Target Product Safety & Quality Assurance Process Manual PDF

PRODUCT SAFETY AND QUALITY ASSURANCE PROCESS MANUAL MAY 2023 Product Safety & Quality Assurance Process Manual...

PRODUCT SAFETY AND QUALITY ASSURANCE PROCESS MANUAL MAY 2023 Product Safety & Quality Assurance Process Manual Vendor Training ©2023 Target Corporation. Confidential information. This document and the contents within are the property of Target. They are for the sole use of PSQA as well as certain authorized partners and shall not be reproduced, disseminated, or disclosed in any form. Please contact PSQA with questions. 1|Page PRODUCT SAFETY AND QUALITY ASSURANCE PROCESS MANUAL MAY 2023 Objective - This manual provides the information needed for business partners to understand:  Target’s Owned Brand Sourcing & Development (OBS&D) Quality and Compliance team and their roles  Target’s Product Safety and Quality Assurance (PSQA) processes and requirements  Target’s PSQA Resources and guidance on how to obtain more detailed information, as needed  This manual does not apply to any food products intended for consumption. For food product requirements contact Food Safety & Quality Regulatory (FSQR) team: [email protected] 2|Page PRODUCT SAFETY AND QUALITY ASSURANCE PROCESS MANUAL MAY 2023 Table of Contents 1. OBS&D Quality and Compliance Mission Statement and Ethical Behavior Expectations (pg.4) 2. OBS&D Quality and Compliance Team (pg.6) 3. Product Brand Definitions and Vendor Expectations by Brand (pg.7) 4. PSQA Process Requirements (pg.11) a. General Timing and Action b. Quality Program Assessment (QPA) c. Factory Assessments (FA) and Good Manufacturing Processes (GMP) Audit d. Product Watch List (PWL) e. Production Readiness (TPR) f. Product Testing g. Product Inspection 5. 3rd Party Oversight Program (pg.37) 6. Factory Quality Index (FQI) (pg.38) 7. Factory Risk Prediction (FRP) (pg.39) 8. Target Accredited Business Partner Quality Inspector (BPQI) for Vendor Self Inspection (pg.40) 9. Chargebacks (pg.42) 10. Appendices (pg.43) a. Appendix A – Factory Assessment (Located in US, Canada, and Mexico) b. Appendix B – Product Watch List (PWL) c. Appendix C – Production Readiness (TPR) d. Appendix D – Product Testing e. Appendix E – Product Inspection f. Appendix F – Factory Quality Index (FQI) g. Appendix G – Factory Risk Prediction (FRP) h. Appendix H – Important Terms & Definitions i. Appendix I – General Contact Information NOTE: Partners Online (POL) contains comprehensive instruction for vendor requirements and procedures. Please reference POL for the most updated information for all Target processes. 3|Page PRODUCT SAFETY AND QUALITY ASSURANCE PROCESS MANUAL MAY 2023 OBS&D Quality and Compliance Mission Statement and Ethical Behavior Expectations Mission Statement Consistently delivering on our “Expect More. Pay Less.” brand promise by assuring that our vendor partners operate efficient, safe and ethical factory environments, capable of producing safe, reliable, quality products. Ethical Behavior Expectations Target Corporation Ethics Business Partner Agreement Target is committed to conducting all business with the highest ethical standards. All Target team members are required to follow Target’s Code of Ethics. Target also requires all business partners to share the same commitment to ethics by complying with Target’s Business Partner Code of Conduct (BPCC), the Standards of Vendor Engagement (SOVE) and following all policies and requirements that apply to Target work. Product Safety and Quality Assurance (PSQA), Responsible Sourcing (RS) and Global Trade (GT) program requirements are located on Partners Online (POL). All business partners (e.g., service providers, vendor representatives, factories, agents, suppliers, and third party representatives) must understand and follow Target requirements. Any business partner that does not comply with (or follow) the law or Target policy requirements, including, but not limited to: conflicts of interest, bribery, unauthorized product modification/substitution, unauthorized use of intellectual property, or withholding required information may result in loss of business with Target. Other results of noncompliance include: factory deactivation, rejection of goods and financial penalties. Target reserves the right to discontinue business immediately with any business partner not following requirements. All Business Partners will Conduct all business ethically Never directly or indirectly offer a Target team member or a government official a bribe (offer anything of value including, money or anything else) with the intent to influence business decisions or receive favorable treatment, an improper advantage, or personal gain  Immediately report any Target team member solicitation (asking for) of a meal, gift, entertainment, travel, or anything else of value from a vendor or vendor representative  Never ask a former Target team member to work on the Target account or perform any Target related business activities for two years following the anniversary of their last day of employment with Target Treat everyone in the workplace with respect  Never threaten, abuse physically or verbally, or intimidate any person in the workplace  Never engage in, ignore, or tolerate any physical, verbal, mental or sexual harassment against or among workers  Never use forced labor or benefit from forced labor or trafficked workers throughout the supply chain *For the purposes of this Agreement, all North Korean nationals shall be considered “forced laborers” Never allow unauthorized subcontracting All production locations that fall within the scope of Target’s Responsible Sourcing program must be registered in the Vendor Management and Maintenance system (VMM) Accuracy and Transparency of records 4|Page PRODUCT SAFETY AND QUALITY ASSURANCE PROCESS MANUAL MAY 2023  Maintain complete and accurate working-hours and payroll records  Never maintain dual or inaccurate records  Permits and documentation must never be falsified Reporting Unethical Behavior If you encounter unethical behavior or any potential or actual violations of the law, Target’s BPCC, SOVE, policies, or other requirements, it is your duty to report this information. You have an option to report details anonymously. Reporting Options include Email: [email protected] Call: In the U.S.: 1-800-541-6838 In India: 000-800-100-1657 Other non-U.S. locations: place a collect call to the U.S. at 1-470-219-7116 Visit: www.targetintegrityhotline.com All reported violations that include detailed information will be investigated, and appropriate action will be taken. 5|Page PRODUCT SAFETY AND QUALITY ASSURANCE PROCESS MANUAL MAY 2023 OBS&D Quality and Compliance Team OBS&D Quality and Compliance is a global team with a wide variety of educational backgrounds, manufacturing experience and product expertise. PSQA teams are located throughout the world in Minneapolis and at local offices, and execute PSQA processes and act as a resource for Target, vendors and factory partners. Product Safety & Quality Assurance – Headquarters and Global Team  Product Safety & Quality Assurance (PSQA)  Product Investigations & Removal (PIR)  3rd Party Partners Oversight  Governance, Regulatory and Compliance (GRC) 6|Page PRODUCT SAFETY AND QUALITY ASSURANCE PROCESS MANUAL MAY 2023 Product Brand Definitions and Vendor Expectations by Brand  Reference APPENDIX H – Table H1 for a list of contacts by Division and Department Name/Number PSQA process requirements vary based primarily on product brand. The brand definitions listed below are not legal or trademark definitions – rather they are guidelines to determine PSQA requirements. Products sold at Target are generally defined as Target Brand, Non-Target Brand, or No Brand. Additional requirements may apply within these three divisions, as shown in the table below. Products identified as “No Brand” follow Target Brand processes. If the “No Brand” product is sold online only, refer to the table for modified requirements. If branding is unclear, contact your Sourcing Manager/Buyer to understand what brand any one product is being carried under prior to proceeding. Non-Target Brand Target Brand No Brand Online Only (“National Brand”) General Target Target is NOT Brand Product DVS - Made to DVS - Mass Target Importer of PSQA Process Includes General Order Production Adult’s Children’s Record the Importer of Record No Brand*** Quality Program Required for Target IOR Required Required Required Required Required Not Required Assessment (QPA) FA – Factory Required Required Required Not Required Required Not Required Not Required Assessment/Good Manufacturing Practices (GMP) Audit Production Required Not Required Required Not Required Not Required Not Required Not Required Readiness Product Testing Required Required* Required Not Required Required Not Required Not Required Product Required Not Required Required Not Required Required** Not Required Not Required Inspection PMC – Product Not Required Not Required Not Required Not Required Not Required Required Not Required Management & Certification * Vendor submits testing prior to orders. Black seals waived. ** Inspection is required when black seals are needed to be pulled for product testing *** General No Brand Products are considered Target Brand and follows Target Brand Process 7|Page PRODUCT SAFETY AND QUALITY ASSURANCE PROCESS MANUAL MAY 2023 Retail Displays PSQA Process Merchant Displays: Perfect Placement Vendor Supplied Out of Box Displays Out of Box Displays Non Sellable displays Displays: Displays: Target Brand: Non-Target Brand: shipped directly from Non Sellable displays Non Sellable Sellable merchandise Sellable vendor to RDC/IW to modified by a third displays that are that is placed on merchandise that is store party vendor for safety uniquely supplied display, typically placed on display, and enhanced guest and managed marked down to sell typically marked experience directly by the down to sell vendor to the store EXAMPLES Shower curtains, furniture, car Electric Toothbrushes, hair Bose sound system, Beats Christmas Trees, Patio Furniture, TV, Cameras seats, strollers, etc. dryers, baby carriers, baby headphone listening Seasonal Items, etc. bottles, razors, etc. station QPA – Quality Program Not Required Not Required Not Required Required Not Required Assessment FA – Factory Not Required Not Required Not Required Required Not Required Assessment/Good Manufacturing Practices (GMP) Audit Production Readiness Not Required Not Required Not Required Required Not Required Product Testing Required if product is Not Required Not Required Required Required if product is functional while on display functional while on display Product Inspection Required Required Required Required Required PMC – Product Management Not Required Not Required Not Required Not Required Required & Certification “Target Brand” Product Definition – one or more criteria must apply  Target Owned Brand: Target owns trademark  Target Exclusive Brand: Target has exclusive rights to the brand name in the U.S.  Target driven product design  Target driven product standards or technical development  No Brand: No distinguishing brand name used in retail packaging  Target Brand o Vendor Manages Quality o Factory Executes Quality o Target Validates Quality via PSQA Requirements Target Brand Examples: Room Essentials, a New Day, Cat & Jack, Pillowfort, Threshold, Up&Up “Target Brand DVS - Made to Order’” Product Definition  Product produced individually in the U.S. to fulfill a specific online order. These items are not made in mass production. Product is shipped directly by the vendor to the guest “Target Brand Direct Vendor Ship (DVS) - Mass Production” Product Definition  Mass production greater than 20 units. Production is typically stored by the vendor/factory until orders are placed by the guest. Product is shipped directly from the vendor to the guest. o Product follows Target Brand requirements “No Brand Online Only” Product Definition –all criteria must apply  No distinguishing brand name used in marketing  Online only product not available in stores  Distributed/Manufactured by vendor  Not considered National or Target brand  Target may be involved in product design or direction 8|Page PRODUCT SAFETY AND QUALITY ASSURANCE PROCESS MANUAL MAY 2023  No Brand Online Only o Vendor Manages Quality o Vendor/Factory Executes Quality o Vendor Validates Quality on all products o Target Validates Quality on children’s products  If product shifts from no brand online only to being sold or featured in Target stores, the full Target Brand PSQA process is required for both the products available in store and their entire collection online “Non-Target Brand” (National Brand, Vendor Brand) Product Definition  Target does not own the brand name and does not have exclusive rights to all products in the brand  Distinguishing brand name used in marketing and packaging  Product distributed by vendor across multiple retailers  National branded product that also carries a license  Licensed brands o Examples: Sony, Stanley, Levi’s  Non-Target Brand (National Brand, Vendor Brand) o Vendor Manages Quality o Vendor/Factory Executes Quality o Vendor Validates Quality o Target Validates Importer of Record requirements Vendor Expectations for Target Brand Products  Manage full quality execution of products through formal quality systems  Implement effective processes in their factories  Ensure their products meet all applicable safety, regulatory, and performance requirements through product testing  Manage and train every level of their supply chain, including agents and factories (domestic and global) using the PSQA Requirements outlined in this document and processes posted to POL rd  Have escalation plans in place with their agents or factories to address 3 party testing failures and/or inspection failures (In-line/ PSQA).  Follow any applicable display requirements as outlined in the table above Vendors Expectations for No Brand Online Only  When producing No Brand Online Only - Adult where Target is the Importer of Record, Business Partners must meet all PSQA Non-Target Brand Importer of Record (NTBIOR) requirements. Refer to the “PMC – External Process” and “PMC – External Reference Guide” posted in the Product Management and Certification (PMC) section of POL for process steps. Contact [email protected] for any questions regarding this process. Vendor Expectations for Non-Target Brand Products  Manage full quality execution of products through formal quality systems  Implement good processes in their factories  Ensure their products meet all applicable safety, regulatory, quality and performance requirements through product testing  Manage and train every level of their supply chain, including agents and factories (domestic and global)  Have escalation plans in place with their agents or factories to address failures in testing or inspections  New Business Partners must complete a Quality Program Assessment (QPA) when Target assumes role as Importer of Record (IOR) and must complete a QPA every three years, thereafter  When producing Non-Target Brand product where Target is the Importer of Record, Business Partners must meet all PSQA Non-Target Brand Importer of Record (NTBIOR) requirements. Refer to the “PMC – External Process” 9|Page PRODUCT SAFETY AND QUALITY ASSURANCE PROCESS MANUAL MAY 2023 and the PMC system training section posted in the Product Management and Certification (PMC) section of POL for process step by step. Contact [email protected] for any questions regarding this process. 10 | P a g e  PRODUCT SAFETY AND QUALITY ASSURANCE PROCESS MANUAL MAY 2023 PSQA Process Requirements General Timing and Action Product Safety and Quality Assurance (PSQA) processes are requirements for doing business with Target. These processes are critical to ensuring our guests are receiving safe and compliant products. The below table is an overview of timing and actions for PSQA Processes that apply to General Target Brand/General No Brand products. Additional or alternative requirements may apply for Non-Target Brand or Essentials products. Process Timing Actions Vendor Management Prior to starting any PSQA 1. All new vendors and factories need to begin the & Maintenance activities registration process in VMM (VMM) Set Up 2. Instructions and access can be found in Partner’s Online (POL) QPA – Quality Initial: Complete Prior to 1. Business Partner receives email to complete QPA Program Assessment Target being considered assessment(s) once vendor import ID process is initiated IOR for product in VMM and repeated every three years 2. Target PSQA and business partner work through open Complete every 3 years issues as necessary via Quality Management Program after previous assessment (QMP) system. 3. If acceptable or after approval, VMM certification for QPA will be updated to “acceptable” and Target will consider being importer of record for business partner’s product Inspectorio - Vendor New vendors and factories  Contact [email protected] for and Factory must complete prior to registration and information for both Inspectorio Sight Registration scheduling an initial FA and Rise platforms Verification Assessment Factory Assessment - Complete prior to 1. Verify with factory if there is already a valid factory Self Assessment scheduling the FA assessment. If yes, vendor does not need to complete a Verification Assessment self-assessment or schedule an FA verification assessment at this time. 2. Ensure the factory status in VMM is “Registered” and contact [email protected] if needed 3. Business Partner works with the factory to complete the required information in Inspectorio RISE and verifies an acceptable score and rating is achieved before submitting for Target’s review. If the score is not acceptable, the factory must improve its quality processes or a new factory is to be selected. If the 11 | P a g e PRODUCT SAFETY AND QUALITY ASSURANCE PROCESS MANUAL MAY 2023 factory has multiple Business Partners for Target production, the factory is required to coordinate with all Business Partners to complete the self-assessment, and the Business Partner who has the largest Target own brand business volume should be accountable to submit the self-assessment. 4. Business Partner submits the self-assessment within Inspectorio RISE to schedule the verification assessment with Target Factory Assessment - Initial: 1. Target will review the self- assessment and schedule a Verification Complete 8-10 weeks verification assessment at the factory Assessment prior to production 2. Ensure key Business Partner and factory personnel are available to participate in the FA process so all areas of Annual: the factory can be evaluated thoroughly rd Complete 12-18 Months 3. Target or designated 3 parties conduct the verification from date of last assessment at the factory, or through virtual approach if verification assessment there is safety or health concern, travel restrictions or factory is in remote location. 4. The FA report and CAPA are generated systematically in Inspectorio RISE. Notification is sent to the factory and all business partners associated with the factory within 3 days of the FA. 5. Refer to the FA Score and Rating flow chart to understand the required next steps FA – Corrective Complete CAPA within 14 1. Factory to complete and submit the CAPA in Action Preventative days of receiving Inspectorio RISE within 14 calendar days Action (CAPA) 2. The business partner is expected to assist the factory in executing the CAPA 3. Target reviews the CAPA and determines if a follow up assessment is required PWL - Product Watch Notification sent to 1. Vendor is notified via Spark notification of any products List vendor after business on the Product Watch List (PWL) following business award award 2. Execute PWL activities. The Vendor is responsible for Execute PWL activities ensuring the factory executes all additional activities throughout production required for product on the PWL throughout pre- production planning and production, including TPR, DUPRO and Set FRI(s). 3. PWL must be included in the PVP Inspection Grouping Prior to submitting the 1. Vendor completes the IGMG spreadsheet (found in POL) Management Grid Target Production by providing the requested information for each new (IGMG) Readiness booking Target Brand item 2. Vendor will assign an inspection grouping code for each item 3. PSQA will review, update and approve the IGMG spreadsheet 12 | P a g e PRODUCT SAFETY AND QUALITY ASSURANCE PROCESS MANUAL MAY 2023 TPR - Target 3-10 Days prior to 1. Vendor to book TPR meeting 14 days before requested Production production TPR date through Inspectorio. Target’s Inspection Readiness Grouping Management Grid (IGMG) must also be completed and uploaded into the Inspectorio platform at the time of TPR booking. 2. Even for products and regions out of scope of TPR, a TPR booking must be requested through Inspectorio Sight along with an IGMG, but will be waived 3. Prepare Production Validation Packet (PVP) documents, including approval samples, production calendars, and packaging approvals. Full PVP can be found on POL 4. Ensure any Product Watch List actions have been taken as outlined by CTB PSQA 5. TPR report, rating and CAPA are generated systematically and notification sent to the factory and business partner TPR - CAPA Within 48 hours from 1. The Vendor has 48 hours to respond to CAPA callouts. It CAPA request is the vendor’s responsibility to close out the issues 2. Target reviews the CAPA and determines if a re-TPR is necessary 3. If re-TPR is required, vendor is responsible to create re- TPR booking 4. Inspection cannot be conducted without addressing all outstanding issues called out on CAPA PPT – Pre-Production Prior to mass production 1. Optional, submit pre-production samples to approved Testing lab 2. Except for Essentials, should be in local lab report format, not using Target TRF Inspection - Production complete (set 1. Vendor to book DUPRO inspection via Inspectorio Sight DUPRO order): 2. TOP testing samples pulled here. TOP samples are Black Min ≥ 10% Sealed. Max ≤ 40% 3. Retail packaging must be available TOP - Top of During Production 1. Complete TRF and send to lab with black sealed Production Testing samples, any grouping forms, TDFs, or other documents for testing Inspection - Production complete: 1. Vendor to book FRI inspection via Inspectorio Sight FRI 100% 2. ORT testing samples pulled here (if needed). ORT Packing complete: samples are Black Sealed Min ≥ 80% 13 | P a g e PRODUCT SAFETY AND QUALITY ASSURANCE PROCESS MANUAL MAY 2023 Inspection CAPA Within 48 hours from 1. The Vendor has 48 hours to respond to CAPA callouts. It CAPA request is the vendor’s responsibility to close out the issues 2. Target PSQA reviews the CAPA and determines if a re- Inspection is necessary 3. If re-Inspection is required, vendor is responsible to create re-Inspection booking through the CAPA. 4. Re-Inspection cannot be conducted without addressing all outstanding issues called out on CAPA VSI-FRI - Vendor Self Production complete: 1. Only for Business Partners whose factories have proven Inspection-Final 100% performance with Factory Risk Prediction (FRP) “Low” Random Inspection Packing complete: ratings Min ≥ 80% 2. Not applicable to factories that do not receive a FRP rating. 3. Vendor to book VSI-FRI workflow via Inspectorio Sight for in scope of Vendor Self Inspection (VSI) instead of FRI 4. DUPRO inspection must have Pass results or CAPA approved/solved prior to conducting VSI-FRI ORT - Ongoing Every 6, or 12 months 1. Request black seals. Black seals can be selected at a FRI Random Testing based on Table D1 inspection. If a FRI inspection is not required at the time the black seal sample is needed, request the ORT black seal through Inspectorio SIGHT by selecting the “Sample Pull” inspection type. 2. Complete TRF and send to lab with black sealed samples, manual grouping forms, TDFs, or other documents for testing ECR – Engineering As needed for all product 1. Send Engineering Change Recertification (ECR) Form to Change and packaging changes on CTB PSQA for all product or packaging change for ECR Recertification all product types testing approval. 2. Request black seals when needed for ECR testing through Inspectorio SIGHT by booking a Black Seal Sample Pull inspection. 1. Complete TRF and send to lab with black sealed samples and approved ECR Form. 14 | P a g e  PRODUCT SAFETY AND QUALITY ASSURANCE PROCESS MANUAL MAY 2023 Vendor Management & Maintenance (VMM) Process Timing Actions Vendor Prior to starting any 1. All new vendors and factories need to begin the Management & PSQA activities registration process in VMM Maintenance 2. Instructions and access can be found in Partner’s (VMM) Set Up Online (POL) Vendor Management and Maintenance (VMM) is a tool used to streamline and consolidate the collection of information about your company. Target uses the information in VMM to understand where your company does business, capabilities, and who to contact. Information found in VMM includes: General information about your company, i.e. Headquarters info, Supplier Diversity, and Business Operations Contact Information Factory & Warehouse locations All attributes pertaining to your vendor number(s) VMM is the source of truth for vendor information. Information in VMM flows to downstream systems therefore it is very important to keep the information accurate and up-to-date. 15 | P a g e  PRODUCT SAFETY AND QUALITY ASSURANCE PROCESS MANUAL MAY 2023 Quality Program Assessment (QPA) Process Timing Actions QPA – Quality Program Initial: Complete Prior to 1. Business Partner receives email to complete QPA Assessment Target being considered IOR assessment(s) once vendor import ID process is initiated for product in VMM and repeated every three years 2. Target PSQA and business partner work through open Complete every 3 years after issues as necessary via Quality Management Program previous assessment (QMP) system. 3. If acceptable or after approval, VMM certification for QPA will be updated to “acceptable” and Target will consider being importer of record for business partner’s product Per federal regulations, importers of record are required to meet the Consumer Product Safety Improvement Act (CPSIA). It is Target's strategy to ensure due care to create confidence that manufacturers’ procedures establish the ability to be compliant with the CPSIA rules prior to Target importing goods. Target utilizes the Quality Program Assessment (QPA) to gauge our business partner’s understanding of regulatory compliance and review of their compliance practices. Completion of the QPA is mandatory for all candidate and existing business partners, regardless of product category or brand, that produce product currently or in the future to be imported by Target.  The QPA must be completed every 3 years OR potentially when the Business Partner adds a new vendor import ID / new product category that changes their QPA type from Non-Regulatory to Regulatory  If a business partner completes a QPA for non-regulated product, then obtains the capability to produce children’s products for Target or any other retailer within 3 years, a new QPA is required. Business Partner must reach out to Target to initiate the new QPA. The Business Partner will be prompted via an email from Target to access the Quality Program Assessment (QPA) via the Quality Management Program (QMP) via POL. No action will be required until receipt of the assessment in email with instructions to complete and submit the QPA assessment. There is an expectation the quality contacts in VMM are current so the assessment can be sent to the appropriate persons  The initial assessment should be submitted within 7 business days in the Quality Management Program (QMP) application. QPA MUST be completed by the Business Partner’s Quality Assurance representative. It is NOT to be completed by a Vendor Representative, Sales Representative, Factory or an Agent on behalf of the vendor. QPA to be completed for all product categories the Business Partner produces for Target and all other retailers All documents uploaded must be in English language  The QPA has the following areas of focus: Business Partner Information, QA Personnel, Regulatory, and Process Control. 16 | P a g e  PRODUCT SAFETY AND QUALITY ASSURANCE PROCESS MANUAL MAY 2023 Inspectorio – Vendor & Factory Registration Process Timing Actions Inspectorio - New vendors and  Contact [email protected] for Vendor and Factory factories must registration and information for both Inspectorio Registration complete prior to Sight and Rise platforms scheduling an initial FA Verification Assessment Inspectorio is the system Target uses to manage Target Brand product inspections, TPR meetings, and factory assessments. Inspectorio receives live data feed from Target systems.  Inspectorio SIGHT platform – this is the communication channel for vendors to submit product inspection requests, Vendor Self Inspections (VSI), and TPR requests to Target  Inspectorio RISE platform – this is the communication channel for vendors to submit self-assessment requests to Target when scheduling a factory assessment. Inspectorio Academy is a great tool to help vendors navigate the SIGHT & RISE platforms. Search key words to find trainings and tutorials.  Inspectorio Academy - https://www.inspectorioacademy.com/ 17 | P a g e  PRODUCT SAFETY AND QUALITY ASSURANCE PROCESS MANUAL MAY 2023 Factory Assessment and GMP Audit  Reference APPENDIX A for more detailed information on factories located in the US, Canada, and Europe  Reference APPENDIX F for additional information related to Factory Quality Index (FQI) for factories located in US, Canada, and Europe There are two types of factory audits used by Target. A Factory Assessment (FA) is conducted for non-FDA regulated products, and a Good Manufacturing Practices (GMP) audit is conducted for FDA regulated products. If a factory produces both FDA regulated products and Non-FDA regulated products, then the factory should follow the GMP audit process in lieu of the FA.  Examples of FDA regulated products: over the counter drugs, medical devices, cosmetics, and dietary supplements. The purpose of the FA is to assess the factory’s quality management systems and controls in advance of Target’s production, and documents a factory’s capabilities and capacity. The assessment also validates that the factory is prepared to produce Target product. The vendor must ensure the factory understands and meets Target’s requirements. To assess this on an ongoing basis, the FA is required every 12-18 months for primary factories that produce or will produce Target brand products. If a factory is shared by multiple business partners, only one assessment is required for the factory. The FA has three main processes:  Self- Assessment – The factory assessment completed by the Business Partner prior to scheduling the Target verification assessment (FA) rd  Verification Assessment – The factory assessment conducted by Target or 3 Party to provide a formal score and rating  Corrective Action Preventative Action (CAPA): The CAPA is the outcome of the Verification Assessment and should be used to drive continuous improvement of factory performance Process Timing Actions Factory Assessment - Complete Prior to 1. Verify with factory if there is already a valid factory Self Assessment scheduling the FA assessment. If yes, vendor does not need to complete a Verification Assessment self-assessment nor schedule an FA verification assessment at this time. 2. Ensure the factory status in VMM is “Registered” and contact [email protected] if needed 3. Business Partner works with the factory to complete the required information in Inspectorio RISE and verifies an acceptable score and rating is achieved. If the score is not acceptable, the factory must improve its quality processes or a new factory is to be selected. If the factory has multiple Business Partners for Target production, the factory is required to coordinate with all Business Partners to complete the self-assessment, and the Business Partner who has the largest Target own brand business volume should be accountable to submit the self-assessment. 4. Business Partner submits the self-assessment within Inspectorio RISE to schedule the verification assessment with Target 18 | P a g e PRODUCT SAFETY AND QUALITY ASSURANCE PROCESS MANUAL MAY 2023 Factory Assessment - Initial: 1. Target will review the self- assessment and schedule a Verification Complete 8-10 weeks verification assessment at the factory Assessment prior to production 2. Ensure key Business Partner and factory personnel are available to participate in the FA process so all areas of Annual: the factory can be evaluated thoroughly rd Complete 12-18 Months 3. Target or designated 3 parties conduct the verification from date of last assessment at the factory, or through virtual approach if verification assessment there is safety or health concern, travel restrictions or factory is in remote location. 4. The FA report and CAPA are generated systematically in Inspectorio RISE. Notification is sent to the factory and all business partners associated with the factory within 3 days of the FA. 5. Refer to the FA Score and Rating flow chart to understand the required next steps FA – Corrective Action Complete CAPA within 1. Factory to complete and submit the CAPA in Inspectorio Preventative Action 14 days of receiving RISE within 14 calendar days (CAPA) 2. The business partner is expected to assist the factory in executing the CAPA 3. Target reviews the CAPA and determines if a follow up assessment is required FA Score Table Initial Score Annual Score Factory Status 40-100 50-100 Green – Acceptable for Production Yellow - Factory at Risk 30-39.99 OR 40 – 49.99 OR *Initial FA: production not allowed 30-100 with Auto-fails 40-100 with Auto-fails *Annual FA: production can continue Red - Non-Compliant *Initial FA: production not allowed Below 30 Below 40 *Annual FA: proceed exit plan 19 | P a g e  PRODUCT SAFETY AND QUALITY ASSURANCE PROCESS MANUAL MAY 2023 FA - Verification Assessment Process Flow Chart NOTE: FA CAP Reviews can be executed on or before required date. Verification Assessment (FA) Process Flow – Based on Score Verification Assessment (FA) FA CAP 1 (on or before 60 days from original FA submission date) FA CAP 2 (on or before 120 days from original FA submission date) Proceed to ANNUAL: Score 50 and Above INITIAL: Score 40 and Above Schedule FA FA Non- Yes Yes CAP 1 Compliant Exit Plan Review COMPLETED FA Review COMPLETED Is there an Conducts FA FA Corrective Action Is there an Corrective Action Auto Fail? CAP 1 Preventative Action Auto Fail? Preventative Action (CAPA) (CAPA) Acceptable for Acceptable No No Production for Production Proceed to Is there an FA Non- Proceed to Yes Auto Fail? Compliant INTIAL: Score Below 40 FA Non- Exit Plan ANNUAL: Score Below 50 Compliant Exit Plan ANNUAL: Score 40-49.99 INITIAL: Score 30-39.99 Review Review Review COMPLETED No COMPLETED FA COMPLETED FA Schedule FA Conducts FA FA Corrective Action What is FA INITIAL: Score 30-39.99 Schedule FA Conducts FA Corrective Action Corrective Action CAP 1 CAP 1 Preventative Action score? ANNUAL: Score 40-49.99 CAP 2 CAP 2 Preventative Action Preventative Action (CAPA) (CAPA) (CAPA) What is FA score? INITIAL: Score 40 and Above Acceptable for ANNUAL: Score 50 and Above INITIAL: Score 40 and Above Acceptable for Production ANNUAL: Score 50 and Above Production ANNUAL: Score below 40 INITIAL: Score Below 30 Proceed to No CAP Review PSQA HQ notified thru FA Non- Conducted Non-compliant process Compliant Exit Plan 20 | P a g e PRODUCT SAFETY AND QUALITY ASSURANCE PROCESS MANUAL MAY 2023 Good Manufacturing Practices Audit (GMP) A GMP factory audit assesses the capacities, capabilities, quality systems and programs in a factory producing FDA regulated products (Cosmetics, OTC Drugs, Medical Devices, Dietary Supplements or Natural Health Products).  The standards for the GMP factory audits are based on current Good Manufacturing Practices (GMPs). All factories producing Target owned-brand FDA regulated products must submit industry standard GMP audits to QA for approval at the following frequency: o Initial Audit: Provided prior to Business Award consideration o Annual Audit: 12 months after the GMP audit date (e.g. if an audit was performed in May 2019, the next audit must be submitted to Target by May 2020)  A GMP factory audit must be conducted by a third party service provider and submitted to Target QA for review.  The scope of the GMP audit is required to be appropriate for the product being manufactured at the site.  If corrective actions are required for any findings, the factory must provide a complete and approved corrective action plan in order to be compliant to this requirement.  If a factory is used by multiple vendors, only one GMP factory audit is required.  Each factory must keep and store the record of their GMP factory audit as part of their Production Readiness meeting documentation. In addition, the factory should retain a copy of an email from QA indicating the submitted GMP audit was accepted.  The GMP audit is a vendor paid activity. 21 | P a g e PRODUCT SAFETY AND QUALITY ASSURANCE PROCESS MANUAL MAY 2023 Capability & Capacity Validation Capability & Capacity Validation process is to provide a supplemental guideline for PSQA team members to validate whether factory has the right capability & capacity to produce a certain product category or an item. This process applies to all factories producing Target Brand products. Factories producing FDA regulated products and subject to Good Manufacturing Practices (GMP) assessments are out of scope. However, if a GMP certified factory expands the production to non-FDA regulated products for Target Brand, C&C Validation might be applicable. The process can be triggered for below reasons:  Off-cycle new capability request for existing factory from vendor  If PSQA team has any capability concerns If there is any off-cycle new capability request, vendor should reach out to PSQA team, and after reviewing the request PSQA team can decide whether Capability & Capacity Validation is required, and advise if it can be combined with Annual FA. Secondly, if there is any capability and capacity concern, PSQA team should call out and partner with vendor and factory to leverage this process to assess whether the program or item is allowed for production. And it’s strongly recommended to have such conversation as early as possible. Capability & Capacity Validation is not required if there are no above no trigger points. And a Capability & Capacity Validation cannot replace Initial or Annual FA. Capability & Capacity Validation Score and Status Grid Capability & Capacity Validation Score Table Score Status 50-100 (no Auto-fails) Green – Go 40-49.99 (no Auto-fails) Yellow – CAPA Required 40-100 (with Auto-fails) *Production of new category or item is NOT allowed Below 40 Red – No Go *Production of new category or item is NOT allowed 22 | P a g e  PRODUCT SAFETY AND QUALITY ASSURANCE PROCESS MANUAL MAY 2023 Capability & Capacity Process Flow Chart 23 | P a g e  PRODUCT SAFETY AND QUALITY ASSURANCE PROCESS MANUAL MAY 2023 Product Watch List  Reference APPENDIX B for more detailed vendor/factory requirements Target’s Product Watch List (PWL) is a list of products that PSQA considers high risk and in need of additional PSQA oversight during production due to the nature of the product or program. There are many reasons a product may be placed on the PWL, including but not limited to: new vendor/factory, high profile products, historical quality issues, new vendor/factory capability, etc. Additional PSQA activities provides increased PSQA oversight to ensure high risk product meet Target’s quality expectations. Process Timing Actions PWL – Product Notification sent to 1. Vendor is notified via Spark notification of any products Watch List vendor after business on the Product Watch List (PWL) following business award award 2. Execute PWL activities. The Vendor is responsible for Execute PWL activities ensuring the factory executes all additional activities throughout production required for product on the PWL throughout pre- production planning and production, including TPR, DUPRO and Set FRI(s). 3. PWL must be available in the PVP. The CTB PSQA engineer will determine what products and additional PSQA activities are required to be designated on the PWL. If a vendor’s product is placed on the PWL, the vendor will receive a Spark notification following business award of the products on PWL including the additional PSQA activities that are required in addition to the regular PSQA process requirements. Product will be tagged as a PWL item in SPARK, and include details of the requirements. If the vendor receives notification that a product has been placed on the PWL, it is the vendor’s responsibility to ensure that the identified products, additional PSQA actions, and instructions specified on your PWL are reviewed with the factory to ensure both vendor and factory understand and execute all additional PSQA requirements specified. The PWL details will be included in the Spark Product Packet and are required to be maintained by the vendor in the Production Validation Packet (PVP) at the factory for TPR and Inspection. 24 | P a g e  PRODUCT SAFETY AND QUALITY ASSURANCE PROCESS MANUAL MAY 2023 Production Readiness  Reference APPENDIX C for more detailed information and requirements  Reference APPENDIX F for additional information related to Factory Quality Index (FQI) for factories located in US, Canada, and Europe Target Production Readiness (TPR) meetings provide proactive support for vendors and factories after business award. The purpose of the meetings are to resolve questions and issues before production begins. This includes setting expectations for vendor and factory managing the program awarded, reviewing the requirements for quality, and taking a proactive approach to prevention and resolution of issues prior to production beginning. These meetings ensure the vendor and factory are successful in delivering high-quality products on-time. Process Timing Actions TPR – Target 3-10 Days prior to 1. Vendor to book TPR meeting 14 days before requested Production Readiness production TPR meeting date through Inspectorio. Target’s Inspection Grouping Management Grid (IGMG) must also be completed and uploaded into the Inspectorio platform at the time of TPR booking. 2. Even for products and regions out of scope of TPR, a TPR booking must be requested through Inspectorio Sight along with an IGMG, but will be waived 3. Prepare Production Validation Packet (PVP) documents, including approval samples, production calendars, and packaging approvals. Full PVP can be found on POL. 4. Ensure any Product Watch List actions have been taken as outlined by CTB PSQA 5. TPR report, rating and CAPA are generated systematically and notification sent to the factory and business partner TPR - CAPA Within 48 hours from 1. The Vendor has 48 hours to respond to CAPA callouts. It CAPA request is the vendor’s responsibility to close out the issues 2. Target reviews the CAPA and determines if a re-TPR is necessary 3. If re-TPR is required, vendor is responsible to create re- TPR booking 4. Inspection cannot be conducted without addressing all outstanding issues called out on CAPA. TPR Scope (TPR Booking and TPR Meeting)  All new Target owned brand products produced in factories  All new Target owned brand products produced in factories in the United States, Canada and Europe  Programs where a Pilot Lot Verification (PLV) is required (TPR Booking Only)  Target.com exclusive products (unique orders)  All new Target owned brand products produced in  Carry-forward products with DPCI change FQI LOW factories in the United States, Canada and 25 | P a g e Europe ThisLine missing from here PRODUCT SAFETY AND QUALITY ASSURANCE PROCESS MANUAL MAY 2023 Target will assess vendor’s full TPR questions using the TPR scoring methodology to validate if product is ready for bulk production. Inspection cannot be conducted without addressing all outstanding issues called out on CAPA. TPR Rating Table TPR Rating CAPA Action Required Pass N/A Acceptable for Production Pass with Follow-up Required Acceptable for Production CAPA needs to be approved by Target before DUPRO Inspection Fail Required Not Acceptable for Production CAPA needs to be approved by Target before DUPRO Inspection Production Readiness Rules and Requirements  TPR meeting must be held prior to production start date.  Vendor reviews program placement and requirements with the factory. This includes but is not limited to: specs, standards, shade bands, manufacturing variability, capabilities and capacities, etc.  Certain departments and categories require a Pilot Lot Verification (PLV) at the TPR meeting, see APPENDIX C for details.  Vendor needs to request TPR booking and fill out Initial Vetting Questionnaire on Inspectorio SIGHT platform at least 14 days prior to actual TPR meeting date.  Target’s Inspection Grouping Management Grid (IGMG) must also be completed and uploaded into the Inspectorio Sight platform at the time of TPR booking (Please see Inspection Process section and APPENDIX E for inspection grouping rules, tools and process).  Local PSQA team will review the submitted TPR booking. Once booking is confirmed, Target will schedule and conduct the TPR meeting.  Target will apply white seal and yellow seal to the production sample per sample approval process. Approvals include but not limited to: red seal sample (pre-production sample), individual component approvals, product specifications, etc. 26 | P a g e PRODUCT SAFETY AND QUALITY ASSURANCE PROCESS MANUAL MAY 2023 Inspection Grouping Management Grid (IGMG) Process Timing Actions Inspection Prior to submitting the 1. Vendor completes the IGMG spreadsheet (found in Grouping Target Production POL) by providing the requested information for each Management Grid Readiness booking new Target Brand item (IGMG) 2. Vendor will assign an inspection grouping code for each item 3. PSQA will review, update and approve the IGMG A module in Inspectorio has been activated that requires the vendor to book inspections only according to PSQA approved grouping codes and item attributes. If they are not approved and uploaded into the Inspectorio system, they will not be available for inspection booking. Refer to APPENDIX E for more information. Additional Resources & Documents in POL POL Home > Library > Produce Product > Product Compliance > Product Inspection > Requirements > Inspection Grouping Requirements > Inspection Grouping Rules In last Version OCTOBER 2022, this content was after PRODUCT WATCH LIST , 27 | P a g e  PRODUCT SAFETY AND QUALITY ASSURANCE PROCESS MANUAL MAY 2023 Product Testing and Inspection rd A list of authorized 3 Party Service Providers for Target Owned Brand Product can be found on POL at the following path: rd POL Home>Library>Working with Target>Team Partners>Product Safety and Quality Assurance Team>Documents>Authorized 3 Party Lab for Target Brand Testing The table for Product Testing and Product Inspection is shown combined because these two activities have overlapping timing. Note there are two separate tables – the first table applies to all products except Essentials, and the second table applies to only Essentials products. Contact PSQA/ESQA if uncertain if a product is Essentials. All Products (except Essentials) Process Timing Actions PPT – Pre- Prior to mass 1. Optional, submit pre-production samples to approved lab Production production 2. Should be in local lab report format, not using Target TRF Testing Inspection - Production 1. Vendor to book DUPRO inspection via Inspectorio Sight DUPRO complete (set 2. TOP testing samples pulled here. TOP samples are Black Sealed. order): 3. Retail packaging must be available Min ≥ 10% Max ≤ 40% TOP – Top of During Production 1. Complete TRF and send to lab with black sealed samples, manual Production grouping form, TDFs, or other documents for testing Testing Inspection - Production 1. Vendor to book FRI inspection via Inspectorio Sight. FRI complete: 2. ORT testing samples pulled here (if needed). ORT samples are Black 100% Sealed. Packing complete: Min ≥ 80% BSSPO - Black Only be used if 1. Vendor to book BSSPO via Inspectorio Sight. rd Beal Sample there is no 2. Samples pulled and black sealed by PSQA or 3 party inspector Pull Only inspection (i.e. FRI following TRF or grouping form or other documents for testing waived by FRP Low) but sample still needs to be pulled to complete retesting, ORT, VRT, etc. BSSPO for retesting Production Complete Min ≥ 10% Max ≤ 40% BSSPO for ORT,VRT Production/Packing Complete : 28 | P a g e PRODUCT SAFETY AND QUALITY ASSURANCE PROCESS MANUAL MAY 2023 Min ≥ 40% Inspection Within 48 hours 1. The Vendor has 48 hours to respond to CAPA callouts. It is the CAPA from CAPA request vendor’s responsibility to close out the issues 2. Target PSQA reviews the CAPA and determines if a re-Inspection is necessary 3. If re-Inspection is required, vendor is responsible to create re- Inspection booking through the CAPA. 4. Re-Inspection cannot be conducted without addressing all outstanding issues called out on CAPA VSI-FRI - Production 1. Only for Business Partners whose factories have proven performance Vendor Self complete: with FRP “Low” ratings. Inspection- 100% 2. Not applicable to factories that do not receive a FRP rating. Final Random Packing complete: 3. Vendor to book VSI-FRI workflow via Inspectorio Sight for in scope of Inspection Min ≥ 80% Vendor Self Inspection (VSI) instead of FRI ORT – Ongoing Every 6, or 12 1. Request black seals. Black seals can be selected at a FRI inspection. If Random months based on a FRI inspection is not required at the time the black seal sample is Testing Table D1 needed, request the ORT black seal through Inspectorio SIGHT by selecting the “Sample Pull” inspection type. 2. Complete TRF and send to lab with black sealed samples, manual grouping form, TDFs, or other documents for testing ECR – As needed for all 1. Send Engineering Change Recertification (ECR) Form to CTB PSQA for Engineering product and all product or packaging change for ECR testing approval. Change packaging changes 2. Request black seals when needed for ECR testing through Inspectorio Recertification on all product SIGHT by booking a Black Seal Sample Pull inspection. types 3. Complete TRF and send to lab with black sealed samples and approved ECR Form. Essentials Only Process Timing Actions PPT Prior to mass 1. Optional for new items, shipment may occur on passing PPT report and production passing DUPRO/FRI inspection. Report must be in Target format using Essentials Target Test Request Form (TRF). TOP still required, but shipment not held for TOP results, if PPT is conducted. Inspection - Production complete 1. Vendor to book DUPRO inspection via Inspectorio Sight DUPRO (set order): 2. TOP testing samples pulled here. TOP samples are Black Sealed. Retail Min ≥ 10% packaging must be available Max ≤ 40% TOP During Production 1. Complete TRF and send to lab with black sealed samples, manual grouping forms, TDFs, or other documents for testing Inspection - Production complete: 1. Vendor to book FRI inspection via Inspectorio Sight FRI 100% 2. ORT testing samples pulled here (if needed). ORT samples are Black Packing complete: Sealed Min ≥ 80% Annual requirement only, not required for every PO 29 | P a g e PRODUCT SAFETY AND QUALITY ASSURANCE PROCESS MANUAL MAY 2023 BSSPO - Black Only be used if there is 1. Vendor to book BSSPO via Inspectorio Sight. rd Seal Sample no inspection (i.e. FRI 2. Samples pulled and black sealed by PSQA or 3 party inspector following Pull Only waived by FRP Low) but TRF or grouping form or other documents for testing sample still needs to be pulled to complete retesting, ORT, ECR, etc. BSSPO for retesting Production Complete Min ≥ 10% Max ≤ 40% BSSPO for ORT,VRT Production/Packing Complete : Min ≥ 40% VSI-FRI - Production complete: 1. Only for Business Partners whose factories have proven performance Vendor Self 100% with FRP “Low” ratings Inspection- Packing complete: 2. Not applicable to factories that do not receive a FRP rating Final Random Min ≥ 80% 3. Vendor to book VSI-FRI workflow via Inspectorio Sight for in scope of Inspection Vendor Self Inspection (VSI) instead of FRI ORT Every 12 months 1. Request black seals. Black seals can be selected at a FRI inspection. If a FRI inspection is not required t the time the black seal sample is needed, request the ORT black seal through Inspectorio SIGHT by selecting the “Sample Pull” inspection type. Complete TRF and send to lab with black sealed samples, any grouping forms, TDFs, or other documents for testing ECR – As needed for all 1. Send Engineering Change Recertification (ECR) Form to CTB PSQA for all Engineering product and packaging product or packaging change for ECR testing approval. Change changes on all product 2. Request black seals when needed for ECR testing through Inspectorio Recertification types SIGHT by booking a Black Seal Sample Pull inspection. 3. Complete TRF and send to lab with black sealed samples and approved ECR Form. 30 | P a g e  PRODUCT SAFETY AND QUALITY ASSURANCE PROCESS MANUAL MAY 2023 Product Testing  Reference APPENDIX D for more detailed information and requirements  Reference Table D1 to determine the MST schedule required The Multi-Stage Testing (MST) procedure is designed to test products throughout the product lifecycle. This helps identify potential issues prior to initial shipment and continually monitor quality for ongoing shipments. Vendors must ensure that Target Multi-Stage testing is built into their production plan. Vendor must manage their programs, including any optional steps such as development testing and pre-production testing, on a local test report. Target reserves the right to require product testing be conducted at any point in the product lifecycle. Target Brand products are tested to 3RD party laboratory protocols, which evaluate aspects including, but not limited to, safety and regulatory requirements, labeling, warnings, claims, performance, and transit testing. MST Test Stages The Three Test Stages Are: 1. Pre-Production Testing (PPT) (ESQA Only) – Performed prior to beginning production with samples selected by the vendor for submission. 2. Top of Production (TOP) – Performed on actual production samples. Pulled and black sealed by 3rd party inspectors on the first production run. 3. Ongoing Random Testing (ORT) – Performed on subsequent production samples as outlined by product category in the MST ORT Cadence. Pulled and black sealed by 3rd party inspectors.  ORT 6 - occurs 6 calendar months after the most recent full satisfactory test report.  ORT 12 - occurs 12 calendar months after the most recent full satisfactory test report. Partial Test Stage  Top of Production - Partial (TOP-Partial) - Test stage for new DPCIs that can be grouped with product that has a valid TOP or ORT test report. If testing is required it is completed on black seal samples from the first production run prior to first shipment.  Ongoing Random Testing - Partial (ORT-Partial) - Test stage for existing DPCIs that can be grouped with product that has a previous valid ORT test report. If testing is required it is completed on black seal samples from the first production run prior to first shipment. Engineering Change Recertification (ECR) Test Stage Testing that is required to be performed on production samples after an engineering change, including all product or packaging changes on all product types that occur during the production lifecycle, per the approval of PSQA/ESQA CTB on an Engineering Change Recertification (ECR) Form. Samples are pulled and black sealed by a 3rd party inspector.  ECR - Full - Test stage when full protocol testing is performed to reissue the TGCC due to an engineering change. Testing is completed on black seal samples, pulled by a 3rd party inspector, from the first production run of the product with the engineering change. 31 | P a g e PRODUCT SAFETY AND QUALITY ASSURANCE PROCESS MANUAL MAY 2023  ECR - Partial - Test stage when only partial protocol testing is performed on the product or component to reissue the TGCC due to an engineering change. Testing is completed on black seal samples, pulled by a 3rd party inspector, from the first production run of the product with the engineering change. Product Testing Rules and Requirements  The Vendor is responsible to ensure their product complies with all applicable U.S. Federal, State, and local regulations. Products that do not comply with these requirements are banned from sale in the United States or in certain locations in the United States. Non-compliant product cannot enter the country and may be seized by US Customs, until compliant. Products that violate any regulations will be subject to withdrawal from Target stores and supply chain, product recall, US government agency disposition, chargebacks, fees and fines. A satisfactory lab test result is not a certification that a Vendor’s product meets all legal requirements.  Target has, in many cases, imposed more stringent standards, earlier compliance effective dates and impact to a wider scope of products for Target Brand products than the published requirements. Therefore, it is imperative that vendors check POL frequently and pull protocols from the 3rd party test labs before negotiations to ensure full understanding of Target’s requirements and processes.  If safety issues are found during testing, additional testing may be required and may lead to a product recall.  If performance issues are found, further testing may be required and may lead to a market withdrawal or product recall.  Proper safety warnings and instructions for use should always be included when necessary.  Protocols must be obtained directly from a Target approved 3rd party lab partner: Bureau Veritas, Intertek, SGS, Underwriters Lab (UL), or CSA. This ensures the latest revised protocol, and applicable protocol is provided.  Not all labs are approved for testing all product categories, please see “Authorized 3rd Party Lab for Target Brand Testing” on POL.  Samples must be sent to an approved 3rd party testing facility within the country of production or closest lab if no lab is located within the country of production.  Testing is required per vendor per product per factory.  Testing must be completed for all sellable DPCIs/SKUs. This includes dynamic master component DPCIs, which has multiple items, each containing a unique UPC. Each UPC within the DPCI is required to be tested.  For all product or packing changes on all product types, the Engineering Change Recertification (ECR) process must be followed.  During product development, if a vendor determines that a given performance criteria in the protocol cannot be met due to the unique nature of the product, a Testing Deviations Form (TDF), found on POL, can be filled out and submitted to PSQA to request an exemption. An exception grant does not relieve the Merchandise Vendor of any legal liabilities set forth in any corporate contractual agreement Exemptions are not guaranteed. For Apparel Only – Email: [email protected] with questions or requests regarding exceptions before commit is issued.  Target also requires the vendor/factory to verify their label claims, which includes all product, packaging and marketing (in-store, online, digital, circulars) claims.  Black seals are required for all test samples. Vendor must ensure that black seals are requested through Inspectorio Sight for all test stages (including ORT testing), even if the factory is FRP or FQI Low and the inspection is waived. Black seal sample pulls are a vendor paid activity. 32 | P a g e  PRODUCT SAFETY AND QUALITY ASSURANCE PROCESS MANUAL MAY 2023 Product Inspection  Reference APPENDIX E for more detailed information and requirements on Product Inspection  Reference APPENDIX F for additional information related to Factory Quality Index (FQI) for factories located in US, Canada, and Europe  Reference POL Home>Produce Product>Product Compliance> Product Inspection> Factory Risk Prediction for information on Factory Risk Prediction (FRP) Target’s product inspections validate quality expectations are met, identify potential issues early, and provide a basis to measure factory performance. Inspection uses TPR results, approval samples (red and yellow seal samples), specifications (Target, vendor generated/provided), test reports, and other documents in the PVP to validate product meets Target’s requirements. The vendor is responsible for scheduling all required inspections for all shipments (set, replenishment, carry forward, etc.) through Inspectorio SIGHT. Target’s inspections are performed by Target approved third party inspection agencies following Target’s requirements and criteria. Additional training for scheduling inspections can be found on POL (Home>Library>Produce Product>Product Compliance>PSQA Updates>Training > Vendor Training – Inspection Scheduling) There are three types of inspections at Target  DUPRO (During Production): Schedule between 10%-40% Produced on first set order.  DUPRO is required at a DPCI level and all DPCIs should have at least one DUPRO (including color/size extension for Carry Forward items).  For seasonal products, new DUPRO is required in each season even if it is a carry forward item without any change due to the long gap between production runs.  Additional DUPRO may be required by PSQA where needed, example for PWL items.  FRI (Final Random Inspection): Schedule at 100% Produced and minimum 80% Packed  FRI is waived for ▫ factories identified as “Low” by the Factory Risk Prediction (FRP) program or Factory Quality Index (FQI) “Low” where FRP is not applicable ▫ items attributed as PWI at TPR ▫ exceptions, e.g. D51 Early Set Order  Ongoing performance will be monitored  If trends of poor performance are identified, Target may require FRI to ensure quality rd  Set order FRI for PWL is required to be conducted by 3 Party  VSI-FRI (Vendor Self Inspection): Schedule at 100% Produced and minimum 80% Packed  VSI workflow version for vendors/factories identified Factory Risk Prediction (FRP) rating as “Low” where vendors are empowered to Perform inspection in Inspectorio SIGHT and guarantee that the product complies with Target Quality Requirements before shipment  Replaces third party conducted FRI Timing for scheduling an inspection in the Inspectorio Sight platform 1. Asia & Central America – submit booking at minimum of 3 business days prior to requested inspection date 2. US, Canada, Mexico, Europe, Middle East & Africa – submit booking at least 10 business days prior to requested inspection date Overview of Inspection Process 33 | P a g e PRODUCT SAFETY AND QUALITY ASSURANCE PROCESS MANUAL MAY 2023 1. Prior to Target conducted inspections, Vendor/Factory must ensure  Target’s Inspection Grouping Management Grid (IGMG) is completed, approved by Target and uploaded into Inspectorio via TPR booking process (See APPENDIX E for inspection grouping rules, tools and process)  TPR follow-up actions are completed as necessary  Provide up-to-date and complete PVP, approval samples and product specification  Perform Factory Internal Product Inspection (DUPRO or FRI)  Ensures all CAPAs are completed  Factory is prepared for the Target inspection 2. Vendor/Factory performs a Factory Internal Product Inspection (DUPRO or FRI), ensures the PVP is complete and up to date, and prepares for the Target inspection. 3. Vendor requests DUPRO or FRI, or VSI-FRI through Inspectorio SIGHT. 4. The inspector follows the Target Sampling Plan (see APPENDIX E) to determine the number of units to randomly pull a sample from the available quantity of goods. 5. The inspector evaluates each unit in the sample pull and identifies any defects. 6. Defects are classified as Critical, Major, or Minor Defect per Target’s Defective Classification List (DCL). 7. There is zero tolerance for Critical defects (safety and regulatory) – one critical defect will FAIL the inspection. 8. If one or more defects are found on a unit, the unit is considered a defective unit. 9. A certain number of Major and Minor defective units are allowed per the Target Sampling Plan  Each defective unit may exhibit multiple defects (critical, major, and minor)  Each defective unit can be counted for critical, major, an