In recent months, when talking about the automobile industry a lot of the focus has been on driverless cars and what they offer for consumers. Less heralded, but likely to have a significant impact over the next decade, is the introduction of a new Global Automotive Standard for quality management.
IATF 16949 may be not be generating headlines or excitement around the globe, but we all should be aware of the evolution taking place within the industry. The adoption of this standard by companies providing products and services to car manufacturers (known as OEM – Original Equipment Manufacturer) and the far-reaching implications should not be underestimated.
Those who are certified to ISO/TS 16949 have to transition to IATF 16949 by September 14, 2018. An estimated 66,000 companies are presently involved in this process that began last month. And of course, this will also apply to other suppliers who have, to this point, not been certified.
Everyone Is Accountable
So far, any media coverage on the change has been focused on the so-called whistleblower policy. Some insiders point out this type of protocol has been in place for some time for many of the larger companies. But given the fallout from the VW emissions scandal it is acknowledged the existing fail-safe measures were not enough. That is about to change.
In October of this year, a U.S. District Court Judge approved the largest auto-scandal settlement in U.S. history. The $15 billion settlement comes after VW accepted responsibility for cheating on emissions testing and putting dirty cars on the road.
IATF 16949 will require that there is:
Employee code of conduct
Ethics escalation policy
This is aligning corporate responsibility with best practice, and certification to the new standard does require companies to be independently audited. Organizations now have to show they are putting in place provisions to protect employees who raise quality control concerns.
“Over a period of time the organization is going to have to be able to demonstrate that this is a working, operable process,” according to Frank Lomas BSI’s director, Technical Review, Automotive. While he acknowledges it is going to take time to see results, it does bring to the attention of top management that they have a responsibility to make sure it is working.
A Supply Chain You Can Trust
Now, suppliers throughout the supply chain to the smallest widget maker will be encouraged to be certified. It is now incumbent on each organization to ensure it is only receiving goods from a company that can demonstrate it has an effective quality management system meeting the requirements of the standard. This should mean quality assurance levels are maintained throughout the process. Every piece of equipment that goes into your car should satisfy the requirements for quality.
While the Tier 1 suppliers to the OEMs have had to be certified for a number of years, until now, that has not always been the case as you go further down the supply chain. As we have seen, sub-standard products have been making their way into vehicles from non-Tier 1 suppliers. The new standard should prevent this from happening.
The industry has not experienced such a dramatic change since 1999, just three years before OnStar was put into vehicles. Since then, the technological and computerised developments within a car have been taking place at break-neck speed. Cars these days are no longer emissions-spewing, gas-guzzlers. In fact this year, the authorities in Paris banned drivers from using cars built before 1997 in the city.
Lomas acknowledges there is a burden and cost for suppliers to become certified but he says the efficiencies they will accrue will far outweigh the initial investment. The changes will lead to a better quality management system (QMS) for suppliers, a sharper focus on safety, more comprehensive warranty provisions and for the first time the issue of embedded software in vehicles will be addressed.
For manufacturers, it is all about identifying and mitigating risk and liability. Under the new standard, they will be able to trace a non-conforming product more easily. This should mean only cars with the defect will have to be recalled.
For consumers, they should see a reduction in vehicle recalls and potentially cheaper cars. Fixing only the cars that require a replacement part and the avoidance of massive lawsuits will be a financial boon to the industry. “The frequency and the magnitude of warranty claims will come down and safety will improve” according to Lomas “and while it will cost some money to implement the measures to do that, it will certainly be far cheaper than the cost phase when you have these mass recalls, plus the damage to a manufacturers’ reputation”.
The cost-benefit analysis will be driven by safety standards and in one of the most competitive industries in the world that should be good for consumers, even if they still have to use a steering wheel.