purchasing process and are designed to ensure an optimised implementation of the purchasing activities.

2 Abstract – Management Summary

This section gives a brief overview of the key content of the Purchasing Guidelines:

- The Purchasing of voestalpine Stamptec is responsible for the procurement activities within the group. - Any contracting of suppliers by employees that are not assigned to Purchasing is prohibited.

- Any contracting of suppliers must be made in writing, normally with ERP order reference.

- Any contracting of investment goods and capitalisable services from an order value of 1,000 EUR upwards is subject to separate approval (investment application) by the management.

- Contracts to suppliers always have to be awarded according to competitive criteria. Normally the sup-plier submitting the best quote must be selected, any deviations from this principle must be justified. - Orders and framework agreements may not be generated in the ERP system and sent to suppliers

without a price. This also applies for the so-called 1ct orders.

- The initial contacting of suppliers (also in an early project stage) must be done by the relevant special-ist purchasing agent. Direct contact to suppliers can also be made after prior arrangement with the specialist purchasing agent.

- For claim management, Purchasing must always be involved.

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3 Scope

The present Purchasing Guidelines apply for all entities within the voestalpine Stamptec Group that are included in the Purchasing control function. Therefore, Purchasing is responsible for all procurement activities within the voestalpine Stamptec Group, with the following exceptions:

- Tools that are procured externally, here a separately defined procurement process applies - Travel management (handled by CWT travel agency)

- Orders to Group IT (done by the ITM)

4 Core competencies of Purchasing

4.1 Importance of Purchasing within the voestalpine Stamptec Group

Optimised procurement operations represent an essential contribution towards the business success and competitiveness of the company as a whole. As it impacts directly onto the company's success (EBIT), the purchase of materials and services is of ever increasing importance. In order to make the best use of this sizeable potential for success, you need a perfect alignment between the Purchasing Department and their partners – therefore the present policy is applicable as a basis for cooperation and defines the operational procedure starting from identifying needs all the way to purchasing supplies and services within the voestalpine Stamptec Group.

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4.2 Service portfolio of Purchasing within the voestalpine Stamptec Group

Purchasing sees itself as the key point of contact for the following activities: - Purchasing of materials, services and investment goods

- Selecting suppliers, tendering, requesting quotes, assessing quotes, negotiating, making award deci-sions jointly with the partners

- Drafting of contracts, negotiation minutes, agreeing on commercial terms and conditions (e.g. pay-ment terms, etc.), order handling

- Procurement marketing and procurement market research - Development and monitoring of product group strategies - Development of procurement concepts and strategies - Setting up sourcing teams to bundle quantities

- Driving standardisation of selected product groups further - Drafting of framework agreements

- Conducting supplier assessments

- Developing suppliers into powerful partners - Contributing to execution guidelines

- Classification and master data management - SQA: Supplier quality

5 Value limits

5.1 Definition

The value limits define who is responsible for approving purchases of materials and services with specif-ic pre-defined values. Furthermore, the stipulated value limits define whether quotes must be assessed for their competitiveness by the Purchasing Department. As a matter of principle, quotes may only be requested by the responsible specialist purchasing agent for a specific need; prior to awarding the con-tract, however, the agent is required to obtain a competing quote and/or approval for the relevant need according to the present value limit definition.

In general the following principle applies:

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5.2 Value limits per purchasing case

Up to an anticipated quote value of EUR 20,000, the cost effectiveness must be verified by comparing it to an alternative quote or according to available up-to-date comparable values such as e.g. internal pro-duction cost.

From an anticipated quote value of more than EUR 20,000, the cost effectiveness must be verified by comparing it to at least 3 similar quotes and be documented in writing by means of a quote comparison. Alternatively, the cost effectiveness must be verified according to available up-to-date comparable val-ues such as e.g. internal production cost. If the contract is not awarded on the basis of at least 3 similar quotes, a release by Purchasing Management is required.

From an anticipated quote value of more than EUR 100,000, the cost effectiveness must be verified by means of at least 3 similar competing quotes and be documented in writing by an award suggestion.

In general it is not allowed to split the overall volume with the intention of circumventing value limits. Any deviations from this policy are only allowed in justified individual cases, such as e.g. type-specific pur-chases or purpur-chases via defined framework contract suppliers. Also in such cases, a quote comparison and/or award suggestion must be drawn up and the applicable exception must be pointed out in the justi-fication document.

Value in EUR

0 20,000 100,000

Obtain at least 1 comparable quote OR review according to already available comparable values (e.g. internal production

cost).

Obtain at least 3 similar quotes. Documentation by comparison

of quotes.

Obtain at least 3 similar quotes. Documentation by award

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5.3 Award decision

The award decision is made on the basis of the technical and commercial negotiation results and taking into account the acquisition and consequential costs, and should be determined jointly by Purchasing and partners. The result is documented in accordance with the signature policy either in a quote compar-ison or award suggestion.

5.4. Orders and framework agreements

Orders and framework agreements may only be awarded by the responsible purchasing agent. This does not apply for calls and procurement via electronic catalogues (e.g. JCatalog). Any contract awards must be made in writing, normally with ERP order reference. Orders and framework agreements may only be generated in the ERP system with a negotiated clear price.

5.5 Triggering orders for investment goods and capitalisable services

The purchase of investment goods and capitalisable services is subject to a separate release policy. From a purchase value of 1,000 EUR, the approval form for investments must be submitted. This form must be signed by the management. Any purchasing agent is prohibited from placing an order without having obtained such approval.

5.6 Signature policy

For orders and framework agreements that are printed and sent to suppliers via mail, fax, e-mail etc., the following policy applies:

Award value 1st signature 2nd signature

Up to 5,000 EUR Allowed without signature

From 5,000 EUR p.p. Purchasing management By order

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For electronically transmitted orders – directly from the IT systems – the following policy applies: - Up to a total order value of EUR 5,000, allowed without signature

- From a total order value of EUR 5,000, the order must pass a release workflow. The order can only be sent off after electronic release by the purchasing management.

These value limits can be adjusted as needed per site or company code!

6 Early involvement of Purchasing

As a general principle, the initial contact to suppliers must always be made by the Purchasing depart-ment. In justified individual cases, for example where the supplier's know-how is absolutely required for finding a technical solution, the partner my also make contact with a supplier directly. If a quote is issued as a result of such contact, the relevant specialist purchasing agent must be involved promptly and the quote be forwarded to him. Also in such exceptional cases it must be ensured that sufficient time is available for comparison with competing quotes in accordance with the purchasing guidelines. For this reason, a technically unbiased enquiry specification must always be created. Where the creation of an enquiry specification would not make economic sense, also an on-site visit with at least two potential suppliers is permissible.

Excepted from this policy are type-specific needs that can only be met by the original manufacturer. If a quote is issued, however, the same procedure as outlined above applies.

If contacts to interesting potential suppliers arise during trade fair visits or similar events, their details should be forwarded to Purchasing. This ensures a higher-level verification of the supplier and that he is captured in the centralised supplier database.

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7 Acceptance of gifts – Code of Conduct

As a matter of principle, any acceptance of gifts from suppliers is prohibited. Excepted are only occa-sional gifts of insignificant value and entertainment within the scope of normal business custom. All other gifts must be declined or returned. Also refer to the Code of Conduct in that regard.

8 Claim management

The claim management process is as follows:

- The partner is responsible for recording any deviations from the commissioned performance (material, service). The potential claims and follow-ups are reviewed jointly with the Purchasing department and if needed in consultation with the Legal department and forwarded for further processing.

- After a commercial, legal and technical evaluation, the further strategy regarding the approach and conduct towards the supplier is determined jointly (by Purchasing and Technology).

9 Compliance with the Purchasing Guidelines

Infringements against the Purchasing Guidelines prevent the company from achieving the best purchas-ing and must therefore be regarded as harmful for business. Furthermore, non-compliance with the pre-sent policies results in additional cost in the Purchasing and Financial areas and thus increases the pro-cess cost or weakens our competitiveness.

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9.1 Escalation levels for partners

Procedure in the event of infringement against these Purchasing Guidelines:

Escalation level 1

In the event of first-time infringement, the partner will be informed and requested to make a written statement.

Escalation level 2

In the event of repeated infringement, the site manager will be involved and informed. A written note is filed in the affected employee's personnel record documenting the infringement. It must be pointed out that in the event of another infringement, employment consequences will be investigated. The filed note must be countersigned by the affected employee, the site manager and the relevant workers' council. The relevant site manager or managing director is informed quarterly of collected infringements in terms of escalation level 2.

Escalation level 3

In the event of repeated infringement, the management will be informed. The management will decide about how to proceed further. Depending on the circumstances, disciplinary action will be taken.

9.2 Infringements by the specialist purchasing agent

The defined escalation levels also apply for the actual purchasing agent himself. If the purchasing agent shows a conduct that is harmful to the business and the company due to direct actions or failure to per-form his standard duties, the same escalation levels apply.

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10 Emergencies

10.1 Definition

In the event of imminent danger or high extent of damage, the partner or purchasing agent my waive compliance with the defined purchasing process in individual cases. In such a case, the below emergen-cy procedure applies.

10.2 Procedure

The purchasing agent or employee is required to fall back to existing framework agreements – wherever possible – even in the event of an emergency.

Any emergency must be forwarded to the relevant specialist purchasing agent within one working day.

Emergencies or frequencies should be evaluated in regular intervals. The analysis of emergencies by Purchasing and the partners is intended to identify potentials for additional framework agreements.

11 Final note

The present Purchasing Guidelines were drawn up in order to govern the cooperation between the pur-chasing department and partners and to define binding practical instructions for it. Therefore, together we can ACTIVELY contribute to the company's success by implementing the purchasing activities in the best possible way.

Purchasing Guidelines