Section 3.0 Purchasing Procedures

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3.1 Initial Supplier Assessment

It is a mandatory requirement of Tenneco European Supply Chain Management, that all potential new Suppliers submit a fully completed Tenneco "Supplier Profile Document" to the responsible commodity manager. Key information required include : Company Operating Philosophy (including Environment Health & Safety), Financial stability, Design, Manufacturing capability, Plant location capacities and Quality System Approvals. All information supplied will be treated in a confidential manner. This document will be used to assess the initial suitability of the Supplier. The "Initial Profile Document" document review is critical in establishing the potential for a successful business relationship between a Supplier and Tenneco. A copy of the "Supplier Profile Document" document can be found in Appendix 8.1 .

3.2 Request for Quotation	As a component of continuous improvement, the Request For Quota tion process is intended to establish specific costs for each element of component part. Therefore it is extremely important for our suppliers to provide costs for material, labour, investment, packaging,transport,... so that through early Supplier involvement and value analysis we can identify and implement cost reduction opportunities. The inquiry implies no obligation on the part of the buyer. We reserve the right to accept any part or all of your proposal at the price quoted. Any substitutes offered with costs and weight savings should be submitted with full details stating any deviation from Tenneco Europe drawing and specification and should not affect the function or interchangeability of the part. All information and data supplied is confidential and remains the property of Tenneco Europe. Information must not be passed onto another organisation without consent from Tenneco Europe. The Feasibility Evaluation form is the mutual agreement between Tenneco Europe and the Supplier that a proposed design can be manufactured, assembled, packaged and shipped at an acceptable level. A feasible design must permit meeting production volumes and schedules, consistent with the ability to meet Engineering requirements and program quality, reliability, investment cost, unit cost and timing objectives.
3.3 Supply Agreements and Requirements	Purchase order contracts for production materials and services are issued exclusively by the Tenneco European SCM staff. Production releases and schedules are issued by our manufac turing facilities on an "as-needed" basis and are consistent with the contract terms and conditions relative to quantity and lead-time. All supplies and services must be covered by a Tenneco Purchase Order, Blanket Order, or Service Order. Suppliers that accept/fulfil "verbal" requests, that are not authorised under a properly assigned order or release number, risk non-payment and return of materials shipped in such situations. Unauthorised over-shipments will also be treated in the same manner. Any and all changes related to quantity, pricing, payment terms,or product specifications must be approved by the SCM Department.
3.4 Blanket Purchase Order	Blanket Orders are issued to cover a fixed percentage of Tenneco requirements over the contract period (usually one year)and cover all Tenneco Europe locations to which item is shipped. In the blanket order the following is clearly defined : Validity Period Payment Terms Inco Terms Part numbers and drawing release level Price per part number General terms and conditions   (Packaging Requirements)   (Indication of Volume Required during contract period) Scheduling Agreement" covering items sourced on Blanket Purchase Orders are issued to all suppliers on a daily/weekly/monthly basis. These "Releases" also include a longer term forecast to cover the future anticipated usage. Blanket Purchase Orders and Scheduling Agreement requirement releases are used within the Ride Control plants. 100 % On Time Delivery (OTD) is mandatory. The Emission Control Aftermarket plants use the term "value contracts or Framework contracts" instead of blanket purchase orders and "Purchase Orders" for monthly requirements releases. The Emission Control OE plants also use Blanket Purchase Orders or "Frame Orders" but use "Call-off schedules" instead of Releases.
3.5 Tooling	Please Refer to the Worldwide Supplier Manual Section 5 for tooling requirements
3. 6 Finance	Tenneco Europe (TAE) will pay for goods/and services provided by Suppliers according to the terms and conditions of the agreed TAE Purchase orders governing such obligations. All payment terms and conditions must be agreed and clearly stated on the purchase order.

	INVOICING Invoice for all goods or services for TAE plants are paid from the respective TAE plants. If some exception, it will be informed on the local (plant level) Supplier information manual sheets.  Invoices must be mailed to the receiving plant, for the attention of Accounts payable. DO NOT mail invoices to the attention of the Buyer or party that requested the goods/invoices. This is forbidden by internal Policy and may delay processing/payment of your invoices. The original invoice and one duplicate copy are to be mailed together per above instruction and must contain for Purchase Orders / Blanket Order the following information : Purchase Order or Service Order Number Packing List Number Tenneco Part Number Quantity Shipped (Unit measure same as purchase order measure) Unit of measure (must be the same as order measure) Unit cost per item as purchase order Total cost per item Total amount per invoice with and without VAT and VAT rate Weight of shipment Pallet / container / package count Address where the invoice should be sent Name, Address and VAT number of the Legal Entity Shipping date PAYMENT TERMS Our standard payment terms : 90 days or cash payment, with agreed discount (to be shown on Purchase order or Service order), at the choice of TAE plants in each case. Any deviation from the standard payment terms has to be authorised by the SCM Department. GENERAL Payment terms are indicated on the Purchase order / Service order Payable date will be based on the date of receipt of the goods, not on invoice date. All parts which have been returned to the Supplier, due to quality rejection, over delivery or delivered too early, requires a credit note from Supplier. Any TAE rework costs incurred, will be invoiced and deducted from the next payment. All parts which have been returned to the Supplier, and are reworked to specification and returned to TAE, must be invoiced again, referring to previous debit note. Receiving of rejected goods have to be invoiced again from Supplier. Negative or positive differences in quantities have to be invoiced by the Supplier.
3.7 Prices	In order to effectively administrate cost control programs and our pricing policy, it is necessary for Tenneco to clearly understand the inflationary pressures faced by Suppliers.
	PRICE CHANGES AND DOCUMENTATION Supplier requests for price changes must be submitted, in writing, prior to the requested effective date and must allow for the application of the full notice period (as agreed locally). Deviation from this policy will not be accepted unless prior negotiation has established other criteria. Price change requests must describe in detail the reasons/justifications for the submission. Price changes based on material cost increases must be documented by: product cost impact analysis (percent content of material which has increased) evidence of actual increase to Supplier by way of sub-supplier material invoices showing the amounts and effective dates of increases or other contractually agreed upon indices supporting the requested increase. In order to facilitate the handling of Supplier requests for price changes in a manner that is conductive to both fair and timely consideration of such requests, as well as being consistent with sound cost, control, and administrative practices, Tenneco requires strict adherence to this policy. A copy of the "Price Change Application and Analysis Form" document can be found in Appendix 8.3. Suppliers are encouraged to offer suggestions as to ways that price increases might be avoided; these might include substitutional products, alternative materials, process improvements, etc. These offerings, of course, should be considered at all times, not only when cost pressures mount to the point that increased selling prices are deemed necessary. It has been, and will continue to be, the policy of Tenneco Europe to favour cost effective suppliers with increased business shares whenever possible.
3.8 Confidentiality	Tenneco requires that all business relationships with it suppliers are conducted in a professional and confidential manner. All information given to our suppliers concerning product specification and design must be kept confidential by the Supplier. Any issues on "Design and Patent" ownership must be fully discussed with the Tenneco SCM in advance of any actions. It is a mandatory requirement of Tenneco that its suppliers must have written authorisation from Tenneco purchase department before they are allowed to pass any Tenneco information to an outside source.
3.9 Payment/Terms/ Conditions	Payment terms are as indicated on the order, Payable date will be based on the date of receipt of goods, not on invoice date. Tenneco European Terms and Conditions govern all purchase orders placed by Tenneco European facilities. (Section last revised 12/18/02 )