The last few sections of this week's article are problematic for suppliers.
The China regulatory authorities are signalling concern over Chinese vehicles that could 'lose face' for the country through both OEM &/or China Supplied component recall failures (the export strategy was built over 20 years, at least. Now there is tsunami of export the state does not seem to be able to control).
And you have Nissan and Honda effectively stating they need the cheapest components possible on their vehicles, from Chinese companies. I'm not convinced Honda nor Nissan have considered their enterprise risk management. I get there are difficult decisions to be made, but can they really afford to buy cheap...!!!
Warranty is an unforgiving bitch, and death based recalls a burden that will be commercially and individually difficult to live with. In my humble opinion, suppliers MUST manage a de-scope creep wisely, D-FMEA and Testing to prescribed requirements may just have been a contractual god-send! Those that put in the intentional effort to use them as Resilience cintract protection will be vindicated, those that cut their costs through a lack of effort may have to pay the premium saved.
Mark - thanks! This is a really interesting take. You've got, in essence, the same risk coming from two different directions: compressed validation from Chinese regulators and aggressive cost-cutting at the OEM level. Either way, the suppliers are going to absorb it.
I think your idea that one of the few lines of defense a supplier has is the actual contract is insightful. DFMEA and test evidence against agreed-upon requirements is what decides who owns it later.
One thought... The annual cost efficiencies achieved from suppliers usually come from changes in materials, design, processes, and tooling. If those analyses and tests aren't updated along with the contract, not only is the supplier taking a hit from the pencil sharpening, but also potentially on the hook for warranty and quality issues. So now, we have the contract, the requirements / tests, and the paper trail of a customer's change decisions. Sheesh! It's any wonder that these things get built!
The word used in many a commercial agreement, quality. Yep, boring I know. A little tame. And for many, "something to do with inspection isn't it".
However, the term Quality used in the sense that it provides a measure, or an assurance, or limits of acceptance, of feature delivery, at accepted durability, reliability, and capability of product and process design, functionality, worthiness, at a mutually agreed rate and cost. Without rigour, a contracted commercial agreement is pretty foundationless, liable to movement from what can responsibly and resiliently be delivered. Without a reasonable understanding a contract may suffer scope creep, when the customer demands change, that is financially a burden to an unwary or unaware supplier.
The Quality process is used by just about every motor manufacturer, even though they may use different wording and phraseology, but ostensibly it is APQP & PPAP. Looked at by many as a trivial set of hurdles to be overcome with a minimum amount of effort for both the customer and the supplier. Done diligently, right from the very start of agreeing requirements (even in SW), it can be a commercial directors or commercial lawyers greatest assistant when change is later requested, whether that be during a new project or years into production after officials from the supplier and the customer have jointly signed a warrant agreeing that what was required, was achieved, no more, no less. Unless of course, someone is prepared to pay for a change to the warranted, contracted commercial agreement of the defined and agreed standards and requirements.
The last few sections of this week's article are problematic for suppliers.
The China regulatory authorities are signalling concern over Chinese vehicles that could 'lose face' for the country through both OEM &/or China Supplied component recall failures (the export strategy was built over 20 years, at least. Now there is tsunami of export the state does not seem to be able to control).
And you have Nissan and Honda effectively stating they need the cheapest components possible on their vehicles, from Chinese companies. I'm not convinced Honda nor Nissan have considered their enterprise risk management. I get there are difficult decisions to be made, but can they really afford to buy cheap...!!!
Warranty is an unforgiving bitch, and death based recalls a burden that will be commercially and individually difficult to live with. In my humble opinion, suppliers MUST manage a de-scope creep wisely, D-FMEA and Testing to prescribed requirements may just have been a contractual god-send! Those that put in the intentional effort to use them as Resilience cintract protection will be vindicated, those that cut their costs through a lack of effort may have to pay the premium saved.
Great post guys.
Mark - thanks! This is a really interesting take. You've got, in essence, the same risk coming from two different directions: compressed validation from Chinese regulators and aggressive cost-cutting at the OEM level. Either way, the suppliers are going to absorb it.
I think your idea that one of the few lines of defense a supplier has is the actual contract is insightful. DFMEA and test evidence against agreed-upon requirements is what decides who owns it later.
One thought... The annual cost efficiencies achieved from suppliers usually come from changes in materials, design, processes, and tooling. If those analyses and tests aren't updated along with the contract, not only is the supplier taking a hit from the pencil sharpening, but also potentially on the hook for warranty and quality issues. So now, we have the contract, the requirements / tests, and the paper trail of a customer's change decisions. Sheesh! It's any wonder that these things get built!
The word used in many a commercial agreement, quality. Yep, boring I know. A little tame. And for many, "something to do with inspection isn't it".
However, the term Quality used in the sense that it provides a measure, or an assurance, or limits of acceptance, of feature delivery, at accepted durability, reliability, and capability of product and process design, functionality, worthiness, at a mutually agreed rate and cost. Without rigour, a contracted commercial agreement is pretty foundationless, liable to movement from what can responsibly and resiliently be delivered. Without a reasonable understanding a contract may suffer scope creep, when the customer demands change, that is financially a burden to an unwary or unaware supplier.
The Quality process is used by just about every motor manufacturer, even though they may use different wording and phraseology, but ostensibly it is APQP & PPAP. Looked at by many as a trivial set of hurdles to be overcome with a minimum amount of effort for both the customer and the supplier. Done diligently, right from the very start of agreeing requirements (even in SW), it can be a commercial directors or commercial lawyers greatest assistant when change is later requested, whether that be during a new project or years into production after officials from the supplier and the customer have jointly signed a warrant agreeing that what was required, was achieved, no more, no less. Unless of course, someone is prepared to pay for a change to the warranted, contracted commercial agreement of the defined and agreed standards and requirements.