MANUFACTURING OPERATING PROCEDURE

APPENDIX "B"
DEVIATION REQUESTS (MRB)
1.0 SCOPE

This document defines the Material Review Board (MRB) and its responsibilities when dispositioning
deviation requests on nonconforming P&H manufactured, purchased or subcontracted materials. It applies
where the nonconforming material is a candidate for a “Use-As-Is” usage decision because the material:

1.1 Is not as specified on the P&H drawing.

1.2 Is found nonconforming at a supplier or subcontractor’s facility.

NOTE: Deviation requests for sample castings per MOP 13.4.1A are excluded from this procedure.

2.0 PURPOSE

To make timely and informed quality decisions of nonconforming characteristics which are candidates for a
usage decision of "Use-As-Is" or for the application of non-standard salvage methods.

3.0 REFERENCES

3.1 Quality Assurance Procedure, QAP 7.4 - Quality Records

3.2 Manufacturing Operating Procedure, MOP 12.0 - Salvage Procedures
3.3 Manufacturing Operating Procedure, MOP 13.5.8 - Nonconforming Material Control
3.4 Manufacturing Operating Procedure, MOP 13.5.8D - Nonconforming Material Control Procedure, Raw
Material Deviation or Substitution
3.5 Business Management System (BMS) Procedures, Online version

4.0 DEFINITIONS

4.1 Nonconforming Material - In the context of this procedure, nonconforming material refers to the
material not being in conformance to P&H specifications.

4.2 Deviation Request - A request to disposition material “Use-As-Is” which is submitted by P&H.

4.3 Supplier Deviation Request - A request submitted by a supplier using the Online Supplier Deviation
Request form (located on the P&H Mining Equipment website).

5.0 MAKE UP OF MATERIAL REVIEW BOARD

5.1 Material Review Board will have members from Quality Management, Product Engineering, and
Manufacturing Engineering, and, for supplier deviation requests, can include representatives from
Purchasing and/or Subcontract. Representatives on the MRB shall be determined by the functions
they represent. It is conceivable that one function may want to divide responsibilities, for example,
Product Engineering may assign representatives by product line. Specific individuals assigned may
vary at the discretion of the management of each function.

5.2 Quality Management will lead the MRB, electronically maintain a Deviation Request database in Lotus
Notes, and maintain permanent records of MRB usage decisions per QAP 7.4.

5.3 The MRB will issue a report of their activities.

VER 07, 04-04 UNCONTROLLED COPY MOP 13.5.8B

Please see online document for current version Page 1 of 3
 MANUFACTURING OPERATING PROCEDURE
APPENDIX "B"
DEVIATION REQUESTS (MRB)
6.0 FUNCTION OF MATERIAL REVIEW BOARD

6.1 The requestor will supply sufficient detailed information regarding the nonconforming item(s), as
required on the electronic deviation request form.

6.2 The MRB will not take any action until the Root Cause and Preventive Action sections of the Deviation
Request are completed by the requestor.

6.3 The MRB has the authority to audit any preventive action and/or request documentation of preventive
or corrective action.

6.4 The MRB will review and act on deviation requests on an as-needed basis and as electronically
notified.

6.5 The Product Engineer will have the authority to apply usage decision "Use-As-Is".

6.5.1 In the event of a “Use-As-Is” disposition, Quality Management may initiate a tracking
Corrective Action Request (CAR) to proactively pursue and document performance of a
material under operating conditions. The CAR will serve to document all activity associated
with monitoring the material. Quality Management will issue the CAR to an appropriate
assignee and will detail within the CAR, at a minimum, what performance characteristics are to
be monitored, how the monitoring will be done, who will do the monitoring, and what the
criteria for closure shall be.

6.6 When a deviation request is dispositioned as “Use-As-Is with Salvage”, work done on an FQ order will
be charged to the original inspection lot number

6.7 The Quality Engineer will have the authority to reject usage decision “Use-As-Is” for reasons other
than fitness for use as determined by Product Engineering.

7.0 RESPONSIBILITIES

7.1 Purchasing/Subcontract

7.1.1 Review information submitted through the Online Supplier Deviation Request database by a
Supplier or Subcontractor when nonconforming material is located at the Supplier or
Subcontractor facility.

7.1.2 An inspection lot will be created in BMS, if necessary.

7.1.3 The system will automatically send a notification when the supplier deviation request has been
processed. If the request has been accepted, the Supplier or Subcontractor should enclose a
copy of the notification of acceptance with the deviated material. This will serve to notify the
goods receipt dock of the Quality Status of the material.

7.2 Supplier Quality

7.2.1 Creates an Inspection Lot in BMS, transactions QA01/QA12/QE11, if necessary.

7.2.1.1 Enters the Inspection Lot number in the Online Supplier Deviation Request database.

MOP 13.5.8B UNCONTROLLED COPY VER 07, 04-04

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 MANUFACTURING OPERATING PROCEDURE
APPENDIX "B"
DEVIATION REQUESTS (MRB)
7.2.2 If subcontracted material, add a “goods receipt inspection operation” to the existing
production order. This inspection operation should be added directly after the subcontract
operation. This will insure a goods receipt inspection by a P&H inspector to verify the
Subcontractor’s measurements and application of acceptance criteria.

7.2.3 If purchased material, set the QA control key to "GRPLAN0" in the 'Q' status of the material
master. This will insure a goods receipt inspection by a P&H inspector to verify the Supplier’s
measurements and application of acceptance criteria.

7.3 Product Engineering

7.3.1 Product Engineering shall be the only legitimate authority to make a usage decision and
approve the request

8.0 PROCEDURE

8.1 A Deviation Request or Supplier Deviation Request will be entered into the Deviation Request
database. This information should include all required fields in the online forms such as: Material
Number, vendor number, failure description, number of pieces, and production or purchase order
number.

8.1.1 The buyer listed on the purchase order will review the supplier deviation request for
completeness and validity.

8.1.2 Supplier Quality will create an Inspection Lot in BMS, if necessary, based on the information
provided on the deviation request. Once the Inspection Lot is created the Inspection Lot
number is to be added to the online deviation request.

8.2 Product Engineering reviews the deviation request and makes a usage decision.

8.3 Quality Management will review the request for final acceptance.

8.4 Quality Management shall maintain permanent records in the P&H Deviation Request database.

8.5 Inspection: Receive material and review the pre-approved deviation request.

NOTE: Receiving Inspection will be flagged to inspect purchased material via the QA Control Key or, in
the case of subcontracted material, by an inspection operation being added to the production
order. The inspector is to review the material condition against the inspection lot information and
the online Deviation Request. If the material condition is as described in the available information,
approve it and cross-reference the old inspection lot in the newly created inspection lot. If
additional nonconformities are found; reject the material and call Purchasing or Subcontract.

9.0 EFFECTIVENESS

9.1 The effectiveness of the MRB will be contingent upon assignment of root cause and implementation of
preventive action by causing department. The MRB is not to be used in lieu of the causing
department Supervisor taking responsibility for usage decisions and corrective action.

VER 07, 04-04 UNCONTROLLED COPY MOP 13.5.8B

Please see online document for current version Page 3 of 3