Preferred Supplier Criteria

Cooper Strategic Sourcing works with all Cooper divisions to create a high-performance team of global suppliers. Through these relationships, we forge strategic, long-term relationships with a select group of suppliers to consolidate our entire range of procurement and materials management activities.

We are a progressive global organization and require our suppliers to share our vision. We do business with suppliers that subscribe to our philosophy of continual delivery, quality and productivity improvements. We require suppliers to collaborate with us on innovative products and to remain cost competitive on current products to help ensure we enjoy a marketplace advantage in providing goods and services to our customers. This direction permits our growth and allows us to reward our supplier base with opportunities to grow their businesses.

Preferred suppliers are selected based on key criteria: quality, cost, flexibility, delivery, service and innovation. We understand our suppliers' core competencies, the commercial and technical complexities of their businesses, and how they relate to our objectives. We build strong relationships with suppliers based on mutual interest and common values.

Cooper Strategic Sourcing believes in a diverse supply base, and encourages suppliers who fit those criteria to make their status known.

What we require of our suppliers:

1. Quality

We expect relentless support and focus on product quality from our suppliers. Our sourcing and quality teams will work with your company to drive root-cause analysis and corrective-action processes. Cooper Industries requires our supplier partners to reduce quality defects and measure performance in Parts per Million (PPM). You will be expected to consistently maintain a PPM level of less than 250.

2. Payment Terms

All suppliers to any division of Cooper Industries are expected to adhere to a minimum of 2% 20, net 90 as a baseline condition for doing business. Individual divisions will occasionally seek more aggressive terms or terms more appropriate to their buys. Terms extended to one division will be assumed to apply to all divisions that do business with your company.

3. Lead Time

Supplier lead time (PIR LT) is measured as the number of days between order release and the receipt of goods at our manufacturing or distribution center. We require a lead time of less than 5 days from our Preferred Suppliers. Supplier-owned inventory within or near our factories or distribution centers is considered to be a strategic advantage for suppliers. Cooper stands ready to assist any supplier in obtaining that capability, through consignment in our facilities, third-party logistics providers or other methods.

4. Sourced On-Time Delivery

The minimum demonstrated supplier on-time delivery performance is 95 percent. Supplier On-Time Delivery is the measurement of the on-time & in-full purchase order lines, divided by the total lines expected on the purchase order.

5. Productivity

We require a minimum of 3 percent per year, every year.

Annual productivity through continuous improvement is the cornerstone of our strategic vision and requires a commitment from you to ensure this is achieved. Understanding and subscribing to this year-over-year productivity philosophy is required. This objective requires creative input from suppliers to our marketing, engineering and purchasing teams to help reduce costs on our current products, streamline manufacturing and supply chain processes, and reduce total supply chain inventory. Cooper has made significant internal productivity improvements through our Manufacturing Variance Program (MVP), which utilizes the tools and concepts of lean Six Sigma. In addition, we have expanded this initiative to include substantive and measurable productivity improvement techniques and tools in business processes (T-MVP) and product design (D-MVP). Strategic Suppliers are encouraged to inquire about this program for use in their operations, ensuring bilateral, ongoing productivity improvements.

6. Price Adjustments

We expect our suppliers to adhere to their contractual commitments. The need for surcharges, adjustments or raw materials flexibility must be negotiated in advance and agreed to by both parties. From time to time, however, reductions in price are expected to meet competitive situations, and adjustments may be necessary for unanticipated global commodity shortages or market impact. Any request for price increases requires substantiating documentation, Cooper management approval, and must be requested 60 days in advance of the effective date on new orders. This allows Cooper time to discuss a potential price increase with our customers, time to consider alternate designs or materials to prevent the price adjustment, or time to source elsewhere.

If you subscribe to the key sourcing strategies above and will promote our philosophy of continual quality and productivity improvement, we welcome you to discuss opportunities to provide your products or services to us.