Global automotive quality management standard

PRESS RELEASE

September 25, 2002

By Simon Ledgard and Errol Taylor of BSI Management Systems

Survival !

The battle for survival in the $1500 billion per year global automotive industry has never been fiercer. During the 1980s, Japanese manufacturers shocked their counterparts in Europe and North America with far better levels of quality and productivity. Kaizen, Kanban, JIT and SPC became essential competitive weapons for all automotive manufacturers. Huge amounts of stock disappeared from inventories and the measurement of failure rates changed from percentages to parts per million.

Since then, Vehicle Manufacturers (VMs) have dramatically rationalized their supply chains. Estimates suggest that car manufacturers in the 1980s would have up to 3,000 suppliers they dealt with directly - “tier-one suppliers". This figure now stands at a few hundred and the trend is continuing downwards.

VMs also concentrate increasingly on what they do best: designing, assembling, selling and financing cars. 70% of the value of cars is now bought in from component makers since they have greater expertise in designing, developing and manufacturing the increasingly sophisticated sub assemblies required by the VMs.

In addition, scale is vital to being able to invest the huge sums required to develop new vehicles: Ford and General Motors each invest in the region of $20 billion per year to keep their ranges competitive. With scale come economies of scale where unit costs can be kept to a minimum without sacrificing quality. Mega-mergers have been an inevitable consequence amongst VMs (Daimler Benz's merger with Chrysler) and their top tier suppliers (TRW's acquisition of LucasVarity).

However, this rationalization has made VMs increasingly dependent on their suppliers. As a result, manufacturing practices, product quality, cost competitiveness, continual improvement and R&D investment at these chosen few has come under the microscope.

The stakes are rising as the traditional markets of North America, Western Europe and Japan become saturated while increasing prosperity in the developing markets of Eastern Europe, South America, China and India is leading to an insatiable demand for transport.

Poor supplier performance, such as late delivery, has a very negative effect on the profitability of VM assembly plants. Component failure leads to breakdowns that destroy hard-won reputations for reliability in the eyes of the motorist.

Co-operation to develop ISO/TS16949

It is essential for VMs to have control of their supply chains and the quality of the components they produce. To help manage their suppliers, VMs formed the International Automotive Task Force (IATF), which includes Ford, General Motors, DaimlerChrysler, Fiat, Renault, Peugeot, BMW and Volkswagen.

The IATF, together with significant input from Asian manufacturers, brought together the key requirements from existing quality management systems standards, (including QS-9000, VDA6, EAQF, AVSQ, and ISO 9001:2000) to create the new global automotive quality standard ISO/TS 16949:2002.

Most suppliers to the automotive industry are intimately aware of QS-9000. Many of its features, like PPAP, FMEA and SPC are seen as best practise tools throughout the engineering industry.

However, QS-9000 was first introduced in 1994 and although it has undergone various revisions, it has reached the end of its development life as far as many VMs and their suppliers are concerned.

“What was wrong with QS-9000 ?"

VM concerns about QS-9000
* VM's have too many problem suppliers who still manage to maintain QS-9000 registration
* Bureaucracy has crept in making change and further development difficult
* VMs have little control over their suppliers' QS-9000
* QS-9000 has lagged behind current business thinking and does not utilize the process approach to Quality Management.

Supplier concerns about QS-9000
* The value of QS-9000 registration is dropping due to the falling credibility of the certification process
* Suppliers need multiple certifications to VDA6.1, EAQF and AVSQ in order to supply to American, European and Japanese VMs

What is ISO/TS 16949:2002 ?

The ISO/TS 16949:2002 standard was published in March 2002 together with the following supporting documents:
* Guidance for implementation
* IATF rules
* Checklist
* Interpretation carried over from previous automotive standards
* Customer specific requirements (released by VMs)

This new standard is more demanding than QS-9000 because it has been strengthened in many key areas that should benefit the manufacturer and its customers:
* Senior management involvement through setting & communicating quality objectives, allocating resource and integrating these into business plans
* Product realization, which covers the whole process from planning & design, through production, sales, processing, delivery and after sales service.
* Analysis and improvement, where data is used to continually improve product quality and processes
* Supplier development where organisations must demonstrate a stronger commitment to improving their own supply base.
* Organizational performance requirements focusing on delivered part quality, on time delivery and customer performance.

How is ISO/TS 16949 better than QS-9000 ?

VMs view:
* Registration involves a generally more rigorous assessment, and is better guarantor of supplier performance
* Increased emphasis on customer requirements
* Less bureaucracy at all levels
* Reduced variation in assessment (performance)
* Better control of the registration and assessor training process
* Focus on continual improvement

Supplier's view:
* Increased reciprocal recognition of registration amongst VMs due to clearer and stronger oversight and greater consistency in the registration process
* Avoidance of multiple registration to VDA6, EAQF, AVSQ & QS-9000, thereby avoiding duplication in terms of preparation, documentation and 3rd party audits
* Vocabulary consistent with ISO 9001:2000 and therefore ISO 14001 (Environmental Management System)
* Adoption of a process approach, which is more consistent with the way, the most effective companies are currently operating.
* Increased focus on continual improvement

VMs are generally either making ISO/TS 16949 a mandatory requirement or encouraging their suppliers to upgrade to the new standard. VMs including Ford, General Motors, Peugeot-Citroen, Renault, Fiat, BMW, DaimlerChrysler and Volkswagen accept ISO/TS 16949 as an alternative to current automotive standards.

VMs have made it fairly clear that ISO/TS 16949 registration will help suppliers achieve “preferred supplier" status. QS-9000 is seen as having failed either as a measure of overall supplier performance or as a tool to ensure that quality products are delivered.

However, each OEM will have slightly different requirements and will adopt one of the following positions with respect to ISO/TS 16949 registration:
* Suppliers must be able to demonstrate that they are in compliance only with no registration required
* Registration is optional, but upgrading from QS-9000 is encouraged and ISO/TS 16949 is recognized as a substitute for QS-9000.
* Phased in approach across the supply chain, meaning different rules apply at different levels
* Mandate registration with fixed dates by which it has to be achieved

Please check either of our web sites www.bsigroup.com/en-US/ISO-TS-16949-Automotive or www.bsigroup.com/en-GB/industries-and-sectors/automotive/ for the most up to date publicly stated position of the major VMs.

It is clear that ISO/TS 16949 is here to stay and that QS-9000 has largely run its course. There are no plans to update QS-9000 (or VDA6.1, EAQF, AVSQ).

It is worth remembering that ISO/TS 16949:2002 adopts a process approach to QMS and is a fundamentally superior standard than QS-9000. As a new supplier to the VMs it would be sensible to go straight for registration to ISO/TS 16949:2002.

Registration can be achieved to ISO/TS 16949:1999 until Dec 2003. From that period all new registrations must be to ISO/TS 16949:2002. Companies registered to ISO/TS 16969:1999 will have until December 2003 to upgrade to ISO/TS 16949:2002.

How can BSI help ?

BSI Management Systems is uniquely positioned across its three hubs - Asia Pacific, the Americas and EMEA. Global registrations are becoming more common, as companies realise the importance of consistency in their different operations. "If you move manufacturing of a product to another location, you need to ensure your management systems are consistent across the globe," says Nick Moy, BSI Management Systems' Managing Director.

BSI is North America's leading automotive registrar and the largest registrar in the world.

BSI was one of the first registrars to become fully recognised by the IATF to perform assessments to ISO/TS 16949.

BSI employs a large number of full time experienced assessors specifically to service the automotive sector. BSI has the resources to train its assessors to meet the exacting standards demanded by the IATF.

BSI can offer a great deal of help to clients old and new in understanding the requirements of the standard.

Although the IATF rules prevent Registrars from offering customised training or consultancy to help clients implement ISO/TS 16949, BSI's sister companies CEEM Inc and BSI Business Solutions Ltd offer a range of publicly available training courses to raise awareness, detailed understanding and interpretation of the standard.

BSI can offer a flexible approach to the upgrade assessment from QS-9000 to ISO/TS 16949. This allows clients to attain registration at a pace that suits them while maintaining their QS-9000 registration whilst upgrading to ISO/TS 16949.

Organisations are not currently registered by BSI can transfer their QS-9000 registration easily to BSI at little extra cost. They will then be able to work with BSI to upgrade to ISO/TS 16949.

CONTACT BSI PRESS OFFICE:
Wilma Tulloch on +44 (0)20 8996 6330 OR
Marc Edney on +44 (0)20 8996 6330