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Warranty management

Warranty claims? We have time for that…

Zero km claim means a customer complaint which occurred at the customers’ production line due to any issue with our supplied products. In case of a complaint, the customer states that the product provided is not according to the agreed specification.

The supplier has the task to prove if that is OK, or if it is confirmed as NOK, to identify the root cause and plan and implement robust actions that prevent re-occurrence.

In the meantime, the supplier must ensure that only good parts arrive at the customer production line; therefore, implements different containment actions.

In practice, it generally means internal and external sortings and additional actions depending on the case.

Even for one NOK part, we pay external sorting companies, block, and re-screen finished products, hold problem-solving meetings, and spend an enormous time to make sure we can entirely eliminate the re-occurrence possibility. Once again, due to one single complaint, maybe due to a single individual failed part.

This is part of the continuous improvement process and also a customer requirement as well (and it is the interest of the Organization too).

To fulfill this requirement, suppliers build-up analysis teams, invest in analysis tools, pieces of equipment, documentation. They also have customer quality teams and spend a lot of money on training the team; usually, they lead customer communication and problem-solving teams.

Of course, they have some other responsibilities, but the zero km complaint handling takes the majority of their time.

And there are claims from the field as well.

Here the customer behaves a bit differently. They do not shout at you when there is a new rejected part (unless it is critical, or they experience massive fallings on the field – but that is a different story).

They send some parts for analysis without informing you by separate e-mails or phone calls.

They will not highlight what and how they expect you to do. How to analyze the product? How to report it?

Some of them might not even send the failed parts if the supplier does not explicitly request it.

Debit notes will regularly land at the finance department, but fortunately not too high amount – at least at the beginning…

This can goes for months, almost a year, sometimes more.

Then the disaster begins; the bomb finally arrives.

A huge debit notes about millions of Euros – as the cost clearance for the last year. Or the finance colleagues notice that the debit notes amounts are higher and higher.

The alarm mode switches on finally. Investigation begins, the quality department is asked what was going on.

Then it can turn out that nobody knows. Engineers thought everything was going well. All returned parts were analyzed. “The customer never said it was not OK.”

Yes, this is right. And most of the time they will not say. It is written in the customer-specific requirements. It is the obligation of the supplier to understand and apply these requirements.

If these requirements were not kept during the analysis and reporting, the debit notes are valid, even if in reality, the supplier part was OK. No one cares that at that time. They will not change the amounts just because the deadlines were not kept either.

How is it possible that many automotive suppliers have big customer quality teams but mainly focus on zero km issues? Some of them do not even have warranty specialists in place.

How is it possible that they are not even aware of the specific requirements about field failure analysis? They invest a lot in eliminating (many times) individual zero km issues but miss the importance of the warranty’s focus.

If they only recognize that something is going on the field when the big debit note arrives – that is just too late. That will cost thousands of times more than the zero km claims.

As I described in my previous article, there are dedicated audits to verify the supplier’s warranty process’s compliance with these requirements, but it is rarely used.

Warranty impacts customer satisfaction more than the zero km issues as the final users (drivers, car owners) are involved and have an unpleasant experience with the car caused by the supplier.

Summary:

It is highly recommended to focus on warranty.

As the cost can often be millions of Euros, suppliers should ensure their warranty processes are according to the requirements. Not only because it is an IATF 16949 requirements, but because it is the own interest of the suppliers, and it has a high impact on customer satisfaction.

It worth investing in the necessary resources, including the improvement of team competence.

Do not only believe that your warranty processes are up to the requirements but verify it by conducting specific internal audits.

As always, think in system with Pro Automotive.

If you are interested in reading articles about automotive quality management topics, best practices, case studies, follow Pro Automotive.

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Warranty management

Automotive warranty management – 8 tips to save money

Warranty management is usually not in focus at the manufacturing location – as long as the received monthly debits are within a certain acceptable limit.

Generally, when it is over a limit, it is too late to control or requires an enormous effort to minimize the risk.

We should always keep in mind that our product performance in the field has a significant impact on customer satisfaction. Every claim means a faulty part from a vehicle; the car must be taken back to the service to repair.

Here are some tips about the focus areas of a proper warranty management process.

  1. Be aware of customer-specific requirements

Sounds easy, right?

Based on my auditor experience, many automotive suppliers are not fully aware of these requirements’ details.

Each OEM has its additional customer-specific requirements, which describe how the warranty management works and what their expectations are.

Study these requirements carefully and ensure that the internal processes are fully aligned with them, including the NTF (no trouble found) process.

2. Plan the warranty analysis process

The supplier needs to be prepared for warranty analysis before SOP according to VDA Field Failure Analysis booklet.

Yes, before SOP.

This means that each newly developed product’s exact analysis process needs to be defined during APQP before the part is used in vehicle series production.

3. Collect and analyze the data from the customer

OEMs continuously provide comprehensive data about the rejected parts, including vehicle data, mileage, failure code, symptom, etc.

Use these data to understand patterns better, identify lifetime issues, predictions for the future failing rate / overall risk.

4. Continuously analyze rejected parts from the field

The supplier’s best interest is to continuously monitor the warranty performance, which ensures that new issues are identified and solved as quickly as possible.

The outcome of the analysis is the basis for Technical Factor (TF) agreements with the customer. That means an agreement about the percentage of the overall warranty cost, which the supplier needs to cover.

5. Keep the deadlines

Simple advice, but as an auditor, I have experienced many times that suppliers were debited just because the given deadline was not kept.

Even if the final analysis outcome was that the supplier is not responsible, if it is over a specific deadline, the debit would come.

6. Verify debit notes and the data behind

Sounds obvious again, but my experience shows it worth mentioning.

Do not accept the debit notes without fully understand the data behind them. Customers are making mistakes too – as the suppliers do as well.

Take the time to review the data and request a modification if something is not OK.

7. Continuous improvement

Warranty management is part of the continuous improvement process. Use the lessons learned for future product and process improvements.

Keep in mind, APQP Phase 1 includes a review of historical warranty and quality information.

8. Audit your field failure analysis process

Do not learn from your mistakes. Detect any lack of fulfillment of the requirements by conducting Field Failure analysis audits.

VDA Field Failure Analysis & Audit standard describes a uniform evaluation method.

The audit for the field failure analysis is an independent audit standard based on the field failure analysis process’s specific requirements.

VDA 6.3 process auditors can perform the audit if they have professional skills in the field failure analysis process.

Look for an experienced auditor and identify any issue on time.

As always, think in system with Pro Automotive.

If you are interested in reading articles about automotive quality management topics, best practices, case studies, follow Pro Automotive.

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