Gap Inc. Quality Assurance Manual

17 Measurement Audit Sampling Plans ………..18 Vendor Managed Inventory VMI Audit Procedures ……… 18 Pack Audit Requirements ……….... • Trims card the factory can prepare this in advance • Dy

Table of Contents

Page # I Introduction, Scope and Contacts

Introduction ……… 4

Purpose……… 4

Policy on Quality ……… 4

Scope ……… 4

Contacts ……… 5

II Requirements for Pre-Production and Pilot Run Pre-Production Requirements ……… 6

Purpose of Pre-Production Meetings ……… 6

Preparing for Pre-Production Meetings ……… 6

Meeting Participants ……… 6

Meeting Materials ……….…… 7

Meeting Timing ……… 7

Purpose of the Pilot Run ……… 7

Pilot Cutting ……… 7

Wet Processing ……….… 8

III Bulk Production Requirements In-Process Inspection ……… 10

Purpose ……….……… 10

In-Process Inspection Forms ……… 10

Cutting Inspection Procedures ……… 10

Trim & Sewing Inspection Procedures ……… 10

Shipment Audits ……….……… 11

Audit Methods ……… 11

Shipment Inspection Forms ……… 11

Acceptable Quality Level (AQL) ……… 11

AQL Standards ……… 12

Critical Defects ……… 13

Major and Minor Visual Defects ……… 14

Visual Audit Sampling Plans ……… 14

Visual Audit Procedure for Non-Destructive ……… 15

Measurement Audit Procedures ……… ……… 17

Measurement Audit Sampling Plans ……… 18

Vendor Managed Inventory (VMI) Audit Procedures ……… 18

Pack Audit Requirements ……… 18

Full Carton Pack Programs ……… 19

Full Carton Pack Audit Procedures ……… 20

Seconds and Overruns ……… 20

Communication and Records ……… 20

IV Safety Procedures Safety Procedures ……… ……… 21

V Needle and Sharp Metal Objects

Policy ……… 22

Back Charge Policy ……… 22

Needle Control ……… 22

Needle Detection ……… 25

Other Metal and Sharp Object Contamination ……… 26

Verification of Factory’s Needle Control Procedures ……… 26

Logs ……… 28

I Introduction, Scope & Contacts

Introduction

This Quality Assurance Manual for Vendors is developed by Gap Inc as a supplement to the Vendor Handbook and outlines the quality expectations of all apparel products The requirements have been carefully established considering ongoing business conditions and Gap Inc.’s constant desire to excel

in the quality of the product they design and develop

Gap Inc.’s Quality Assurance program is not intended to replace the vendor’s own quality control program as Gap Inc expects its vendors and suppliers to develop a positive culture of quality to enable them to deliver products that comply with all Gap Inc.’s requirements This culture must begin with vendor management’s commitment to develop a quality organization and to embrace a proactive approach to drive continuous improvement in product quality Gap Inc expects vendors to particularly focus on following areas:

• Allocating appropriate resources to ensure quality systems are working and effective

• Encouraging active participation of all workers in improvement efforts

• Ensuring that manufacturing processes are stable, capable, and under control at all times and are producing defect free products

• Ensuring that adequate in-process inspections and testing are in place to monitor quality

• Documenting systems, processes, procedures, etc to maintain effective operations

• Creating open, honest and timely communication with Gap Inc.’s sourcing offices

Purpose

The purpose of the Quality Assurance Manual is to communicate product quality requirements to vendors, suppliers and agents as it outlines the policies, procedures and quality expectations Vendors, suppliers and agents that do business with Gap Inc must be familiar with the contents of this manual and the Appendix worksheets and forms Certain Chapters are written to outline procedures for Gap Inc’s internal QA teams However, the vendor may use it to train their QA teams

or use it in any manner to supplement their QA processes

Policy on Quality

Gap Inc.’s policies on quality of apparel products are developed by defining various measures and by setting standards that vendors are required to meet or exceed when shipping every purchase order to Gap Inc

San Francisco, California 94105 USA

Email: Corporate Quality Assurance

GIS Offices

GIS Americas

5200 Blue Lagoon Drive, Suite 300

Miami, Florida 33126 USA

Tel: 305-476-7500

Fax: 305-476-7545

GIS Hong Kong

20-22/F, BEA Tower, Millennium City 5,

418 Kwun Tong Road, Kwun Tong

Kowloon, Hong Kong

Tel: 852.2.730.9883

Fax: 852.2.736.8903

GIS India

B-1/I-2, Mohan Co-operative Industrial Estate,

Mathura Road, New Delhi, India

II Requirements for Pre-Production and Pilot Runs

Pre-Production Requirements

This section has been written as a guideline for Gap Inc.’s QA personnel but the vendor can apply and adopt it to train their internal QA staff as well In-depth preparation is a critical step to ensure success of any manufacturing program Gathering timely and accurate information of styles and production details from the Merchandising is a critical preparation step

Purpose of Pre-Production Meetings

The purpose of the pre-production meeting is to ensure that all teams that are involved get an opportunity to go over the details and are able to develop plans to deliver product that complies with all the requirements The intent of preparation is to facilitate early detection of potential quality issues and help develop action plans to prevent it in bulk production Pre-production requirements are outlined below

Preparing for Pre-Production Meeting

Pre-production Samples:

In preparation for a pre-production meeting, once a final Garment Size Specifications sheet (GSS)

with size set comments is available, a factory must prepare either a jump size set or a full size set of

pre-production samples, incorporating all the fit comments, for evaluation during the pre-production meeting

QA will evaluate the samples on:

This step is expected to help speed up the production process as potential production issues are likely

to surface during such runs and can be addressed before the start of bulk production This can be a critical step for large programs

Order Placement Information:

QA should get a Confirmed Placement Summary (CPS) from the merchandising department that provides visibility to styles being placed with each vendor and its facilities QA must therefore work with merchandising and the factory to obtain production information such as production planning, raw materials and accessories status, etc This will help the QA to plan meetings and/or visits to support pre-production activities

Meeting Participants

The pre-production meeting must involve all parties responsible for the quality of the production The following personnel are recommended to be in a pre-production meeting QA should make an effort to schedule and coordinate the meeting to time it with facility’s production planning or other such key meetings

From the Factory

• Factory manager/Production manager

• Production floor supervisor/s (cutting/sewing/finishing/packing)

• Gap certified QA

• Merchandiser

From Gap Inc

• QA/Garment technician/appropriate QA handling the program

• Merchandiser

• Product safety specialist (for kids/baby program) if based at source

It is recommended that either the spoke merchant or the hub merchant get involved in pre-production meetings as well Involve the product safety specialist in these meetings as necessary if there are special safety issues that need clarification

• Trims card (the factory can prepare this in advance)

• Dye lots (as made available by the mill)

• Pre-production garment samples

• Sample with final size set comments sent by merchants

• Product Safety Line review comments or equivalent (for kids/baby programs)

Special comments & specific quality issues must be recorded on a Pre-production Sample Evaluation Checklist (Appendix I, form #2) to ensure proper follow up action by the factory, in-house QA, and the line supervisor

For baby/kids garment production, QA must review any product safety recommendations contained in the line review report so that they are correctly implemented in production

Meeting Timing

The most appropriate time to hold a pre-production meeting is before the cutting operation As previously stated the intent of pre-production meeting is to consolidate all information and to ensure that all parties have the same details and understanding of the program If possible the evaluation of pre-production samples should also be done prior to the meeting

Purpose of the Pilot Run

The main objective of a pilot run is to review and anticipate potential production issues that may arise during various operations such as cutting, sewing, finishing, pressing and also to review any issues related to production measurements, product safety and overall quality

For programs that require special wet processing treatments, the pilot run samples may be kept aside for wash pilot at a later date when the wash standard is approved The factory should start a pilot run soon after the pre-production meeting

Pilot Cutting

Cutting is the first process prior to the commencement of a pilot run QA should review the following points at the pilot cutting stage with the factory personnel and/or in-house QA:

• Proper shrinkage has been built into the paper patterns

• GSS used is “Final” and critical fit comments are interpreted onto the paper pattern

• Fabric testing has been done & meets the basic testing standard

• Dye lot or shades have been sorted and grouped; out of tolerance (i.e off shade) rolls removed & put aside for a later discussion with the fabric mill

• Face and back of fabric has been clearly defined and identified This is critical for certain

Factory should proceed with the cutting operation only when above details are verified and confirmed, The details should be reported on an Shipment Inspection Report (Appendix I, form #8), using the Fabric/Cutting Checklist and defect portion

If questions arise concerning specifications, fabric or material standards, color or shade, QA must contact the merchandising representative for clarification It is a good practice to verify with merchandising representative if there are discrepancies between their own information and those of the factories before proceeding with bulk production

Pilot Run Set up

The pilot run should be set up to simulate a small production run comprising of the entire size range or having at least a jump size range in three possible color ranges The minimum recommended units are 200 Depending on the availability of colors, the vendor may be required to do more than one pilot run

QA must check that all components, trims, accessories and labels are available to meet the production schedule If certain components or trims are not available a pilot run may be done using prototype or available trims and components In such cases QA will ensure that a proper audit is later performed to verify that the correct trims and components are used in bulk production

Evaluating Pilot Run

As pilot runs are mini production runs, they are audited according to Gap Inc.’s visual and measurement audit standards for shipment These standards may vary according to the brand, and are located within the QA Manual However, the sample size to be audited should not exceed 50 pieces The audit results should provide the quality level so that the vendor can address any non-compliance issues in bulk production

Pilot runs are evaluated in following areas:

• Hand feel and color against approved standards If standards are not available examples of fabric colors and range of shades should be forwarded to the merchandiser or production representative for their records

• Placement and size of pattern pieces against specification sheet

• Seam construction, thread color and size against specification sheet

• Check that all small parts for baby’s and kids’ wear are securely attached and are meeting product safety regulations

• Attachment quality of buttons, rivets and grommets on adult garments

• Garment measurements against specification sheet

QA must inform merchandising of any quality issues that cannot be corrected and are beyond control

of the vendor (e.g excessive fabric defects making cutting difficult) Merchandising will work with SF

GP to set an acceptable tolerance for such PO’s

Wet Processing

Setting Shade Band Standards and Tolerance

In case of programs that go through wet processing and special washes, it is the responsibility of the vendor to sort fabrics into appropriate shade groups and dye lots, prepare a shade blanket, sew together shade lots from the fabric inventory assigned for use, and wash those blankets to match the approved standards In doing so it is assumed that the vendor will remove any out of tolerance fabric rolls and only use those that match the finish and the wash standard

In case of woven fabrics it is recommended to sew 12 leg panels using three depths of colors so as to assess overall aesthetics, high-low effect, and abrasion Pockets and other embellishments should also be sewn on the leg panel to assess for abrasion

Wash Pilot

Once the shade band tolerance is set and the aesthetics approved, QA follows up with the factory on performing a wash pilot so that final bulk production tolerance can be confirmed Garments from pilot run or from bulk production may be used in a wash pilot, depending on timing of final wash approval

Evaluating a Wash Pilot

A wash pilot is performed on the first 500 garments of a bulk production run or as early as possible when a wash standard has been approved and set The wash pilot must include appropriate light, medium and dark shades or dye lots to enable proper assessment of bulk production

A representative sample size of 50 pieces of garments are inspected according to a statistical sampling plan and evaluated for the following criteria:

• Shade tolerances are within approved shade bands or dye lots Check this by:

• Stacking up the different shades and reviewing them against approved shade bands

• Vendor can rework as necessary to match the standard

• Shades that are out of tolerance must be sorted and communicated to merchant for further decision

• QA may reject small quantities of production with shade bands outside of standard tolerance if it does not impact size ratio

• High-lows and abrasive effects are in the correct position & not over abraded:

• Hold a garment up when checking for high low and abrasive effect and numbers of nicks against approved standards

• Key areas of garments to check are the edges along waistbands, bottom hem, outseam and inseams, pocket edge and belt loops

• Sandblasting, permanganate, localized bleaching, whisker-finish:

• Hang a garment up when checking for correct positioning and size of an appropriate finish

• This helps to give a more accurate assessment of the required three- dimensional look

• In most cases, for localized effects, they should be gradually faded out at the edge for a natural look

QA can always seek technical assistance of a hub wet processing specialist to address and resolve wet processing problems at the pilot stage Once the wash standard is set, in-house QA should follow

up on the process by monitoring routine bulk production to ensure shade continuity and matching to approved standard

III Bulk Production Requirements

In-Process Inspection

The purpose of an In-Process inspection is to check the following: raw materials, marker layout, spreading, cutting, sewing, wet processing, screen printing, pressing and other embellishments Sampling plan should not be used at this stage since a lot size is a bundle For woven and knit production, the first In-Process inspection begins when knitting/weaving commences

While inspecting semi-finished goods and batches during work-in-process, QA must keep records on defects found for discussion and communication with the manufacturer/GIS production representatives

The number of defects found during a cutting, measurement or visual inspection should be noted on the various In-Process reports It is not the purpose of the In-Process inspection to try and measure percent defective, but to identify potential problems that arise during these operations These In-Process reports will be the basis for data collection and evaluation and to help drive improvements in the operations

In-Process Inspection Forms

At the relevant In-Process Inspection stages, QA will use the following forms:

• In-Process Inspection Report (Appendix I, form # 4)

• In-Process Audit Worksheet (Appendix I, form #5 & 6)

• In-Process Graphics Worksheet (optional ~ not included)

Please note these forms must be used as is during the In-Process Inspection If there are questions

or change requests regarding the forms, contact the GIS QA lead or Corporate QA in San Francisco

Cutting Inspection Procedures

The following are QA procedures when performing an In-Process cutting inspection:

• Verify and record fabric test reports

• After cutting, perform visual and measurement (i.e top to bottom ply, hard pattern to cut pieces) inspection of cut parts using the In-Process Inspection Report (use the Fabric/Cutting Checklist and defective portion) (Appendix I, form #4)

• Discuss the problems found and recommend solutions to factory management

• If the factory can not correct the problem, the production representative should be contacted for corrective action

• If questions regarding specifications, fabric/material standards, color, etc arise, the production representative should be contacted for corrective action

Trim & Sewing Inspection Procedures

The following are QA procedures when performing an In-Process inspection:

• All fabrics, components, trims, and labels should be checked against production approved standards, and must reflect correct country of origin and fibers and component contents

• Review and record all required Gap, Inc fabrics, components, and product test reports

• Verify needle control and safety procedures are being followed

• Check to make sure that all components, trims, and labels are available to meet production schedules

• Perform random checks in sewing lines and finishing

• Verify factory is inspecting at least six pieces of each operator’s semi-finished goods to check for workmanship defects ~ Record finding on the appropriate In-process Inspection report

• Check hand and color against approved standards ~ If standards are not available, send the production representative examples of fabric colors and range of shades

Shipment Audits

The purpose of a shipment audit is to determine the quality of the products by its visual appearance, measurement to specifications and packing execution The shipment audit must be performed before the finished product is shipped This is done in order to minimize the risk of shipping defective product

to Gap Inc distribution centers, stores or other designated locations

Destructive Audit

This type of audit covers measurement, visual and packaging audits and is performed during packing process when garments are boxed for shipping

Shipment Inspection Forms:

At the relevant shipment inspection stage QA will use the following forms:

• Visual Inspection Worksheet (Appendix I, form #7)

• Finished Garment Measurement Sheet (Appendix I, form #9)

• Box Audit (Appendix I, form #10)

Please note, these forms must be used as is during the Shipment Inspection If there are questions

or change requests regarding the forms, contact the GIS QA lead or Corporate QA in San Francisco

Acceptable Quality Level (AQL)

Acceptable Quality Level is the maximum percent defective that, for the purpose of sampling inspection, is considered satisfactory as a manufacturing process average

The table on the following page shows the AQL for each brand Gap Inc requires that vendors must meet or exceed these standards on every purchase order shipped to Gap Inc

AQL Standards

Table 1: AQL Standards for Gap, Old Navy, Athleta & Outlet brands

ANSI/ASQC Zi.4 1993 Single Sampling Plan, Level I

Gap Body

Gap Adult &

Kids

Baby Gap

Old Navy Athleta BRFS

Gap Outlet

Hardlines all Brands

Critical

Defects

0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 Major Visual

Defects

2.5 2.5 2.5 4.0 2.5 2.5 4.0 2.5 Minor Visual

0.25 major

0.25 major

0.25 major

0.25 major

0.25 major

0.25 major

0.25 major

* = Defect is a Defect

*(A) = Gap Body departments 165,167 & 168

*(B) = Gap Body (excluding departments 165,167 & 168)

Table 2: AQL Standards for Banana Republic

ANSI/ASQC Zi.4 1993 Single Sampling Plan, Level I = BR & BR UK

ANSI/ASQC Zi.4 1993 Single Sampling Plan, Level II = BR Japan & BR Monogram

BR & BR UK BR Japan & BR Monogram

Critical

Defects

0.1 0.1 Major Visual

2.5 Wovens & Denim**

4.0 Knits & Sweaters

2.5 Wovens (a) & Denim(a)**

4.0 Knits & Sweaters OCR/Ticket

Audit

0.25 major

0.1 major

Critical Defects

A Critical Defect is defined as anything that can potentially pose a hazard or cause an injury or be considered harmful to the product user A Critical Defect can be, but is not limited to, sharp points and edges, broken needles, loose components or other foreign items which are potentially harmful and/or may pose a hazard Improper or inaccurate country of origin or fiber, component content markings and Consumer Product Safety Commission (CPSC) “snug fitting sleepwear” measurements that are greater than tolerance are also considered Critical Defects (For details on design restrictions for snug fitting children’s sleepwear please refer to Section III on Flammability outlined in the Softlines Manual

at: http://gapsource.gap.com/manuals/productguidelines/sl/flammability.pdf )

Visual Critical Defects

To find Critical Defects pertaining to product safety, component content markings and country of origin, the method used is visual inspection

Measurement Critical Defects

To find Critical Defects pertaining to “snug fitting sleepwear”, the method used is the measurement audit

The AQL for appraising Critical Defects is 0.1

If a critical defect is found either during visual inspection or during measurement of snug fitting sleepwear audit, the audit automatically fails and requires the entire lot to be inspected All critical measurements must be removed before the lot can be submitted for a second audit

Procedure for Measurement Audit of “Snug Fitting Sleepwear”

• Determine if the product is “snug fitting sleepwear" by looking at the sketch on the front page

of the spec (GSS) It will state if it is a "snug fitting sleepwear" style subject to CPSC regulations On the measurement page of the Karat GSS governed by CPSC regulations will

be in CAPITAL LETTERS On the measurement page of the PLM GSS governed by CPSC the initials “CPSC” will be at the beginning of each point of measure description

• Use the standard measurement sampling plan as stated in the measurement audit procedures section of this manual (Refer to the Measurement Audit Sampling Plan: Page 18)

• Any CPSC regulated measurement - those in CAPITAL LETTERS or with the CPSC at the beginning of the description - that is greater than tolerance on the plus (+) side will be considered a critical measurement defect

• Any CPSC regulated measurement - those in CAPITAL LETTERS or with the CPSC at the beginning of the description - that is greater than tolerance on the minus (-) side will be considered a measurement defect

• The AQL for appraising Critical Measurement Defects is 0.1 and shipping decision should be made only when the audit is in compliance

Major and Minor Visual Defects

Visual defect is defined as a product flaw that prevents the product from realizing its full market value There can be several reasons for visual defects and can be attributed to fabric defects, defective trims

or components, poor workmanship, construction defects, poor housekeeping, poor handling, transportation damage, etc The visual defects are classified as Major or Minor based on the location

on the garment

Visual Audit Methods

There are two methods for auditing visual defects The vendor should contact the GIS quality manager to get the recommendation on what method to be used

Option 1: Non-Destructive Visual Audit (audit performed before garments boxed)

Option 2: Visual Auditing begins after boxing/packing process has started

Visual Audit Forms and Reference Sheets

At relevant stages of the Visual Audit, use the following forms:

• Shipment Inspection Report (Appendix I, form #8)

• Visual Inspection Worksheet (to be used for non-destructive audits that occur over an

extended period of time) (Appendix I, form #7)

Please note these forms and sheets must be used as is during the Visual Audit At relevant

stages of the Visual Audit, reference the Classification of Visual Defects Sheets (Appendix II)

Visual Audit Sampling Plans

Table 3: Visual Audit Sampling Plan for BabyGap, GapKids, Gap Adult, Gap

Body, Banana Republic, Banana Republic UK, Old Navy, Athleta, BRFS, & Gap

Outlet

ANSI/ASQC Z1.4 1993 Single Sampling Plan Level (I)

Garment Visuals Ticket Check

(OCR)

Shipment Size

Lot

Sample Size

Critical AQL 0.1 Pass/Fail

AQL 2.5 Pass/Fail

AQL 4.0 Pass/Fail

AQL 0.25 Pass/Fail

ANSI/ASQC Z1.4 1993 Single Sampling Plan Level (II)

Garment Visuals Ticket Check

AQL 2.5*

Pass/Fail

AQL 0.1 Pass/Fail

Visual Audit Procedure for Non-Destructive

This type of audit may take place over an extended period of time i.e more than one day When the non-destructive visual audit is performed over more than one day, the results are recorded on the Visual Inspection Worksheet (Appendix I, form #7)

This worksheet must be reviewed and signed by factory management The information on this worksheet must be transferred and attached to the Shipment Inspection Report (Appendix I, form #8)

If any defects are found during this visual audit, a Gap Inc representative will ensure that corrective action is taken to address the defects

Sample Size for Auditing

Sample size that is to be used for auditing will depend on the size of the lot and sampling plan used The lot size is the total number of units in a given shipment Samples are to be taken randomly and must include all sizes and colors Therefore in such cases samples should be drawn based on the ratio of each size and color to the total units in that shipment

When multiple Purchase Orders are ready for shipment, they can be combined and the audit performed on a sample taken from this combination However, if the audit fails all Purchase Orders will fail and if it passes all Purchase Orders will pass

Major Defects

During this audit any defects as described below will be counted as major:

• Incorrect size strip (31x31 strip on a 34x31 pair of pants)

• Incorrect flasher

• Incorrect logo label (wrong size)

• Incorrect non-OCR (BARCODED) price ticket (These items must correspond to the Bill of Materials (BOM) as to item number and size)

• More than one major defect per product should only be counted as one major defect

• Above items are coordinated by size and style

Minor Defects

If consistent minor defects are seen that affect the overall appearance of the product, the shipment audit fails This failure must be brought to the attention of the production representative However, there is no need to notify production representative when the minor defects are within acceptable range

Labeling

Incorrect country of origin and/or incorrect fiber content label on any portion of the shipment will result

in failure of the shipment For details on country of origin information please refer to Softlines Manual Section I: http://gapsource.gap.com/manuals/productguidelines/sl/label%20guidelines.pdf

Shade Variation

If shade variations occur within a shipment, the production representative must be notified and samples should be sent for approval The vendor should also re-inspect 100% and sort units by shade band The results of shade variation observed during re-inspection must be reported to the production representative for a decision If the production representative requests that the shades be separated then all cartons should be checked and accordingly segregated for different shades

OCR Audit

Any trim that contains OCR (BARCODE) information must be audited during the visual auditing process This will be a separate audit and results must be posted to the Shipment Inspection Report (Appendix I, form #8) When an incorrect OCR trim/label/ticket is detected, the facility must perform an additional audit of OCR trims to determine the severity of the problem as well as the correction

Measuring the Weight of Sweaters

Gap, Old Navy and Athleta Sweaters:

Three pieces of the median size (the average of the smallest to the largest in the range) are weighed The results are added together, and then divided by three (3) This will determine the average weight per sweater

Banana Republic Sweaters:

Sweaters of every size in a program must be weighed individually and calculated for average weight based on the required size ratio in a placement memorandum according to the below listed procedures:

• Assuming that the required size ratio is 1:2:2:1 (XS/S/M/L)

• Randomly select four sweaters of every size; weigh them individually and record the results for the interim audit report

• Calculate the average weight of each sweater size by adding the four (4) readings together and dividing by four (4)

• Based on the size ratio 1:2:2:1, the average overall weight of a sweater is calculated in the following manner:

(avg wt of sizes “xs” x size ratio 1) + (avg wt of size “s” x size ratio 2) + (avg wt of size “m”

x size ratio 2) + (avg wt of size “l” x ratio 1) /six (6) = overall weight of sweater

Visual Audit Acceptance Criteria

• If the number of visual defects is equal to or less than the number allowed per the sampling plan, the audit passes The defective products found are to be sent back for repair or seconds

• If the number of visual defects is more than the number allowed, the audit fails The production representative is to be notified to determine the disposition of the shipment The vendor has the option to perform 100% inspection to get an assessment of percentage that is defective

• If the audit fails, record in the comment column as to when the re-audit will take place When the re-audit is done use the same procedures as new audit, including packing

• Pass or fail status of Visual Audit is determined based on the sample plan and the corresponding AQL Standards for each Brand as listed in Tables 1, 2, 3 & 4

Measurement Audit Procedure

Measurement Defects

While performing a shipment audit, all measurements that are out of tolerance are considered

“Measurement Defects.”

Procedure for Measurement Audit:

Measurements should be taken on products after wash, after press and sometimes before packing Measurement audits must be done using a metal or fiberglass tape measure Vinyl and plastic tape measures are prohibited

• Fiber glass tape measures should be calibrated using a Metal ruler

• Vendors in-house QA supervisor must calibrate the QA /DA fiberglass tape measures monthly

• All calibrations should be recorded and dated for reference as requested by Gap Inc QA Only critical measurement points highlighted on the specification sheet (Karat specification sheets utilize an * to denote the criticals / PLM specification sheets utilize QC “yes” boxes to denote the criticals) are taken at the time of the shipment audit A product with more than one measurement defect is counted as one defect only

• Select samples at random

• Measure products at critical measurement points which are noted with a (*) on the approved Karat specification sheet or a QC “yes” on the PLM specification sheet

• Record all measurements taken on the Finished Garment Measurement Sheet (Appendix I, form #9)

• Highlight all measurement defects but make sure that a product with more than one measurement defect is counted as one defect only

Determining the Acceptance of a Measurement Audit

Acceptance is based on the AQL (See AQL Standards Tables #1 - 4) pass/fail levels for Measurement defects

Accept

• An audit is considered acceptable when total numbers of measurement defects is less than or equal to the number of defects allowed (see guideline and calculations below)

Fail

• An audit is considered failed when total numbers of measurement defects exceed the number

of defects allowed (see guideline and calculations below)

Exceptions

The above criteria does not apply to the children’s “snug fitting sleepwear” program as it is governed

by the CPSC Children’s Snug Fitting Sleepwear Regulations

Measurement Audit Sampling Plans

Table 5: Sampling Plan for Measurement and Pass/Fail Chart – Single Color

ANSI/ASQC S1.4 1993 Single Sampling Plan Level (1)

Lot Size by Color

Sample Size

AQL 2.5 Pass/Fail

AQL 4.0 Pass/Fail

AQL 6.5 Pass/Fail

Five (5) sizes or less 20 1/2 2/3 3/4

More than five (5) sizes 32 2/3 3/4 5/6

Table 6: Sampling Plan for Measurement & Pass/Fail Chart– Multiple Colors

ANSI/ASQC Z1.4 1993 Single Sampling Plan Level (1)

Lot Size by Color

Sample Size

AQL 2.5 Pass/Fail

AQL 4.0 Pass/Fail

AQL 6.5 Pass/Fail

More than (5) Colors 125 7/8 10/11 14/15

Vendor Managed Inventory (VMI) Audit Procedures

Gap QA will check the pre production sample, take part in pre production meetings and will conduct random shipment audits at the vendor site

Select regions have empowered Gap Designated Auditors (DA) to release the goods for shipment if

no quality issues are found Any audit (measurement, visual, OCR, packing) that fails is repaired/reprocessed and re-audited before shipment If the DA fails an audit they will contact Gap

QA for disposition If the audit passes the DA audit, the PO will ship There are safeguards in place around this process, and Gap will de-certify a DA if they find issues

All audits must pass current measurement, visual, OCR, and packing standards as per our established sampling tables before shipping to Gap Inc distribution centers (DCs)

Production Lot and DPO Audits

For VMI styles, Measurement, Visual, and OCR audits are performed on production lots versus DPO’s because the units are ready earlier than the actual ship dates If there is to be any rework or reprocessing this allows the vendor the time needed to make the appropriate corrections preventing delay of shipments Production lots are defined as units that are ready to be packed with appropriate size and quantity breakdowns

Packing audits are performed at the DPO level verifying counts, labeling, and assortment accuracy

Pack Audit Requirements

The vendor is required to perform the packing audit to determine packing accuracy compliance The shipment is to be checked for assortment accuracy, counts verification, and labelling accuracy This is the final audit before goods are shipped

There are two types of packing audits, one done by the vendor entitled Factory Audit (“FA”) and the other done by Gap Inc QA entitled Acceptance Audit (“AA”) to assess the packing accuracy It is necessary to use “FA” and “AA” terms to differentiate similar terms used in the Distribution Centers

The “AA” is the responsibility of the facility/vendor and as per Gap Inc.’s Policy this audit is

mandatory Gap Inc QA or those designated by Gap Inc to perform shipment audits will be

responsible for a full “AA” of the vendor

Pack Audit Defects include the following

• Carton not as specified (size and construction)

• Crushed or damaged cartons

• Use of wire or metal strapping to strap cartons

Pack Audit Procedure

• When performing the pack audit, the vendor must place “FA” on each box audited This “FA” must be placed in a one inch by one inch space (1x1) at the top right hand corner of the box information label (the label containing Purchase Order, style, quantity, etc.) This “FA” must not

be covered with tape or other labels because it will be used as a guide by Gap Inc field personnel and Gap Inc distribution centers to verify audits and assess these cartons

• Upon failure of an assessment, the auditor will continue the random sampling, using the Factory Pack Audit Sample Plan (see Table 14) If the Factory Pack Audit fails, the factory must then take appropriate action to correct the problems found Discuss the results with factory representatives Receive and record the factory action plan to correct the issues found

in the audit A re-audit will then be performed (not assessment) to verify the packing errors were corrected A re-audit will be performed and recorded on a separate Shipment Inspection Report (Appendix I, form #8) This re-audit must be attached to the original report

• Upon completion of this assessment and/or audit, complete the appropriate section in the Shipment Inspection Report (Appendix I, form #8) Record the results of the “PA” and the results of the “FA”

• If problems found create shipping delays, notify the merchandiser/production representative for corrective action

Table 7: AQL and Sampling Plan for Pack Audit for Factory/Vendor:

ANSI/ASQC Z1.4 1993 Single Sampling Plan Level II - 0.65 AQL

Factory Pack Audit Sample Plan - AQL 0.65

# of cartons Sample Size Pass Fail

Full Carton Pack Programs

Each vendor who participates in Gap, Inc.’s full carton pack program should establish a packing audit

system

Prototype Pack

For each Full Carton Purchase Order, the vendor is required to have in their packing department a

prototype packed carton for training This prototype is to be approved by Gap QA

Sample Size

The Vendor should determine what quantity of cartons can be packed, and held, before closing the

cartons

This carton quantity becomes the population from which the sample is drawn The way a sampling

plan works is the larger the population the smaller the sample size is as a percent of the population

To optimize the inspection time, the maximum quantity of cartons packed and labeled but not closed

is desired Once that number is determined, the vendor should choose the sampling size from the

pack audit’s sampling plan (0.65 AQL)

Full Carton Pack Audit Procedures

The factory is responsible for the full carton pack audit The following are procedures for performing a

full carton pack audit:

• It is important for the vendor to keep the population size at a level that takes into consideration

the staging area available as well as the factory’s accuracy history If an audit does not take

place until the population is large, a great deal of extra handling will take place if it fails We

recommend that in the beginning, a vendor that is new to full carton pre-packs choose a small

population to audit until history can be developed and expertise learned

• A same criterion for major packing errors is to be used as a normal shipment audit; use the

same criterion as listed under Pack Audits (FA and AA procedures)

• Gap Inc will perform an assessment after the audit is completed by the factory/vendor

• Should vendors allow improperly packaged merchandise to ship, it will be the responsibility of

the vendor to pay for any special handling required later in order to correct those errors at Gap

Inc.’s distribution centers

Seconds and Overruns

Vendors must be reminded that all seconds or overruns sold to anyone other than Gap Inc must have

all Gap Inc logos, labels, or other identification removed in accordance to the guidelines outlined in

the Vendor Handbook After all are removed, then an audit must be scheduled with Gap QA to

verify that the removal has been executed correctly