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by Roderick A. Munro, Ph.D., and Ronald J. Bowen

Have you noticed the recent news about the automotive industry? Industry gossips hint that U.S. automakers aren’t happy with supplier performance under the QS-9000 requirement and consider ISO/TS 16949:2002 a last chance for the international community to prove its ability to ensure “perfect parts.” Consider:

Toyota has enough cash to buy both Ford Motor Co. and General Motors Corp. if it wanted--but why would it?

Toyota is developing a new vehicle line--Scion--aimed at young buyers. (People laughed when it developed Lexus, too.)

GM and Ford have made tremendous quality improvements during the last 20 years, but in some key areas they haven’t kept pace with Japanese automakers.

During the 1980s, U.S. OEMs were concerned about supply-base reductions for a number of reasons, notably eliminating poor performance. Now OEMs want to raise the bar even higher. Who will be left? Only “excellent” suppliers? What will it take to become an excellent supplier in the automotive community? How will suppliers deliver only perfect parts?

Both Ford and GM are closing the gap between them and Toyota and are working with suppliers to ensure that parts delivered to automakers’ assembly plants are the best they can be. This article takes a look at a few efforts that are currently underway.

Common practices of U.S. automakers

The industry uses something called automotive core tools to establish processes that meet customer requirements. The five basic tools include:

Advanced product quality planning and control plans. These are developed by product engineers rather than quality engineers. The process monitors planning procedures during the design and development of assembly plant products and establishes controls to ensure perfect parts.

Production part approval process. This is carried out by the supplier before production to ensure that everything is ready. Thus, the run-at rate must be achieved before the OEM assembly plant is ready to launch.

Failure mode and effects analysis. This is conducted in both design and potential production failure modes to anticipate problems and ascertain their risks prior to any occurrences.

Preventive action is carried out to eliminate the problems.

Statistical process control. This reduces variation in the process and monitors process behavior characteristics. Under the international standard, all employees are required to know how to analyze statistical data. Using all the basic statistical tools--not just control charts--is key.

Measurement systems analysis. It’s more important than ever for a supplier to be aware of a measurement system’s uncertainties in order to establish benchmark data about ongoing improvements. A single gage repeatability and reproducibility study will no longer suffice. At least for families of gages, suppliers must conduct stability, bias, linearity and graphical analysis studies in conjunction with the gage R&R analysis.

Along with these five basic tools, additional methods are now in use. ISO/TS 16949:2002’s new process approach emphasizes process auditing, and internal auditors are expected to identify turtle and octopus diagrams that lead to preventive action reports, as illustrated on pages 60 and 62. This approach should produce many more PARs than the traditional corrective action report method. If all process activities are correct and flawlessly executed, outputs will likewise be flawless.

Six Sigma initiatives have been established. Specially trained individuals and teams identify variation reduction opportunities and process improvements. Both Ford and GM now require suppliers not only to use problem-solving tools but anticipate quality improvements of both parts and services that are delivered to OEMs.

Improvements at General Motors

Is GM returning to the days of the conglomerates, fully supported by Wall Street? The stage was set even before the “bubble,” those stock market excesses created by momentum players and traders.

GM’s pilot programs, Yellowstone and Blue Macaw, might give us a glimpse into the future. Blue Macaw is GM’s small-car program in Brazil, where it builds the Chevrolet Celta. Lear is only one of its just-in-time suppliers. In 2000, Lear built a 63,000 ft2 facility adjacent to GM’s Gravatai Automotive Complex so that car seats could be installed immediately into the Celta.

Yellowstone is the code name for GM’s North American Car Group’s plan to achieve profitability. “Yellowstone builds on Blue Macaw and tailors the concepts to North America,” explains GM’s Bill Hogan. The Yellowstone concept includes codesigning with suppliers as well as modularity, the latter being defined as combining subsystem components into a single assembly-part number for delivery to the plant. With codesigning, GM and its supply base work together to define module requirements. Suppliers are far more involved in product development than ever before.

Since 1999, GM has replicated these two pilots and the lessons learned. In a September 2000 article in Automotive Industries, John McCormick wrote: “GM’s new plant in Thailand is cranking out Opel Zafires--and setting the stage for other ‘common footprint’ plants to come. In the pipeline for the next two to five years are new Delta Township and Lansing Grand River plants in Michigan, as well as a massive investment in a fresh facility at Opel’s mammoth Russelsheim, Germany, complex. All of these and more to follow will benefit from the lessons learned in Rayong, Thailand, and its three sister plants in Poland (Gliwice), China (Shanghai) and Argentina (Rosarlo).”

For more information, read the following articles regarding Yellowstone and Blue Macaw:

“Yellowstone Provides Basis for Profitability in Small Cars, GM’s Hogan Tells World Congress,” PR Newswire, Jan., 1999 (www.findarticles.com/cf_0/m4PRN/1999_Jan_11/53545441/print.jhtml)

“Another Piece of the Puzzle (General Motors’ new Thailand plant),” Automotive Industries, Sept., 2000 (www.findarticles.com/cf_0/m3012/9_180/65352732/print.jhtml)

“Lear Corporation Inaugurates New Brazilian Plant to Supply General Motors Corp.’s Gravatai Automotive Complex,” PR Newswire, July, 2000 (www.findarticles.com/cf_0/m4PRN/2000_July_20/63573448/p1/article.jhtml)

GM’s strategy appears to be right on track. Lansing Grand River is in place, and suppliers now build and install the front-end module right on line. Given this, it’s easy to imagine suppliers staffing future assembly centers. Each step of the process, from the body shop through car track and shipping, would be the supplier’s and its organization’s responsibility--consequently requiring that suppliers be registered to ISO/TS 16949:2002 and

comply with the GM site’s ISO 14001 EMS processes and procedures. Also, the seven quality strategies--which include PFMEAs, PPAP, APQP, MSA, SPC and Six Sigma--must be executed flawlessly.

GM has worked hard to fine-tune its vehicle development process, and one need only look at J.D. Power and Associates and Harbour reports to see the results of its labor. In 2003 J.D. Power awarded GM’s new Lansing Grand River plant the Silver Plant Quality Award; the GM Oshawa, Ontario, plant received the Gold Plant Quality Award. But Toyota and other manufacturers continue to improve as well. For example, in 2003, J. D. Power recognized Korean manufacturers as the most improved in quality. Global competition is unrelenting.

GM registered all its sites to ISO 9001, QS-9000 and ISO 14001. They’ve championed certification of top management, engineers, quality personnel, manufacturing personnel and technicians as ASQ-certified quality engineers, quality auditors, reliability engineers, and Six Sigma practitioners.

GM’s mission is to be the manufacturing best-in-class at understanding, managing and controlling variation. Variation must be reduced in all areas of production around the stated target, specification or requirement. The same intensity will be expected of suppliers that plan to do business with the automaker.

GM has benefited immensely from its registration initiatives. If today’s challenges happened a decade ago, the company wouldn’t have survived the competitive requirements, marketing incentives and economic variation it’s now experiencing. But that’s exactly what ISO 9001:2000, ISO/TS 16949:2002, ISO 14001 and their predecessors were designed to help companies do--provided they comply with the standards. If not suboptimized, each of the elements can reduce process variation even in the simplest functions.

Ford’s Q-1 customer endorsement

Ford’s assembly plants still use a concept called “incoming quality” with suppliers. This involves a monthly meeting during which the five to 10 worst suppliers explain to plant management and senior Ford executives what they’ll do to improve products. If a supplier stays on this list for more than six consecutive months, the Ford plant can withdraw its Q1 customer endorsement.

Ford’s Q1 endorsement was originally developed during the early 1980s. The current version includes five categories. (Note: Most of Ford’s listed documents are accessible only to its suppliers via a confidential Web site. Other items are available through the Automotive Industry Action Group at www.aiag.org.):

Capable systems. Suppliers are required to maintain third-party registrations to both ISO/TS 16949:2002 (or QS-9000:1998 through December 2006) and ISO 14001. Also, suppliers must pass an MS 9000 materials management operations guideline or materials management system assessment. Ford required suppliers to register to ISO 14001 by July 1, 2003. For those that didn’t meet the deadline, a special letter published earlier this year through the AIAG outlined the steps they must take. Basically, if a supplier has yet to comply with ISO 14001, it’s subject to losing its Q1 status.

Ongoing performance. With the ongoing performance requirement, suppliers are monitored for five key performance metrics: field service actions, stop shipments, part per million performance, delivery performance and violation of trust. A monthly report called “Supplier Improvement Metrics” is issued with a six-month rolling status. Suppliers start with 1,000 points, which diminish following various requirements violations. If a supplier falls below 850 points, it must create action plans for Ford’s supplier technical assistant. If these fail to resolve the issue, then Q1 probation is initiated.

Manufacturing site assessment. This is an evaluation of whether a supplier is performing to Ford’s various operating units’ expectations. The assessment includes planning and demonstrating manufacturing process capability, variability improvement (i.e., Six Sigma project results), manufacturing efficiencies (i.e., new programs improved through surrogate data, first-time-through initiatives and overall equipment effectiveness) and customer satisfaction (i.e., a robust and effective quality operating system).

Customer endorsements. These state that Ford operation units are satisfied with the service and quality they receive from a specific supplier. In addition to the assembly plants, suppliers must seek endorsements from other Ford groups they might deal with, including material planning and logistics, customer service, and supplier technical assistants.

Continuous improvement. CI is a yearly assessment to ensure that suppliers are actually improving. Suppliers must show objective evidence both to their registrars and Ford indicating improvement--not just change--in the way they satisfy the automaker. This is monitored primarily through the SIM reports. As one supplier technical assistant stated: “All STAs are watching the continual improvement thresholds, which suppliers must establish in 2003, with manufacturing efficiency, variability reduction and customer satisfaction as the lead indicators. The lean game, Six Sigma, FTT and OEE improvement, and other quality tools are required.”

Ford has been credited with one of the best quality system concepts in the industry, despite the fact that, during the 1990s, the company didn’t seem to practice what it preached. Today, it’s working toward a full partnership with its suppliers to ensure that customers are truly delighted about the product.


OEMs expect flawless execution in every process their suppliers undertake. This begins with the advanced product quality planning process and continues through service of vehicle parts with no warranty claims. However, the purchasing public also expects vehicles that are exciting and perform as promised in advertising. In this regard, U.S. OEMs would do well to heed Einstein’s definition of insanity: doing the same thing over and over and expecting different results.

As U.S. manufacturers continue their quest for the elusive “silver bullet,” Japanese automakers found help from people like W. Edwards Deming and Joseph M. Juran. Toyota, Honda and others even opened their operations to U.S. competitors and formed joint ventures such as NUMMI, knowing that U.S. organizations would miss the opportunity to improve, as Japanese manufacturers did, too, early in their benchmarking.

W. Edwards Deming summarized his life mission in what he called “profound knowledge” into four key attributes: appreciation for a system, knowledge of variation, theory of knowledge and psychology. Japanese organizations listened to Deming and implemented and improved upon what they learned. U.S. OEMs used Deming’s ideas for a while, but it’s not always evident that they consistently apply what they’ve learned. They still have an opportunity to demonstrate continual improvement, but time is growing short.

The silver bullet is nothing more than understanding, managing and controlling variation. It must be reduced around targets, specifications and requirements in every process step, from concept through product sale.

About the authors

Roderick A. Munro, Ph.D., is a business improvement coach with RAM Q Universe Inc. (www.ramquniverse.com) and has more than 30 years of experience in manufacturing, automotive, service and education. He has served, trained and consulted for many industries in the United States, Canada and Europe, and trained or consulted with production, nonproduction and transportation tier-one suppliers in quality systems. Munro is an ASQ Fellow, Certified Quality Engineer, Certified Quality Auditor, Certified Quality Manager and a Fellow of the Quality Society for Australasia.

Ronald J. Bowen spent 46 years with General Motors, focusing on variation reduction. He developed the internal audit process and managed QS-9000 registration and ISO 14001 implementation and registration at one of GM’s plants. He now serves as president of Quality Station Inc., which provides consulting services in quality and environmental management systems implementation and internal audits. Bowen is a past chair of ASQ Greater Detroit Section, served as the ASQ deputy chair for four years, is a member of ASQ’s American Quality Congress Board, examining chair for the ASQ Automotive Division and deputy regional director for ASQ Region 10. He’s an ASQ senior member, and CQE, CQA and IRCA QMS provisional auditor. Letters to the editor regarding this article can be sent to letters@qualitydigest.com.